HBA-SEP H.B. 2356 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2356 By: Tillery Higher Education 3/18/2001 Introduced BACKGROUND AND PURPOSE Most Texas universities and colleges receive state assistance from the general revenue fund, permanent funds, or tuition equalization grants (grants). Many of these institutions also run research programs that produce licensed or copyrighted products, the sales of which generate revenue. The state does not direct the schools on how to spend this revenue but the state may be able to recover part of its investment in higher education through revenue sharing on intellectual property rights. House Bill 2356 requires an institution that receives such royalties to direct 25 percent of the revenue to the general revenue fund and makes intellectual property rights revenue sharing a prerequisite before the students of an institution may receive grants. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 1 (Section 51.010, Education Code) of this bill. ANALYSIS House Bill 2356 amends the Education Code to require the governing board of each institution of higher education (institution) to transfer, to the credit of the general revenue fund at least quarterly, 25 percent of the net royalties received by the institution in each state fiscal year from the sale, lease, licensing, or use of intellectual property derived or created from the efforts of the faculty, research fellows, staff, other personnel, or students of the institution. The bill requires the comptroller of public accounts to adopt rules and procedures for the administration and enforcement of the transfer. The bill authorizes the comptroller to retain, from amounts appropriated to an institution that fails to make a required transfer, an amount equal to the amount of the required transfer. The bill prohibits the students of a college, university, or other entity from receiving tuition equalization grants (grants) in any state fiscal year unless the entity enters into an agreement with the comptroller not later than August 1 preceding that fiscal year to contribute 25 percent of its net royalties for that fiscal year from intellectual property to the general revenue fund. In the agreement, the entity must agree to provide the comptroller the information the comptroller requests to administer the transfer and to allow the comptroller access to the appropriate records of the entity for that purpose. The comptroller is required to collect the appropriate amounts from such an entity. If the comptroller certifies to the board that an entity is not in substantial compliance with the agreement, the bill requires the Texas Higher Education Coordinating Board (board) to immediately suspend the payment of grants to students of the entity. The bill prohibits the board from resuming those payments until the comptroller certifies that the entity has satisfied its obligations, including making all of the required payments under the agreement. EFFECTIVE DATE September 1, 2001.