Tuition Revenue Bonds build a better campus

What exactly is a Tuition Revenue Bond (TRB)? The Texas Senate’s website offers a mouthful of a definition: “TRBs are bonds that have their debt serviced by the revenue of the project for which it was issued and pledge a revenue stream provided by income from tuition charges levied against students or institutions specified in the bond covenants.”

Don’t let the TRB’s misleading label and convoluted definition frighten you; student tuition is not ultimately used to pay off the bonds. The state allocates funds — or has, in past practice, done so — for the reimbursement of the TRB principal and interest.

The process is easier to understand via analogy. Suppose you are a student, and you receive all of your income from your parents. You have a checking account in your name out of which you pay rent, but your parents reimburse you each month for the amount you fork over to your landlord. You, the student, are technically doing the paying, but at the end of the day, the cost ultimately falls to your parents. Similarly, the state reimburses TRBs for public university construction projects, even though the bonds pledge a revenue stream that comes out of tuition dollars.

TRBs have been the favored method of funding construction and renovation projects at Texas public universities since the 1970s. Beginning in 1997, the Texas Legislature set a decade-long precedent of authorizing TRBs every other legislative session — every four years — to fund construction projects on college campuses across the state. But in the 2009 legislative session, the Legislature bucked tradition and failed to renew the TRB bill as expected. As a result, no new TRBs have been authorized since 2006.

But now an opportunity to get them restarted has arisen, and we recommend that the Lege jump on it. Specifically, Sen. Judith Zaffirini, D-Laredo, filed Senate Bill 16 last month in an attempt to fix the return to regular authorization of TRBs. On April 11, the Senate Committee on Higher Education heard testimony from Texas public university administrators, who told the lawmakers they need more money to fund construction and renovation projects on their campuses. We support the bill as a necessary measure to help UT-Austin keep pace with its peer institutions.

Among those testifying was Michael O’Donnell, associate vice chancellor for facilities planning and construction at the UT System. O’Connell assured the committee that “the approval process [for construction projects] at the University of Texas is comprehensive.” Not all projects are without kinks, of course, as illustrated by the delayed debacle that was the opening of the new computer science complex. But construction-related headaches aside, our students and faculty demand a modernized campus and University administrators attest that proposed construction and renovation projects to that end are not possible without the issuance of TRBs. Moreover, SB 16 has auspicious timing: Interest rates and construction costs are low; meanwhile, higher education in Texas continues to expand.

As specified in the Texas Constitution, the state has a responsibility to maintain UT’s reputation as a “university of the first class.” Our excellence starts from the ground up, with infrastructure at the foundation.

The entire UT System stands to benefit significantly from SB 16. UT-Austin in particular would receive funding to expand and revitalize facilities related to technical fields. Specifically, the bill includes a provision for the University to aggregate TRBs totaling “$95 million for an engineering education and research center.”

For better or worse, campus structures have a shelf life. They must be updated frequently in order for our facilities to remain competitive and up-to-date. Buildings that predate the computer era, for example, are simply not suited to the needs of a rapidly developing computer science and engineering sector at the University. The University needs infrastructural investment, and SB 16 will help keep us on track.