Legislative Recommendations 83rd Texas Legislature

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1 Legislative s 83rd Texas Legislature Office of External Relations er@thecb.state.tx.us

2 THECB Legislative s 83rd Texas Legislature Rec. # Topic/Level of Priority (Tier 1-Highest; Tier 3-Lowest) Division/Staff Lead Implementing Outcomes-Based Funding 1a 1b 1c Relating to outcomes-based funding for universities Relating to outcomes-based funding for community colleges Relating to the Texas State Technical College Returned Value Funding Model Reducing Time-to-Degree Tier 1 - Major Priorities Implementing Outcomes-Based Funding Implementing Outcomes-Based Funding Implementing Outcomes-Based Funding P&A/ Susan Brown P&A/ Susan Brown P&A/ Susan Brown 2 Relating to capping the number of hours for an Associate's Degree to 60 hours Reducing Time-to-Degree WAAR/ MacGregor Stephenson 3 4a Relating to lowering credit hour thresholds used to limit state formula funding and charging students a higher rate of tuition for excess credit hours Restructuring Financial Aid Relating to limiting the TEXAS Grant award amount and number of semesters, requiring full-time attendance, and covering transfer students Reducing Time-to-Degree Restructuring Financial Aid WAAR/ MacGregor Stephenson BSS/ Dan Weaver 4b Relating to expanding the eligibility requirements for the Texas Educational Opportunity Grant Restructuring Financial Aid BSS/ Dan Weaver 5 Relating to restructuring the B-On-Time program into an undergraduate tuition rebate program and creating a state subsidized student loan program Tier 2 - Programmatic Changes Restructuring Financial Aid BSS/ Dan Weaver 6 Relating to creation of the Graduate Medical Education Physician Resident Expansion Program Improving Medical Education WAAR/ MacGregor Stephenson 7 Relating to re-mandating that institutions report deferred maintenance data to the THECB Improving Transparency P&A/ Susan Brown 8 Relating to making multiple changes to the Hazlewood Act for the benefit of veterans and their families Relating to making multiple changes to tuition exemption and waiver programs to make them more efficient and effective Relating to the establishment of a Dual Credit Crosswalk that shows which high school credits should be awarded for college courses offered for dual credit Relating to authorizing the THECB to collect fees from private postsecondary institutions pursuing a certificate of authorization Relating to requiring the THECB and TEA to review and revise the College and Career Readiness Standards on a regular basis Relating to clarifying current statutes that provide the THECB with the authority to set the Texas Success Initiative exemption based on the college readiness standard on the End of Course Exams Relating to establishing a readiness standard for high school students to take dual credit college courses based on their performance on End of Course Exams Improving Program Administration Improving Program Administration Improving Program Administration Improving Program Administration Improving College and Career Readiness Improving College and Career Readiness Improving College and Career Readiness BSS/ Dan Weaver BSS/ Dan Weaver WAAR/ MacGregor Stephenson WAAR/ MacGregor Stephenson P-16/ Judy Loredo P-16/ Judy Loredo WAAR/ MacGregor Stephenson

3 THECB Legislative s 83rd Texas Legislature Tier 3 - Statutory Updates and Efficiencies 15 Relating to the consolidation of statutory requirements of the Higher Education Assistance program and plan and transferring responsibility to institutions Improving Efficiency P-16/ Judy Loredo 16 Relating to elimination of THECB authority to approve administrative units such as departments and schools within institutions of higher education Improving Efficiency WAAR/ MacGregor Stephenson 17 Relating to elimination of THECB advisory committee charged with creating standards and accounting methods for restricted research funds Improving Efficiency WAAR/ MacGregor Stephenson 18 Relating to elimination of the Compensation of Resident Physicians program Improving Efficiency WAAR/ MacGregor Stephenson 19 Relating to elimination of the state Tech Prep Program Improving Efficiency WAAR/ MacGregor Stephenson 20 Relating to elimination of THECB authority to approve off-campus courses offered outside of Texas Improving Efficiency WAAR/ MacGregor Stephenson 21 Relating to removal of THECB as a pass-through for legislative appropriations used to support the African American Internship Program Improving Efficiency WAAR/ MacGregor Stephenson 22 Relating to statutory expiration clause for TEG program requirements prior to 2005 Improving Program Administration BSS/ Dan Weaver 23 Relating to THECB authority to block certain licensure renewals for persons in default of state student loan Improving Program Administration GC/ Bill Franz; BSS/ Dan Weaver 24 Relating to Texas Supreme Court rules to block renewal of law license for persons in default of state student Improving Program loan Administration GC/ Bill Franz; BSS/ Dan Weaver 25 Relating to court venues for persons subject to legal proceedings related to state student loans in default Improving Program status Administration GC/ Bill Franz; BSS/ Dan Weaver 26 Relating to creation of financial need requirement for the Texas Armed Services Scholarship Program Improving Program Administration BSS/ Dan Weaver 27 Relating to reimbursement for costs associated with Hazlewood exemptions Improving Program Administration BSS/ Dan Weaver 28 Relating to methodology and responsibility for setting non-resident undergraduate tuition rates Improving Program Administration BSS/ Dan Weaver 29 Relating to granting THECB the authority to conduct facility audits at Health Related Institutions Improving Transparency P&A/ Susan Brown Divisions BSS = Business and Support Services; WAAR = Workforce, Academic Affairs, and Research; GC = General Counsel; P-16= P-16 Initiatives; P&A = Planning & Accountability

