Bill > HF2568

Introduced Session

This bill establishes a temporary independent fiscal restructuring authority (authority) to provide oversight of institutions of higher education (institutions) governed by the state board of regents (board). The authority is created as a temporary instrumentality of the general assembly exercising ministerial authority to apply statutory criteria to the board and institutions. The authority shall commence operations on July 1, 2027, and shall cease operations on July 1, 2032. A directive of the authority, issued as provided in the bill, is controlling, notwithstanding any provision of law, or of a board or institution policy, or of a contract entered into by the board or an institution to the contrary. The bill provides that the board shall serve as the implementing body for directives of the authority and prohibits the board from countermanding, delaying, or interfering with the implementation or enforcement of such directives. The bill requires the authority to submit quarterly reports on its activities to the general assembly. The bill authorizes the general assembly, by joint resolution subject to approval by the governor, to override any directive of the authority by a vote of at least two-thirds of the members of both chambers of the general assembly. The bill specifies required content of major directives of the authority and provides that such directives are voidable upon a timely challenge in district court if the required content is not included. The bill provides for judicial review of board activities. The authority shall consist of a member appointed by the speaker of the house of representatives, a member appointed by the majority leader of the senate, and a member jointly selected by the other two members, who shall serve as chairperson. The bill provides additional requirements and procedures for the membership of the authority. The bill requires an institution, for the fiscal year beginning July 1, 2027, and the four subsequent fiscal years, to establish its budget from a zero baseline annually. The institution shall not presume in favor of continuation of any program, position, or expenditure. The requirement applies to all expenditures. The bill requires each institution to achieve a 15 percent reduction in administrative full-time equivalent positions, relative to the number of such positions on July 1, 2027, no later than January 1, 2029. The bill requires each institution to achieve a 25 percent reduction in managerial and executive full-time equivalent positions, relative to the number of such positions on July 1, 2027, no later than July 1, 2030. The bill provides for capped increases in the number of such positions for a period thereafter. The bill prohibits changes in classification relating to such positions without prior written approval from the authority. The bill requires the authority to evaluate each academic program by audit at each institution with a score using metrics and weights specified in the bill and a scoring methodology specified and published by the board. The bill provides procedures and standards for the authority to audit academic programs based on the scoring methodology, with a higher scoring indicating a program shall be presumptively retained and a lower score indicating the program shall be presumptively subject to elimination. The bill provides procedures for the authority to order an institution to eliminate, consolidate, or restructure an academic program; eliminate a specific employment position or a specified number of positions; merge administrative functions; establish or modify an operational standard; and establish or modify a procurement standard. The bill provides for notice and an opportunity to respond and other procedures for such orders. The bill requires the authority to publish quarterly summaries showing the distribution of program elimination, reduction, and restructuring. The bill authorizes the authority to order the modification, suspension, or termination of any contract, other than a collective bargaining agreement, entered into by the board or an institution where necessary to achieve the statutory objectives of the bill. The bill provides procedures for such orders. The bill requires that counterparties be provided reasonable compensation when a contract is modified, suspended, or terminated. The bill provides standards and procedures for such compensation. The bill specifies that such compensation is not discretionary and constitutes a binding obligation. The bill requires the department of management (department) to withhold 20 percent of the moneys appropriated to an institution from the general fund that would otherwise be released to the institution in that quarter, in each fiscal quarter beginning on or after July 1, 2027, until the quarter in which the authority ceases operations. In each fiscal quarter, an institution is required to remit 20 percent of tuition moneys received to the department. The bill provides for the release of general fund and tuition moneys when the authority certifies to the department that an institution has carried out specified actions to comply with the bill. An institution may petition for early release of moneys based on hardship as specified in the bill. The bill prohibits the authority from ordering any action that would constitute a mandatory violation of binding requirements of federal law. The bill provides that federal pass-through funds, indirect cost recovery, and quasi-endowment funds derived from federal sources shall be subject to oversight by the authority the maximum extent permitted by federal law. The bill establishes a process whereby an institution’s general fund appropriations are offset by the department in an amount equal to federal funds not subject to oversight by the authority. The bill provides that an institution employee or official found to have obstructed any function of the authority shall be subject to state employment disqualification. The period of