SRC-TJG S.B. 1855 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1855
78R7122 KSD-DBy: Duncan
Finance
4/24/2003
As Filed


DIGEST AND PURPOSE 

Currently, the Texas Excellence Fund and the University Research Fund
allocate equal amounts of money under two separate methodologies.  These
funds, created by the 77th Texas Legislature are for institutions of
higher education that do not receive excellence funding from the Permanent
Education Fund.  As proposed, S.B. 1855 abolishes the Texas Excellence
Fund and the University Research Fund and creates the research development
fund with a single distribution methodology.  This bill also provides for
a transition period. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends the heading to Chapter 62, Education Code, to read as
follows: 

CHAPTER 62.  DIVISION OF CONSTITUTIONALLY APPROPRIATED FUNDS AMONG CERTAIN
INSTITUTIONS OF HIGHER EDUCATION; RESEARCH DEVELOPMENT FUND 

SECTION 2.  Amends Chapter 62, Education Code, by adding Subchapter E, as
follows: 

SUBCHAPTER E.  RESEARCH DEVELOPMENT FUND

Sec. 62.091.  PURPOSE.  Provides that the research development fund (fund)
is established to provide funding to promote increased research capacity
at eligible general academic teaching institutions. 

Sec. 62.092.  DEFINITIONS.  Defines "coordinating board" and "eligible
institution." 

Sec. 62.093.  ADMINISTRATION.  (a)  Provides that the fund is a fund
outside the state treasury in the custody of the comptroller of public
accounts (comptroller). 

(b) Requires the comptroller to administer and invest the fund.

Sec. 62.094.  FUNDING.  (a) Provides that the fund consists of certain
amounts deposited, appropriated, or transferred to the credit of the fund. 

(b) Authorizes the legislature, in each state fiscal year, to appropriate
or provide for the transfer to the credit of the fund of a certain amount. 

(c) Requires the comptroller to deposit all interest, dividends, and other
income earned from investment of the fund to the credit of the fund. 

(d) Authorizes the comptroller to accept gifts or grants from any public
or private source for the fund. 

 Sec. 62.095.  APPORTIONMENT OF FUND TO ELIGIBLE INSTITUTIONS.  (a)
Requires the comptroller, in each state fiscal year, to distribute the
total amount of all assets in the fund to eligible institutions.  Requires
the amount to be apportioned among the eligible institutions based on the
average amount of registered research funds expended by each institution
per year for the three preceding state fiscal years. 

(b) Provides that for purposes of Subsection (a), the amount of restricted
research funds expended by an institution in a fiscal year is the amount
of those funds as reported to the Texas Higher Education Coordinating
Board (THECB) by the institution for that fiscal year, subject to any
adjustment by THECB in accordance with the standards and accounting
methods THECB prescribes under Section 62.096. 

Sec. 62.0951.  APPORTIONMENT OF FUND IN 2006-2007 FISCAL BIENNIUM.  (a)
Provides that this section applies to the apportionment of the fund in
each state fiscal year of the state fiscal biennium ending August 31,
2007.   

(b) Requires the comptroller to increase the amount apportioned to that
institution from the fund to an amount equal to 50 percent of the amount
distributed to the institution from the university research fund in the
state fiscal year ending August 31, 2005, in a state fiscal year to which
this section applies, if under the apportionment method prescribed by
Section 62.095 an eligible institution that receive money from the
university research fund in the state fiscal year ending August 31, 2005,
would be entitled to receive from the fund an amount that is less that
[sic] 50 percent of the amount distributed to the institution from the
university research fund in the state fiscal year ending August 31, 2005. 

(c) Requires the comptroller, after apportioning the amount prescribed by
Subsection (b) to each eligible institution to which Subsection (b)
applies, to apportion the remaining amount to be distributed from the fund
in that fiscal year to the remaining eligible institutions in proportion
to the amounts the institutions would be entitled to receive in that
fiscal year under the apportionment method prescribed by Section 62.095.   

(d) Provides that this section expires January 1, 2008.

Sec. 62.096.  VERIFICATION OF ALLOCATION FACTORS.  (a) Requires THECB, for
purposes of this subchapter, to prescribe standards and accounting methods
for determining the amount of restricted research funds expended by an
eligible institution in a state fiscal year. 

(b) Requires THECB, as soon as practicable in each state fiscal year, to
provide the comptroller with verified information relating to the amounts
of restricted research funds expended by eligible institutions as
necessary to determine the apportionment of the fund under this subchapter
for that fiscal year. 

(c) Authorizes THECB to audit the appropriate records of an eligible
institution to verify information for purposes of this subchapter. 

Sec. 62.097.  USE OF ALLOCATED AMOUNTS.  (a) Authorizes an eligible
institution to use money received from the fund only for the support and
maintenance of educational and general activities, including research and
student services, that promote increased research capacity at the
institution. 

(b) Authorizes money received by an institution from the fund in a fiscal
year that is not used by the institution in that fiscal year to be held
and used by the institution in subsequent fiscal years. 

Sec. 62.098.  ANNUAL REPORT.  (a) Requires each eligible institution that
receives  money under this subchapter in a state fiscal year to prepare a
report at the end of that fiscal year describing the manner in which the
institution used the money.  Requires the institution to include in the
report information regarding the use of money spent in that fiscal year
that was received under this subchapter in a preceding fiscal year. 

(b) Requires the institution the institution to deliver a copy of the
report to THECB and the Legislative Budget Board (LBB) not later than
December 1 after the end of the fiscal year.  Authorizes the LBB to
establish requirements for the form and content of the report. 

(c) Requires the institution to include in the report information on the
use or other disposition of money the institution preciously received from
the Texas excellence fund or the university research fund, if the
institution spent money from either of those funds in the fiscal year of
the report. 

SECTION 3.  Amends Sections 62.025(a), (c), and (e), Education Code, as
follows: 

(a) Requires the comptroller, not later than November 1 of each state
fiscal year, to deposit the first $50 million that comes to the state at
the beginning of each state fiscal year and that is not dedicated by other
certain laws, in a certain manner, including a deposit to the fund under
Subchapter E.. 

(c) Requires the comptroller, in each state fiscal year that begins on or
after that date, to deposit to the credit of the fund established under
Subchapter E, rather than the Texas excellence fund, established under
Subchapter C, from the first money that comes to the state at the
beginning of that fiscal year an amount, not to exceed $50 million, equal
to a certain portion of the total return on all investment assets of the
higher education fund in the preceding state fiscal year computed by a
certain equation. 

(e) Makes conforming changes.

SECTION 4.  Repealer: Section 62.025(d) and Subchapters C (Texas
Excellence Fund) and D (University Research Fund for Certain Permanent
University Fund Institutions), Chapter 62, Education Code. 

SECTION 5.  (a) Requires the first distribution of money from the fund
established by this Act to be made in the state fiscal year beginning
September 1, 2005. 

(b) Requires any amount remaining in or payable to the credit of the Texas
excellence fund or the university research fund to be transferred to the
credit of the fund established by this Act, on and after the effective
date of this Act. 

SECTION 6.  Effective date: September 1, 2005.