TO:	Honorable Brandon Creighton, Chair, Senate Committee on Education
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	SJR81 by Birdwell (Proposing a constitutional amendment providing for the creation of the technical institution infrastructure fund and the available workforce education fund to support the capital needs of career and technical education programs offered by the Texas State Technical College System.), As Introduced

Appropriations:

General Revenue-Related Funds, Five- Year Impact:

All Funds, Five-Year Impact:

Fiscal Analysis

The resolution would propose an amendment to Article VII of the Texas Constitution.

The proposed amendment would establish the Technical Institution Infrastructure Fund (TIIF) and the Available Workforce Education Fund (AWEF) as special funds in the state treasury for the purpose of providing funding for certain capital projects and equipment purchases related to career and technical education programs offered by the Texas State Technical College (TSTC) System. The amendment stipulates that the TIIF would consist of money transferred or deposited to the fund and any interest or other earnings of the fund and would be administered by the TSTC System board of regents in the manner and according to the standards utilized for investment of the Permanent University Fund. The Legislature could not appropriate money from the TIIF for any purpose.

The proposed amendment would allow the board to issue bonds and notes up to 30 percent of the cost value of the investments and other assets of the TIIF, other than real estate, and to pledge the system's interest in the AWEF to secure the debt service on the bonds and notes, for the purpose of supporting the system administration and career and technical education programs offered by component institutions of the TSTC System. Bonds and notes could be issued only for the purpose of acquiring land; constructing and equipping buildings or other permanent improvements; major repair and rehabilitation of buildings and other permanent improvements; acquiring capital equipment; acquiring library books and materials; and refunding bonds or notes. The amendment would prohibit TIIF bonds or other money appropriated from the AWEF from being used to construct, equip, repair, or rehabilitate buildings or other permanent improvements that were to be used for intercollegiate athletics or auxiliary enterprises.

The proposed amendment would require the board, each fiscal year, to distribute from the TIIF to the AWEF an amount at least equal to the amount necessary to pay debt service on bonds and notes backed by the TIIF and determined in a manner intended to provide the AWEF with a stable and predictable stream of annual distributions. The distribution could not exceed seven percent or, if the 10-year purchasing power of the TIIF was not maintained, the amount distributed in the preceding fiscal year. The amendment would provide that the annual TIIF distribution appropriated to the board that was not spent during the fiscal year would be retained by the TSTC System and could be spent in a subsequent fiscal year.

The proposed amendment would direct the Comptroller, on January 1, 2024, to transfer $750.0 million of the unencumbered balance of the General Revenue Fund to the TIIF.

The proposed amendment would remove the TSTC System and its campuses from Higher Education Fund (HEF) eligibility. The transfer of the TSTC System from HEF to TIIF, as provided by the proposed amendment, would apply with the fiscal year beginning September 1, 2025. Any HEF funds that would have been allocated to the TSTC System as of that date would be allocated to other HEF-eligible institutions proportionally, until the Legislature or designated agency eliminated the TSTC System from the HEF allocations.

The proposed amendment would be submitted to voters at an election to be held November 7, 2023.

Methodology

Local Government Impact

No fiscal implication to units of local government is anticipated.