By: Morrison (Senate Sponsor - Shapiro)	H.B. No. 3828
	(In the Senate - Received from the House May 14, 2007;
	May 15, 2007, read first time and referred to Committee on
	Education; May 18, 2007, reported favorably by the following vote:
	Yeas 5, Nays 1; May 18, 2007, sent to printer.)

	A BILL TO BE ENTITLED
	AN ACT
	relating to performance incentive funding for institutions of
	higher education.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 61, Education Code, is amended by adding
	Subchapter EE to read as follows:
	SUBCHAPTER EE.  PERFORMANCE INCENTIVE FUNDING
	Sec. 61.9801.  PERFORMANCE INCENTIVE FUNDING FOR CERTAIN
	GENERAL ACADEMIC TEACHING INSTITUTIONS. (a) This section applies
	only to general academic teaching institutions other than public
	state colleges.
	(b)  In this section:
	(1)  "Advanced degree" means a graduate or professional
	degree for which a baccalaureate degree is usually required as a
	prerequisite to admission into the degree program.
	(2)  "At-risk student" means a student of an
	institution to which this section applies:
	(A)  whose score on the Scholastic Assessment Test
	or the American College Test is less than the national mean score of
	students' scores on that test;
	(B)  who has been awarded a grant under the
	federal Pell Grant program;
	(C)  who was 20 years of age or older but younger
	than 60 years of age on the date the student initially enrolled in
	the institution;
	(D)  who initially enrolled in the institution for
	less than 12 semester credit hours during a fall or spring semester;
	(E)  who did not receive a high school diploma but
	received a high school equivalency certificate;
	(F)  who may not be claimed by any other person as
	a dependent for federal income tax purposes but may claim at least
	one other person as a dependent for federal income tax purposes; or
	(G)  who is a single parent.
	(3)  "Critical field" means a field of study designated
	as a critical field under Subsection (c).
	(c)  Except as otherwise provided under Subdivision (2), the
	fields of engineering, computer science, mathematics, physical
	science, allied health, nursing, and teaching certification in the
	field of science or mathematics are critical fields.
	(d)  Except as otherwise provided by rules adopted under
	Section 61.9806, for each state fiscal year, the board shall
	distribute any performance incentive funds appropriated by the
	legislature for the purposes of this section, and any other funds
	made available for the purposes of this section, to institutions to
	which this section applies in proportion to the number of points
	assigned to each institution under the tables prescribed by
	Subsections (f) and (g).
	(e)  A number of points is assigned in accordance with
	Subsections (f) and (g) only on the basis of a degree awarded during
	the state fiscal year preceding the year for which the distribution
	of funds under this section is made. Points may not be assigned for
	any degree awarded to an international student.
	(f)  A number of points is assigned for a bachelor's degree
	awarded to a student by an institution to which this section applies
	according to the following table:
	POINTS
	Non-critical Field/Not At-Risk 1.0
	Non-critical Field/At-Risk 2.0
	Critical Field/Not At-Risk 2.0
	Critical Field/At-Risk 3.0
	(g)  A number of points is assigned for an advanced degree
	awarded to a student by an institution to which this section applies
	based on the type of advanced degree awarded according to the
	following table:
	TYPE OF DEGREE AWARDED POINTS
	Master's 1.0
	Doctoral 1.0
	Professional 1.0
	Sec. 61.9802.  PERFORMANCE INCENTIVE FUNDING FOR COMMUNITY
	COLLEGES, PUBLIC TECHNICAL INSTITUTES, AND PUBLIC STATE COLLEGES.
	(a) This section applies only to the following institutions of
	higher education:
	(1)  community colleges;
	(2)  public technical institutes; and
	(3)  public state colleges.
	(b)  In this section:
	(1)  "At-risk student" means a student of an
	institution to which this section applies:
	(A)  who graduated from high school with a
	cumulative grade point average of less than 2.5 on the grading scale
	established by the board by rule under Section 51.807;
	(B)  who has been awarded a grant under the
	federal Pell Grant program;
	(C)  who was 20 years of age or older but younger
	than 60 years of age on the date the student enrolled in the
	institution for the first time;
	(D)  who initially enrolled in the institution for
	less than 12 semester credit hours during a fall or spring semester;
	(E)  who did not receive a high school diploma but
	received a high school equivalency certificate;
	(F)  who may not be claimed by any other person as
	a dependent for federal income tax purposes but may claim at least
	one other person as a dependent for federal income tax purposes; or
	(G)  who is a single parent.
