STATEWIDE: Governor-elect Greg Abbott s Legislative Priorities Staff Positions Announced By Governor-elect Greg Abbott Chief of Staff

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1 STATEWIDE: Governor-elect Greg Abbott s Legislative Priorities On December 8 th, Texas Governor-elect Greg Abbott outlined his priorities for the upcoming legislative session. His top priority will be education where he called for improving pre-kindergarten through fourth grade, making sure that high school graduates are college-ready or prepared for a good job, making higher education more affordable, and elevating a Texas public university to top-tier national standing. His other priorities include transportation, border security, economic expansion and tax reduction. Abbott said, On Election Night, I made a promise to the people of Texas to begin work immediately to keep Texas the beacon of opportunity and the best state in the nation. A promise is worth little without the right plan and the right people to turn that plan into action. I have outlined a Blueprint for an even better Texas of tomorrow, and I am proud to have an experienced leadership team with the proven skills and the deep commitment needed to make my promises a reality. We are ready to get to work on Day One to ensure greater opportunity for all Texans. Abbott s budget priorities include an additional $4 billion in new spending on roads; $790.5 million in new spending on education including $182 million for pre-kindergarten and $403 million for higher education; and $344.8 million for securing the border. Staff Positions Announced By Governor-elect Greg Abbott On December 8 th, Abbott also announced senior staff including: Chief of Staff - Daniel Hodge, currently First Assistant Attorney General and head of Governor-elect Abbott s transition team. A graduate of Davidson College and the University of Texas Law School. Deputy Chief of Staff - Julia Rathgeber, currently Commissioner of the Texas Department of Insurance (she will resign effective January 20 th ); former Deputy Chief of Staff in the Office of Lt. Governor David Dewhurst, director of research for the Texas General Land Office, and director of the strategic assessment division for the Texas Natural Resource Conservation Commission; bachelor s and law degrees from the University of Texas at Austin. Deputy Chief of Staff Robert Allen, currently Deputy Chief of Staff at the Office of the Attorney General, where he has served Governor-elect Abbott since 2003; bachelors degree from The University of Texas at Austin. Budget Director - Kara Belew, currently Senior Counsel at the Office of the Attorney General; former Public Education Advisor in the Budget, Planning and Policy Office of Governor Rick Perry; JD from the University of Texas at Austin. General Counsel - Jimmy Blacklock, currently Deputy Attorney General for Legal Counsel; former Special Assistant and Senior Counsel to the Office of the Attorney General and Assistant Solicitor General; former Counsel to the Assistant Attorney General for Civil Rights under former President George W. Bush; bachelor s degree from the University of Texas at Austin and JD from Yale Law School. Press Secretary - Amelia Chassé, former Deputy Communications Director for Governor-elect Abbott s gubernatorial campaign; former Vice President at Hynes

2 Communications; bachelor s degree from the George Washington University. Senior Advisor Reed Clay, currently Senior Counsel to the Attorney General, former Assistant Texas Solicitor General and litigator for the U.S. Department of Justice; graduate of Wake Forest University and the Duke University School of Law. Policy Director - Drew DeBerry, currently Deputy Commissioner of the Texas Department of Agriculture (since 2007), former national agriculture coalition director of President George W. Bush s 2000 campaign and subsequently served as White House Liaison and then Deputy Chief of Staff at the U.S. Department of Agriculture; holds a degree in Agricultural and Applied Economics from Texas Tech University. Legislative Director - Randy Erben, founder of Erben & Yarbrough private law practice; former Assistant Secretary of State and Director of the Texas Office of State-Federal Relations under former Governor Bill Clements; bachelors degree from Princeton University and JD from the University of Texas at Austin. Deputy Legislative Director - Jay Dyer, currently Deputy Attorney General for Intergovernmental Relations; former Special Assistant and Senior Counsel to the Attorney General (since 2008) and General Counsel at the Office of the Secretary of State; government degree and JD from the University of Texas. Communications Director - Matt Hirsch, currently Communications Director for Governor-elect Abbott s gubernatorial campaign; former Press Secretary for Lt. Governor David Dewhurst and has served in various communications roles on Presidential, U.S. Senate and gubernatorial campaigns; graduate of the George Washington University in Washington, D.C. Special Assistant to the Governor - Erin Hodges, currently Policy Director and Senior Advisor at the Office of the Attorney General; former Chief of Staff for State Representative Linda Harper-Brown. Senior Advisor to the Governor for the Office of the First Lady - Lauren Clay, currently Deputy Communications Director at the Office of the Attorney General (since 2010), former Communications Director to U.S. Representative Michael Burgess and Deputy Press Secretary for U.S. Senator John Cornyn; graduate of The University of Texas at Austin. Senior Advisor to the First Lady - Chelsea Holden, served as First Lady-elect Cecilia Abbott s personal aide throughout the gubernatorial campaign; former director of marketing at Harden Healthcare and former staff assistant at the White House and the Department of Defense during President George W. Bush s administration; graduate of Southern Methodist University. President of the Texas Economic Development Corporation - Tracye McDaniel, currently head of private business recruitment and investment efforts for the State of New Jersey; previously Executive Vice President and Chief Operating Officer of the Greater Houston Partnership (GHP), Executive Director of the Office of the Governor s Economic Development and Tourism Division for the State of Texas, and CEO for the Texas Economic Development Corporation s Texas One Program; graduate of The University of Texas at Austin. Director of Administration - Stacey Napier, currently Deputy Attorney General for Administration; former Deputy Attorney General for Government and External

