Lone Star College System expands, debt and taxes follow suit

Enrollment at community colleges across Texas is booming, as there has been a 31.9 percent increase in enrollment in the past five years. But debt has followed this growth, and statewide the total outstanding debt for all community college systems stands at $4.3 billion. Despite the large number, this remains a mere 2.2 percent of all public debt. However, debt in this sector has essentially quadrupled in ten years, and shows no sign of slowing down. This rapid growth gives reason for concern about the future of our community colleges and their relationship toward the community in terms of debt and taxation.

Lone Star Community College is the fastest growing community college in the nation. From 2007 – 2011 enrollment grew 53.86 percent, and currently stands at around 75,000 students. During the same time period, Lone Star’s debt spiked 140.66 percent and is currently $591,625,000, which is the 3rd highest in the state, behind Houston Community College System and Alamo Community College District. Debt per student during this time period outpaced enrollment growth at 56.42 percent, and currently stands at $8,667.99. To put this into perspective, that would mean that a student who completes his associate degree at Lone Star in the normal time of 4 semesters would then have over 10.5 semesters worth of debt attached to his degree. This is in contrast to the statewide average, where debt per student is $5,527.88 and has increased 42.3 percent since 2007.

Of course, debt by definition is not always a bad thing- so long as it is used for specific purposes, is not hastily acquired and can be paid back. But debt is always a serious thing, and any government entity that enters into debt should know that it is dealing with a drug that can easily turn into an out of control habit if strict discipline is not followed. We’ve seen this happen too many times with the Federal government and, unfortunately, are seeing it more often at the local level, as well.

In 2008, the Lone Star College System Board of Trustees issued a $420 million bond referendum which ended up passing by 59.92 percent amid very low voter turnout. The list of projects for the bond referendum included 6 new satellite campuses, 17 new buildings or additions to buildings, 7 building renovations, and various infrastructure and technology upgrades. The reasoning behind the referendum, the Trustees at the time declared, was to keep pace with an increasing enrollment in conjunction with population growth and the need for a trained workforce. According to their May 2008 Star Newsletter, “almost 40 percent of all college-bound high school graduates in the district will attend a Lone Star College the following fall.” The “district” the newsletter refers to is the group of 11 ISDs which make up the Lone Star College System voting district: Aldine, Conroe, Cy-Fair, Humble, Klein, Magnolia, New Caney, Spring, Splendora, Tomball, and Willis.

Along with their reasoning to support the approval of the bond, the Newsletter stated that “the college’s financial advisors said the system can easily fund the $420 million in new bonds without increasing the tax rate.” On top of that, in another section of the Newsletter entitled “Quick Facts about the Bond Election,” which is formatted along the lines of a “Frequently Asked Questions” section, the Newsletter poses the hypothetical question, “Will this bond request increase the tax rate?” The response: “According to the college’s financial advisors, LSCS can accommodate this bond request with no increase in the tax rate.”

Two years later, the board voted to increase taxes and student fees. The only votes against the tax increase came from Trustees David Holsey and Chris Daniel (Daniel has since been replaced by Tom Forestier following his election as Harris County District Clerk). A year after that, in 2011, they raised taxes again.

The vote to increase taxes and fees was due to the loss of $19.2 million of state funds over the subsequent three year period coupled with an expected rise in enrollment. Lone Star College System’s funding is categorized by 36 percent property tax funds, 22 percent state funds, 34 percent tuition and fees, and 8 percent “other” or “auxiliary.” According to an article by Beth Kuhles in Ultimate Woodlands, in a July 27, 2010 budget drafting session, Lone Star College System Chancellor Richard Carpenter justified the tax and fee increases to the board, saying “This is a shared responsibility… Everyone should have skin in the game and nobody has been spared.”

Before accumulating debt, government entities should make sure, all things considered, that they will be able to pay off the debt no matter what circumstances arise amidst economic and budgetary uncertainty. It appears as if Lone Star hedged too much of their bets on the ability of the state to assist them, rather than making the conservative decision to not rely on outside funding sources to subsidize their desire for expansion. In the 2010 tax increase talks, Lone Star reportedly agreed to $2.58 million of cuts in areas such as administration, furniture and equipment, and supplies and materials. Lone Star College should continue looking for cuts, and should always resort to tuition increases before seeking tax increases.

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