4 Tier 1: Major Priorities

5 Tier 1 Implementing Outcomes-Based Formula Funding Action Relating to outcomes-based formula funding for universities Success Amend Existing Statute New Statute A change in the General Appropriations Act necessary Yes, 81st and 82nd Texas Legislature During the 81st and 82nd Legislative Sessions, the THECB proposed to allocate 10% of formula funding for universities based on metrics that measure student success. During the 82nd Legislative Session, the House-adopted version of the General Appropriations Act included a rider that would have instituted the Coordinating Board s recommendation for public universities. However, no outcomes-based funding methodology was included in the final bill. Instead, HB 9 was enacted by the 82nd Legislature, instructing the THECB to coordinate with institutions to develop methodologies that would incorporate student success measures into potential funding methodologies for the 83rd Legislature to consider. The Formula Advisory Committees for General Academic Institutions (GAIs) devised an outcomes-based funding methodology for public universities. The recommendation developed by the GAI Formula Advisory Committee was fully endorsed by the Board at the April 2012 quarterly meeting. For General Academic Institutions, Section 28 of Special Provisions Relating Only to State Agencies of Higher Education in the General Appropriations Act, should be amended to read (in part): Sec. 28. General Academic Funding. Appropriations made in this Act for formula funding for general academic institutions will consist of five formulas and supplemental items. 1. Instruction and Operation Formula. The Instruction and Operations Formula shall provide funding for faculty salaries, including nursing, departmental operating expense library instructional administration, research enhancement, student services, and institutional support. The funds are distributed on a weighted semester credit hour basis. The rate per weighted semester credit hour is [TBD]. Weighting is determined by the following matrix: [Matrix to be added when data available] 2. Student Success Funding. An amount equal to 10 percent of the funding that would otherwise have been allocated to undergraduate weighted semester credit hours through the Instructions and Operations Formula are allocated based upon weighted measures of student achievement of success metrics. The metrics and weights are as follows: 2

6 Metric Weight Total number of bachelor's degrees awarded 1 Total number of bachelor s degrees awarded multiplied by the school s six-year graduation rate Total number of bachelor s degrees awarded divided by Full Time Student Equivalents and multiplied by 100 Total number of bachelor s degrees weighted using cost-based weights Total number of bachelor's degrees awarded to at-risk students, as defined in accordance with Texas Education Code (b)(1) Total number of bachelor's degrees awarded in critical fields, as defined in accordance with Texas Education Code (b)(2) Total number of students who complete their 30th, 60th, or 90th hour at the institution The Coordinating Board will continue to work with the Texas Workforce Commission, institutions of higher education, and other stakeholders to refine the critical fields in order to help meet the state s critical workforce needs. This change to methodology would simply allocate funds in a different way, and would not create any new costs for the state. The new allocation methodology would be effective for Fiscal Year

7 Tier 1 Implementing Outcomes-Based Formula Funding Action Relating to outcomes-based formula funding for community colleges Success Add a rider in the General Appropriations Act Yes, 81st and 82nd Texas Legislature During the 81st and 82nd Legislative Sessions, the THECB proposed to allocate 10% of formula funding for community and technical colleges based on metrics that measure student success. In the 82nd Legislative Session, the Senate-adopted version of the General Appropriations Act created a small pool of funding to be allocated based on outcomes measurements: however, no outcomes-based funding was included in the final bill. Instead, HB 9 was enacted by the 82nd Legislature, instructing the THECB to coordinate with institutions to develop methodologies that would incorporate student success measures into potential funding methodologies for the 83rd Legislature to consider. The Formula Advisory Committee (FAC) for Community and Technical Colleges (CTCs) devised an outcomes-based funding methodology for community and technical colleges, which the Board adopted in April Subsequently, the Texas Association of Community Colleges endorsed an outcomes-based formula funding proposal that substantially mirrors the Board s recommendation, with some key differences. In September, the Board s Committee on Affordability, Accountability and Planning (CAAP) voted to modify the previously adopted outcomes-based formula funding proposal to reflect, in part, the recommendation from TACC. The modifications include: Using a rolling 3-year average of the data for the student success metrics, Adding a 2.25 weight for credentials awarded in STEM fields, Agreeing to add successful completion of an ABE or ESL sequence as a metric when new data collection makes it possible. Agreeing to further consider how to define first college-level English. The CAAP left standing the Board s recommendation to allocate funding among institutions based on relative performance, but agreed to continue discussions with the community colleges on their desire for community colleges to compete against their own performance rather than against each other. Also, the CAAP did not adopt TACC s recommendation that universities receive additional state funding for enrolling students who have completed an associate s degree. These modifications will be considered by the full Board at the October quarterly meeting. Rider revisions on the following page incorporate the CAAP recommendations. A new rider should be added to Public Community/Junior Colleges to read: 22. Formula Funding Methodology for Public Community/Junior Colleges. Formula funding is allocated among public community/junior colleges based upon certified contact hours generated in the previous academic year.

