TITLE 19.EDUCATION

Part 1. TEXAS HIGHER EDUCATION COORDINATING BOARD

Chapter 1. AGENCY ADMINISTRATION

Subchapter A. GENERAL PROVISIONS

19 TAC §1.15

The Texas Higher Education Coordinating Board adopts new §1.15 concerning the authority of the Commissioner of Higher Education to propose Board rules, without changes to the proposed text, as published in the February 18, 2005, issue of the Texas Register (30 TexReg 784). 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.

No comments were received regarding the new section.

The new section is adopted under the Texas Education Code, Section 61.027, which provides 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501663

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts 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 without changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 785). 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, this amendment 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 adopted amendments would make §4.25 of Board rules consistent with the definitions in §4.23.

The following comments were received regarding the amendments:

Comments: The University of Texas Medical Branch at Galveston commented that these amendments were acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

These amendments are adopted 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501667

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts an amendment to §5.6 concerning distribution of operating costs of the Common Admission Application, without changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 787). Specifically, the amendments would allow a different fee structure to be used in assessing the annual cost of using the Texas Common Application by a Texas community college.

No comments were received regarding the amendments.

The amendments are adopted under the Texas Education Code, §51.762, which states 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 25, 2005.

TRD-200501685

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 15, 2005

Proposal publication date: February 18, 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 adopts amendments to §5.23 and §5.24, concerning planning authority for degree without changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 788).

Specifically, these 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.

The following comments were received regarding the amendments:

Comments: The University of Texas Medical Branch at Galveston commented that these amendments were acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

The amendments are adopted 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501668

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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

Texas Higher Education Coordinating Board adopts 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. Section 5.50 is adopted with changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 788). Section 5.44 is adopted without changes and will not be republished.

The amendments to §5.44 change the term planning authority to preliminary authority. The amendments to §5.50 permit the Commissioner to delegate to the Assistant Commissioner for Academic Affairs and Research the approval of all new degree programs at public universities and health-related institutions.

The following comments were received regarding the amendments:

Comments: The University of Texas Medical Branch at Galveston found these amendments acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

The amendments are adopted 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.

§5.50.Approvals by the Commissioner.

(a) The Commissioner may approve proposals from the public universities and health-related institutions for new baccalaureate or master's degree programs and academic administrative change requests, and, in very limited circumstances, new doctoral programs, on behalf of the Board in accordance with the procedures and criteria specified in this section.

(b) To be approved by the Commissioner, a proposal for a new degree program must include certification in writing from the Board of Regents of a proposing institution, in a form prescribed by the Commissioner, that the following criteria have been met:

(1) The proposed degree program is within the Table of Programs previously approved by the Board for the requesting institution.

(2) The curriculum, faculty, resources, support services, and other components of a proposed degree program are comparable to those of high quality programs in the same or similar disciplines offered by other institutions.

(3) Clinical or in-service placements, if applicable, have been identified in sufficient number and breadth to support the proposed program.

(4) The program is designed to be consistent with the standards of the Commission on Colleges of the Southern Association of Colleges and Schools, and with the standards of other applicable accrediting agencies; and is in compliance with appropriate licensing authority requirements.

(5) The institution has provided credible evidence of long-term student interest and job-market needs for graduates; or, if proposed by a university, the program is appropriate for the development of a well-rounded array of basic baccalaureate degree programs at the institution where the principal faculty and other resources are already in place to support other approved programs and/or the general core curriculum requirements for all undergraduate students.

(6) The program would not be unnecessarily duplicative of existing programs at other institutions.

(7) Implementation and operation of the program would not be dependent on future Special Item funding.

(8) New costs to the institution over the first five years after implementation of the program would not exceed $2,000,000.

(c) In addition to the requirements listed in subsection (a) and (b) of this section, a new doctoral program may only be approved by the Commissioner if:

(1) the institution already offers a doctoral program or programs in a closely related disciplinary area,

(2) those existing doctoral programs are productive and offered at a high level of quality,

(3) the core faculty for the proposed program are already active and productive faculty in an existing doctoral program at the institution,

(4) no other university or health-related institution objects to the program during the 30-day comment period during which the request is posted on the web, and

(5) there is a very strong link between the program and workforce needs or the economic development of the state.

(d) A proposal for a new degree program or administrative change must include a statement from the institution's chief executive officer certifying adequate financing and explaining the sources of funding to support the first five years of operation of the program or administrative change.

