Abolish the Texas Space Commission and Transfer Its Functions

The Texas Space Commission should be abolished and its functions transferred to the Texas Department of Commerce (or its successor agency).


Background
The Texas Space Commission (TSC) was created by the 70th Legislature to serve as the foc al point for space industry commercialization by encouraging economic development through the fostering of industries. The commission is charged with analyzing space-related research conducted within Texas and is required to report to the Legislature no la ter than the 30th day of each regular session.

The commission is composed of nine members appointed by the governor with the advice and consent of the Senate. The commission members serve for staggered six year terms. They meet once a calendar-year quarter and may not receive compensation other than reimbursement for actual and necessary expenses incurred in performing functions as a member of the commission. Commission members may solicit public and privat e donations and hire necessary staff.

The 72nd Legislature authorized the issuance of TSC license plates. The plates are issued for $30, of which $25 goes into the operating budget of the commission and $5 goes to the Department of Transportation to defr ay administrative costs. The commission received a $10,000 appropriation in fiscal 1992 and 1993 from the General Revenue Fund. The Texas Department of Commerce (TDOC) provides administrative support to the commission and transferred $100,000 to the commis sion in fiscal 1992 to assist with space industry promotion. The license plate fee, direct appropriation and inter-agency contract have been in effect only during the 1992-93 biennium.

Small agencies are often not equipped with resources enabling them to function autonomously. Smaller, free-standing agencies often find it difficult to meet complex state requirements, and each staff member may perform multiple functions without the types of checks and balances that can be found in larger agencies. Experti se to handle the complexities of state, legal, budget, purchasing and accounting functions is often difficult to arrange with a limited budget in a small agency. In addition, it usually costs less to have these free-standing agencies merged with another ag ency that performs similar oversight functions. The functions and practices of the TSC were reviewed to determine whether an efficient and effective system of checks and balances exists within the current structure of the TSC and whether better options exi st for carrying out TSC s duties. This review uncovered several key concerns.

First, the review identified opportunities for improved travel practices. A review of fiscal 1992 expenditures indicated that travel costs by loaned executives from the private sector accounted for 29 percent of the entire TSC budget, while travel expenses for paid administrative staff comprised only 6 percent. These expenses exceeded those normally allowed to employees, board members and executive directors of other agencies, pa rticularly TDOC.

Instead of contracting with TDOC for printing services, TSC paid higher prices to have printing and design jobs done by private companies. According to the fiscal 1992 expenditure report, TSC spent close to $10,000 for design services, bu siness cards, letterhead memorandum, envelopes and brochures. TDOC maintains an in-house design and printing section. Costs for design could have been eliminated and the cost of brochures and letterheads would have been greatly reduced by using TDOC. For e xample, TSC spent $200 to have a business card designed, and on two separate occasions, $224 to have 2,000 cards reproduced. TDOC contracts with a private printer to produce business cards at $18.50 per 500, one-third of the cost. There were also instances of TSC paying state and local sales taxes on paid invoices for these services and products.

TSC will be faced with a substantial loss of funds beginning as early as September 1993, when the TDOC terminates the interagency contract. TSC recognized the need to secure funding beyond the 1992-93 biennium and requested an increase in their regular app ropriation from $10,000 to $110,000 to counter the anticipated loss of the interagency contract with TDOC. The request also indicates that TSC expects the sale of 1,000 license plates beginning in fiscal 1993 to generate $25,000 per year in operating funds. Based on the revenue generated from the sale of 59 license plates (only $1,475) in fiscal 1992, it is questionable whether this appropriation could be substanti ated.

TSC did not always handle its donations from the public/private sector in the correct manner. The TSC statute stipulates that all donations and grants are to be deposited in the State Treasury to the credit of the TSC account. However, at least one instance is known where donated funds ($2,500 from a chamber of commerce) were deposited into an account other than the State Treasury. Improper handling of this type may indicate inaccurate accounting procedures.

The review found that TSC s location in Houston is not essential for carrying out the state s role with regard to encouraging economic development of space industries. In fact, its location, near existing space-related industry, could place the agency in the position of being accused of having a regional focus. If the goal of the state is to promote space and aerospace industry in Texas, a location near other economic development activities would be advantageous.

Both TSC and TDOC are charged with promoting job growth and job retention in Texas. TDOC has expertise and resources that TSC cannot reasonably be expected to maintain. There are a myriad of duplicative administrative functions that could more effectively be absorbed by TDOC. These include, but are not limited to, in-house printing and d esign services, travel management and reporting, the ordering and procuring of consumables, oversight of financial reporting and accounting and mailroom services. The mere size of TSC implies that certain critical functions do not exist and could be essent ial to the organization in the foreseeable future. These functions include internal audit, internal accounting and budgeting and legal services.

Current TSC staffing is inadequate for the needs of an agency. In its recent Legislative Appropriations Request, TSC asserts the need to secure additional staff to handle the myriad of routine administrative tasks necessary to operate a state agency. 1 TDOC has stated that they can handle the administrative needs of the commission if it were a part of the department rather than a separate agency, without additional full-time employees. 2

TDOC has a successful history of overseeing advisory boards and councils; it currently oversees five such entities: the Texas-Mexico Authority, the International Trade Commissio n, Texas Partnership for Economic Development Governing Board, the State Job Training Coordinating Council and the Policy Board. By virtue of their interagency contract, TDOC and TSC have worked closely together. TDOC is familiar with the needs and the mis sion of TSC and could readily absorb TSC s administrative functions. Still, as a private-public partnership TSC could remain a valuable resource to the state.


