Emsi Case Study (See Full Archive)
Summary: The Texas state legislature recently agreed to provide $3.1 billion worth of tuition revenue bonds (TRBs, or capital construction bonds) to the state’s colleges and universities—funds that were desperately needed to build and renovate facilities. To assist in the legislature’s decision-making, the Texas Council of Public University Presidents and Chancellors (CPUPC) enlisted Emsi’s custom analysis.
“[Emsi’s] study provided a data-driven perspective that was one of many resources available to support the conversations,” said CPUPC Executive Director Rissa Potter.
- These were the first major TRBs that have been approved in Texas since 2006—and the funds were desperately needed because enrollment has been skyrocketing in Texas and schools have been running out of space for students.
- Emsi’s analysis estimated the short- and long-run economic activity that would be created by capital funding. CPUPC found Emsi’s regional analysis to be the most helpful portion of the study.
- The study may also have the potential to help prospective donors understand the impact of new and renovated facilities.
Higher ed enrollment is skyrocketing in Texas. So much so, in fact, that the state’s public colleges, universities, and health science centers are running out of space to educate their students. This urgency fueled a winning proposal for capital funding, in which the state legislature agreed to provide $3.1 billion worth of tuition revenue bonds (TRBs, or capital construction bonds) to Texas colleges and universities—the first major TRBs that have been approved in Texas since 2006.
To help articulate the economic benefits of capital funding, the Texas Council of Public University Presidents and Chancellors (CPUPC) commissioned a custom analysis by Emsi economists. Coupled with tours and stories of campuses that are in desperate need of new and renovated facilities, Emsi’s analysis—which quantifies how capital funding would impact the statewide and regional economies—was enlisted as a resource to help lay the groundwork for a positive decision from the legislature.
The Stakes Were High for Texas Higher Ed
Colleges and universities in Texas are rife with examples that demonstrate why new and renovated buildings are essential to increase the capacity for more students. “In one case, at Tarleton State University, students study in a renovated 1940’s era poultry barn,” said CPUPC Executive Director Rissa Potter. “We have another campus in Beaumont that utilizes a classroom building that does not have air conditioning.”
“The Council is a statewide organization, but the interest of the institutions is also locally or regionally based. And legislators and other stakeholders consider impacts with a local perspective as well. To be able to offer that breakdown was helpful.”
—Rissa Potter, CPUPC
With enrollment down across the country, why is Texas so overloaded with college students? The answer has to do with Texas’ increasing population, which is the result of people migrating to the state to take advantage of the booming economy. There are also a lot of students enrolled in secondary education and in the pipeline for college, Potter said. These prospective students include young adults who have not enrolled or individuals who have previously enrolled but have not finished a degree—either way, Texas campuses don’t have room for all of them.
“It’s capacity that is at question,” Potter said. “For instance, Texas wants to meet the demand for graduates with engineering degrees, but we don’t have the classrooms and the lab space to meet the number of students who are interested. As a result, we lack the number of graduates that employers and the state want to add to the workforce.”
The state’s capital funding investment will have a huge impact on these issues, allowing schools to build and renovate facilities, as well as update their resources. These projects include an engineering building at The University of Texas at Dallas, a biocontainment research facility at Texas A&M University, a biomedical sciences center at the University of Houston, and the first building for Tarleton State University’s new Fort Worth campus, among many more. (For an extensive list, see here).
The Role of Emsi’s Capital Analysis
By the time the 2015 biennial legislative session was underway, capital funding was overdue in Texas. “With the growing Texas economy, a positive state budget outlook, and the fact that the universities hadn’t received funding for so many years, the potential was very good that the funding would be authorized,” Potter said. “But [we also thought] Emsi’s study would provide an objective analysis to contribute to the funding discussions. Essentially, the study provided a data-driven perspective that was one of many resources available to support the conversations.”
Emsi’s analysis estimated the short- and long-run economic activity that would be created by capital funding. That includes everything from the new wages that would cycle through the economy to the increased human capital that results from more students attaining degrees and learning new skills. The study included an analysis of the total statewide impacts as well as regional analyses.
The regional analyses were perhaps the most helpful parts of the study, said Potter: “The Council is a statewide organization, but the interest of the institutions is also locally or regionally based. And legislators and other stakeholders consider impacts with a local perspective as well. To be able to offer that breakdown was helpful.”
The regional analyses also put each of the projects into perspective. A region consisting of one or more rural institutions may have requested less funding for its projects, but those funds could have a huge impact on relatively small communities. “[The small, rural institutions] are often the major employer in their communities and may have a less research-oriented mission than the more urban institutions. Yet, the contributions to their communities—and to the state—are significant,” Potter said.
For example, Midwestern State University in Wichita Falls received $58 million for an academic and revitalization project. Emsi estimates that the economic activity generated by this project will have an impact that translates to about 1,650 new jobs in Texas between 2015 and 2026—a major impact for a metro with a total workforce of only 67,500 jobs.
Lastly, Potter noted one unexpected benefit of the study: the potential to help prospective donors understand the impact of new and renovated facilities. In this way, the findings of the study may be very effective for cultivating major gifts.
The Council is composed of the chief executive officers of Texas’ publicly-supported general academic universities, system offices, and health-related institutions. Established over 20 years ago, the Council provides a forum for discussing the mutual needs, concerns and issues facing public universities in Texas and encourages inter-institutional cooperation in meeting the higher education goals of the State.
Emsi turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions and associations, among other clients, build a better workforce and improve the economic conditions in their regions.