Senate Bill No. 287
(By Senators Tomblin, Mr. President, and Caruth,
By Request of the Executive)
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[Introduced January 22, 2008; referred to the Committee on
Education; and then to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §18B-18A-1,
§18B-18A-2, §18B-18A-3, §18B-18A-4, §18B-18A-5, §18B-18A-6,
§18B-18A-7, §18B-18A-8, §18B-18A-9, §18B-18A-10, §18B-18A-11
and §18B-18A-12, all relating to the establishment of the West
Virginia Research Trust Fund; providing legislative findings
of fact; defining certain terms; creating a special account in
the State Treasury; providing for allocation of moneys
appropriated for deposit into the West Virginia Research Trust
Fund; authorizing Marshall University and West Virginia
University to establish directed research endowments;
providing requirements for directed research endowments;
providing for administration of directed research endowments
by applicable governing board; granting investment authority
to the governing boards; authorizing use of investment earnings accruing to directed research endowments and
prohibiting the expenditure of the principal of a directed
research endowment; establishing criteria and restrictions for
qualified private donations and qualified private donation
pledges; establishing eligible uses of directed research
endowment proceeds; providing for submission of directed
research endowment plans; establishing criteria and procedures
for distribution of matching moneys from the West Virginia
Research Trust Fund; providing for reallocation of moneys in
the West Virginia Research Trust Fund; requiring participating
institutions to return unmatched moneys to the fund under
certain circumstances; authorizing distribution of certain
moneys to state colleges; establishing powers and duties of
the Higher Education Policy Commission; and requiring the
Higher Education Policy Commission to submit an annual report.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §18B-18A-1, §18B-18A-2,
§18B-18A-3, §18B-18A-4, §18B-18A-5, §18B-18A-6, §18B-18A-7,
§18B-18A-8, §18B-18A-9, §18B-18A-10, §18B-18A-11 and §18B-18A-12,
all to read as follows:
ARTICLE 18A. DIRECTED RESEARCH ENDOWMENTS.
§18B-18A-1. Legislative findings and purpose.
(a) The Legislature hereby finds and declares as follows:
(1) That the continued expansion of the national economy will
be dependent upon the ability of its institutions of higher
education to increase the quantity, productivity, and quality of
its citizens in scientific and technical fields of study. Indeed,
the failure of the United States to compete in these areas could
lead to lower standards of living, dependence upon foreign
intellectual capital, and international insecurity;
(2) That the future of the economy of the State of West
Virginia is equally dependent upon the ability of Marshall
University and West Virginia University, the state's two doctoral-
granting, public research universities, to promote and train
scholars, researchers, and technicians in these diverse fields of
study;
(3) That a recent emphasis on the creation of innovative
curricula, plus the receipt of significant private donations by
Marshall University and West Virginia University, has led to major
expansions in certain areas of study including energy, national
security technology, environmental sciences, health and biomedical
sciences, biometrics, biotechnology and nanotechnology;
(4) That despite these expansions, the additional investment
of both private donations and state moneys is critical to continue
funding the recruitment of world-class scientists, researchers,
research staff, technicians and professional degree graduates, as
well as funding for laboratories and scientific equipment;
(5) That the establishment of a state fund to allocate
matching public moneys to the state's two doctoral-granting public
research universities will provide an incentive to private donors
to make corresponding donations for certain priority areas of study
consistent with each institution's long-range strategic plan for
research.
(b) It is the intent of the Legislature to establish a fund
administered by the Higher Education Policy Commission for the
distribution of moneys to Marshall University and West Virginia
University, thereby promoting strategic private donations for
targeted areas of research and creating a sustainable source of
funding for research initiatives that are critical to achieving
long-term goals of research-based economic development and economic
diversification, while increasing the potential for the patenting,
licensing, and related technology transfer and commercialization of
scientific and technological research in the state.
§18B-18A-2. Definitions.