disqualification increases based on the severity of the obstruction. Disqualification includes employment by institutions, community colleges, state agencies, and certain contractors. The bill provides for notice, an opportunity to respond, and other procedures for such disqualification. The bill specifies other activities that also constitute obstruction. The bill requires the president and chief financial officer of each institution to certify annually under oath that the institution is in compliance with all directives of the authority and that all information provided to the authority in the previous year is accurate, truthful, and complete. The bill provides penalties including prohibition of salary increases, forfeiture of performance bonuses, and referral for discipline under Code chapter 70A or to the attorney general for investigation. The bill prohibits retaliation against an employee who reports conduct to the authority reasonably believed to constitute obstruction, evasion, or noncompliance with the bill. The bill provides for confidential reporting to the authority. The bill provides for a recognition payment to such an employee whose report results in a specified amount of savings. The bill authorizes the authority to subpoena documents, data, and testimony as it determines necessary to carry out its functions. The bill provides procedures for subpoenas. University-affiliated entities subject to subpoena include any tax-exempt organization using the name, branding, or trademarks of an institution; any entity employing personnel whose compensation is funded in whole or in part by state appropriations; any entity managing, holding, or administering assets related to state-funded facilities, programs, or operations; any entity receiving pass-through funding from an institution; and any institution foundation, research park, alumni association, athletics fundraising entity, and faculty practice plan. Knowing and willful provision of materially false information to the authority, or knowing and willful destruction of records responsive to an authority subpoena, constitutes an aggravated misdemeanor. An aggravated misdemeanor is punishable by confinement for no more than two years and a fine of at least $855 but not more than $8,540. The bill provides procedures for judicial review of action by the authority, including standing, venue, timelines, the standard of review, bonding requirements, and qualified immunity for authority members and staff. The bill prohibits reinstatement of an academic program eliminated by the authority for five years from the date of elimination or two years from the date the authority ceases operations, whichever is shorter. The bill provides procedures and standards for an institution to petition for a determination that a proposed new academic program is not substantially similar to an eliminated program. A proposed new academic program found to be substantially similar to an eliminated program is subject to the prohibition on reinstatement. A petition shall be made to the authority unless it has ceased operations, in which case it shall be made to the auditor of state (auditor). The prohibition does not apply to academic programs required by federal law, required for accreditation necessary for federal financial aid eligibility, or required by court order. The bill requires the auditor to conduct annual compliance audits to determine if the board and institutions are in compliance with the bill. An audit shall be conducted in each fiscal year the authority is in operation and the two fiscal years after it ceases operations. The auditor shall report the results of each audit to the general assembly. As part of the annual audit, the auditor is also required to certify the dollar amount of total savings across all institutions each fiscal year achieved as a result of implementation of the bill. If the amount of savings certified in any fiscal year is less than 15 percent, the board shall establish a remediation plan to increase the amount of savings for the next fiscal year to at least 15 percent. The bill appropriates moneys saved by an institution as a result of implementation of the bill, in the fiscal year beginning July 1, 2027, and the four subsequent fiscal years, to the authority to cover the costs associated with the implementation of the bill. Upon certification by the authority to the department each fiscal year that no further funding is required by the authority for the fiscal year, the bill appropriates the remainder of such funds to the respective institutions at which the savings accrued to be used for the purposes of tuition reduction, need-based financial aid, high-priority academic programs meeting demonstrated workforce needs, and deferred maintenance. If the funds appropriated to the authority are insufficient to fully cover the costs of the authority in a fiscal year, the bill appropriates an amount of moneys appropriated to the institutions from the general fund in the fiscal year to the authority for that purpose. The amount appropriated shall be divided evenly across the institutions. The bill shall not be construed to require any action that would cause loss of regional or specialized accreditation required for federal financial aid eligibility. The bill requires the authority to consult with relevant accrediting bodies before taking any action that may implicate accreditation standards. If an accrediting body provides written notice that a proposed action by the authority would jeopardize accreditation, the authority is required to modify the action to preserve accreditation or submit to the accrediting body an explanation of why the action is necessary and certification that alternative means were unavailable. The bill includes legislative findings and rules of construction. The bill provides for severability.

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Charley Thomson (R)*, 

Introduced, referred to Appropriations. H.J. 316. (on 02/17/2026)

Official Document