Make the Texas State Technical College Eligible for HEAF Funding

The Legislature should make the Texas State Technical College eligible to receive capital funding from the state s Higher Education Assistance Fund.


Background
The Texas State Technical College (TSTC) was established in 1965 to provide college-level programs in highly specialized technical and vocational fields. TSTC has four branch campuses in Amarillo, Harlingen, Sweetwater and Waco, with extension centers in A bilene, Brownwood, Marshall and McAllen.

Part of TSTC s mission is to support economic development on educating and training skilled occupational workers. Vocat ional and technical education provided through TSTC is uniquely structured to respond to rapidly changing job markets, adapt to new training techniques and meet individual student needs. It is likely to be an increasingly valuable resource for producing hi ghly trained graduates with marketable skills.

TSTC has no independent tax base as a funding source. State general revenue appropriations fund more than 60 percent of the institution s spending. Administrative and instructional appropriations are based on the contact-hour formula used for community colleges. Physical plant operation and maintenance costs are funded through the physical-plant formulas used by general academic institutions. TSTC is the only state institution of higher education without a dedicated revenue source for its capital needs.

Institutions in the University of Texas and Texas A&M University systems can use bond proceeds secured by the Permanent University Fund (PUF) for construction. Other public colleges and universities are eligib le for capital funding from the Higher Education Assistance Fund (HEAF).

Voters approved a 1984 constitutional amendment creating the HEAF after 17 of the state s universities were left without a dedicated capital funding source following the 1982 repeal of the state property tax. At that time, TSTC was under the supervision of the Texas Education Agency. TSTC was not considered an institution of higher education and was not included with those institutions eligible for HEAF funding. In 1985, the Legisla ture moved supervision of TSTC to the Higher Education Coordinating Board but did not authorize it to receive HEAF money.

The HEAF is funded annually with $100 million from the General Revenue Fund. The funds were reallocated by the Legislature in 1989 based on a formula which considers space deficits, facility conditions, institutional complexity, separate allocations for me dical units and an additional allocation for Texas Desegregation Plan compliance. 1 The funds will be reallocated again in fiscal 1996.

HEAF dollars may be spent to acquire land, to construct, equip, repair or rehabilitate buildings and other permanent improvements, and to purchase capital equipment and library books and materials. An institution s governing board may issue bonds and pledge up to half of the HEAF money allocated to each institution to repay those bonds. 2 At present, 13 institutions have outstanding bonds. 3

TSTC s four branch campuses are located on the grounds of former air bases and include many structures built for temporary use during World War II and the Korean War. Pre-1965 structures account for 46 percent of all TSTC campus buildings. 4 Consequently, high maintenance costs and energy inefficiencies create unique problems for TSTC.

During the 1988-89 biennium, TSTC received $600,000 in general revenue for new construction, major repairs and facility rehabilitation. During 1990-91, TSTC received $2.7 million in general revenue for similar purposes. Appropriations for 1992-93 for const ruction, leases and facility maintenance totalled $3.2 million. TSTC also has been able to secure construction funds from other sources including the U.S. Department of Commerce.


Recommendation
When the Higher Education Assistance Fund (HEAF) is reallocated in fiscal 1996, Texas State Technical College (TSTC) should be added to the list of institutions eligible to participate.


Implications
This recommendation would allow TSTC to receive capital funding like the state s other non-PUF institutions. This recommendation would replace TSTC s current line-item capital funding from the General Revenue Fund.


Fiscal Impact
HEAF funding would not pay any TSTC capital costs until fiscal 1996. Current line-item appropriations for capital costs would continue for TSTC for fiscal 1994 and 1995. Subsequently, general revenue savings would accrue in the amount of these appropriatio ns. Assuming that TSTC capital costs remain constant, annual general revenue savings in the amount of $1.6 million would occur starting in fiscal 1996.

Fiscal Savings to the General Change in
Year Revenue Fund 001 FTEs

1994 $ 0 0
1995 0 0
1996 1,600,000 0
1997 1,600,000 0
1998 1,600,000 0



Endnotes
1 Texas Education Code, Sec. 62.021(a) (Vernon Supp. 1991).
2 Texas Const. Art. VII, Sec. 17(a).
3 Comptroller of Public Accounts, Texas Comprehensive Annual Financial Report 1991 (Austin, Texas, February 28, 1992), p. 230.
4 Senate Interim Committee to Study the Need for Capital Equipment and New Construction on the Campuses of Texas State Technical Institute, The Need For Capital Equipment and New Construction Texas State Technical Institute (Austin, Texas, December 14, 1990), p. 10.