Texas 2023 - 88th Regular

Texas House Bill HB1595 Compare Versions

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1	1	H.B. No. 1595
2	2
3	3
4	4	AN ACT
5	5	relating to the administration and investment of, and distribution
6	6	and use of money from, certain constitutional and statutory funds
7	7	to support general academic teaching institutions in achieving
8	8	national prominence as major research universities and driving the
9	9	state economy.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 51.406(c), Education Code, is amended to
12	12	read as follows:
13	13	(c) A rule or policy of a state agency, including the Texas
14	14	Higher Education Coordinating Board, in effect on June 1, 2011,
15	15	that requires reporting by a university system or an institution of
16	16	higher education has no effect on or after September 1, 2013, unless
17	17	the rule or policy is affirmatively and formally readopted before
18	18	that date by formal administrative rule published in the Texas
19	19	Register and adopted in compliance with Chapter 2001, Government
20	20	Code. This subsection does not apply to:
21	21	(1) a rule or policy for which the authorizing statute
22	22	is listed in Subsection (b);
23	23	(2) a rule or policy for which the authorizing statute
24	24	is repealed on or before September 1, 2013, by legislation enacted
25	25	by the legislature that becomes law; or
26	26	(3) a report required under any of the following
27	27	provisions:
28	28	(A) Article 59.06(g)(1), Code of Criminal
29	29	Procedure;
30	30	(B) Section 51.005;
31	31	(C) Section 51.0051;
32	32	(D) Subchapter F-1 of this chapter;
33	33	(E) Section 51.402;
34	34	(F) Section 56.039;
35	35	(G) Section 61.059;
36	36	(H) [Section 62.095(b);
37	37	[(I)] Section 62.098;
38	38	(I) [(J)] Section 411.187(b), Government Code;
39	39	(J) [(K)] Subchapter C, Chapter 606, Government
40	40	Code;
41	41	(K) [(L)] Subchapter E, Chapter 815, Government
42	42	Code; or
43	43	(L) [(M)] Chapter 1551, Insurance Code.
44	44	SECTION 2. Section 62.092(2), Education Code, is amended to
45	45	read as follows:
46	46	(2) "Eligible institution" means a general academic
47	47	teaching institution as defined by Section 61.003, other than:
48	48	(A) The University of Texas at Austin or Texas
49	49	A&M University; or
50	50	(B) an institution of higher education described
51	51	by Section 62.132(2) or 62.145.
52	52	SECTION 3. Section 62.095, Education Code, is amended to
53	53	read as follows:
54	54	Sec. 62.095. APPROPRIATION OF FUND TO ELIGIBLE
55	55	INSTITUTIONS. [(a)] In each state fiscal year, amounts shall be
56	56	appropriated to eligible institutions in the same manner that
57	57	research performance funding is appropriated to institutions
58	58	eligible to receive funding from the Texas University Fund under
59	59	Section 62.1482(a) [based on the average amount of restricted
60	60	research funds expended by each institution per year for the three
61	61	preceding state fiscal years].
62	62	[(b) For purposes of Subsection (a), the amount of
63	63	restricted research funds expended by an institution in a fiscal
64	64	year is the amount of those funds as reported to the coordinating
65	65	board by the institution for that fiscal year, subject to any
66	66	adjustment by the coordinating board in accordance with the
67	67	standards and accounting methods the coordinating board prescribes
68	68	under Section 62.096.]
69	69	SECTION 4. The heading to Subchapter F-1, Chapter 62,
70	70	Education Code, is amended to read as follows:
71	71	SUBCHAPTER F-1. NATIONAL [CORE] RESEARCH SUPPORT FUND
72	72	SECTION 5. Section 62.131, Education Code, is amended to
73	73	read as follows:
74	74	Sec. 62.131. PURPOSE. The national [core] research support
75	75	fund is established to provide funding to promote increased
76	76	research capacity at certain institutions of higher education
77	77	eligible to participate in the available university fund [emerging
78	78	research universities].