3 Affairs and Senior Counsel to the Attorney General; former chief of staff and legislative director in the Texas Senate; graduate of Louisiana State University and JD from Southern Methodist University. Appointments Director - Luis Saenz, currently senior vice president for State Government Relations for McGuireWoods Consulting; former Assistant Secretary of State and senior advisor to Governor Rick Perry; graduate of St. Mary s University in San Antonio. Director of Scheduling and Advance Kim Snyder, served as Deputy Campaign Manager on Governor-elect Abbott s gubernatorial campaign; former Director of Scheduling and Advance for Governor Rick Perry and Director of Scheduling and Advance for U.S. Department of Housing & Urban Development under Secretary Alphonso Jackson in the administration of George W. Bush. Executive Director of Office of State and Federal Relations - Jerry Strickland, currently Director of Communications for the Office of the Attorney General, and has served as spokesman and advisor for Governor-elect Abbott since 2003; former reporter and anchor for CBS and ABC news affiliates in Texas and other states; graduate of the University of Mississippi. Note: This appointment is subject to Senate confirmation. Secretary of State Governor-Elect Greg Abbott announced his intention to nominate Cameron County Judge Carlos Cascos as Texas Secretary of State. Judge Cascos is a certified public accountant, and has been Cameron County Judge for two terms, having just won his third term. Abbott said, "I wanted someone with proven leadership experience, someone who understands how government works, someone who can cultivate strong bonds along the border as well as someone who can advance Texas interests both at home and abroad." The Texas Secretary of State is responsible for Texas' elections and also advises the Governor on International Affairs. Cascos is a former member of the Texas Public Safety Commission. Note: This appointment is subject to Senate confirmation. Inaugural Committee Announced On December 12 th, Governor-elect Greg Abbott and Lieutenant Governor-elect Dan Patrick announced the leadership team responsible for the coordination and oversight of the January 20 th celebration honoring the inauguration of Governor Greg Abbott and Lieutenant Governor Dan Patrick. Ardon Moore of Fort Worth has been named Chairman of the 2015 Texas Inaugural Committee; Alejandra de la Vega Foster of El Paso and Toni Brinker Pickens of Dallas have been named Committee Co-Chairs; and John Nau of Houston and Trevor Rees-Jones of Dallas have been named as Finance Committee Co-Chairs. Governor-elect Abbott said, Whether in business or in their communities, each of these Texans has served our state in an enormous capacity, personifying the Texas work ethic and proving all that can be accomplished through dedication and hard work. Texas inaugurations are steeped in time-honored tradition and reflect the story of our great state. These men and women are the best possible team to honor this tradition and I look

4 forward to working with them as we plan the 2015 Texas Inauguration. Pre-Filed Legislation Legislators began pre-filing bills on November 10 th for consideration by the 84 th Texas Legislature, which begins on Tuesday, January 13, Through December, 251 Senate Bills; 13 Senate Joint Resolutions; 539 House Bills; and 40 House Joint Resolutions were pre-filed. Some of the prefiled bills are discussed in the issue categories below. SENATE: Lt. Governor-elect Dan Patrick Staff Announcements On December 4 th and 19 th Lt. Governor-elect Dan Patrick released staff announcements. Patrick said, I am very proud of the work of my Transition Team and I am confident they have brought together a team with the skills, commitment and expertise to make sure we move the conservative agenda forward, said Patrick. We will hit the ground running in January on the work the people of Texas have elected us to do. Staff announcements include: Parliamentarian Karina Davis Chief of Staff - Logan Spence Senior Advisor - Walter Fisher Budget Director - Mike Morrissey Education Policy Advisor - Marian Wallace General Counsel - Darrell Davila Policy Director - Kate McGrath Policy Coordinator and Business & Commerce Policy Advisor - John Gibbs Legislative Coordinator - Colby Beuck Research Director - Travis Richmond Budget Analyst - Joaquin Guadarrama External Affairs Director - Elliott Griffin Health and Human Services Policy Advisor - Jessica Olson Transportation Policy Advisor - Aaron Kocian Natural Resources Policy Advisor - Deb Hastings Tax Advisor - Carolyn Merchan Saegert Criminal Justice Policy Advisor - Lauren Fleming General Government Policy Advisor - Suzanne Mackowiak Intergovernmental Relations Policy Advisor - Julie Frank Receptionist Vickie Miles Senator Lois Kolkhorst Sworn in On December 22 nd, Lois W. Kolkhorst (R- Brenham) was officially sworn in as Senator for District 18. Kolkhorst won the special election for Senate District 18 to succeed former Senator and Comptroller-Elect Glenn Hegar on December 6th with percent of the vote. Senator Kolkhorst said, "Today is not about me but rather it's really about the people all across our Senate district. I'm honored to serve them and I'm ready to deliver the results they expect and deserve. As State Senator, my goals will be simple. I'm going to work hard to protect and preserve the rights of hardworking families and businesses across these twenty-one counties. Texas is an exemplar