(e) If a proposal meets the criteria specified in this section, the Commissioner may either approve it or forward it to the Board for consideration at an appropriate quarterly meeting.

(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 decision to deny approval to the Board.

(g) If a proposed program is the subject of an unresolved grievance or dispute between institutions, the Commissioner must forward it to the Board for consideration at an appropriate quarterly meeting.

(h) At the beginning of each month, the Commissioner shall make available to the public universities, health-related institutions, community/technical colleges, and Independent Colleges of Texas, Inc. a list of all pending proposals for new degree programs and administrative changes. If an institution wishes to provide the Commissioner information supporting a concern it has about the approval of a pending proposal for a new degree program at another institution, it must do so within one month of the initial listing of the proposal, and it must also forward the information to the proposing institution.

(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 section) may be delegated by the Commissioner to the Assistant Commissioner for Academic Affairs and Research.

(j) 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 adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501669

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts amendments to §7.7 and §7.9, concerning standards for certificates of authority and standards for off-campus operations at exempt institutions without changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 789).

Specifically, the standards of the Board in §7.7, 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.

The following comments were received regarding the new sections:

Comments: The University of Texas Medical Branch at Galveston commented that these amendments were acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

Comments: One commenter requested that the Board add the word "secular" to various parts of Standard 9 (Faculty Qualifications) and Standard 12 (Curriculum).

Response: The staff believes the suggested change is not only unnecessary, but would confuse the public by implying that institutions could offer degrees, which is always a secular function, if they claim that the degrees being offered are religious in nature. The commenter argues that the term "secular" should be inserted because the statute is unconstitutional; a claim that has been rejected by state district court, federal district court, and the state court of appeals. Finally, the question of the constitutionality of the statute is currently being considered by the Texas Supreme Court and it would be premature to enact any change of this nature until after they issue an opinion on this matter. As a result of this comment, no changes were made to the proposed amendments.

The amendments are adopted 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 - 61.405, 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501671

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts amendments to §9.93 and §9.96, concerning approval of certificate programs and applied associate degree programs without changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 795).

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.

The following comments were received regarding the amendments:

Comments: The University of Texas Medical Branch at Galveston found these amendments acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501670

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts amendments to §12.21, concerning the procedures for career schools and colleges to seek authority to offer academic degrees with changes to the proposed text as published in the February 18, 2005, issue of the Texas Register (30 TexReg 796).

Specifically, §§12.1 - 12.46 set forth provisions allowing institutions holding from the Texas Workforce Commission a certificate of authority to operate a career school or college to gain permission from the Coordinating Board to offer applied associate degrees. The 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. 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.

The following comments were received regarding the amendments:

Comments: The University of Texas Medical Branch at Galveston commented that these amendments were acceptable.

Response: As a result of this comment, no changes were made to the proposed amendments.

The amendments are adopted under the Texas Education Code, §§61.301 - 61.319. Section 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.

§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 seeking authority to offer an academic associate, baccalaureate, or higher degree shall seek approval from the Board for a certificate of authority under 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 adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 22, 2005.

TRD-200501672

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 12, 2005

Proposal publication date: February 18, 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 adopts new §§13.120 - 13.130 concerning reporting restricted research expenditures for equitable distribution of the Research Development Fund with changes to §§13.122, 13.124, 13.125, and 13.127 as published in the February 18, 2005, issue of the Texas Register (30 TexReg 796). Specifically, §§13.120 - 13.122 are adopted concerning purpose, scope, authority, and definitions. Section 13.123 is adopted concerning the restricted research advisory committee. Sections 13.124 - 13.130 are adopted concerning the standards and accounting methods, report on restricted research projects and activities, the restricted research review panel, report of restricted research expenditures, report to the comptroller, reviews and appeals, and audits.

The following comments were received regarding the new sections:

Comment: Texas A&M University-Corpus Christi, West Texas A&M University, Texas State University at San Marcos, Texas Tech University, and the University of Houston suggested clarification of the language in §13.125(a) to include all restricted research projects in the awards report. Texas Tech University suggested that institutions without a current restricted research award greater than $250,000 in annual funding provide a negative report.

Response: The Coordinating Board staff agrees. As a result of this comment, new language requiring each eligible institution to report all of its restricted research awards was added to §13.125(a).

Comment: Texas A&M University-Corpus Christi, West Texas A&M University, and Texas State University at San Marcos suggested adding language to §13.125(h) to ensure that the institutions receive notice that reports are due.