(a)
General. -- Terms used in this article have the meaning
ascribed to them in section two, article one of this chapter,
unless the context in which the term is used in the article clearly
requires a different meaning or a specific definition is provided
in subsection (b) of this section.
(b)
Words and phrases defined. -- For purposes of this
article, the term:
(1) "Directed research endowment" means a research endowment
account established at and administered by a participating
institution in accordance with the provisions of section four of
this article.
(2) "Directed research endowment proceeds" mean those
investment earnings accruing to a participating institution's
directed research endowment and available for expenditure by a
participating institution in accordance with the provisions of
subsection (d), section four of this article.
(3) "Fund" means the special account designated as the West
Virginia Research Trust Fund established in section three of this
article.
(4) "Participating institution" means Marshall University or
West Virginia University;
(5) "Qualified private donation" means any private donation,
gift, or bequest to a directed research endowment established at
and administered by a participating institution that meets the
criteria set forth in section five of this article; and
(6) "Qualified private donation pledge" means any pledge,
commitment, or other agreement to donate a qualified private
donation to a directed research endowment that is made pursuant to
a written agreement between the donor and the appropriate governing
board and that meets the criteria set forth in section five of this
article.
§18B-18A-3. West Virginia Research Trust Fund.
(a) There is hereby established in the State Treasury a
special account designated the West Virginia Research Trust Fund.
(b) The fund shall consist of any moneys appropriated by the
Legislature and any interest or other return on the moneys in the
fund. Any moneys remaining in the account at the end of a fiscal
year, including accrued interest, do not revert to the General
Revenue Fund, but remain in the account.
(c) Based upon the amount of moneys appropriated for deposit
into this account, the commission shall allocate seventy percent of
such moneys for distribution to West Virginia University and thirty
percent of such moneys for distribution to Marshall University.
Subject to this allocation, moneys appropriated for deposit into
this account shall be distributed by the commission in accordance
with the provisions of section eight of this article.
(d) Investment earnings accruing in the account may be
expended by the commission to:
(1) Cover all reasonable direct and indirect costs incurred in
the administration of the provisions of this article:
Provided,
That the amount of investment earnings expended for such
administrative costs shall not exceed two hundred fifty thousand
dollars in any given fiscal year;
(2) Provide research grants to state colleges in accordance
with the provisions of section ten of this article.
§18B-18A-4. Directed research endowments.
(a) The governing board of each participating institution is
hereby authorized to create and administer one or more directed
research endowments for the receipt of qualified private donations
and the receipt of matching state moneys allocated for distribution
to that institution.
(b) A directed research endowment shall consist of:
(1) Qualified private donations; and
(2) Matching moneys distributed by the commission from the
fund in accordance with the provisions of section eight of this
article.
(c) The governing board of a participating institution may
invest moneys deposited into a directed research endowment with its
nonprofit foundation that has been established to receive
contributions exclusively for that institution
: Provided, That any
interest or investment earnings on the moneys invested shall be
retained by the participating institution for the purposes set
forth in this article:
Provided, however, That any investments
that are authorized by this subsection shall be made in accordance
with and subject to the provisions of the Uniform Prudent Investor
Act codified as article six-c, chapter forty-four of this code
:
Provided further, That any investments that are authorized by this
subsection shall not be subject to the provisions of section
twelve-d, article one, chapter twelve of this code.
(d) Investment earnings accruing to a participating
institution's directed research endowment, hereinafter referred to
as directed research endowment proceeds, may be expended by the
governing board for one or more of the eligible uses designated in
section six of this article
: Provided, That the principal of a
directed research endowment may not be expended for any purpose.
The governing board of a participating institution may transfer
directed research endowment proceeds to affiliated research
corporations established pursuant to the provisions of article
twelve of this chapter for one or more of the eligible uses
designated in section six of this article.
