approved 08152019 19 20 · accelerating change tstc continues to ready itself for shifts within the...

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Strategic Plan Updateand Budget Report

FY 2020

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Place More Texans in Great-Paying Jobs

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EXECUTIVE SUMMARY 4

CONTEXT FOR PLANNING & BUDGETING 6

STRATEGIC PLAN UPDATE 12

BUDGET PRESENTATION, ASSUMPTIONS & ESTIMATES 22

FISCAL YEAR 2020 ANNUAL OPERATING BUDGET 23

OPERATING REVENUES 24

OPERATING EXPENDITURES 29

EXHIBITS 36

CONTENTS

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EXECUTIVE SUMMARY

Introduction

The annual budget for Texas State Technical College (TSTC) is submitted to the Board of Regents (Board) at a special budget meeting the day before its regularly scheduled August Board meeting. The fiscal year for the College begins September 1 and ends August 31. Management updated the TSTC Strategic Plan and proposed the Fiscal Year 2020 budget to the TSTC Board of Regents on August 14, 2019.

Strategic Plan Highlights

TSTC’s strategic plan was adopted in August 2017 with the launch of the first phase in Spring 2018. The first phase focused on TSTC’s student success goal. Leadership and the Board reviewed progress on the plan in January 2019. The Board provided feedback and this report includes revised goals for consideration with the Fiscal Year 2020 budget.

Phase 1 of TSTC’s strategic plan engaged all instructional programs to focus on one of five elements of program vitality: placement, wages, persistence, enrollment and net contribution margin. The majority of programs realized gains in their respective areas of focus, continuing the College’s growth trajectory for more anticipated graduates and offsetting the effects of program closure decisions made to focus on high quality programs.

Phase 2 of the strategic plan will launch on January 1, 2020. This phase is focused on Organizational Health. Pre-launch activities of planning, developing, training and a soft launch for select departments are currently underway. TSTC managers will be responsible for executing commitments toward the successful attainment of our organizational health goal. In addition, the College is deploying a comprehensive management training program to apply leadership practices and behaviors to improve the overall level of employee engagement.

Operational Planning

Throughout the College, operational plans are generally focused on several key areas:

Increasing Capacity and Flow Through the Learning Infrastructure and Pipeline Top initiatives include prioritizing resources to highest yielding programs, strengthening capability for attracting and retaining talent and engaging cross-functional collaborations in enrollment planning and management. TSTC capabilities are reaching new levels of maturity with new approaches for managing facilities, human capital and scheduling. State and local leadership are identifying and removing constraints to maximize the conversion of applicants to students, thereby driving increased placements. Ultimately, continued progress and related growth will rely on the alignment of people, processes and technology towards a reimagined way of doing business.

Launching New Modalities, Products and Markets TSTC is launching a Performance-Based Education (PBE) modality for select pilot programs in Fall 2020. This development effort includes introducing entirely new online products, validating skill requirements directly with employers, integrating essential employability skills into curriculum and creating new off-campus learning delivery channels. This results in students spending less time enrolled, paying less tuition, getting into the workforce quicker and having a more immediate impact on the Texas economy and TSTC’s funding formula.

Developing New Quality Control The 2019-2020 accreditation reaffirmation process requires the development and explanation of performance standards and related practices. Departments statewide are implementing the necessary quality control methods to sustain the reaffirmation effort.

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Budget Highlights

The following exceptional items were approved by management in addition to the normal recurring budget allocations for Fiscal Year 2020:

People. $8.5M in strategic compensation adjustments for TSTC’s workforce through targeted market adjustments and merit pay initiatives.

Core Operations Capacity. $1.9M to increase the various pipelines that convert prospective students into a skilled workforce.

Innovation. $2.6M to launch Performance-Based Education (PBE) modality in Fall 2020. $2M towards the development of strategic opportunities and partnerships.

Business Processes. $3M towards implementation of new Enterprise Resource Planning (ERP) solution. This includes professional services and the related technology platform.

Brand. $1M towards marketing and branding efforts including design and the launch of a new external website.

Infrastructure and Urgent Deferred Maintenance. $2.6M for upgrades to Information Technology and Facilities infrastructure, as well as $1.4M for urgent deferred maintenance.

