Irregular Session

By Andrew Roush in 40 Acres, Jan | Feb 2015 on December 18, 2014 at 11:06 am | 1 Comment

The 84th Texas Legislature is poised to begin another round of doing the people’s business, but will they give higher education the attention it requires before time runs out?

It’s almost like the Texas Legislature is designed to fail. The Texas Constitution was whipped up in a fervor of post-Civil War idealism, the ideal being that government should be limited and efficient. Legislators, it was decided, should be working people, not career politicians, so legislators are paid a pittance, which often requires them to hold down real jobs. It was also set down to the ages that our citizen-legislators should only meet once every two years.

In the 1870s, when the state’s single public university, Texas A&M University, was little more than a wolf-plagued prairie, managing all the affairs of state in a few months may not have been difficult. Today, the issues and interests of a bustling state all must jockey for attention, spurred on by professional advocates, lobbyists, and rabble rousers. That’s probably why modern legislatures, burdened by issues and industries their forefathers could have scarcely imagined, have so much trouble cramming it all in. Pressing business is often left to the special sessions called by the governor that now seem required to be tacked on every other year.

The 84th legislature, beginning Jan. 13, has no shortage of things to consider—transportation, water, public schools, and health. So where does that leave higher education?

It’s not yet known how new faces in the legislature, not to mention the Governor’s Mansion and the Lt. Governor’s seat in the Senate will affect the next biennium for Texas universities. Like many state agencies, colleges have to first make their case for a slice of the state budget, but other factors are likely to come into play as well. Here are three issues to keep an eye on.

Outcomes-Based Funding

An idea that’s been discussed for years, outcomes-based funding is fairly straightforward: State colleges should get state funds not simply based on how many students they enroll, but on the success of those students. That takes its clearest form in graduation rates, but could also include other forms like student learning assessments.

It has caught on in other states and has many supporters in Texas. Tennessee sets aside a certain amount for basic administration at each state college, leaving 100 percent of appropriations to be determined by a long list of metrics, including enrollment, retention, and research awards. Incoming governor Greg Abbott, BBA ’81, Life Member, lists outcomes funding in his higher education plan, and Texas already ties 10 percent of funds for two-year colleges to graduation and transfer rates.

The Texas Higher Education Coordinating Board (THECB) has recommended an outcomes-based formula using $235 million new general revenue per biennium, separate from the instruction and operations formula that keeps universities open for business. The UT System has endorsed this proposal, and legislators might heed the call. On the first day of bill filing, state Sen. Judith Zaffirini, BS ’67, MA ’70, PhD ’78, Life Member, Distinguished Alumna (D-Laredo) offered up Senate Bill 22. Public universities would get funding based on retention, graduation, and retention of at-risk students once instruction and operation needs are met, based on the THECB’s recommendations.

While universities are naturally cautious to move to a strings-attached model, the reception for outcomes-based funding has been generally positive. UT-Austin would likely fare well under an outcomes regime, as it leads four-year universities in graduation rates. If the legislature gets around to it—and they haven’t in recent years—outcomes-based funding is likely to become the new normal.

The Hazlewood Act

Grady Hazlewood represented the Panhandle in the Texas Senate for 30 years, from the FDR administration to Nixon. The legislation that bears his name covers the tuition at state universities for honorably discharged veterans and members of their families. The exemption covers up to 150 credit hours—enough for a bachelor’s degree and then some. The act has been praised from all sides of the aisle, and also made it into Abbott’s higher education priorities, where he recommends full funding. The act is an unobjectionably good idea, but in practice, it has been expensive.

Public colleges across Texas have struggled to meet the needs of Hazlewood. As general revenue funding has declined, colleges have come to rely on tuition as major revenue source. Hazlewood removes that income when it comes to educating veterans, and the increasing popularity of the program has become a financial strain. The Legislative Budget Board reports that the program grew by 200 percent in its first two years. According to the UT System, Hazlewood waivers cost $38.8 million in lost revenue across all campuses in 2013. The cost is expected to rise 16 percent each year through 2019.

In 2013, the legislature set up an endowment to ensure future funds for Hazlewood benefits, but the $30 million it allotted isn’t going to meet the projected need. The legislature will likely have to find new revenue—no easy feat—or adjust the program to lower costs.

Campus Construction

The bane of college administrators and lawmakers alike can be summed up in three simple words: tuition revenue bonds. The mechanism for building new buildings on public college campuses, the bonds known as TRBs have bedeviled the higher education landscape for years.

The need is clear: For colleges to educate more students and hire more faculty to teach them (see: funding, outcomes-based), they need to update old labs and build new classrooms. Besides philanthropy, the money for these projects comes from TRBs. The nomenclature is ill-fitting, as the bonds are not paid for from universities’ tuition, but indirectly through legislative funding.

While the idea is simple and the drumbeat consistent, policymakers have struggled to pass TRB bills in recent years. The last time the legislature passed a TRB package, in 2006, Shakira’s “Hips Don’t Lie” was topping the charts and Democrats were poised to sweep the national midterm elections. Despite continual efforts, public universities have been without TRB revenue since Crash upset Brokeback Mountain for Best Picture.

The most recent failure to launch, in 2013, came down to an 11th-hour disagreement between House and Senate versions of the bill. This year, the UT System’s nine academic institutions are seeking $1.4 billion in construction and renovation funding, and its six health institutions are seeking $591 million. The academic total includes $100 million to renovate the aging Welch Hall and $105 million for new buildings at the McCombs School of Business.

Tags: capital construction, hazlewood act, outcomes based funding, state budget, texas legislature, veterans