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TG's Legislative Report

November 1, 2004

Texas Higher Education Coordinating Board Publishes Priorities for Upcoming State Legislative Session

The Texas Higher Education Coordinating Board (CB) has released its agenda for the 79th Regular Session of the Texas legislature which will convene for its biennial 140 day session on January 11, 2005.

Included as a part of the CB's agenda are the findings and recommendations of the Texas Student Financial Aid Steering Committee included in its report, Preparing for an Emerging Texas, which can be accessed at http://www.THECB.Texas.Gov/reports/pdf/0776.pdf.

The following is from the CB.

The Board's highest priority is helping Texas achieve the goals of Closing the Gaps by 2015, the state's higher education plan. In that context, the following are the top issues for the Board as the 79th Legislature convenes. While some attempt has been made to put these issues in order of relative concern, they are all important and are issues on which the Board is focusing simultaneously and continuously.

Accountability and Performance System
An accountability and performance system is required by an executive order from the Governor and is the subject of a charge to the Joint Interim Committee on Higher Education. The Board will work with state leadership to refine this system, to be in place by December 17, 2004, for use in developing state policy on higher education and in monitoring progress toward the goals of Closing the Gaps by 2015.

Financial Aid
The Board supports the recommendations of its August 2004 report, Preparing for the Emerging Texas, to streamline and enhance financial aid programs. In particular, the Board emphasizes financial aid funding levels recommended in its 2006-2007 Legislative Appropriation Request:

  • Raise total funding for two programs, TEXAS Grant and Texas B-On-Time Loan Program, from $324 million to $646 million for the biennium.
  • Increase funding for Texas College Work-Study from $4.7 million to $14.7 million to serve approximately 11,000 more students each year of the biennium.
  • Increase funding for TEXAS Grant II from $4.5 million to $14.5 million per year to support approximately 18,000 more students seeking associate degrees at two-year institutions.

Excellence
Students at each public higher education institution in the state must receive an excellent undergraduate education. Excellent undergraduate programs are the foundation of excellent graduate-level programs, and the Board will focus on ensuring that high-quality undergraduate and graduate programs are developed, maintained, or expanded based on an institution's capabilities and regional/state needs and interests. In this regard, the Board will assist in defining "Tier 1" in a way that makes sense for Texas, given its limited resources, and that strikes a better balance between teaching and research. The Board also will advise policy makers on improving planning and coordination, increasing the level of cooperation, and reducing the amount of competition across systems and among campuses.

Time-To-Degree
Encouraging students to complete their degrees more quickly will allow Texas higher education institutions to serve more students in the same amount of time, thereby helping the state accommodate more students with limited resources on the way to achieving the Closing the Gaps participation goal of enrolling 1.5 million students by 2015. Incentives to encourage students to take greater course loads and incentives to encourage institutions to structure offerings in ways that students can take the classes they need will be vital.

Research
The Board will contribute its expertise toward helping state leaders define and develop research and/or "Tier 1" institutions effectively and efficiently for Texas. Also, the Board's 2006-2007 Legislative Appropriations Request emphasizes the need for additional funding for state research grant programs:

  • Advanced Technology Program — Increase funding levels for the first time since 1987 from $19.4 million to $40.6 million per biennium to support technology research
  • Advanced Research Program — Restore funds to $30 million per biennium to support basic research.

Higher Education Funding
While acknowledging state government's limited financial resources, the Board recommends increased funding for higher education where feasible. In that regard, all exceptional items requested in the Board's 2006-2007 Legislative Appropriations Request would restore current funding levels for funds trusteed to the Coordinating Board and for other types of funding to institutions. In particular:

  • Dramatic enrollment growth funding at institutions of higher education. With the large and rapid enrollment growth expected as the state to meets Closing the Gaps goals over the next ten years, appropriate funding is critical.
  • Health profession-related education
  • Nursing enrollment growth ($11.8 million per year requested in specifically designated fund for nursing growth)
  • Family practice residency program ($1.3 million per year needed to restore to 2003 level of $10 million)
  • Graduate medical education ($6.1 million more per year needed; funded at $7.2 million in 2003, but at only $1.9 million in 2004-2005).

P-16 Initiatives
Through its work with the P-12 education sector, the Board continues to encourage effective methods for developing interest in higher education among public school students and their parents, which in turn encourages them to prepare academically and financially for college. Examples of recent legislative action that support the Board in these efforts include:

  • Authorizing and funding a motivational and awareness campaign (College for Texans Campaign)
  • Adopting the Texas Academic Knowledge and Skills (TAKS) assessment, with a college-readiness component
  • Creating the P-16 Council, an
  • Requiring partnerships between low-performing high schools and institutions of higher education.

Community Colleges
An estimated 80 percent of the 500,000 additional students needed to meet the Closing the Gaps by 2015 participation goal will enter higher education at community colleges. These institutions must be funded at levels that ensure that they continue to offer broad access to high-quality educational programs. While Texas' transfer initiatives are among the best in the nation, we must continue to improve articulation agreements and the transfer process to increase the number of two-year college students who successfully transfer to universities and complete a bachelor's degree.