Budget Proposal & Approval

In Minute Order 30-19, the TSTC administration proposed the Board of Regents approve an operating budget of $240,020,091 in support of the plans and allocations described within this report. The summary of the budget request is found on page 23. On August 15, 2019, the Board of Regents approved this minute order.

Fort Bend County Campus

Marshall Campus

North Texas Campus

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CONTEXT FOR PLANNING & BUDGETING

Higher Education Industry Trends

Operating performance of higher education institutions has been mixed in recent years. The industry is seeing a divide emerge with a widening performance gap between different types of institutions. Highly selective institutions and flagship universities continue to grow in strength while many less selective institutions wrestle with declining enrollments, reductions in state support and declines in overall financial strength as a result. The performance gap between institutions is true of enrollment results as well as student employability outcomes; specifically, employability results for highly selective institutions far exceed the performance of the institutions that are less selective.

Nationally, community colleges have experienced steady declines since 2010 which is the historical trend with unemployment rates. Within Texas, the two-year sector has seen declines that are less severe than national peers because of corporate relocations and population increases.

Even so, growth--where present--has been nearly flat and has occurred in the larger metro communities. Enrollment results in the two-year sector are generally a mix of significantly declining traditional student enrollments, offset with significantly increasing dual credit enrollments. The metro community college districts in Texas with large, growing populations and substantial tax bases realize much more prosperity than smaller districts.

Accelerating Change

TSTC continues to ready itself for shifts within the higher education sector, as well as preparing for the broader, disruptive technology changes spanning nearly all industries. This advancement and convergence of technology is rapidly shaping other major industries and all aspects of our lives. Higher education’s response to these changes has been slow despite the warning signs. However, the rate of innovation will continue to accelerate and compound. Technology will continue to grow, become faster, cheaper, more ubiquitous and available everywhere.

TSTC Foundation Re-engineered

East Williamson County Campus Opened

Statewide Compensation Plan Launched

Statewide Merger Launched

North Texas Campus Opened

50th Anniversary Celebrated

$100+ Million in Gifts & Bonds for Facility Expansion

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“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

Timeline of Key Events

Several events in recent years demonstrate TSTC’s anticipation and readiness for the threats and opportunities that this era of accelerating change offers. Each of these advancements will equip the College to grow, innovate, achieve financial stability, and execute its plans. Being aware of the significant milestones for the College is useful context for understanding and evaluating TSTC’s approach to planning and budgeting.

Below is a timeline of key events realized by TSTC.

Other external influences requiring higher education to ready itself for changes include:

Labor market shifts and the rise of automation

Changing needs and preferences of customers (students and employers)

Supply and demand mismatches

Changing demographics

Pricing pressures and value proposition challenges

The institutions comprising the industry that serves in the higher education market are likely to change significantly. Over 80 nonprofit institutions of higher education have either closed or merged since 2016. In addition, more than 100 for-profit institutions of higher education have closed in that same time frame. Many predict this rate of closure will accelerate in the next decade. Considering the shifting markets, disruptive technologies and other external influences, institutions must encourage risk-taking, evaluate the vulnerabilities of revenue sources and prepare resources, culture and strategy for this paradigm shift. Jack Welch warns institutions,

Merger of Accreditations Completed

Fort Bend Campus Opened

First StatewideStrategic Plan Adopted

Product Mix Aligned

86th Legislature Reaffirmed Returned-Value Funding

Strategic Plan 4DX Execution Framework Launched

New Abilene Campus Opened

Bond Rating Strengthened

If the rate of change on the outside exceeds the rate of change on the inside, the end is near.

- Jack Welch

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Funding Overview & Outlook

Higher education funding increased overall during the 86th Regular Session of the Texas Legislature. The results of the higher education allocation during this session are summarized below:

After a disappointing 85th Legislative Session where TSTC’s performance and accountability funding was overshadowed by other pressures, the 86th Legislature re-established the historical, calibrated funding rate (aka TSTC’s “commission rate”). The 86th Legislative Session ended with TSTC’s realization of its earned funding under the Returned-Value Formula. The illustration on the following page highlights the trend of economic value produced by the placements and wages of TSTC’s students. Also highlighted is the funding rate applied to the value and the resulting funding allocation for the same period. The increased performance of TSTC’s students in the Texas workforce resulted in a significant increase in TSTC’s Returned-Value funding for Fiscal Year 2020 and 2021. This trend is expected to continue in future bienniums.

