HBA-DMH C.S.H.B. 1839 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1839 By: Junell Appropriations 4/22/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE The economic future of Texas depends on the state's ability to remain at the forefront of scientific and technological innovation. Texas is favorably located and has the infrastructure needed to facilitate growth in the high-tech industry. Texas is positioned to meet the technological challenges of the next century. Currently, Texas ranks second in the nation in the total number of high-tech jobs and first in the number of new jobs created since 1990. There are 772,000 high-tech employees in Texas, approximately 11 percent of the state's workforce. Texas companies will be able to lead in national and world markets only if there is continuing development of the research base. Universities can comprise a major part of the research base. Through university research, new technologies are developed and commercialized which can create a considerable economic advantage for the state. Investments in research and development can have a considerable rate of return. C.S.H.B. 1839 creates the Texas excellence fund and the university research fund to support and maintain educational and general activities, including research and student services, that promote increased research capacity and develop institutional excellence. 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. ANALYSIS C.S.H.B. 1839 amends the Education Code to provide that the Texas excellence fund and the university research fund are funds outside the state treasury in the custody of the comptroller of public accounts (comptroller). The bill requires the legislature to appropriate or provide for the transfer to the credit of the university research fund an amount equal to the amount deposited to the credit of the Texas excellence fund in that fiscal year, and prohibits the comptroller from depositing money to the credit of and the legislature from appropriating money specifically for the purposes of the Texas excellence fund unless an equal amount is deposited at the same time to the credit of the university research fund (Secs. 62.053, 62.073, and 62.074). The bill requires the comptroller to administer and invest the Texas excellence fund and the university research fund and to deposit all interest, dividends, and other income earned from investing the individual funds to the credit of the individual funds. The bill authorizes the comptroller to accept gifts or grants from any public or private source for the Texas excellence fund and for the university research fund. The bill authorizes the legislature to appropriate or provide for the transfer of any available money to the credit of the Texas excellence fund and requires the comptroller to distribute all assets in the university research fund as soon as practicable to eligible institutions. The bill authorizes an institution to use money appropriated from the Texas excellence fund or the university research fund only for the support and maintenance of educational and general activities that promote increased research capacity and develop institutional excellence (Secs. 62.053, 62.054, 62.073, and 62.074). The bill specifies the manner in which the legislature, in each state fiscal year, is authorized to appropriate all or part of the money in the Texas excellence fund to eligible comprehensive research universities (research universities) and other eligible general academic teaching institutions (teaching institutions) (Sec. 62.055). The bill specifies the manner in which the comptroller, in each state fiscal year, is required to distribute the total amount of all assets in the university research fund (Sec. 62.075). In each state fiscal year of that biennium, the bill requires the comptroller, as soon as practicable, to distribute the total amount of all assets in the university research fund in a specified manner until January 1, 2004 (Sec. 62.0751). The bill modifies the method by which the comptroller is required to deposit the first $50 million that comes to the state at the beginning of each state fiscal year and that is not dedicated by other law to provide that an amount equal to the income earned from investment of the higher education fund in the preceding state fiscal year as certified by the comptroller must be deposited to the credit of the Texas excellence fund and that the remaining amount must be deposited to the credit of the higher education fund. The deposit that is required to be made to the higher education fund expires on September 1 after the date the comptroller certifies that the value of the higher education fund is $2 billion. In each fiscal year that begins on or after that date, the bill requires the comptroller to deposit to the credit of the Texas excellence fund from the first money that comes to the state at the beginning of that fiscal year an amount equal to the income earned from investment of the higher education fund in the preceding state fiscal year as certified by the comptroller, not to exceed $50 million. In any state fiscal year for which the legislature has made an appropriation specifically for the purposes of the Texas excellence fund in an amount equal to or greater than the income earned from investment of the higher education fund in the preceding state fiscal year as certified by the comptroller, the deposit to the Texas Excellence fund may not be made (Sec. 62.025). The bill requires the comptroller, in consultation with the presiding officers of the governing boards of the research universities and teaching institutions, to invest the Texas excellence fund in a manner that maximizes the fund's profits (Sec. 62.026). The bill sets forth provisions relating to the authority and duties of the Texas Higher Education Coordinating Board in monitoring allocations to teaching institutions (Sec. 62.076). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1839 differs from the original by adding provisions establishing the university research fund, including provisions relating to the administration, funding, and allocation of the fund (Sec. 62.071-62.076). The substitute differs from the original by specifying that in any state fiscal year for which the legislature has made an appropriation specifically for the purposes of the Texas excellence fund in an amount equal to or greater than the income earned from investment of the higher education fund in the preceding state fiscal year as certified by the comptroller, the deposit to the Texas Excellence fund may not be made (Sec. 62.025).