5 of freedom, jobs and prosperity and my intention is to keep our state strong and free for our children and grandchildren." Senate District 26 Special Election December 23 rd was the filing deadline for the special election in Senate District 26. Three Democrats and two Republicans filed for the January 6, 2015 special election to fill the unexpired term of Senator Leticia Van de Putte (D-San Antonio), who resigned to run for Mayor of San Antonio. Her term runs through Democrats: Trey Martinez Fischer, Attorney and State Representative Jose Menendez, Businessman and State Representative Al Suarez, Community Supervision Officer Republicans: Alma Perez Jackson, Retiree, State Republican Executive Committee Joan Pedrotti, Retiree HOUSE: Special Elections December 23 rd was the filing deadline for the special elections in House Districts 17 and 123. December 29 th was the filing deadline for the January 13, 2015 special election in House District 13. Early voting for the January 6, 2015 special election started on Monday, December 29, Early voting for the January 13, 2015 special election starts on Monday, January 5, House District 13 - Three Republicans and one Democrat filed their candidacy for the January 13, 2015 special election to replace Lois Kolkhorst who moved up to the Texas Senate. Republicans: Becky Berger, Geologist, Schulenburg Carolyn Bilski, Austin County Judge, Sealy Leighton Schubert, Attorney, Caldwell Democrat: Cecil Webster, Sr., Retired, Carmine House District 17 - Two Republicans, two Democrats and one Independent candidate are running in the January 6, 2015 special election to fill the unexpired term of Representative Tim Kleinschmidt (R-Lexington), who resigned to become General Counsel at the Texas Department of Agriculture. His term runs through Republicans: John Cyrier, General Contractor and former Caldwell County Commissioner (Lockhart) Brent Golemon, Businessman from Bastrop Democrats: Shelley Cartier, Realtor from Cedar Creek Ty McDonald, Pastor from Bastrop

6 Independent: Linda Curtis, Community Organizer from Bastrop House District Three Democrats, one Republican, one Libertarian, and a Green Party candidate filed for the January 6, 2015 special election to fill the unexpired term of Representative Mike Villarreal (D- San Antonio), who resigned to run for Mayor of San Antonio. All six candidates are from San Antonio. Democrats: Melissa Aguillon, Business Owner and Public Relations Consultant Diego Bernal, Civil Rights Attorney and San Antonio City Council member Walter Martinez, Businessman and former San Antonio City Council member Republican: Nunzio Previtera, Insurance Agent Libertarian: Roger V. Gary, Sales and Marketing Green Party: Paul Ingmundson, Psychologist BUDGET: State Spending Cap On December 1 st, the Legislative Budget Board adopted a spending limit for the state budget. The statute requires the LBB to adopt a limit on future appropriations based on either personal income or the rate of growth of the state s economy. The LBB chose the most conservative option available to them and based the spending cap on personal income growth of percent. Dale Craymer, President of Texas Taxpayers and Research Association praised the actions of the Legislative Budget Board saying, The LBB adopted the most conservative limit allowed under current law, increasing the likelihood that Texans will benefit from a conservative spending plan coupled with meaningful tax relief. Further, it is important to remember that the limit is a cap, not an obligation. Legislators should continue to exercise restraint as they begin work on the state budget. Talmadge Heflin, Director of the Center for Fiscal Policy for the Texas Public Policy Foundation and former chairman of the Texas House Committee on Appropriations recommended the adoption of an alternative calculation using population growth and inflation to determine the state s spending cap. Comparing total Texas state government spending with population growth plus inflation since 2004, total spending is up 13.4 percent, costing a Texas family of four $1,800 more this year to support state government. Part of this excessive spending stems from the poor job of controlling spending by the state s constitutional spending limit. The limit covers only forty percent of the state s total budget, is based on personal income, and relies on projections that are often imprecise. Now that the LBB has made its decision, we recommend that the committee designated to adopt the appropriations limit better match spending growth with Texas families ability to support it by limiting the increase in appropriations to population growth plus inflation.