8 An amount equal to 10% of funding that otherwise would have been allocated base on certified contact hours is allocated on a three-year average of student completion of the following metrics: Metric Student successfully completes developmental education in mathematics Weight 1 Student successfully completes developmental education in reading.5 Student successfully completes developmental education in writing.5 Student completes first college-level mathematics course with a grade of C or better Student completes first college-level course designated as reading intensive with a grade of C or better Student completes first college-level course designated as writing intensive with a grade of C or better Student successfully completes first 15 semester credit hours at the institution Student successfully completes first 30 semester credit hours at the institution Student transfers to a General Academic Institution after successfully completing at least 15 semester credit hours at the institution Student receives from the institution an associate s degree, a Bachelor s degree, or a certificate recognized for this purpose by the Coordinating Board in a field other than Science, Technology, Engineering and Mathematics (STEM). Student receives from the institution an associate s degree, a Bachelor s degree, or a certificate recognized for this purpose by the Coordinating Board in the fields of Science, Technology, Engineering or Mathematics (STEM) Texas Education Code Sections (b-1) and and the General Appropriations Act This change to methodology would simply allocate funds in a different way, and would not create any new costs for the state. The new allocation methodology would be effective for Fiscal Year 2014.

9 Tier 1 Implementing Outcomes-Based Formula Funding Relating to a returned value funding model for Texas State Technical Colleges Success Action Add a rider in the General Appropriations Act. Yes Background In the General Appropriations Act, H.B. 1, 82nd Texas Legislature, page III-54, Rider 42, a new funding model for the Texas State Technical College System (TSTCS) is mandated: The Texas Higher Education Coordinating Board shall work with the Texas State Technical College System, the Legislative Budget Board and other relevant agencies to develop a new A&I funding formula to be implemented for the biennium for the Texas State Technical Colleges. The formula shall reward job placement and graduate earnings projections, not time in training or contact hours. Previously, the 81st Texas Legislature directed the Coordinating Board (THECB) to study the feasibility of developing a returned value system of funding based on the increased economic value that the education services of TSTCS provide in the state. Working with the Comptroller s Office, THECB determined that it is feasible to provide formula funding to TSTCS using that type of system. Working with staff from TSTCS, Legislative Budget Board, and the Ray Marshall Center at The University of Texas at Austin s Lyndon B. Johnson School of Public Affairs, the THECB staff met monthly to develop a reasonable methodology that can, and should, be updated each biennium. It incorporates suggested changes from the previous State Comptroller s study and simplifies the inputs, with the goal to devise a mechanical formula that is fairly easy to update and replicate using available data. This funding methodology will be considered by the Board at their October Quarterly meeting. A new rider should be added to Special Provisions Relating Only to Components of Texas State Technical College to read: 12. Returned Value Funding Model for Texas State Technical Colleges. Funding is allocated among Texas State Technical Colleges based on the additional direct and indirect economic value provided to the state economy as a result of the education provided to students by the TSTCs. The funding methodology is based on the following components: The model includes the cohort of TSTC graduates (earning an associate s degrees or certificate), transfers, and leavers (students who were not found in Texas higher education for two years following the last time they were enrolled in the TSTC) from 2005 and

10 The cohorts were matched with UI wage records for employment and wage information for five years after the students graduated from or left the TSTC to establish annual wages for each student. Direct value-added was defined as the incremental income between a student s annual wage and a base wage representing a full-time employee earning minimum wage. Indirect value-added was defined as incremental income multiplied by 1.5, an economic multiplier derived from a U.S. Bureau of Economic Analysis study. Total direct and indirect value-added was determined for each group of students by campus across five years. Values-added were reduced by half, based on the assumption that the benefits would equally accrue to the state and TSTCS and therefore only half of the added value should be included in the formula calculations. Values-added by campus were divided into the total TSTC value-added to define each institution s proportional share of overall formula funding. General Appropriations Act This change to methodology would simply allocate funds in a different way, and would not create any new costs for the state. The new allocation methodology would be effective for Fiscal Year

