>> WELCOME EVERYONE TO OUR DALLAS COLLEGE - FINANCE COMMITTEE MEETING,
[00:00:09]
FEBRUARY 1ST, 2022.[1. Roll Call - Announcement of a Quorum]
>> SO, IN ACCORDANCE WITH CHAPTER 551 OF THE TEXAS OPEN MEETING ACT, I CALL TO
[2. Certification of Notice Posted for the Meeting]
ORDER THE DALLAS COLLEGE - FINANCE COMMITTEE MEETING BOARD OF TRUSTEES OF DALLAS COLLEGE FOR FEBRUARY THE FIRST, '22 AT 10:33.MEMBERS OF THE PUBLIC, FOLLOW THE INSTRUCTIONS ON THE DALLAS COLLEGE BOARD OF TRUSTEES WEBSITE FOR REGISTERING TO SPEAK DURING THE PUBLIC COMMENT PORTION WILL BE GIVEN 5 MINUTES TO SPEAK.
THE MEETING IS BEES BROADCAST OVER THE INTERNET AND AUDIO RECORDING AND TRANSCRIPT OF THIS MEETING WILL BE MADE TO THE PUBLIC AT A LATER DATE.
WILL YOU PLEASE CONFIRM THAT THE MEETS HAS BEEN POSTED IN ACCORDANCE WITH THE LAW.
>> I DO CERTIFY THAT THIS MEETING WAS POSTED ACCORDING TO TEXAS GOVERNMENT CODE 551.054.
>> AND THERE'S NO ONE WHO HAS REQUESTED TO SPEAK?
>> SO, OUR PRESENTATION, FROM OUR CHANCELLOR.
[4.1. Texas Community College Finance Commission Briefing]
>> THANK YOU, VERY MUCH, CHAIR BRAVO, CAN YOU HEAR US OKAY? GOOD TO SEE YOU.
WELL, THANK YOU, I'VE BEEN ASKED TO SHARE THE NEW INFORMATION UPDATE ON THE COMMUNITY COLLEGE FINANCES COMMISSION.
AS I JUMP INTO IT, I'M NOT ON THE COMMISSION ITSELF, HOWEVER I AM DOING ABOUT THREE THINGS IN REGARD TO THIS.
SERVING AS A CO-CHAIR OF TEXAS 136 AND DEVELOPING A SIMULATOR TO SYMPTOM ULATE BUDGET AS AND WORKING WITH DIRECTLY, ADVISING EDUCATING TEXAS WITH THEIR WORK ON THIS.
AND THEN WORKING INDIVIDUALLY WITH SEVERAL MEMBER OF THE COMMISSION AND GENERALLY IMMEDIATE WITH COMMISSIONER KELLER BEFORE EACH OF THESE FINANCES MEETING TOSS TALK ABOUT SOME OF THE THINGS THAT ARE OUT THERE.
SO, LET ME GET TO THE NEXT SLIDE.
THIS WAS CAME ABOUT AS A RESULT OF OF SENATE BILL 1230 BY SENATOR LARRY
TAYLOR, HE WAS THE DRIVER AND OPEN MEETING BILL THAT WAS (INDISCERNIBLE) >>
(INDISCERNIBLE) >> THE GOAL OF THE FINANCES COMMISSION AND THE LEGISLATION IS TO PUT TOGETHER A COMMISSION THAT WILL STUDY THE COMMUNITY COLLEGE FINANCES TO ENSURE THAT COMMUNITY COLLEGE SERVICES ARE AVAILABLE TO STUDENTS IN ALL PARTS OF THE STATE THAT THEY ARE RESPONSIVE TO DIFFERING WORKFORCE NEEDS AND ALL REGIONS OF THE STATE AND SUPPORTING THE 60 X 30 GOALS OF THE TEXAS BOARD.
THAT COMMUNITY COLLEGE ARE AFFORDABLE TO ALL RESIDENTS IN ALL PARTS OF THE STATE.
THAT RECOGNIZING THAT THERE ARE GAPS IN EDUCATIONAL ATTAINMENT BY REGIONS AND PLAN TO ELIMINATE THOSE AND THAT COLLEGES RECEIVE SUFFICIENT P FUNDS TO PROVIDE THE NECESSARY AND RELEVANT SERVICES.
I THINK, AND IF THERE ARE ANY QUESTIONS ON THAT, I'LL JUST JUMP RIGHT INTO IT.
SO, HERE ARE THE GOVERNORS APPOINTEES.
WELL, THE GOVERNOR APPOINTEES, THE SPEAKER AND THE (INDISCERNIBLE) THERE AS WELL, THE GOVERNOR APPOINTED WOODY HUNT OUT OF EL PASO.
HE ALSO CHAIRS THE BUSINESS ADVISORY GROUP FOR THE TEXAS EDUCATION COMMUNITY COLLEGES SO HE'S A VERY INVOLVED CHAIR OF SENATE EDUCATION, BRANDON CREIGHTON, AND.
>> MAYOR: AND STEELE DOSSIER, DR. BRENDA HELLYER, OSCAR LONGORIA WITH THE HOUSE, CAROL SCOTT A TRUSTEE FROM DEL MAR COLLEGE.
[00:05:18]
SENATOR LARRY TAYLOR THE SPONSOR OF THE BILL WHO ALSO LED THE CHARGE ON THE K-12 PUBLIC SCHOOL FINANCE.GARY VANDEAVER WITH THE HOUSE AND THEN TODD WILLIAMS. YOU HAVE TWO BUSINESS PEOPLE IN TERMS OF WOODY HUNT AND TODD WILLIAMS, AND YOU HAVE A GROUP OF COMMUNITY COLLEGE LEADERS.
A LITTLE BIT ABOUT THE CONTEXT, AND I THINK SOMETHING THAT YOU'VE PROBABLY HEARD OF, BUT TEXAS HAS A LONG HISTORY OF VERY STRONG LOCAL CONTROL OF COMMUNITY COLLEGES.
THERE'S NO COORDINATING BODY THAT LINKS STATEWIDE POLICY TO LOCALLY GOVERNED COLLEGES.
THAT'S VIRTUALLY NON-EXISTENT.
WE SOMETIMES WILL WEED THAT IN AS WE THE WORK THAT WE DO.
THE STATE HAS VERY DIFFERENT REGIONAL ECONOMIES, AND THE NEEDS OF THE STATE VARY CONSIDERABLY, HOWEVER, FROM A FUNDING POINT OF VIEW TEXAS TREATS IT DIFFERENTLY.
THE COMMUNITY COLLEGES, YOU CAN'T GET TO THE TEXAS BILLS WITHOUT A STRATEGY INVOLVING COMMUNITY COLLEGES.
AND IT'S ONE OF THE FEW STATES THAT HAS LOCAL BOARDS IN WHICH TAXING DISTRICTS DO NOT COVER THE ENTIRE STATE.
AND I'LL SHOW YOU WHAT THAT LOOKS LIKE.
>> SO, THIS IS PROBABLY SAYS AS MUCH AS ANYTHING ABOUT THE PROBLEM THAT'S OUT THERE.
ON YOUR LEFT, YOU HAVE THE COMMUNITY COLLEGE SERVICE AREAS WHICH DOES COVER THE ENTIRE STATE IN TERMS OF GEOGRAPHY, ON THE RIGHT, YOU SEE WHERE THE TAXING DISTRICTS LIE.
SO, BASICALLY, THE MAJORITY OF THE GEOGRAPHY OF THE STATE IS NOT IN THE TAXES DISTRICTS.
AND, EVEN THOUGH THE TAXING DISTRICTS COVER THE URBAN AREAS GENERALLY SPEAKING, THEY STILL LEAVE OUT ABOUT ONE THIRD OF THE POPULATION IN THE STATE OF TEXAS AREN'T IN ANY TAXING DISTRICT.
>> SO, ACCORDING TO THAT, FOR EXAMPLE, AT THE VERY TOP OF THE PAN HANDLE, THAT PURPLE AREA, THE PEOPLE THAT LIVE OUTSIDE OF THE TAXING DISTRICT DO NOT PAY TAXES THAT FEED INTO THE COMMUNITY COLLEGE.
>> SO, IF YOU'RE LOOKING AT THE PAN HANDLE, AT THE TOP AMARILLO, AND YOU HAVE THERE, AND THEN CLARENDON IN THE RED.
>> SO, THE PEOPLE THAT LIVE IN THAT COUNTY...
>> IT'S ASSIGNED TO THE ENTIRE COUNTY.
THEY SO, YOU'LL SEE THIS A LOT, THAT ACTUALLY ONLY INCLUDES THE SCHOOL DISTRICT THAT'S IN THERE.
SOME CASES INCLUDE SCHOOL DISTRICTS AND SOME PLACES INCLUDES COUNTIES AND SOME CASES MAY INCLUDE CITY LIMITS, LIKE PARIS.
>> SO, THAT COLORED AREA UP THERE AT THE TOP, ONLY THE PEOPLE IN THAT COLORED AREA PAY TAXES TO SUPPORT?
>> IT'S THE SAME ISSUE THAT HAPPENS IN HEALTH CARE.
PARKLAND IN DALLAS COUNTY, WE PAY PARKLAND TAX, BUT PEOPLE IN COLIN COUNTY DON'T HAVE A HOSPITAL DISTRICT THAT'S WHY WE SPEND ABOUT $30 MILLION A YEAR IN FEES.
SO, IT'S IDENTICALLY THE SAME PROBLEM.
>> COLIN COUNTY HAS IT'S OWN COMMUNITY COLLEGE.
>> I'M TALKING ABOUT HEALTH CARE.
>> IT'S I DIDN'T PUT UP THIS, I STARTED TO PUT UP A TABLE, BUT IT EATS UP TIME BECAUSE IT'S CONFUSING.
YOU WILL SEE THAT SOME OF THESE INSTITUTIONS, 80-90% OF THE STUDENTS ARE OUTSIDE
[00:10:04]
OF THE TAXING DISTRICT.>> BUT THAT'S ONE OF THE REASONS THAT YOU PAY OUT OF COUNTY TUITION.
>> THAT IS ONE OF THE THINGS THAT WHEN YOU NEED THE SERVICE, YOU PAY FOR THE SERVICE INSTEAD OF IN TAXING, EVERYBODY PAYS FOR THE SERVICE IF THEY USE IT OR NOT.
SO, THE OUT-OF-DISTRICT OR WHATEVER, THOSE CHARGES MAKE BETTER SENSE BECAUSE THEN YOU DO HELP CARRY THE BURDEN OF YOU ATTENDING THAT SCHOOL.
>> YEAH, EXCEPT THAT IT CREATES A COST ISSUE.
>> (INDISCERNIBLE) >> THAT'S THERE.
>> BUT IT'S NOT LIKE A PRE -- >> WELL, YOU ARE -- >> I THINK THAT'S -- YOU ARE BEARING SOME OF THE COST.
>> YEAH, AND I'LL ACTUALLY GET INTO THAT, PROBABLY NOT AS MUCH DETAIL AS I DID WITH THE COMMISSION ITSELF.
>> CAN I ASK YOU A QUESTION ABOUT THE PRIOR SLIDE?
>> COULD YOU SORT OUT A BILL OF THE SERVICE AREA, THE NORTH TEXAS AREA.
>> SO, WE'RE COUNTED AS A TAXING DISTRICT AND A SERVICE AREA COUNTED NOT OUTSIDE OF DALLAS COUNTY.
HUNT COUNTY AND SO FORTH, AND TARRANT COUNTY IS 209, AND THEY'RE SERVING DENTON COUNTY, AND PARKER COUNTY, I GUESS OTHER COUNTYS IMMEDIATELY TO THE NORTH AND WEST.
ARE THOSE LINES, ARE THOSE SERVICE AREAS ESTABLISHED BY LEGISLATION, DO THEY INVOLVE MAPPING COORDINATING.
>> THEY REALLY GO BACK FOR THE MOST PART, 60-70 YEARS -- THEY'VE BEEN AROUND AS VIRTUALLY UNCHANGED AS LONG AS I CAN REMEMBER.
AND, YOU'RE REALLY GETTING AT THE HEART OF THE PROBLEM, WHEN THIS WAS ALL SET UP, THE POPULATION OF THE STATE LOOKED ONE WAY, TODAY IS LOOKS VERY DIFFERENT FROM OVER TIME.
AND THEN, WHAT'S ALSO HAPPENED, AND WE CAN GET INTO IT, IS THAT THE INSTITUTION MAY BE ASSIGNED THAT SERVICE AREA IN MOST CASES REALLY DIDN'T HAVE THE FINANCIAL CAPABILITY TO SERVE SOME OF THESE AREAS BECAUSE THE AMOUNT THEY COULD CHARGE FOR TUITION DOESN'T COME CLOSE TO OFF SETTING THE COST OF THIS.
>> KAUFMAN COUNTY IN SERVICE AREA 205, THEY'RE NOT ATTACHED TO US AT ALL, WE HAVE NO OBLIGATION TO SERVICE OUT THERE, RIGHT?
>> WE PROBABLY HAVE THE LEAST AMOUNT OF THAT, AS YOU COULD SEE, ANYBODY IN THE STATE, ON IT, FOR A LOT OF THE INSTITUTIONS, THAT'S 80-90 PERCENT OF STUDENTS IF THEY'RE SERVING ALONG SIDE THEIR TAXING DISTRICT THERE.
NOT TO GET SPECIFIC IN THAT, BUT THAT'S REALLY IT'S FROM A INSTITUTIONAL POINT OF VIEW AND AN ACCESS POINT OF VIEW, IT'S REALLY AN EQUITY ISSUE OF WHO HAS ACCESS AND AT WHAT PRICE AND TO WHAT PROGRAMS. TECHNICALLY IN THE EYES OF THE STATE OF TEXAS, THESE SERVICE AREAS DON'T EXIST.