Recommendations
A. The current Texas Space Commission should be abolished and all of its funct ions and property should be transferred to the Texas Department of Commerce or its successor agency. (A separate proposal in this report recommends creation of a Commission on Commerce and Labor). TDOC should discontinue the $100,000 interagency contract w ith TSC and the $10,000 annual appropriation should be eliminated. The Legislature should not provide the commission with its requested $110,000 General Revenue Appropriation for fiscal 1994-95.

TSC should become an advisory body and its name should be changed to the Advisory Committee on the Promotion of Aerospace Industries, to better reflect the promotion and retention of aerospace industries. Another recommendation in this report would transfer TDOC s functions to a new commerce and labor agency. TSC s functions could also be a part of this new agency if the recommendation to create the new agency is adopted. TDOC s board (or that of the new commerce and labor agency) will appoint members to the committee, however, the board may choose to retain some or all of the current TSC staff as advisory members to ensure continuity of the commission s work. This transfer will preclude the need for TSC to hire administrative staff to perform duties, and will require that all properties and functions be accounted for under TDOC jurisdiction. Another recommendation in this report would move other functions within TDOC toward a fee-for-service or self-funding approach. This change would be consistent with other recommendations in this report.

B. Section 482.003 of the Government Code should be amended to include the commercialization of aerospace industries as one of the duties of the advisory board.

This change represents the need to transcend regional boundaries and broaden the focus and relationship of both space and aerospace industries. TSC has already begun to redirect their goals to address the relationship between the space technology and aero space, and aviation and defense arenas. The recent interagency contract with TDOC has already called for the inclusion of aerospace industries as one of the existing commission s charges. The new advisory committee would not be burdened with additional responsibilities.

C. State law should require that the advisory board s functions be self-supporting through license plate fees and private contributions except for administrative support provided by TDOC as authorized by the Appropriations Act. The Legislature should not appropriate general revenue for any portion of this committee s activity.

A statewide endeavor would be undertaken to develop and foster job growth, retention of jobs and the possible conversion of defense industries in the aerospace arena. This must be accomplished in an efficient and effective manner without unnecessarily duplicating functions or expenditures. A public/private partnership should be nurtured to obtain funds, services and expertise from the private sector. The advisory body should continue to promote the sale of license plates at $30 each.


Implications
The transfer of TSC would res ult in the consolidation of administrative services such as mailing, accounting, data processing, fiscal support, legal services, copying and printing of letters and forms and procurement. These functions would be absorbed by TDOC and additional staff woul d not be necessary to support the newly created advisory body. TDOC also has available space in their Austin headquarters.

Since TSC would no longer exist as a separate agency and its board would become advisory, the interagency contract with TDOC would become void because all of the related support functions are already handled in TDOC.

This transfer would require the advisory board to reduce their current expenditures by $24,406 or to increase license plate sales and raise private donations in order to be self-supporting as stated in Recommendation C.


Fiscal Impact
By making the advisory board self-supporting, the $110,000 currently funded out of general revenue and requested in the 1994-95 appropriation would be eliminated.

Through the following efficiencies, a savings of $60,594 per year would be achieved. Improved accountability of purchases would result in more appropriate expenditures necessary to fulfill the advisory commission s goals. Closing the Houston/Clearlake office location would result in a yearly savings of $47,649 which includes the cost of the lease and 0.5 FTE for an administrative person who currently runs the office. This person earned over $26,000 in fiscal 1992 for a part-time position. Assuming that the current rate of travel wo uld continue, total travel expenses by the loaned executives would be reduced by 25 percent through adherence to TDOC travel guidelines, resulting in yearly savings of $7,984. Printing costs would be reduced by 50 percent, resulting in yearly savings of $4 ,961. In addition, the state could avoid the costs of full-time employees as requested in the TSC Legislative Appropriations Request.

Based on the above calculations, if the advisory board desired to continue its current level of activity, it would have t o achieve revenues of $25,000 in license plate sales as currently projected and make up for about $24,406 in appropriations through donations. The alternative would be for the advisory board to cut back on its current activity, such as the number of trips taken, to be able to operate within available revenues.

Additional cost savings should occur in freight, delivery, postage, telecommunications, magazine and journal subscriptions, seminars and conferences and consumable office supplies, which will be either eliminated, reduced or absorbed by TDOC.

Indirect costs, such as the staff hours used by the Comptroller of Public Accounts and the General Services Commission to approve and track agency payments and receipts, and by the Legislative Budget Board in processing and reviewing a separate appropriati ons request for a small agency would be eliminated.

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

1994 $110,000 - 0.5
1995 110,000 - 0.5
1996 110,000 - 0.5
1997 110,000 - 0.5
1998 110,000 - 0.5



Endnotes
1 Legislative Budget Board, Requests for Legislative Appropriations for Fiscal Years 1994 and 1995 by the Texas Space Commission (Austin, Texas, August 31, 1992), p. 11.
2 Interview with Mike Regan, CPA, Chief Financial Officer, Texas Department of Commerce, Austin, Texas, November 23, 1992.