11 Tier 1 Reducing Time to Degree Relating to capping the total number of credit hours required for an Associate s degree at 60 hours Success Action Amend Existing Statute x New Statute Yes, 82nd Texas Legislature in the House version of HB 3025 In 2005, the 79th Texas Legislature enacted a statute that placed a limit on the number of semester credit hours (SCH) that public universities may require for any baccalaureate degree it offers. The statute (Texas Education Code ) states that a student must not be required to complete more than the minimum number of SCH required for a baccalaureate degree by the Southern Association of Colleges and Schools or its successor. The effective limit for most baccalaureate degree programs is now 120 SCH. The 2005 amendment did not address limitations on SCH for Associate s degrees. The THECB recommends capping the SCH required for Associate s degrees to no more than that required of the appropriate accrediting agency or professional licensure requirement in an effort to improve time to degree. The effective limit for most Associate s degrees would be 60 semester credit hours under this provision. This recommendation was also a recommendation in the Cost Efficiencies in Higher Education report submitted to the Governor in New Texas Education Code additional costs to the state are expected. To be implemented in the fall 2015 academic year. 8

12 Tier 1 Reducing Time to Degree Relating to lowering credit hour thresholds used to limit state formula funding and charging students a higher rate of tuition for excess credit hours Success Action x Amend Existing Statute New Statute In 2005, the 79th Texas Legislature enacted a statute that placed a limit on the number of semester credit hours (SCH) that public universities may require for any baccalaureate degree it offers. The statute (Texas Education Code ) states that a student must not be required to complete more than the minimum number of SCH required for a baccalaureate degree by the Southern Association of Colleges and Schools or its successor. The effective limit for most degree programs is now 120 SCH. Current statute (Texas Education Code and ) establishes 30 SCH as a threshold for limiting state formula funding and authorizing universities to charge students a higher rate of tuition for accumulating excess credits. The effective limits for both based on a traditional 120 SCH degree is 150 SCH. The THECB recommends lowering the threshold to 15 SCH for the purpose of limiting formula funding and authorizing universities to charge higher tuition rates. The new effective limit for a traditional 120 SCH degree would be 135 SCH. Degrees that require more credits will necessarily have higher effective limits for both provisions. Additionally, institutions will continue to have the flexibility to decide whether to charge higher tuition rates and adopt hardship policies to mitigate for higher tuition rates. Texas Education Code and additional costs to the state are expected. Savings to the state are expected given the decrease in the number of hours universities may claim for formula funding purposes. THECB staff found that 2011 university students took an average of 147 SCH to complete a 120 SCH Bachelor s degree. Given this average, that the state could have saved approximately $15 million and the students could have saved $94 million by reducing the hours from 147 to 135. te: This is an exit cohort of 32,000 graduates in 2011 that started full-time in their first semester. (They started at different points in time). The graduates were tracked back 10 years to see how many hours they accumulated since they started. Some of them started at a university and others at a community college. Calculation: State savings -- $38 GR per SCH x 12 hours over = 456; 456 x 32,000 = $14.6M Student savings -- $245 per SCH x 12 hours =$2,940; $2,940 x 32,000 = $94.0M To be implemented beginning with the fall 2014 entering class.

13 Tier1 Restructuring Financial Aid Relating to limiting the TEXAS Grant award amount and number of semesters, requiring full-time attendance, and covering transfer students Participation and Success Action x Amend Existing Statute New Statute o The socioeconomic status of higher education students in Texas is placing an ever growing demand for limited financial resources. It is imperative, therefore, to allocate grant dollars as efficiently as possible in order to maximize persistence and success. The THECB recommends restructuring the TEXAS Grant program in ways that effectively and predictably reach more financially needy students regardless of the funding climate. The following proposals have been discussed with the Financial Aid Advisory Committee as well as with attendees at public open forums. The recommendations are as follows: 1) Give awards that (when combined with Pell and family contribution) cover tuition, fees, and course materials for many needy students, rather than target awards to cover full cost of attendance for fewer needy students; (Awards will continue to be based on the statewide average tuition, fees, and books and not on actual tuition, fees, and books charged by each institution.) 2) Create TEXAS Grant eligibility pathway for all transfer students; 3) Require full-time enrollment (12 hours) per federal guidelines; 4) Cap eligibility at eight regular semesters, instead of the current 150 semester credit hours (SCH); (Semesters do not have to be consecutive but must not be more than eight. Language will be recommended to allow proration awards that exceed eight semesters for students to complete degree programs that require more than 120 SCH to complete and retain TEXAS Grant eligibility.) 5) Eliminate the institution s obligation to provide non-loan funds to make up the difference between a student s TEXAS Grant award and the student s tuition and fee charges; 6) Make TEXAS Grant a university only program; and 7) Defer to federal requirements regarding controlled substances to streamline the awarding of TEXAS Grant funds. The THECB recommendation to give TEXAS Grant awards that cover tuition, fees, and books is a radically different model but one that could virtually fund every needy university student. Reverting to the old practice of granting large awards to a few students, the state would serve an estimated 18% or approximately 72,300 students. This includes all students, university and community and technical college students. Embracing a change, the state could serve roughly 95% of eligible university students or 133,500 students including about 32,000 transfer students. This estimate is based on the 83rd Legislature appropriating $580.8M for the next biennium as requested in the agency s Legislative Appropriations Request (LAR) and keeps the $4,000 Estimated Family Contribution cap. The proposed distribution method would guarantee a smaller TEXAS Grant award to an additional 61,200 students and cover (when combined with Pell and family contribution) tuition, fees, and course materials. The award is estimated to be roughly $3,000. Further, the THECB proposes the TEXAS Grant be a university only program but it is critical to note that the funding community colleges receive in TEXAS Grant has been requested through the Texas Educational Opportunity Grant (TEOG) strategy in the THECB LAR. The LAR added about $41 million to TEOG in the baseline request for FY14/15. Of that, $36 million is to make whole the community college students who would no longer be eligible

