Issue 10: April 16, 2007

That Was Then...

Game On

Some players in the National Basketball Association refer to the regular season as “pre-season” and the playoffs as the real season. So it is with the appropriations process. Now that the House and Senate have passed their own versions of the fiscal 2008-09 budget, the real spending decisions will start being made soon by the 10-member conference committee, to be announced this week. But, for the moment, attention is focused on the $152 billion substitute bill (SCSHB 1) adopted unanimously Tuesday by the Senate Finance Committee (SFC) and approved without amendment by the full Senate Thursday by a vote of 26-5 (including three Republicans in the minority) [view Legislative Budget Board (LBB) summary].

Highlights include:

• $79.6 billion in general revenue (GR) and GR-dedicated funds, an 11.62 percent increase ($8.3 billion) over fiscal years (FY) 2006-07.

• $14.575 billion in GR/GR-dedicated funds for higher education, a 10 percent increase over FY 06-07.

• An amendment to the bill’s general provisions (Article 9) ratifying the settlement agreement in the Frew v. Hawkins Medicaid case for a total of $706.7 million in GR ($1.8 billion, all funds) to the Health and Human Services Commission (HHSC).

• Adjusted for the Frew amendment, which reduces higher ed GR/GR-dedicated funding by 0.59 percent ($85.99 million), the higher ed total is $14.489 billion in GR/ GR-dedicated funds, a 9.4 percent increase ($1.246 billion) over FY 06-07.

The Senate has identified $240.8 million in GR and $607.2 million in all funds already appropriated to health and human services agencies (Article 2) that would pay for part of the agreed settlement in Frew. To pay for the rest, the Art. 9 amendment reduces appropriations by 0.59 percent across the board in Articles 1 through 10, a total of $468.85 million in GR/GR-dedicated funds, and increases appropriations to the HHSC by the same amount.

Key higher ed elements of SCSHB 1 include:

• $12.15 billion solely in GR, including Teacher Retirement System and Optional Retirement Program benefits, a 12 percent increase ($1.3 billion) over FY 06-07.

• An enrollment growth formula funding increase of 1.1 percent ($26.2 million) for general academic institutions (GAIs).

• A 3.8 percent formula funding enhancement ($100 million) for GAIs, allocated 83 percent to the Instruction and Operations (I&O) Formula and 17 percent to the Infrastructure Formula.

• A 3 percent ($13.2 million) formula “hold harmless” provision to bring GAIs to 97 percent of their FY 06-07 formula funding levels.

• A $56.8 million increase in weighted enrollment growth formula funding for health-related institutions (HRIs).

• A 3.8 percent formula enhancement of $44.3 million for HRIs, allocated $33.4 million to I&O, $8.5 million to Infrastructure and $2.46 million to the Research Formula.

Key UT System elements include:

• A net $222.4 million increase in GR over FY 06-07

• A $75.3 million increase for operations, including formula funding, formula hold harmless provisions, and special items, allocating an additional $10.5 million (0.84 percent) to the GAIs and an additional $64.9 million (4.3 percent) to the HRIs.

• A $147.1 million increase for debt service on new and existing tuition revenue bonds.

During floor debate, Sen. Rodney Ellis (Houston) decried tuition deregulation, attributing less availability of TEXAS Grants to designated tuition increases, which he claimed have been as high as 80 percent in some cases. SFC Chair Steve Ogden (Bryan) countered that the $750 million in student financial aid in the proposed budget is up 33 percent from FY 06-07. Sen. Dan Patrick (Houston) lamented what he termed a patchwork system of fees, including designated tuition, which he called a tax on college students. Patrick urged formation of a spending commission, arguing that the state budget has grown too large for the 15-member SFC to craft in only a few months every two years. Ogden replied, “It’s not their job; it’s our job. We don’t need to contract it out.”

Patrick also asked rhetorically when a state income tax would be discussed. Ogden pointed out that it’s up to the House, where all tax bills must originate.

Watch floor debate video [beg. 28:50]

Budget documents now available on line
Senate version:
• SCSHB 1 [note: 17 MB file]
• OGR higher ed overview
• Frew amendment summary

House version:
• CSHB 1 [note: 18 MB file]
• LBB summary

House supplemental appropriations bill, HB 15

The UT System Controller’s “side by side” comparison of the two budget bills is forthcoming soon.