As an agency of the State of Texas (versus a community college with a local tax base), TSTC’s largest source of funding is state appropriations. TSTC is most dependent on the general revenues as a portion of overall funding compared to all other higher education sectors.

2018–19 GR 2020–21 GR Difference % Change

General Academic Institutions $5,007.7 $5,351.1 $343.4 6.9%

Health Related Institutions $2,855.0 $3,021.4 $166.4 5.8%

Two-Year Institutions $1,987.9 $2,129.6 $141.7 7.1%

A&M System Agencies $355.1 $370.5 $15.5 4.4%

Other $4,704.0 $4,979.3 $275.3 5.9%

Total – Article III $14,909.7 $15,851.9 $942.3 6.3%

TSTC $139.1 $185.9 $46.8 33.6%

HIGHER EDUCATION — GENERAL REVENUE(IN MILLIONS)

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Senate Bill 500

The 86th Legislature passed a $6 billion supplemental appropriation bill, Senate Bill 500, to address needs too urgent to be postponed until the next biennial appropriation. This included, among other things, appropriations related to Hurricane Harvey response and recovery. TSTC was appropriated nearly $30 million in the bill for abatement, infrastructure and demolition liabilities associated with pre-World War II facilities acquired by the State of Texas when opening the TSTC campus in Waco. The Board of Regents approval of the related project budgets will be requested in the Fall 2019 Board meeting.

Capability Maturity

TSTC is a new college. The merger into a single statewide college and the addition of new campuses created the opportunity to evaluate the people, processes and technology with a fresh perspective. An evaluation of the organization’s many capabilities with this new perspective reveals that while the institution is nearly 55 years old, many of the organization’s capabilities are underdeveloped. These capabilities, and their related maturity, are linked to management and organization, technology, people and culture and processes. The initial statewide merger aligned the management and organizational structure. Significant post-merger efforts have focused on aligning the culture. The firm is now focusing on business process and technology alignment. This report and related proposal are the result of one such maturing capability: planning and budgeting. The following table describes the developmental phases of this maturity.

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Establish New College, New Structures & New Capabilities

50+ Years of Independent College Practices

4 Different Planning (Strategic & Operating) Processes

Analytics & Metrics Systems Disintegrated

Operations & Accountability Siloed

Statewide Communication Practices Immature

4+Versions of TSTC

Bias Towards Compliance, Not Performance

Bound in Silos with Different Priorities

Engage Stakeholders & Develop Strategic Plan

Develop OneTSTC Approach

Produce First Statewide Plan Inclusively with Cross-functional & Cross-geographical Participation

Develop Data & Analytics Capability

Create Unified Language Around Planning (e.g., Lead & Lag Measures)

Develop Statewide Execution & Accountability Capability

Introduce Plan & New Execution Framework to College Community

Engage Franklin Covey Consulting Services

Focus Enterprise-wide Implementation on Single Topic (WIG 1)

Launch of Execution Framework Across Statewide College Including:

Statewide and Cross-functional Focus on Quality, Integrity & Continuous Improvement through SACSCOC Reaffirmation Process

Goal Scorecards

Weekly Cadence of AccountabilityMeetings

Assessments & Report-outs

Operationalize & Sustain

FormingFY 2016

CoordinatingFY 2017

DeployingFY 2018

Planning, Budgeting & Accountability Development

During its first 50 years, TSTC conducted planning in an autonomous fashion, consistent with the requirements of the decentralized accreditation structure. With the merger, TSTC developed new capabilities around planning, budgeting, and related accountability. The illustration below shows the progression of maturity of these capabilities.

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Leverage Collaborations & Business Intelligence to Inform Clarity, Plans & Goals

Leverage Program Vitality Outcomes to Optimize Classic College Offerings & Ensure Best-in-Class, High Demand, High Tech Program Mix

Develop Institutional Effectiveness Committee & Habits Around Planning, Budgeting, Executing & Measuring

Adopt Core Values to Drive Organizational Behavior & Standards

Launch Statewide Effective Leadership Training in Advance of WIG 3 Execution to Strengthen Foundational Skills & Behaviors for Leading a Team

Re-evaluate & Re-engineer the Obsolete

Implement ERP - Human Resource Information System Module (Fall 19 - Spring 21)