7 Economic Stabilization Fund On December 11 th, the Joint Select Committee to Determine a Sufficient Balance of the Economic Stabilization Fund, co-chaired by Senator Jane Nelson (R-Flower Mound) and Representative Myra Crownover (R-Lake Dallas) approved setting a $7 billion floor for the Economic Stabilization Fund (Rainy Day Fund). The decision will allow an estimated $1.74 billion to be transferred to the State Highway Fund in Fiscal Year 2015 to benefit transportation projects as directed in Proposition One, which was approved by Texas voters in November. Proposition One directs 50 percent of the oil and gas severance tax funds that would otherwise have gone into the Rainy Day Fund after the floor is met to go into the State Highway Fund. The floor approved by the committee will apply for the next three fiscal years. The Rainy Day Fund balance is currently $6.7 billion, and it is projected to rise to $8.44 billion in FY15, after the first transfer takes place. If the Rainy Day Fund balance falls below the floor, the funds that are distributed to the State Highway Fund will be reduced or eliminated and the Rainy Day Fund will receive all funds until the floor is reached. Senator Nelson said, "This transfer will provide a much-needed boost to transportation, which affects everything from commerce and economic development to public safety and our quality of life. The floor also ensures that Texas has sufficient reserves for any unexpected difficulties in the future. It also allows us to address our vital infrastructure needs in a fiscally responsible way." Representative Crownover added, "Texas is fortunate to have such a healthy economy, and we must make sound, responsible decisions to protect what we have achieved. As a conservative, I strongly believe that a healthy Rainy Day Fund is key to Texas' continued long-term fiscal health. This committee took a fiscally responsible approach, preserving a healthy balance in the Economic Stabilization Fund, and giving flexibility to future legislators. Other committee members are Senators Robert Nichols (R- Jacksonville), Brian Birdwell (R- Granbury), Kevin Eltife (R- Tyler), and John Whitmire (D- Houston) and Representatives Patricia Harless (R- Spring), Abel Herrero (D- Robstown), John Otto (R-Dayton) and Sylvester Turner (D- Houston. Pay Down Texas Debt Act On December 16 th, Senator Donna Campbell (R- New Braunfels) filed SB 249 to create a dedicated fund for the purpose of retiring state debt. It would set aside revenue from oil and gas severance taxes to pay down debt once the Rainy Day Fund hits its constitutional cap. Senator Campbell said, "Addressing debt today will save taxpayers money tomorrow. Saving instead of spending - especially when times are good - will help keep taxes low for future generations and ensure Texas remains a place of prosperity for our families and businesses. A plentiful Rainy Day Fund shouldn't be a green light to spend recklessly. Capturing excess revenue to pay off debt is good fiscal policy that will benefit the entire state and protect our excellent credit rating. The Texas economy is strong because we have remained vigilant against unnecessary government growth. The Pay Down Texas Debt Act builds on that successful conservative model." ECONOMIC DEVELOPMENT:

8 State-Hatched Biotechnology Company Acquired by FIJIFILM On December 18 th, Governor Rick Perry announced the acquisition of Kalon Biotherapeutics LLC by FUJIFILM Diosynth Biotechnologies U.S.A. Inc., a subsidiary of FUJIFILM Corp. Kalon is a biopharmaceutical contract manufacturing organization owned by the State of Texas and the Texas A&M University System. Governor Perry said, Today s signing represents an important next step and an exciting new chapter for the State of Texas, which is fast becoming a global leader in biotechnology and pharmaceutical manufacturing. The Texas A&M Center for Innovation in Advanced Development and Manufacturing is at the forefront of an exciting new method to produce lifesaving treatments and vaccines, and I m proud of the role the state has played in helping shape Texas into America s Third Coast in biotechnology. Kalon is biopharmaceutical contract manufacturing organization that produces life-saving vaccines and therapeutics. Much of its work is done in collaboration with the Texas A&M Center for Innovation in Advanced Development and Manufacturing (CIADM), one of three public-private partnership centers created by the U.S. Department of Health and Human Services to help guard against a variety of threats including bioterrorism and infectious diseases. Texas A&M System Chancellor John Sharp added, This acquisition proves the tremendous value of public-private partnerships, and the importance of creating an environment in which they can succeed. The State of Texas and the A&M System are delivering on a joint promise to help businesses develop and to create jobs. I applaud the Texas A&M System Board of Regents for their unwavering support in building Kalon and positioning it for this transaction. Pre-Filed Economic Development Bills: HB 346 by Nicole Collier (D-Fort Worth) would require the governor to consider making grants from the Texas Enterprise Fund and the Emerging Technology Fund to historically underutilized businesses. HB 523 by Phil King (R-Weatherford) would abolish the Emerging Technology Fund. ENERGY: Smart Meters - Representative Rafael Ancia (D-Dallas) has pre-filed HB 489 which would require the Public Utility Commission to ensure that retail electric providers or aggregators that offer residential or small commercial customers a product or service related to smart thermostats provide customers clear descriptions in plain language of the contract terms and the customers rights. ENVIRONMENT: Computer Recycling Two bills related to technology products recycling have been pre-filed including: HB 87 by Mary Gonzalez (D-El Paso) would prohibit large retailers (annual sales of $5 million or more) from selling new computer or television equipment in Texas unless the retailer accepts, without charge, computer and television

