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 Ellis County. TSTC currently has an extension center in Ellis County and the bill would designate the current extension center as a TSTC campus. It is estimated, passage of SB 420 as Introduced could result in a negative impact of ($6,714,696) through the 2016-17 biennium. The bill would not make an appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

The introduced version of SB 420 proposed to add Ellis County to the list of counties that are exempted from Texas Education Code, Section 135.04(b). Adding Ellis County to the list of exempted counties would not have any impact because Ellis County is not in a taxing district. The removal of this provision in the substituted bill would therefore have no fiscal impact.

Fiscal Impact

Based on information provided by the TSTCs, the analysis estimates that General Revenue funding for special items, formula funding, and tuition revenue bond debt service would be required to implement the provisions of the bill in the amounts of $3.4 million annually from fiscal years 2016 through 2020. According to TSTC System, no additional full-time equivalent positions would be needed moving from an extension center to a campus.

It is assumed that the TSTCs would be appropriated a special item for transition funding of $2.3 million in General Revenue in fiscal year 2016, $2.3 million in 2017, $1.8 million in fiscal year 2018 and $1.8 million in fiscal year 2019, and $1.8 million 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 extension center becoming a campus. This estimate assumes the new campus would begin generating formula funding from the General Academic Institutions, Lamar State Colleges, and Texas State Technical Colleges Infrastructure Formula beginning in the 2018-19 biennium, estimated to be $400,985 per year in General Revenue in fiscal years 2018 and 2019, and $488,156 in fiscal year 2020. This estimate assumes current returned-value formula funding methodology for the TSTC Instruction and Operations formula. The TSTC extension center in Ellis County began serving students in fiscal year 2014. Accordingly, this estimate assumes the new campus would not generate Instruction and Operations formula funding until the 2022-23 biennium, as students complete courses at the new campus and then generate five years worth of post TSTC wage history for the returned-value model.

Based on information provided by TSTCs, it is assumed that the campus would require a tuition revenue bond of $13.8 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 $1,107,348 beginning in fiscal year 2016.

Based on information provided by TSTCs, it is assumed that there will be an increase in statutory tuition, General Revenue-Dedicated Fund 770, in the amount of $500,680 in fiscal year 2016, $789,962 in fiscal year 2017, and $1,068,118 in fiscal years 2018 through 2020.

Based on information provided by the TSTCs, it is assumed that there will be an increase in institutional funds (designated tuition and fees) in the amount of $275,903 in fiscal year 2016, $430,536 in fiscal year 2017, and $578,260 in fiscal years 2018 through 2020.

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

The following information has been provided by Agency 781, the Texas Higher Education Coordinating Board:

Background - Higher Education Availability in Ellis County

In analyzing the feasibility and fiscal impact of the proposed legislation, Coordinating Board staff reviewed current information about the economic condition of the Dallas/Fort Worth metropolitan area with an emphasis on the population growth trends of Dallas and Ellis Counties, the availability of higher educational opportunities in Ellis County, the location of the TSTC North Texas Center, and workforce demand projections.

The 83rd Legislature passed House Bill 3640 and funded the creation of an extension center for TSTC Marshall at Red Oak in Ellis County at the request of the local community. The region is a fast-growth area with significant industrial expansion. TSTC North Texas is adjacent to Red Oak High School and offers dual-at the high school, in addition to its regular program offerings.

Programs selected for the center were based on an economic study and are focused on meeting the area's high-tech, advanced workforce needs. Programs include High-Voltage Electrical Engineering Technology; Logistics Technology; Diesel Equipment Technology; Computer Aided Manufacturing and Basic Machining; Basic and Combination Welding; Heating, Ventilation, Air Conditioning & Refrigeration; and Industrial Maintenance.

The local community has made a significant investment in TSTC North Texas, contributing the land and other resources for the facility. The proposed designation change is the result of the community's desire for the location to hold a full campus designation. For the community, changing the designation from extension center to campus signals the region's commitment to TSTC and vice versa. Additionally, the designation signals the community's commitment to economic development and to its industry partners.

For the TSTC system, the campus designation allows more flexibility with internal budgetary allocations. For example, with the campus designation, state appropriations can be used for utilities and physical plant expenses. For an extension center, these costs are paid with local funds. Additionally, the campus designation allows funds from the Higher Education Fund (HEF) to be used at the proposed stand-alone campus in Red Oak.

TSTC's statewide role and mission is to efficiently and effectively help Texas meet the high-tech challenges of today's global economy, in partnership with business and industry, government agencies, and other educational institutions. TSTC has high graduation and post-graduate success rates, and a strong record in graduating individuals from diverse cultural and socioeconomic backgrounds.

