HIGHER EDUCATION FUND

(HEF)HIGHER EDUCATION COORDINATING BOARD

HEF – HOW MUCH

Fiscal Year Amount

1985 $100M

1996 $175M

2008 $262.5M

HEF – PERMISSIBLE USES

• Improved or unimproved Land

• Construct and Purchase Buildings (and Equipment)

• Repair and Rehabilitation

• Capital Equipment

• Library Books and Materials

• Other Permanent Improvements

• Bonds and Notes

• Pledge up to 50%

• Not more than 10 Years

… to the extent of their use for educational and general activities.

HEF – WHO IS ELIGIBLE

• Institutions created that are not part of • The University of Texas

System

• Or, Texas A&M University System

• Institutions not entitled to participate in funding from bonds or notes payable from the Available University Fund (AUF).

HEF – WHO IS ELIGIBLE

UT-Pan American*UT-Brownsville*TAMU-Corpus ChristiTAMU-KingsvilleTAM International

UniversityWest TAMUTAMU-Commerce

(East Texas State University)

TAMU-Texarkana (University at Texarkana)

UH System AdministrationUHUH-VictoriaUH-Clear Lake

UH-DowntownMidwestern State

UniversityUNTUNT at DallasUNTHSC at Fort Worth

(Texas College of Osteopathic

Medicine)

Stephen F. AustinTexas SouthernTTUAngelo StateTTUHSCTTUHSC at El PasoTexas Woman's

Texas State System Administration

LamarLamar Institute of

TechnologyLamar-OrangeLamar-Port ArthurSam HoustonTexas State

(Southwest Texas State

University)

Sul Ross (including Uvalde Study Center)

Sul Ross-Rio Grande CollegeTexas State Technical

College System*UT-Pan American and UT Brownsville remain in the constitution as eligible HEF institutions, but as of FY 2016 will be combined as a new institution and no longer be eligible.

HEF ALLOCATION - REVIEW

• Every 10 years beginning in 1985

• And every 5 years

• Compare Deferred Maintenance (DM) needs to HEF DM expenditures.

• Evaluate allocation effectiveness concerning DM needs

TSTC Set-AsideSpace DeficitFacilities

ConditionComplexity

HEF ALLOCATION – COMPONENTS

HEF ALLOCATION – SET-ASIDE

• TSTC set aside

• First 2.2 percent

• or less

• TSTC is excluded from the allocation of the remaining 97.8 percent of the annual distribution.

Remaining Allocation97.8%

TSTC System2.2%

HEF ALLOCATION – ELEMENTS

• 50% to Complexity• Split remaining 50%

between Space Deficit and Facilities Condition Elements by monetary value

Space Deficit27%

Facilities Condition23%

Complexity50%

HEF ALLOCATION - COMPLEXITY

Allocate on Formula Funding: Educational and General Space

SupportGeneral Academic Institutions

Operations Support (including Teaching Experience Supplement)

Health Related Institutions Medical, Nursing, and Pharmacy

Education Allied Health Professions and

Biomedical Sciences Training Graduate Training in Public Health Physicians Assistant Program Research Enhancement

Convert Appropriations to Allocation• Divide 50% of remaining allocation• By total formula appropriations for

all institutions• Times institution formula

appropriations• For example

• Allocation Factor = 50% X Remaining Allocation / Total Appropriations = $128M / $2.355B = $0.054

• Institution Complexity = Institution Appropriation X Allocation Factor = $112M X $0.054 = $6M

HEF ALLOCATION – SPACE DEFICIT

• Unadjusted space surplus = Zero

• Space Model (Unadjusted) Deficit

• Monetize• $30 per square foot

• Multiply by 1.5 to convert to Gross Square Feet (GSF)

• Divide by 10 (the number of years in the allocation)

• Multiply by $200 (cost of one gross square foot of Classroom Space in 2008)

For example

• Space Projection Model Deficit = 329K Net Assignable Square Feet

• Space Deficit = 329K X 1.5 ÷ 10 X $200 = $9.9M

HEF ALLOCATION – FACILITIES CONDITION

• Campus Condition Index Value• Formerly

Replacement Value

• Monetize • Multiply by 2% - an

acceptable portion of building value to carry in deferred maintenance

For example

• Campus Condition Index Value = $455M

• Monetized Facilities Condition = $455M X 0.02 = $9.1M

HEF ALLOCATION – MONETARY VALUES TO ALLOCATION

Allocation Factor

• Divide 50% of Remaining Annual Allocation by

• The Sum of Monetized Space Deficit and Facilities Condition elements

• For example

• Allocation Factor = 50% X Remaining Annual Allocation / (Space Deficit + Facilities Condition) = $128M / ($183M + $210M) = $0.33

Multiply the Each institution’s Monetized Value by the Allocation Factor• For example

• Monetized Space Deficit = $9.9M

• Space Deficit Allocation = $9.9 X $0.33 = $3.2M

• Monetized Facilities Condition = $9.1M

• Facilities Condition Allocation = $9.1M X $0.33 = $3.0M

• Institution Allocation = Complexity + Space Deficit + Facilities Condition = $6M + $3.2M + $3.0M = $12.2M

HEF ALLOCATION – STUDY OBJECTIVES

1. Study and make recommendations on the amount of total annual allocation of HEF

• Consider the change in value of the facilities from 2008 to 2014

• Consider the reported maintenance needs of the institution and the cost increases between 2008 and 2014

2. Study the effect of HEF allocation on the amount of reported deferred maintenance.

• Identified needs, 10 year review

• Maintenance performed using HEF funds

3. Review the current allocation formula

• Fairness of the calculations

• Components of the calculations reflect the intent of the statute, 62.021 (a)

HEF ALLOCATION – PARTICIPATION OF ALL INSTITUTIONS

• Assist with the collection of data from the institutions.

• Review data collected from the institutions for reasonable accuracy.

• Provide written feedback on current allocation formula.

• Review feedback from other participants and assist with constructive suggestions.

• Participate in discussions of recommendations for modifications to formula allocations.

• Provide written feedback on draft reports prepared for submission to THECB agenda.

TIMELINE

8/5

• Phone Conference• Overview and Q&A

8/18

• Phone Conference• Review Data and Consider Feedback

9/2

• Phone Conference• Comment on Draft Report

9/9

• Phone Conference• Finalize Report