Develop Next Generation of Data, Analytics, Design & Strategy to Enhance, Strengthen & Mature Capabilities

Shift Enterprise-wide Focus on Organizational Health (WIG 3) Using Execution Framework Implemented & Developed in 2018

Operationalize Staff & Faculty Training & Development Process to Reinforce Organizational Health

Reinforce Operational Success Through Proven Compliance & Elevated Standards of Performance In Line with Accrediting SACSCOC Principles

Integrate Processes & Technology to Support Planning, Budgeting & Accountability

Implement ERP - Finance Information System Module (Spring 21 - Fall 22)

Leverage Strategic & Operational Planning to Drive Capital Allocation to Highest Return Initiatives

Plan Instructional Delivery in Direct Response to Industry Specific Demand

Provide Dynamic Support on Operational Decisions with Data Analytics

Enhance Business Decision Capability with Developed Institutional Effectiveness & Analysis Research

Analyze & Align Risk Management Approaches with Goals & Desired Outcomes

Institutionalize Alignment Between Learning Outcomes & Job Skills

Decision EnablingFY 2019

Re-engineeringFY 2020

IntegratingFY 2021

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and student success and the State of Texas two-year higher education sector. They also participated in a SWOT (strengths, weaknesses, opportunities and threats) analysis of the proposed areas of focus to coalesce identified weaknesses and opportunities into objectives and strategies.

Following the session, the Board of Regents and TSTC’s Executive Leadership Team identified three areas of focus that would guide the development of TSTC’s strategic plan over the next fiscal year. These include Student Success, Revenue & Financial Stability and Organizational Health. The foundational

STRATEGIC PLAN UPDATE

Historical Overview

The TSTC Strategic Plan is a living and fluid document that articulates the College’s focus areas and goals in alignment with its mission, vision and values. In the summer of 2016, following the merger that created the singly accredited statewide TSTC, the College launched its first statewide planning effort. During a special meeting of TSTC’s Board of Regents later that fall, executive leadership facilitated a strategy workshop. This involved a situational analysis that included topics such as trends in the labor market, trends in public higher education funding, organizational health

Oct. 2017 Nov. Dec. Jan.

2018 Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Phase 1: Student Success: WIG 1

Create TeamStructure

Statewide Launch of Phase 1

Weekly Cadence of Activity & Accountability

Performance Assessment & Adjustment of Phase 1

Transition Responsibility to Student Learning

Shift of Focus to Enrollment & Persistence

LeadershipOrientation & WIGValidation

Launch of Scoreboard & New Cadence

Team Training(Goals & Activities)

CoachNomination& Training

Jan.2019 Feb.

Regent Strategy Meeting

TSTC STRATEGIC PLAN IMPLEMENTATION TIMELINE

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premise of these focused priorities is TSTC’s mission, its vision and values, as well as its overall charge and rallying cry as the state’s premiere technical education provider to “Place More Texans in Great-Paying Jobs.”

The 2018-2021 Strategic Plan was presented to the Board of Regents via the FY 2018 Budget and Strategic Plan Update during their August 9, 2017 meeting. The original plan contained three primary Board of Regents Wildly Important Goals (WIGs). Those original WIGs (as well as the latest version of the measures) are highlighted on page 15 of this report.

Strategic Plan Timeline

As leadership approached the development of a new strategic planning and execution capability, it adopted Franklin Covey’s The Four Disciplines of Execution (4DX) as the operating model. Consistent with the 4DX principle of laser focus on the highest level goal that requires disproportionate energy to change human behavior, TSTC elected a phased approach to execution efforts on its strategic plan. The first phase focused on WIG 1, Student Success. The phases and related timeline are illustrated above.

Continue Cadence of Accountability

Coach Nomination& Training

WE AREHERE

Launch & Review Enterprise Scoreboard for WIG 3

Performance Assessment & Adjustment of Phase 2

Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.2020 Feb. Mar. Apr. May Jun. Jul. Aug.

