TITLE 19.EDUCATION

Part 1. TEXAS HIGHER EDUCATION COORDINATING BOARD

Chapter 1. AGENCY ADMINISTRATION

The Texas Higher Education Coordinating Board proposes new §1.15 concerning the authority of the Commissioner of Higher Education to propose Board rules. Specifically, this new section authorizes the Commissioner of Higher Education to propose and submit proposed rules to the Texas Register for publication prior to consideration by the Board of the adoption of those rules. Historically, the Board has considered both the proposal and adoption of rules.

Ms. Jan Greenberg, General Counsel, has determined that for each year of the first five years the section is in effect, there will not be any fiscal implications to state or local government as a result of enforcing or administering the rules.

Ms. Greenberg has also determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of administering the section will be a more streamline process for the adoption of Board rules. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no impact on local employment.

Comments on the proposed new section may be submitted to Jan Greenberg, General Counsel, 1200 East Anderson Lane, Austin, Texas 78752, or by e-mail to: jan.greenberg@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

The new section is proposed under the Texas Education Code, §61.027, which provide the Board with the authority to adopt and publish rules and regulations in accordance with and under the conditions applied to other agencies by Texas Government Code, Chapter 2001.

The new section affects Texas Education Code, §61.0027 .

§1.15.Authority of the Commissioner to Propose Board Rules.

The Board authorizes the Commissioner to approve proposed Board rules for publication in the Texas Register . The Commissioner may refer proposed rules for consideration by Coordinating Board committees established pursuant to §1.5 of this title (relating to Coordinating Board Committees) or for consideration by the Board.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 2, 2005.

TRD-200500479

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 4. RULES APPLYING TO ALL PUBLIC INSTITUTIONS OF HIGHER EDUCATION IN TEXAS

Subchapter B. TRANSFER OF CREDIT, CORE CURRICULUM AND FIELD OF STUDY CURRICULA

19 TAC §4.25

The Texas Higher Education Coordinating Board proposes amendments to §4.25, concerning degree program requirements for undergraduate students transferring from a Texas public institution of higher education to another public institution of higher education. Sometimes a degree program's requirements change. Courses may be added or deleted, based on changes in the field, market needs, or other reasons. Students who are enrolled in the program when changes are enacted are generally given a choice of graduation under the requirements that were in effect when they first enrolled, or the revised requirements. Transfer students who follow published degree requirements should be afforded the same options for graduation as students native to the institution. Specifically, these amendments would require that institutions treat transfer students the same way they treat their own non-transfer students regarding graduation requirements under a particular catalog. Institutions would be required to include information about their policies regarding graduation under the degree requirements of a particular catalog in their official publications, including print and electronic catalogs. The proposed amendments would make §4.25 consistent with the definitions in §4.23.

Dr. Marshall A. Hill, Assistant Commissioner for Universities and Health-Related Institutions, has determined that for each year of the first five years the section is in effect, there will not be any fiscal implications to state or local government as a result of enforcing or administering the rules.

Dr. Hill has also determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of administering the section will be the improved consistency in institutional policies regarding graduation requirements under a particular catalog for undergraduate students who transfer among Texas public institutions of higher education. Students will be able to feel more confident that the information they receive about degree requirements is reliable and will, in most cases, be the ones that will allow them to graduate. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no impact on local employment.

Comments on the proposed amendments may be submitted to Catherine Parsoneault, Ph.D., Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711-2788, or by e-mail to Catherine.Parsoneault@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

The amendments are proposed under the Texas Education Code, §61.027, which provides the Coordinating Board with general rule-making authority; §61.002, which establishes the Coordinating Board as an agency charged to provide leadership and coordination for the Texas higher education system; and §61.051, which provides the Coordinating Board with authority to develop and implement policies to provide for the free transferability of lower division course credit among institutions of higher education.

The amendments affect Texas Education Code, §61.002 and Texas Education Code, §61.051.

§4.25.Requirements and Limitations.

(a) (No change.)

(b) Each institution of higher education [ ~~university~~ ] must offer at least 45 semester credit hours of academic courses that are substantially equivalent to courses listed in the Lower Division Academic Course Guide Manual including those that fulfill the lower-division portion of the institution's Core Curriculum.

(c) All institutions of higher education [ ~~public colleges and universities~~ ] must accept transfer of credit for successfully completed courses identified in subsections (a) and (b) of this section as applicable to an associate or baccalaureate degree in the same manner as credit awarded to non-transfer students in that degree program.

(d) (No change.)

(e) All [ ~~senior~~ ] institutions of higher education in Texas shall provide support services appropriate to meet the needs of transfer students. These support services should be comparable to those provided to non-transfer students regularly enrolled at the institutions, including an orientation program similar to that provided for entering freshman enrollees.

(f) No institution of higher education [ ~~university~~ ] shall be required to accept in transfer , or apply toward a degree program, more than sixty-six (66) semester credit hours of lower-division academic credit. Institutions of higher education [ ~~Universities~~ ], however, may choose to accept additional credit hours.

(g) Each institution of higher education shall permit a student who transfers from another Texas public institution of higher education to choose a catalog for the purpose of specifying graduation requirements, based upon the dates of attendance at the receiving institution and at the transferring institution, in the same manner that a non-transfer student may choose a catalog. Each Texas public institution of higher education shall include information about graduation requirements under a particular catalog in its official publications, including print and electronic catalogs.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500451

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Subchapter G. EARLY COLLEGE HIGH SCHOOLS AND MIDDLE COLLEGES

19 TAC §§4.151 - 4.160

The Texas Higher Education Coordinating Board proposes new §§4.151 - 4.160, concerning Early College High Schools and Middle Colleges. Specifically, these new sections will provide appropriate oversight by the Board of Early College High Schools (ECHS) by requiring notification of intent to develop an ECHS entity; assessment of students; appropriate faculty selection, supervision, and evaluation; oversight of curricula; transcripting of credit; program evaluation; and funding.

Dr. Glenda O. Barron, Assistant Commissioner, Community and Technical Colleges Division, has determined that for each year of the first five years the sections are in effect, there will be no fiscal implications to state or local government as a result of enforcing or administering the new sections.

Dr. Barron has also determined that for each year of the first five years these sections are in effect, the public benefit anticipated as a result of administering these sections will be improved high school graduation and college going rates for those students attending ECHS. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no impact on local employment.

Comments on the proposal may be submitted to Lynette Heckmann, Texas Higher Education Coordinating Board, P. O. Box 12788, Austin, TX, 78711, or Lynette.Heckmann@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

These new sections are proposed under the Texas Education Code, §§61.027, 61.076, 130.001(b)(3) - (4), 130.008, and 130.090 which provide the Board with the authority to regulate courses and programs offered by public institutions of higher education in cooperation with secondary schools.

These new sections affect Texas Education Code, §§61.076, 130.001(b)(3) - (4), 130.008, and 130.090.

§4.151.Purpose.

This subchapter provides rules and regulations for public colleges or universities to engage in early college high schools or middle colleges.

§4.152.Authority.

Texas Education Code, §§61.027, 61.076, 130.001(b)(3) - (4), 130.008, and 130.090 provide the Board with the authority to regulate courses and programs offered by public institutions of higher education in cooperation with secondary schools.

§4.153.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Assessment--The criterion-referenced assessment instruments adopted by the Board to assess a student's readiness to enroll in college-level coursework or curricula.

(2) Board--The Texas Higher Education Coordinating Board.

(3) Colleges or Universities, or C/U--Texas public two-year colleges or public universities.

(4) Commissioner--The Commissioner of Higher Education.

(5) Early College High School or Middle College, or ECHS/MC--The institution or entity that provides the outreach, curricula, and student learning and support programs for students who attain the Recommended High School Program (RHSP) diploma and up to two-years of college credit simultaneously.