THIS IS KIND OF AN ARTIFICIAL CONSTRUCT THAT IF YOU WERE TO TRY TO ANNEX, REALLY KIND OF GIVES YOU PERMISSION TO ANNEX IN AND I'M NOT GOING TO GET INTO HOW YOU WOULD DO THAT, BECAUSE IT VIRTUALLY NEVER WORKS.
SO, WHY WOULD YOU START TO PAY TAXES FOR SOMETHING WHEN YOU'RE ALREADY GETTING THE SERVICES THAT ARE OUT THERE?
SO, (INDISCERNIBLE) >> NEXT SLIDE.
>> SO, BRIEFLY, I THOUGHT I WOULD JUST SHARE AND I GUESS IT COULD HAVE BEEN THE THIRD ONE HERE, THE UNIVERSITY FUNDING WHICH IS COMPLETELY DIFFERENT.
BUT, I THOUGHT I WOULD SHARE THE COMPARISONS BETWEEN PUBLIC SCHOOL FINANCES AND COMMUNITY COLLEGE FINANCES.
YOU'LL SEE AND UNDERSTAND THE REQUIREMENTS THAT THE CONSTITUTION SAYS THAT THOSE OF YOU IN THE LEGISLATURE TO ESTABLISH THE SUPPORT AND MAINTENANCE EVER SCHOOLS.
UNDER COMMUNITY COLLEGES, IT JUST SIMPLY SAYS THERE SHALL BE APPROPRIATED BIANNUALLY AN AMOUNT SUFFICIENT TO SUPPLEMENT LOCAL FUNDS FOR THE PROPER SUPPORT, MAINTENANCE OPERATION AND IMPROVEMENT.
[00:15:03]
NO MANDATE.COMMUNITY COLLEGES OPERATE UNDER AN ALLOCATION MODEL.
THIS IS WHY SOMETIMES IT'S CONFUSING TO THE BOARD THAT WE COULD SEE AN ENROLLMENT INCREASE AND WE GET NO NEW MONEY FROM THE STATE OR WE SEE A DECLINE AND WE GET NO NEW MONEY FROM THE STATE.
BECAUSE AN ALLOCATION MODEL SAYS THAT THE PIE IS (INDISCERNIBLE) >> AND IT WILL BE RECALCULATED EVERY BIANNUALLY BY CONTACT HOURS.
AND EVEN IF NEW MONEY GOES IN BECAUSE IT'S AN ALLOCATION MODEL, LET'S SAY THAT OVERALL STATE ENROLLMENT GREW AT COMMUNITY COLLEGES AN AVERAGE OF 10%.
IF YOU'RE NOT PART OF THAT 11-15%, YOU MAY HAVE A BUDGET CUT EVEN THOUGH YOU GREW, THREE, OR FOUR OR 5% ALONG THE WAY.
AT THE SAME TIME, WITH ENROLLMENT OVERALL, LIKE WHAT'S GOING ON RIGHT NOW, DROPS, BUT YOU DROP A LITTLE BIT LESS THAN THE AVERAGE, SO, WE'RE NOW, YOU KNOW, THE STATE DROPPED ABOUT 11% LAST YEAR, AND I THINK WE WERE DOWN 6%, MEANING WE GOT MORE MONEY ADDED BACK INTO OUR BUDGET BECAUSE IT'S AN ALLOCATION MODEL.
SO, THE PROBLEM IS PARTICULARLY FOR SMALL COLLEGES, YOU CAN GROW AND HAVE ADDITIONAL EXPENSES AND NOT GET A PENNY FOR IT BECAUSE IT TENDS TO COROLLATE WITH SIZE IN THE ALLOCATION MODEL THAN IT DOES WITHOUT IT.
AND PUBLIC AND SOCIETY CONSIDERS LOCAL TAX REVENUES, DISTRICTS, THE LEGISLATURE HAS NO IDEA (INDISCERNIBLE) IT'S NOT COLLECTED IN A MEANINGFUL OR ACCURATE WAY TO LOOK AT.
EQUITY, THERE ARE ADJUSTMENTS FOR MULTIPLE STUDENTS, DISTRICT CHARACTERISTICS, IN OTHER WORDS, HIGH RISK DISTRICT GENERATE MORE DOLLARS, IT'S A ONE SIZE FITS ALL.
UNDER THE INSIDE, THERE'S SETTLE UP PROCESS, SO, YOU START THE YEAR WITH AN ESTIMATE YOU TAKE 12 ON WHAT YOU THINK'S GOING TO HAPPEN AND WHEN YOU GET YOUR CENSUS, THEY, THEY, THEY WRITE THAT.
SO, THEY CORRECT IT SO THAT IF YOU WERE LOW, AND YOU ACTUALLY GET IN YOUR BUDGET CORRECTED TO THE RIGHT, THERE IS NO CORRECTION WITH COMMUNITY COLLEGE.
WHATEVER HAPPENS EVERY OTHER YEAR, IT REALLY DOESN'T MATTER.
WE COULD GROW 20% THIS YEAR AND WE WOULD GET NO MORE FUNDING FOR IT BECAUSE LAST YEAR WAS THE RATIO IN THERE, AND SO FROM THE STATE'S SIDE IT'S THE MOST UNRELIABLE PART OF OUR FUNDING MODEL AND THE LEAST CONSISTENT PART OF WHAT'S OUT THERE AND THE MOST DIFFICULT TO PROJECT.
BECAUSE WHAT YOU DO MATTERS, BUT NOT AS MUCH AS WHAT THE OTHER 49 COLLEGES DO BECAUSE OF THE ALLOCATION PROCESS, THEY DETERMINE WHAT WE GET AS MUCH OR MORE THAN WE DETERMINE WHAT WE GET, IF THAT MAKES SENSE.
SO, YOU COULD DO EVERYTHING RIGHT AND STILL NOT BENEFIT.
>> SO, JUST A COUPLE OF THINGS, I THINK AT THE LOCAL LEVEL, WE CONTROL TUITION RATES BOTH IN-DISTRICT AND OUT-OF-DISTRICT AND TAX RATES.
THE STATE CONTROLS AND I'LL GET INTO THIS, THE BASE FUNDING AMOUNT WHICH IS CORE FUNDING, THE CONTACT HOUR FUNDING WHICH IS SOMETIMES CALLED FARM YOU LA AND OUTCOMES WHICH RELATES TO THE STUDENT'S SUCCESS POINTS AND THEN THERE'S ONE OTHER PIECE THAT WE DON'T TALK ABOUT MUCH AND THAT'S THE FEDERAL PERKINS DOLLARS THAT SUPPORT CAREER EDUCATIONAL PROGRAMS THAT'S ALLOCATES VERY SPECIFICALLY FOR CERTAIN TYPES OF PROGRAMS IN THE STATE AND THEY CAN ONLY BE USED FOR THAT PURPOSE.
THEY'RE NOT CONSIDERED REVENUE, WHEN THOSE DOLLARS COME IN, WE SUBMIT A PLAN TO THE COORDINATING BOARD WHICH APPROVES WHAT WE'RE GOING TO DO WITH THOSE PERKINS DOLLARS.
>> SO, FROM THE STATE'S SIDE THEY SR. IT NOTHING, IT'S A ONE SIZE FITS ALL.
[00:20:03]
UNDER THE PART THAT'S MANAGED BY LOCAL BOARDS, TUITION VARIES CONSIDERABLY.THERE'S 250% VARIANCE WITHIN THAT AND WE DID A JOHN DID AN ANALYSIS OF THAT, THERE'S NOT A SINGLE COMMUNITY COLLEGE THAT ACTUALLY COVERS THE COST OF THEIR OUT-OF-DISTRICT REAL COST.
SO THAT MEANS ALMOST ALL OF THEM ARE SUPPLEMENTED A LITTLE BIT BY THE TAX DOLLARS THAT WITHIN THAT DISTRICT.
AND THEN, TAX RATES VARY 650% ACROSS ALL 50 COMMUNITY COLLEGES.
>> HOW DOES THE STATE ADJUST PERFORMANCE BASED.
>> I'LL GET TO THAT AND I'LL SHOW YOU WHAT LITTLE CONTROL WE HAVE OVER THAT AS WELL.
SO, YOU'VE GOT TO, YOU KNOW, THIS IS KIND OF -- WHO BENEFITS AND WHO CONTRIBUTES, WHEN WE LOOK AT IT, I'VE ALREADY MENTIONED THIS, IS THAT THE MAJORITY OF THE STATE GEOGRAPHIC AREA WE HAVE MORE THAN ONE THIRD OF THE POPULATION OUTSIDE AS WELL JUST TO GIVE YOU THE INSIGHT AND AS ZIMMERMAN INDICATED EARLIER, IF A COLLEGE DOES GO INTO OUT-OF-DISTRICT, THEN THOSE ADDITIONAL COSTS ARE PAID FOR BY THE STUDENTS.
AND AS WE'LL SEE A LOT OF THESE AREAS, PARTICULARLY SINCE IT HITS RURAL AREAS VERY HARD, IT REALLY HITS FOLKS WITH THE LEAST ABILITY TO PAY.
IT PUTS THE GREATEST BURDEN ON THEM.
>> SO, AS WE LOOK AT THIS, RERECOMMENDED A SET OF DESIGN PRINCIPLES THAT WE CONSIDERED BY THE COMMISSION TO LOOK AT, AND THEY USED IT AND I BELIEVE THEY'RE FOLLOWING IT WITH THEIR STRUCTURE, BUT, YOU KNOW, I THINK THE HARD PART FOR LEGISLATURES TO GET THEIR HEAD AROUND IS THEY'RE THE MINORITY INVESTORS IN COMMUNITY COLLEGSES, THEY PAY THE LEAST, THEY SUPPORT THE LEAST AND THEY'RE THE MOST UNRELIABLE.
AND THEREFORE, THEY ACTUALLY HAVE THE LEAST AMOUNT OF STAKE IN TERMS OF WHAT'S GOING ON.
THEY DON'T SEE IT THAT WAY BUT THAT'S THE REALITY.
WE HOPE THERE'LL BE INCENTIVES FOR COLLEGES TO SUPPORT ATTAINMENT P AROUND STUDENT'S SUCCESS AND ACHIEVE THE 60X30 GOALS, WE WANT THEM TO ACHIEVE AFFORDABLITY ACROSS THE STATE.
THAT THERE'S CONSIDERATION GIVEN TO DIFFERENT WORKFORCE NEEDS.
OBVIOUSLY, THE GULF COAST, THE CHEMICAL NEEDS ARE VERY DIFFERENT FROM OUR NEEDS HERE THIS TEXAS AREA.
AND ALSO RECOGNIZE CIRCUMSTANCES LARGE VERSUS SMALL, WEALTHY VERSUS POOR.
I WAS RECENTLY TALKING WITH A SUPERINTENDENT IN WEST TEXAS WHO HAS PARTNERSHIP WITH SNYDER.
TEXAS HAS A VERY GOOD TAX PACE AND DISTRICT WHICH ALLOWS THEM TO SERVE YOU, OTHERWISE YOUENT WOULD BE SERVED IN YOUR COMMUNITY.
SO, THESE ARE THINGS THAT ARE BEING TAKEN UP THAT'S IN THERE, LOOKING AT HOW TO REDUCE THE FUNDING BURDEN ON STUDENTS WHO PAY OUT-OF-DISTRICT TUITION.
HOW TO PROVIDE ADEQUATE FUNDING FOR COLLEGES IN TAXING DISTRICTING WITH LOW VALUATIONS TO ENSURE AFFORDABILITY IN-DISTRICT.
AND IT'S A MATTER OF RECORD, YOU COULD CHECK, PARIS', FOR EXAMPLE, JUST EAST OF US, HAS A TAXING DISTRICT THOUGH ONLY INCLUDES THE DOWNTOWN DOES NOT INCLUDE THE INDUSTRIAL PART OR THE SCHOOL DISTRICTS, THEIR TOTAL VALUATION IS $1.5 BILLION.
FOR US THAT'S JUST A VERY VERY (INDISCERNIBLE) >> HOW TO OBTAIN THE
[00:25:04]
APPROPRIATE LEVELS OF CONTRIBUTIONS FROM AREAS OUTSIDE TAXING DISTRICTS, I THINK THAT'S GOING TO BE A GOOD ONE.AND HOW TO ENSURE THAT WORKFORCE PROGRAMS APPROPRIATE TO ALL TEXAS REGION ARE EFFECTIVELY DELIVERED THROUGH THE LOCAL COMMUNITY COLLEGE OR VIA COLLABORATION AMONG PROVIDERS.
AND HOW TO DEN SURE THAT STUDENTS WITH ALL BACKGROUNDS CAN ACCESS AND SUCCEED IN PROGRAMS DIRECTLY TIDE TO REGIONAL WORKFORCE REQUIREMENTS.
THOSE ARE THE TOPICS THAT WE'VE ASKED THE COMMISSION TO LOOK AT.
HOW DO WE FUND THIS AND ENSURE ALL OF THIS HAPPENS GOING FORWARD.
>> THE GEOGRAPHIC LOCATION AND CAPACITY IS NOT ALIGNED WITH THE DEMOGRAPHIC GROWTH OF THE STATE.