14 for TEXAS Grant under the THECB recommendations, and the remainder is for the community college students that would be excluded from B-On-Time per Sunset s recommendation. The recommended change regarding controlled substances would align the TEXAS Grant controlled substance restrictions to the federal requirements now in effect for Title IV federal aid programs. The state program wording is very broad. It asks whether the student has ever been convicted of a crime or felony involving a controlled substance. The federal question on the FAFSA asks whether the person has been convicted for the possession or sale of illegal drugs while receiving federal aid. In FY 2010 and FY 2011, over 94% of TEXAS Grant recipients also received federal aid and would fall under these provisions. Originally, the federal and state program wording was the same so schools could just use the FAFSA statement. The federal wording was changed a couple of years ago and institutions of higher education have had to get students to complete an additional form for substance abuse only. This additional form has been a major challenge for the institutions, and its elimination will greatly streamline the processing of TEXAS Grant awards. Texas Education Code, Chapter 56, Subchapter M ne. Suggested changes would merely serve to leverage available dollars more efficiently Award Year 11

15 Tier 1 Improving Program Administration Relating to expanding the eligibility requirements for the Texas Educational Opportunity Grant (TEOG) Participation Action x Amend Existing Statute _ New Statute Current Texas Educational Opportunity Grant (TEOG) statutes preclude two-year institutions from charging a TEOG recipient an amount of tuition and fees in excess of the TEOG award. An institution is to use financial aid other than loans and Pell Grants to cover any difference in the TEOG amount and tuition and fees, or waive the excess tuition and fees. This is an inefficient limitation on the schools ability to package financial aid, and the THECB recommend removing this language. In addition, TEOG statutes reference the Tuition Equalization Grant (TEG) program although TEG is not and has never been relevant to the TEOG program that serves public two-year institutions. The THECB recommends this language be removed. Further, TEOG statutes require first-time recipients to be entering students, which is defined in THECB rule as having fewer than 30 hours of college credit. As a result, prospective students looking to improve workforce skills cannot receive TEOG if the person attended college and accumulated at least 30 hours at some point prior to reenrolling. The THECB recommends this restriction be removed to align more closely with state goals to produce a greater number of students that are workforce ready. In order to streamline the awarding of TEOG funds, THECB recommend the program defer to Federal Title IV Financial Aid Program restrictions regarding controlled substances. This change would switch the TEOG controlled substance restrictions to the federal requirements now in effect for Title IV federal aid programs. The state program wording is very broad. It asks whether the student has ever been convicted of a crime or felony involving a controlled substance. The federal question on the FAFSA asks whether the person has been convicted for the possession or sale of illegal drugs while receiving federal aid. In FY 2010 and FY 2011, over 95% of TEOG recipients also received federal aid and would fall under these provisions. Originally, the federal and state program wording was the same so schools could just use the FAFSA statement. The federal wording changed a couple of years ago and Texas institutions of higher education have had to complete an additional form for substance abuse only. This additional form has been a major challenge for the institutions, and its elimination will greatly streamline the processing of TEOG awards. Texas Education Code and These changes would increase the eligible applicant pool to ensure better use of available funding, but would not obligate the state to increase funding for the program. To be implemented in the fall 2013 academic year. 12