§4.154.Notification of Institutional Intent to Develop an Early College High School/Middle College Entity.

Texas public colleges and universities (C/U) are eligible to enter into agreements with Texas public schools to create an ECHS/MC. Any Texas public college or university which participates in the creation of an ECHS/MC shall notify the Board in accordance with provisions and schedules determined by the Commissioner.

§4.155.Student Eligibility.

(a) An ECHS/MC shall assess each student for readiness to engage in any college-level curriculum offered for college credit prior to the student's enrollment in such curriculum.

(b) For this assessment, an ECHS/MC may use any instrument otherwise approved by the Board for Texas Success Initiative purposes in accordance with §4.54 of this title (relating to Exemptions/Exceptions) and §4.56 of this title (relating to Assessment Instrument) including, but not limited to, Texas Assessment of Knowledge and Skills (TAKS) scores, ACT scores, SAT scores, and Preliminary SAT scores.

(c) After assessment, the ECHS/MC, using guidelines established by the C/U, shall determine what forms of assistance and remediation, if any, are necessary prior to a student's enrollment in any college-level curriculum based on the results of the assessment and other indicators of student readiness.

§4.156.Faculty Selection, Supervision, and Evaluation.

(a) The college/university (C/U) shall select instructors of all college-level curricula offered for college credit in an ECHS/MC. These instructors must be regularly employed faculty members of the C/U or must meet the same standards, including but not limited to, minimal requirements of the Commission on Colleges of the Southern Association of Colleges and Schools.

(b) The C/U shall supervise and evaluate instructors of college-level curricula offered for college credit using the same or comparable procedures used for faculty at the C/U.

§4.157.Course Curriculum, Instruction, and Grading.

The C/U shall ensure that curricula offered for college credit and comparable courses offered by the C/U are equivalent with respect to the curriculum, materials, instructional activity, and method/rigor of evaluation of student performance.

§4.158.Transcripting of Credit.

The C/U shall determine when the college credit for each ECHS/MC student should appear on the C/U transcript.

§4.159.Evaluation and Accountability.

Each ECHS/MC and sponsoring C/U shall be responsible for the development and implementation of an evaluation process to determine the effectiveness of the ECHS/MC. Measures of effectiveness shall include, but not limited to, student results on the K-12 accountability assessments (e.g., TAKS) and success of graduates at Texas public institutions of higher education (e.g., participation rates, grade point average, retention rates, and graduation rates).

§4.160.Funding.

(a) Each ECHS/MC shall receive funding in accordance with provisions and schedules determined by the Commissioner of Higher Education and Commissioner of Education.

(b) Beginning with the 2008 - 2009 biennium, funding may be based on the results of a cost study conducted by the Board and subject to subsection (a) of this section.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2005.

TRD-200500545

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 5. RULES APPLYING TO PUBLIC UNIVERSITIES AND/OR HEALTH-RELATED INSTITUTIONS OF HIGHER EDUCATION IN TEXAS

Subchapter A. GENERAL PROVISIONS

19 TAC §5.6

The Texas Higher Education Coordinating Board proposes amendments to §5.6 concerning distribution of operating costs of the Common Admission Application. Specifically, the amendments would allow a different fee structure to be used in assessing the annual cost of using the Texas Common Application by Texas community colleges than the fee structure used by general academic teaching institutions.

Ms. Lois Hollis, Assistant Commissioner for Student Services, has determined that for each year of the first five years the section is in effect, there will be no fiscal implications to the state. There will be no fiscal implications to local government as a result of enforcing or administering the rules.

Ms. Hollis has also determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of administering the section will be to help increase the number of students enrolling in higher education in Texas. There is no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. There is no impact on local employment.

Comments on the proposal may be submitted to Lois Hollis, P.O. Box 12788, Austin, Texas 78711, 512-427-6465, Lois.Hollis@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

The amendments are proposed under the Texas Education Code, §51.762, which provides that the Coordinating Board, with the assistance of an advisory committee composed of representatives of general academic teaching institutions and in consultation with affected general academic teaching institutions, shall adopt by rule a common admission application form for use by a person seeking admission as a freshman student to a general academic teaching institution. The agency's statutory authority to contract with other entities, found in the Texas Education Code, §61.067, allows the Board to contract with community colleges for use of the Common Application.

The amendments affect Texas Education Code, §51.762.

§5.6.Common Admission Application.

(a) - (e) (No change.)

(f) The Coordinating Board shall enter into a contract with a public institution of higher education to maintain the electronic common application system for use by the public in applying for admission to participating institutions and for distribution of the electronic application to the participating institutions designated by the applicant. Operating costs of the system will be paid for by all institutions required to use the common application plus those institutions that have contracted for use of the electronic application. Each participating institution will pay a portion of the cost based on the percentage of its enrollment compared to the total enrollment of all participating institutions based on the previous year's certified enrollment data. However, the Coordinating Board may, by contract, implement a reduced rate for participating community colleges. The Board shall monitor the cost of the system and notify the institution on an annual basis of their share of the cost. Billings for the services for the coming year will be calculated and sent to the institutions in March and payments must be received by September 15.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500457

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Subchapter B. ROLE AND MISSION, TABLES OF PROGRAMS, COURSE INVENTORIES

19 TAC §5.23, §5.24

The Texas Higher Education Coordinating Board proposes amendments to §5.23 and §5.24 concerning planning authority for degree programs and the delegation of authority for approval of new degree programs at public universities and health-related institutions. Specifically, the amendments change the term planning authority to preliminary authority, require an institution requesting a new doctoral program to have prior preliminary authority for the program, and allow institutions to ask for a change in its table of programs for additional preliminary authority requests more often than every four years.

Dr. Hill has also determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of administering these sections will be the clarification of the concept of preliminary authority, more control by the Board for approval of doctoral programs, and increased institutional flexibility in strategic planning. There is no effect on small businesses. There is no anticipated economic costs to persons who are required to comply with the section as proposed. There is no impact on local employment.

Comments on the proposed rules may be submitted to Marshall A. Hill, Ph.D., Texas Higher Education Coordinating Board, P.O. Box 12788, Austin, Texas 78711-2788, or by e-mail to Marshall.Hill@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposed rules in the Texas Register .

The amendments are proposed under the Texas Education Code, §61.027, which provides the Coordinating Board with general rule-making authority; §61.002, which establishes the Coordinating Board as an agency charged to provide leadership and coordination for the Texas higher education system; and §61.051, which provides the Coordinating Board with authority to coordinate institutions of public higher education in promoting quality education.

Texas Education Code, §61.002; and Texas Education Code, §61.051.

§5.23.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Preliminary [ ~~Authority or Planning~~ ] Authority--permission from the State of Texas to propose new [ ~~plan or offer~~ ] degree programs in a given disciplinary area at a given level of instruction. The Table of Programs, defined in paragraph (9) of this section, prescribes the academic areas and levels that are approved by the Board as being appropriate for an institution's existing role and mission.

(2) - (11) (No change.)

§5.24.Criteria and Approval of Mission Statements and Tables of Programs.

(a) Criteria. In reviewing an institution's request for additions to its Table of Programs for preliminary authority [ ~~the program authority of an institution~~ ], the Board shall consider:

(1) - (4) (No change.)

(b) Review and Approval Process.

(1) As provided by Texas Education Code, §61.051 (e), at least every four years the Board shall review the role and mission statements, the table of programs and all degree and certificate programs offered by each public senior university or health related institution. Requests for preliminary authority for new degree programs shall be presented as part of this review . The review shall include the participation of the institution's board of regents.

(2) - (3) (No change.)

(4) Outside the normal review process described in paragraph 1 of this subsection, an institution may request of the Board an amendment to its authorized role and mission and/or preliminary authority for additional degree programs at any time the Commissioner determines that compelling circumstances warrant.

(5) [ ~~(4)~~ ] After approval or re-approval, requests for new programs and administrative changes shall be considered in the context of the approved role and mission for the institution.