79	79	SECTION 6. Section 62.132, Education Code, is amended by
80	80	amending Subdivisions (2) and (3) and adding Subdivision (4) to
81	81	read as follows:
82	82	(2) "Eligible institution" means a general academic
83	83	teaching [an] institution [of higher education] that:
84	84	(A) is entitled to participate in the funding
85	85	provided by Section 18, Article VII, Texas Constitution;
86	86	(B) spent on average at least the following
87	87	amount in federal and private research funds per state fiscal year
88	88	during the preceding three state fiscal years:
89	89	(i) for the state fiscal year beginning
90	90	September 1, 2023, $20 million; or
91	91	(ii) for a state fiscal year beginning on or
92	92	after September 1, 2024, the amount determined under this paragraph
93	93	for the preceding state fiscal year adjusted by the increase, if
94	94	any, in the general price level during the preceding state fiscal
95	95	year, as determined by the coordinating board on the basis of
96	96	changes in the consumer price index published by the Bureau of Labor
97	97	Statistics of the United States Department of Labor or a successor
98	98	agency; and
99	99	(C) awarded on average at least 45 research
100	100	doctoral degrees per academic year during the preceding three
101	101	academic years [is designated as an emerging research university
102	102	under the coordinating board's accountability system].
103	103	(3) "Fund" means the national [core] research support
104	104	fund.
105	105	(4) "General academic teaching institution" has the
106	106	meaning assigned by Section 61.003.
107	107	SECTION 7. Section 62.133, Education Code, is amended to
108	108	read as follows:
109	109	Sec. 62.133. FUNDING. The national [core] research support
110	110	fund consists of money appropriated by the legislature to eligible
111	111	institutions for the purposes of this subchapter.
112	112	SECTION 8. Subchapter F-1, Chapter 62, Education Code, is
113	113	amended by adding Section 62.1335 to read as follows:
114	114	Sec. 62.1335. ELIGIBILITY TO RECEIVE DISTRIBUTIONS FROM
115	115	FUND. (a) A general academic teaching institution becomes
116	116	eligible to receive an initial distribution of money appropriated
117	117	under this subchapter for a state fiscal year if the institution:
118	118	(1) is entitled to participate in the funding provided
119	119	by Section 18, Article VII, Texas Constitution;
120	120	(2) spent on average at least $20 million in federal
121	121	and private research funds per state fiscal year during the
122	122	preceding three state fiscal years; and
123	123	(3) awarded on average at least 45 research doctoral
124	124	degrees per academic year during the preceding three academic
125	125	years.
126	126	(b) A general academic teaching institution that becomes
127	127	eligible to receive a distribution of money under this subchapter
128	128	remains eligible to receive a distribution in each subsequent state
129	129	fiscal year.
130	130	SECTION 9. Section 62.134, Education Code, is amended to
131	131	read as follows:
132	132	Sec. 62.134. APPROPRIATION OF FUND TO ELIGIBLE
133	133	INSTITUTIONS. In each state fiscal year, amounts shall be
134	134	appropriated to eligible institutions in the same manner that
135	135	research performance funding is appropriated to institutions
136	136	eligible to receive funding from the Texas University Fund under
137	137	Section 62.1482 [as follows:
138	138	[(1) 50 percent based on the average amount of
139	139	restricted research funds expended by each institution per year for
140	140	the three preceding state fiscal years, determined in the manner
141	141	described by Section 62.095(b); and
142	142	[(2) 50 percent based on the average amount of total
143	143	research funds expended by each institution per year for the three
144	144	preceding state fiscal years, determined in the manner described by
145	145	Section 62.053(b)].
146	146	SECTION 10. The heading to Subchapter G, Chapter 62,
147	147	Education Code, is amended to read as follows:
148	148	SUBCHAPTER G. TEXAS [NATIONAL RESEARCH] UNIVERSITY FUND
149	149	SECTION 11. Section 62.141, Education Code, is amended to
150	150	read as follows:
151	151	Sec. 62.141. PURPOSE. The purpose of this subchapter is to
152	152	allocate appropriations from the Texas University Fund [national
153	153	research university fund] to provide a dedicated, independent, and
154	154	equitable source of funding to enable certain general academic
155	155	teaching institutions [emerging research universities in this
156	156	state] to achieve national prominence as major research
157	157	universities and drive the state economy.