(e) The governing board of a participating institution is
exempt from liability for any loss or decrease in value of the
assets or income of a directed research endowment, except as losses
or decreases in value are shown to be the result of bad faith,
gross negligence or intentional misconduct.
(f) The governing board of each participating institution
shall adopt policies and procedures for the administration of
directed research endowments consistent with the requirements of
this article.
§18B-18A-5. Qualified private donations.
(a) Qualified private donations and qualified private donation
pledges to a directed research endowment shall meet the following
criteria:
(1) The donation or pledge shall be expressly and specifically
restricted by the donor for one or more of the eligible uses
designated in section six of this article:
Provided, That nothing
in this subdivision shall be construed to prohibit a participating
institution from designating unrestricted gifts or bequests, or any
portion thereof, for use as a qualified private donation;
(2) The donation or pledge, whether individually or bundled,
shall be a minimum of fifty thousand dollars; and
(3) Donations or pledges may be accepted from individuals,
partnerships, associations, public and private corporations,
whether for profit or nonprofit, nongovernmental foundations, and
hospitals.
(b) The following shall not be included as qualified private
donations or qualified private donation pledges:
(1) Any donation or pledge received by an institution or its
affiliated foundation prior to the effective date of this article;
(2) General funds, fees, tuition or other revenue generated by
the institution of higher education;
(3) Proceeds from promissory notes, bonds, loans, or other
instruments evidencing an indebtedness, or any other obligation of
repayment by the governing board to the maker of such instrument;
(4) Any moneys or assets, other than donations or pledges
meeting the criteria of subsection (a) of this section, received
from the institution's affiliated nonprofit foundation; or
(5) Any other moneys received from the state or federal
government.
(c) Each participating institution's affiliated nonprofit
foundation that has been established to receive contributions
exclusively for that institution, may transfer donations or pledges
that it receives and that meet the criteria of this section to the
applicable institution for deposit into a directed research
endowment administered by such institution.
(d) The president of each participating institution or his or
her designee, shall make the initial determination of whether a
donation or pledge meets the criteria for qualified private
donations or qualified private donation pledges as set forth in
this section. The president shall provide periodic reports, at
least annually each fiscal year, to the appropriate governing board
regarding the amount of qualified private donations and qualified
private donation pledges received.
§18B-18A-6. Eligible uses of directed research endowment proceeds.
(a) Directed research endowment proceeds may be expended by a
participating institution, or transferred to the institution's
affiliated research corporation, for any of the following
designated uses:
(1) To pay the base salaries of newly-endowed department
chairs, new professorship positions, new research scientists, and
new research staff positions, including, but not limited to, research technicians and support personnel, and to fund affiliated
graduate or undergraduate student research fellowships
: Provided,
That all such positions or fellowships shall be engaged primarily
in one of the following areas of research: (A) Energy and
environmental sciences; (B) Nanotechnology and materials science;
(C) Biological, biotechnological and biomedical sciences; or (D)
Biometrics, security, sensing and related identification
technologies; or
(2) To purchase basic infrastructure directly related to an
area of research identified in subdivision (1) of this subsection,
including, but not limited to, laboratory and scientific equipment,
and other essential equipment and materials.
(b) Eligibility criteria regarding the expenditure of directed
endowment proceeds to pay the base salaries of personnel, to fund
student fellowships, and to purchase basic infrastructure shall be
established pursuant to guidelines and policies adopted by the
commission in accordance with the provisions of section eleven of
this article.
§18B-18A-7. Directed research endowment plans.
(a) To facilitate the goals of this article and to ensure the
prudent expenditure of state moneys, the governing board of each
participating institution shall submit to the commission a directed
research endowment plan.
