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  By: Branch, McCall, Coleman, McClendon, H.B. No. 51
      Madden, et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to funding and incentives to support emerging public
  research universities in developing and maintaining programs of the
  highest tier.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The heading to Chapter 62, Education Code, is
  amended to read as follows:
  CHAPTER 62.  CONSTITUTIONAL AND STATUTORY [DIVISION OF
  CONSTITUTIONALLY APPROPRIATED] FUNDS TO SUPPORT [AMONG CERTAIN]
  INSTITUTIONS OF HIGHER EDUCATION[; RESEARCH DEVELOPMENT FUND]
         SECTION 2.  Chapter 62, Education Code, is amended by adding
  Subchapters C and D to read as follows:
  SUBCHAPTER C.  RESEARCH UNIVERSITY DEVELOPMENT FUND
         Sec. 62.051.  DEFINITIONS. In this subchapter:
               (1)  "Eligible institution" means an emerging research
  university.
               (2)  "Emerging research university" means an
  institution of higher education that the coordinating board
  determines:
                     (A)  is a research university as that term is
  commonly used in classifying or ranking institutions of higher
  education; and
                     (B)  has demonstrated a commitment to developing
  and maintaining degree and research programs that support the
  mission of the institution and the institution's efforts to improve
  its ranking among research universities.
               (3)  "Institution of higher education" has the meaning
  assigned by Section 61.003.
         Sec. 62.052.  PURPOSE. The purpose of this subchapter is to
  provide funding to eligible institutions for the enhancement of
  research productivity to enable those institutions to achieve
  national prominence as major research universities.
         Sec. 62.053.  FUNDING. (a) For each state fiscal year, the
  comptroller shall distribute any funds appropriated by the
  legislature for the purposes of this subchapter, and any other
  funds made available for the purposes of this subchapter, among
  eligible institutions in proportion to the total amount of
  restricted research funds expended by each institution in the two
  most recent state fiscal years.
         (b)  For purposes of Subsection (a), the amount of restricted
  research funds expended by an eligible institution in a state
  fiscal year is the amount of those funds as reported to the
  coordinating board by the institution for that year, subject to any
  adjustment by the coordinating board in accordance with the
  standards and accounting methods the coordinating board prescribes
  for purposes of this section.
         (c)  The legislature may not appropriate money for purposes
  of this subchapter in a state fiscal year unless the legislature
  appropriates an equal amount of money for that fiscal year for the
  Texas Research Incentive Program under Subchapter D.
         Sec. 62.054.  USE OF ALLOCATED AMOUNTS. An eligible
  institution may use money received under this subchapter only for
  the support and maintenance of educational and general activities
  that promote increased research capacity at the institution.
         Sec. 62.055.  RULES. The coordinating board shall adopt
  rules for the administration of this subchapter, including rules
  requiring eligible institutions to report necessary information to
  the coordinating board.
  SUBCHAPTER D. TEXAS RESEARCH INCENTIVE PROGRAM (TRIP)
         Sec. 62.071.  DEFINITIONS. In this subchapter:
               (1)  "Eligible institution" means an emerging research
  university.
               (2)  "Emerging research university" means an
  institution of higher education that the coordinating board
  determines:
                     (A)  is a research university as that term is
  commonly used in classifying or ranking institutions of higher
  education; and
                     (B)  has demonstrated a commitment to developing
  and maintaining degree and research programs that support the
  mission of the institution and the institution's efforts to improve
  its ranking among research universities.
               (3)  "Institution of higher education" has the meaning
  assigned by Section 61.003.
               (4)  "Program" means the Texas Research Incentive
  Program (TRIP) established under this subchapter.
         Sec. 62.072.  PROGRAM ADMINISTRATION. (a)  The coordinating
  board shall administer the Texas Research Incentive Program (TRIP)
  in accordance with this subchapter to provide matching funds to
  assist eligible institutions in leveraging private gifts for the
  enhancement of research productivity and faculty recruitment.  The
  comptroller shall deliver any payment of matching funds to which an
  eligible institution is entitled under the program.
         (b)  The legislature may not appropriate money for purposes
  of this subchapter in a state fiscal year unless the legislature
  appropriates an equal amount of money for that fiscal year for the
  research university development fund under Subchapter C.
         Sec. 62.073.  MATCHING GRANTS.  (a)  An eligible institution
  that receives cash gifts from private sources in a state fiscal year
  for the purpose of enhancing research activities at the
  institution, including gifts for endowments or endowed chairs or
  professorships, research or academic facilities, equipment,
  program costs, or graduate stipends or fellowships, is entitled to
  receive, out of funds appropriated for the purposes of the program
  for that fiscal year, a matching grant in an amount determined
  according to the following rates:
               (1)  50 percent of the total amount of the gifts
  received, if the total amount of those gifts is $100,000 or more but
  not more than $999,999;
               (2)  75 percent of the total amount of the gifts
  received, if the total amount of those gifts is $1 million or more
  but not more than $1,999,999; or
               (3)  100 percent of the total amount of the gifts
  received, if the total amount of those gifts is $2 million or more.