158	158	SECTION 12. Section 62.142, Education Code, is amended by
159	159	amending Subdivision (3) and adding Subdivision (5) to read as
160	160	follows:
161	161	(3) "Fund" means the Texas University Fund [national
162	162	research university fund].
163	163	(5) "Trust company" means the Texas Treasury
164	164	Safekeeping Trust Company.
165	165	SECTION 13. Section 62.143, Education Code, is amended to
166	166	read as follows:
167	167	Sec. 62.143. ADMINISTRATION AND INVESTMENT OF FUND. (a)
168	168	The Texas University Fund [national research university fund] is a
169	169	fund outside the state treasury held by [in the custody of] the
170	170	comptroller and administered by the trust company.
171	171	(b) The trust company [comptroller] shall administer and
172	172	invest the fund in accordance with Section 20, Article VII, Texas
173	173	Constitution.
174	174	(c) The trust company shall determine the amount available
175	175	for distribution from the fund in accordance with a distribution
176	176	policy adopted by the comptroller that is designed to:
177	177	(1) preserve the purchasing power of the fund's assets
178	178	over an economic cycle, subject to the liquidity needs of the fund;
179	179	and
180	180	(2) provide as nearly as practicable a stable and
181	181	predictable stream of annual distributions.
182	182	SECTION 14. Section 62.144, Education Code, is amended to
183	183	read as follows:
184	184	Sec. 62.144. FUNDING. (a) The fund consists of:
185	185	(1) money [any amounts] appropriated or transferred to
186	186	the credit of the fund;
187	187	(2) gifts and grants contributed to the fund; and
188	188	(3) the interest and other earnings attributable to
189	189	the investment of money in the fund [under the Texas Constitution or
190	190	otherwise appropriated or transferred to the credit of the fund
191	191	under this section or another law].
192	192	(b) [The comptroller shall deposit to the credit of the fund
193	193	all interest, dividends, and other income earned from investment of
194	194	the fund.
195	195	[(c)] The comptroller may solicit and accept gifts or grants
196	196	from any public or private source for the fund.
197	197	SECTION 15. Section 62.145, Education Code, is amended to
198	198	read as follows:
199	199	Sec. 62.145. ELIGIBILITY TO RECEIVE DISTRIBUTIONS FROM
200	200	FUND. (a) The following general academic teaching institutions
201	201	are eligible to receive distributions under this subchapter for
202	202	each state fiscal year:
203	203	(1) Texas State University;
204	204	(2) Texas Tech University;
205	205	(3) the University of Houston; and
206	206	(4) the University of North Texas.
207	207	(b) A general academic teaching institution not listed in
208	208	Subsection (a) becomes eligible to receive an initial distribution
209	209	of money appropriated under this subchapter for a state fiscal year
210	210	if:
211	211	(1) the institution:
212	212	(A) is not entitled to participate in the funding
213	213	provided by Section 18, Article VII, Texas Constitution;
214	214	(B) spent on average at least the following
215	215	amount in federal and private research funds per state fiscal year
216	216	during the preceding three state fiscal years:
217	217	(i) for the state fiscal year beginning
218	218	September 1, 2023, $20 million; or
219	219	(ii) for a state fiscal year beginning on or
220	220	after September 1, 2024, the amount determined under this paragraph
221	221	for the preceding state fiscal year adjusted by the increase, if
222	222	any, in the general price level during the preceding state fiscal
223	223	year, as determined by the coordinating board on the basis of
224	224	changes in the consumer price index published by the Bureau of Labor
225	225	Statistics of the United States Department of Labor or a successor
226	226	agency; and
227	227	(C) awarded on average at least 45 research
228	228	doctoral degrees per academic year during the preceding three
229	229	academic years; and
230	230	(2) the legislature appropriates money to the fund in
231	231	an amount that is sufficient to ensure as nearly as practicable a
232	232	stable and predictable stream of annual distributions from the fund
233	233	to each eligible institution and may not be less than the difference
234	234	between:
235	235	(A) the quotient of:
236	236	(i) the market value of the fund on
237	237	September 1 of the state fiscal year in which the institution would
238	238	receive the initial distribution; and
239	239	(ii) the difference between one and the