Fiscal Nuts and Budget Bolts

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

House Appropriations – 8 a.m. daily (almost, and upon House adjournment as needed) E1.030 (HAC Hearing Room, Capitol Extension 1st floor) Cristina Self, 463-1091

Senate Finance – 9 a.m. daily (almost, and upon Senate adjournment as needed) E1.036 (SFC Hearing Room, Capitol Extension 1st floor) Amy Jeter, 463-0370

From session to session, the two houses alternate writing the initial version of the appropriations bill. The starting point this session has been HB 1, but both Finance and Appropriations, or their workgroups and subcommittees, respectively, have met almost daily. When both the Senate and the House have approved spending plans, the legislative leadership will appoint a 10-member conference committee to reconcile the differences in the two proposed budgets and present a compromise bill to each house for approval.

Higher Ed Highlights

TNT (Tuition ‘N’ Top 10%)
Tuition deregulation and the top 10 percent law occupied the Senate Higher Education Subcommittee for most of Tuesday’s lengthy, bifurcated hearing. All 11 bills on the two hot topics – six to restrict or repeal regents’ tuition rate-setting authority and five to modify automatic admissions – were left pending. The tuition proposals range from outright repeal (SB 96 by Ellis, SB 1131 by Lucio), to a three-year moratorium on increases (SB 85 by Hinojosa), to rate stabilization by entering class (SB 100 by Shapiro), to various caps or “freezes” (SB 578 and SB 579, both by Ellis).

Regents have been able to set rates for the designated portion of tuition since 2003. Increases since then, which opponents claim have exceeded healthcare inflation and been as high as 80 percent in some cases, plus proposed increases at certain schools provided the focus of senators’ criticism Tuesday. Sen. Rodney Ellis (Houston) noted that the law was passed in the midst of a $10 billion budget shortfall with little advance study. He mentioned a news report stating that Texas surpassed the national average in 2006 for the cost of a full academic courseload at public four-year universities. Tuition increases, according to Ellis, prompted the closing of the Texas Tomorrow Fund and curtailed access to TEXAS Grants.

Sen. Tommy Williams (The Woodlands) accused university officials of “hiding the cheese” by not fully disclosing all their funding sources and how their revenues, including tuition, are spent. “We don’t really know where the money goes” he said.

Williams, who compared tuition deregulation to crack cocaine addiction, said he fears more hikes, even if a rate guarantee passes, as proposed by Sen. Florence Shapiro (Plano). Williams expressed concern that subsequent classes would have to pay higher rates to make up for those set in the near term. As Sen. Royce West (Dallas) characterized the issue, “It’s all about the money.”

When Sen. Judith Zaffirini (Laredo) asked how universities would make up for revenue shortfalls sans tuition flexibility, Shapiro said it would depend on the budget dynamics of that biennium. West urged adoption of his plan for higher ed districts funded by locally imposed sales taxes, and Sen. Dan Patrick (Houston) urged formation of a spending commission.

UT Austin President Bill Powers pointed out that tuition there has gone up only 5 percent annually on average and will increase by 1.9 percent this fall. He said UT Austin is underfunded from all sources, needing $59 million more a year to reach tenth among the 12 schools in its peer group. UT Austin’s tuition remains below the national median, he noted, and half of its students receive means-tested financial aid, including those with family incomes of up to $80,000 a year.

Powers acknowledged that UT’s overall funding has grown, making the state’s share proportionally smaller (30 percent is federal) despite increases in dollar amounts. But he maintained that funding levels were eroding prior to 2003. UT Austin’s administrative expenses are relatively low, he said, and its finances are audited by four separate entities.

Dr. Geri Malandra, interim executive vice chancellor for academic affairs, noted various innovations created by tuition flexibility, such as flat-rate tuition and rebates. She said these have led to increased enrollment, timelier graduation and more degrees awarded. Former Student Regent Brian Haley urged senators not to stifle growth and stability. UT Student Government Representative Andrew Solomon said the solution is more state funding, not regulated pricing plans.

