House Higher Education RFI Responses: Charge 2

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This report covers the responses House Higher Education received for their RFI on Charge #2, relating to evaluations of current and future capital infrastructure needs at Texas public universities, health-related institutions, and Texas State Technical Colleges. The RFI for this charge can be found here and a complete list of responses can be found here.

The HillCo report below is a summary of information intended to give you an overview and highlight of the various topics included in the responses. This report does not cover the entirety of each response, but aims to provide an overview of the testimony submitted.

University of Texas System (answers immediately below are from the system, subsequent answers are from separate universities within the system)

How have institutions’ needs changed since the 86th Legislature? Are there projects that were included in HB 2000 that are no longer needed; i.e., were funded through other means? Are there projects that were not included in HB 2000 that now are a need? If so, why?

HB 2000 included 17 projects across 14 institutions
4 were covered by the Permanent University Fund

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

CARES act provided limited federal funds to address this
These funds can only be used for capital needs related to the pandemic

Has the economic recession impacted borrowing costs for a potential Tuition Revenue Bond? Are there any anticipated changes to the costs of borrowing in the future, should conditions remain as they are?

Borrowing costs are currently among the lowest on record
Authorizing TRBs would allow minimization of borrowing costs and enable them to spread borrowing costs over several years

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Have in the past allowed additional facilities and the expansion of class size
Redirection of general revenue from operations to capital projects would likely negate the potential stimulus of the capital projects (underscores need for external funding)
Credit profiles for colleges are currently lower in credit agencies; COVID-19 related factors
Tribes weaken institutions’ financial ratios calculated by the credit rating agencies; use up a portion of each institution’s debt capacity
Legislature should instead provide funds directly so that these institutions can avoid a poor credit profile; preserves debt capacity and bond rating

As a result of the pandemic, have institutions’ infrastructure needs changed?

UT Arlington

Short term, requires larger classrooms for social distance learning
Long term, as hybrid enrollment grows, need multipurpose teaching space and space for online learning

UT Dallas

Need expanded research facilities as school-sponsored research grows
Need retrofitting of academic buildings and spaces that accommodate social distancing

UT Lepas

Have made changes to accommodate online learning and social distancing

UT Permian Basin:

Needs to upgrade classrooms to enable distance learning; potential needs include more green spaces and stronger WIFI
Current initiatives are updating AV systems, retooling staff devices for remote work, creating special software access for students
Requests complete classroom modernization so that students can attend class in any manner they choose

UT Rio Grande Valley:

Need deferred maintenance
Need a new Nursing Facility and Health Affairs Building
Area is medically underserved and has been a hotspot for the COVID-19 pandemic
Nursing facility would serve entire area’s hospital and health facilities, would be located on land in Hidalgo County; would be in partnership with City of Pharr and the PSJA School District
Health Affairs Building allows UTRGV to expand its health science programs and address the RGV’s high demand for physician assistants, occupational therapists, and speech pathologists
Ultimately, these facilities decrease local and state health disparities

UT San Antonio

Needs include an expansion of the College of Business on the Downtown Campus, a residential Honors College, a Performing Arts Center, and a student success center

UT Tyler

General needs include enhanced communication system to provide “anywhere” access soft phones, updated classrooms to allow for Zoom capabilities, and WIFI in more outdoor spaces and far buildings
Physical needs include reduced space utilization, provision of physical barriers, toe pulls and automated entry doors; potential installation of ultraviolet lights in the air stream of air handlers

UT Southwestern Medical Center

Need State support for an incremental ~25% more academic space to maintain the breadth and quality of programs and IT software if COVID continues
Possess Clements Health Hospital for emergency disease outbreak

UT Medical Center at Galveston

Have reassessed building needs for the $157M multi-use building at the League City Campus
Need critical mechanical systems in four key research buildings on the Galveston Campus for greater reliability and energy efficiency
Need to reconfigure existing space to better support current research
Need to build out shelled space in UTMB’s newest research building to create an fMRI core to benefit growing neurosciences and addiction research programs

University of Texas Health Science Center at Houston

Need for a research building that houses UTHealth School of Public Health
Need a Digital Innovation Tower on the south research campus for the UTHealth School of Biomedical Informatics
Both fields saw explosions in enrollment, and the workforce currently reflects a need

The University of Texas Health Science Center at San Antonio

Needs include renewal for the new equipment, software, and licensing
Need investments in a BSL3 Infectious Diseases (ID) facility and cryopreservation services to fully sustain COVID-19 testing efforts
The Department of Pathology made and manufactured testing kits when there were none available and diverted research PPE for the sake of COVid19
Used funds to invest in information technology

The University of Texas M.D. Anderson Cancer Center

HB allocated $100 million for the partnered construction of a biomedical facility ($500-million-dollar project)
The total cost of this project is estimated at 500 billion, but the potential impact on Texas is $5.4 billion in returns
Support for this project must continue to bring it to fruition

UT Health Center at Tyler

Needs continue to be largely unchanged (most funds covered by the Federal CARES Act)
UTHSCT undertook a rapid renovation and retrofitting of 22 negative pressure and 14 ICU rooms to prepare for COVID-19 patient
renovations are underway to increase capacity and update mechanical systems at the Public Health Laboratory of East Texas (PHLET)

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

UT Arlington

If TRBs continue to be pushed off, there will be further delays in existing infrastructure, therefore throwing off annual budgets
After huge capitals investments recently, there is a need for capital renewal

UT Austin

Cannot independently financially manage and fund all the institution’s needs in support of the academic mission

UT Dallas

Existing campus infrastructure will continue to be strained
Funding will not be available to retrofit technology in older buildings
Growing campuses will continue to see overcrowded facilities and use of older, possibly unsafe, facilities

UT El Paso

Further delaying TRBs for the existing Liberal Arts (60 years old) and Academic Advising buildings (42 years old) will result in ‘critical’ deferred maintenance needs (could likely lead to demolition)

UT Permian Basin

Would be the delay in new construction or renovation projects (Mesa building renovations would be the most impacted)
The key projects in the Campus Transformation Project, particularly signage, way finding, and ADA upgrades are critical to get accomplished as soon as possible (could lead to ultimately more costly repairs)

UT Rio Grande Valley

Will limit UTRGV’s ability to expand health science programs
Adds to deferred cots in the long run and creates unsafe spaces

UT San Antonio

The delay of TRB, especially for the Innovation, Entrepreneurship and Careers Building – and the expansion of the College of Business
Will affect strategic enrollment plans, opportunities for experiential learning under SACSCOC QEP around classroom to career, and efforts to meet 60×30 targets and workforce benefits in San Antonio

UT Tyler

Miss opportunities to grow high-need programs and improve student safety (Nursing and Engineering require additional investment)

UT Southwestern Medical Center

Will not be able to meet the growing demand for student training and research

UT Medical Center at Galveston

Could not maintain critical facilities and the capacity for strategic investments
could put pressure on the institution to be staffed at less than ideal levels

University of Texas Health Science Center at Houston

Will cap enrollment in vital areas (such as studying viruses that could easily mutate and be transmitted to humans)

The University of Texas Health Science Center at San Antonio

Deferred maintenance facilities and lack of safe facilities

The University of Texas M.D. Anderson Cancer Center

Need funding for South Campus research center (also, strategies to vacate ancient buildings rely on its creation)
Lutheran Pavilion is failing due to lack of infrastructure
Relying totally on revenue streams could be detrimental to the service provided

UT Health Center at Tyler

Absent tuition revenue bond support, growth in critical programs such as graduate medical education and a future medical school could be slowed

University of North Texas System (answers immediately below are from the system, subsequent answers are from separate universities within the system)

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

Federal funding overwhelmingly insufficient

Could finance TRBs the most cheaply in history

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

If the economic recession persists and deteriorates the State of Texas’ credit profile, cost of borrowing would likely be increased

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

UNT unable to serve growing needs of population

As a result of the pandemic, have institutions’ infrastructure needs changed?

UNT

Pandemic has brought to light unsafe infrastructure (lack of warm water for handwashing, plumbing materials prone to metallic leaching
Additional investment in HVAC systems for filtration and cleaning

UNT Dallas

Invested in hotspots and send out a newsletter everyday

UNT

UNT still requires a new science and technology research building as indicated in HB 2000

UNT Health Center at Fort Worth

No longer in need of the $115 million TRB request proposed in the last Legislative Session for a new academic building
Could use TRBs for space optimizations and alignment; $42 million

Texas A&M System

As a result of the pandemic, have institutions’ infrastructure needs changed?

Need for increased health and mental health services
Have mobilized all space and instituted other mechanisms to promote distancing=

A&M references materials submitted to the committee

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

None to sufficiently do so

Interests rates have remained low but volatile; 30 % lower than July of last year
People are issuing more debt; may cause an uptick in interest rates down the road

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

In a low interest environment, would be beneficial to put liquid funds in high earning investment
Over 20 years, interest rates can end up amounting to half of the total source

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

On campus teaching with proper facilities is essential for students, particularly first in family

Texas Tech System (answers immediately below are from the system, subsequent answers are from separate universities within the system)

As a result of the pandemic, have institutions’ infrastructure needs changed?

Overall need for renovation, maintenance, and safe facilities has increased

Overall need has increased as budgets have shrunk

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

Federal funds to help equipment and technology for distance learning
Did not receive money for capital infrastructure

They note the record low cost for borrowing money
anticipate no changes to the cost of borrowing as most of debt is comprised of fixed rate long-term bonds

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Retaining high credit is imperative

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Halt research, safety measures, and defer maintenance

Texas Tech

Still require that same funding

Texas Tech University Health Sciences Center

Most funding stated in HB 2000 will come from philanthropic resources

Texas Tech Health Sciences Center El Paso

Need for educational and development opportunities for undergraduate students has increased
Hunt School of Dental Education is currently occupying two different temporary locations

As a result of the pandemic, have institutions’ infrastructure needs changed?

Texas Tech University

Put a pause on construction and renovation; there is now strain on remaining infrastructure

Texas Tech University Health Sciences Center

Needs have not changed

Texas Tech University Health Sciences Center El Paso

No new needs
Have created infrastructure to accommodate distancing requirements

Texas State University System (answers immediately below are from the system, subsequent answers are from separate universities within the system)

On a $100 million project, the annual debt service would decrease by ~$400,000 per year over the 20-year amortization

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

There are interests or financing costs associated with debt financing
There is opportunity cost for paying with General Revenue; no liquid money for investments

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Building infrastructure will become increasingly less reliable, excessive density poses a health threat, and overuse of existing spaces increases maintenance cost

As a result of the pandemic, have institutions’ infrastructure needs changed?

Need to modernize and replace infrastructure as well as increase research facilities

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

Funds to mitigate the impacts of COVID on new learning environment and directly impacted individuals
CARES funds provide no long-term financial support mechanism

On a $100 million project, the annual debt service would decrease by ~$400,000 per year over the 20-year amortization

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

There are interests or financing costs associated with debt financing
There is opportunity cost for paying with General Revenue; no liquid money for investments

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Building infrastructure will become increasingly less reliable, excessive density poses a health threat, and overuse of existing spaces increases maintenance cost

Sam Houston State

TRB request to construct 100,000 square foot Allied Health Building in Conroe and a new request 80,000 square foot Active Learning Center on the main campus

Texas State

Maintains need for a STEM classroom building on the main campus in San Marcos and a Health Professions Building

Lamar University

Need for library spaces has intensified

LSCO

Requires new academic building to ensure safety

LSPCA

Increased need for specialized nursing facilities

Sul Ross State University

Increased need for a nursing facility

LIT

Maintains request for Workforce Training Center to facilitate Allied Health Center

Miscellaneous

Need support for the outdoor field laboratory and needed repair to the Ament Lake Dam at the Christmas Mountain in West Texas

Stephen F. Austin State University

As a result of the pandemic, have institutions’ infrastructure needs changed?

Need technology and infrastructure to facilitate social distance learning

How have institutions’ needs changed since the 86th Legislature? Are there projects that were included in HB 2000 that are no longer needed, i.e., were funded through other means? Are there projects that were not included in HB 2000 that now are a need? If so, why?

Currently reforming their requests

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

$10 million in federal CARES Act funding, and the funds were crucial in providing student relief aid, technological upgrade support, and residence life student reimbursement support

Favorable interest climate for capital investments

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Despite low interest rates, money would be saved if TRBs are paid for with cash rather than borrowing money

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

SFA would not be able to keep up with classroom and laboratory demands

Midwestern State University

As a result of the pandemic, have institutions’ infrastructure needs changed?

Have made progress but need technology/infrastructure to facilitate social distance learning

Funds do not address long term investments in campus facilities
CARES Act and funds from the Strengthening Institutions Program have been useful

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

$10 million in federal CARES Act funding, and the funds were crucial in providing student relief aid, technological upgrade support, and residence life student reimbursement support

Favorable interest climate for capital investments
If debt issuances are deferred, borrowing costs will increase and be coupled with the cost of instruction

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

This source enumerates benefits of TRBs and borrowing money rather than cash use

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Would lead to increase of delayed maintenance and obsolescence of current facilities

Texas State Technical College

As a result of the pandemic, have institutions’ infrastructure needs changed?

Infrastructure needs, particularly regarding lab facilities, have increased

Additional need for heavily equipped lab space

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

Were granted $5.6 million CARES dollars
Are pursuing additional $6 million in EDA CARES grant for economic infrastructure

They consider the current borrowing market neutral to positive

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Borrowing capacity of schools is affected by each TRB issuance

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Would limit Texans’ abilities to enter into a fast growth market

Texas Conservative Coalition Research Institute

The legislature should authorize Tuition Revenue Bonds and not appropriate general revenue after the fact to pay for them; notes that TRBs should be funded by tuition alone
Recommends renaming TRBs to denote the legislature is taking on this obligation; mandating that schools use tuition to back these bonds (their tuitions are increasing)

University of Houston System

As a result of the pandemic, have institutions’ infrastructure needs changed?

Need resources and support to facilitate social distancing (in particular, buildings that facilitate industry standard airflow rates)

Received General Revenue Funds for the Hobby School and the Law Center
Need for Innovation Center; U of H is the number one entrepreneurship program in the country
U of H Sugarland requires new academic building and a College of Technology

If the pandemic has changed institutional needs, are there federal funds that could qualify to help offset COVID-related changes?

Have received funding to retrofit classroom

Assess true interest costs at 2.3 %
Tax rates are at record lows

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Would prefer to pay with GR to avoid issuing bonds

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Would delay ability to invest in excellence

Texas Woman’s University

As a result of the pandemic, have institutions’ infrastructure needs changed?

Need more academic space for both increased enrollment and CDC compliance

Need more funding for Health Sciences Center (need is more pressing than ever)

With interest rates at historic lows and construction costs reduced, TWU finds this option very attractive

Are there financial or other benefits to paying for TRBs with cash rather than borrowing money?

Would prefer to pay with GR to avoid issuing bonds

What kinds of longer-term impacts will we see to institutions if TRBs continue to be pushed off?

Would delay ability to invest in excellence
Would hinder ability to grow enrollment in healthcare and other fields