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August 2009

JUNE REVENUE (IN MILLIONS): SALES TAX: $1,579.4 OIL PRODUCTION: $65.8 NATURAL GAS: $50.1
MOTOR FUELS: $258.4 MOTOR VEHICLE SALES: $216.1 TOBACCO: $125.8

Around Texas

  • Houston’s Rice University has received $11.1 million in federal stimulus money that will go toward the construction of a new 110,000-square-foot physics building. The $44.5 million Brockman Hall for Physics is expected to open in spring 2011.
  • In June, Woodbine Development Corp. and Hyatt Hotels and Resorts broke ground on a $30 million Hyatt Place Hotel project in Sugar Land.
  • The Texas Department of Transportation has chosen Atlanta-based Archer Western to build Woodall Rodgers Park, a five-acre urban park plaza that will straddle Woodall Rodgers Freeway in Dallas.
  • The Cruise Lines International Association reports that the cruise industry contributed $1.1 billion in direct spending and more than 18,600 jobs to Texas in 2008.

New Help for Higher Ed

by Bruce Wright

Breakthrough legislation in the 2009 session

The 2009 session of the Texas Legislature ended as they often do, in a swirl of last-minute votes and sheaves of dead bills. But despite the typically chaotic nature of the session, Texas lawmakers made important contributions to the state’s colleges and universities.

New legislation will add to the state’s list of universities, encourage the growth of scientific research, increase financial aid and help community colleges produce competent technical workers trained on the latest equipment.

Some highlights of the 2009 session’s higher education initiatives include:

Adding Tier 1 Schools

One major goal of the 2009 Legislature is increasing Texas’ number of “Tier 1” universities. Tier 1 is a common label for the nation’s foremost research institutions – those that dominate in factors such as research funding, endowment assets and doctorates awarded.

One common yardstick for Tier 1 status is membership in the Association of American Universities (AAU), a group of 62 “preeminent” public and private research institutions in the U.S. and Canada. Texas has three of these – the University of Texas at Austin (UT-Austin), Texas A&M and Rice University. California, by contrast, has nine AAU-member universities, while New York has seven.

Tier 1 schools attract the world’s most talented students and are significant economic assets in their own right.

Tier 1 schools attract the world’s most talented students, and are significant economic assets in their own right, spinning off companies and playing a midwife role in the development of technology-based industrial clusters. And if Texas students can’t find a berth at one of our Tier 1 schools, they may leave the state – never to return.

“Students tend to stay where they go to college,” says Guy Bailey, president of Texas Tech University. “When they leave Texas, looking for opportunities to attend Tier 1 universities, our chances of getting that talent back aren’t nearly as good.”

Guy Bailey, President, Texas Tech University

Guy Bailey,
President, Texas Tech University

House Bill 51 contains several initiatives designed both to strengthen the state’s existing public Tier 1 universities and to develop Tier 1 status at seven “emerging” research institutions – Texas Tech, the University of Houston, the University of North Texas in Denton and the UT institutions in Arlington, Dallas, San Antonio and El Paso.

“If some of our emerging research universities can become nationally ranked institutions, similar in status to A&M and UT-Austin, we’ll keep a significantly larger percentage of our students here,” Bailey says. “It’s a great resource for keeping and expanding our talent pool.”

HB 51 retools an existing state fund as the Research University Development Fund, providing it with $126.2 million over the next biennium. This funding can go only to UT-Austin, Texas A&M, Texas Tech and the University of Houston; in subsequent years, however, the other five emerging research universities will be eligible to receive appropriations from the fund as well.

The new law also creates a Texas Research Incentive Program (TRIP) with $50 million in funding over the next two years. These funds will be used to match private gifts to any of the seven emerging research universities.

“The TRIP fund will be extremely useful to us in helping us entice private donors – it provides leverage,” Bailey says. “We expect a significant increase in donations for research.”

Most importantly, perhaps, HB 51 will create a National Research University Fund, if Texas voters approve a constitutional amendment in November. This fund would receive income from about $425 million representing the permanent endowment of the state’s Higher Education Fund, which supports Texas’ public institutions other than UT-Austin and Texas A&M.

On the Money - Stimulus to the Rescue

On the Money - Stimulus to the Rescue

When Texas lawmakers convened in January, they faced a discouraging forecast: 10.5 percent less money over the next two years.

A month later, Congress approved the American Recovery and Reinvestment Act.

It changed the tone and direction of the 2009 legislative session. And postponed a day of reckoning.

“The stimulus money took some potentially draconian budget cuts off the table,” says Dale Craymer, president of the Texas Taxpayers and Research Association, a business group.

Without $14.4 billion in federal stimulus funding, Craymer says Texans could have experienced layoffs in education, cuts in social services — and a donnybrook over state spending.

Instead, the 2009 Legislature appropriated $2.3 billion to finish fiscal 2009 and added $12.1 billion to the next biennium’s budget of $182.3 billion, a 7.4 percent increase over the last biennium.

But Craymer joins other forecasters in predicting that in two years Texas will face a budget gap that could erase the $9 billion in the Rainy Day Fund — and then some.

