Funding Public Higher Education in Texas The Continuing Challenge

Published by: Summer Gill | Published on: 25 Jan, 2018
Funding Public Higher Education in Texas: The Continuing Challenge

Written by Summer Gill, Former Project Manager, Greater Killeen Chamber of Commerce
Published in the Greater Killeen Business Quarterly 2017 Annual Report & Economic Outlook Guide


During the 85th legislative session in Texas, proposed general revenue funding for public higher education followed an uncertain pathway before final approval of the state’s budget, beginning with a Senate proposal to eliminate all funding that was not formula driven. Traditionally referred to as Exceptional Item (non-formula) funding for educational projects identified and approved by the Legislature, the proposed elimination of this funding would have reduced Net General Revenue (exclusive of debt service) for public higher education by approximately $800 million (MM). Had it occurred, a cut of that magnitude would have had a debilitating impact on many of the State’s institutions, some faced with absorbing more than a 50% reduction in operating funds from the loss of Net General Revenue.

However, as the session moved forward, compromises were ultimately reached between the Senate and the House that reduced potential funding cuts to a maximum of 10%. Seven state institutions managed to gain funding, and six were held harmless at no gain or loss.  Twenty-four institutions lost funding, with ten of those losing the 10% maximum. And while Exceptional Item funding was dramatically reduced, approximately $463 million remains in the budgets of the State’s public universities, with no clarity at this time as to whether it too will be eliminated during the next legislative session as the Senate had originally proposed.

One of the State’s institutions absorbing a full 10% reduction in Net General Revenue was Texas A&M University–Central Texas (A&M Central Texas) in Killeen. However, its president, Dr. Marc Nigliazzo says the reduction could have been much worse. The original budget proposal from the Senate would have eliminated all of his university’s Exceptional Item Funding for Transition ($11.4 MM), Institutional Enhancement ($1 MM), and the development of the East Williamson County Higher Education Center ($1.5 MM) for a total biennial reduction in Net GR of approximately $13.9 MM. After subtracting some modest gains from traditional formula funding, the final reduction would have been approximately $12.7 MM for the biennium, or $6.35 MM per year, for a total Net General Revenue reduction of 47.9%.

Fortunately, the final version of the budget bill made much smaller reductions for Transition ($3.6 MM), Institutional Enhancement ($0.27 MM), and the East Williamson County Higher Education Center ($0.70 MM), for a total Net General Revenue reduction of approximately $4.6 MM for the biennium. After again subtracting some modest gains from formula funding, the actual reduction was approximately $3 MM for the biennium, or $1.5 MM per year, for an overall reduction of approximately 10%. Dr. Nigliazzo states that while accommodating that level of budget reduction has been a challenge for A&M Central Texas, the original proposal would have eliminated all Transition Funding that was originally appropriated to build this new university, leaving it with no choice but to dramatically reduce its size and scope.

Avoiding this potential budget disaster was due in large part to the commitment made by members of the Texas House, like Representative Scott Cosper, who pushed for a funding compromise with the Senate that would dramatically reduce the negative impact on all public higher education. This budget would have been especially detrimental for promising new universities like A&M Central Texas, depriving them of sufficient time and resources to develop to full potential.

However, Representative Cosper is well aware that the issue of providing adequate funding for public higher education in Texas has not been ultimately resolved.
The funding of public higher education in Texas will again become a challenge in the upcoming 86th Legislative Session, requiring the State Legislature to reach agreement not simply on the level of funding, but on the methodology for determining that funding in a consistent manner. The State’s ability to assure a highly educated and competitive workforce may well depend upon that outcome.