~~[(5) An institution may request an amendment to its authorized role and mission at any time circumstances warrant.]~~

(6) The Commissioner may approve minor changes to the mission statement or table of programs of an institution during the period between the [ ~~four-year~~ ] reviews referenced in paragraph (1) of this subsection .

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500452

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Subchapter C. APPROVAL OF NEW ACADEMIC PROGRAMS AND ADMINISTRATIVE CHANGES AT PUBLIC UNIVERSITIES AND/OR HEALTH-RELATED INSTITUTIONS

19 TAC §5.44, §5.50

The Texas Higher Education Coordinating Board proposes amendments to §5.44 and §5.50 concerning planning authority for degree programs and the delegation of authority for approval of new degree programs at public universities and health-related institutions. Specifically, the amendments change the term planning authority to preliminary authority, and permit the Commissioner to delegate to the Assistant Commissioner for Academic Affairs and Research approval of new degree programs at public universities and health-related institutions.

The amendments are proposed under the Texas Education Code, §61.027, which provides the Coordinating Board with general rule-making authority; §61.002, which establishes the Coordinating Board as an agency charged to provide leadership and coordination for the Texas higher education system; and §61.051, which provides the Coordinating Board with authority to coordinate institutions of public higher education in promoting quality education.

Texas Education Code, §61.002; and Texas Education Code, §61.051.

§5.44.Presentation of Requests and Steps for Implementation.

(a) (No change.)

(b) Requests for new degree and certificate programs and for administrative changes require:

(1) Approval by the Board of preliminary [ ~~planning~~ ] authority, if needed prior to Board consideration; all requests for doctoral programs require preliminary authority prior to Board consideration.

(2) - (4) (No change.)

§5.50.Approvals by the Commissioner.

(a) - (e) (No change.)

(f) If a proposal does not meet the criteria specified in this section, the Commissioner may deny approval or forward it to the Board for consideration at an appropriate quarterly meeting. Institutions may appeal the [ ~~Commissioner's~~ ] decision to deny approval to the Board.

(g) - (h) (No change.)

(i) The authority given to the Commissioner to approve proposals from public universities and health-related institutions for new degree programs (and other related duties given under this paragraph) may be delegated by the Commissioner to the Assistant Commissioner for Academic Affairs and Research.

(j) [ ~~(i)~~ ] Each quarter, the Commissioner shall send a list of his approvals and disapprovals under this section to Board members. A list of the approvals and disapprovals shall also be attached to the minutes of the next quarterly Board meeting.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500453

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 7. PRIVATE AND OUT-OF-STATE PUBLIC POSTSECONDARY EDUCATIONAL INSTITUTIONS OPERATING IN TEXAS

Subchapter A. GENERAL PROVISIONS

19 TAC §7.7, §7.9

The Texas Higher Education Coordinating Board proposes amendments to §7.7 and §7.9 concerning standards for certificates of authority and standards for off-campus operations at exempt institutions. Specifically, the standards of the Board in §7.7 of the Board's rules, which set out the standards for unaccredited institutions seeking certificates of authority to grant degrees, and in §7.9, which set out the standards for accredited out-of-state institutions seeking authority to operate off-campus locations in Texas, are being modified to make certain requirements of the Board more explicit and to change certain requirements to be more consistent with standard educational practice in the United States. Section 7.7(1) changes "proprietary" to "career" to be consistent with current terminology. Section 7.7(2) makes explicit the qualifications of the chief academic officer. Section 7.7(3) clarifies the mission of the governing board and adds the requirement of a compliance committee of the governing board. Section 7.7(6) creates explicit auditing requirements to accommodate for-profit institutions. Section 7.7(8) addresses the Texas Success Initiative and appropriate standards for assessing foreign credentials. Section 7.7(9) allows experience to be included in documenting the qualifications of faculty. Section 7.7(12) further defines what constitutes an adequate curriculum and sets out minimum and maximum lengths of programs. Section 7.7(13) sets out the minimum length of the general education requirement. Section 7.7(14) limits the credit for work outside a collegiate setting which may be applied to a degree. Section 7.7(15) clarifies the responsibilities of the librarian. Section 7.7(18) clarifies the items to be included in the academic catalog. Section 7.7(20) changes "student handbook" to "Student rights and responsibilities" to clarify the purpose of the standard. Section 7.9(a)(2) changes language to use a term that has been defined herein. Section 7.9(b)(5) addresses the Texas Success Initiative and appropriate standards for assessing foreign credentials. Section 7.9(b)(6) allows experience to be included in documenting the qualifications of faculty. Section 7.9(b)(9) further defines what constitutes an adequate curriculum and sets out minimum and maximum length of programs. Section 7.9(b)(10) sets out the minimum length of the general education requirement. Section 7.9(b)(11) limits the credit for work outside a collegiate setting which may be applied to a degree. Section 7.9(b)(12) clarifies the responsibilities of the librarian. Section 7.9(b)(15) clarifies the items to be included in the academic catalog. Section 7.9(b)(17) changes "student handbook" to "Student rights and responsibilities" to clarify purpose of the standard.

Dr. Marshall A. Hill, Assistant Commissioner for Universities and Health-Related Institutions, has determined that for each year of the first five years the amendments are in effect, there will not be any fiscal implications to state or local government as a result of enforcing or administering the rules.

Dr. Hill has also determined that for each year of the first five years the amendment is in effect, the public benefit anticipated as a result of administering this amendment will be the improved organization and clarity of rules affecting private and out-of-state institutions offering baccalaureate, graduate or professional degrees in Texas. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no impact on local employment.

The amendments are proposed under the Texas Education Code, §61.027, which provides the Board with general rule-making authority; Texas Education Code, §61.002, which establishes the Board as an agency charged to provide leadership and coordination for the Texas higher education system; Texas Education Code, §§61.301 - 61.319, concerning regulation of private postsecondary education institutions; §61.311, which provides the Board with the authority to promulgate rules governing certificates of authority; Texas Education Code, §§61.401 - 405, regarding regulation of public institutions of higher education established outside the boundaries of the State of Texas; and Texas Education Code, §61.403 which provides the Board with the authority to promulgate rules regarding out of state public institutions.

The amendments affect Texas Education Code, §§61.301 - 61.319, and Texas Education Code, §§61.401 - 61.405.

§7.7.Standards for Certificates of Authority.

The decision to grant a certificate of authority to an institution will be based on its demonstrated compliance with the following twenty-one standards. Particular attention will be paid to the institution's commitment to education, responsiveness to recommendations and suggestions for improvement, and, in the case of a renewal of a certificate of authority, record of improvement and progress following initial approval which would ensure accreditation within the time limits specified in §7.6(c)(3) of this title (relating to Certificate of Authority). The twenty-one standards represent generally accepted administrative and academic practices and principles of accredited institutions of higher education in Texas. Such practices and principles are generally set forth by regional and specialized accrediting bodies and the academic and professional societies which have established standards for their members' programs, such as the National Association of College and University Business Officers and the American Association of Collegiate Registrars and Admissions Officers.

(1) Legal Compliance. The institution shall be maintained and operated in compliance with all applicable ordinances and laws, including the rules and regulations adopted to administer those ordinances and laws. The institution shall demonstrate compliance with the Texas Education Code, Chapter 132 by supplying a copy of a certificate of approval to operate a career school or college [ ~~proprietary~~ ] school or a letter of exemption from the Texas Workforce Commission.

(2) Qualifications of Institutional Officers. The character, education, and experience in higher education of governing board members, administrators, supervisors, counselors, agents, and other institutional officers shall be such as may reasonably ensure that the students will receive education consistent with the objectives of the course or program of study. In particular, the chief academic officer [ ~~administrator~~ ] shall be qualified by level and area of academic preparation, as well as through appropriate experience, to direct the academic affairs of the institution. In general, this requires at least five years of administrative experience at an institution of higher education accredited by a recognized accreditor or a master's degree with major in higher education administration awarded by an institution accredited by a recognized accreditor.