9 equipment for recycling and ensures that all equipment collected is recycled, reused, or disposed of legally. HB 423 by Joe Farias (D-San Antonio) would institute a landfill ban on computer and television equipment. HEALTH: Senate Health and Human Services Committee Interim Report On December 2 nd, the Senate Committee on Health and Human Services released its Interim Report to the 84th Texas Legislature. The report outlines a number of legislative recommendations aimed at addressing access to women's healthcare, improving the state's mental health services, stopping prescription drug abuse, and finding affordable care options for our state's uninsured population. Senator Charles Schwertner, MD (R-Georgetown), who chairs the Senate Committee on Health and Human Services, said, "This report provides a blueprint for tackling some of our state's most pressing healthcare issues. Since taking over as Chairman in July, it's been an honor to work alongside my fellow Senators and help Texas move toward the kind of healthcare system that s affordable for consumers, accessible for families, and accountable to taxpayers. While the members of this committee may approach the issues of healthcare from different political backgrounds or ideological perspectives, in the end, we all want what's best for the people of Texas. That's why I'm proud we were able to reach common ground on many of the issues outlined in this report." Mental Health and Substance Abuse Program Recommendations: 1. Mental health and substance abuse programs should be elevated from their current status as a division within the Department of State Health Services to a more highly visible position within the Health and Human Services Enterprise that will ensure adequate leadership and accountability. 2. Expand Mental Health First Aid to include additional school personnel. In addition to educators, school personnel such as counselors, school nurses, teacher's aides, school bus drivers, principals, assistant principals, and school resource officers have frequent contact with students and should have the opportunity to receive Mental Health First Aid training. 3. Create a Mental Health Professionals Loan Repayment Program for psychiatrists, psychologists, advanced practice psychiatric nurses, licensed professional counselors, and licensed clinical social workers who provide direct care in Mental Health Professional Shortage Areas. 4. Promote the use of Certified Peer Specialists, which are individuals in recovery from mental illness or substance abuse who have received training to effectively use their recovery story to help other individuals suffering from mental illness or substance abuse. 5. Ensure crisis stabilization services are available in all areas of the state to avoid more costly and restrictive treatment settings such as Emergency Rooms and county jails. 6. Carefully evaluate the Harris County Jail Diversion Pilot Program to determine if expansion is warranted. 7. Encourage jails to allow Mobile Crisis Outreach Teams into their facilities.

10 to respond on-site immediately when a psychiatric crisis occurs. 8. Create a centralized online source of information about behavioral health prevention, treatment, and recovery for patients, families, providers and advocates. 9. Encourage integration of substance abuse and mental health services by providing grants for the co-location of providers. Women's Access to Preventative Health Care Recommendations: 1. The state's three major women's health programs should all be housed at the Health and Human Services Commission, and should be consolidated in a manner that ensures continuity of care and does not reduce access to services. 2. Reduce gaps in family planning coverage. Lags in coverage present the opportunity for unintended pregnancies to occur in the period after delivery of a child. This also presents an issue of not sufficiently spacing births, which can present health problems for the mother and child. Medicaid Recommendations: 1. Texas should require TANF applicants to undergo a controlled substance screening assessment and require drug testing for any TANF applicant who has a felony drug conviction, has previously tested positive, or whose screening assessment indicates good cause to suspect the person of using controlled substances. 2. Remove the exemption from work requirements for adults in child-only cases who have been disqualified from TANF for non-compliance or reaching lifetime benefit limits. 3. Require the Personal Responsibility Agreement signed by adults in child-only cases to include a requirement to fulfill work requirements and to attend parenting classes, if referred. Prescription Drug Abuse Recommendations: 1. Transfer the Prescription Access in Texas (PAT) system and associated appropriations from the Department of Public Safety to the Texas State Board of Pharmacy. 2. Give the Texas State Board of Pharmacy the authority to join the national Prescription Monitoring Program InterConnect to facilitate the transfer of prescription monitoring program data securely across state lines to authorized users. 3. Automatically register providers in the PAT system upon receipt of renewal of their Controlled Substance Registration permit to encourage use of PAT. 4. Align the Controlled Substance Registration permit for advanced practice registered nurses and physicians assistants with license renewal. 5. Enhance services, education, and outreach to communities and providers in order to reduce the prevalence of and treat the symptoms of Neonatal Abstinence Syndrome (NAS). Sunset Commission Report on Health and Human Services On December 10 th, the Sunset Advisory Commission unanimously approved reorganizing Texas' health and human services agencies from five separate agencies into one in order to better coordinate programs and streamline administrative support.