Other Two-Year Colleges in the Area

The local communities are served currently by Navarro College and Cedar Valley College. Navarro College is a two-year public institution consisting of a main campus located in Corsches in Fairfield, Mexia, Midlothian, and Waxahachie. The Midlothian and Waxahachie branch campuses are both located in Ellis County. In fall 2014, Navarro Collegeved just under 10,000 students in all locations combined. The Midlothian campus also houses the Midlothian Higher Education Center, a multi-institutional teaching center where several university partners provide degree programs.

Cedar Valley College is located in southern Dallas County, approximately 9 miles north of the TSt is one of seven colleges in the Dallas County Community College District (DCCCD) and serves more than 6,800 students. Cedar Valley is a comprehensive community college, which includes for-credit academic transfer courses, career and technical education programs, and non-credit continuing education courses such as reatate, computer technology, foreignguage, and music.

Changing Population Demographics

Dallas/Fort Worth is the fourth largest metropolitan area in the United States according to the United States Census Bureau, and by 2030, the projections of the North Central Texas Council of Governments indicate that an additional 3 to 4 million people will reside, bringing the total population of this area to almost 10 million people. With this growth comes a need for expanded educational opportunities that provide economic opportunity for students

Ellis and Dallas Counties

Dallas and Ellis Counties have a combined 2010 estimated population of 2,517,749. The two-county region consists of 1,861 square miles with a population density of 2,718 residents per square mile in Dallas County and 159.9 residents per square mile in Ellis County, compared to a statewide average density of 96.3 persons per square mile. According to the county-based population estimates from the United States Census Bureau, the two counties changed in population from 2,330,259 in April 2000, to an estimated 2,517,749 in April 2010. This reflects an increase in population of 8 percent, or 187,490 residents.

The cities of Midlothian and Waxahachie are both located within 15 miles of the TSTC North Texas Center. According to the Midlothian Economic Development Corporation, the city has grown 185 percent since 2000, to a United States Census Bureau estimated 2010 population of 18,037. However, the 2006-2010 American Community Survey estimates only slightly over 30 percent of the population graduated from high school, and only 21 percent of the population has a bachelor's degree or higher. The region could benefit from expanded educational opportunities. The city of Waxahachie has experienced almost 50 percent growth since 2000.

Area Independent School Districts

Red Oak ISD

The Red Oak Independent School District (ROISD), established in 1912, serves students across five municipalities in Ellis County, including Red Oak and Pecan Hill, as well as portions of Glenn Heights, Oak Leaf, and Ovilla. Red Oak has experienced steady to rapid growth in conjunction with the metropolitan area as a whole. In 1970, the population of Red Oak stood at 767. By 2009, the city had grown to nearly 11,000 residents. Even more striking has been the growth of the community since 2000 - more than doubling in the past nine years - with new business and high-tech manufacturing now calling Red Oak home. ROISD maintains a responsibility to prepare students for postsecondary success in college, technical school, or the workforce and is a Texas Education Agency Recognized School District.

Midlothian ISD

The Midlothian Independent School District (MISD) served 7,720 students during the 2013-2014 school year, an increase from 7,329 during the 2009-2012 school years. Based on projections from MISD, the district is projected to serve 12,163 students built and sold each year, for each of the next three years, after which the estimate increases to 540 new homes per year. A large number of people will be moving into the area in the next few years.

Waxahachie ISD

Waxahachie Independent School District (WISD) has grown by nearly 1,000 students from 6,924 students in 2009 to 7,817 students in 2013. Currently, WISD has 3,639 elementary students enrolled in the district. Although, slightly farther south of the Dallas/Fort Worth metropolitan area than Midlothian and Red Oak, WISD is also experiencing growth.

Several other school districts are located within 25 miles of the center location, including: Alvarado, Cedar Hill, Desoto, Duncanville, Ennis, Italy, Mansfield, Maypearl, Rice, and others, and collectively serve thousands of students.

Rapidly Growing Workforce Demographics

The North Central Texas Workforce area is made up of the 14 counties surroundirrant County, and include: Collin, Denton, Ellis, Erath, Hood, Hunt, Johnson, Kaufman, Navarro, Palo Pinto, Parker, Rockwall, Somervell, and Wise. The area is home to more than 2.5 million residents and more than 1.1 million workers. According to Workforce Solutions of North Central Texas, the 14-county workforce development area (WDA) is second in the state in terms of job growth. The North Central Texas WDA is expected to grow at a rate of 25 percent by adding 190,200 jobs from 2006 to 2016.

Educational Services, Retail Trade, Health Care & Social Assistance, and Accommodation & Food Services will account for close to half of the projected growth by adding 89,000 jobs at an average growth rate of 30 percent. Mining; Administrative/Support; Waste Management/Remediationd Professional, Scientific, and Technical Services will see the fastest industry growth in the North Central WDA by adding 29,450 jobs at a growth rate of 84 percent, 40 percent, and 36 percent respectively.