(3) Governing Board. The institution shall have a governing board [ ~~of the institution,~~ ] consisting of at least five members . [ , ] The institution's governing board shall be an active policy-making body, focused on promoting the mission of the institution [ ~~independent from any person or organization~~ ], and shall exercise its authority to ensure that the mission of the institution is carried out. Members of the board shall represent the interests of the institution's constituencies of faculty, students, and supporters. The institution's governing board shall have a compliance committee consisting of not fewer than three board members. No member of the compliance committee shall have contractual, employment, personal or familial, or financial interest in the institution. The compliance committee as a whole shall be responsible for reviewing continuous compliance with this chapter and shall report in writing to the full governing board at least annually. The governing board shall ensure that the institution complies with this chapter. [ The presiding officer of the board, along with a majority of the other voting members, shall have no contractual, employment, or personal or familial financial interest in the institution and derive no financial gain from the operations of the institution. ]

(4) - (5) (No change.)

(6) Financial Records. Financial records and reports of the institution shall be kept and made separate and distinct from those of any affiliated or sponsoring person or entity. Financial records and reports at a not-for-profit institution shall be kept in accordance with the guidelines of the National Association of College and University Business Officers as set forth in College and University Business Administration, (Sixth Edition), or such later editions as may be published. Financial records and reports of a for-profit institution shall be kept in accordance with generally accepted accounting principles. A for-profit institution shall organize its reports and records under categories or cost centers comparable to accounting funds as set forth in College and University Business Administration, (Sixth Edition), or such later editions as may be published. An annual independent audit of all fiscal accounts of the educational institution shall be authorized by the governing board and shall be performed by a properly authorized certified public accountant.

(7) (No change.)

(8) Student Admission and Remediation.

(A) Upon the admission of a student to any undergraduate program, the institution shall document the student's level of preparation to undertake college level work by obtaining proof of the student's high school graduation or General Educational Development (GED) certification and by assessing the academic skills of each entering student with an instrument approved in §4.56 of this title (relating to Assessment Instruments), and otherwise complying with §§4.51 - 4.59 of this title (relating to the Texas Success Initiative) [ ~~appropriate diagnostic tests~~ ]. If a GED is presented, to be valid, the score must be at or above the passing level set by the Texas Education Agency. The institution shall provide an effective program of remediation for students diagnosed with deficiencies in their preparation for collegiate study.

(B) Upon the admission of a student to any graduate program, the institution shall document that the student is prepared to undertake graduate-level work by obtaining proof that the student holds a baccalaureate degree from an institution accredited by a recognized accrediting agency , or an institution holding a certificate of authority to offer baccalaureate degrees under the provisions of this chapter, or a degree from a foreign institution equivalent to a baccalaureate degree from an accredited institution. The procedures used by the institution for establishing the equivalency of a foreign degree shall be consistent with the guidelines of the National Council on the Evaluation of Foreign Education Credentials or its successor. [ ~~The institution shall follow standard practice in assessing the credentials of students who graduated from foreign institutions.~~ ]

(9) Faculty Qualifications. The character, education, and experience in higher education of the faculty shall be such as may reasonably ensure that the students will receive an education consistent with the objectives of the course or program of study.

(A) Each faculty member teaching in an academic associate or baccalaureate level degree program shall have at least a master's degree from an institution accredited by a recognized agency with at least 18 graduate semester credit hours in the discipline , or closely related discipline, being taught.

(B) At least 25 percent of the courses in an academic associate or baccalaureate level major shall be taught by faculty members holding doctorates, or other [ ~~terminal~~ ] degrees, generally recognized as the highest attainable in the discipline , or closely related discipline, being taught, from institutions accredited by a recognized agency.

(E) Graduate-level degree programs shall be taught by faculty holding doctorates, or other degrees generally recognized as the highest attainable in the discipline , or closely related discipline, awarded by [ ~~being taught from~~ ] institutions accredited by an agency recognized by the Board [ ~~a recognized agency~~ ].

(F) With the approval of a majority of the institution's governing board, an individual with exceptional experience in the field of appointment, which may include direct and relevant work experience, professional licensure and certification, honors and awards, continuous documented excellence in teaching, or other demonstrated competencies and achievements, may serve as a faculty member without the degree credentials specified above. Such appointments shall be limited and the justification for appointment fully documented. The Coordinating Board shall evaluate the qualifications of the full complement of faculty providing instruction at the institution to determine that such appointments are justified and make up a small percentage of the faculty as a whole.

(10) - (11) (No change.)

(12) Curriculum.

(A) The quality, content, and sequence of each course, curriculum, or program of instruction, training, or study shall be appropriate to the purpose of the institution and shall be such that the institution may reasonably and adequately achieve the stated objectives of the course or program. Each program shall adequately cover the breadth of knowledge of the discipline taught and coursework must build on the knowledge of previous courses to increase the rigor of instruction and the learning of students in the discipline. Substantially all of the courses in the areas of specialization required for each degree program shall be offered in organized classes by the institution . An institution may offer no more than a very limited amount of for-credit coursework that does not directly relate to approved programs. [ ~~, provided such courses are appropriate to the level of the institution.~~ ]

(B) An academic associate degree must consist of at least 60 semester credit hours or 90 quarter credit hours and not more than 66 semester credit hours or 99 quarter credit hours. A baccalaureate degree must consist of at least 120 semester credit hours or 180 quarter credit hours and not more than 139 semester credit hours or 208 quarter credit hours. A master's degree must consist of at least 30 semester credit hours or 45 quarter credit hours and not more than 36 semester credit hours or 54 quarter credit hours of graduate level work past the baccalaureate degree.

(C) Courses designed to correct deficiencies, remedial courses for associate and baccalaureate programs, and leveling courses for graduate programs, shall not count toward requirements for completion of the degree.

(D) The degree level, degree designation, and the designation of the major course of study shall be appropriate to the curriculum offered and shall be accurately listed on the student's diploma and transcript.

(13) General Education.

(A) Each academic associate degree program shall contain a general education component consisting of at least 30 semester credit hours or 45 quarter credit hours. Each baccalaureate degree program shall contain a general education component consisting of at least 25 percent of the total hours required for graduation from the program. [ ~~Each associate or baccalaureate degree program shall contain a general education component consisting of at least 25 percent of the total hours required for graduation from the program.~~ ]

(B) (No change.)

[(C) Courses designed to correct deficiencies, remedial courses for associate and baccalaureate programs, and leveling courses for graduate programs, may not count toward general education requirements for the degree.]

(C) [ ~~(D)~~ ] The applicant institution may arrange to have all or part of the general education component taught by another institution, provided that:

(i) the applicant institution's faculty shall design the general education requirement;

(ii) there shall be a written agreement between the institutions specifying the applicant institutions' general education requirements and the manner in which they will be met by the providing institution;

(iii) at least one-half of the courses shall be offered in organized classes; and

(iv) the providing institution shall be accredited by a recognized accrediting agency.

(14) Credit for Work Completed Outside a Collegiate Setting.

(A) (No change.)

(B) No more than one quarter of the credit applied toward [ ~~15 semester credit hours or 23 quarter credit hours in~~ ] a student's associate or baccalaureate degree program may be based on work completed outside a collegiate setting . Those credits must be [ ~~and~~ ] validated in the manner set forth in subparagraph (A) of this paragraph. No more than 15 semester credit hours or 23 quarter credit hours of that credit may be awarded by means other than recognized evaluative examinations. No graduate credit for work completed outside a collegiate setting may be awarded. In no instance may credit be awarded for life experience per se or merely for years of service in a position or job.

(15) Library.

(A) - (B) (No change.)

