Summary of Findings

The bill amends the Education Code relating to the creation of a campus of the Texas State Technical College (TSTC) System located in Fort Bend County. The bill, as Engrossed, could result in a negative impact of ($12,054,520) through the 2016-17 biennium. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

House Bill 658 also adds Fort Bend County to the list of counties that are exempted from Texas Education Code, Section 135.04(b).

Fiscal Impact

Based on information provided by the TSTCs, the analysis estimates that General Revenue funding for special items, employee benefits, formula funding, and tuition revenue bond debt service would be required to implement the provisions of the bill in the amounts of $5.8 million in fiscal year 2016, $6.3 million in fiscal year 2017, $6.3 million in fiscal year 2018, $6.4 million in fiscal year 2019, and $6.4 million in fiscal year 2020.

Based on information provided by the TSTCs, it is anticipated that the campus would begin offering programs in fiscal year 2017 and it is assumed that a special item for start-up costs and institutional operations would be required to operate the campus in Fort Bend County. It is estimated that the TSTCs would be appropriated a special item for transition funding of $4.5 million in General Revenue in fiscal year 2016, $4.5 million in 2017, $4.2 million in fiscal year 2018, $4.2 million in fiscal year 2019, and $4.0 million in fiscal year 2020. It is also estimated based on information provided by the TSTCs, that the system would need additional full-time equivalent (FTEs) positions of 8.0 FTEs in fiscal year 2016 increasing to 55.0 FTEs by fiscal year 2020 for the new campus. This would result estimated benefits and payroll costs to the state of $100,654 in fiscal year 2016, $554,612 in fiscal year 2017, $599,839 in fiscal year 2018, $649,423 in fiscal year 2019, and $731,163 in fiscal year 2020.

It is assumed that there would be a cost to General Revenue from an estimated increase in formula funding for the TSTCs due to the additional square footage from the TSTC campus. This estimate assumes the new campus would begin generating formula funding from the General Academic Institution, Lamar State Colleges, and Texas State Technical Colleges' Infrastructure Formula beginning in the 2018-19 biennium, estimated to be $288,895 per year in General Revenue in fiscal years 2018 and 2019, and $462,233 in fiscal year 2020. This estimate assumes current returned-value formula funding methodology for the TSTC Instruction and Operations formula. Accordingly, this estimate assumes the new campus would not generate Instruction and Operations formula funding until the 2024-25 biennium, due to students taking and then completing courses at the new campus and then generating five years worth of post TSTC wage history for the returned-value model before formula funding would begin.

Based on information provided by TSTCs, it is assumed that the establishment of the campus would require a tuition revenue bond of $15 million to be authorized by the Legislature. It is assumed that tuition revenue bond debt service would be appropriated to the institution beginning in fiscal year 2016. Based on information provided by the TSTCs, it is estimated that the annual debt service would be $1,199,627 beginning in fiscal year 2016.

Based on information provided by the TSTCs, it is estimated that there will be an increase in statutory tuition, General Revenue-Dedicated Fund 770, from new students in the amount of $940,605 in fiscal year 2017, $1,222,787 in fiscal year 2018, $1,504,968 in fiscal year 2019, and $2,069,331 fiscal year 2020.

Based on information provided by the TSTCs, it is estimated that there will be an increase in institutional funds (designated tuition and fees) from new students in the amount of $496,967 in fiscal year 2017, $646,057 in fiscal year 2018, $795,147 in fiscal year 2019, and $1,093,327 in fiscal year 2020.

It is assumed that these increases in General Revenue-Dedicated Fund 770 and institutional funds would be offset by the expenditures of these funds on other institutional operations associated with the establishment of the campus.

The following information was supplied by Agency 781, the Higher Education Coordinating Board:
 

Background - Higher Education Availability in Fort Bend County

In analyzing the feasibility and fiscal impact of the proposed legislation, Coordinating Board staff reviewed current information about the economic condition of the Gulf Coast region with an emphasis on the population growth trends of Fort Bend and the surrounding counties, the availability of existing higher education opportunities in Fort Bend County, the location of the proposed TSTC-Fort Bend campus, and workforce demand projections..
 
The local community plan to make significant investment in the proposed TSTC-Fort Bend campus, contributing the land and other resources for the facility. Local economic development corporations, local governments, and foundations have pledged more than $40 million to establish the campus. 

The existing TSTC program extension in Fort Bend County has shared a facility with Wharton County Junior College (WCJC) for more than 14 years. WCJC and TSTC have executed a memorandum of understanding (MOU) outlining the partnership between the two schools to avoid duplication of programs by providing complementary offerings in tandem. The MOU is valid for the next 75 years and WCJC is supportive of this initiative.
 
The MOU between TSTC and WCJC defines the Classification of Instructional Programs (CIP) Codes, a taxonomic scheme used for tracking and reporting of fields of s completions activity used by the U.S. Department of Education, TSTC is allowed to develop programs in as part of the agreement. The CIP designations are as follows: computer and information systems ancurity/information assurance, culinary arts and related services, engineering technologies and engineering-related fields, construction trades, mechanic and repair technologies/technicians, precision production, transportation and materials moving, and design and applied arts. The programs areas defined in the MOU are consistent with TSTC's mission.
 
