HBA-KMH H.B. 3525 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3525 By: Coleman Higher Education 3/25/1999 Introduced BACKGROUND AND PURPOSE At the request of a member of the Board of Regents (board) of Texas Southern University (TSU), the Office of the Comptroller of Public Accountes conducted a performance review of TSU. The review team developed 124 recommendations to improve TSU's operations and institute controls to assure its future viability and independence. The review identified potential savings of nearly $14.8 million that could be realized by fiscal 2003-4, as well as investment opportunities totaling $980,981 in fiscal 1999-2000, and total investment opportunities of $10.6 million through fiscal 2004. Cumulative net savings from all recommendations are projected to reach more than $4.1 million by fiscal 2004. According to the comptroller's office, TSU has experienced serious financial and management difficulties for more than two decades. In 1997, the state auditor's report estimated that the school would have a $4 million deficit by the end of the year. That same year, a $10 million bailout was sought to keep TSU from being taken over by the state. A declining student enrollment has also contributed to the persistent financial problems of TSU. H.B. 3525 provides for a transition team (team) to act in place of the existing board and make changes in the operation of TSU. The team is to be disbanded, remanding control back to the board, when a plan for the efficient operation of TSU has been implemented successfully. H.B. 3525 requires the appointment of a legislative oversight committee (committee) to receive and review monthly reports required to be made by the team. This bill requires the governor to appoint a coordinator, from recommendations of the speaker of the house of representatives and the lieutenant governor, and the coordinator to appoint a team. This bill vests in the team all the powers, duties, and obligations of the board, and provides for compensation and reimbursement. This bill provides that the team and the committee expire by July 31, 2001, even if the prescribed plan is not fully implemented. H.B. 3525 also amends the statutory provisions relating to the board. This bill limits the size of the board of regents to six members, rather than nine. This bill, further, requires two members to have expertise in auditing or financial management. This bill decreases the term of a member to two years, from six years, and removes the requirement that the terms are staggered. This bill specifies that the modified structure for the board is temporary and requires the board to report to the 77th Legislature its recommendation of a permanent structure for the board. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 2104, Government Code, by adding Subchapter E, as follows: SUBCHAPTER E. MILLENNIUM PLAN FOR TEXAS SOUTHERN UNIVERSITY Sec. 2104.101. COORDINATOR; TRANSITION TEAM. (a) Requires the governor to appoint a coordinator from nominees submitted by the speaker of the house of representatives and the lieutenant governor to form a transition team (team) that will temporarily govern Texas Southern University (TSU). Requires the speaker of the house of representatives and the lieutenant governor each to nominate two persons to the governor for the position of coordinator. Requires the governor to request additional nominees if all nominees are rejected. (b) Requires the coordinator to appoint the team for which the coordinator is the head. Sec. 2104.102. POWERS AND DUTIES OF TRANSITION TEAM. (a) Sets forth that the team has all the powers and duties given by law to the Board of Regents (board) of TSU. Prohibits the board from acting until the team is abolished in accordance with this subchapter. (b) Requires the team to develop and implement a plan to address and remedy the problems regarding the governance and operation of TSU that were identified in the performance review of TSU released by the comptroller on February 26, 1999, and in the report of the state auditor released on February 12, 1999. Provides that the plan must be based on the recommendations in those reports. (c) Requires the team to make needed changes to operational policies and procedures. Authorizes the team to dismiss personnel who in the opinion of the team have contributed to the fiscal and management problems of TSU. Authorizes the team alternatively to temporarily relieve management personnel of operational responsibilities and direct that those persons attend management training of a type prescribed by the team. (d) Authorizes the team to contract with private entities to perform functions for TSU that are related to problem areas. Sec. 2104.103. COMPENSATION OF COORDINATOR; COSTS AND EXPENSES. (a) Entitles the coordinator to receive a salary for performing duties as coordinator that is equal to the salary received by the chief financial officer of TSU. Provides that the members of the team other than the coordinator serve without compensation. Entitles the team to reimbursement for reasonable and necessary expenses, as provided by the General Appropriations Act, incurred in performing duties under this subchapter. (b) Authorizes the coordinator to employ staff to assist the team to perform their duties. Authorizes the coordinator to contract for necessary office space for the team and provide for other necessary administrative matters. (c) Requires the state to pay for salary, costs, and expenses incurred under this section on certificates of approval by the coordinator out of amounts appropriated or otherwise available to TSU. Sec. 2104.104. LEGISLATIVE OVERSIGHT COMMITTEE. (a) Establishes a legislative oversight committee (committee) for TSU composed of two members of the house of representatives and one public member appointed by the speaker of the house of representatives and two members of the senate and one public member appointed by the lieutenant governor. (b) Requires the team to report at least monthly to the committee regarding their progress in implementing the plan. Authorizes the committee to suggest changes in the plan based on these reports. (c) Requires the team to make a final report to the committee regarding implementation of the plan not later than November 1, 2000. (d) Requires the committee to report to the governor at any time that the committee find that the plan has been successfully implemented to the point that the team may be disbanded, the coordinator dismissed, and control of TSU be returned to the board. Requires the governor by proclamation to return control of TSU to the board if the governor agrees with the committee's findings under this subsection. Provides that the team is disbanded and the coordinator dismissed, except for the purpose of making the final report under Subsection (c), upon such proclamation. Sec. 2104.105. ABOLITION OF TRANSITION TEAM AND LEGISLATIVE OVERSIGHT COMMITTEE; EXPIRATION OF SUBCHAPTER. Provides that the coordinator is dismissed and the team abolished July 31, 2001, if a proclamation under Section 2104.104(d) has not occurred. Provides that the committee is abolished and this subchapter expires July 31, 2001. SECTION 2. Amends Sections 106.11 and 106.12, Education Code, as follows: Sec. 106.11. BOARD OF REGENTS. Vests the government of TSU in a board of regents of six members, rather than nine. Provides that at least two members must have expertise in auditing or financial management. Sec. 106.12. TERMS OF OFFICE. Reduces terms of office of members to two years, rather than six. Deletes language which provided for a staggered terms of office. SECTION 3. (a) Provides that the Board of Regents of TSU as it exists on the effective date of this Act is abolished, and the terms of office of its members expire, on the date the governor appoints the coordinator under Section 2104.101, Government Code, as added by this Act. (b) Requires the governor to appoint initial members of the reorganized board under Section 106.11, Education Code, as amended by this Act, for terms expiring February 1, 2001. Requires the board appointed under this section to resume control over TSU in accordance with Section 2104.104(d) or 2104.105, Government Code, as added by this Act, and requires the governor to appoint the members in time for the board to do so. (c) Sets forth that it is the intent of the legislature that the structure of the board of TSU as reorganized under Sections 106.11 and 106.12, Education Code, as amended by this Act, be a transitional and temporary structure. Requires the reorganized board to report to the 77th Legislature on a recommended permanent structure for the board and recommend corresponding amendments to Sections 106.11 and 106.12. SECTION 4. (a) Requires, if this Act takes immediate effect: _the governor to appoint a coordinator under Section 2104.101, Government Code, as added by this Act, not later than June 30, 1999; _the coordinator to form the team under Section 2104.101, Government Code, as added by this Act, not later than July 15, 1999; and _the Legislative Oversight Committee for TSU to be appointed under Section 2104.104, Government Code, as added by this Act, not later than July 15, 1999. (b) Requires, as soon as possible after the effective date of this Act, if this Act does not take immediate effect: _the governor to appoint a coordinator; _the coordinator to form the team; and _the Legislative Oversight Committee for TSU to be appointed. SECTION 5. Emergency clause. Effective date: upon passage.