The Texas Higher Education Coordinating Board states the following regarding this bill.
 
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.  In addition, creation of a four-year institution offering lower-division courses would unnecessarily duplicate educational services offered by Central Texas College and Temple College.  The Tarleton Center currently offers only upper-division and master’s level instruction.

 
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. 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. 
 
(Higher education needs continue in the area)

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. 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 Tarleton Center helps narrow this gap by providing area residents easy access to a range of courses.  When the state acquired the facility, it enrolled 1,159 students. Fall 2004 enrollment at the Tarleton Center totaled 1,683 students (846 FTSEs). The number of students increased 24 percent and the FTSEs increased 14 percent since fall 2000, indicating that the Center has growing, but limited, utilization. 
 
(Additional considerations)

1. The Texas A&M University System and its Tarleton State University, the “parent” institution for the Tarleton Center, have taken several actions related to the future of the Center:
 
2. Tarleton State University has submitted to the 79th Texas Legislature an exceptional item request for an additional $6.6 million ($2.8 million in fiscal year 2006; $3.8 million in fiscal year 2007) to operate the Center.
 
3. The Texas A&M University System has submitted a $45 million Tuition Revenue Bond request to “plan, construct, furnish, and equip new facilities and related infrastructure on 662 acres of land that is pending donation from the U.S. Congress for a new campus in the area of Killeen.” Legislation authorizing this transfer was passed by Congress and signed by the President. Negotiations with the Secretary of the Army are underway to explore possible in-kind contributions in lieu of funds.
 
4. The Texas A&M University System supports lowering the Tarleton Center threshold below the currently established 2,500 FTSE level on the condition that the Legislature grants the requested Tuition Revenue Bond authority and appropriates $4.2 million for one year of debt service.