ISSUE 1: February 12, 2007

They're Ba-a-a-a-ck...And so is Legislative Update

This is an e-communication service provided by The University of Texas System Office of Governmental Relations (OGR). With the regular session of the 80th Legislature now in full swing, it is critical to keep information flowing. Every week LU will deliver timely news about the status of our most important issues and legislation, key committee actions, the state budget, and upcoming events of interest. Contributors are the UT System's Governmental Relations and Public Affairs offices. We welcome your comments; please feel free to contact Pat Graves, research analyst, at 512/499-4711, or Anthony de Bruyn, interim director of public affairs, at 512/499-4363.

That Was Then...

In case you missed the first five weeks, on the House side there was a race for Speaker (challenger Jim Pitts withdrew after losing a procedural vote that indicated that Speaker Craddick had the support to be re-elected), but there are several new committee chairs and many new assignments (see House committee appointments).  In the House, committee composition is determined by a combination of seniority and speaker appointments, but speaker appointments − including the chair, vice-chair, and appropriations representative − make up the majority of each committee.

For the first time since the early 1980s, the House failed to suspend the constitutional order of business, which prohibits floor consideration of bills during the first 60 days unless four-fifths of the membership (120 House members) vote to suspend the rule.  Traditionally, the House suspends the constitutional rule at one time for all bills, while the Senate traditionally suspends the rule on a bill-by-bill basis.  The rule does not apply to measures declared emergencies by the Governor. On the Senate side, its longstanding two-thirds rule remains in effect in order to bring up bills for consideration, but during the first 60 days a bill must have a 4/5 vote because of the constitutional rule. What few major changes were made in Senate committee assignments, other than for newcomers, occurred last year.

Gov. Rick Perry has designated eight matters as emergencies (see press releases on emergency issues and additional issues). This means that lawmakers may consider bills on these subjects during the session’s first 60 days, when they otherwise are precluded by the Texas Constitution from passing legislation.

Dollars and Sense

From session to session, the two houses alternate writing the initial version of the appropriations bill. Although the Senate Finance Committee (SFC) conducted budget hearings in the fall, the designated starting point legislatively this session is HB 1. Both the SFC and the House Appropriations Committee (HAC), or the HAC’s subcommittees, will meet almost daily until the General Appropriations Act is written.

Keys to the Kingdom
Sen. Steve Ogden (Bryan) chairs Senate Finance and has divided the panel into Finance Committee Workgroups. Sen. Florence Shapiro (Plano), who also chairs the Senate Education Committee, leads education (Workgroup B). Sen. Robert Duncan (Lubbock) leads special topics (Workgroup E), including the Permanent University Fund, correctional managed health care, and higher education employee’s group insurance. House Appropriations has a new chair: Rep. Warren Chisum (Pampa) replaces Rep. Jim Pitts (Waxahachie). Rep. Lois Kolkhorst (Brenham) remains chair of the HAC Education Subcommittee.

Nuts and Bolts
The budget-writing committees’ regular meeting times and places, clerks and office phone numbers are:

>>House Appropriations - Usually 8 a.m. daily (and upon House adjournment as needed, E1.030 (HAC Hearing Room, Capitol Extension 1st floor) Amy Peterson, 463-1091

>>Senate Finance - Usually 8 a.m. daily (and upon Senate adjournment as needed), E1.036 (SFC Hearing Room, Capitol Extension 1st floor) Amy Jeter, 463-0370

Doing the Numbers
As currently proposed by the Legislative Budget Board (LBB), the overall state budget
totals $147.6 billion for the 2008-09 fiscal biennium. Much of the projected $14.3 billion surplus would be spent, leaving approximately $2.5 billion available for discretionary spending.

A major issue early on is the constitutional spending limit. In order to pay for the massive school property tax relief package enacted in special session last summer, the Legislature may have to exceed the cap on state spending, which is set by the LBB and tied to growth in personal income statewide.

Higher education fares well in the base budget bill. It includes funding for tuition revenue bonds (TRBs, both current and newly authorized) and restoration of the 10 percent across-the-board cuts mandated during the budget preparation process.

Formula funding is increased: $26 million for the general academic institutions (1.1 percent for enrollment growth), and $22 million for the health-related institutions (7.3 percent growth). Nevertheless, these amounts are well below the almost $600 million that the System would have received under requests made by the Texas Higher Education Coordinating Board (THECB).

The LBB’s proposed budget does move higher ed employees closer to parity with all state employees in terms of funding health insurance costs, but a 10 percent gap remains.

As always, there’s another budget in town crafted by Gov. Rick Perry (press release, summary, full document). He recently announced a comprehensive $1.7 billion plan for higher education, but only $700 million is new funding. Funding for certain institutions would be reallocated, and $300 million would be performance-based, i.e., linked to incentives. Performance measures include the number of graduates produced and their scores on non-binding exit exams and professional or licensure exams, with bonuses available for students at risk of not completing their degrees or majoring in critical fields. Gov. Perry also called for an end to lump-sum appropriations for individual institutions.