16 Tier 1 Restructuring Financial Aid Relating to restructuring the B-On-Time Loan Program into an undergraduate tuition rebate program and creating a state subsidized student loan program Participation and Success Action x Amend Existing Statute x New Statute The B-On-Time program is currently structured as a 0% interest loan available to certain Texas residents enrolled full-time at a Texas institution of higher education. Participants loans are forgiven if they: graduate within two years (community and technical college students) or four years (university students, and up to five years for certain degrees); or earn no more than six hours beyond their degree requirement; and finish with a cumulative 3.0 GPA or better. The program is funded through a combination of tuition set-asides collected from public university students and general revenue. The program was designed to create a strong incentive for students to graduate on time and with good grades. However, while research of the program does show that B-On-Time recipients have an increased likelihood of graduating on time, too few students participate due to inconsistent appropriations and other factors. Additionally, the limited reach of the program does nothing to encourage non-recipients to progress to a timely graduation. Obstacles that hinder the wider use and effectiveness of the program include: Institutions vary widely in their ability or willingness to package B-on-Time loans to eligible students. This reticence is compounded by federal regulations that deter institutions from making students aware of nonfederal loan options. The structure of the B-On-Time loan can be confusing to students, who may assume it is a grant or may decline to participate at all for fear of falling short on the forgiveness criteria. Although all students contribute to B-On-Time through tuition set-asides, only subsets of students are able to receive loans through the program. On a statewide average in FY2011, it took about 65 undergraduate students paying tuition to fund one B-On-Time award for one year. The THECB proposal would split B-On-Time into two separate, but related, programs. An undergraduate tuition rebate program would be open to all undergraduate students at public universities, who could earn back a portion of their tuition paid if they meet the current B-On-Time loan forgiveness requirements. A repurposed B-On- Time loan program would provide zero-interest loans to students while enrolled in higher education, with any rebate helping pay down the loan balance. Further, the THECB recommends the B-On-Time program become a university only program. The THECB, through the Legislative Appropriations Request (LAR), requested an additional $5M be appropriated to community colleges in the TEOG strategy in order to make up for the elimination of the B-On-Time funding. Rebate Program All designated tuition set-asides (currently 20% of designated tuition in excess of $46/SCH, of which 5% is for B-On-Time) would be retained at the institutions where they are collected. Set asides would remain as they currently are, with 5% going to fund tuition rebates, and institutions allowed to use the remaining 15% for other financial aid purposes identified in statute. 13

17 Any undergraduate student who meets the B-On-Time academic performance and time-to degree criteria would receive an equal share of the B-On-Time tuition set-asides collected at the institution, up to an amount equal to their total tuition paid, but never less than what they had contributed. All undergraduates will be incented to meet the rebate criteria. This could dramatically reduce the statewide averages for credit hours taken beyond degree requirements, saving student s and taxpayer s money. Students at institutions with low graduation rates will be particularly incented, as those institutions will likely have a larger pool of funds to provide rebates to students meeting the rebate criteria. A rebate program could prove more appealing to institutions and students, as it would be fairly straightforward and exempt from the federal regulations currently impacting the program. Loan Program Students would be offered a no-interest, in-school loan to meet the up-front costs of their attendance. A low interest rate would apply when they enter repayment, much like federal loans, and would be set based on market conditions. Any tuition rebate earned by the student would go first toward paying down this or any other educational loan debt. After an initial appropriation of approximately $100 M already in the B-On-Time account, the loan program would be self-sustaining and funded through bond issuance under the THECB Private Activity Bonding Allocation. further general revenue appropriation would be necessary to support the program. A contingency rider will be necessary for this appropriation. Texas Education Code , , and A one-time appropriation of approximately $100M from B-On-Time account to the THECB. Immediately, to be implemented in the fall 2013 academic year. 14

18 Tier 2: Programmatic Changes

19 Tier 2 Improving Medical Education Relating to creation of the GME Physician Resident Expansion Program n/a Action x Amend Existing Statute _ New Statute In accordance with findings from the 2012 GME study, mandated by HB 2908 (82nd Texas Legislature), the THECB recommends revising the Primary Care Residency Program to establish a new GME Physician Resident Expansion Grant Program. Part of the existing statute under Texas Education Code, Chapter 58 relates to a program called the Resident Physician Compensation Program, which was last funded in fiscal years 2002 and 2003 at $8.07M. The funding was trusteed to the THECB, and the agency contracted directly with the state s teaching hospitals to support the training of primary care residents. There was little oversight and little expansion of the program, and administrative oversight has shifted between the THECB and other agencies until funding was eliminated. Additional sections have been added to Chapter 58 over time. The existing statute, Texas Education Code and created a program called the Primary Care Residency Program designed to provide funds to create new residency positions and support positions that had not previously been funded, as a mechanism to increase the number of primary care physicians trained in the state. In FY 2011, the funds provided support for 122 residents in 23 primary care residency programs. There were no funds appropriated for FY 2012 or FY Under this program, funding was limited to Texas primary care residency programs, defined as family practice (not supported by the Family Practice Residency Program), general internal medicine, general pediatrics, or obstetrics/gynecology. Funding was provided to residency programs based on residency program directors identification and designation of residents likely to remain in Texas to practice. The residency program received funds for the duration of the designated residents training, up to a maximum of four years for obstetrics/gynecology residents. Funds could be expended on educational enhancements that benefited all residents training at the program. Beginning in FY 2010, all family practice residency programs supported previously under the Primary Care Residency Programs were transferred to receive funding exclusively under the Family Practice Residency Program. The proposed revisions to the statute would allow for the creation and establishment of a new physician residency program, which we would administer with oversight by a new Advisory Committee. The focus would be the development and funding of additional first year entry physician residency positions. The proposed amendment would allow the 83rd Texas Legislature to establish a new program. The proposal aligns with the THECB Legislative Appropriations Request of $11 million to support physician residency training. Texas Education Code, The THECB estimates $11 million is needed to fund program beginning in FY This amount has been requested in the agency s Legislative Appropriations Request (LAR) Immediately 16