(b) The directed research endowment plan shall include, but not be limited to, the following:
(1) An assessment of the participating institution's current
research initiatives, including any initiatives falling within an
area of research identified in subdivision (1), subsection (a),
section six of this article;
(2) A discussion of the manner in which those current research
initiatives could be enhanced;
(3) A projected outline for the participating institution's
proposed use(s) of directed research endowment proceeds, including
the identification of any specific disciplinary hires,
collaborations, or acquisitions currently under consideration;
(4) A list of prioritization of each proposed use contained in
the plan, including the anticipated costs associated with each
proposed use;
(5) A discussion of how the anticipated costs correspond to
the directed research endowment proceeds expected to be available
to the institution;
(6) An evaluation of how the plan furthers the goals of this
article and addresses the research needs of the institution;
(7)
The identification of those proposed uses for which
alternative funding sources, other than qualified private
donations, matching moneys from the fund, and the directed research
endowment proceeds generated therefrom, may be sought to enhance
the comprehensive research initiatives contemplated by the participating institution including, but not limited to, any funds
received pursuant to the America Competes Act of 2007, Public Law
110-69; and
(8) Notation of the amount allocated for distribution to the
participating institution pursuant to subsection (c), section three
of this article.
(c) The governing board of each participating institution
shall submit its directed research endowment plan to the commission
prior to submitting its first request for a distribution of
matching moneys from the fund.
§18B-18A-8. Distribution of matching moneys.
(a) A participating institution seeking to receive a
distribution of matching moneys from the fund shall obtain
qualified private donations and/or qualified private donation
pledges in an amount equal to the amount of matching moneys
requested for distribution and shall submit a request to the
commission setting forth the following:
(1) The proposed use of the directed research endowment
proceeds and an evaluation of how such use furthers the goals of
this article and addresses the research needs of the institution as
identified in the directed research endowment plan submitted
pursuant to section seven of this article;
(2) An evaluation of how the proposed use satisfies the
criteria for the eligible uses of directed research endowment proceeds set forth in section six of this article;
(3) Designation of the applicable directed research endowment
into which the requested matching moneys are to be distributed;
(4) Notation of the amount allocated for distribution to the
participating institution pursuant to subsection (c), section three
of this article and the amount of any previous distributions of
matching moneys from the fund; and
(5) Notation of the amount of qualified private donations
and/or qualified private donation pledges designated for use in
requesting the distribution of matching moneys from the fund.
(b) The commission, working in conjunction with the state
EPSCoR advisory council, shall review a request for distribution to
evaluate the research, scientific, educational and economic merits
of the request, to ensure compliance with the provisions of this
article, and to ensure that the request furthers the research
objectives of the institution, as identified in the directed
research endowment plan submitted pursuant to the provisions of
section seven of this article. The commission shall verify the
amount of qualified private donations and/or qualified private
donation pledges designated for use by the participating
institution in submitting its request.
(c) Upon approval of a request by the commission, matching
moneys from those allocated to the applicable institution shall be
distributed to the applicable directed research endowment in an amount equal to the amount of qualified private donations and/or
qualified private donation pledges identified in subdivision (5),
subsection (a) of this section.
§18B-18A-9. Reallocation of matching moneys.
(a) Within five years from the effective date of this article,
each participating institution shall have deposited into its
directed research endowment(s) an amount of qualified private
donations equal to or exceeding the total amount of moneys
allocated for distribution to such institution pursuant to the
provisions of subsection (c), section three of this article.
(b) If only one of the participating institutions fails to
have deposited into its directed research endowment(s) the
requisite amount of qualified private donations by the end of this
five-year period, then the following provisions shall apply:
(1) Any portion of the moneys allocated to such institution
that has not been distributed shall be reallocated for distribution
to the other participating institution.
(2) If any donation or pledge previously used by such
institution to receive a distribution of matching moneys from the
fund has not been received in full by the end of this five-year
period, then the participating institution shall return the
unmatched portion of state moneys to the fund, which moneys shall
be reallocated for distribution to the other participating
institution.
