The Texas Higher Education Coordinating Board has revised their analysis of this bill to state the following.
 

Conclusion

The Coordinating Board continues to endorse the Supply/Demand Pathway and its 3,500 FTSE over four fall semesters standard as the most effective and efficient way to determine when and where to establish new universities.  

The proposed 1,000 FTSE enrollment for one semester does not demonstrate the continuing demand necessary to support a range of high quality programs and services with an appropriate economy of scale required to support a stand-alone higher education institution.

Rationale

Economies of Scale. A university does not benefit from economies of scale, which allow it to make the most effective and efficient use of state funding, until enrollment reaches approximately 5,000 students (approximately 3,500 full-time student equivalents).  At lower enrollment levels, universities spend a significantly higher percentage of state funds on administration rather than instruction. For example, in 2003 the average per FTSE expenditure on administration (institutional support) at institutions with fewer than 2,500 FTSE was $2,650, compared with the statewide average of $1,720. Previous Texas Legislatures have acknowledged this inefficiency with a $750,000 annual supplemental appropriation for institutions with fewer than 5,000 students. 

Supply/Demand Pathway. The Coordinating Board developed the Supply/Demand Pathway to ensure that the state’s limited higher education resources are used wisely to meet proven demand for services in areas of the state that need additional higher education opportunities. Educational facilities such as the Tarleton Center are established first to “test the market” for educational demand, allowing state resources to be increased as needs for educational services increase. Centers focus on teaching and are encouraged to use local resources. Their administrative costs are relatively low because they are managed by “parent” institutions and do not have many of the ancillary services usually associated with universities. While the Tarleton Center currently has the basic administrative structure to support existing students and programs, it would likely need to increase the number of administrative and staff positions to fully support a stand-alone institution. The Pathway model allows the Coordinating Board to recommend to the Legislature conversion of a center to an upper-level university after enrollment reaches 3,500 full-time student equivalents (based on the thresholds identified in the “Economies of Scale” section above) for four fall semesters.

Meeting Higher Education Needs in the Killeen Area. To help meet the area’s needs, the state established Tarleton Center in October 1998 when it acquired the independent University of Central Texas. The Center is located in Killeen and next to Central Texas College and Fort Hood, one of the nation’s largest active-duty military bases. The Center now offers 18 bachelor’s degree programs in the liberal arts, business, nursing, computer information systems, and other fields. It also offers 12 master’s degree programs in education, business, criminal justice, curriculum and instruction, and mathematics.

There is no public university in the Temple-Killeen area. The nearest public upper-division and graduate courses are offered 50 miles to the south at the Round Rock Higher Education Center, operated by Texas State University-San Marcos, and 50 miles to the north by The University of Texas at Arlington and Tarleton State University on the campus of McLennan Community College in Waco.  In addition, the University of Mary Hardin-Baylor is the only one of the area’s three independent universities that enrolls a significant number of students from Killeen and Fort Hood. Two area community colleges, Central Texas College and Temple College, enroll a combined total of 12,015 students.

Approximately 85 percent of Bell County’s adult population has at least a high school diploma, a rate that is higher than the state average of 76 percent. High school graduation rates in surrounding counties vary with 78 percent for Burnet County, 81 percent for Coryell County, 79 percent for Lampasas County, 77 percent for McLennan County, 66 percent for Falls County, 71 percent for Milam County, and 89 percent for Williamson County. However, only about 20 percent of Bell County’s population has a bachelor’s degree or higher, compared to a statewide average of 23 percent. The college graduation rate for most of the surrounding counties average approximately 17 percent. The Tarleton Center helps narrow this gap by providing area residents easy access to a range of courses. In fall 1999, the Center opened with 617 FTSE and had increased to 824 FTSE by fall 2004.  Based on these patterns of enrollment, the Coordinating Board does not have evidence that the current educational opportunities in the Killeen area are insufficient to meet current and near-term demand.

According to the State Demographer, the 2000 to 2015 population change for Bell, Burnet, Coryell, Falls, Lampasas, McLennan, Milam and Williamson Counties is projected to be the most substantial in the Hispanic and “Other” categories. See the table below for projected changes.