20 Tier 2 Improving Transparency Topic/Issue Relating to re-mandating that institutions report deferred maintenance data to the THECB N/A Action x Amend Existing Statute New Statute SB 5 approved by the 82nd Texas Legislature removed the requirement for institutions to report deferred maintenance data to the THECB. Given this provision, the state will no longer have access to centralized data or retain the ability to analyze the condition of facilities statewide. The THECB recommend the Legislature reinstate the reporting requirement related to deferred maintenance to the state. Texas Education Code costs anticipated to the state. Immediately since the actions by the 82nd Texas Legislature will go into effect beginning Fall

21 Tier 2 Improving Program Administration Relating to making multiple changes to the Hazlewood Act for the benefit of veterans and their families Participation Action x Amend Existing Statute x New Statute The THECB recommend the following changes to the Hazlewood Act in order to better serve veterans and their families: Allow eligible veterans who are out of state on military orders to use Hazelwood; Clarify eligibility requirements for disabled and fallen veterans; Align statute relating to disabled and unemployable veterans with the U.S. Department of Veteran s Affairs Make clear that age cutoff for benefits to children only applies to Legacy portion of the program, not for children of disabled veterans or those killed in action; Provide clarity regarding stacking of federal and state benefits (pending AG opinion); Give veterans the authority to revoke hours assigned through the Legacy Act; Add a general clause to make clear that in the absence of legislative clarity, and in cases not explicitly outlined in THECB rules or policy, institutions have the sole discretion to implement the Hazlewood Act, including eligibility, as they deem appropriate provided the legislative intent. Texas Education Code Amending the statute related to veterans who are out of state, veterans who are disabled or unemployable, stacking federal benefits with Hazlewood, and the age limit for children, should result in an increase in eligible veterans and children qualifying for the exemption, but the extent to which is unknown. It is expected that the revoked hours will be used by the veteran or by another child of the veteran, and therefore this change will have no cost effect. Various Upon adoption and starting with tuition and fee charges for fall

22 Tier 2 Improving Program Administration Relating to making multiple changes to tuition exemption and waiver programs to make them more efficient and effective Success Action Amend Existing Statute x New Statute Yes. Much of this language was included in the original draft of SB 32, 82nd Texas Legislature. The state s many exemption and waiver programs have been developed in isolation of one another over many decades with few commonalities to facilitate central administration. The THECB recommend the following changes to improve program administration and student success: 1) Add common definitions for all exemption and waiver programs to create consistency and avoid confusion; 2) Require exemption and waiver recipients to meet the satisfactory academic progress requirements set by institutions of higher education for continuation awards in order to improve student success; 3) Prevent the use of exemptions and waivers to avoid statutory penalties for excess hours or excess dropped classes to encourage timely completion; and 4) Require recipients to complete a FAFSA within the first semester of enrollment in order to gather recipient data and ensure students receive advising. Texas Education Code, Subchapter D, Sections There should be no additional costs to the State given the costs of exemption and waiver programs are borne by the institutions, not the State; however, the addition of academic progress and the elimination of the use of exemptions to avoid penalties for excess hours and dropped classes should generate savings for the institutions. The proposed changes should apply to tuition and fees paid for the fall 2014 term and beyond in order to give ample time for institutions to implement. 19

23 Tier 2 Improving Program Administration Relating to the establishment of a Dual Credit Crosswalk that show which high school credits should be awarded for college courses offered for dual credit Action Participation Amend Existing Statute x New Statute There currently is no state mandate or guidance for school districts as to how they should provide high school credit for college courses taken for dual credit. This means that students from different school districts taking the same dual credit courses will likely not receive the same high school credits. This leads to confusion and transcript problems. The THECB recommend the state provide guidance in the form of a crosswalk that shows which high school credits should be awarded for college courses offered for dual credit. Texas Education Code Minimal costs generated should be absorbed by the independent school districts and higher education faculty. September 1,

24 Tier 2 Improving Program Administration Relating to authorizing the THECB to collect fees from private postsecondary institutions pursuing a certificate of authorization N/A Action Previously Recommended x Amend Existing Statute New Statute Prior to the revision of Chapter 7 rules, the THECB staff collected funds regularly from the private postsecondary institutions operating under Certificates of Authority. With the recognition of additional national accreditors, the vast majority of institutions now operate under a certificate of authorization instead. The agency is not authorized to collect fees from certificate of authorization institutions. The division has had to absorb the cost of operating the approval processes for these institutions under general revenue funds. This has resulted in a very challenging workload, and reduced resources for other THECB division responsibilities. The institutions that would be affected by this have supported a fee structure in the past, and would be contacted for their support should this move forward. The THECB recommends seeking legislative authority to collect fees from private postsecondary institutions pursuing a certificate of authorization. Texas Education Code Section and There would be no cost to the state. This would have a positive revenue fiscal note. The THECB would need two additional FTE. September 1,