	(2)  "Critical field" means a field of study designated
	as a critical field under Subsection (c).
	(c)  Except as otherwise provided under Subdivision (2), the
	fields of engineering, technology, computer science, mathematics,
	physical science, allied health, and nursing are critical fields.
	Beginning September 1, 2010, the board, based on the board's
	determination of those fields of study in which the support and
	development of postsecondary education programs at the
	lower-division level are most critically necessary for serving the
	needs of this state, by rule may:
	(1)  designate as a critical field a field of study that
	is not currently designated by this subsection or by the board as a
	critical field; or
	(2)  remove a field of study from the list of fields
	currently designated by this subsection or by the board as critical
	fields.
	(d)  Except as otherwise provided by rules adopted under
	Section 61.9806, for each state fiscal year, the board shall
	distribute any performance incentive funds appropriated by the
	legislature for the purposes of this section, and any other funds
	made available for the purposes of this section, to institutions to
	which this section applies in proportion to the number of points
	assigned to each institution under the tables prescribed by
	Subsections (f) and (g).
	(e)  A number of points is assigned in accordance with
	Subsections (f) and (g) only on the basis of a degree or certificate
	awarded or a student transfer made during the state fiscal year
	preceding the year for which the distribution of funds under this
	section is made. Points may not be assigned for any degree or
	certificate awarded:
	(1)  in a program on a topic or at a level that the board
	determines does not merit funding under this section; or
	(2)  to an international student.
	(f)  A number of points is assigned for an associate degree
	or certificate awarded to a student by an institution to which this
	section applies according to the following tables:
	TABLE 1
	POINTS
	Associate Degree/Non-critical Field/Not At-Risk 2.0
	Associate Degree/Non-critical Field/At-Risk 4.0
	Associate Degree/Critical Field/Not At-Risk 4.0
	Associate Degree/Critical Field/At-Risk 6.0
	TABLE 2
	POINTS
	Certificate Program/Non-critical Field/Not At-Risk 1.0
	Certificate Program/Non-critical Field/At-Risk 2.0
	Certificate Program/Critical Field/Not At-Risk 2.0
	Certificate Program/Critical Field/At-Risk 3.0
	(g)  A number of points is assigned to an institution to
	which this section applies for each student of the institution who,
	in the preceding state fiscal year, completed at least 30 semester
	credit hours at the institution with a grade point average of at
	least 2.5 on the grading scale established by the board under
	Section 51.807 before transferring to a general academic teaching
	institution other than a public state college and determined
	according to the following table:
	POINTS PER TRANSFER STUDENT
	Not At-Risk 2.0
	At-Risk 4.0
	Sec. 61.9803.  PERFORMANCE INCENTIVE FUNDING FOR MEDICAL AND
	DENTAL UNITS. (a) This section applies only to:
	(1)  medical and dental units; and
	(2)  the Baylor College of Medicine.
	(b)  Except as otherwise provided by rules adopted under
	Section 61.9806, for each state fiscal year, the board shall
	distribute any performance incentive funds appropriated by the
	legislature for the purposes of this section, and any other funds
	made available for the purposes of this section, to institutions to
	which this section applies in proportion to the number of points
	assigned to each institution under the table prescribed by
	Subsection (d).
	(c)  A number of points is assigned in accordance with
	Subsection (d) only on the basis of a degree awarded or a first
	residency completed during the state fiscal year preceding the year
	for which the distribution of funds under this section is made.
	Points may not be assigned for any degree awarded to an
	international student.
	(d)  A number of points is assigned for a degree awarded to a
	student by an institution to which this section applies based on the
	type of degree awarded or a first residency completed according to
	the following table:
	TYPE OF DEGREE POINTS PER DEGREE
	Bachelor's 1.0
	Master's 1.0
	Doctoral 1.0
	First Residency Completed 1.0
	(e)  Notwithstanding any other provision of this section, a
	number of points may be assigned under this section for a degree
	awarded or a first-year residency completed by a student of the
	Baylor College of Medicine only if the student was awarded the
	degree or completed the residency in a program at the college for
	which the college receives state funding under Subchapter D or I.
	Sec. 61.9804.  RULES. The board shall adopt rules for the
	administration of this subchapter.
	Sec. 61.9805.  REPORT BY INSTITUTIONS TO BOARD. Not later
	than September 1 of each year, each institution of higher education
	or other postsecondary educational institution to which this
	subchapter applies shall compile and submit to the board, in
	accordance with rules adopted by the board, a report that includes
	the following data regarding each student who was awarded a degree
	or certificate by the institution, completed a first residency with
	the institution, or transferred from the institution to a general
	academic teaching institution other than a public state college,
	during the preceding state fiscal year:
	(1)  the student's scores on the Scholastic Assessment
	Test and American College Test;
	(2)  the student's cumulative high school grade point
	average;
	(3)  the number of semester credit hours completed by
	the student at the institution;
	(4)  the student's grade point average on all
	coursework completed at the institution using the grading scale
	established by the board by rule under Section 51.807;
	(5)  whether the student received a grant under the
	federal Pell Grant program;
	(6)  the age of the student on the date the student
	initially enrolled in the institution;
	(7)  whether the student initially enrolled in the
	institution for less than 12 semester credit hours during a fall or
	spring semester;
	(8)  whether the student is an international student;
	(9)  whether any degree or certificate awarded to the
	student by the institution is in a field designated as a critical
	field under Section 61.9801 or Section 61.9802;
	(10)  whether the student did not receive a high school
	diploma but received a high school equivalency certificate;
	(11)  whether the student may not be claimed by any
	other person as a dependent for federal income tax purposes but may
	claim at least one other person as a dependent for federal income
	tax purposes;
	(12)  whether the student is a single parent; and
	(13)  any other information required by the board.
	Sec. 61.9806.  ADJUSTMENT OF FUNDING BASED ON QUALITY OF
	DEGREES AND CERTIFICATES AWARDED.  (a)  The board, in consultation
	with institutions of higher education or other postsecondary
	educational institutions to which this subchapter applies, by rule
	shall develop and adopt as an additional criteria by which points
	are assigned under Sections 61.9801, 61.9802, and 61.9803, or for
	which the points assigned under those sections are adjusted, a
	methodology designed to assess the quality of the degrees and
	certificates for which points are assigned under this subchapter.
	(b)  The methodology adopted under this section must:
	(1)  be designed to promote the maintenance or
	enhancement of the quality of degrees and certificates awarded by
	the institutions; and
	(2)  include minimum standards of quality that a degree
	or certificate awarded by an institution must satisfy in order to
	qualify for an assignment of points under this subchapter.
	(c)  The minimum standards required under Subsection (b)(2)
	may be established per graduate, per department, per institution,
	or based on any other unit of measurement the board considers
	appropriate.
	(d)  The board may consider for purposes of this section the
	following indicators to measure the quality of degrees or
	certificates:
	(1)  end-of-degree and end-of-certificate
	examinations, except that the board may not require a student's
	performance on such an examination authorized by the board to be
	used for purposes of this section to be used to determine the
	student's eligibility for graduation;
	(2)  a peer review process;
	(3)  accreditation status; and
	(4)  any other factor the board considers appropriate
	relating to the participation goals in Closing the Gaps, the
	state's master plan for higher education.
	(d-1) A student's performance on a standardized test may not
	be required for graduation from an institution of higher education,
	used as a measure of an institution's accountability, or used as an
	indicator or criterion under this section.
	(e)  Not later than January 31 of each even-numbered year,
	the board shall adopt the methodology required by this section
	applicable to the distribution of funds under this subchapter in
	the state fiscal biennium that begins in the following odd-numbered
	year.  Upon adoption, the board shall submit a copy of the
	methodology to the governor, lieutenant governor, speaker of the
	house of representatives, chair of the senate finance committee,
	chair of the house committee on appropriations, and  members of each
	legislative standing committee or subcommittee with higher
	education oversight responsibility.
	(f)  The board shall adopt rules for the administration of
	this section.
	Sec. 61.9807.  REPORT TO BOARD AND LEGISLATURE BY EDUCATION
	RESEARCH CENTER REGARDING EVALUATION OF POINT ASSIGNMENTS. Each
	state fiscal biennium, the board shall provide for the evaluation
	by an education research center established under Section 1.005 of
	the points assigned under Sections 61.9801, 61.9802, and 61.9803 or
	under rules adopted by the board under Section 61.9806. Not later
	than November 1 of each even-numbered year, the education research
	center shall submit to the board and the legislature a written
	report regarding the center's evaluation under this section,
	including any recommendations for changes to the points assigned
	under those sections.
	SECTION 2.  Section 61.0591, Education Code, is repealed.
	SECTION 3.  The Texas Higher Education Coordinating Board
	shall adopt rules relating to the administration of Subchapter EE,
	Chapter 61, Education Code, as added by this Act, as soon as
	practicable after the effective date of this Act.
	SECTION 4.  This Act takes effect September 1, 2008.
	* * * * *