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ED 12
Allow Community Colleges and School Districts to Use State Travel Services

Summary

The state’s travel services provide state agencies with low-cost and highly flexible travel arrangements by negotiating favorable contracts for these services. Institutions of higher education are required to use the state’s travel services when using general revenue funds or education and general funds. It is unclear whether community colleges or technical colleges can participate. Public school districts, which spend $130 million annually on travel, are not required or even allowed to use the state’s travel services. By making state travel services available to public schools and community colleges, districts and colleges should be able to save money that then can be redirected into the classroom.

Background

Educational institutions often must absorb significant travel expenditures for employees and board members who are required to travel for conferences, recruitment trips, training and speaking engagements. While most trips can be planned in advance to take advantage of lower airfares and reduced rates, these savings are offset by a corresponding reduction in flexibility; discounted airfares, for instance, often are not exchangeable or transferable.

The state’s travel services, by contrast, provide low-cost and highly flexible travel rates, obtained through favorable contracts negotiated with various vendors. These services include airfare, rental cars, lodging, travel agency services and the like. Airline fares obtained through the program are as much as 60 percent lower than coach fares, are fully refundable and involve no cancellation or change fees. The state’s contracts also offer last-seat availability, meaning that a state employee can obtain an airline ticket seat at the discount rate even at the last minute, assuming one is available.

A fully refundable Southwest Airlines fare from Austin to Dallas costs $93 when purchased through the Internet.[1] The state rate, as quoted on Texas Building and Procurement Commission’s (TBPC’s) Web site, is $37.[2] And no transaction fees are charged for these services.

Agencies in the executive branch of state government must participate in the program and use the travel agency, charge card, rental car, airline, hotel and other travel services it offers.[3]

County participation

Counties also may use the state’s contracted airline fares and travel agency services.[4] The expansion of the state’s travel services to counties began in 1997, with House Bill 255, which stated that a county sheriff, deputy sheriff or juvenile probation officer could obtain reduced airfares under the state’s contract when transporting a state prisoner under a felony warrant; the reduced fares were applicable only to the officer and the prisoner. The 1999 Legislature extended the privilege to county officers or employees engaged in official county business. Finally, the 2001 Legislature expanded the law to allow counties general access to reduced airfares and travel agent fees. Counties seeking to participate in the program must pass and submit a commissioner’s court resolution indicating compliance with all rules and procedures outlined in the TBPC’s airline and travel agency contracts.[5]

TBPC charges Texas counties a participation fee to recover its cost incurred in administering this program. The fee ranges from $560 annually for counties with fewer than 35,000 residents to $3,358 for counties with more than 500,000 residents.[6]

Educational participation

Texas school districts spent $133 million on travel for employees and school board members in fiscal 2001; this represented a 33 percent increase over fiscal 1997 travel expenditures of $100 million.[7]

School districts are not allowed to participate in the state’s travel services and generally are not required to follow state travel rules. A number of state and federal guidelines pertaining to state and federal grants and assistance programs, however, do specify allowable travel costs that can be expended from those funds. All travel expenses charged to these state and/or federal programs and projects are reimbursed at actual costs not to exceed the maximum allowable in the state’s biennial appropriations bill. In most instances, the district’s General Fund covers costs that are not allowable charges to state or federal grants.[8]

Institutions of higher education must use the state’s travel services contracts when such purchases are made using general revenue funds or educational and general funds as defined by the Education Code, §51.009.[9]

TBPC does not offer the state’s purchasing services to community colleges, however, on the grounds that they do not meet the legal definition of an institution of higher education. An employee of the Houston Community College System estimated that access to the state’s travel services could reduce the system’s travel expenses by much as 40 to 45 percent.[10]

TBPC’s objection to the inclusion of community colleges appears groundless. The Texas Education Code, §61.003 (8), reads as follows:

“Institution of higher education” means any public technical institute, public junior college, public senior college or university, medical or dental unit, public state college, or other agency of higher education as defined in this section.

Safeguards against abuse

When asked what problems might arise from allowing public schools and community colleges to participate in the state’s travel contracts, TBPC representatives said vendors might be reluctant to give favorable rates to these groups because it would be difficult to monitor them for abuse.[11]

During the course of more than 85 performance reviews of school districts and higher education institutions in Texas, the Texas School Performance Review (TSPR) has encountered a number of instances of excessive travel expenditures. During its review of the San Angelo Independent School District (ISD), for instance, TSPR found that travel expenses were being reimbursed without proper receipts and that the cost of items such as hotel movie rentals and alcoholic beverages were reimbursed to district employees. In addition, the amounts paid for meals and lodging were excessive, with room rates as high as $180 per night.[12]

Controversies over travel in Galveston ISD resulted in a grand jury investigation. Some areas of complaint included the board president’s trip to Accra, Ghana; poor record-keeping; and noncompliance with Internal Revenue Service requirements for an accountable travel reimbursement plan.[13]

In Del Valle ISD, both board and administrative travel expenditures were called into question. Some questionable purchases included airfare for spouses and children on trips to Albuquerque, New Mexico in November 1998, Orlando, Florida in February 2000 and Tucson, Arizona in October 1998. In addition, some board members charged the district for meals and cab fares in and around the Austin area. District staff could provide no proof of reimbursement by employees in cases calling for it.[14]

Some school districts and community colleges, however, have travel policies requiring adherence to the state’s travel guidelines. If employees or board members elect to stay in expensive hotels or spend money on alcoholic beverages or movie rentals during their travel, the district simply does not reimburse them for these portions of their expenses.