11 Senator Jane Nelson (R-Flower Mound), who chairs the commission said, "This reorganization of Texas health and human services agencies will better serve our most vulnerable citizens and will create one front door for Texans who are seeking services. By creating one agency, we will also be able to eliminate duplicative functions and inefficiencies throughout our health and human services." The Sunset Advisory Commission also approved key policy recommendations to change the current system used by the Office of the Inspector General (OIG) to investigate fraud in healthcare provider claims. Senator Juan "Chuy" Hinojosa (D-McAllen), Chairman of a workgroup to study the current OIG investigation process and recommend changes to the current system said, "I am pleased with the recommendations adopted today by the Sunset Advisory Commission and I thank the entire OIG workgroup for their hard work and dedication in crafting policy recommendations to achieve a fair and transparent system that protects the public. We can no longer have an OIG that accuses providers of fraud, presumes them guilty, and denies them due process. The Legislature envisions an OIG that targets the healthcare providers who are defrauding our taxpayers and not those who commit clerical errors. The recommendations adopted today will work to alleviate these concerns by providing due process, increasing transparency, and getting at actual fraud while not wasting our resources on innocent providers." Some of the OIG workgroup changes include amending the statutory definition of fraud by clarifying that it does not include unintentional technical, clerical, or administrative errors as well as streamlining and significantly expediting the current process. HIGHER EDUCATION: Commissioner Paredes s Legislative Agenda On December 9 th, Higher Education Commissioner Raymund Paredes proposed a $1.1 billion increase (13.7 percent) in base funding for colleges and universities. The proposed increase would be $516 million (11.8 percent) for public universities; $243.1 million (13.8 percent) for community colleges; $138 million for student aid grants; and $235 million in performance-based incentive funding. Tuition Cap On December 9 th, Senator Charles Schwertner (R-Georgetown) filed legislation to make higher education more affordable by addressing the cost growth at Texas' public colleges and universities. SB 233 would cap tuition and fees at their current levels and limit any future increases to no more than the rate of inflation. Senator Schwertner said, "The pursuit of a higher education in Texas has never been more daunting, and as tuition and fees at our public universities continue to climb, the dream of attaining a college degree is becoming a nightmare for more and more Texas students. I think the legislature has a responsibility to consider whether the deregulation policies enacted over a decade ago still make sense for Texas students." Since the legislature's decision to deregulate tuition in 2003, tuition and fees at Texas public universities have more than doubled and designated tuition (the portion of tuition set directly by the universities) has increased 222 percent, outpacing the 27% growth in inflation over the same timeframe. Senator Schwertner concluded, "Are we really

12 expected to believe that the value of an undergraduate degree is worth twice what it was only a decade ago? It's time to demand that our public universities live within their considerable means and work to provide affordable and attainable higher education for Texas students. Senator Schwertner also filed SB 232 to exempt the purchase of college textbooks from the state sales tax during defined periods at the beginning of each semester. Other Pre-Filed Public Education Bills: HB 61 by Ruth Jones McClendon (D-San Antonio) would require the Texas Higher Education Coordinating Board to approve a single common course numbering system for lower-division courses to facilitate the transfer of courses among institutions of higher education. HB 89 by Mary Gonzalez (D-El Paso) would cap tuition at academic year levels. HB 298 by Gene Wu (D-Houston) would require institutions of higher education to help facilitate credit transferability by: 1. publishing on the institution s Internet website a detailed description of the learning objectives, content, and prior knowledge requirements for at least 12 courses offered by the institution for which credit is frequently transferred from lower-division institutions of higher education; 2. identifying the public junior colleges from which the institution regularly receives transfer students; and 3. establishing, for at least five degree plans, articulation agreements with each public junior college from which the institution has received an average of at least five percent of the institution s transfer students in the preceding academic years. HB 299 by Gene Wu (D-Houston) would require public junior colleges to notify school districts of the number of students who received a high school diploma from the district and who the junior college referred to developmental coursework to address the student s deficiencies in the student s readiness to perform freshman-level academic coursework. HB 301 by Gene Wu (D-Houston) would require institutions of higher education that offer freshman- and sophomore-level courses to develop and administer one or more institution-specific examinations by which entering or current undergraduate students can earn freshman- or sophomore-level course credit by examination. SB 22 by Judith Zaffirini (D-Laredo) is based on the Texas Higher Education Coordinating Board s recommendation on outcomes-based funding. It would create an outcomes-based funding pool separate from the formula funding that institutions of higher education receive. Once full-funding is achieved, the outcomes-based funding pool would be activated. The outcomes-based funding would be 10 percent of the overall amount of formula funding. It would be phased in over three biennia (six years) and would be distributed to institutions based on success points. SB 24 by Judith Zaffirini (D-Laredo) would require training for members of higher education governing boards to be in the member s first year of board service (instead of in the first two years of service) and would require the training