Let the Games Begin
This past Friday, Chancellor Yudof and the presidents of the general academic institutions testified before the HAC Education Subcommittee. The Chancellor touted the landmark $2.5 billion competitiveness initiative and the System’s 25 percent rates of enrollment and graduation in science, technology, engineering and math. After noting the importance to the initiative of the tuition revenue bonds approved last year, he was asked to provide comprehensive funding source data. He expressed concerns about the inadequacies of current formula funding, employee salaries and general revenue per student. Emphasizing how state appropriations have not kept pace with enrollment growth or inflation, he suggested that the panel fund higher education at fiscal year 2002 levels, before the state’s $10 billion revenue shortfall.

During an exchange about the adverse impact of formula revisions on engineering and science programs, especially nursing, the Chancellor suggested that legislators “make sure the money’s spent where you want it spent” if, in fact, there is evidence that the current cost-based funding matrix is flawed. He embraced the notion of combining accurate formula funding with targeted incentive funding offered by Rep. Myra Crownover (Denton). She extolled competition among universities and decried too much “bean-counting.”

Regarding two concepts in Gov. Perry’s reform plan, the Chancellor said he does not advocate binding exit exams for graduating seniors but favors incentive funding, or performance-based budgeting. Offering meaningful performance measures such as graduation rates, diversity levels and job placement, he advised, “You better pick three or four because, otherwise, you are just going to end up with mashed potatoes.” When asked about higher ed’s full transferability of appropriated funds, the Chancellor said such flexibility is needed to manage the business of complex universities. While declining to state an optimum level of transferability, he argued that the ultimate transparency is in accountability and audits, i.e., showing how the money is spent rather than how it is budgeted. The System’s finances undergo an annual external audit.

The presidents’ testimony dealt with a range of issues and prompted several discussions. Among the highlights:

• Large proportions (70 percent at UTEP) of graduating classes are not reflected in schools’ graduation rates due to the calculation methodology and difficulty tracking transfer and non-traditional students.
• Scores on post-graduate professional and licensing exams would be valid performance measures for appropriations decisions.
• The formula matrix penalizes some engineering schools (esp. UT Arlington) and may need adjusting.
• “One-size” budgeting does not fit all colleges and universities.
• Federal research funding is relatively flat nationwide.
• The “top 10 percent law” needs modification.
  
  (watch archived hearing video beg. 5:42:10)

On Thursday, Commissioner Raymund Paredes discussed with the subcommittee the THECB’s special items requests, primarily $342.3 million for financial aid, $211.7 million for tuition equalization grant restoration, and increasing the Advanced Research Program (ARP) to $75 million (for basic research). Chair Kolkhorst asked if some universities benefit more than others from ARP funds by racing to add to the top-tier status of the state. Paredes said the grants have been widely distributed and offered to provide a list and additional information. He also emphasized the Joint Admission Medical Program, family practice/primary care residencies, and restoring THECB’s operating budget for administration and information resources.

Higher Ed Highlights

Along with the appropriations process, committee hearings are ramping up in what some have predicted may be a “higher ed session.” Sen. Judith Zaffirini (Laredo) now chairs the Senate Education Committee’s Higher Education Subcommittee, having replaced Sen. Royce West (Dallas). Rep. Geanie Morrison (Victoria) remains chair of the House Higher Education Committee. Both panels hold their organizational meetings today (see below).

Gov. Perry touted some aspects of his higher ed plan last Tuesday in his State of the State Address (read the text, watch the video, beg. 1:23:35 on clip). To address the statewide nursing shortage, for example, he would offer new recruiting incentives and create a pilot licensing program in hospitals. He has proposed restructuring the state’s student financial aid programs and increasing them by $360 million. Many details remain to be developed as discussions ensue on this facet of the initiative. Along those lines, during an HAC Education Subcommittee hearing Thursday, Chair Kolkhorst said there is a lot of interest in student financial aid this session, including variations of the grants, funding sources, and eligibility criteria.

At that hearing, when asked about universities’ efforts to encourage timely (four-year) graduation, THECB Commissioner Raymund Paredes said that they are not embracing it as much as is preferred. He noted, however, that many universities have non-traditional student bodies that cannot graduate in four to six years. Schools need to increase promotion of the B-on-time Loan program, he said. Inquiring about nursing shortage reduction efforts, Kolkhorst wanted to know if it’s more a function of too little money to hire faculty or a dearth of Ph.D.-qualified faculty.