240	240	institution's percentage share of the fund for the state fiscal
241	241	year in which the institution would receive the initial
242	242	distribution, as determined by coordinating board rule; and
243	243	(B) the market value of the fund on September 1 of
244	244	the state fiscal year in which the institution would receive the
245	245	initial distribution [is designated as an emerging research
246	246	university under the coordinating board's accountability system;
247	247	[(2) in each of the two state fiscal years preceding
248	248	the state fiscal year for which the appropriation is made, the
249	249	institution expended at least $45 million in restricted research
250	250	funds; and
251	251	[(3) the institution satisfies at least four of the
252	252	following criteria:
253	253	[(A) the value of the institution's endowment
254	254	funds is at least $400 million in each of the two state fiscal years
255	255	preceding the state fiscal year for which the appropriation is
256	256	made;
257	257	[(B) the institution awarded at least 200 doctor
258	258	of philosophy degrees during each of the two academic years
259	259	preceding the state fiscal year for which the appropriation is
260	260	made;
261	261	[(C) the entering freshman class of the
262	262	institution for each of those two academic years demonstrated high
263	263	academic achievement, as determined according to standards
264	264	prescribed by the coordinating board by rule, giving consideration
265	265	to the future educational needs of the state as articulated in the
266	266	coordinating board's "Closing the Gaps" report;
267	267	[(D) the institution is designated as a member of
268	268	the Association of Research Libraries or has a Phi Beta Kappa
269	269	chapter or has received an equivalent recognition of research
270	270	capabilities and scholarly attainment as determined according to
271	271	standards prescribed by the coordinating board by rule;
272	272	[(E) the faculty of the institution for each of
273	273	those two academic years was of high quality, as determined
274	274	according to coordinating board standards based on the professional
275	275	achievement and recognition of the institution's faculty,
276	276	including the election of faculty members to national academies;
277	277	and
278	278	[(F) for each of those two academic years, the
279	279	institution has demonstrated a commitment to high-quality graduate
280	280	education, as determined according to standards prescribed by the
281	281	coordinating board by rule, including standards relating to the
282	282	number of graduate-level programs at the institution, the
283	283	institution's admission standards for graduate programs, and the
284	284	level of institutional support for graduate students].
285	285	(c) [(b)] A general academic teaching institution that
286	286	becomes eligible to receive a distribution of money under this
287	287	subchapter remains eligible to receive a distribution in each
288	288	subsequent state fiscal year.
289	289	SECTION 16. Sections 62.148(a), (b), and (c), Education
290	290	Code, are amended to read as follows:
291	291	(a) In each state fiscal year, the comptroller shall
292	292	distribute to eligible institutions in accordance with this
293	293	subchapter [section] money appropriated from the fund for that
294	294	fiscal year.
295	295	(b) The total amount appropriated from the fund for any
296	296	state fiscal year may not exceed an amount equal to 7.0 [4.5]
297	297	percent of the average net market value of the investment assets of
298	298	the fund, as determined by the comptroller, for a period set by
299	299	comptroller policy [the 12 consecutive state fiscal quarters ending
300	300	with the last quarter of the preceding state fiscal year, as
301	301	determined by the comptroller].
302	302	(c) The [Subject to Subsection (e), of the total] amount
303	303	appropriated from the fund for distribution in a state fiscal year
304	304	must be allocated as follows:
305	305	(1) 75 percent to the permanent endowment for
306	306	education and research base funding under Section 62.1481; and
307	307	(2) 25 percent to the research performance funding
308	308	under Section 62.1482[, each eligible institution is entitled to a
309	309	distribution in an amount equal to the sum of:
310	310	[(1) one-seventh of the total amount appropriated; and
311	311	[(2) an equal share of any amount remaining after
312	312	distributions are calculated under Subdivision (1), not to exceed
313	313	an amount equal to one-fourth of that remaining amount].