(C) The librarian shall hold a graduate degree in library science from an institution accredited by a recognized accrediting agency. The librarian shall have authority to select and acquire resources with funds in the library budget, have interaction with faculty sufficient to ensure a library collection that supports the courses and programs offered, and have adequate interaction with students to support the library and research needs of the students.

(D) (No change.)

(16) - (17) (No change.)

(18) Accurate and Fair Representation in Publications, Advertising, and Promotion.

(A) (No change.)

(B) The institution shall provide students, prospective students prior to enrollment, and other interested persons with a catalog containing, at minimum, the following information:

(i) the institution's mission;

(ii) a statement of admissions policies;

(iii) information describing the purpose, length, and objectives of the program or programs offered by the institution;

(iv) the schedule of tuition, fees, and all other charges and expenses necessary for completion of the course of study;

(v) cancellation and refund policies;

(vi) a definition of the unit of credit as it applies at the institution;

(vii) an explanation of satisfactory progress as it applies at the institution, including an explanation of the grading or marking system;

(viii) the institution's calendar, including the beginning and ending dates for each instructional term, holidays, and registration dates;

(ix) a complete listing of each regularly employed faculty member showing name, area of assignment, rank, and each earned degree held, including degree level, degree designation, and institution that awarded the degree;

(x) a complete listing of each administrator showing name, title, area of assignment, and each earned degree held, including degree level, degree designation, and institution that awarded the degree;

(xi) a statement of legal control with the names of the trustees, directors, and officers of the corporation;

(xii) a complete listing of all scholarships offered, if any;

(xiii) a statement describing the nature and extent of available student services;

(xiv) complete and clearly stated information about the transferability of credit to other postsecondary institutions including two-year and four-year colleges and universities;

(xv) a statement of Texas Success Initiative requirements;

(xvi) any such other material facts concerning the institution and the program or course of instruction as are reasonably likely to affect the decision of the student to enroll therein; and

(xvii) any disclosures specified by the Board or defined in Board rules. [ The institution shall provide students, prospective students prior to enrollment, and other interested persons with a catalog containing information describing the purpose, length, and objectives of the programs offered by the institution; its schedule of tuition, fees, and all other charges and expenses necessary for completion of the course of study; its cancellation and refund policy; a list of administrative personnel and faculty members, including the degrees held by each person and the institutions awarding those degrees; and such other material facts concerning the institution and the program or course of instruction as are reasonably likely to affect the decision of the student to enroll therein. Any disclosures specified by the Board or defined in the rules shall be included. The cancellation and refund policy of the institution shall be fair and shall be applied equitably. ]

(D) The institution shall provide to each prospective student, newly-enrolled student, and returning student, complete and clearly presented information indicating the institution's current graduation rate by program and, if required by the Board, job placement rate by program.

(E) Any special requirements, or limitations of program offerings, for the students at the Texas branch must be made explicit in writing. This may be accomplished by either a separate section in the catalog or a brochure separate from the catalog. However, if a brochure is produced, the student must also be given the regular catalog.

(F) [ ~~(C)~~ ] Upon satisfactory completion of the program of study, the student shall be given appropriate educational credentials indicating the degree level, degree designation, and the designation of the major course of study, and a transcript accurately listing the information typically found on such a document, subject to institutions' obligation, if any, to cooperate with the rules and regulations governing state, and federally guaranteed student loans.

(19) (No change.)

(20) Student Rights and Responsibilities [ ~~Handbook~~ ]. The institution shall establish and adhere to a clear and fair policy regarding due process in disciplinary matters, and publish this policy in a handbook, which shall include other rights and responsibilities of the students. This handbook shall be supplied to each student upon enrollment in the institution.

(21) (No change.)

§7.9.Operation of Branch Campuses, Extension Centers, or Other Off-Campus Units by Exempt Institutions.

(a) Off-Campus Operations.

(1) (No change.)

(2) An exempt private postsecondary institution must be approved by the Board to operate a branch campus, extension center, or other off-campus unit in Texas, except as noted in §7.4(a)(2) of this title (relating to Exemptions, Revocation of Exemptions and Certificates of Authorization).

(3) - (9) (No change.)

(b) Standards for Off-Campus Operations at Exempt Institutions.

(1) - (4) (No change.)

(5) Student Admission and Remediation.

(6) Faculty Qualifications. The character, education, and experience in higher education of the faculty shall be such as may reasonably ensure that the students will receive an education consistent with the objectives of the course or program of study.

(B) At least 25 percent of the courses in an academic associate or baccalaureate level major shall be taught by faculty members holding doctorates, or other degrees generally recognized as the highest attainable in the discipline , or closely related discipline, being taught, from institutions accredited by a recognized agency.

(E) Graduate-level degree programs shall be taught by faculty holding doctorates, or other [ ~~terminal~~ ] degrees, generally recognized as the highest attainable in the discipline , or closely related discipline, being taught from institutions accredited by a recognized agency.

(7) - (8) (No change.)

(9) Curriculum.

(A) The quality, content, and sequence of each course, curriculum, or program of instruction, training, or study shall be appropriate to the purpose of the institution and shall be such that the institution may reasonably and adequately achieve the stated objectives of the course or program. Each program shall adequately cover the breadth of knowledge of the discipline taught and coursework must build on the knowledge of previous courses to increase the rigor of instruction and the learning of students in the discipline. Substantially all of the courses in the areas of specialization required for each degree program shall be offered in organized classes by the institution . An institution may offer no more than a very limited amount of for-credit coursework that does not directly relate to approved programs. [ , provided such courses are appropriate to the level of the institution. The degree level, degree designation, and the designation of the major course of study shall be appropriate to the curriculum offered and shall be accurately listed on the student's diploma and transcript. ]

(10) General Education.

(B) (No change.)

(C) [ ~~(D)~~ ] The applicant institution may arrange to have all or part of the general education component taught by another institution, provided that:

(i) the applicant institution's faculty shall design the general education requirement;

(iii) at least one-half of the courses shall be offered in organized classes; and

(iv) the providing institution shall be accredited by a recognized accrediting agency.

(11) Credit for Work Completed Outside a Collegiate Setting.

(A) (No change.)

(B) No more than one quarter of the credit applied toward [ ~~30 semester credit hours or 46 quarter credit hours in~~ ] a student's associate or baccalaureate degree program may be based on work completed outside a collegiate setting . Those credits must be [ ~~and~~ ] validated in the manner set forth in subparagraph (A) of this paragraph. No more than 15 semester credit hours or 23 quarter credit hours of that credit may be awarded by means other than recognized evaluative examinations. No graduate credit for work completed outside a collegiate setting may be awarded. In no instance may credit be awarded for life experience per se or merely for years of service in a position or job.

(12) Library.

(A) - (B) (No change.)

(D) (No change.)

(13) - (14) (No change.)

(15) Accurate and Fair Representation in Publications, Advertising, and Promotion.

(A) (No change.)

(B) The institution shall provide students, prospective students prior to enrollment, and other interested persons with a catalog containing, at minimum, the following information:

(i) the institution's mission;

(ii) a statement of admissions policies;

(iii) information describing the purpose, length, and objectives of the program or programs offered by the institution;

(iv) the schedule of tuition, fees, and all other charges and expenses necessary for completion of the course of study;

(v) cancellation and refund policies;

(vi) a definition of the unit of credit as it applies at the institution;

(vii) an explanation of satisfactory progress as it applies at the institution, including an explanation of the grading or marking system;

(viii) the institution's calendar, including the beginning and ending dates for each instructional term, holidays, and registration dates;

(x) a complete listing of each administrator showing name, title, area of assignment, and each earned degree held, including degree level, degree designation, and institution that awarded the degree;

(xi) a statement of legal control with the names of the trustees, directors, and officers of the corporation;

(xii) a complete listing of all scholarships offered, if any;

(xiii) a statement describing the nature and extent of available student services;

(xiv) complete and clearly stated information about the transferability of credit to other postsecondary institutions including two-year and four-year colleges and universities;

(xv) a statement of Texas Success Initiative requirements;

(xvi) any such other material facts concerning the institution and the program or course of instruction as are reasonably likely to affect the decision of the student to enroll therein; and

(E) [ ~~(C)~~ ] Any special requirements, or limitations of program offerings, for the students at the Texas branch must be made explicit in writing. This may be accomplished by either a separate section in the catalog or a brochure separate from the catalog. However, if a brochure is produced, the student must also be given the regular catalog.