Leadership Orientation & WIG Validation

Data Collection & Report Out

Team Training(4DXOS)

Board Approval ofRevised WIG Metrics

Strategic Planning Ad Hoc Review of Revised WIGs

Phase 2: Organizational Health: WIG 3

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WIG 1 aligns with other critical Student Learning initiatives including Program Vitality. Program Vitality provides a scorecard for each instructional department to gauge program health (vitality) and to drive conversations about the department’s contribution to the organization and the outcomes generated for students and employers. Cross-functional collaborations with instruction, sales, enrollment management, budget, analytics, human resources and local and state leadership utilize the data points from Program Vitality and WIG 1 momentum to support planning and prioritization around programs. This includes the determination of programs falling in a growth, strategic value, income or divestment category.

WIG 1 activities toward improving enrollment and persistence outcomes continue through August 2019, after which data for the second assessment of WIG 1 will be collected and evaluated for reporting in October 2019.

Phase 1, WIG 1 - Student Success

During Fiscal Year 2018 and continuing through the Fiscal Year 2019, faculty and instructional leadership were highly engaged in the various milestones related to implementation of the 4DX process on WIG 1. Non-instructional personnel supported the effort by leading the different focus, or sub-WIG, areas in addition to working as coaches that supported the team’s implementation. This collaboration created the enterprise-wide project team which led TSTC through Phase 1 of the strategic plan.

Phase 1, WIG 1 - Shift to Sustainability

In January 2019, the organization shifted from implementation to sustainability, requiring a shift from an enterprise-wide project structure to TSTC’s management hierarchy. Accordingly, the Student Learning division assumed responsibility for WIG 1. Based on the feedback from the first cycle of results, the team narrowed its focus from the five areas on the Vitality Scorecard (net contribution margin, wage growth, persistence, enrollment and percent of graduates found working) to enrollment and persistence. Generally, departments and instructors can have the greatest impact on enrollment and persistence. Additionally, the original WIG 1 metric, placement and wages, was based on data with delayed availability. This prohibited the College’s ability to affect change on student success outcomes, hence the recommendation to measure student success with a new metric, number of graduates.

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PLA

CE

MO

RE

TE

XA

NS STUDENT SUCCESS WIG 1

Increase the annual combined totalwages of TSTC students enteringthe workforce by 60 percentby 2021.

FINANCIAL STABILITY WIG 2

Increase TSTC’s total annual revenues from $62 million in Fiscal Year 2017 to $90 million in Fiscal Year 2021.

ORGANIZATIONAL HEALTH WIG 3

Increase the score from 66 percent to 80 percent by 2021 on the question: “I would recommend TSTC to a friend as a great place to work” in the Survey of Employee Engagement.

FINANCIAL STABILITY WIG 2

(Demoted)

Eliminate WIG 2 from the strategic plan with continued monitoring during routine reporting to the Board of Regents.

ORGANIZATIONAL HEALTH WIG 3

Increase the Overall Score on the Survey of Employee Engagement from 370 in Fiscal Year 2016 to 385 in Fiscal Year 2021.

STUDENT SUCCESS WIG 1

. Increase Graduates

. Increase Graduate Wages

. Increase Enrollment

. Increase Persistence

. Increase Net Contribution Margin

STUDENT SUCCESS WIG 1

Increase the number of TSTCgraduates from 2,949 in Fiscal Year2016 to 3,200 in Fiscal Year 2021.

REVISED MEASURESORIGINAL MEASURES

Strategic Plan Board Update, January 2019

During the May 2019 Strategic Planning Ad Hoc meeting of the Board, leadership proposed revisions to the strategic plan. The following revised Wildly Important Goals are the result of that collaboration between leadership, management and the Board of Regents.

During the January 2019 strategy meeting of the Board of Regents, leadership and the Board reflected on the challenges observed with the original WIG 1 metric. While the data point, combined total wages, was determined as the most reliable measure of student success, the long lag between its measurement, reporting

and the actual activity created challenges for performance management and accountability. Consequently, management proposed a measure that is more proximal to the activities that leadership aims to manage.

While the College is revising the measure of student success for strategic planning and assessment purposes, leadership and the Board will remain intensely focused on placement and wages of former students (graduates and leavers) as an ultimate assessment of the College’s success. In addition, the College will continue to build capability around assessing the quality of the workforce placed in industry through ongoing feedback with employers.