314	314	SECTION 17. Subchapter G, Chapter 62, Education Code, is
315	315	amended by adding Sections 62.1481 and 62.1482 to read as follows:
316	316	Sec. 62.1481. PERMANENT ENDOWMENT FOR EDUCATION AND
317	317	RESEARCH BASE FUNDING. (a) For each state fiscal year, an eligible
318	318	institution is entitled to a distribution of a portion of the total
319	319	amount allocated for the permanent endowment for education and
320	320	research base funding under Section 62.148(c)(1) for that fiscal
321	321	year. The portion to which an eligible institution is entitled is a
322	322	fraction computed as follows:
323	323	(1) subject to Subsection (c), for an institution that
324	324	spent at least the amount determined under Subsection (b) in
325	325	federal and private research funds in each of the preceding two
326	326	state fiscal years, an amount computed by dividing two by the sum
327	327	of:
328	328	(A) the number of institutions entitled to
329	329	receive a distribution under this subdivision multiplied by two;
330	330	and
331	331	(B) the number of institutions to which
332	332	Subdivision (2) applies; or
333	333	(2) for an institution not described by Subdivision
334	334	(1), half the amount to which an institution to which Subdivision
335	335	(1) applies is entitled.
336	336	(b) For purposes of Subsection (a)(1), the minimum amount in
337	337	federal and private research funds required to be spent in each of
338	338	the preceding two state fiscal years is:
339	339	(1) for the state fiscal year beginning September 1,
340	340	2023, $45 million; or
341	341	(2) for a state fiscal year beginning on or after
342	342	September 1, 2024, the amount determined under this subsection for
343	343	the preceding state fiscal year adjusted by the increase, if any, in
344	344	the general price level during the preceding state fiscal year, as
345	345	determined by the coordinating board on the basis of changes in the
346	346	consumer price index published by the Bureau of Labor Statistics of
347	347	the United States Department of Labor or a successor agency.
348	348	(c) An eligible institution is entitled to receive a
349	349	distribution under Subsection (a)(1) only if:
350	350	(1) in each of the state fiscal years beginning
351	351	September 1, 2020, and September 1, 2021, the institution spent at
352	352	least the amount in federal and private research funds described by
353	353	that subdivision; or
354	354	(2) the legislature appropriates money to the fund in
355	355	an amount required by Section 62.145(b)(2).
356	356	(d) An eligible institution that becomes eligible to
357	357	receive a distribution under Subsection (a)(1) remains eligible to
358	358	receive a distribution under that subdivision in each subsequent
359	359	state fiscal year.
360	360	Sec. 62.1482. RESEARCH PERFORMANCE FUNDING. (a) From 85
361	361	percent of the amount allocated for research performance funding
362	362	under Section 62.148(c)(2) for a state fiscal year, an eligible
363	363	institution is entitled to a distribution for that fiscal year in an
364	364	amount proportionate to the average amount of federal and private
365	365	research funds the institution spends per state fiscal year during
366	366	the preceding three state fiscal years as compared to the average
367	367	amount of those funds all eligible institutions spend per state
368	368	fiscal year during that period.
369	369	(b) From 15 percent of the amount allocated for research
370	370	performance funding under Section 62.148(c)(2) for a state fiscal
371	371	year, an eligible institution is entitled to a distribution for
372	372	that fiscal year in an amount proportionate to the average number of
373	373	research doctoral degrees the institution awards per academic year
374	374	during the preceding three academic years as compared to the
375	375	average number of those degrees all eligible institutions award per
376	376	academic year during that period.
377	377	(c) The coordinating board by rule shall establish a method
378	378	for determining the amounts to which each eligible institution is
379	379	entitled under this section.
380	380	SECTION 18. Sections 62.149(a) and (b), Education Code, are
381	381	amended to read as follows:
382	382	(a) An eligible institution may use money received under
383	383	this subchapter only for the support and maintenance of educational
384	384	and general activities that promote increased research capacity at
385	385	the institution in a manner that aligns with the goals of the
386	386	state's master plan for higher education developed under Section
387	387	61.051.