Developmental Education
The Closing the Gaps by 2015 success goal calls for ensuring that more students persist in higher education and earn certificates and degrees at higher education institutions. The Texas Success Initiative adopted by the 78th Legislature gives institutions the flexibility to respond more creatively and effectively in efforts to develop the academic skills of under-prepared college students. The Board will continue to support this program and improve developmental education programs.

Top Ten Percent Law
While the Board may not adopt a recommendation regarding proposed changes to the top ten percent law, it stands ready to help state leaders weigh the impact of various alternatives.

Requests for additional information about these recommendations can be addressed to Helena Stangle at the Texas Higher Education Coordinating Board — (512) 427-6117, Helena.stangle@thecb.state.tx.us.

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Election Winners Face Deficit(s) Issues

Whichever party wins the White House and the majorities in the House of Representatives and the Senate will inherit record budget and trade deficits, as well as a baby boomer time bomb that will overshadow the new Administration and congressional agendas.

In three years, the federal budget has gone from a budget surplus of 236 billion dollars to an estimated on-budget deficit of 413 billion dollars for the fiscal year that ended September 30, 2005. And, according to the Congressional Budget Office (CBO) and Office of Management and Budget (OMB), this figure does not include the estimated $4 billion per month costs for the "war of terrorism" or the recently enacted $137 billion extension of expiring tax cuts. The total federal debt has increased, over the same period, from $5.4 trillion to $7.4 trillion — with 40 percent of the debt held by foreign investors and governments — the largest being China.

Additionally, according to the CBO, OMB, and General Accountability Office (GAO), the United States had a trade deficit of 166 billion dollars in the second quarter, which is considered to be the broadest measure of the strength of the dollar.

These deficits mean that the US is:

  • consuming more than it is producing, and
  • allowing foreign investors and governments to fill the gap with foreign capital.

While many economists say this is unsustainable and will further weaken the dollar, erode US living standards and destabilize the global economy, those seeking election to the presidency and congress are promising to cut the annual deficit in half, while also increasing spending and/or cutting taxes. Government and private estimates have costed out the various tax and spending proposals at anywhere from an additional $1 trillion to $2 trillion dollars over a ten year period under the current mix of tax and appropriations laws.

These deficits can be coupled with the GAO's estimate of a $53 trillion dollar unfunded liability, which includes such items as the public debt, future Medicare and Social Security obligations, and military and veterans' pension and health benefits, which will begin impacting the federal budget in a significant way when baby boomers (those individuals born between 1946 and 1964) begin retiring at age 62 in about four years.

Some economists have stated that given the size of these estimates and campaign and budget proposals, neither party is likely to succeed in halving the budget deficit by 2009. Instead, over the next decade, these plans are likely to increase the federal debt by between 30 and 50 percent, with increasing foreign investment in the credit markets, leading to higher US interest rates and a weaker dollar that roils the global economy as the US continues to go from the world's leading "creditor nation" 20 years ago to the world's leading "debtor nation", which is what it is today.

The US will be able to raise enough money to fund the deficits. The issue is the source of funding and the price. The US will rely increasingly on less stable sources of funding and pay higher interest rates.

The GAO has published its general recommendations to address these issues. These include restructuring federal entitlement programs, reexamining programs funded through discretionary appropriations, look for ways to restructure and simplify federal tax policies.

Essentially, short of generating increased dollars into the Treasury to fund programs that receive discretionary appropriations (currently about 25 percent of the total annual federal budget), reduced spending for these programs (which include the Title IV student financial aid programs)will probably be where the new Administration and 109th Congress — Republican or Democrat — will begin when the FY2006 appropriations and budget debates, along with the Higher Education Act reauthorization, begin next year.

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Sunset Review Update

The initial phase of the review of TG by the Sunset Advisory Commission has been completed. The staff assigned to TG's review published its report with findings and recommendations on October 18. The report can be accessed on the Sunset Advisory Commission Web site at http://www.sunset.state.tx.us/whatsnew.htm.

The public is invited to comment on the staff report prior to the Commission's public hearing on November 16th.

The ten member commission (four state senators, four state representatives, and two public members) will convene a public hearing on November 16 and 17 when it will formally receive its staff's report on TG, along with TG's response to the report, and testimony from the public. The commission then will formally adopt the staff report, with any changes the commission chooses to incorporate, in December.

TG is pleased with the positive tone of the staff's report and has submitted a response that generally agrees with the staff's findings and recommendations.

After the commission adopts the staff report, TG will work with the Sunset Advisory Commission and the Texas Legislative Council to draft legislation to implement the report's recommendations. Two legislative members of the commission then will introduce the legislation during the 79th Texas Legislature, which convenes on January 11, 2005 for a 140 day session.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100

 

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