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As leadership and the Board assessed WIG 2, the analysis highlighted the relative impact of the traditional instructional offerings (Classic College) on the overall goal of increasing the size and share of non-appropriated revenues for the College. Tactics aimed at increasing revenues within the Classic College are likely redundant with many of the tactics identified with WIG 1. After eliminating the Classic College revenues from the overall measure for WIG 2, the remaining revenues were relatively immaterial for consideration in the strategic plan. Consequently, the Board elected to eliminate WIG 2 from the strategic plan. Management did, however, commit to continue its regular reporting of profit center performance on an annual basis.

Reflection on WIG 3 illuminated the opportunity to identify an existing measure of performance that would be representative of employee’s perceptions of the organization’s health. In addition, the proposed measure is expected to be more actionable for the College to seize the momentum within an area of weakness or to address an area of concern. With this in mind, management proposed the overall score of employee engagement rather than the results of a single question from the same survey.

Transition to Phase 2, WIG 3 - Organizational Health

With Phase 1 shifting to sustainability, TSTC is transitioning to Phase 2 of its strategic plan. Phase 2 shifts the enterprise focus toward WIG 3 - Organizational Health, utilizing the same 4DX framework to execute its strategy. WIG 3 focuses on the organization’s health and more specifically, on the College’s ability to engage employees towards successfully fulfilling its mission, vision and values. TSTC has participated in the Survey of Employee Engagement (SEE) since 2016 as part of its commitment to continuously measure and evaluate key drivers and institutional practices that influence employee perceptions of their work environment and overall level of engagement.

The SEE, designed and administered by The University of Texas, is comprised of 12 constructs that capture the concepts most utilized by leadership to drive organizational performance and engagement. Each construct measure contains a set of questions or survey items scored by employees on a 5-point scale from Strongly Disagree (1) to Strongly Agree (5).

The SEE also produces an “Overall Score”, which is an average of all survey items; and represents a broad and comprehensive indicator of employee engagement for the College. As such, TSTC’s WIG 3 is aimed at “Increasing the Overall Score on the Survey of Employee Engagement”.

In keeping with the 4DX methodology, WIG 3 includes defined starting and ending points (from x to y) with a timeframe for accomplishment (to z). TSTC’s timeframe (or “z”) for accomplishing the established target is 2021, aligned with the strategic plan timeline. The “x” value is 370, reflecting the baseline value of the SEE Overall Score in 2016, the first year the survey was administered. The proposed “y” value of the goal is 385, which represents a medium value between lower and upper end predictive assumptions of the Overall Score with the application of a standard deviation rate of 0.042 on prior-year scores.

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Phase 2, WIG 3 - Launch

TSTC will implement a phased launch of WIG 3 that allows flexibility and implementation options for teams. These phases are summarized below:

Soft Launch Beginning September 1, 2019: Functional areas and reporting divisional/departmental units who have undergone training to include consensus/validation of unit-level WIGs, lead measures, targets and implementation plans can begin execution of WIG 3 related activities in the 4DX Operating System (4DXOS) starting September 1st.

Official Launch, January 1, 2020: All functional areas and reporting divisions/departmental units will launch WIG 3 related activities in the 4DXOS.

This approach allows functional areas with training and a high level of readiness to begin execution of WIG 3 goals in advance of the institution-wide launch.

Phase 2, WIG 3 - Execution

WIG 3 is an enterprise-wide goal that will touch all levels of the organization. This goal is unique in that it is driven by qualitative characteristics - attitudes, feelings and behaviors of employees in the context of the organization and their working teams. In this context, WIG 3 is a measure of how effectively TSTC creates a culture where employees feel valued, empowered and have the opportunity to grow professionally. For this reason, TSTC is scaling training and development opportunities for managers on how to apply effective leadership practices that will not only maximize the potential of its workforce, but will lead to measurable gains in its ability to engage employees towards successfully fulfilling the values and mission of the College. TSTC leaders and managers will be responsible for developing and executing lead measures and commitments toward the successful attainment of the institutional goal of a more engaged and effective workforce.

Workgroup

InternalCommunication

Strategic

Pay

Supervision

Benefits

Workplace

Employee Development

Community

Job Satisfaction

Information System

EmployeeEngagement

Constructs

Similar items are grouped together, and their scores are averaged to produce twelve construct measures. These constructs capture the concepts most utilized by leadership and drive organizational performance and engagement.

12Constructs

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Wildly Important Goals 2018-2021

Wildly Important Goal 1: Increase the number of TSTC graduates from 2,949 in Fiscal Year 2016 to 3,200 in Fiscal Year 2021.