PARTICULARLY ABOUT THE GROWTH AND THE HISPANIC POPULATION, OF COURSE, WHEN THESE COLLEGES WERE CREATED, THAT POPULATION WAS RELATIVELY SMALL TO WHAT WAS GOING ON IN THE STATE AND THEN YOU GET INTO THE STATE FUNDING DECLINE WHICH HAS DECLINED SUBSTANTIALLY IN RELATIONSHIP TO THE STATE TO THE LOCAL TAXES AND TUITION.
THEIR SHARE DOES NOT EVEN COME CLOSE TO ALIGNING WITH THE LEGISLATURE'S GOALS.
THE STATE FINANCE DESPITE THE SUCCESS POINTS, AND I'LL GET INTO THIS, IS REALLY FUNDING IS REALLY NOT TIDE AT ALL TO THE EXPECTATIONS OF ANY TYPE OF PUBLIC AGENDA, ANY TYPE OF OUTCOMES, LIKE 60X30, TEXAS, THERE'S NO CORRELATION ON RELATIONSHIP.
SO, JUST REAL QUICKLY, FROM A COLLEGE PERSPECTIVE, THIS IS HOW COLLEGE REALLY LOOKS AT FUNDING.
YOU'VE GOT THE GREEN TAXING DISTRICT, YOU'VE GOT TUITION, WHICH IS REALLY SPLIT BETWEEN THE TWO THERE, OUT-OF-DISTRICT AND IN-DISTRICT STUDENTS AND FOR US, IN-DISTRICT IS THE LARGEST PERCENT, BUT FOR SOME OUT-OF-DISTRICT IS THE BIGGEST PART OF THEIR ACTUAL BUDGET.
AND THEN WHATEVER YOU DO IN CONTACT TRAINING WITH EMPLOYERS AND THE 5TH IS THE STATE SO, THIS MAKES UP THE BASIC OF THE INSTITUTION SIDE THAT WE LOOK AT AND CONSIDER KIND OF IN THE STATE, WE YOU KNOW, WE KIND OF MIX THAT PERKINS IN THERE.
FROM A STUDENT PERSPECTIVE, THEY'RE LOOKING AT THE I GUESS, WHO PAYS THERE IS THAT THE YOU HAVE THE TUITION FROM THE STUDENT, IN-DISTRICT, OUT-OF-DISTRICT, AND THEN FINANCIAL AID, EITHER FEDERAL OR STATE.
NOT TO GET INTO DETAILS, THAT'S A SEPARATE DISCUSSION ON STATE AID.
FOR EXAMPLE, FOR A LOT OF STUDENTS, IF WE DON'T GIVE THEM AID WHILE AT DALLAS COLLEGE, THEY'RE INELIGIBLEABLE FOR STATE AID WHEN THEY TRANSFER, FOR EXAMPLE.
SO, THERE'S A BIG DISCONNECT IN THE STATE AID POLICY.
PEL GRANTS ARE THE DRIFR OF DRIVER OF WHAT COMMUNITY COLLEGES ARE FOCUSED ON.
THAT'S THE PRIMARY FUNDER OF ALL COMMUNITY COLLEGES IN THE STATE OF TEXAS AND THEN YOU HAVE A SMALL AMOUNT OF INSTITUTIONAL WHICH INCLUDES OUR FOUNDATIONS AND OTHERS.
THIS IS WHO SUPPORTS STUDENTS IN THIS DISTRICT.
>> THAT'S IT'S FEDERAL GRANT BASED ON FAMILY ECONOMIC INCOME AND NEED.
SO, YOU KNOW, MORE THAN LIKELY, OUR STUDENTS ABOUT PROBABLY 70% ARE ELIGIBLE, ONLY ABOUT 48% GET IT.
PARTLY BECAUSE NOT EVERYONE APPLIES WHO IS ELIGIBLE.
AND IT'S PARTICULARLY HITS HARD IMMIGRANTS, THE HISPANIC COMMUNITY, INDIVIDUALS WHO ENGLISH ISN'T THE PRIMARY LANGUAGE SPOKEN AT HOME.
THEY'RE FEARFUL OF THE GOVERNMENT SO THEY DON'T APPLY.
[00:30:02]
AND 20% OF PEOPLE WHO DO GET FORWARD FOR VERIFICATION THAT THEY ARE ELIGIBLE BUT THE FEDERAL GOVERNMENT CAN'T RESOLVE THEIR PARENT'S TAXES AND THAT'S USUALLY THE ISSUE.(INDISCERNIBLE) >> (INDISCERNIBLE) >> YOU SAID WE DON'T (INDISCERNIBLE) FINANCIAL AID AND THEY TRANSFER SOMEWHERE ELSE, THEY CAN'T GET IT.
SO, (INDISCERNIBLE) >> (INDISCERNIBLE) UNTIL THEY ARE TRANSFERRED SOMEWHERE ELSE.
>> YOU NAILED THE PROBLEM, OFTEN THEY DON'T NEED IT WITH US, BASED ON THE NEED, BUT THAT'S THERE WITH THE TEXAS GRANTS THAT ARE THERE.
BUT IF THEY DO NOT GET IT WITH US, THEY WILL NOT BE ELIGIBLE FOR IT WHEN THEY TRANSFER TO THE FOUR-YEAR INSTITUTION, THAT'S WHAT I MEANT ABOUT THE POLICIES NOT MAKING SENSE THERE BECAUSE CIRCUMSTANCES CHANGE.
THE REASON WHY THEY MAY NOT NEED IT WITH US IT BECAUSE OUR TUITION IS LOW AND THEY CAN GET EVERYTHING COVERED WITHOUT THAT NEED TO GO INTO THOSE FUNDS.
THEY TRANSFER TO A HIGH-PRICED UNIVERSITY AND NOW THEY NEED THOSE DOLLARS, BUT THEY'RE NOT ELIGIBLE BECAUSE THEY DIDN'T GET THEM AT THE TWO-YEAR INSTITUTION.
THAT'S A WHOLE SEPARATE CONVERSATION.
>> (INDISCERNIBLE) >> THAT DOESN'T MAKE SENSE.
>> YEAH, IT DOESN'T MAKE SENSE.
BUT IT'S ONE OF THOSE THINGS THAT NOBODY LOOKS AT BECAUSE IT'S IN THAT NO-MAN'S-LAND, THE INSTITUTION FOCUSES ON WHO THEY'RE SERVING.
THE COMMUNITY COLLEGE FOCUS ON WHO THEY SERVE AND THE UNIVERSITIES FOCUS ON WHO THEY SERVE, THEY DON'T KNOW WHAT'S GOING ON IN EACH OTHER'S CAMPS.
>> THAT'S ONE OF THE THINGS THAT IS GOING TO BE ADDRESSED?
>> IT'S ACTUALLY NOT WHAT'S BEING ADDRESSED IN THIS, THAT'S REALLY FOR A SEPARATE LOOK AND CONVERSATION.
>> WHY WOULDN'T SOMETHING LIKE THAT BE LOOKED AT IT?
>> WELL, IT NEEDS TO BE LOOKED AT AND THAT'S ONE OF THE THINGS THAT WE'RE ADVOCATED FOR IN FOLLOWUP FOR THIS AND THERE'S A WAY TO GET AT THIS THROUGH THIS BUT IT WOULD REQUIRE THEM TO REALLY THINK ABOUT SOME GOVERNANCE STRUCTURES AND A FEW OTHER THINGS DIFFERENTLY.
>> SO, THEY WOULD HAVE TO SHOW THAT THEY HAD AID HERE BEFORE THEY COULD GET IT THERE.
>> IT'S NOT THAT SIMPLE, IT'S A VERY SPECIFIC AID THAT THEY HAVE TO RECEIVE, NOT JUST ANY AID.
>> SO, THAT MAKE IT IS EVEN MORE COMPLICATED.
SO, A LOT OF FOLKS WOULD NOT UNDERSTAND IT.
>> IS THIS POLICY A MATTER OF THE STATE LAW, OR?
>> WELL, WE'LL COME BACK TO THAT.
>> THAT'S REALLY A DIFFERENT CONVERSATION THAN THIS.
BUT IT JUST SHOWS THE COMPLEXITY OF DEALING WITH SOME OF THE ISSUES.
>>> YOU'RE DRIVING PEOPLE, IN SOME INSTANCES IN DEBT.
WHICH WHEN I WAS GOING, THAT WAS THE A CASE, WE PAID OUT OF POCKET.
>> (INDISCERNIBLE) >> MAY BE, (INDISCERNIBLE) >> SHORT TERM LOAN, BUT THAT'S IT.
BY THE TIME I GOT TO UNIVERSITY (INDISCERNIBLE) >> >> AND THAT'S KIND OF WHAT'S CHANGED AND THAT'S WHAT WE GET INTO IN THIS SLIDE WHICH REALLY SHOWS, I TALK ABOUT, IT'S ALMOST INPERCEPTIBLE YEAR TO YEAR WE REMEMBER WHEN IT WAS 80% STATE FUNDED WHICH IS THE YELLOW ON HERE.
YOU KNOW, IT JUST CROPS A LITTLE BIT EACH, YOU KNOW, EVERY 5 YEARS, WHICH MEANS YEAR TO YEAR, IT'S NOTHING ANYONE'S GOING TO SCREAM ABOUT BECAUSE IT'S SO GRADUAL OVER TIME THAT IT'S VIRTUALLY UNOBSERVABLE, PARTICULARLY WITH A BIANNUAL BUDGET AT THE SAME TIME YOU SEE THE SHIFT WHICH IS THE RED THAT YOU SEE THERE, AND THE GROWTH OF LOCAL TAXES, YOU COULD ALSO SEE THAT INSTITUTIONS HAVE PUSHED BACK ON TUITION.
THERE WAS A LOT OF INCREASE EARLY ONTO OFF SET THE LOSS OF STATE DOLLARS, BUT THEN,
[00:35:02]
MIRACULOUSLY, IT SHIFTED MORE TO RELY ON PROPERTY TAX SO THEY'RE NOT PUTTING AS MUCH OF THE BURDEN WHERE THEY CAN AND NOT ALL CASES CAN THEY MAKE THAT HAPPEN.SO, THIS SLIDE SHOWS YOU THE YEAR AND THE POINT IN TIME WHEN PROPERTY TAX PASSED STATE FUNDING, IN TERMS OF IT.
AND I WOULD ARGUE THIS IS THE POINT IN TIME WHERE THE LEGISLATURE AND THE COORDINATING BOARD LOST ALL ABILITY TO MANAGE POLICY ON THAT SIDE BECAUSE AS MUCH AS YOU WANT TO HAVE OUTCOME POSITIVE RESULTS, IF THE FUNDING IS NOT COMING FROM THE STATE IN THAT REGARD, THEN, THERE IS NO INCENTIVE TO DO PERFORMANCE.
BECAUSE, IT'S REALLY NOT THE DRIVER.
AS YOU BECOME THAT MINORITY PLAYER IN THE EQUATION.
AND IN THE NEXT SLIDE IT WEIGHS IT OUT AS TO DO THIS KIND OF HOW THINGS HAVE SHIFTED.
>> SO, THE STATE PUT IN THE STUDENT'S SUCCESS POINTS.
BASICALLY THEY DID TWO THINGS, THEY CREATED BACK A FEW YEARS AGO, THE BLUE AT THE BOTTOM WHICH IS CORE FUNDING, THAT OCCURRED ACTUALLY JUST BEFORE I CAME HERE.
IT WAS STILL CONTROVERSIAL WHEN I CAME TO DALLAS, BECAUSE IF YOU FUND, I THINK AT THE TIME IT WAS $1 MILLION EVERY COLLEGE GOT ACROSS THE BOARD, AS I PUT OUT THERE TO THE RIGHT, THE SUCCESS POINTS, THAT REPRESENTS 11.15% OF THE BUDGET, IT'S .
15% OF THE DALLAS BUDGET, SO, THE CORE FUNDING BENEFITS SMALL INSTITUTIONS WHICH IS WHY IT WAS DONE TO GIVE THEM A BASE OF FUNDING WHICH IS PRETTY IMPORTANT TO THEM.
THE ORANGE IS A CONTACT HOUR FUNDING THAT'S THERE AND THEN THE TOP AT THE SUCCESS POINTS WHICH YOU GET RELATIVELY NEW COMING INTO PLAY AROUND 14-15 THAT'S THERE, BUT ONE THING THAT YOU WILL NOTICE IN THAT IS THAT THERE WAS REALLY NEVER ANY NEW MONEY ADDED FOR THE SUCCESS POINTS, THAT WAS JUST SIMPLY CARVED OUT OF THE CONTACT HOUR FUNDING.
SO, AT THE END OF THE DAY, SO, IN A PUBLIC BUDGET MODEL, THEY WERE (INDISCERNIBLE) MONEY.
THERE WOULD HAVE BEEN MORE MONEY PUT INTO K-12 IF THERE WERE A FUNDING MODEL BECAUSE IT'S AN ALLOCATION MODEL, NO, ALL IT DOES IS SHIFT THE POT WITHIN THERE.
SO, IT DOESN'T CHANGE IT AT ALL.
AND SO IF YOU FIX DOLLARS, LIKE AN ALLOCATION TO THE CORE, THAT MEANS YOU TAKE MONEY AWAY FROM SOMETHING ELSE.
IF YOU PUT MONEY INTO SUCCESS POINTS, THAT MEANS YOU TAKE MONEY AWAY FROM SOMETHING ELSE.
IT IS NOT A FUNDING MODEL ALLOCATION MODEL AND THAT'S WHY THIS MATTERS.
LET ME TALK ABOUT THAT BECAUSE THAT REPRESENTS RIGHT NOW ABOUT 12.4% OF THE ALLOCATION.
BUT IT'S ONLY 2.67% OF INSTITUTIONAL REVENUE.
