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Senate Approves $3 Billion in Bonds for Campus Construction

Senators on Tuesday approved House Bill 100, which would authorize $3 billion in debt to pay for construction projects on university campuses.

University of Texas at Austin students pass by the Main Building on their way to and from classes.

Long-delayed construction projects on university campuses moved a step closer to breaking ground Tuesday after the Texas Senate approved a bill that would authorize $3 billion in bonds to pay for the new buildings.  

That action was good news for universities, which have made the bonds one of their top legislative priorities for 2015. But the schools aren’t celebrating yet. A similar bill reached this point in 2013, but failed to reach the governor’s desk before the end of the session. 

Supporters are optimistic this time around, however. The legislation, House Bill 100, has already passed the House. And it was only tweaked slightly by the Senate. The Senate version authorizes about $85 million less in bonds. The two versions will need to be reconciled before they are sent to the governor. 

The bonds, known as tuition revenue bonds, are usually paid back through state appropriations. Schools would be required to provide some of their own money to cover the full costs of the projects. 

New buildings funded in the bill include a biocontainment research facility at Texas A&M University, a biomedical sciences center at the University of Houston and renovations to Robert Welch Hall Hall at the University of Texas at Austin and to law school buildings at the University of North Texas. In all, 64 universities would have construction projects financed. Many of the projects represent the top construction priorities for particular schools, lawmakers said. 

University officials have said that the failure to pass the bonds in 2013 was costly. Construction costs have increased since then. And many schools had to slow enrollment growth in particular programs due to a lack of facility space. 

The bill passed the Senate with an 26-5 vote, even though several senators used the debate to raise frustrations with higher-education spending. 

State Sen. Kevin Eltife, R-Tyler, said he was bothered that the state was using bonds to pay for the campus construction. The state easily has enough money to pay for the projects with cash, he said, and he offered an amendment to do so. But he said lawmakers don't want to vote to surpass the state's spending limit, which is set by the Legislative Budget Board.

Issuing debt will require the state to pay about $1.5 billion in interest, he said. 

"It just makes no sense to me that we are going to borrow $3 billion when we have cash sitting in the bank," Eltife said. 

But Eltife quickly withdrew his amendment saying he knew it would fail. Too many lawmakers are against exceeding the spending cap for any reason, he said. 

Meanwhile, state Sen. Charles Schwertner, R-Georgetown, offered an amendment that would have banned any school that uses the tuition revenue bonds from increasing tuition beyond the rate of inflation. He filed a similar bill that failed to make it out of committee. He has added a similar amendment to another tuition bill that made it out of the Senate, Senate Bill 778. That bill, which would require schools to meet certain performance metrics before they can raise tuition, is still waiting for a hearing in the House Higher Education Committee. 

"I hope each and every one of you will look at this issue, reflect on it on the interim so we can address it next session, Schwertner said. 

Disclosure: Texas A&M University, the University of North Texas, the University of Houston and the University of Texas at Austin are corporate sponsors of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

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