Higher Education Commissioner Raymund Paredes said colleges need to reduce costs, but many are the products of national factors. Pointing to Texas providing among the lowest amounts of financial aid, Paredes said our colleges need both more fiscal accountability and flexibility. Taxpayer advocate Clark Patterson said those who benefit the most – students and their families – should pay the entire cost. He claimed there is no correlation between more higher education spending and economic growth.

The top 10 percent law discussion dealt almost exclusively with UT Austin, where 71 percent of its resident first-time entering freshmen last summer and fall were admitted based on their high school graduating class rank. UT Austin prefers a 50 percent cap on automatic admissions per entering class (SB 101 by Shapiro). One of the law’s chief advocates, Sen. Royce West (Dallas), would add only a requirement that students complete the recommended or advanced high school curriculum to be admitted automatically.

Sen. Patrick would entitle top 10-percenters admission to any college within a public system, rather than to a specific campus such as UT Austin or Texas A&M – College Station (SB 1569). Alternatively, he would link automatic admission to college entrance exam performance, either by specifying minimum test scores for those two schools (SB 1570) or requiring schools with at least half their entering classes automatically admitted to adopt minimum test scores as an additional admission requirement (SB 1571).

Shapiro argued that two U.S. Supreme Court rulings subsequent to Hopwood, the impetus for the top 10 percent law, eliminated the need for it because race and ethnicity now can be considered in admissions decisions. A 50 percent cap would retain incentives and rewards while allowing colleges more flexibility to admit worthy students based on other important criteria, she argued.

As for fairness, she asked rhetorically, “What about the student with higher test scores and lower class rank?”

West claimed that many schools in a national top 50 ranking had entering classes comprised of more top 10-percenters, and more resident students, than does UT Austin. He called for standardizing calculation of grade point averages statewide. West said it is foolhardy to base public policy on court decisions.

Paredes testified that most U.S. colleges would be reluctant to admit students on a single criterion. California, he noted, has a top 12.5 percent threshold for eligibility, but the standard is applied statewide, not to individual high school class ranking. Standardized tests are not good predictors of college success, he said, adding that Texas is not losing significant numbers of students to other states because of the top 10 percent law.

Powers pointed to UT Austin’s capacity problem, especially as the proportion of its first-time applicants who are top 10-percenters approaches 100 percent. “We have a train wreck coming,” he warned. With more than 24,000 high school students graduating in the top 10 percent of their classes in 2006, Powers observed, “We can’t take them all.”

There isn’t sufficient funding to maintain quality for 50,000 students, Powers said, much less 60,000. But Williams pointed out that colleges can limit the size of their entering classes.

Powers assured senators that both he and the school would remain committed to racial and ethnic diversity, regardless of whether the Supreme Court reversed its previous rulings allowing it as a factor. He asserted that UT Austin could increase minority enrollment through outreach and assistance if it could broaden admissions criteria, while continuing geographic diversity.

Patterson, the taxpayer advocate, supported the current objective standard as appealing to both ends of the political spectrum. Conservatives should like its racial neutrality, he said, and liberals should like its circumvention of any institutional racial bias. Other witnesses voiced concern that modifying the law would erase the gains made by ethnic minorities and rural, small-town high school students.

The subcommittee reported two unrelated bills favorably to Senate Education Tuesday. CSSB 1146 by Shapiro would require institutions of higher education to post online performance report cards, one for the Legislature and one for prospective students. The legislative report card must include information in four categories: total enrollment; costs (average annual resident undergraduate tuition and fees); student retention and graduation rates; and funding, including total appropriations, total amounts from any source available to the institution, and the percentage of total money available coming from tuition and fees. SB 1446 by Duncan is a “clean-up” bill conforming a statute to the appropriations practice of excluding indirect cost recovery from the calculation of “other educational and general income.” This practice, begun two sessions ago, allows schools to retain 100% of earned overhead cost recovery; i.e., no offset to general revenue in the funding formulas. SB 1446 is necessary because SB 1227, which contained a similar provision, did not pass in 2005.
View the agenda ll Watch the video: Part 1 Part 2

Moving Right Along

The House Higher Education Committee last week reported favorably a substitute for HB 956 by Hochberg that revised provisions in the filed bill for college course textbook notices, “bundle” return policy and faculty textbook selection. During the hearing, Rep. Fred Brown (Bryan) chided a chain bookstore representative for claiming that the bill is anti-competitive, noting her company’s large market share. UT Austin Co-op manager Tom Seale opposed the bill for not doing more to address marketing abuses, such as bundling materials that cannot be returned once opened.