AND DEPENDING ON YOUR SIZE, THAT'S THE AVERAGE, SO, FOR US, JOHN, IT'S ABOUT HALF THAT.
SO IT DOESN'T REALLY HAVE MUCH OF A DRIVER, ALSO THERE'S NO CONSISTENCY, BECAUSE EVERY BIENNIUM IT OCCURS.
AND WE CAN'T CALCULATE HOW THE SUCCESS POINT PRIVATE SECTOR DETERMINED.
IT'S NOT TRANSPARENT IN THAT PROCESS, WE DON'T ACTUALLY KNOW, OUR TEAM HAS WORKED A YEAR IN SOME CASES TO FIGURE OUT BACK INTO WHAT THE COORDINATING BOARD DID, AND THEY CAN'T EVEN ALWAYS EXPLAIN WHAT THEY DID.
THE IMPACTED SUCCESS POINTS WERE MINIMIZED BECAUSE THEY'RE NESTED INSIDE A MUCH MORE INFLUENTIAL REVENUE STRUCTURE.
I LIKEN IT TO LIKE TRYING TO GO A BOX WITHIN A BOX WITHIN A BOX BECAUSE IT'S BURIED SO FAR IN INTEREST, YOUR ABILITY TO IMPACT IS DIFFICULT.
>> IS THERE ANY ALIGNMENT WITH THE SUCCESS POINT OF THE 60 BY 30 GOALS?
[00:40:02]
PARTLY BECAUSE THEY'RE NOT POLICY DRIVEN, THEY'RE LEGISLATIVELY DRIVEN.
AND THE LEGISLATURE, CHOSE TO WHAT ALMOST APPEARS RANDOMLY CHANGE THEM BIANNUALLY.
>> THAT'S ONE OF 12 COMPONENTS INSIDE THE OVERALL SUCCESS MEASURE.
ONE COMPONENT OUT OF 12 INSIDE THE STATE REVENUE MODEL WHICH IS BROKE UP INTO THREE OTHER BOXES, INSIDE OF TOTAL INSTITUTION WHICH IS FIVE DIFFERENT SOURCES THAT ARE OUT THERE.
THEN YOU ADD TO THAT, YOU HAVE 12 DIFFERENT BOXES WHICH IS WAY TOO MANY WITH DIFFERENT WEIGHTS THAT FLUCTUATE FROM YEAR TO YEAR DEPENDING ON THE WILL OF THE LEGISLATURE, AND THEN THERE ARE ALSO 25 BOXES RELATED TO CRITICAL FIELDS WHICH QUITE HONESTLY HAVE NO BUILT RELATIONSHIP TO WHAT THE NEEDS ARE LOCALLY.
IF YOU GET POINTS FOR THAT, YOU'RE PROBABLY NOT GIVING LOCAL COMMUNITY WHAT THEY NEED, BECAUSE THOSE HAVE NOT BEEN UPDATED SINCE 2014 WHEN THEY WERE PUT IN.
>> DOES EVERYONE HAVE TO HAVE THE STUDENT SUCCESS POINTS?
THAT'S BUILT IN, IT'S ROUGHLY 12.6% OF THE MODEL.
BUT, HERE'S THE REALITY, IT SIMPLE COROLLATES TO ENROLLMENT BUT SUCCESS POINTS HAVE A 92% CORRELATION WITH ENROLLMENT, BASICALLY MEANING, THE LARGER THE INSTITUTION, YOU SEE WE'RE AT THE TOP OF THE LIST, YOU GET MORE SUCCESS POINTS, THE SMALLER THE INSTITUTION, THE LEAST AMOUNT OF SUCCESS POINTS THAT YOU GET AND IT COROLLATES UP AND DOWN WITH THIS.
WE DON'T NEED THIS MODEL TO BE THE ONE THAT.
THIS IS JOHN AND HIS TEAM, THIS IS THE, THE, IN MANY WAYS, PERHAPS THE MOST UPSETTING SLIDE FROM AN OVERALL POLICY POSITION IF YOU ARE LOOKING AT A STATE THAT'S TRYING TO DRIVE POLICY OUTCOME 60X30, WHAT YOU SEE IS THE REVENUE DISTRIBUTED AND REALIZE NO TWO COLLEGES RECEIVED THE SAME REVENUE FIX OUT OF ALL 50 ACROSS HERE.
THE ONE SIZE FITS ALL IS KIND OF THE STATE FUNDING.
AND YOU'LL SEE A FEW OUTLIERS LIKE IN HOWARD, WHERE THEY HAVE A SCHOOL FOR THE BLIND AND HILL HAS A MUSEUM, BUT THE BOTTOM LINE IS THAT THAT THE YELLOW, THE STATE FUNDING BAR IS BARELY CONSISTENT ACROSS THERE, BUT IN ORDER TO GET TO TOTAL BUDGET IT'S A MIX BETWEEN TUITION AND LOCAL TAXES.
SO, YOU'LL SEE A TARRANT HAVING THE BECAUSE OF THEIR VALUATION AND THEIR PROPERTY TAX RATE, THEY GET THE LARGEST% OF THEIR BUDGE AND RELIABILITY LEAST ON TUITION IN THE STATE.
BELIN RELIES ON TUITION AND THE LEAST ON PROPERTY TAX IN THE STATE.
SO, IMAGINE TRYING TO PROVIDE A POLICY LIKE DUEL ENROLMENT OR PTECH THAT APPLIES TO ALL OF THESE INSTITUTIONS WHEN SOME MUST HAVE REVENUE FROM TUITION IN ORDER TO SURVIVE, WHERE WE COULD SURVIVE TO WAVE THE TUITION BECAUSE OF THE LOCAL FINANCIAL SUPPORT THAT'S THERE.
>> (INDISCERNIBLE) >> (INAUDIBLE) >> THEY HAVE A MUSEUM, THAT'S THE STATE FUNDS AND IT GETS ROLLED INTO THEIR BUDGET AND HOWARD HAS A STATE MUSEUM THAT'S LOCATED ON THEIR CAMPUS AND THE STATE FUNDS THAT.
AND THEN HOWARD HAS THE SCHOOL FOR THE BLIND ON THEIR CAMPUS THAT THE STATE FUNDS.
SO, THOSE ARE THE BIG OUTLIERS.
THERE ARE FEW OTHER MINOR THINGS, WE ACTUALLY GET A BUMP TOO BECAUSE OF THE SMALL BUSINESS DEVELOPMENT CENTERS THAT WE GET THAT NUDGES US UP A LITTLE BIT
[00:45:03]
ABOVE THE BOARD.AND SO, THERE ARE MINOR LITTLE THINGS LIKE THAT THAT WE WILL (INDISCERNIBLE)
>> SO, AND JOHN AND HIS TEAM HAVE BEEN REALLY HELPFUL HERE.
SO, WHEN WE BREAK IT DOWN, WE SEE THAT COMMUNITY COLLEGES FROM A BUSINESS MODEL REALLY FALL INTO THREE CATEGORIES, THEY'RE EITHER COMPLETE WILL I ENROLLMENT-DRIVEN WHICH IS THE GROUP IN THE RIGHT BOX, AND THE NEXT LARGEST GROUP ARE THOSE THAT ARE LOCAL ALLOCATION, MEANING LOCAL TAX DOLLARS THAT COME IN, AND THEN YOU HAVE A GROUP IN THE MIDDLE THAT ARE SOMEWHAT BALANCED, MEANING IT BREAKS OUT TO A THIRD, A THIRD, A THIRD.
BUT IF YOU ARE IN THAT BALANCED GROUP, QUITE HONESTLY, YOU'RE GOING TO BE BELOW AVERAGE IN OVERALL FUNDING PER STUDENT.
>> SO, THIS IS THE AVERAGE OF ALL DISTRICTS IN THE STATE, THE AVERAGE COST FOR A FULL-TIME STUDENT ATTENDING ON A FULL-TIME BASIS FOR ONE YEAR IS LET'S JUST SAY, ROUGHLY $10,000, $9,882 AT THE MOST OF THAT.
AND OF THAT, ABOUT 25% COMES FROM THE STUDENTS, ROUGHLY 25% COMES FROM THE STATE, AND ON AVERAGE 51% IS COLLECTED BY THE LOCAL PROPERTY TAXES TO GET THERE.
BUT, OBVIOUSLY, YOU'RE MILEAGE MAY VARY, LET'S GO TO DALLAS, WHAT YOU SEE IS WE'RE AT THAT $10,000 MARK, SO WE'RE CLOSE TO THE AVERAGE, BUT WE'RE A LOCALLY FUNDED INSTITUTION, MEANING THAT WE GET A LITTLE BIT MORE FROM THE LOCAL TAXES AND WE PASS THAT SAVINGS ONTO STUDENTS AS A RESULT OF IT.
SO, WE ARE A LOW TUITION INSTITUTION, I THINK SECOND OR THIRD LOWEST IN THE STATE AS WE LOOK AT THIS, WE'RE RIGHT AT ABOUT AVERAGE OF THE STATE ALLOCATION.
BUT WE'RE ABOVE AVERAGE IN TERMS OF OUR RELIANCE ON THE LOCAL PROPERTY TAX BUT THAT'S OBVIOUSLY THE OFFSET.
IF LOCAL SUPPORT DROPPED, WE WOULD HAVE TO INCREASE COST TO STUDENTS.
SO, IT'S BASICALLY ONE OR THE OTHER BECAUSE YOU REALLY PIVOT AROUND THE STATE DOLLARS SINCE THAT'S THE MOST CONSISTENT FROM A PERCENTAGE BASIS ON ALL COLLEGES, THE LEAST RELIABLE ON DOLLAR TO DOLLAR, WE'RE MUCH BETTER ABLE TO PREDICT PROPERTY TAX AND TUITION THAN WE'RE ABLE TO PREDICT THE DOLLARS THAT WE WOULD GET FROM THE STATE.
LET'S LOOK AT AN ENROLLMENT DRIVEN INSTITUTION, WHICH WE PICKED GLEN WHICH WAS THE FURTHEST RIGHT.
THEY ARE COST BECAUSE THEY DON'T HAVE ANY TYPE OF BALANCE IS ABOUT $7,000 PER STUDENT, WHICH MEANS, I'LL JUST TELL YOU WHAT THAT MEANS.
THAT MEANS THEY DO VERY LITTLE HEALTH CARE, CONSTRUCTION, TECHNOLOGY, MANUFACTURERING, THEY CAN'T AFFORD IT.
WHAT THEY CAN AFFORD TO DO IS 40-50 STUDENTS PER CLASSROOM WITH A WHITE BOARD AND A TEACHER.
SO, THEY'RE FUNDING MODEL DRIVES THE TYPES OF SERVICES THAT THEY PROVIDE BECAUSE THEY CONTINUE AFFORD TO DO TECHNICAL EDUCATION.
>> DISTRICTS OF WHICH THAT (INDISCERNIBLE) THEY'RE LOW LEVEL SUPPORT IS IT DUE TO LACK OF TAX BASE OR IS IT DUE TO LACK OF TAX REVENUE?
>> ACTUALLY, THE ONLY TAXES DISTRICT BLEND IS WASHINGTON COUNTY.
THEY SERVE 13 COUNTIES THAT SURROUND WASHINGTON COUNTY, BUT THEY'RE ONLY TAXING ABILITY IS WITHIN WASHINGTON COUNTY.
I CAN GIVE YOU A 20-HOUR DISCERTIFICATION.
THEY SURVIVED WITH THE OUT OF STATE ALLOCATION.
AS LONG AS THEY GROW, THEY'RE OKAY.
>> AND THEY'RE GROWTH HAS TO BE IN ACADEMIC TRANSFERS SO THEY BUILT A BUSINESS MODEL THAT SURROUNDS THAT, WHERE BASICALLY THEY GET NO LOCAL SUPPORT, THEY GET ABOUT THE
[00:50:03]
SAME STATE DOLLARS PER STUDENT AS EVERYONE ELSE.BUT THEY PUSH A DISPROPORTIONATE COST ON TO THE STUDENT.
>> THEY WILL BE WAY HIGHER THAN THAT.
THEY ARE TAX RATE IS ABOUT $0.05 PER ONE HUNDRED DOLLARS.
BUT IT'S ONLY $2 MILLION OR $3 MILLION OUT OF A 60 PLUS MILLION DOLLAR BUDGET, THEY'RE VERY, VERY, SMALL IN THEIR ABILITY.
>> (INDISCERNIBLE) >> WITH THE LEGISLATURE, OVER TIME, THE TIME THEY MOVED TO THE CITY AND THE CAMPUS THERE, THEY COULD NOT BUILD BUILDINGS OUTSIDE OF THEIR TAXING DISTRICT.
AND ALL THAT HAS CHANGED IN THE LAST 20 YEARS.
>> THE STATE HAS CHANGED THE LAWS THERE, WHICH ALLOWS FOR SOME -- >> BUT IT IS THE HOME OF THE CONTENTED COWS.
>> (INDISCERNIBLE) >> WHAT'S THEIR TUITION?
>> YOU WOULD HAVE TO DIVIDE THAT OUT.
>> (INDISCERNIBLE) >> YEAH, ABOUT THREE TIMES OUR'S.
SO, YEAH, IT'S GOING TO BE WELL, THEY'RE OUT-OF-DISTRICT AND THE ONE WHERE THEY GET ALL THE REVENUE, THEY HAVE A HIGHE IN-DISTRICT BUT THAT'S WASHINGTON COUNTY.
LET'S GO TO THE LAST ONE, WHICH IS KIND OF A BALANCE, AND YOU KNOW, TYLER IS ABOUT A THIRD, A THIRD, A THIRD, WHICH IS KIND OF WHAT FOR THOSE OF US THAT GO WAY BACK, THAT WAS KIND OF THE DEAL WITH THE STATE.
IT WOULD BE A THIRD FROM THE STUDENT, A THIRD FROM THE STATE AND A THIRD FROM THE LOCAL SUPPORT IN CONTRIBUTION.
THE FACT THAT THERE'S FIVE OR SIX COLLEGES THAT FIT INTO THIS CATEGORY IS JUST SIMPLY A LUCK OF THE DRAW ON THEIR TAX BASE ALLOW.
IT'S NOT BIG ENOUGH TO REALLY FULLY SUPPORT THE INSTITUTION LIKE WE SEE IN DALLAS COUNTY, TARRANT COUNTY, AND COLIN COUNTIES.
HARRIS, OTHER COUNTIES THAT ARE OUT THERE.
WHICH MEANS THAT THEY END UP HAVING TO PUSH MORE OF THE COST ON TO THE STUDENTS AS A RESULT OF IT.
BUT, COMPARATIVELY, THIS MEANS THOSE FILLED WITH THESE STUDENTS PEL GRANT WILL COME CLOSE BUT NOT QUITE COVER THE COST OF TUITION.
WITH BLINN IT DOESN'T COME CLOSE, WITH US, IT COVERS ALL OF IT.
WITH, WITH, WITH -- SO, NEXT SLIDE.
THE THING THAT WE'RE ASKING, IS WHAT CAN WE LEARN FROM OTHER STATES? WELL, I CAN TELL YOU, THERE'S NO STATE THAT DOES ANYTHING LIKE TEXAS OR THE CIRCUMSTANCES THAT CURRENTLY EXIST.
MOST STATES START WOULD VISION OF HOW TO SERVE THE ENTIRE POPULATION, NOT OF JUST POPPING UP WHERE EVER SOME LOCAL COMMUNITY WANTED TO HAVE A COLLEGE.
I THINK THE OTHER PIECE IS IT'S NOT THAT UNUSUAL IS THAT THE STRONGLY HELD VALUE AND I CALL IT, THE FRONTIER ATTITUDE THAT WE HAVE WHERE DISTRUST OF STATE-LEVEL OVERSIGHT GUIDANCE AND STRONG LOCAL CONTROL, WHICH HONESTLY I DON'T THINK WOULD CHANGE BECAUSE OF THE WAY THE CONSTITUTION IS WRITTEN ON THIS ISSUE, SO, THE STATE NEEDS TO COME UP WITH A WAY TO ENSURE THAT WE CAN DELIVER TO ALL AREAS IN THE STATE WHILE RECOGNIZING THE LIMITATIONS OF THE CONSTITUTION.
WITH COMPLETE DECENTRALIZED GOVERNANCE THERE'S NO ACCOUNTABILITY.
AND THERE DOZE NEED TO BE FINANCES POLICY RELATED TO PERFORMANCE.
AND TRY AS WE MIGHT, WITH THINGS LIKE SUCCESS POINTS AND OTHERS, WE'RE STILL STUDYING ENROLLMENT, BECAUSE I DON'T CARE WHAT YOU DO WITH BLINN, WHEN THEIR DOLLARS COME FROM TUITION THAT'S ENROLLMENT DRIVEN AND IT DOESN'T MATTER WHAT THE STATE DOES ON PERFORMANCE SIDE OR SUCCESS POINTS, OR TRYING
[00:55:03]
TO HAVE THE PROGRAMS THAT ARE ALIGNED WITH THE ECONOMY, THEY'RE FORCED BY THE REVENUE MODEL TO DO THE LOWEST COST OPTIONS THAT ARE OUT THERE AND MINIMIZE SOME OF THESE OTHER THINGS THAT NEED TO HAPPEN.>> SO, YOU KNOW, THIS IS WHAT'S KIND OF WHEN I DID MY PRESENTATION TO THE COMMISSION A COUPLE OF MEETINGS AGOIOUS YOU KNOW, REALLY ASKED THEM THAT THEY NEED TO CONSIDER REALLY HOW TO REMOVE THE BARRIERS FO STUDENTS TRYING TO GET INTO HIGH-WAGE JOBS WITHIN THE STATE.
AND REALLY COME UP WITH A FINANCE MODEL THAT WILL ENSURE THAT ALL SERVICE AREAS HAVE ACCESS TO THE PROGRAMS AND SERVICES THAT ARE NEEDED BY THE STATE AND BY INDIVIDUALS.
AND THAT ENSURING, AS MUCH AS POSSIBLE THAT THE PROGRAMS ALIGN WITH THE LOCAL, REGIONAL AND STATE NEEDS.
MEANING THAT THEY NEED TO LOOK DIFFERENT, IN SAN ANTONIO THAN THEY DO IN DALLAS OR IN AUSTIN THAT ARE THERE.
SO, YOU KNOW, THIS IS KIND OF THE OVERVIEW OF WHERE I THINK THE COMMISSION IS BOTH HEADED.
AND I WANTED TO GIVE YOU A SENSE OF THE ENORMOUS TASK THAT THEY HAVE TO COME UP WITH A NEW WORKING MODEL FOR THE STATE AND WHY THIS IS SO IMPORTANT.
BECAUSE, WHILE I THINK, DALLAS COLLEGE WILL BE FINE AND LOAN STAR, ALMOST NO MATTER WHAT THE STATE DOES, THE ACCESS WILL CONTINUE TO SHRINK FOR THE MAJORITY OF PEOPLE IN THE OUTLYING GEOGRAPHIC REGIONS AS COLLEGES HAVE LESS AND LESS CAPACITY WITH CONTINUED REDUCTION OF STATE SUPPORT TO MEET THOSE NEEDS OF ALL STUDENTS.
THANK YOU, SIR, ANY OTHER QUESTIONS?
>> YES, SO, EARLIER YOU HAD A SLIDE THAT COMPARED THE DIFFERENCES BETWEEN PUBLIC EDUCATION AND COMMUNITY COLLEGES, AND THERE ARE A WHOLE LOT OF SIMILARITIES THAT PLAYED OUT WELL IN SCHOOL FINANCE LITIGATION OVER THE PAST 30 YEARS IN THIS STATE.
BOTH ENTITIES ARE SERVING A HIGH DRIVEN STATE WITH AVAILABLE GROWTH IN VARIOUS PARTS OF THE STATE.
THERE'S A DECLINE IN STATE AID CONSISTENT OVER DECADES AND THERE'S ALSO SUBSTANTIAL PROPERTY TAX INEQUITY.
WHEN THE STATE TACKLED SCHOOL FINANCE, THEY WENT TO A RECAPTURE MODEL, BASICALLY SAYING WE'RE GOING TO TAKE MONEY FROM RICH DISTRICTS AND MOVE IT TO POORER DISTRICTS AND CONSERVE CONSOLIDATION OF THE SCHOOL DISTRICTS AND MAY BE NOT EVERY COMMUNITY CAN AFFORD TO HAVE THAT KIND OF SCHOOL AND FINALLY, AT THE TIME, THE STATE BUREAUCRACY TO HAVE MORE CONTROL IN CURRICULUM, INCENTIVES AND REWARDS IN WAYS THAT WE DON'T SEE IN COMMUNITY COLLEGES TODAY.
IN FACT, I THINK COMMUNITY COLLEGES COULD BE A REAL BARRIER TO WHAT WE'RE TRYING TO DO.
HOW MUCH OF THE SPILLOVER DID YOU SEE FROM THE STATE'S EXPERIENCE?
>> NOT MUCH, REALLY, PART OF THE REASON THAT I PUT IN A SLIDE IN THERE IS APPLES AND ORANGES.
YOU HAVE ONE THAT'S CONSTITUTIONALLY MANDATED.
>> AND -- >> JUST ABOUT EVERY AREA IS IN A K-12 TAXING DISTRICT.
EVERY PART OF THE STATE IS COVERED.
THERE'S NO WAY THE CONSTITUTION BASICALLY SAYS THAT PROPERTY TAX MUST COME OUT OF LOCAL INITIATIVES.
THERE'S NO AUTHORITY IN THE STATE OF TEXAS TO EXPAND THE TAXING DISTRICTS OF COMMUNITY COLLEGE TO COVER THE ENTIRE STATE.
SO, I THINK THAT'S PRETTY MUCH OFF THE TABLE.
AND THE LAWSUITS WERE A RESULT OF THE INEQUITITIES THAT EXISTED THEY WERE OUT THERE EVEN THOUGH YOU HAD A LOT OF THESE OTHER THINGS, THERE HAD BEEN NO LAWSUITS AROUND COMMUNITY COLLEGES.
SO, THERE'S A BARRIER FOR THE FINANCES COMMISSION, BECAUSE THE LAWSUITS COMPEER TO WHERE THE GUARD RAILS WERE AND THE BOUNDARIES WERE TO WHAT CAN ADD COULD NOT BE DONE.
THE REALITY THEIR IS IT WOULD BE EASY FOR COMMISSION TO MAKE RECOMMENDATIONS AND GET LAWS PASSED AND THEN THERE ARE LAWSUITS TO COME BACK AND CHALLENGE THE ACTION BECAUSE THERE'S NO PRECEDENT OUT THERE.
WE HAVEN'T SEEN THAT ON THE K-12 SIDE BECAUSE ALL OF THAT HAD BEEN WORKED OUT IN
[01:00:04]
THE COURTS AHEAD OF TIME.I THINK THAT'S VERY, VERY, VALUABLE INFORMATION FOR US TO HAVE.
AND WHAT'S REALLY VALUABLE FOR US IS IN YOUR ROLE AS CHANCELLOR EMERITOUS THAT YOU WILL BE INVOLVEND AND WE HAVE A VOICE AT THE TABLE ONE THAT PEOPLE RESPECT AND LISTEN TO.
SO, WE DO STILL HAVE A GREAT AVENUE AS TRUSTEES TO PASS OUR ISSUES IN DALLAS TO THIS COMMITTEE AND WE'RE VERY FORTUNATE AND I THANK YOU FOR THAT, JOE.
OUR NEXT ITEM THAT WE HAVE IS ON.
[4.2. Project Financing Program]
IF Y'ALL ARE READY, MOVE FRONT STAGE.I WOULD LIKE TO INTRODUCE OUR FINANCIAL ADVISORS, BOB ESTRADA AND JASON HUGHES.
AND KRISTA THOMAS THAT YOU KNOW REPRESENTS THE FINANCES OFFICE THAT WE HAVE AND THEY'RE GOING TO GIVE YOU A QUICK PRESENTATION OF WHERE THEY ARE.
THERE'S NO APPROVAL TODAY ON THIS INFORMATION.
WE'RE JUST GIVING YOU AN INTRO OF WHAT WE'RE LOOKING AT MOVING DOWN THE LINE FUNDING THE PROJECTS WHILE THE WORK IS BEING DOWN BEHIND THE SCENES.
>> BEFORE WE GET STARTED, LET'S RECAP.
SO, WE KNOW WE HAVE A SIGNIFICANT VOLUME OF FACILITY RELATED PROJECTS THAT WE'VE BEEN UNDERTAKING OVER THE LAST SEVERAL YEARS.
THINGS THAT WE RECENTLY FINISHED, AND THINGS STILL ONGOING.
WE HAD SEVERAL YEARS THAT WE DID IT CLOSETS, WE HAD A HUGE SCOTT AND HIS TEAM HAVE A HUGE FACILITY IMPROVEMENT PROJECT, MAINTENANCE, RENOVATION AND ENHANCEMENT IN STRUCTURES.
AND THEN WE HAVE WHAT I CALL OUR LARGE-SCALE NEW PROJECTS WHICH WERE OUR BOND PROJECTS WE WERE EXPECTING TO FINANCE WITH BONDS.
SO WE HAD FEW FUNDING DECISION TOSS MAKE.
WE USED OPERATING DOLLARS, AND HAD TAX NOTES AND WE GOT A APPROVAL TO DO GO BE BOND.
ALTHOUGH WE HAVE SUBSTANTIAL CAPACITY TO ISSUE THE GO BONDS WE KNOW THEY'RE FAULTED NOW BECAUSE OF A LAWSUIT.
AT THIS TIME, YOU KNOW WE HAVE BEEN SELF-FINANCING BECAUSE WE HAD GONE AHEAD WITH SOME FACES OF THE GO BOND PROJECTS AND WEAVE SELFED FINANCED TO THE TUNE OF P $70 MILLION.
HOW DO WE PROCEED FROM THIS POINT CONSIDERING THAT WE DO HAVE THAT CASH OUTLAYING, AND WE DO HAVE OTHER OPTIONS THAT WE COULD USE FOR FINANCING IN THE INTERIM WHILE WE WAIT FOR THE LAWSUIT TO BE RESOLVED.
FOR THAT, I'LL TURN OVER TO OUR FAS, AND THEY HAVE PREPARED A PRESENTATION FOR US.
>> SO, >> (INDISCERNIBLE) >> JUST A PREVIEW.
IN MARCH, WE WILL BE BRINGING BACK WHAT WE CALL A SPRING BUDGET UPDATE WHICH INCLUDE AS HUGE PORTION OF FACILITY UPDATES TOO, SO, THAT'S COMING, SO DON'T FEEL REICH WE'RE NOT TELLING YOU EVERYTHING TODAY, WE'RE TAKING THESE IN ORDER AS WE GO ON.
>> SO, I'LL TURN IT OVER TO JASON.
>> THANK YOU, WELL, CHAIR, TRUSTEES, CHANCELLOR, GOOD TO BE WITH YOU TODAY.
JUST GOING TO PROVIDE AN OVERVIEW THERE.
IF YOU TURN WITH ME, I THINK THAT YOU HAVE THIS ON YOUR COMPUTER SCREEN THERE.
BUT, I THINK WITHIN THE CONTEXT OF WHAT WE WENT THROUGH WITH MORE LARGE-SCALE CAPITAL PROJECTS FUNDING PUT IN PLACE TO START SOME OF THOSE.
IT'S HELPFUL TO LOOK AT SOME OF THOSE OBJECTIVES.
SO, WITHIN THAT CONTEXT, YOU SEE THAT WE DO HAVE A LARGE SCALE PROJECTS AND WE'RE LOOKING FOR THOSE MONEYS SPENT TO DATE AT SOME POINT AND THAT LAST BULLET POINT, WE WANT TO BE SURE THAT HOPEFULLY WE GET A FAVORABLE OUTCOME OF THE LAWSUIT, WE COULD MOVE FORWARD THAT WHATEVER WE DO NOW WE MAINTAIN FLEXIBILITY.
>>> AS FAR AS THE OPTIONS FOR FUNDING CAPITAL PROJECTS, AGAIN, USE OF CASH ON HAND, THAT ALLOWS YOU TO START WITH PROJECTS NOW.
AND IT ALLOWS YOU TO BILL THE AMOUNT OF PROJECTS OR YOU HAVE SOME FINANCING, SO, AS YOU HAVE THE LARGER PROJECTS, ONLINE, WE'RE NOT KIND OF FUNDING OF EACH INDIVIDUAL PROJECT.
SO, YOU'RE LONG-TERM GENERAL OBLIGATIONS BONDS WHICH YOU DID HAVE IN THE 2019 ELECTION FOR $2 BILLION.
[01:05:02]
PRIOR TO THAT, MAY 2004, YOU HAD A $450,000 BOND ELECTION BUT THE CONTEXT, THE LAST TIME THAT YOU ISSUED MONEY BONDS SPECIFICALLY FOR BOND WAGS IN 2010.SO IT'S BEEN ALMOST 12 YEARS AGAIN ROOKING AT THAT BOND.
ON THE GO BONDS, AGAIN WE'RE WAITING FOR FINAL APPROVAL.
THE OTHER THING THAT YOU'VE DONE IN THE PAST AND ALL THE WAY BACK IN 2001 IS YOU DID ISSUE LONG-TERM REVENUE (INDISCERNIBLE) IN 2001.
(INDISCERNIBLE) >> THIRD MILLION DOLLAR.
(INDISCERNIBLE) >> ALL OF THE REVENUE BOND WAS PAID OFF BY (INDISCERNIBLE) >> LONG-TERM DEBT ON THE REVENUE SIDE (INDISCERNIBLE).
>> AND THEBE THE LAST THING THAT YOU HAD UTILIZED WAS COMMERCIAL (INDISCERNIBLE)
>> (INDISCERNIBLE) >> ON SLIDE THREE IS REVENUE BONDS, TYPICALLY THESE ARE LONG-TERM OBLIGATIONS SOLD WITH A 20-25 YEAR MATURITY, THEY'RE SECURED DIFFERENTLY THAN THE GENERAL OBLIGATION BONDS, THEY'RE SECURED WITH CHARGES AND RATES AND A LIMITED PLEDGE OF TUITION WHAT'S NOT INCLUDED IS ANY PLEDGE ON YOUR TAX RATES WHICH IS WHAT YOU PAY LONG-TERM GO TO.
WE DID PUT IN THERE, ESTIMATED DEBT SERVICES SO, BASED ON TALKING WITH JOHN AS FAR AS OKAY, WE WANT TO GENERATE PROCEEDS OF $250 BILLION ALL THE WAY TO TWO $50 BILLION WHAT THAT WOULD LOOK LIKE, THE AVERAGING OF THAT SERVICE RANGING ANYWHERE FROM $12.9 MILLION TO $72 MILLION.
IT IS A SIGNIFICANT COMMITMENT TO REVENUE SUPPORT ACT SO
(INDISCERNIBLE) >> JOHN AND I DEVELOPED THIS SPREAD HERE OF THE 2015 TO THE 2050 BECAUSE AGAIN THIS IS BASED ON OR PLEDGE FROM OUR OPERATING BUDGET SO OUR OPERATING BUDGET WOULD TAKE A HIT FROM THIS AMOUNT.
THAT'S THE REASON WE GAVE YOU THIS SPREAD.
>> WHEN WE WERE DOING OUR FACILITIES AND FINANCES PLAN BEFORE THE BOND, WE WEREN'T ASSUMING THAT WE WOULD HAVE REVENUE BONDS ANYWHERE NEAR THIS LEVEL OF A QUARTER BILLION DOLLARS, SO, FOR SOME REASON WE DECIDED NOT TO DO $1.1 BILLION, WE WOULD STILL HAVE A QUARTER OF A BILLION DOLLARS OF REVENUE BOND IN CAPACITY.
>> THE COVENANCE OF THE REVENUE BOND IS YOU PLEDGE EVERYTHING PLUS YOUR FIRST BORN, BUT YOU LOOK AT WHAT THEY CALL THE DEBT SERVICE AS A PERCENTAGE IF YOU WILL.
YOUR COMMITMENT OF REVENUES THAT YOU COULD HAVE.
THE LAST TIME WE HAD REVENUE BONDS, WE WERE ABOUT 14 TIMES REVENUES TO DEBT RATIO AND THAT'S THE THEY REQUIRE, 2, 2 AND-A-HALF, I CAN'T REMEMBER.
>> BUT ONE PIECE OF THAT, JOHN, AND YOU GOT TO HELP ME OUT THERE, WE'VE ALSO SAID, WE WERE ASSUMING WE WOULD BE ABLE TO GO MOVE RIGHT AWAY.
WHEN WE PASSED THE BOND AND MAKE THIS, BUT WE ALSO SAID THAT WE WOULD FRONT PAY A BIG PORTION AND THAT WE HAD TRY TO AVOID ACTUALLY SELLING THE BONDS UNTIL WE WERE ACTUALLY READY TO START CONSTRUCTION.
SO, WE HAD KIND OF SET A WINDOW, AS I RECALL, 250 TO $300 MILLION, THAT WE WOULD ASHEN SOME VEHICLE TO FUND AND THEN GIVE THE BOARD THE OPTION OF PAYING OURSELVES BACK.
SO, INTERIM FINANCING ALLOWS YOU TO PAY FOR THE CONSTRUCTION COSTS, IF YOU WILL, ONCE YOU MOVE IN, THEN YOU START YOUR LONG-TERM DEBT.
>> WE HAVE A QUARTER BILLION DOLLARS IN REVENUE BOND CAPACITY, THE DEBT SERVICE COST OF USING THAT OPTION ARE HIGHER TO THE TAX PAYERS OF DALLAS THAN GENERAL OBLIGATION BONDS, RIGHT? BECAUSE YOU PAY MORE INTEREST ON THEM.
>> WE HAVE ENOUGH RATING WITH REVENUE BONDS.
BUT THE TAX PAYERS DON'T PAY FOR REVENUE BONDS DIRECTLY.
YOU CAN'T PLEDGE TAXES TO PAY REVENUE BONDS, YOU COULD ONLY PLEDGE, OPERATING REVENUES, AND THAT'S TUITION, PRETTY MUCH IT'S TUITIONS, INVESTMENT INCOME, AUXILARY OF COURSE.
[01:10:04]
THE THING THAT WE HAVE TO HAVE AN UNDERSTANDING OF CAPACITY.WE NEED TO UNDERSTAND WHAT OUR TOP LINE CAPACITY IS.
BECAUSE, AS THIS THING, THIS COULD END UP IN THE SUPREME COURT, THIS THING COULD BE HERE FOR FIVE YEARS, SIX YEARS, WE KNOW THAT WE CAN'T WAIT THAT LONG.
AND WHEN YOU TALK ABOUT THE COST OF ONE VEHICLE VERSUS THE OTHER, YOU GOT TO LOOK AT THE COST OF INFLATION.
YOU GOT TO LOOK AT THE COST OF GOODS, SO, WE REALLY NEED TO HAVE SOMEBODY TRULY MODELLING OUR OPTIONS AND ALTERNATIVES AND JOHN KNOWS, I ALWAYS BRING THIS UP TOO.
WE HAVE TO LOOK AT ALTERNATIVES.
I'VE SEEN IT DEMONSTRATED, AND IT'S A VEHICLE THAT ALLOWS US TO NOT IMPEDE OUR MISSION, BUT ALLOWS US TO MOVE FORWARD IN A PRUDENT WAY THAT THE PEOPLE THAT HAVE ELECTED US TO DO.
SO, I REALLY, AND AS CHAIRMAN OF THE FINANCE COMMITTEE AND WORKING WITH JOHN AND MORE DETAILS EVERY MONTH.
I REALLY WANT US TO STRUCTURE A MODELLING AND A VERY FORWARD-LOOKING VISION OF OUR FINANCES OF WHAT OUR OPTIONS ARE.
I'M OLD ENOUGH TO KNOW THAT YOU DON'T LIKE TO BE POINTED INTO A CORNER.
AND I THINK THAT WE COULD VERY QUICKLY GET THERE.
SO, I HOPE THAT WE CAN ADDRESS THAT FROM Y'ALL'S PROFESSION AN OPINION.
AND I ENCOURAGE YOU TO GET US A MODELLING, SOMETHING THAT WE COULD UNDERSTAND, SOMETHING THAT WE COULD SEE THE PLUG AND PLAY TO UNDERSTAND AS TIME MOVES ALONG WHEN DECISIONS DON'T GET MADE THAT WE KEEP MAKING THE RIGHT DECISION AT THE RIGHT TIME.
THE THINGS THAT WE'RE TALKING ABOUT TODAY AND IN ALL OF OUR SESSIONS IS WHAT IS THE COST OF THE PRICE TO MAKE THE RIGHT DECISION AT THE RIGHT TIME.
>> AND IF I COULD, YOUR POINT ON TIME, I THINK IS PROBABLY MORE RELEVANT NOW THAN IT WAS GOING BACK WHEN WE PASSED THE BONDS.
I MEAN, WE REJECTED SEVEN FED INCREASES OUT THERE.
TIME IS NOT OUR FRIEND IN SOME OF THESE DECISIONS.
COMPARED TO WHAT WE'RE LOOKING AT, SO, THERE'S REALLY SOME SENSE OF URGENCY TO MOVE QUICKLY.
AS QUICKLY AS WE CAN TO FEEL GOOD ABOUT SOME OF THOSE DECISIONS.
>> THAT'S WHY I SAID A PLUG AND PLAY MODEL THAT WE COULD ALL UNDERSTAND AND AS TIME MOVES HERE OR THIS OR THAT HAPPENS, WE COULD SEE THE CALL AND WE'LL MAKE THE RIGHT DECISIONS, THE BEST WE CAN AT THE TIME.
(INDISCERNIBLE) >> KEN SAID ONE THING ON SLIDE THREE, REVENUE BONDS, I THINK WHAT'S IMPORTANT AS WE GO AND ADDRESS THIS ON THE NEXT PAGE (INDISCERNIBLE) TYPICALLY, WHENEVER WE ISSUE THAT LONG-TERM DEBT IS WE'RE COMING TO THE BOARD AND SAYING OF COURSE, THERE'S PROJECTS, THAT YOU HAVE STARTED OR ARE WITH ABOUT TO START SO THERE ARE ECONOMIES TO SCALE OF HAVING THAT LARGE (INDISCERNIBLE) IN STEAD OF COMING TO YOU AND SAYING WE'RE GOING TOISH $5 MILLION NOW, AND $10 MILLION NOW, AND SO ON AND SO FORTH.
IF YOU TURN TO THE NEXT PAGE, THIS IS A REVENUE-BACKED COMMERCIAL PAPER PROGRAM.
YOU'VE HAD IT IN THE PAST AND IT WAS TIDE TO THE 2004 BOND ELECTION.
BUT WE'RE AGAIN TALKING ABOUT THEM BECAUSE OF THE LAWSUIT, THERE'S A REVENUE-BACKED COMMERCIAL PAPER PROMISE.
THIS ALLOWS US TO DO IS AS SOON AS WE HAVE THAT SET UP IN THE COLLEGE CAN GO AND GET THIS SHORT-TERM FUNDING, FOR THE VARIOUS PROJECTS, SO IT MAKES IT EASIER TO GET SHORT-TERM FUNDING FOR YOUR SMALLER, AND I SAY SMALLER (INDISCERNIBLE) TAKE THAT AND MAKES IT MUCH MORE ECONOMICAL AND ISSUING THAT LONG-TERM EVENT.
THIS IS SOMETHING THAT WE DID IN 2004 AND WE TERMINATED THE PROGRAM BECAUSE WE WERE OUT OF OR VOTED AUTHORITY FROM THE TWEPT 04 (INDISCERNIBLE)
[01:15:01]
>> IS SO IN SLIDE FIVE, THIS GOES THROUGH SOME OF THE ITEMS THAT IF YOU DECIDED TO MOVE FORWARD, AGAIN, AS JOHN POINTED OUT, THERE'S NO DECISION TO BE MADE TODAY JUST -- YES, MA'AM?
>> UM, YOU SAID (INDISCERNIBLE) > (INAUDIBLE) >> CAN'T
(INAUDIBLE) >> EXAMPLES OF THE REASONS WHY.
(INDISCERNIBLE) >> SO, TYPICALLY, YOU SEE IN TH EVENT OF THE A FAILED REMARK, THERE'S SOMETHING SIGNIFICANT GOING ON IN THE FINANCIAL DEPARTMENTS THAT HAS INVESTORS SCARED.
WHERE YOU HAVE GENERALLY SPEAKING (INAUDIBLE) >> AUDIT AUDIT >> GLOBAL
FINANCIAL (INAUDIBLE) >> AND IT'S WEST PURCHASES, BROTHERS WHICH IS A LARGE WALL STREET INVESTMENT BANK.
>> (INAUDIBLE) >> THAT WAS ONE OF THE THINGS.
THERE WERE A NUMBER OF THINGS AND THAT WAS CERTAINLY ONE OF THEM.
>> SO, WHAT WE HAVE SEEN TO THIS POINT ARE GENERALLY LARGE-SCALE, GLOBAL SIGNIFICANT EVENTS.
>> SO, BASICALLY, THAT'S THE (INDISCERNIBLE) > INVESTORS GET SCARED.
>> YOU'RE IN THE PANDEMIC AND I WOULD PROVIDE WHAT WE'VE SEEN GENERALLY ONCE WE GOT PASSED ABOUT MAY OF 2020 WHICH WE THINK REALLY, THE PANDEMIC HIT U.S.
SOIL EN MASSE MARCH OF 2020, ONCE WE GOT OUTSIDE OF MAY, THE BOND MARKET GENERALLY SPEAKING PERFORMED GOOD.
>> BUT IT'S AN EXAMPLE OF AN UNCONTROLLED EVENTS THAT CAN OCCUR WITHOUT WARNING OR ANYTHING ELSE.
>> THE EXAMPLE OF WHAT, THAT'S WHAT I THINK WHAT THE INSURANCE POLICY
(INAUDIBLE) >> VERY LOW COST GENERALLY.
WOE DON'T RIGHT NOW BECAUSE WE DON'T HAVE ANY PAPER.
>> TIED TO THE PREVIOUS COMMERCIAL PAPER PROGRAM.
>> ON THAT SLIDE, YOU MENTIONED THE PREVIOUS PAPER COMMERCIAL PLAN HAD A NUMBER OF $150 BILLION OUTSTANDING AT ANY TIME.
WHAT WE'RE THINKING ABOUT DOING MATCHES A REVENUE BACKED COMMERCIAL PAPER PROGRAM, WHAT IS THE MAXIMUM THAT WE COULD HAVE OUT STANDING IF HE COULD DO THAT?
>> THAT'S CERTAINLY SOMETHING THAT WE'VE TALKED WITH JOHN ABOUT, I THINK THERE'S CAPACITY FOR A LARGER, I WOULD SAY $200 MILLION TO TWO $50 MILLION, WHICH IS INFLATED FOR LONG-TERM COSTS, SO, I THINK WE COULD GET A FACILITY THAT CAN COVER THAT.
KIND OF GOING THROUGH AND LOOKING AT GENERAL OPTIONS WE WANTED TO COME TO THE FINANCE FIRST AND GET AN IDEA OF YES, THIS MAKES SENSE OR NO, WE DON'T LIKE THIS.
LET'S LOOK AT IT BEFORE WE GET TO (INDISCERNIBLE) >> WELL, THIS IS HELPFUL IN TERMS OF CLIFF'S, PLUG AND PLAY QUESTION.
WE HAVE $250 MILLION IN REVENUE CAPACITY AND WE HAVE $250 MILLION IN COMMERCIAL PAPER REVENUE.
>> CORRECT, YOUR GO BOND PROGRAM AND REVENUE BOND PROGRAM COULD BE SEPARATE AND APART IF YOU WILL BECAUSE THEY'RE SECURED SEPARATELY.
>> WHAT PHIL SAID WAS WE COULD DO 250 IN REVENUE AND 250 IN COMMERCIAL PAPER.
>> 250 IN GO AND 250 IN PAPER.
>> WE ONLY HAVE ENOUGH REVENUE TO PLEDGE $250 MILLION.
SO, WE CAN'T DO REVENUE BONDS COVERED BY OUR REVENUES, RIGHT, OR WE CAN'T DO REV BONDS AND COMMERCIAL PAPER BONDS AT THE SAME TIME, RIGHT?
>> SO, THE REVENUE BONDS, ONCE THOSE ARE ISSUED, THE COMMERCIAL PAPER GOES AWAY AND IF WE WERE TO ISSUE GO BONDS, NOW THOSE ARE TAXPAYER FINANCED RIGHT, AND THEN THE REVENUE BONDS WOULD GO AWAY BECAUSE WE REPAY THEM.
[01:20:02]
NOW, IF BY CHANCE WE WANTED TO HAVE BOTH OF THEM OUTSTANDING, WE DO HAVE THE CAPACITY FOR THAT, BECAUSE WE HAVE THE CAPACITY FOR GO AND WE HAVE THE CAPACITY FOR REVENUE ALSO, SO, WE WOULD HAVE 250 IN GO OUTSTANDING AND HAVE DEATH SERVICE TO COVER THAT, AT THE INS RATE WE COULD ALSO HAVE 250 CAPACITY IN REVENUE IF WE WANTED TO USE THAT IN OPERATING FUNDS.>> LET ME GO THROUGH SLIDE FIVE BECAUSE I THINK THAT WILL LEAD INTO SOME OF OUR QUESTIONS.
THIS GOES THROUGH SOME OF THE HIGH LEVEL MECHANICS OF THIS.
WE HAD THAT LIQUIDITY PROVIDER AS HIGHLY RATED, TYPICALLY, YOUR LARGE INVESTMENT BANKS WHO'LL STEP IN AND PURCHASE THE COMMERCIAL PAPER, WE WOULD HAVE A DEALER THAT'S JUST THE ENTITY THAT WE GO OUT AND MARKET THE COMMERCIAL PAPER WHEN THE COLLEGE DIRECTED THEM TO.
OF COURSE, THERE ARE LEGAL DOCUMENTS TO BE DRAFTED, JUST TO GET DOWN TO THE MECHANICS, AND GET DOWN TO THE THINGS RELATED TO THE COMMERCIAL PAPER PROGRAM AND WE WOULD GO TO CREDIT AGENCIES AND HAVE THEM RATE A COMMERCIAL PAPER AND THAT COMMERCIAL PAPER RATING WOULD BE BASED NOT ONLY ON THE LOWER CREDIT RATING BUT THE LIQUIDITY PROVIDERS CREDIT.
WE WANT A PARTNER WHO IS AS STRONG AS THEY COULD BE THAT CONTRIBUTE TOSS THAT RATING, ULTIMATELY RESULTS IN THE LOWEST COST TO THE COMPEL PUSS, 6789 THIS TRUSTEE, LET NE ANSWER YOUR QUESTION.
ONCE WE HAVE THE PROGRAM SET UP, SO WE HAVE ALL THE (INDISCERNIBLE) >> AND OUR CREDIT RATINGS, THE COLLEGE CAN GO UP AND ACCESS THAT COMMERCIAL PAPER, SO WE HAVE $20 MILLION IN NEEDS, SO WE CAN.
>> $50 MILLION, WE ISSUE $50 MILLION, AND SO ON AND SO FORTH.
SO, IT'S MORE (INDISCERNIBLE) FINANCING.
>> COMMERCIAL BACKED, WHO IS THERE TO GUARANTY?
(INAUDIBLE) >> (INAUDIBLE) >> SUPPOSE THE COMMERCIAL, IS THE CHALLENGE.
(INDISCERNIBLE) >> (INDISCERNIBLE) >> SO, THERE'S DIFFERENT -- >> I'M TRYING TO ANTICIPATE NOW.
>> NO, THAT'S A GOOD QUESTION.
>> WELL, WE MENTIONED THAT BEFORE, SO.
>> LET ME, I'LL SPEAK FROM MY EXPERIENCE, GOING BACK TO THE 2007 BOND.
FOR INSTANCE, WHENEVER YOU SOLVE WHENEVER RAYMOND BROTHERS WENT UNDER THERE WAS NO ONE STANDING BEHIND THEM FOR THE FINANCIAL OBLIGATIONS THEY HAD.
WE WERE ABLE TO TAKE THOSE FINANCIAL OBLIGATIONS FIND ANOTHER, STRONGER BANK AT THE TIME AND TRANSFER THOSE OBLIGATIONS FOR LACK OF A BETTER WORD.
BUT THERE COULD BE A SITUATION IF YOU LOOKED AT INTERESTING WORSE SKIES SCENARIO ARE OUR SPECIAL BANK THAT WE PICK WENT UNDER, WE COULD BE IN A SITUATION WHERE FOR A PERIOD OF TIME, OUR COMMERCIAL PAPER MIGHT PRICE HIGHER THAN OTHERWISE AND WE WOULD HAVE TO BOND THAT OUT INTO LONG-TERM DEBT WHICH WOULD BE TAKING OUT THAT THIRD-PARTY PROVIDER OR LOOK FOR ANOTHER STRONG PARTNER.
>> WOULDN'T BE PROVISION FOR THAT ABILITY TO KIND OF LIKE AN EARLY TERMINATION ON A LEASE.
SO, YOU'RE GOING TO HAVE -- REMEMBER, WE'RE RECEIVING THE MONEY, WE'RE NOT DEPENDING ON THEM PAYING US.
WE'RE BASICALLY, THE RECIPIENT OF THE MONEY, SO IF THEY CAN'T DELIVER THE MONEY TO US, THE ONLY THING THAT WE'VE HEARD IS WE CAN'T DO WHAT WE WANT TO DO BECAUSE WE CAN'T GET THE MONEY, SO IF THEY FAIL, IT'S GOING TO BE ABOUT A PRICING ISSUE PROBABLY MORE THAN ANYTHING ELSE, RIGHT?
>> (INDISCERNIBLE) >> (INDISCERNIBLE) >> IS IT AT THE END OF THE DAY IT'S THE TAX PAYERS.
>> DIRECTLY, I MEAN IN THE CASE OF 2007 (INDISCERNIBLE) >> REMEMBER
>> THAT WAS BROUGHT IN FROM THE FEDERAL RESERVE SYSTEM.
AND AS A RESULT OF THAT, THE SO-CALLED BOND YOU HAVE MUCH MORE TRANSPARENCY NOW ABOUT THE VALUATION AND THE CAPITAL RESERVES OF EVERY MENTIONABLE BANK IN THE
[01:25:03]
COUNTRY AND YOU CAN ACCESS THAT INFORMATION, I MEAN, WE DO IT REGULARLY.WE KEEP UP FOR ALL OF OUR CLIENTS.
YOU KNOW, CHECK ON THE BANKS THAT OUR CLIENTS ARE DOING BUSINESS WITH PERIODICALLY AND MAKE SURE THAT THE NUMBERS ARE DISCLOSED TO THE REGULATORS ARE SOLID AND THEY'RE NOT TAKING ANY RISKS, AND IT'S A MUCH DIFFERENT SYSTEM
THAN (INDISCERNIBLE) >> AND SO, THAT GIVES YOU SOME COMFORT THAT WE WOULD MONITOR A SOLID AND SOL LID (INDISCERNIBLE) AND IT'S STANDARD CONTRACT WITH ANY PROVIDER THAT HAS ALL KINDS OF OUTS AND IF THEY VIOLATE ANY OF THE STANDARDS THEY'RE SUPPOSED TO MAINTAIN, YOU COULD CHANGE BANKS IN A HEARTBEAT.
>> SO, WHICH BANKS WOULD IT BE WE'RE IN ESSENCE PROTECTED, THE TAXPAYER DOLLARS?
>> DO YOU FEEL THAT INTEREST RATES WILL CREEP UP WITH INFLATION?
RIGHT NOW, TODAY, TAX EXEMPT COMMERCIAL TODAY ARE AT A HISTORIC LOW.
MUNICIPAL GOVERNMENTS HAVE BEEN TAKING ADVANTAGE TORE THAT FOR THE LAST 10 YEARS.
COMMERCIAL PAPER IS PROBABLY HALF A PERCENT.
>> FOR BORROWING TENS OF BILLIONS OF DOLLARS.
(INDISCERNIBLE) >> >> THE AIRPORT, THAT'S ALWAYS HA COMMERCIAL PAPER, TEXAS PROGRAM AND THE (INDISCERNIBLE) (INAUDIBLE) SIZE AND THEY DIDN'T ALWAYS HAVE THAT MUCH PAPER BUT THEY SAY MILLIONS AND MILLIONS IN INTEREST COSTS AND DEBT SERVICE COSTS BECAUSE OF THE WAY THAT MANAGED THAT WITH THE LOCAL DART SYSTEM HERE IN DALLAS, THAT WOULDN'T BE WHERE THEY ARE TODAY IF THEY HADN'T STARTED THE COMMERCIAL PAPER INITIATIVE.
JUST AS HISTORY AND BACKLOG ON HOW THE PROGRAM WORKS, INVESTORS LIKE TO BUY COMMERCIAL PAPER.
THERE'S DIFFERENTLY A VERY STRONG DEMAND FOR TAX EXEMPT COMMERCIAL PAPER DAY-TO-DAY.
AND THEY PARTICULARLY LOOK FOR STRONG CREDITS, AAA CREDITS AND THINGS LIKE THAT.
AND (INDISCERNIBLE) >> (INAUDIBLE) >> NOT EVERY COMMUNITY COLLEGE DISTRICT
IN THE STATE COULD SELL THAT KIND OF (INDISCERNIBLE) >> IS IT ALL A FIXED RATE?
>> ONCE WE WOULD IS IT ON A AVAILABLE RATE?
>> THE ONE THING THAT I WOULD POINT OUT AS WE TALKED ABOUT IT, AS A MAXIMUM SECURITY OF 270 DAYS.
WE COULD DETERMINE WHAT WE WANT THAT RESET TO BE.
THE ONE THING THAT I WANT TO BE CLEAR ABOUT, IS WHENEVER THAT LEASE HITS THAT RATE CAN CHANGE, SO, YES IT IS A FIXED RATE, HOWEVER WE'RE MARKETING IT EVERY WEEK OR MONTH.
WHATEVER IT REMARKETS, IF THE IT FED IS TALKING ABOUT, THEY ORANYLLY STARTED OUT THE YEAR AND THE THOUGHT WAS THREE RATE INCREASES AND THE RATE INCREASES IMPACT SHORT-TERM RATES, NOW THE CONVENTIONAL WISDOM IS MAYBE IT'S 7.
IF WE'RE SITTING THERE AND REMARKING COMMERCIAL PAPER, THE SHORT-TERM RATES ARE GOING UP BECAUSE THE FED RAISED IT'S RATES.
>> WE'RE WORKING ON THE BEST INFORMATION THAT WE HAVE TODAY.
RIGHT? THAT THESE ARE THE CHOICE THAT IS WE'RE PRESENTING TO YOU FOR WHAT WE HAVE TODAY.
[01:30:03]
AS TO PROTECTING THE TAXPAYERS, WE TALKED ABOUT THE COMMERCIAL PAPER PROGRAM THE RATES HERE ARE MUCH LOWER THAN IF WE WERE TO SELL FINANCE AND USE OUR MONEY BECAUSE RIGHT NOW WE'RE EARNING A HIGHER RATE IN OUR POOLS THAN WE WOULD BE PAYING TO LEASE SOMEBODY ELSE'S MONEY.>> ON SLIDE FIVE TO WRAP THAT UP.
WHENEVER WE GET TO THE POINT OF REMARKETING THE COMMERCIAL PAPER, AT THAT POINT, WE COULD TELL WE COULD REMARKET IT FOR A MONTH OR HOWEVER MANY DAYS AND WE COULD TAKE THAT OUT LONG-TERM.
THAT GIVES US TO GO BACK TO THE FIRST PAGE IS GIVES US THE FLEXIBILITY OF THE COMMERCIAL PAPER TO MEET, THAT'S THREE OBJECTIVE THAT IS YOU HAVE.
THE LAST PAGE GOES THROUGH SOME OF THE ITEMS THAT I TALKED ABOUT THE FIXED RATE BONDS AND REVENUE-BACKED COMMERCIAL PAPER.
AND AGAIN, THERE'S NO APPROVAL NEEDED FOR THIS TODAY (INDISCERNIBLE) >>
PREVIEW (INDISCERNIBLE) >> SO, (INAUDIBLE) >> ARE THERE ANY OTHER QUESTIONS?
>> I WOULD LIKE TO ASK A QUESTION.
BOTH OF INTO HE IS FINANCING MECHANISMS RELY ON THE SAME REVENUE STREAM, RIGHT? TUITION, AND WHAT IS THAT ANNUALLY FOR US? WHAT IS OUR ANNUAL REVENUE STREAM THAT WE COULD BOND USING EITHER ONE OF THESE MECHANISMS?
>> AND SO, $197 MILLION REVENUE STREAM CAN BE BONDED THROUGH EITHER OF THESE TWO REVENUE MECHANISMS TO FUND A TOTAL OF $250 MILLION IN PROJECTS, ROUGHLY? BECAUSE THE INTEREST RATES ARE CLOSE, SO IT'S NOT $500 MILLION, BUT IT'S $250 MILLION THAT WE HAVE.
>> DO YOU HAVE ANY OTHER COMMENTS?
>> >> THIS IS JUST A BRIEFING TO TELL US WHERE WE ARE AND IF WE WANTED TO
(INDISCERNIBLE) >> W ANTICIPATE THAT NEXT MONTH.
>> SO, NEXT MONTH WE ANTICIPATE BRINGING OUR RECOMMENDATIONS BACK TO FINANCE FOR THE MARCH MEETING.
>> I SEE WHAT YOU WANT TO DO MOVING FORWARD?
WHEN YOU BRING THAT BACK, WILL YOU HAVE SPECIFIC NUMBERS?
>> FOR WHAT WE WANT THE ISSUANCE TO BE?
>> AND WHAT (INDISCERNIBLE) >> YES.
>> WITH THE GIVEN THAT THESE WE HAVE TO MAKE AN ESTIMATE OF WHAT WE THINK WILL ACTUALLY HAPPEN IN THE MARKETPLACE.
YOU AUTHORIZE TYPICALLY, THE CHANCELLOR TO ISSUE THE BONDS ON A CERTAIN STATE, WE WILL PAY MARKET RATES AT THAT TIME, AND WE HAVE BEE VERY GOOD ABOUT THIS, HISTORY HAS PROVEN WE'VE BEEN GOOD ABOUT ISSUING THOSE AT THE RIGHT TIME AND GETTING BETTER RATES.
PARTLY BECAUSE PEOPLE LOVE US, AND THEY LIKE OUR DEBT.
THEY LIKE TO BUY IT, THEY FEEL TRUST WORTHY.
AND THAT'S THE RESULT OF WHAT THIS BOARD HAS DONE, SUCH AS WE HAVE.
WE COULD USE RESERVE FUNDS, BUT WE DON'T HAVE ENOUGH TO DO ALL OF THIS, $250 MILLION, AND IT COMES WITH A COST, BUT IT'S VERY POSSIBLE THAT EVEN WHEN WE SELL THE COMMERCIAL PAPER PROGRAM, IT MIGHT BE $150 MILLION CAPACITY THAT WE SET UP, BUT WE MIGHT SPEND $20 MILLION OF OUR OWN MONEY AND THEN ISSUE $20 MILLION WORTH OF CP TO PAY OURSELVES BACK.
WE MAY USE A MULTITUDE OF ALL OF THE TOOLS THAT WE HAVE AVAILABLE RATHER THAN ISSUE THE CP UP FRONT TO PAY FOR EXPENSES THAT ARE COMING.
WE MIGHT FUND THAT LOCALLY OUT OF THAT.
BUT, TISH HAS THE MONEY TO DO SMALLER -- I SHOULDN'T SAY IT THIS WAY.
>> TO DO LESSER AMOUNTS, MILLIONS TALKING $250 MILLION, WE'RE NOT THAT RICH AND THAT'S AN EMERGENCY RESERVE FUND.
AND Y'ALL GET RID OF ME, MAY BE SOMEBODY ELSE WILL LET YOU DO THAT.
WE SAVE THAT MONEY, AND WE SAVE IT ON PURPOSE.
[01:35:03]
THE BOARD HAS A LONG HISTORY OF MAKING SURE THAT WE REALLY HAVE HOW LONG THIS INSTITUTION HAS HAD A GOOD HISTORY AND WHAT.THAT'S WHY WE GET AA AND AAA RATINGS.
>> (INAUDIBLE) >> WATCHING THIS STUFF WE STILL -- >> YES, JOHN POPPER.
THESE TWO WATCH IT FOR US, AND WE HAVE A LOT OF PEOPLE WATCHING WHOSE GOING ON IN THE MARKETPLACE.
WE WILL NOT TELL YOU WHAT STOCKS TO BUY, IT IS ONE OF THE THINGS THAT WE HAVE ENOUGH PEOPLE WATCHING.
>> IT'S IMPORTANT TO NOTE ALSO, THAT MOST MUNICIPAL BOND ISSUERS THAT MAINTAIN THOSE LARGE COMMERCIAL PAPER PROGRAMS ON A YEAR ROUND BASIS, THEY WILL TYPICALLY GIVE THEMSELVES WIGGLE ROOM AND YOUR BOND LAWYER WILL TELL YOU THAT.
IF YOU THINK THE MOST THAT YOU ARE EVER GOING TO NEED IS $100 MILLION, THEY MIGHT IMPROVE OR SET UP $125 MILLION.
OR $150 MILLION, ET CETERA, AND IT ONLY COSTS YOU WHAT YOUR DEBT SERVICE IS, THE AMOUNT TO ACTUALLY ISSUE WHETHER THE LEND WAS 200 TO ONE, YOU ARE PAYING THE SAME INTEREST RATE.
SO, THAT'S ANOTHER GOOD OPTION TO CONSIDER FOR RECOMMENDATION.
AND THAT SHOULD BE TAKEN CARE OF.
AND THERE ARE BANKS THAT JASON AND I ARE PARTICULARLY GOOD AT IN OUR BUSINESS, BUT THANK GOODNESS, THERE ARE THINGS THAT WE DON'T HAVE TO BE EXPERTS ON.
BUT EACH OF OUR FIRMS HAVE A TRAINING DESK, AN UNDERWRITING DESK, AND THE PEOPLE AT THEIR DESK TALK TO OUR PEOPLE AND COMPARE NOTES AND.
[LAUGHTER] >> IT'S THEY LIKE EACH OTHER AND IT'S THAT THEY'RE COMPARING NOTES AND THEY'RE THE ONES THAT TELL US SO WE COULD DO WHAT WE NEED TO DO IF THERE IS A REASONABLE DEMAND IN THE MARKETPLACE AND RATES ARE AND THEY MONITOR THAT AND
WE GET THE ADVANTAGE OF (INDISCERNIBLE) >> (INAUDIBLE) >> (INAUDIBLE)
>> (INAUDIBLE) (INAUDIBLE) (INAUDIBLE) (INAUDIBLE) (INAUDIBLE) >> IT
(INDISCERNIBLE) >> ANYWAY, WHAT YOU PROVIDE AND WHAT (INDISCERNIBLE)
(INDISCERNIBLE) >> GOOD ADVICE AND HELP US STAY ON THE RUCHINGS, BUT IN GOOD TIMES AND BAD TIMES OR WHATEVER.
>> WE CALL THEM AND TALK WITH THEM A LOT ABOUT THINGS.
>> SO, JOHN, TO YOUR TIMING COMMENTS, SO, BASED ON THE TIMING OF THE ISSUING BONDS HOW MUCH CAN WE SAVE IN THE TAX PAYERS?
>> JUST BECAUSE WE'RE UP OVER $50 BILLION, IT'S PROBABLY CLOSER TO 60.
>> THAT'S IMPORTANT TO NOTE BECAUSE OF THE CONCERN THAT THIS IS TAXPAYER MONEY AND HOW MUCH WE SAVE THEM AND THAT'S ON THE 2004 PROGRAM.
>> THAT WAS THE PREVIOUS FINANCE CHAIR THAT BEAT ON US TO DO THAT.
SO YOU HAVE A LOT TO LIVE UP TO.
>> OUTSTANDING RIGHT NOW IS $3 MILLION (INDISCERNIBLE) >> THANK YOU, VERY MUCH.
>> I THINK THIS IS THE TIME FROM MY PERSPECTIVE THIS IS NOT AN VISIT, JUST TO ME WITH THESE TYPE OF ADVISORS, WITH WHAT WE'RE DEALING WITH NOW IS ASKING YOU BACK NOR FREQUENTLY TO CONTINUE TO KEEP US UP AND AVAILABLE.
WE'RE GOING TO GO INTO EXECUTIVE SESSION.
WE'RE GOING TO ADJOURN INTO EXECUTIVE SESSION FOR ONE OR FOLLOWING REASONS,
[6. Executive Session]
CONSULTATION CONCERNING THE PARTYS LEGAL MATTERS, PENDING OR CONTEMPLATING LITIGATION OR SETTLEMENT OFFERS FOR SECTION 551107 ONE.PERSONAL MATTERS RELATING TO EMPLOYMENT, VALUATION OF ASSIGNMENTS, DISPLAINARY OR
[01:40:01]
DISMISSAL OF EMPLOYEES, SECTION 551 (INDISCERNIBLE >> LIBERATE MOST (INDISCERNIBLE) OPEN DELIBERATION WOULD HAVE A DETRIMENTAL EFFECTS ON NEGOTIATIONS WITH PERSONS.
IT IS 12:12 AND WE WILL NOW CALL THE ORDER TO BE IN EXECUTIVE SESSION.
(GAVEL WRAPPING) (MEETING ADJOURNED TO EXECUTIVE SESSION) DOES >> DALLAS COLLEGE - FINANCE COMMITTEE MEETING STANDING BY FOR.
DALLAS COLLEGE - FINANCE COMMITTEE MEETING IN EXECUTIVE SESSION.
STANDING BY FOR >> MEETING IN EXECUTIVE SESSION.
>> (MEETING IN EXECUTIVE SESSION) >> >> >> >> >> STANDING BY FOR.
>> THIS IS A TEST FOR CAPTIONS.
>> THIS IS A TEST FOR CAPTIONS.
>> >> DALLAS COLLEGE - FINANCE COMMITTEE MEETING, FEBRUARY 1, 2022.
(MEETING IN EXECUTIVE SESSION) >> DALLAS COLLEGE - FINANCE COMMITTEE MEETING, FEBRUARY 1, 2022.
(MEETING IN EXECUTIVE SESSION) >> DALLAS COLLEGE - FINANCE COMMITTEE MEETING, FEBRUARY 1ST, 2022.
>> DALLAS COLLEGE - FINANCE COMMITTEE MEETING, FEBRUARY 1ST, 2022.
>> ALL RIGHT, IT IS 1:40 P.M., AND I'M NOW NOW ADJOURN THE MEETING OF THE FINANCE COMMITTEE.
(MEETING ADJOURNED)
* This transcript was compiled from uncorrected Closed Captioning.