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Community Colleges Cut Deal with Perry for Restored Funds Print E-mail
by Christine DeLoma    Mon, Oct 29, 2007, 09:53 AM

Gov. Rick Perry announced this week he would fully restore $154 million in vetoed funds to community colleges. The decision stemmed from months of negotiations with legislative leaders following Perry’s veto of health benefits in June for employees at community colleges.

The controversial veto reverberated through many parts of the state, and many lawmakers called for restoration of funds to colleges in their districts. In turn, some community colleges turned to fee hikes or warned of planned tax increases to make up for the upcoming shortfall for fiscal year 2009.

“We’re obviously thrilled that the money will be returned to the colleges,” said Steve Johnson, spokesman for the Texas Association of Community Colleges. “I think…the single most important thing is that they [community colleges] will be made whole again...”

Perry had argued that community college leaders did not follow an accounting measure called proportionality when submitting their legislative appropriation requests.

The Governor’s office believed the state was paying too much for community college employees’ health benefits. Before a Senate subcommittee on Aug. 14, Perry’s budget director, Mike Morrissey, said he believed the state’s share of health benefits was closer to $92 million than to $154 million.

Perry’s office had offered a solution to the stalemate: Pass his higher education incentive program in return for releasing a portion of the vetoed funds.

In committee, the Governor’s office proposed the Legislature sign off on a $200 million program for fiscal year 2009 that includes incentives and technology grants for community colleges.

Yet, despite the commitment to invest in financial grants, lawmakers expressed doubt about creating an incentive program when community colleges needed to pay the ever-rising health care costs.

Lt. Gov. David Dewhurst and Speaker Tom Craddick did not agree to use part of the health benefit money for Perry’s higher education incentive program.

Instead, they agreed only to appoint a task force to study the measure in the 2009 session. Despite the defeat, Perry put a positive spin on the deal reached with legislative leaders.

“I am pleased a consensus was reached on appropriate health benefit funding,” Perry said. “And I am encouraged that we not only clarified the truth-in-budgeting standard for community colleges, but we were also able to place a greater emphasis on achievement through incentive funding.”

Johnson welcomed Perry’s higher education incentive program and indicated the community colleges introduced a similar proposal several years ago.

The trio agreed to allocate $99 million for the state’s share of health benefits and a “transitional” $55 million payment, meaning the money may or may not be there for community colleges in the future. Funds will be allocated through budget execution or existing transfer authority.

As part of the compromise, Perry won Dewhurst’s and Craddick’s agreement to define “proportionality” as including only community college employees actually paid with state funds.

The definition of proportionality is a major source of contention among community college leaders and Perry.

Since creation of the community college system in Texas over 30 years ago, state and local governments have operated on a cost-sharing premise, argue community college leaders. In theory, the state pays for instructional costs (faculty salaries and benefits, librarians, some administrators), with local support going for non-instructional costs, including facilities.

But the state has never fully funded the instructional costs, and its share has disproportionately declined over the last decade.

From 1973 to 1995, the state shared 50 percent or higher in costs. In 2005, the state’s share accounted for only 31 percent of total costs.

When the state doesn’t pick up its own share, local communities must make up the difference.

And by Perry’s definition of proportionality, community colleges will be penalized even more for picking up the state’s share, by getting less money from the state, college administrators fear.

“The governor also mentioned... that they’ve agreed to an appropriate definition of proportionality,” Johnson said. “I guess only I could say is that we see this as an interim solution and hope as we move forward through this interim and into this next legislative session we can work with legislative leaders to solve proportionality permanently.”

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