(F) [ ~~(D)~~ ] Upon satisfactory completion of the program of study, the student shall be given appropriate educational credentials indicating the degree level, degree designation, and the designation of the major course of study, and a transcript accurately listing the information typically found on such a document, subject to institutions' obligation, if any, to cooperate with the rules and regulations governing state, and federally guaranteed student loans.

(16) (No change.)

(17) Student Rights and Responsibilities [ ~~Handbook~~ ]. The institution shall establish and adhere to a clear and fair policy regarding due process in disciplinary matters, and publish this policy in a handbook, which shall include other rights and responsibilities of the students. This handbook shall be supplied to each student upon enrollment in the institution.

(18) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500454

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 9. PROGRAM DEVELOPMENT IN PUBLIC TWO-YEAR COLLEGES

Subchapter E. CERTIFICATE AND ASSOCIATE DEGREE PROGRAMS

19 TAC §9.93, §9.96

The Texas Higher Education Coordinating Board proposes amendments to §9.93 and §9.96, concerning approval of certificate programs and applied associate degree programs. Specifically, the amendments permit the Commissioner to delegate to the Assistant Commissioner for Academic Affairs and Research the approval of all certificate programs and applied associate degree programs that comply with Board policies as outlined in the Guidelines for Instruction Programs in Workforce Education.

Dr. Glenda O. Barron, Assistant Commissioner for Community and Technical Colleges, has determined that for each year of the first five years the sections are in effect, there will not be any fiscal implications to state or local government as a result of enforcing or administering the sections.

Dr. Barron has also determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of administering these sections will be to allow the Commissioner more flexibility in delegating authority to an Assistant Commissioner in approving requests for new certificate programs, applied associate degree programs, and administrative changes. There is no effect on small businesses. There is no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no impact on local employment.

Comments on the proposal may be submitted to Glenda O. Barron, Ph.D., Texas Higher Education Coordinating Board, P. O. Box 12788, Austin, Texas 78711-2788, or by e-mail to Glenda.Barron@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

The amendments are proposed under the Texas Education Code, §61.027, which provides the Coordinating Board with general rule-making authority; §61.002, which establishes the Coordinating Board as an agency charged to provide leadership and coordination for the Texas higher education system; and §61.051, which provides the Coordinating Board with authority to coordinate institutions of public higher education in promoting quality education.

Texas Education Code, §61.002; and Texas Education Code §61.051.

§9.93.Application, Approval, and Revision Procedures for Instructional Programs in Workforce Education

(a) In accordance with the Guidelines for Instructional Programs in Workforce Education as approved by the Board, each institution wishing to offer a new certificate or applied associate degree program must have completed the following procedures:

(1) - (3) (No change.)

[ ~~(4)~~ The Assistant Commissioner for the Community and Technical Colleges Division shall recommend certificate and applied associate degree programs to the Commissioner for approval or disapproval or referral to the Board.]

(4) [ ~~(5)~~ ] New Program Approval. The Board delegates to the Commissioner final approval authority for all certificate programs, and for applied associate degree programs that meet Board policies for approval as outlined in the Guidelines for Instructional Programs in Workforce Education. The Commissioner may delegate this final authority to the Assistant Commissioner for Academic Affairs and Research.

(5) [ ~~(6)~~ ] Each quarter, the Commissioner shall send a list of the [ ~~his~~ ] approvals and disapprovals under this section to Board members. A list of the approvals and disapprovals shall also be attached to the minutes of the next appropriate quarterly meeting.

(6) [ ~~(7)~~ ] The Commissioner must forward a program to the Board for consideration at an appropriate quarterly meeting if either of the following conditions is met:

(A) The proposed program is the subject of an unresolved grievance or dispute between institutions.

(B) The Commissioner has disapproved of the proposed program and the institution has requested a Board review.

(b) - (e) (No change.)

§9.96.Disapproval of Programs; Noncompliance

No funds appropriated to any public two-year college or other institution providing certificate or associate degree programs shall be expended for any program which has not been approved by the Commissioner or the Assistant Commissioner for Academic Affairs and Research or, when applicable, by the Board.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2005.

TRD-200500546

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 12. CAREER SCHOOLS AND COLLEGES

Subchapter B. GENERAL PROVISIONS

19 TAC §12.21

The Texas Higher Education Coordinating Board proposes amendments to §12.21 concerning the procedures for career schools and colleges to seek authority to offer academic degrees. Specifically, §§12.1 - 12.46 of Board rules set forth provisions allowing institutions holding from the Texas Workforce Commission a certificate of approval to operate a career school or college to gain permission from the Coordinating Board to offer applied associate degrees. The proposed amendment to §12.21 would make more explicit the point that institutions have the option to obtain approval to offer academic degrees in Texas under the existing provisions in §§7.1 - 7.17 of the Board's rules. This change would add a reference to the procedures for seeking degree granting authority into the section heading to draw attention to the procedures and to clarify that career schools and colleges are specifically included in the group of institutions eligible to apply for authority to offer academic degrees under the procedures in §§7.1 - 7.17. Since 1976, institutions of all types, including career schools and colleges, have been eligible to apply for authority from the Board to offer academic degrees. Board rules in §§7.1 - 7.17 (implementing the Texas Education Code, Chapter 61, Subchapter G) require an institution to meet the standards of the Board and then seek accreditation from an accrediting agency recognized by the Board. The institution must gain accreditation within eight years of receiving its first certificate of authority. The institution becomes exempt from Board oversight when it becomes accredited by a recognized accrediting agency.

Dr. Hill has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of administering these sections will be the improved clarity of rules affecting institutions of higher education. There is no effect on small businesses. There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no impact on local employment.

The amendments are proposed under the Texas Education Code, §§61.301-61.319. §61.311 provides the Coordinating Board with general rule-making authority regarding the use of protected academic terms, offering of degrees and of courses said to be applicable to degrees, and institutional standards for issuance of a Certificate of Authority to grant degrees and to offer courses to be applicable toward a degree.

The amendments affect Texas Education Code, §§61.301 - 61.319.

§12.21.Degree Titles Authorized Under This Chapter .

(a) Associate of Applied Science (AAS), Associate of Applied Arts (AAA), and Associate of Occupational Studies (AOS) degrees shall be the only associate degrees authorized under this chapter.

(b) A career school or college [ ~~private postsecondary institution~~ ] seeking authority to offer an academic associate, a baccalaureate , or higher degree shall seek approval from the Board for a certificate of authority under [ ~~and is subject to~~ ] the provisions outlined in Chapter 7 of this title (relating to Private and Out-of-State Public Postsecondary Educational Institutions Operating in Texas).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500455

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114

Chapter 13. FINANCIAL PLANNING

Subchapter G. RESEARCH DEVELOPMENT FUND

19 TAC §§13.120 - 13.130

The Texas Higher Education Coordinating Board proposes new §§13.120 - 13.130, concerning reporting restricted research expenditures for equitable distribution of the Research Development Fund. Specifically, §§13.120 - 13.122 are proposed concerning purpose, scope, authority, and definitions. Section 13.123 is proposed concerning the restricted research advisory committee. Sections 13.124 - 13.130 are proposed concerning the standards and accounting methods, report on restricted research projects and activities, the restricted research review panel, the report of restricted research expenditures, report to the comptroller, reviews and appeals, and audits.