The illustration on page 18 shows the anticipated trajectory for the growth in TSTC’s number of graduates from 2016 to 2021. The organization aims to maximize the pipeline capacities that contribute to the ultimate flow of students into the workforce. The Student Lifecycle Performance Measure illustration shows several phases of the talent pipeline and the Fiscal Year 2018 performance. These pipelines are managed at a program and location level and the management capabilities of these flows are in different phases of development. The intentionality and collaboration involved in these efforts have increased significantly in recent years; a result of the merger, process improvement initiatives and accountability for production under this new strategic plan.

The proposed target of an annual graduation of 3,200 students by Fiscal Year 2021 will be the result of increased capabilities in sales, capacity management, persistence and retention. Increased production in each of the capabilities is essential as the related increases will be offset by the results of program closures determined essential for limiting offerings to those that meet the profile of best-in-class, high demand and high tech.

Student Lifecycle Performance MeasureFiscal Year 2018

Number of Applications

4.10%16,111

Persistence

78%0.44%

New-Student Cohort

2.15%4,321

Graduate Rate1%

38%

Percent of Graduates Found Working

.92%81.30%

Average Wage

$

4.85%$37,069

Number of Graduates

.52%3,046

Number of Graduates Found Working

.05%2,218

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Wildly Important Goal 3: Increase the Overall Score on the Survey of Employee Engagement from 370 in Fiscal Year 2016 to 385 by Fiscal Year 2021.

WIG 3 retains a focus on the organizational health and more specifically, on the College’s ability to engage employees towards successfully fulfilling the mission, vision and values of the organization. TSTC has made improvements in recent years based on various initiatives including, but not limited to, increasing resources and related offerings in employee development, intentional focus on communication at both a statewide and local level, cultivating deepened interpersonal relationships statewide, fostering lateral collaboration on primary initiatives and promoting habits around TSTC’s core values of Excellence, Accountability, Service and Integrity.

WIG 3 will measure TSTC’s efforts that influence and grow organizational health. Details describing the launch of TSTC’s enterprise efforts are described more fully on page 17. Applying the 4DX model to WIG 3 encourages the behavioral change TSTC seeks, with an ultimate goal of being the industry model for employee engagement.

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Operational Goals & Outcomes

In addition to the Wildly Important Goals, the College assesses the quality and effectiveness of each unit’s administrative operations. These are called Operational or Whirlwind Goals and focus on specific factors deemed critical to the successful performance of the College in fulfilling its mission. Examples of these Whirlwind Goals are listed below:

Support Student Success

Streamline Processes to Improve Financial Stability

Advise Students in Educational and Career Development

Ensure Quality and Customer Service

Optimize Use of College Facilities

The assessment process involves each unit developing goals and targets, identifying lead measures or outcome strategies designed to achieve goals, analysis and reporting of results and documenting improvement plans based on the assessment of their results annually.

The adoption of operationally focused Whirlwind Goals and lead measures is supported and informed by institutional data and surveys, which serve as a resource for better understanding departmental effectiveness, challenges, opportunity for support improvements and for establishing applicable baselines and targets. This process is strategically integrated in annual budget planning; requiring managers to establish new, or carry over prior year, goals for the subsequent fiscal year and align budget requests to those goals accordingly.

Institutional Effectiveness

It is the vision for the College to maintain and conduct a broad-based, comprehensive system of educational and operational planning, budgeting, measuring and execution processes that facilitate continuous improvement in the quality of instruction and services that the College provides.

TSTC is committed to the continuous quality improvement that is made possible through systematic research, planning and analysis of activities and services to evaluate impact on TSTC’s WIGs and Whirlwind Goals and Outcomes. The College is dedicated to ensuring a comprehensive institutional effectiveness system that operates effectively and efficiently and is able to maintain accountability at all levels.

PLAN

EXECUTEMEASU

REBUDGET

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BUDGET PRESENTATION, ASSUMPTIONS & ESTIMATES

Organizational Structure & Budget Framework

Since TSTC’s reorganization in 2015 as a single statewide college, organizational and leadership structures have incrementally evolved to enhance the College’s focus on optimizing growth and student success. Details of the current organizational structure and the resulting budget framework are as follows:

Presentation, Assumptions & Estimates

Various line items in prior year Budget and Actual amounts have been reclassified to align with the current organizational structure and budget framework for consistency in comparative analysis.