(3) To be eligible to receive a distribution of reallocated
moneys pursuant to this subsection, the other participating
institution shall have qualified private donations in excess of the
amount required by subsection (a) of this section deposited into
its directed research endowment(s) in an amount equal to or
exceeding the amount of reallocated moneys: Provided, That if the
other participating institution does not have such excess qualified
private donations on deposit, the reallocated moneys shall be made
available for distribution by the commission to state colleges in
accordance with the provisions of section ten of this article.
(c) If both participating institutions fail to have deposited
into their respective directed research endowment(s) the requisite
amount of qualified private donations by the end of this five-year
period, then the following provisions shall apply:
(1) Any moneys remaining in the fund that have not been
distributed shall be made available for distribution by the
commission to state colleges in accordance with the provisions of
section ten of this article.
(2) If any donation or pledge previously used by the
participating institutions to receive a distribution of matching
moneys from the fund has not been received in full by the end of
this five-year period, then each participating institution shall
return the unmatched portion of state moneys to the fund, which
moneys shall be made available for distribution by the commission to state colleges in accordance with the provisions of section ten
of this article.
§18B-18A-10. Distributions to state colleges.
(a) The commission may use a portion of those moneys derived
from investment earnings accruing to the fund in accordance with
the provisions of section three of this article, as well as moneys
that are not distributed to participating institutions in
accordance with the provisions of section nine of this article, to
distribute state matching moneys to state colleges, as that term is
defined in subsection (q), section two, article one of this
chapter.
(b) The commission shall use the recommendations of the state
EPSCoR advisory council in establishing criteria for the eligible
use of moneys distributed pursuant to this section and in
developing procedures for the competitive application and review of
requests for funding submitted hereunder.
(c) To qualify for a distribution of state matching moneys
pursuant to this section, a state college shall solicit qualified
private donations in an amount equal to or exceeding the amount of
matching moneys requested for distribution from the fund, shall
establish a new account designated exclusively for the receipt of
qualified private donations and matching moneys from the fund, and
shall deposit the qualified private donations and any matching
moneys distributed from the fund into such account.
(d) Investment earnings accruing to an account established
pursuant to subsection (c) of this section shall be expended for a
research-oriented initiative approved by the commission: Provided,
That the principal of such an account may not be expended for any
purpose.
§18B-18A-11. Duties of Higher Education Policy Commission.
The commission shall:
(1) Establish documentation standards and review procedures to
determine whether a donation or pledge, when initially received or
when the terms of such donation or pledge are materially altered,
meets the criteria of a qualified private donation or qualified
private donation pledge;
(2) Develop guidelines and procedures establishing eligibility
criteria regarding the expenditure of directed endowment proceeds
to pay the base salaries of personnel, to fund student fellowships,
and to purchase basic infrastructure consistent with the provisions
of section six of this article.
(3) Develop guidelines and procedures to ensure that directed
research endowment proceeds are expended in compliance with this
article; and
(4) Require each participating institution to report on the
total amount of qualified private donations received, the
investment earnings realized, and any anticipated expenditures from
its directed research endowment(s) in its annual operating budget.
§18B-18A-12. Annual report.
Commencing on the first day of January, two thousand ten, and
annually thereafter, the commission shall submit a report to the
Governor, the President of the Senate, the Speaker of the House of
Delegates, and the Legislative Oversight Commission on Education
Accountability detailing the implementation of the directed
research endowments at each participating institution, the amount
of qualified private donations received by each participating
institution in the preceding fiscal year, the amount of any
distributions made from the fund, and a description of the
scholarship or research supported by those moneys.
NOTE: The purpose of this bill is to establish directed
research endowment funds at Marshall University and West Virginia
University for the purpose of promoting research, scholarship, and
economic development in certain areas of study. The bill
establishes a program whereby eligible private donations are
matched by the allocation and distribution of state moneys from the
newly established West Virginia Research Trust Fund.
This article is new; therefore, strike-throughs and
underscoring have been omitted.
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