Dr. Linda Domelsmith, Director, Research, has determined that for each year of the first five years the sections are in effect, there will be no fiscal implications to state or local government as a result of enforcing or administering the rules.

Dr. Domelsmith has also determined that for each year of the first five years the sections are section is in effect, the public benefit anticipated as a result of administering the section will be the development of increasing research capacity and excellence at participating universities. There is no effect on small businesses. There is no anticipated economic costs to persons who are required to comply with the proposed sections. There is no impact on local employment.

Comments on the proposal may be submitted to Linda Domelsmith, P.O. Box 12788, Austin, Texas 78711 or by email to Linda.domelsmith@thecb.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register .

The new sections are proposed under Texas Education Code, §62.096 which provides the Coordinating Board with the authority to verify restricted research expenditures reports to the Texas Comptroller of Public Accounts for equitable distribution of the Research Development Fund.

The new sections affect Texas Education Code, Chapter 62, Subchapter E, §§62.091 - 62.098.

§13.120.Purpose and Scope.

The purpose of this subchapter is to establish standards and accounting methods for determining restricted research expenditures, the process for reporting of verified restricted research expenditures to the Comptroller of Public Accounts, and the process for audit of the reported restricted research expenditures and for appeal of decisions relating to restricted research expenditures.

§13.121.Authority.

Texas Education Code, §62.091, establishes the Research Development Fund to promote increased research capacity at eligible general academic teaching institutions. Texas Education Code, §62.096, authorizes the Board, with the assistance of an advisory committee, to prescribe methods for the verification of allocation factors for the Research Development Fund.

§13.122.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Advanced Research Program/Advanced Technology Program (ARP/ATP)--research programs administered by the Board under Texas Education Code, Chapters 142 and 143.

(2) Advisory committee--The Board's Restricted Research Advisory Committee.

(3) Board or Coordinating Board--the Texas Higher Education Coordinating Board.

(4) Clinical Trial Agreement--an externally sponsored agreement for the administration of a specifically mandated patient protocol (sometimes in multiple clinical sites involving other institutions), in which some costs typically are paid from patient charges or other sources.

(5) Commissioner--Commissioner of Higher Education.

(6) Comptroller--the Texas Comptroller of Public Accounts.

(7) Demonstration Projects--projects in which the primary purpose is to apply previous Research and Development findings in new settings and to demonstrate their utility.

(8) Departmental Research--research, development, and scholarly activities that are not organized research and, consequently, are not separately budgeted by an institution.

(9) Development--the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes.

(10) Eligible institution or institution--a general academic teaching institution, as defined by Texas Education Code, §61.003, other than The University of Texas at Austin, Texas A&M University, and Prairie View A&M University.

(11) Higher Education Assistance Fund (HEAF)--a fund established in Article 7, §17, of the Texas Constitution to fund capital improvements and capital equipment for institutions not included in the Permanent University Fund.

(12) Indirect Costs--costs incurred for certain overhead related to administering a particular sponsored project, an instructional activity, or any other institutional activity. Indirect costs are synonymous with "facilities and administrative (F&A) costs."

(13) Industrial Collaboration Agreements--agreements with universities, colleges, centers, or institutes under which funds are provided for collaborative R&D activities. The activity must be sponsored by private philanthropic organizations and foundations, for-profit businesses, or individuals.

(14) Instruction--the teaching and training activities of an institution. This term includes all teaching and training activities, whether they are offered for credit toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division.

(15) Multiple Function Awards--awards that have multiple goals, such as research, instruction, and public service.

(16) Organized research--research and development activities of an institution that are separately budgeted by an institution.

(17) Other Sponsored Activities--programs and projects financed by Federal and non-Federal agencies and organizations that involve the performance of work other than instruction and organized research. Examples of such programs and projects are health service projects and community service programs. Other Sponsored Activities may include travel grants, unless for research activities; support for conferences or seminars; support for university public events; provision of non-instructional and economic services beneficial to individuals and groups external to the university such as testing or diagnostic services, surveys, urban planning and mapping, etc.; publications by the university press; support for student participation in community service projects; support for projects pertaining to library collections, acquisitions, bibliographies or cataloging, unless primarily for documented research purposes, or programs to enhance institutional resources, including computer enhancements, unless primarily for documented research purposes.

(18) Permanent University Fund (PUF)--A fund established in Article 7, §11, of the Texas Constitution to fund capital improvements and capital equipment at certain institutions of higher education.

(19) Pass-Throughs to Subrecipients--external award funds passed from one entity ("pass-through" entity) to another entity (subrecipient). The subrecipient administers the program, expending the award funds on behalf of or in connection with the pass-through entity.

(20) Research--a systematic study directed toward fuller scientific knowledge or understanding of the subject studied and the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities.

(21) Research and Development (R&D)--all research activities, both basic and applied, and all development activities that are supported at universities, colleges, and other non-profit institutions. R&D also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function. Curriculum development projects may be considered as R&D when the primary purpose of the project is to develop and test an instructional or educational model through appropriate research methodologies, such as data collection, evaluation, dissemination, and publication.

(22) Research Development Fund--a fund established outside the state treasury to promote increased research capacity at eligible general academic teaching institutions under Texas Education Code, §§62.091 - 62.098.

(23) Restricted funds (restricted awards)--funds for which some external agency or organization has placed limitations on the uses for which the funds may be spent.

(24) Sponsored Instruction and Training--specific instructional or training activity established by grant, contract, or cooperative agreement with federal, state, or local governmental agencies; private philanthropic organizations and foundations; for-profit businesses; or individuals. Sponsored Instruction includes:

(A) any project for which the primary purpose is to instruct any student at any location; recipients of this instruction may be university students or staff, teachers or students in elementary or secondary schools, or the general public;

(B) curriculum development projects at any level either to improve significantly or to add to an institution's general instructional offerings, and do not include R&D;

(C) projects that involve university students in community service activities for which they are receiving academic credit;

(D) activities funded by awards to departments or schools for the support of students, except for those activities defined in paragraph (25), part E of this Section as Sponsored R&D;

(E) dissertation work funded by grants, including grants for travel in relation to a dissertation, unless associated with a R&D activity as defined in paragraph (21) of this Section;

(F) outreach programs that bring local students on campus for classes; or

(G) general support for the writing of textbooks or reference books, video, or software to be used as instructional materials.

(25) Sponsored Research and Development (Sponsored R&D)--activity funded (sponsored) by grants, gifts, and/or contracts, including sponsored research contracts, that are designated by the sponsor as primarily for R&D purposes. The activity must be sponsored by federal, state, or local governmental agencies; private philanthropic organizations and foundations; for-profit businesses; or individuals. Sponsored R&D includes:

(A) awards to university faculty to support R&D activities;

(B) external faculty "career awards" to support the R&D efforts of the faculty;

(C) external funding to maintain facilities or equipment and/or operation of a center or facility that will be used for R&D;

(D) external support for the writing of books, when the purpose of the writing is to publish R&D results;

(E) activities involving the training of individuals in R&D techniques (commonly called R&D training) where such activities utilize the same facilities as other R&D activities and where such activities are not included in the Instruction function;

(F) the research portion of expenditures in the federal work-study program, in accordance with instructions for preparing the annual financial report that is submitted by an institution to the Comptroller after each fiscal year ends; or

(G) clinical trial agreements in which data collection and analysis are the primary components of the institution's role in the trial, excluding costs that are covered by patient charges or similar sources.

(26) University Research and Development (University R&D)--activity that is supported by unrestricted university funds that the university has designated for use in R&D, such as unrestricted gifts, distributions from unrestricted endowments, interest income, technology licensing income, fees received from external entities for non-research services, proceeds from cost recovery enterprises, state appropriations not identified specifically by the legislature for R&D purposes, non-capitalized allocations from the PUF or HEAF for R&D purposes other than construction and remodeling, state appropriations made directly to the university for R&D through formula or special item funding including ARP/ATP, or cost-sharing expenditures by the university.