The panel also favorably reported two bills potentially affecting the status of the suspended Texas Tomorrow Fund. CSHB 2173 by B. Cook implements Sunset recommendations for the Prepaid Higher Education Tuition Board, which oversees the fund. The bill clarifies that the hold-harmless provisions limiting the board's liability for tuition and fees to the statewide weighted average apply to contracts entered into on or before December 31, 2003. This means that the hold-harmless provisions would not apply to any new contracts offered in the future, so the buyers would cover the full cost of tuition and fees. CSHB 3900 by Morrison would allow a purchaser to buy a group of tuition units from the board that are basically worth 1 percent of a year's tuition and fees at current prices. If a purchaser bought 100 tuition units on behalf of a beneficiary, the beneficiary would be entitled to redeem those units in full payment of tuition and required fees for an academic year at an institution covered by that particular type of tuition unit.

Also voted out last week was HB 2639 by Smithee, which requires universities to implement a risk management program addressing issues for all registered student organizations, including possession and use of drugs and alcohol, hazing, sexual abuse and harassment, fire prevention and safety, and conduct at parties and events.

The committee discussed several bills last Monday but left them all pending.
View the agenda ll Watch the video

The Senate Education Committee voted out several higher ed bills last week, including:
• CSSB 649 by Shapleigh, directing a study of joint partnerships between universities (originally authorizing a joint partnership between UTEP and the Texas Tech University Health Science Center at El Paso).
• CSSB 1232 by Zaffirini, allowing tuition and fee payment plans and emergency student loans. The substitute lowers the maximum origination fee to 1.25 percent of the loan amount.
• SB 289 by Nelson, permitting grant recipients to use part-time faculty to provide clinical instruction for the increased nursing school enrollment. Current statute only permits the use of preceptors to provide clinical instruction.

The panel left pending a substitute for SB 1052 by Zaffirini, which offers tuition credits for students taking core curricula at two-year community colleges. The bill was left pending due to fiscal concerns: $767,000/biennium beginning in 2010 when the first students become eligible. This would obligate future legislatures in the base budget, but Sen. Kyle Janek (Houston) pointed out that that would be true even if the bill had an appropriation in the fiscal 2008-09 budget. Janek expressed concern that it creates an incentive not to go to four-year schools the first two years and suggested adding it to a top 10 percent bill.
View the agendas: Tuesday Thursday ll Watch the videos: Tuesday Thursday

Fees and Thank You

On Tuesday, the Senate passed UT Permian Basin’s student services building fee bill, SB 523 by Seliger. On Wednesday, the Senate passed SB 285 authorizing fees for transportation, a student services building, and athletics at UT Dallas. The author, Sen. Florence Shapiro (Plano), accepted an amendment by Sen. Steve Ogden (Bryan) requiring a student referendum for implementation (retroactive in this case), as well as before the fees could be increased by more than 10 percent.

Miscellany

Not So Fast
The House State Affairs Committee went long (into the next day) and deep (into the meaning of life) Thursday night at its marathon hearing on stem cell research. Sometime before dawn it approved HB 225 by Paxton, which prohibits the use of state money for biomedical research if prohibited by federal law.

A parade of witnesses waxed both eloquent and pragmatic as members struggled into the wee hours with such weighty matters as when human life begins and who should consent to experimentation with human embryos. No authors presented their bills, which ranged from human cloning bans to authorizing an institute to oversee human cell and tissue research and prohibiting a ban on stem cell research.

Pitting science versus theology, with a potential economic boon to the state in between, the debate swung from esoteric discussions of cytology to poignant expressions of faith.

Citing an extraordinary sea change in medical history, ethicist and former UTMB professor Thomas George said the issue is not money but deeply held beliefs and values. He said state regulation is more ethical than reliance on the private sector, due to its profit motive. George advocates embryonic research because he considers it human tissue, but not a human being.

Other witnesses conceded that no one knows which cells will cure what diseases, if any. Raymond Bohlin warned, “Defining life in terms of what you can do with it puts us all at risk.”