25 Tier 2 Improving College and Career Readiness Relating to requiring the THECB and TEA to review and revise the College and Career Readiness Standards on a regular basis Participation and Success Action x Amend Existing Statute New Statute Yes, 82nd Texas Legislature In 2006, the 79th Texas Legislature, Special Called Session enacted House Bill 1 which provided for the development and implementation of College and Career Readiness Standards (CCRS). The THECB and Commissioner of Education adopted the CCRS and the State Board of Education (SBOE) has incorporated the standards into the Texas Essential Knowledge and Skills (TEKS). The THECB recommend the statute be amended to require the CCRS be reviewed and revised on a regular basis to ensure the standards are appropriate to the changing needs of higher education and the skilled workforce. Coordinating with TEA and the Commissioner of Education would be imperative. Texas Education Code Some funding may be necessary for TEA and the THECB to offset costs of public and higher education faculty members costs for travel and substitute teachers/release time. The estimate is $1,000 per team member or $40,000 (4 teams of 10 members each). The THECB P-16 Division has intends to absorb the costs. September 1,

26 Tier 2 Improving College and Career Readiness Relating to clarifying current statutes that provide the THECB with the authority to set the Texas Success Initiative exemption based on the college readiness standard on the End of Course Exams Participation and Success Action x Amend Existing Statute x Amend Existing Statute New Statute New Statute The THECB have identified a conflict in statute relating to college readiness performance standards on the End of Course (EOC) assessments. In Chapter 39 of the Texas Education Code, the two commissioners have responsibility for establishing the college readiness performance standard on EOC English III and Algebra II. In Chapter 51, the THECB has responsibility for setting the Texas Success Initiative (TSI) exemptions, which should include the EOC English III and Algebra II exemptions. If the Commissioners set the EOC college readiness performance standard, then there is no exemption for the THECB to determine. In addition, the statute states that a TSI exemption is valid for three years while another section authorizes the commissioner of higher education to set the exemption period. Finally, the statute states that only a student who completes a recommended or advanced high school program and demonstrated the performance standard for college readiness on the Algebra II and English III end-ofcourse assessment instruments is exempt from the [TSI] requirements. This has unintended consequences for students who graduate under the minimum high school curriculum and meet the college readiness performance measure. Any student admitted to a Texas public institution under the minimum graduation plan and who has achieved the college readiness performance measure would then need to be re-assessed under TSI unnecessarily. Accordingly, the THECB recommend the following: Amend legislation to grant the THECB authority to approve the college readiness standards and the exemptions for TSI. Amend legislation to grant the THECB authority to set the TSI exemption period in rules. Amend legislation to allow students who meet the EOC college readiness performance standards to be TSI exempt regardless of the high school program the student completes. Texas Education Code and costs to the state are expected. Immediately or by September 1,

27 Tier 2 Improving College and Career Readiness Relating to establishing a readiness standard for high school students to take dual credit college courses based on their performance on End of Course Exams Participation Action x Amend Existing Statute x New Statute HB 3, 2009 Texas Legislature, Regular Session, created the End of Course (EOC) exams as a replacement for the previous assessment of student progress, the Texas Assessment of Knowledge and Skills (TAKS). TAKS scores have long been used as an indicator of college readiness for high school students to take college courses for dual credit. As EOC exams begin to replace TAKS, there needs to be a method for determining eligibility to take dual credit college courses based on those exams. The EOC exams in Algebra II and English III must, by law, include a standard for higher education readiness. However, because almost all students will take the English III course and affiliated EOC exam in Grade 11, the exam could not be used to qualify students to take dual credit courses in Grade 11. Algebra II is of less concern since many advanced math students frequently take Algebra II in grade 10. A related concern is students taking dual credit courses in place of high school courses with an associated EOC exam. Those students who successfully complete the dual credit college course (defined as a C or better) should have an exemption from taking the EOC exam associated with the high school course because they have shown mastery of more advanced material, but may not have studied the specific content in the high school course. The following recommendations address these concerns. Math and Science The THECB recommend a high school student be required to achieve the college readiness standard on the Algebra II EOC test to be eligible to take a dual credit college science course in lieu of a high school science course with an EOC testing requirement. Because Algebra II is the highest level math course with an EOC requirement, no dual credit math courses may be taken in lieu of a math course with an EOC requirement. English and Humanities The THECB recommend a student be required to achieve the dual credit eligibility standard on the English II EOC test to be eligible to take a dual credit college course in lieu of a high school English, social studies, or course with an EOC testing requirement. End of Course Exam Exemptions A Texas public high school student who is taking a dual credit course in lieu of English III, U.S. History, Biology, Chemistry, or Physics shall be waived from taking an EOC test for that course provided that the student: Meets the testing requirements outlined above; and Takes a college course that has been designated by the Texas TEA and THECB as corresponding to the EOC high school course and approved by each agency to substitute for the EOC high school course; and Passes the approved college course with a C or better. Texas Education Code fiscal implication to the state is anticipated. September 1,

28 Tier 3: Statutory Updates and Efficiencies