Rep. Dan Branch (Dallas) voiced concern about the state’s lagging Hispanic enrollment, wondering aloud if Texas would reach its goal of 630,000 additional students by 2015. Kolkhorst noted, and Paredes confirmed, the key role played by community colleges in meeting the enrollment goal, urging retention and graduation as well. Branch pointed out that graduation levels have been flat over recent years. Paredes expressed concern, adding  that the governor’s focus on graduation rates and at-risk students is a positive step. The THECB is exploring learning assessments, which relates to Kolkhorst’s admonition to maintain quality, as well as graduation incentives. Paredes observed, however, that research indicates incentives do not work as well as hoped.

At its fifth annual legislative policy orientation Thursday, the Texas Public Policy Foundation hosted a panel discussion on “Higher Education: Who’s the Customer?” The panelists were House Higher Ed Chair Geanie Morrison; Jeff Sandefer of the Governor’s Business Council; Guy Diedrich, Texas A&M System; and Rick O’Donnell of The Fund for Colorado’s Future.

Sandefer said higher ed’s customers are its tenured professors, emphasizing that they must be rewarded for teaching. Diedrich said it is the taxpayers, and that we should emphasize research that meets a market need. O’Donnell said it is the student. Chair Morrison agreed,  adding that the state is a customer as well.

Sandefer’s approach is to provide the right incentives to the tenure-track professor to get a better work product. Diedrich pointed to an obligation to make university research relevant and to give the taxpayer a free return on their investment. O’Donnell’s and Morrison’s messages were similar in that they expressed the importance of providing a quality education for students. There must be accessibility and accountability. Morrison believes that we should convey early on to students that higher education is attainable and should be considered an investment, not an expense. Universities should be held accountable for the money appropriated to them, she said, and we need to know that institutions are meeting the needs of the state.

Sandefer would lower accreditation barriers so as to open higher education to competition. Diedrich wants to see commercialization as a part of the research process. O’Donnell stressed the need for a true system of “student-centered” financing to help create student access. Morrison emphasized that higher education needs to be both more efficient and effective by graduating students on time and not spend state dollars on students who are not performing.

Strange Bedfellows
Dozens of ex-Longhorns and former Aggies put aside their rivalry just long enough to join forces once again Thursday for Orange and Maroon Legislative Day. Both schools’ alumni organizations were recognized on the floor of each chamber as resolutions of support were adopted (HR 227, SR 140). At the Intercontinental Stephen F. Austin Hotel, Speaker Tom Craddick addressed the group on various higher ed issues, including the top 10 percent law. Afterward, alums made numerous Capitol office visits to members as a show of solidarity on matters of mutual interest. The rare display of unity culminated with a reception back at the hotel and a speech by UT Austin President William Powers, among others. Did they all hold hands and sing “Kumbayah?” We’ll never tell.

Take a Loan Officer to Lunch
The Senate on Monday proclaimed February Financial Aid Awareness Month (SR 135). Sponsor Florence Shapiro praised the THECB and its College For Texans Campaign that publicizes financial aid opportunities to high school students. Several events will occur across the state in February to promote financial aid awareness among families. More than $4 billion in aid is distributed in Texas each year.

...This Is Now

Double Whammy

UT System officials participated in more budget hearings Monday, both starting at 9 a.m.:

• HAC Education Subcommittee – Dr. Shine and the presidents of the health-related institutions (watch archived hearing)

• Senate Finance – Chairman Huffines and Chancellor Yudof and the general academic institutions’ presidents (watch archived hearing)

On Wednesday, beginning at 8 a.m., Senate Finance will hear testimony from the HRI presidents.

Call AAA, Twice

The House Higher Education Committee held its organizational meeting at 8 a.m. Monday. The focus was to be on issues related to accountability, affordability and accessibility. (watch archived hearing).The Senate Higher Education Subcommittee followed suit at 2 p.m. (or on Senate adjournment) today/Monday. (watch archived hearing). THECB officials, among others, will testify at both hearings; Chancellor Yudof appeared before House Higher Ed only.

Session Snapshot

Legislative deadlines and other important dates may be found at Key Legislative Dates. The bill filing deadline is Friday, March 9, the 60th day of the session. Committees’ permanent meeting schedules will be listed as soon as they are made available.

Duly Noted

On Feb. 5, the House recognized the Sweetwater Jaycees’ educational efforts regarding snakes (HR 203 by Rep. Susan King, Abilene), in advance of the annual rattlesnake roundup held there every March. Just before the snake-handling began in front of the dais, Rep. Fred Hill (Richardson) made this parliamentary inquiry:

“Mr. Speaker, would you mind having the House stand at ease while I go to my office and get my hoe?”

Speaker Craddick: “Mr. Hill, you’ve been unanimously selected to come down front. We’ve got a little project for you.”

When Rep. Joe Driver (Garland) asked if everyone could speak a little softer, Craddick replied, “Mr. Driver, this is a new member of your committee you need to meet.” Driver chairs House Law Enforcement.