Rep. Byron Cook (Corsicana) said it is wrong to take a human life in the embryonic stage. One witness suggested using adult stem cells only, but others said both types of research should be pursued for the economic opportunities and to save lives.

Rep. Wayne Christian (Center) asked if public funding of adult stem cell research would free up private funding for research on embryos. He was told that most basic research is government sponsored. Christian also wondered aloud how to use discarded embryos without creating an industry.

A Parkinson’s Disease sufferer decried cells being stored 10 minutes from her home that cannot be accessed. “You cannot compare human lives to cells being discarded,” she said. But a multiple sclerosis victim said she would not accept a cure derived from embryos. “All life has value,” she insisted. “I will not sacrifice my soul for the souls of others.”
View the agenda ll Watch the video [beg. 2:38]

…This Is Now

If It’s Monday, It’s Higher Ed

Among the bills that the Senate Higher Education Subcommittee will hear today are:
• SB 114 (Van de Putte), requiring an institution of higher education to provide, on the request of any retailer or other provider of instructional materials, any list of required or recommended instructional materials at the same time such a list is given to the institution's affiliated bookstore. Also, dependent on available space, other sellers must be given the same opportunity as an affiliated bookstore to participate in programs related to distribution of instructional materials to students.
• SB 1601 (West), removing provisions requiring the inclusion of “non-traditional” medical students (economically disadvantaged students over the age of 25) into the Joint Admission Medical Program. The bill also amends the allocation of program openings among public and private institutions of higher education.
• SB 1045 (Wentworth), exempting the performance evaluations of the Commissioner of Higher Education and the chief executive officers of university systems and institutions of higher education from public disclosure.
• SB 1919 (Watson), establishing a commission to study the allocation of state resources for medical education.
View the agenda ll Watch the hearing

Among the bills being heard today by the House Higher Education Committee are:
• HB 3828 (Morrison), authorizing incentive funding for higher education and establishing separate incentive funding programs for general academic teaching institutions, community colleges, and medical and dental units. The bill establishes three point systems and authorizes the allocation of incentive funds in proportion to the number of points earned by the respective institutions within each category.
• HB 3443 (Howard), creating the Texas Hospital-Based Nursing Education Partnership Grant Program to increase the number of nurses in Texas.
• HB 1431 (Alonzo), establishing the Sustainable Water Supply Research Center at the University of Texas at Arlington.
View the agenda ll Watch the hearing

Three bills reported from the Senate Higher Education Subcommittee are on the Senate Education Committee’s agenda Tuesday:
• SB 1146 (Shapiro), requiring universities to post online legislative report cards containing information on enrollment, costs, student success, and funding, including total appropriations, total amounts from any source available to the institution, and the percentage of total monies available from tuition and fees.
• SB 1052 (Zaffirini), authorizing tuition credits for students who complete the core curriculum at two-year public institutions of higher education.
• SB 1446 (Duncan), deleting indirect cost recovery fees from income sources that must be accounted for as educational and general funds. This will conform the statutory list of "educational and general funds" to the legislative changes made in 2003.
View the agenda ll Watch the hearings

St. Elsewhere

Other committees hearing bills of interest this week:

HOUSE
State Affairs
Monday's hearing
HB 38 (Solomons) – requiring license applicants to be eligible for employment in the United States
Thursday's hearing
HB 39 (Paxton) – prohibiting resident tuition for illegal residents
HB 104 (Riddle) – requiring legal residency status verification for tuition purposes
HB 141 (Jackson) – prohibiting resident tuition for illegal residents
HB 159 (Zedler) – prohibiting resident tuition for illegal residents
Local Govt. Ways & Means
HB 3567 (Rose) – defining ecological research for the qualified open-space land appraisal method
Appropriations Health & Human Services Subcommittee
HB 1793 (Veasey) – eligibility for hospital charity care
HB 2404 (Delisi) – operation and financing of the medical assistance program and other similar health care programs (companion to SB 10 by Nelson, omnibus Medicaid reform bill)
HB 3465 (Delisi) – creating a federally funded low-income pool fund to reimburse health care providers for providing uncompensated health care and to assist uninsured persons in obtaining health care coverage.
HB 3778 (Rose) – creation and administration of a quality assurance fee for nursing facilities
HB 3793 (J. Davis) – performance measures and incentives in Medicaid managed care contracts