Other Two-Year Colleges in the Area
 
The local communities are served by Wharton County Junior College (WCJC), with a taxing district encompassing Wharton County and the Needville Independent School District located in Fort Bend County. WCJC has a service area that includes Fort Bend, Matagorda, Colorado, and parts of Jackson and Austin Counties. It has a central campus in Wharton and extension campuses in Sugar Land, Richmond, and Bay City. In addition, the college offers classes at extension centers in El Campo and Palacios. The Richmond campus is commonly referred to as the WCJC Fort Bend Technical Center. The facility is shared with TSTC.
 
Alvin Community College District and Brazosport College are both located in Brazoria County, located to the south of Fort Bend. Houston Community College is located in Harris County to the east. Austin and Waller counties are located to the north in the service area of Blinn College. Colorado and Matagorda counties are located in the service area of WCJC. Each of these institutions are two-year public community colleges.
 
Area Independent School Districts
 
Brazos, Fort Bend, Katy, Lamar Consolidated, Needville, and Stafford independent school districts serve the communities of Fort Bend County. Each of these school districts is located within 25 miles of the proposed campus location.
 
Brazos ISD
 
Brazos Independent School District (ISD) is located in the northern part of the county. The district serves in the cities Wallis and Orchard and part of Austin County. The district enrolls 822 students.
 
Fort Bend ISD
 
The district is Texas' seventh largest independent school district with more than 71,000 students, and it's one of the most diverse. Fort Bend ISD currently has 74 campuses: 11 high schools, 14 middle schools, 45 elementary campuses and four secondary campuses to address the academic and vocational interests of students. With more than 9,250 full-time employees and substitutes, the District is the largest employer in Fort Bend County. The district serves Sugar Land, Missouri City, and the surrounding municipalities.
 
Stafford Municipal School District (MSD), located in the eastern part of Fort Bend County, was split off from FBISD in the late 1970s and opened its first campus in 1982 with 547 students. The city of Stafford has grown as the Houston metropolitan area continues to expand outward. Today Stafford (MSD) has an enrollment of just over 3,200 students.
 
Katy ISD
 
Katy ISD had an enrollment of 47,500 students in 2005-06. Total enrollment in the 2014-15 school year student enrollment surpassed 70,000 students. These students are served by 60 schools, including seven four-year high schools. From fall 2013 to fall 2014 the district grew by 2,865 students, the second fastest growth in the state. Between the 2000 Census and the 2010 Census, the area served by Katy ISD gained 117,153 residents, ranking it 23rd in the United States for population growth, out of 13,709 U.S. school districts.
 
Lamar Consolidated ISD

Lamar CISD includes about 40 percent of Fort Bend County, covering the cities of Richmond, Rosenberg, Kendleton, Simonton, and Thompsons and serval smaller communities and unincorporated rural areas in central Fort Bend County. The Lamar CISD enrolls over 27,000 students and is the fastest growing district in Fort Bend County. It was projected to add about 1,000 students in the 2013-2014 school year, with that growth expected to continue for the foreseeable future.

Needville ISD
 
The district was established in December 1946, when the country school districts of Big Creek, Marlow, Guy, Brown, Forester, Needville, Seiler, Modena, William School, and Concord were consolidated to form the school district. The district encompasses more than 200 square miles in the western half of Fort Bend County and serves almost 3,000 students.
 
Changing Population Demographics
 
In March 2014 The Perryman Group conducted a study of Fort Bend County and the surrounding counties to determine the workforce needs to support economic growth in the area. The counties, in addition to Fort Bend, included in the study are Harris Galveston, Brazoria, Matagorda, Wharton, Colorado, Waller, and Austin. The Perryman group projected the local economy in the market area of the proposed campus would create over 850,000 new jobs by 2040. The study defined the market area for the proposed campus as a 25-mile radius from the city of Richmond and the entire population of Brazoria, Matagorda, Wharton, Colorado, Waller, and Austin Counties because of their smaller populations.
 
According to an article in the March 26, 2015 issue of The Texas Tribune Fort Bend County is the second fastest growing county in the state and the sixth fastest growing county in the nation. Additionally it has been called the most ethnically diverse county in the U.S. because its population comes the closest to having an equal division of the nation's four major ethnic communities  Asian, African American, Hispanic and white.
 
Rapidly Growing Workforce Demographics
 
According to an article in the January 2015 edition of Forbes the Houston metro area has added 667,800 new jobs since 2005, in large part to the boom in horizontal drilling and fracking. Houston, known for its role in energy production, experienced a 4.5 percent year-over-year job growth rate, this is the nation's fastest. Jobs at major energy corporations helped to boost the median annual pay for college-educated workers to $71,900, fourth among America's 100 largest metro areas. The economy grew at a 3.52 percent rate last year, landing Houston as number one on Forbes' annual list of America's Fastest-Growing Cities.
 
The Perryman Group projects the fastest employment growth in the proposed campus market area to be in agriculture, mining, construction, manufacturing, trade, transportation, warehousing and utilities, information, finance, insurance and real estate, and services. Between now and 2040 the service sr is projected to add over 500,000 new jobs.tional 200,000 new jobs are projected to be added in manufacturing, construction, trade and mining, which includes the oil and gas sectors.