§13.123.Restricted Research Advisory Committee.

The Commissioner shall appoint an advisory committee to review and recommend changes to standards and accounting methods for determining restricted research expenditures.

(1) The advisory committee shall consist of 11 to 15 representatives from eligible higher education institutions.

(2) The Commissioner shall select institutions that represent both system institutions and institutions that are not in systems, including institutions that provide diversity in size, mission, and geographic distribution for membership on the advisory committee.

(3) At least 30 days prior to the first meeting each calendar year, the Commissioner shall inform the president(s) of a selected institution(s) that he or she may each recommend an institutional representative to fill a vacant position on the advisory committee.

(4) Advisory committee members shall serve staggered, three-year terms.

(5) At its first meeting during each calendar year, the advisory committee shall elect a member to serve as its chair.

(6) The Commissioner may remove an advisory committee member who is absent for three consecutive meetings of the advisory committee.

§13.124.Standards and Accounting Methods for Determining Restricted Research Expenditures.

(a) Only those expenditures from restricted awards made from the following types of projects and activities and sponsored by federal, state, or local governmental agencies; private philanthropic organizations and foundations; for-profit businesses; or individuals shall be classified as restricted research expenditures:

(1) Sponsored R&D, as defined in §13.122 of this title (relating to Definitions).

(2) Industrial Collaboration Agreements for R&D activities, as defined in §13.122 of this title (relating to Definitions) with universities, colleges, centers, or institutions.

(3) Demonstration Projects, as defined in §13.122 of this title (relating to Definitions), which have a significant new R&D component.

(4) Sponsored instruction and training, as defined in §13.122 of this title (relating to Definitions), for curriculum development projects when the primary purpose of the project is developing and testing an instructional or educational model through appropriate research methodologies that include data collection, evaluation, dissemination, and publication.

(5) Multiple Function Awards, as defined in §13.122 of this title (relating to Definitions), if the scope or activity of the restricted award includes R&D subject to the following limitation: if the purpose of a restricted award is primarily (more than 50 percent) research, then all expenditures made from that award qualify as restricted research expenditures. If the purpose of the restricted award is not primarily research (less than 50 percent), then none of the expenditures may be counted as restricted research.

(b) Institutions shall document the process for determining restricted research awards and shall maintain documentation justifying the rationale used to classify the awards as restricted research.

§13.125.Report on Restricted Research Projects and Activities.

(a) Not later than June 30, each eligible institution shall provide to the Commissioner a verified report of restricted research projects and activities for the current state fiscal year with awards greater than $250,000 in annual funding.

(b) Classified military projects or any sponsored program deemed confidential or proprietary by funding entities shall not be included in the award lists.

(d) Only those projects or activities described in §13.124(a) of this title (relating to Standards and Accounting Methods for Determining Restricted Research Expenditures) shall be included in the report.

(e) All projects and activities reported by institutions shall be classified in accordance with these rules and, if the project or activity is pursuant to an award from the federal government, shall be classified by the federal government as R&D

(f) The report shall indicate the person or persons who determined that the projects or activities were restricted research projects or activities.

(g) The Commissioner shall provide the reports made under this section to each eligible institution.

(h) Institutions that fail to provide a report of restricted research projects and activities shall not be eligible for an allocation from the Research Development Fund and shall not be included in the Board's report to the Comptroller.

§13.126.Restricted Research Review Panel.

Not later than July 31 of each year, the Commissioner shall convene a panel of representatives of all eligible institutions. The president of each eligible institution shall recommend the institution's representative on the review panel.

(1) The Commissioner shall provide each review panel member with a copy of each eligible institution's report on restricted research awards.

(2) The review panel shall examine the institutions' reports on restricted research awards and provide a report to the Commissioner, recommending to the Commissioner those awards from which expenditures may be classified as restricted research expenditures.

(3) The Commissioner shall review the report of the review panel and any appeals made under §13.129 of the title (relating to Reviews and Appeals) and determine those awards from which expenditures may be classified as restricted research expenditures.

(4) Not later than August 15, the Commissioner shall provide each institution with a copy of the recommendations of the review panel and notify each institution of its awards from which expenditures may be classified as restricted research expenditures.

§13.127.Report of Restricted Research Expenditures.

(a) Not later than October 15, each eligible institution shall provide a verified, preliminary report of its restricted research expenditures to the Commissioner.

(b) The preliminary report shall contain only those restricted research expenditures from awards approved by the Commissioner under §13.126 of this title (relating to Restricted Research Review Panel).

(d) Expenditures for pass-throughs to subrecipients shall not be included in the report.

(e) The institution shall maintain separate budgets and accounts for restricted research awards.

(f) Reported restricted research expenditures shall be separately identified for awards equal to or greater than $2,000,000 in annual funding.

(g) If an eligible institution fails to report its restricted research expenditures, the Commissioner shall use data reported in previous years to estimate that institution's allocation from the Research Development Fund.

§13.128.Report to the Comptroller.

(a) Not later than November 1 of each fiscal year for which there is an appropriation for the Research Development Fund, the Commissioner shall provide a preliminary restricted research expenditure report to the Comptroller and recommend funding allocations from the Research Development Fund to eligible institutions.

(b) The Commissioner shall not recommend a funding allocation for an institution that has failed to report its restricted research expenditures until the institution has completed the required report. The Commissioner may recommend that a percentage of the institution's funding allocation, not to exceed 15 percent, be withheld permanently and redistributed among the other eligible institutions as a penalty for restricted research expenditure reports that are more than 60 days late.

(c) If there are remaining funds in the Research Development Fund after the initial allocation, the Commissioner shall provide updated reports to the Comptroller for distribution of those funds.

§13.129.Reviews and Appeals.

(a) If an institution wishes to appeal the recommendation of the Restricted Research Review Panel, the President of the institution shall notify the Commissioner, in writing, not later than September 1.

(b) After completion of the institutions' annual financial reports, scheduled audits of restricted research expenditures, and incorporation of corrections from audits, each eligible institution shall provide the Commissioner with a final report of restricted research expenditures.

(c) Each institution shall provide to the Commissioner a copy of the institution's fiscal year report to the Legislative Budget Board that describes the expenditures of the allocation from the Research Development Fund within 30 days of submission to the Legislative Budget Board.

(d) The Commissioner may reduce an institution's allocation from the Research Development Fund as a penalty for failure to comply with recommendations made by the review panel, the auditors, or the Commissioner. In determining such a penalty, the Commissioner shall consider any excess distribution(s) received by the institution as a result of not complying with the recommendations.

§13.130.Audits.

(a) Institutions that receive an allocation from the Research Development Fund are subject to periodic audits to ensure that the projects and activities reported under §13.125 of this title (relating to Report on Restricted Research Projects and Activities) were properly classified as restricted research projects and activities.

(b) Institutions that receive an allocation from the Research Development Fund are subject to periodic audits to ensure that the restricted research expenditure reports required in §13.127 of this title (relating to Report of Restricted Research Expenditures) were properly classified as restricted research expenditures.

(d) The advisory committee shall determine the frequency and scope of audits and shall select institutions to be audited.

(e) Under an interagency cooperation agreement, all eligible institutions shall agree to payment of the costs of the audits in proportion to the institution's allocation from the Research Development Fund.

(f) Copies of the final audit reports shall be provided to the Commissioner and each audited institution.

(g) Institutions that do not comply with the provisions of this paragraph shall be ineligible for an allocation from the Research Development Fund and shall not be included in the Commissioner's report to the Comptroller.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 1, 2005.

TRD-200500456

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Proposed date of adoption: April 21, 2005

For further information, please call: (512) 427-6114