SENATE
Finance
SJR 56 (Williams) – constitutional amendment calculating the fiscal growth rate based on population growth and inflation and the biennial spending limit from all available non-federal revenue sources
SB 769 (Zaffirini) – prohibits state agencies, including institutions of higher education, from spending appropriations on contract auditing
SB 992 (Nelson) – extending a nursing education grant program through fiscal 2011

Your Hit Parade

Bills of interest scheduled for full House consideration:
Monday
HB 11 (B. Cook) – monthly reporting by wholesalers/distributors of alcohol/tobacco sales to retailers
HB 460 (Miller) – defining identifying information for identity theft
HB 1105 (McClendon et al.) – state TRS contribution and supplement
HB 1973 (Delisi) – processing physician's license applications
HB 2198 (Flores et al.) – authorizing certain public junior colleges to offer baccalaureate degree programs

Tuesday
HB 472 (Solomons) – authorizing fee collections from third-party administrators in the workers' compensation system
HB 522 (Woolley et al.) – health benefit plan ID cards
HB 1787 (Hartnett) – allowing declaratory judgments to settle land title disputes

Access House calendars

Bills of interest eligible for full Senate consideration:
Notice of Intent
SB 10 (Nelson et al.) – operation and financing of the medical assistance program (Code Red)
SB 445 (Hinojosa et al.) – design and construction standards for newly constructed state buildings
SB 649 (Shapleigh) – study of joint partnerships between higher education institutions
SB 1325 (West) – prohibiting scholarships to regents’ close relatives
SB 1447 (Duncan) – investment authority of the Teacher Retirement System of Texas

Access Senate agendas

Session Snapshot

Week	15
Days Remaining	43
Bills/Joint Resolutions Filed*	6,298
Bills/Joint Resolutions Passed**
>House	356
>Senate	334
Bills Enacted*	16
Legislation Tracked	1,884
High Priority Bills	368

*Incl. SCR 20 (const. spending limit)
**By each house

The bill filing deadline was March 9, the 60th day of the session. To file a bill now requires a four-fifths vote of the members present in either house, and several bills have been introduced this way. Legislative deadlines and other important dates may be found at Key Legislative Dates.

House Committees’ permanent meeting schedules

Senate Committees’ permanent meeting schedules

Duly Noted

Toward the end of the House’s lengthy debate Wednesday on one of three bills by Rep. Warren Chisum (Pampa) to strengthen marriages, Rep. Pat Haggerty (El Paso) offered an amendment requiring legislators (with their spouses, if married) to take eight hours of marital training per year. Rep. Lon Burnam (Fort Worth) asked to exempt members married 25 years or more to the same person. “Absolutely. Anybody who can do it that long,” Haggerty observed, “has already suffered cruel and unusual punishment, so go ahead.”

During an exchange with Rep. Jim Dunnam (Waco), who reported that his wife wanted him to attend classes twice so she could skip, Haggerty said of the bill, “It does say that those who are married live longer. It’s not really true – it just seems longer.”

The amendment eventually was spurned on an unspecified point of order. Irreconcilable differences?

Watch Haggerty & Co. [beg. 3:36]

80th Legislature

Information Resources

Legislative Update Home (archive of past issues)

RECENT TESTIMONY

Mark G. Yudof Testimony House Committee on Higher Education - February 12, 2007

James R. Huffines Testimony
to Senate Finance Committee - February 12, 2007

Mark G. Yudof Testimony to the Senate Finance Committee -February 12, 2007

This Week

Monday
7:00 - Senate Higher Ed. Sub
8:00 - House Higher Education
9:00 - House State Affairs
Senate Finance
1:30 - Senate reconvenes
Senate Education (FA*)
2:00 - House reconvenes

Tuesday
7:30 - Senate Education

Wednesday
7:00 - Appropriations H/HS Sub.

Thursday
7:00 - Appropriations H/HS Sub.
8:00 - House State Affairs
*final adjournment

On the Horizon

May 12 Constitutional amendment election on school property tax relief for elderly and disabled homeowners

May 28 Sine die!

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