388	388	(b) For purposes of Subsection (a), the use of money shall
389	389	be limited to the following permitted activities:
390	390	(1) providing faculty support and paying faculty
391	391	salaries;
392	392	(2) purchasing equipment or library materials;
393	393	(3) paying graduate stipends; [and]
394	394	(4) supporting research performed at the institution,
395	395	including undergraduate research;
396	396	(5) increasing technology transfer,
397	397	commercialization, and patent development; and
398	398	(6) increasing the number of research doctoral
399	399	graduates in this state.
400	400	SECTION 19. Subchapter G, Chapter 62, Education Code, is
401	401	amended by adding Sections 62.150, 62.151, and 62.152 to read as
402	402	follows:
403	403	Sec. 62.150. INSTITUTIONAL ENDOWMENT REPORTING. (a) In
404	404	this section, "institutional endowment fund" means a fund
405	405	established to support a general academic teaching institution's
406	406	mission in perpetuity.
407	407	(b) For purposes of reporting the amount of an institution's
408	408	institutional endowment funds, each eligible institution may
409	409	include as a true endowment, in accordance with coordinating board
410	410	rule, the institution's share of the market value of the fund
411	411	corresponding to the share of the permanent endowment for education
412	412	and research base funding to which the institution is entitled for a
413	413	state fiscal year as provided by Section 62.1481.
414	414	Sec. 62.151. DETERMINATION AND REPORT OF AMOUNT OF
415	415	DISTRIBUTIONS. For each state fiscal biennium, the Legislative
416	416	Budget Board, in consultation with the coordinating board, shall:
417	417	(1) determine the amount of each distribution from the
418	418	fund to which each eligible institution is entitled as provided by
419	419	this subchapter; and
420	420	(2) report the determinations made under Subdivision
421	421	(1) to the legislature and the comptroller.
422	422	Sec. 62.152. RULES. The coordinating board may adopt rules
423	423	as necessary to implement this subchapter.
424	424	SECTION 20. The following provisions of Chapter 62,
425	425	Education Code, are repealed:
426	426	(1) Sections 62.096(a), (b), and (e);
427	427	(2) Section 62.135(b);
428	428	(3) Section 62.142(2);
429	429	(4) Sections 62.146 and 62.147; and
430	430	(5) Sections 62.148(d), (e), and (f).
431	431	SECTION 21. This Act takes effect January 1, 2024, but only
432	432	if the constitutional amendment proposed by the 88th Legislature,
433	433	Regular Session, 2023, relating to the Texas University Fund, which
434	434	provides funding to certain institutions of higher education to
435	435	achieve national prominence as major research universities and
436	436	drive the state economy is approved by the voters. If that
437	437	amendment is not approved by the voters, this Act has no effect.
438	438	______________________________ ______________________________
439	439	President of the Senate Speaker of the House
440	440	I certify that H.B. No. 1595 was passed by the House on April
441	441	18, 2023, by the following vote: Yeas 136, Nays 11, 1 present, not
442	442	voting; that the House refused to concur in Senate amendments to
443	443	H.B. No. 1595 on May 23, 2023, and requested the appointment of a
444	444	conference committee to consider the differences between the two
445	445	houses; and that the House adopted the conference committee report
446	446	on H.B. No. 1595 on May 28, 2023, by the following vote: Yeas 128,
447	447	Nays 12, 2 present, not voting.
448	448	______________________________
449	449	Chief Clerk of the House
450	450	I certify that H.B. No. 1595 was passed by the Senate, with
451	451	amendments, on May 9, 2023, by the following vote: Yeas 30, Nays 1;
452	452	at the request of the House, the Senate appointed a conference
453	453	committee to consider the differences between the two houses; and
454	454	that the Senate adopted the conference committee report on H.B. No.
455	455	1595 on May 27, 2023, by the following vote: Yeas 30, Nays 1.
456	456	______________________________
457	457	Secretary of the Senate
458	458	APPROVED: __________________
459	459	Date
460	460	__________________
461	461	Governor