         (b)  An eligible institution is not entitled to matching
  funds under the program for:
               (1)  an in-kind gift;
               (2)  a gift that has been pledged but has not been
  received by the institution;
               (3)  a gift for undergraduate scholarships, grants, or
  other financial aid; or
               (4)  any portion of gifts received by the institution
  from a single source in a state fiscal year in excess of $10
  million.
         (c)  The coordinating board shall establish procedures for
  the certification by the coordinating board of an eligible
  institution's receipt of a qualifying gift. A gift must be
  certified as of the date the gift was deposited by the institution
  in a depository bank or invested by the institution as authorized by
  law.
         (d)  If the funds appropriated for the program for a state
  fiscal year are insufficient to provide matching grants in the
  amounts specified by this section for all qualifying private gifts
  received by eligible institutions during that fiscal year, the
  coordinating board shall authorize matching grants for those gifts
  in order of their certification dates under Subsection (c) and
  shall authorize matching grants for any remaining unmatched gifts
  in the following fiscal year. Unmatched gifts carried forward from
  a preceding fiscal year under this subsection shall be given
  priority over gifts received in the current fiscal year, and shall
  be provided matching grants under this section in order of their
  certification dates. An unmatched gift shall continue to be
  carried forward to subsequent fiscal years until a matching grant
  is awarded for the gift.
         (e)  Matching grants received by an eligible institution
  under this section may not be considered as a basis to reduce,
  directly or indirectly, the amount of money otherwise appropriated
  or allocated to the institution under any other law.
         Sec. 62.074.  USE OF MATCHING GRANTS. An eligible
  institution may use matching grant money received under this
  subchapter for the same purpose as that for which the matched gift
  was received or for the support and maintenance of educational and
  general activities that promote increased research capacity at the
  institution.
         Sec. 62.075.  RULES. The coordinating board shall adopt
  rules for the administration of this subchapter, including rules
  requiring eligible institutions to report necessary information to
  the coordinating board.
         SECTION 3.  Chapter 62, Education Code, is amended by adding
  Subchapter F to read as follows:
  SUBCHAPTER F.  NATIONAL RESEARCH UNIVERSITY FUND
         Sec. 62.121.  PURPOSE. The purpose of this subchapter is to
  allocate appropriations from the national research university fund
  to provide a dedicated, independent, and equitable source of
  funding to enable emerging research universities in this state to
  achieve national prominence as major research universities.
         Sec. 62.122.  DEFINITIONS. In this subchapter:
               (1)  "Eligible institution" means a general academic
  teaching institution that is eligible to receive distributions of
  money under this subchapter.
               (2)  "Fund" means the national research university
  fund.
               (3)  "General academic teaching institution" has the
  meaning assigned by Section 61.003.
         Sec. 62.123.  ADMINISTRATION AND INVESTMENT OF FUND.  (a)  
  The national research university fund is a fund outside the state
  treasury in the custody of the comptroller.
         (b)  The comptroller shall administer and invest the fund in
  accordance with Section 20, Article VII, Texas Constitution.
         Sec. 62.124.  FUNDING.  (a)  The fund consists of any
  amounts appropriated or transferred to the credit of the fund under
  the Texas Constitution or otherwise appropriated or transferred to
  the credit of the fund under this section or another law.
         (b)  The comptroller shall deposit to the credit of the fund
  all interest, dividends, and other income earned from investment of
  the fund.
         (c)  The comptroller may accept gifts or grants from any
  public or private source for the fund.
         Sec. 62.125.  ELIGIBILITY TO RECEIVE DISTRIBUTIONS FROM
  FUND. (a) A general academic teaching institution is eligible to
  receive a distribution of money under this subchapter for each year
  of a state fiscal biennium if:
               (1)  the institution is designated as an emerging
  research university under the coordinating board's accountability
  system;
               (2)  in each of the two state fiscal years preceding the
  state fiscal biennium, the institution expended at least $45
  million in restricted research funds; and
               (3)  the institution satisfies at least four of the
  following criteria:
                     (A)  the aggregate value of the institution's
  endowment funds is at least $400 million;
                     (B)  the institution awarded at least 200 doctor
  of philosophy degrees during each of the two academic years
  preceding the state fiscal biennium;
                     (C)  the entering freshman class of the
  institution for each of those two academic years demonstrated high
  academic achievement, as determined according to standards
  prescribed by the coordinating board by rule, giving consideration
  to the future educational needs of the state as articulated in the
  coordinating board's "Closing the Gaps" report;
                     (D)  the institution is designated as a member of
  the Association of Research Libraries or has a Phi Beta Kappa
  chapter or has received an equivalent recognition of research
  capabilities and scholarly attainment as determined according to
  standards prescribed by the coordinating board by rule;
                     (E)  the faculty of the institution for each of
  those two academic years was of high quality, as determined
  according to coordinating board standards based on the professional
  achievement and recognition of the institution's faculty,
  including the election of faculty members to national academies;
  and
                     (F)  the institution has demonstrated a
  commitment to high quality graduate education, as determined
  according to standards prescribed by the coordinating board by
  rule, including the number of graduate-level programs at the
  institution, the institution's admission standards for graduate
  programs, and the level of institutional support for graduate
  students.