13 to include the orientation course provided to newly appointed state officers, board members and executive officials; include ethics training; include limitations on the authority of the governing board; and include information on student privacy. SB 177 by Kel Seliger (R-Amarillo) would clarify and codify best practices of university governance by applying principles from nationally recognized organizations such as the Association of Governing Boards and the Southern Association of Colleges and Schools. PUBLIC EDUCATION: School Finance Reform On December 16 th, Senator Kirk Watson (D-Austin) filed a package of bills aimed at jump-starting the discussion about how to fix Texas school finance system, regardless of any ruling by the Texas Supreme Court in the lawsuit brought by two-thirds of Texas school districts. Senator Watson said, There s a lack of political will to do anything about our school finance system until we re forced to do so by the court. Oddly, there s also a lack of will to begin even talking about how to fix it. Everybody knows our school finance system is broken, and continuing to do nothing about it is a disservice to the schoolchildren and taxpayers of Texas. Senator Watson s bills include: SB 240 would ensure additional local school property taxes supplement rather than supplant state education dollars. SB 241 would require the state to cover an equal share of transportation costs. SB 242 would allow "Robin Hood" school districts to apply their transportation costs against their recapture payment to the state, as is already done with other components of the formula such as the New Instructional Facilities Allotment. SB 243 would update the Cost of Education Index to reflect current conditions. SB 244 would eliminate the Cost of Education Index. For SB s 243 or 244, a contingency rider would be needed in the appropriations bill to flow the same amount of money to school districts through the basic allotment. SB 245 would provide Tuition Revenue Bonds for institutions of higher education that are working with local school districts to achieve the post-secondary readiness goals of House Bill 5. SB 246 would eliminate a vestige of the 2006 school finance legislation that reduces state aid for certain school districts, known as fractional funding, if a district tax rate is now more than $1. SB 247 would raise the yield on copper pennies levied above a $1.06 tax rate to the same value as the pennies in the first $1. Senator Watson concluded, "Texas should address these important issues independent of the lawsuit. It s silly that our state relies upon decades old information to pay for schools today." Other Pre-Filed Public Education Bills: SB 23 by Judith Zaffirini (D-Laredo) would establish universal pre-kindergarten for all four-year olds and would expand half-day pre-kindergarten to three-year olds that meet at-risk criteria.

14 SB 74 by Rodney Ellis (D-Houston) would subject the State Board of Education to sunset review in the Sunset Commission s next review cycle and every twelve years thereafter. SB 149 by Kel Seliger (R-Amarillo) would establish an individual graduation committee for each student who fails to pass an end-of-course assessment after two attempts. SB 176 by Kel Seliger (R-Amarillo) would require the Commissioner of Education to consider factors not related to assessments, including student participation the University Interscholastic League, the number of dual credit hours earned, successful completion of Advanced Placement and International Baccalaureate courses, career and technical certifications awarded and college-ready performance on the Texas Success Initiative Assessment. The current public school accountability system s indices laid out in HB 5 (2013R) include - Student Achievement, Student Progress, Closing the Performance Gaps and Postsecondary Readiness. PRIVACY: Revenge Porn Three bills have been pre-filed related to revenge porn including: HB 101 by Ryan Guillen (D-Rio Grande City) would create an offense for intentionally displaying, distributing, publishing, advertising, offering, or disclosing visual material depicting another person engaged in sexual conduct without the person s consent. It would be a defense to prosecution that the actor is an interactive computer service or an information service provider and the disclosure was provided by another person. HB 147 by Jose Menendez (D-San Antonio) would make it an offense to transmit a visual image of an intimate area of another person without the person s consent. HB 496 by Mary Gonzalez (D-El Paso) would specify remedies available to victims of promotion of unauthorized intimate visual material. It would not apply to a claim brought against an interactive computer service for a disclosure consisting of intimate visual material provided by another person. Data Security Two bills have been pre-filed concerning the security of the state s information resources including: SB 34 by Judith Zaffirini (D-Laredo) would require the Department of Information Resources to submit a report prior to each legislative session evaluating the information security of the state s information resources. SB 35 by Judith Zaffirini (D-Laredo) would require state agencies to include in the state agency s information security plan a written acknowledgement that the agency head, the chief financial officer, and each executive manager have been made aware of the risks revealed during the preparation of the agency s information security plan. TAXATION:

15 Coalition for Equal and Uniform Taxation On December 4 th several trade associations representing the real estate industry announced the formation of The Coalition for Equal and Uniform Taxation. The coalition is composed of commercial real estate organizations that are joining forces to defend the Texas constitution s guarantee of Equal and Uniform Taxation and fight efforts to impose mandatory sales price disclosure. The Texas constitution mandates that all property be taxed at market value and that the taxes be equal and uniform. Both homeowners and businesses have a right to challenge a central appraisal district s valuation if it does not meet this constitutional standard. Coalition spokesman David Margulies said, This important protection is one of the fundamental reasons for Texas growing, healthy economy. Our tax system has been under attack by certain taxing jurisdictions with an agenda that will hurt the Texas economy and has the potential to increase taxes for many Texans. The current constitutional requirement of equal and uniform taxation is being challenged by false claims that undervalued commercial property is raising taxes on homeowners. In fact, according to a report by the respected Texas Taxpayers and Research Association, residential property has become a larger part of the Texas tax base due to a booming urban housing market and a reduction in manufacturing jobs in the state and not because property is not being adequately appraised. Margulies concluded, It is very important that Texas business and property owners keep tabs on this issue. There will be continuing pressure from special interest groups to get business valuations increased as a stealth strategy to hide a significant increase in taxes. Discussion of this issue has proponents of change discussing dramatically increasing tax revenue. The coalition includes the Texas Apartment Association, Building Owners and Managers Association/Texas, International Council of Shopping Centers, Texas Association of Realtors, the North Texas Chapter of NAIOP, Texas Hotel & Lodging Association, Texas Self Storage Association, Texas Association of Business, Real Estate Councils of Texas, and Texas Association of Builders. Second Amendment Sales Tax Holiday On December 11 th, Senator Brandon Creighton (R-Conroe) and Representative Jeff Leach (R-Plano) filed SB 228 and HB 206, the Second Amendment Sales Tax Holiday Act. Senator Creighton said, This common-sense legislation is a bold step towards protecting and promoting our Second Amendment freedoms by establishing a tax-free weekend for the purchase of firearms, ammunition and hunting supplies during the last full weekend in August in advance of the fall hunting season, which begins on September 1st. Surrounding states, including Louisiana and Mississippi, currently have similar tax exemption measures in place towards the purchase of firearms, ammunition and certain hunting supplies. I am proud to work with Representative Leach on this legislation. Providing this sales tax benefit prior to the start of hunting season will give our retailers an economic boost and our hunters much deserved savings. Texas is blessed with abundant natural resources and opportunities for those who enjoy hunting and the outdoors. I am glad to encourage the strong hunting culture of our state and certainly to promote our heritage and support of the Second Amendment." Representative Leach added,

16 "At a time when our fundamental constitutional rights are under constant attack, I believe Texas has an obligation to take a strong stand on this issue and work vigilantly to promote the Second Amendment. This legislation ensures that Texas remains at the forefront in the fight to protect our treasured right to keep and bear arms. Further, it encourages gun owners and sportsmen to spend their money in Texas and, in doing so, serves as an economic engine for large and small retailers across the state. I am honored to work alongside my friend and colleague, Senator Creighton, to advance this common-sense measure during the 84th Legislative Session. Taxed Out of Town Initiative On December 16 th, the Texas Building Owners and Managers Association (BOMA) launched Taxed Out of Town, a statewide initiative advocating for Texas property appraisal reform. Tammy Betancourt, Executive Vice President of Houston BOMA said, Unpredictable and uncontrolled valuation increases have placed significant financial burdens on Texas businesses, forcing some to move outside of city limits to avoid erratic appraisals. This issue affects everyone, not just commercial real estate. Commercial property taxes are paid by the businesses that lease space in Texas. Higher commercial property taxes lead to increased operating costs for Texas business owners, rents for tenants, and costs for goods and services. In some areas of Houston, property valuations have increased more than 100 percent in the last two years. In 2013, commercial property valuations across the Bayou City increased 53 percent on average, then another 18 percent in Similar double-digit increases have occurred in other Texas cities and counties, without proportionate reductions in tax rates. Statewide property valuations have not only risen sharply, but erratically. The Texas Constitution requires equal and uniform taxation for all, but commercial property valuations have proved to be inconsistent and lacking in a standard formula, with similar properties in the same neighborhood receiving varying appraisals. As a result, it s difficult for Texas small businesses to accurately plan for the future. Betancourt concluded, Texas takes pride in being pro-business, but the current property appraisal process is anything but. If runaway increases in commercial property valuations are allowed to continue to burden Texas businesses, the end result will be stalled local growth, decreased job creation, and local businesses and investors looking elsewhere to do business. Our great state s continued economic growth and prosperity means little if our local businesses cannot afford to grow along with it. Texans deserve meaningful property appraisal reform. WORKFORCE: Manufacturing Development On December 9 th, the office of Comptroller Susan Combs released a study required by HB 2482 by Representative Carol Alvarado (D-Texas) from the 2013 legislative session on why major manufacturing firms choose to invest in other states after considering economic incentives to develop in Texas. The report found that there was not a single determining reason that caused a business to relocate to another state, however workforce availability and training programs was cited most frequently as a major

17 decision factor. Other factors that played a role in a business' location decision ranged from proximity of the final location to markets or related industry to transportation issues. The report proposed various recommendations to improve manufacturing development in Texas including: 1. Enhancing workforce development efforts to ensure that Texans have the skills for available jobs; 2. Streamlining incentive programs to offer companies a coordinated, transparent process; 3. Ensuring local flexibility so communities can employ a variety of tools to promote manufacturing development; and 4. Reviewing and evaluating economic incentive programs. Representative Alvarado said, "This report presents a clear argument for increasing career and technical education in our schools, increasing funding for training programs and other initiatives that will help close our state s workforce skills gap. I am very encouraged by the findings in this report and look forward to finding some legislative solutions to improve our state's workforce and business climate." State Websites - Additional information can be obtained via the Senate, House, and capitol websites: