UT-Austin wouldn't get bond reimbursement under legislation

Senate bill also would single out medical center in Dallas

By Ralph K.M. Haurwitz, Laura Heinauer
Austin American-Statesman
Wednesday, July 13, 2005

The University of Texas at Austin might not get any money for replacing an aging science building under a proposal that lawmakers are expected to debate today.

The proposal, offered by Sen. Steve Ogden, R-Bryan and chairman of the Senate Finance Committee, would authorize about $2 billion in bonds for repairs and new buildings at public universities throughout the state. But in a change from the Legislature's historical practice, the universities would have to pay at least 40 percent of the principal and interest out of tuition and fees. And UT-Austin, along with the UT Southwestern Medical Center at Dallas, would have to pay back all the debt for their projects.

"I find the provision very curious, that our campus and UT Southwestern would be singled out and precluded from any benefit under the bill," said Kevin Hegarty, vice president and chief financial officer for UT-Austin.

Up to now, the Legislature has appropriated general revenue to cover the entire debt for the universities' projects. Campus officials regard their projects as crucial for meeting growth demands and repairing everything from aging sewer lines to leaky roofs.

University officials favor a bill that the House approved and sent to the Senate on Tuesday. That measure, authored by Rep. Geanie Morrison, R-Victoria, would authorize $2.7 billion in so-called tuition revenue bonds, with no provision calling for the universities to share the burden of paying off the debt.

Under the House bill, UT-Austin would receive $75 million in bonds to rebuild the Experimental Science Building.

Officials and students say there is an urgent need to replace the building, which is operating at half capacity with makeshift natural gas piping. Some of the heating and cooling vents are black with grime.

"The fact that half of it has been abandoned severely limits classroom space on campus," said UT Student Government President Omar Ochoa.

The Senate Finance Committee is scheduled to hold a public hearing on Ogden's bill today. Ogden said Tuesday that he expects the bill to change, but he did not specify how.

Ogden said during an interview last month that he would like universities to bear some of the burden for paying off the tuition revenue bonds.

"The universities need some skin in this game," Ogden said at that time. "This idea that they can just come down and invent projects and go borrow money is creating a certain feeding frenzy, putting a lot of pressure on legislators and allowing universities to act less responsibly."

During the regular legislative session, a House-Senate conference committee recommended $1.1 billion in bonds, but the proposal did not pass. Gov. Rick Perry directed lawmakers to take another stab at the matter during the current special session.

It is unlikely that the Legislature would approve the full amount authorized by the House. In fact, the House approved an amendment that would appear to call into question whether the entire $2.7 billion could be financed by general revenue. The amendment would provide $108 million for debt payments during the next two years. A Legislative Budget Board analysis said debt payments on the full $2.7 billion would cost $474 million during that period.

Among the projects under consideration are an emergency center at the UT M.D. Anderson Cancer Center in Houston, a business college building at Texas Tech University and repairs to the basketball arena's roof and other work at Midwestern State University in Wichita Falls.

The differences between the House and Senate bills are in some cases considerable as far as individual campuses are concerned.

For example, Texas State University at San Marcos would get $40 million under both bills for its Round Rock Higher Education Center. The Senate bill would authorize an additional $30 million for an academic center, while the House bill would provide $143 million for the academic center, a fine arts and communications center and other projects.

Tuition revenue bonds

Tuition revenue bonds are used to finance construction, renovation, equipment and infrastructure at public universities. The Legislature historically has appropriated general revenue to pay the interest and principal so universities would not have to use tuition and fees to pay off the bonds. That would change under a proposal in the Senate that would require universities to pay at least 40 percent of the debt.