         (b)  A general academic teaching institution that becomes
  eligible to receive a distribution of money under this subchapter
  remains eligible to receive a distribution in each subsequent state
  fiscal year.
         Sec. 62.126.  ACCOUNTING STANDARDS; VERIFICATION OF
  INFORMATION. (a) The coordinating board, in consultation with the
  State Auditor's Office, by rule shall prescribe standard methods of
  accounting and standard methods of reporting information for the
  purpose of determining the eligibility of institutions under
  Section 62.125.
         (b)  As soon as practicable in each even-numbered year, based
  on information submitted by the institutions to the coordinating
  board as required by the coordinating board, the coordinating board
  shall certify to the comptroller the institutions that are
  determined to be initially eligible for distributions of money from
  the fund for the following state fiscal biennium.
         (c)  At the request of the coordinating board, the State
  Auditor's Office shall verify the information supporting the
  coordinating board's determination under Subsection (b).
         Sec. 62.127.  INELIGIBILITY OF INSTITUTIONS RECEIVING
  PERMANENT UNIVERSITY FUND SUPPORT AND MAINTENANCE. The University
  of Texas at Austin, Texas A&M University, and Prairie View A&M
  University are ineligible to receive money under this subchapter.
         Sec. 62.128.  ALLOCATION OF APPROPRIATED FUNDS TO ELIGIBLE
  INSTITUTIONS. In each state fiscal year, the comptroller shall
  distribute to eligible institutions the total amount appropriated
  from the fund for that fiscal year. The amount allocated to the
  eligible institutions shall be based on an equitable formula
  adopted by the legislature to carry out the purposes of the fund as
  established by Section 20, Article VII, Texas Constitution. In
  adopting the allocation formula, the legislature shall consider the
  recommendations of the coordinating board, including
  recommendations on the appropriate elements and relative weights of
  elements of the formula.
         Sec. 62.129.  USE OF ALLOCATED AMOUNTS.  (a)  An eligible
  institution may use money received under this subchapter only for
  the support and maintenance of educational and general activities
  that promote increased research capacity at the institution.
         (b)  For purposes of Subsection (a), permitted activities
  include the use of the money to:
               (1)  provide faculty support and pay faculty salaries;
               (2)  purchase equipment or library materials;
               (3)  pay graduate stipends; and
               (4)  support research performed at the institution,
  including undergraduate research.
         (c)  Money received in a fiscal year by an institution under
  this subchapter that is not used in that fiscal year by the
  institution may be held and used by the institution in subsequent
  fiscal years for the purposes prescribed by this section.
         SECTION 4.  Section 62.094, Education Code, is amended to
  read as follows:
         Sec. 62.094.  FUNDING.  (a)  The research development fund
  consists of the [amount deposited to the credit of the fund under
  Section 62.025 in each state fiscal year, the amount appropriated
  or transferred to the credit of the fund by the legislature under
  Subsection (b), and any other] amounts appropriated or transferred
  to the credit of the fund under this section or other law.
         (b)  [In each state fiscal year, the legislature may
  appropriate or provide for the transfer to the credit of the
  research development fund of an amount not less than the amount
  deposited to the credit of the fund under Section 62.025 in that
  fiscal year.
         [(c)]  The comptroller shall deposit all interest,
  dividends, and other income earned from investment of the research
  development fund to the credit of the fund.
         (c) [(d)]  The comptroller may accept gifts or grants from
  any public or private source for the research development fund.
         SECTION 5.  Sections 62.025 and 62.026, Education Code, are
  repealed.
         SECTION 6.  The Texas Higher Education Coordinating Board
  shall adopt rules relating to the administration of Subchapters C,
  D, and F, Chapter 62, Education Code, as added by this Act, as soon
  as practicable after the effective date of this Act.
         SECTION 7.  (a) Except as provided by Subsection (b) of this
  section, this Act takes effect September 1, 2009.
         (b)  Sections 3, 4, and 5 of this Act take effect January 1,
  2010, but only if the constitutional amendment proposed by the 81st
  Legislature, Regular Session, 2009, establishing the national
  research university fund to enable emerging research universities
  in this state to achieve national prominence as major research
  universities and transferring the balance of the higher education
  fund to the national research university fund is approved by the
  voters. If that constitutional amendment is not approved by the
  voters, Sections 3, 4, and 5 of this Act do not take effect.