In addition, the Comptroller’s office periodically audits travel vouchers submitted in connection with state agencies’ travel. Counties are required to check their own vouchers, since payments are not made with state appropriated funds.[15]

Another safeguard is the fact that that all contract airfares must be charged on the state’s corporate travel charge cards.[16] The required use of these cards provides a number of controls. For example, every agency receives activity reports each month showing all of the charges and the merchants’ names by account, and TBPC has the authority to randomly review credit card statements to ensure compliance with travel guidelines. In addition, TBPC can block access to certain merchant codes that are clearly outside of the travel guidelines, such as liquor stores. Expenditures at non-travel locations such as retail stores also are limited to no more than $200 per 30 day cycle.[17] This safeguard is in effect for state agencies as well as counties.

Recommendations

A. State law should be amended to allow all Texas public higher education institutions, including community colleges, and Texas public school districts, to participate in the state’s travel services and contracts.

This would require added language in the law similar to that currently in place for Texas counties. Clarification of legislative intent or more specific language may be needed to ensure that TBPC extends travel services to community colleges, depending upon the results of a legal review by TBPC attorneys. School districts and community colleges should be charged a cost-recovery participation fee, similar to those charged to counties, to cover TBPC’s added administrative costs.

B. The Texas Education Code should be amended to limit the amount of money that a school district or community college can spend or reimburse for travel to the amounts stipulated in state travel guidelines.

Fiscal Impact

This recommendation would have no net fiscal impact on the state because the participation fees should cover any added administrative expenses. It would, however, result in considerable travel savings for community colleges and school districts, in some cases cutting the cost of airfares by as much as 60 percent. The actual amount of savings could not be determined for community colleges due to a lack of data, but assuming that the state’s school districts can achieve savings of even 10 percent on their $133 million in annual travel expenditures, districts could save $13.3 million annually.


Endnotes

[1]Quote derived from Southwest Airlines’ web site at http://iflyswa.com/, July 22, 2002.

[2]Texas Building and Procurement Commission, “State of Texas Contract sAirline Fares (Fiscal Year 2002),” http://www.tbpc.state.tx.us/travel/fy2002air.html. (Last visited September 13, 2002.)

[3]Tex. Admin. Code, Title 1 Administration Part 5; Texas Building And Procurement Commission; Chapter 125 Support Services Division—Travel And Vehicle; Subchapter A Travel Management Services; Rule §125.19: Participation by State Agencies (a) (1).

[4]Tex. Gov’t Code, Subchapter B; §2171.055: Participation in Travel Services Contracts (e).

[5]Tex. Admin. Code, Title 1 Administration Part 5; Texas Building And Procurement Commission; Chapter 125 Support Services Division—Travel And Vehicle; Subchapter A, Travel Management Services, Rule §125.9.

[6]E-mail communication from Gerry Pavelka, manager of the State Travel Management Program, Texas Business and Procurement Commission, July 24, 2002.

[7]Texas Education Agency, Public Education Information Management System Object Codes 6411 and 6419; 1996-97 through 2000-01.

[8]Texas Education Agency, Financial Accountability System Resource Guide Update 8.1 (Austin, Texas, December 2001), 1.8.1.1, Allowable Cost Principles.

[9]Tex. Admin. Code, Title 1 Administration Part 5; Texas Building And Procurement Commission; Chapter 125 Support Services Division—Travel And Vehicle; Subchapter A Travel Management Services; Rule §125.19 Participation by State Agencies (a) (2).

[10]Memorandum from Kay York, project director, Houston Community College System, received at meeting in Houston on July 11, 2002.

[11]Telephone interview with Melissa Hernandez, representative, Texas Building and Procurement Commission, July 19, 2002.

[12]Texas Comptroller of Public Accounts, Texas School Performance Review of the San Angelo ISD (Austin, Texas, August 2001), p. 309.

[13]Texas Comptroller of Public Accounts, Texas School Performance Review of the Galveston ISD (Austin, Texas, August 2001), p. 55.

[14]Texas Comptroller of Public Accounts, Texas School Performance Review of the Del Valle ISD (Austin, Texas, August 2001), p. 26.

[15]Telephone interview with Wilson Day, Claims Division Ombudsman, Texas Comptroller of Public Accounts, September 25, 2002.

[16]Tex. Admin. Code, Title 1 Administration Part 5; Texas Building And Procurement Commission; Chapter 125 Support Services Division—Travel And Vehicle; Subchapter A Travel Management Services; Rule §125.9 (d) Corporate Travel Charge Card Services.

[17]Telephone interview with Gerry Pavelka, manager of the State Travel Management Program, Texas Business and Procurement Commission, September 13, 2002.