Agreeing how to spend those emergency funds won’t be easy, either. It will take a two-thirds vote of the Legislature.

“Even if we have a robust economic recovery,” Craymer warns, “it’s not going to fill the gap.”

“The financial outlook underlines what I’ve been saying for some time,” says Texas Comptroller Susan Combs. “We’ve got to make sure the state spends tax dollars as wisely and as frugally as possible, and we must conduct state business with full transparency, so taxpayers can see where the money goes.”

(Laylan Copelin)

Read Laylan Copelin’s On the Money blog on the Comptroller’s Stimulus/Recovery site.

To qualify for this funding, institutions would have to meet certain benchmarks (such as obtaining at least $45 million annually in certain private and federal research funding). At present, none of the seven emerging institutions would be eligible – but that may change if the other HB 51 initiatives pay off.

More Grants

The Legislature also took steps to maintain the affordability of college. Texas’ primary grant program for college students, the Toward EXcellence, Access & Success (TEXAS) Grants, provides financial aid to Texas residents enrolled in the state’s public colleges and universities. The program received a significant funding boost for fiscal 2010 and 2011. TEXAS Grant funding will rise to $614.3 million over the next two years, 44 percent more than in the previous biennium.

According to the Texas Higher Education Coordinating Board (THECB), the TEXAS Grant program provided about 82,400 students with $199.6 million in financial assistance in 2008. THECB estimates the funding boost will allow the program to serve about 104,000 students for the next two years, 21,660 more than in the previous biennium.

New Universities

Other 2009 legislation created three new Texas universities from institutions previously affiliated with other schools.

The new institutions include Texas A&M-Central Texas and Texas A&M-San Antonio, formerly “system centers” of Tarleton State University and Texas A&M-Kingsville, respectively; and the University of North Texas at Dallas, formerly part of the University of North Texas at Denton.

John Ellis Price, Vice Chancellor and President Designate, University of North Texas at Dallas

John Ellis Price,
Vice Chancellor and
President Designate,
University of North Texas at Dallas

Their new status qualifies these schools to issue revenue bonds to support new construction and other infrastructure improvements.

The legislation has, for instance, “cleared the way for the construction of a second building on the University of North Texas Dallas campus,” says John Ellis Price, vice-chancellor and president designate of the new institution. “UNT-Dallas will begin enrolling freshmen in 2010, and we have desperately needed more space.

“Our current student population of 2,300 is difficult to house in our single building,” Price says. “Adding 100,000 square feet will allow us to offer science curricula in state-of-the-art laboratories and classrooms.”

Aid for Work Force Training

The Legislature also acted to help remedy Texas’ growing shortage of skilled technical workers – specialists it will need to flourish in a global economy increasingly dominated by information technology and service industries.

A new $25 million program, based on a proposal put forward in the 2008 Comptroller report Texas Works, will create three new state funds to encourage job training for students entering high-demand occupations in technical fields and emerging industries. The Comptroller’s office will administer the funds under the collective program title the Every Chance Funds.

The Every Chance Career and Technical Scholarship Fund will provide scholarships for students in career and technical training programs at Texas public community colleges and technical schools. It will have $5 million to disburse in fiscal 2010 and 2011.

The Every Chance Launchpad Fund will provide grants to Texas nonprofit organizations that offer programs that prepare high school students for technical occupations such as welding, computer support, nursing and allied health professions. The fund will have $10 million to disburse in fiscal 2010 and 2011.

Finally, the Every Chance Job Building Fund will provide grants to Texas public community colleges and technical schools to help them purchase the cutting-edge equipment and facility upgrades needed for high-demand career and technical education programs. This fund, too, will have $10 million available in fiscal 2010 and 2011.

“We were thrilled to see this program emerge,” says Don A. Perry, executive district director of Work Force Education and Compliance for the Dallas County Community College District. “The difficulty always with starting new programs is having sufficient funds up front to acquire the equipment needed to teach new and emerging technologies. Even some of the more traditional industrial trades areas, such as welding and machining, call for increasingly complex – and highly expensive – equipment to produce highly competitive individuals.

“And the scholarship funds will help give more Texas students the skills they’ll need to support both themselves and Texas’ economic growth,” he says. FN

To learn more about financial aid for college in Texas, please visit the Comptroller’s Every Chance, Every Texan Web site.

More Money For College

TEXAS Grant funding will rise by 44 percent during the next two years.

The Texas Higher Education Coordinating Board estimates that additional funding for the TEXAS Grant program will allow it to serve about 21,660 more Texas students during the 2010-2011 biennium.

Texas Grant Awards
Fiscal Year2000200120022003200420052006*2007*2008*2009**2010**2011**
Number of Students Served10,86517,395 45,72268,55564,10860,13061,05752,56254,44860,30370,46370,104
Amount Awarded (in millions)$19.7$34.6$101.9$164.5$157.3 $167.3$186.1$175.0$199.6$231.4$285.7$329.0

* Includes Texas Equalization Grant funds used for TEXAS Grant continuing students attending independent colleges and universities. A 2005 legislative change made such students ineligible for TEXAS Grants.
** Estimated.

Source: Texas Higher Education Coordinating Board

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