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UT-Pan American, UT-Brownsville to benefit from combined $178.4 million for major facilities, says Rep. Canales

By DAVID A. DÍAZ

Legislativemedia@aol.com 

The day after the House of Representatives gave final approval to landmark legislation merging the University of Texas-Pan American and UT-Brownsville, state lawmakers passed a key funding bill that will provide a combined $178.4 million for new construction at both campuses, Rep. Terry Canales, D-Edinburg, has announced. 

House members gave final approval on Tuesday, May 21, for passage of Senate Bill 16, by Sen. Judith Zaffirini, D-Laredo, and Rep. Dan Branch, R-Dallas, that authorizes the issuance of $2.7 billion in tuition revenue bonds for institutions of higher education statewide to finance construction and improvement of infrastructure and related facilities.  

The version approved by the House contained a few minor changes, so the legislation goes back to the Senate for their acceptance, and then would go to Gov. Rick Perry for his review and action. 

Almost $79 million will go to UT-Pan American to build a Science Building II, a sophisticated facility featuring classrooms and laboratories designed to provide state-of-the-art education for students majoring in science, technology, and math, said Canales, whose House District 40 includes UT-Pan American and the UT Regional Academic Health Center Medical Research Division. 

UT-Brownsville, which is negotiating with the City of Brownsville to acquire nearly 70 acres of city-owned land for its new campus, will receive $100 million for facilities. 

The House approval of Senate Bill 16 followed its approval on Monday, May 20, of Senate Bill 24, by Sen. Juan “Chuy” Hinojosa, D-McAllen, and Rep. René Oliveira, D-Brownsville, which sets into motion the UTPA/UT-B merger. Senate Bill 24 also includes the creation of a UT medical school. 

Canales hailed the final House passage of SB 16 and SB 24 as unprecedented victories for the Rio GrandeValley. 

“In both cases, the Valley legislative delegation remained united, knowing full-well that this new Valley university, to be made up of UT-Pan American and UT-Brownsville along with the UT medical school, is going to transform, forever and for the better, our economy, education, medical care, and prestige,” said Canales. “We worked together for the benefit of the entire region. This is just the beginning.” 

Oliveira said the planned expansions in Edinburg and Brownsville will have far-reaching effects. 

“The new facilities created by this action will be an amazing addition as we form the new University of Texas university in the Rio Grande Valley,” Oliveira’s said. “We know that the demand for education in our region is increasing. The need for investment in new facilities is crucial to meeting those demands, and creating new economic opportunities for our students.” 

“Soon enough, as a result of Senate Bill 24, we will have access to the Permanent University Fund, which will be a major source of construction money for both campuses and the medical school. There’s no stopping us now,” Canales noted. 

The Permanent University Fund is an endowment fund that supports certain universities in the University of Texas and Texas A&M University systems through investments made with state oil and gas royalties. 

Prior to the passage of Senate Bill 24, UT-Pan American and UT-Brownsville did not have access to the PUF. 

On December 31, 2012 the market value and book value of the PUF was $13.9 billion and $11.9 billion, respectively, exclusive of land acreage. Today the PUF contains 2.1 million acres located in 24 counties primarily in West Texas. 

Under Senate Bill 16, tuition revenue bonds (TRBs) are financing mechanisms used by which institutions of higher education to fund capital projects such as institutional construction, renovation projects, equipment, and infrastructure, according to the bill analysis of the measure. 

The Legislature must authorize issuance of TRBs and typically appropriates general revenue to reimburse institutions for the tuition used to pay the debt service.  

Also according to the bill analysis of Senate Bill 16: 

SB 16 would support a wide range of critical facilities projects at higher education institutions throughout the state that play an important role in enhancing opportunities for a quality education. Renovations, repairs, upkeep, and new facilities are essential to the state’s ability to provide a high quality and competitive education to Texas students. 

Higher education institutions depend on state support for maintenance and expansion to keep pace with the exploding growth in student enrollment and to maintain and enhance the quality of education these students receive.  

A highly skilled and well-educated workforce is vital to remaining economically competitive in a global marketplace. Texas has devoted much to creating and securing the reputation as providing a good environment for business. A world-class workforce is a key part of this equation.  

TRBs are the most cost-effective means of financing construction or improvements of durable capital infrastructure, and construct facilities that can be used while the debt is being paid off. The bonds would be pledged against university revenues and thus would pose little financial risk for the state. Interest rates on recent bond issuances, moreover, have been secured at remarkably low levels.  

SB 16 is also tied into the passage of three other major bills: 

• Senate Joint Resolution 1, a proposed constitutional amendment that would use the state’s Rainy Day Fund to boost public education ($800 million); provide $2 billion for water projects in the State Water Plan; and provide $2.9 billion for transportation projects. The Rainy Day Fund is a savings fund that allows states to set aside excess revenue for use in times of unexpected revenue shortfall. The Rainy Day Fund is projected to have almost $12 billion by the end of August 2013. 

• Senate Bill 1, the state budget; and 

• House Bill 1025, a supplemental budget bill that addresses funding needs for the current two-year state budget, which ends on August 31.

 

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