Establishing a temporary independent fiscal restructuring authority to provide oversight of institutions of higher education governed by the state board of regents, providing penalties, and making appropriations

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 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 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 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 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