Response: The Coordinating Board staff agrees that notice should be given to the institutions and will do so. It is not necessary, however, that the rules be amended. No changes were made as a result of this comment.

Comment: Texas A&M University-Corpus Christi noted that §13.127(f) no longer applies to the standards and accounting methods for determining restricted research expenditures and should be deleted.

Response: The Coordinating Board staff agrees. As a result of this comment, §13.127(f) was deleted.

Comment: West Texas A&M University and Texas A&M University-Corpus Christi suggested deleting §13.125(h) because it is repeated in §§13.127(g) and 13.128(b).

Response: The Coordinating Board staff disagrees. These sections deal with different reports. §13.125(h) precludes participation by institutions that do not submit awards lists for review, but §§13.125(g) and 13.128(b) deal with institutions that do not submit reports of restricted research expenditures that will be used to calculate distributions of the Research Development Fund. No changes were made as a result of this comment.

Comment: In responding to §§13.127(g) and 13.128(b), West Texas A&M University suggested that an institution that fails to file the required reports should not be eligible to receive money from the Research Development Fund, although there should be a provision for special circumstances (catastrophic computer failures, hurricanes, etc.).

Response: The Coordinating Board staff disagrees. To date, the Coordinating Board has not assessed penalties and has not recommended that these funds be withheld for institutions that file late reports. The proposed rules allow for a penalty and the withholding of funds until the report is received. The statutory reporting deadline is challenging because it falls before the institutions have completed their annual financial reports. If late reports become problematic, the Board may wish to revisit this issue at a future meeting. No changes were made as a result of this comment.

Comment: The University of Texas at El Paso suggested that the rules follow the language used to establish "primary purpose" according to the Standards and Accounting Methods for Determining Restricted Research Expenditures §13.124(a)(5).

Response: The Coordinating Board staff agrees. As a result of this comment, new language that enhances consistency and flexibility in establishing "primary purpose" was added to §13.124(a)(5).

Comment: The University of Houston noted §13.127(c) states that indirect costs should not be included in reports of restricted research expenditures, pointing out that this was reversed for the recent reporting requirement.

Response: The Coordinating Board staff disagrees. According to a memo from the Commissioner of Higher Education on October 1, 2001, only indirect costs on pass-through funds are disallowed. As a result, Coordinating Board staff directed participating institutions to include indirect costs in their restricted research expenditures reports for Fiscal Year 2004. In November 2004, the Restricted Research Advisory Committee directed Coordinating Board staff to treat indirect costs the same way the institutions' annual financial reports treat indirect costs. In those reports, indirect costs are not included in restricted research. Therefore, the proposed rules exclude indirect costs from restricted research expenditure reports. As result, indirect costs will not be included in future reports. No changes were made as a result of this comment.

Comment: The University of Texas at El Paso recommended deletion of §13.127(c) and (d) which disallow inclusion of indirect costs and "pass through to" expenditures, citing conformance with new national accounting standards.

Response: The Coordinating Board staff disagrees. Neither the new nor the previous accounting standards allowed indirect costs to be included in restricted research. "Pass through to" expenses are funds that are passed through an institution to another entity with little or no activity on the part of the passing institution and as such do not represent research activity by the passing institution. A member of the Restricted Research Advisory Committee conducted an in-depth study of "pass through to" funding and concluded that it was not wise to include these expenditures in determining restricted research. No changes were made as a result of this comment.

Comment: The University of Texas at El Paso recommended referencing an exception in the definition of sponsored instruction and training (§13.122(24)(D)).

Response: The Coordinating Board staff agrees. As a result of this comment, a reference to an allowance found in sponsored research and development §13.122(25) was added to §13.122(24)(D).

The new sections are adopted under Texas Education Code, §62.096 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.

§13.122.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, except for those activities defined in Paragraph (25) of this section;

(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.

§13.124.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. Primary purpose will normally be demonstrated by more than half of the funds having been budgeted for research, but may be demonstrated by the sponsor's statement of purpose or other documented evidence.

(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 all restricted research projects and activities for the current state fiscal year specifically identifying 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.

(c) The report shall be in a format and with the specific content prescribed by the Commissioner.

(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.

§13.127.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).

(c) Expenditures for indirect costs of any restricted research award shall not be included in the report.

(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) 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.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 25, 2005.

TRD-200501689

Jan Greenberg

General Counsel

Texas Higher Education Coordinating Board

Effective date: May 15, 2005

Proposal publication date: February 18, 2005

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