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.