FY 2019 Forecast amounts and certain FY 2020 Budget amounts are based on available data and related estimates as of June 30, 2019.

Appropriation revenues will be realized in accordance with the bill patterns established by the 86th Legislature.

TSTC budgets are prepared using a cash basis of accounting.

The annual budget report is only a starting point. TSTC anticipates many refinements to this budget throughout the year as the needs and circumstances of all TSTC departments continually change.

Operating Budget

32%Instruction

5%Finance7%

StatewideAdministration

17%Grants &

Financial Aid

18%StudentServices

21%Shared

Resources

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FY 20

Budget Actual Budget Forecast Budget

State Appropriations & HEAF 89,953,532 91,517,381 90,538,324 90,507,466 111,950,795

Benefits Appropriations 9,050,000 9,078,767 9,100,000 9,084,690 9,858,000

Tuition 44,962,573 42,393,649 45,428,342 44,391,734 47,281,046

Student Financial Assistance 25,221,085 35,567,703 32,819,587 33,727,542 33,190,901

Auxiliary Enterprises 12,837,787 12,319,141 13,047,100 12,011,431 12,349,341

Debt Service 4,827,151 5,054,564 4,750,856 4,824,754 4,756,240

Fees & Educational Sales 4,599,392 4,993,523 6,855,780 4,512,718 4,336,150

Industry Relations 8,946,250 5,575,120 5,906,104 4,801,295 4,239,823

Grants & Contracts 4,922,987 4,813,557 5,285,768 5,232,910 5,194,295

Donations 0 1,264,574 2,387,345 1,480,423 1,500,000

Other 35,619 889,058 425,560 1,105,507 1,053,500

205,356,376 213,467,037 216,544,766 211,680,470 235,710,091

2,361,131 0 4,773,573 0 4,310,000

Operating Expenditures

Instruction 72,008,488 69,141,233 71,329,885 65,068,175 75,612,486

Financial Aid 30,565,341 39,163,312 38,274,914 39,461,224 39,687,490

Student Services 36,439,213 34,618,109 35,547,805 32,120,442 41,950,478

Finance 8,746,836 8,435,561 8,943,051 8,702,521 10,866,070

Admin Advancement & Communications 5,996,380 6,123,055 5,808,519 5,059,654 7,099,381

General Counsel 2,606,099 2,461,552 2,429,011 2,373,458 3,095,440

Government Affairs 755,356 747,428 737,613 850,338 1,065,210

Internal Audit 365,646 358,443 374,034 376,003 382,121

Office of the CEO 986,154 948,690 1,046,835 1,183,234 1,426,127

Shared Benefits Statewide 18,387,241 18,968,220 19,828,201 19,229,610 19,884,672

Benefits Appropriation Match 9,050,000 9,078,767 9,100,000 9,084,690 9,858,000

Debt Service & Leases 10,831,119 10,723,501 10,676,435 11,756,581 11,570,047

Insurance 559,922 382,141 572,922 680,787 702,396

Utilities 6,188,682 5,965,482 5,993,476 5,485,928 6,228,572

IT Shared 2,217,342 2,004,485 1,900,780 2,032,372 5,063,078

Grants 1,549,688 1,342,143 1,527,954 2,051,864 528,523

Strategic Pool (to be allocated) 464,000 - 7,226,904 - 5,000,000

207,717,507 210,462,122 221,318,339 205,516,881 240,020,091

0 3,004,915 0 6,163,589 0

Capital Expenditures & Budget Beginning Increases / Balance Transfers

Bond Proceeds 23,740,496 200,195

Insurance Proceeds - 1,772,801

Capital Reserve Accounts (174,779) 1,905,941

Bond Proceeds 4,432,611 76,513

Insurance Proceeds 1,657,541 1,254,273

Capital Reserve Accounts 226,851 6,000,000

Demo Appropriation - 29,644,640 (500,000)

Bond Proceeds 2,926,523 35,000 (2,423,675)

Insurance Proceeds 1,800,163 - (702,621)

Capital Reserve Accounts 44,412 3,000,000 (2,888,890)

Demo Appropriation 29,144,640 - (2,464,464)

Total Operating Expenditures

Operating Budget Margin (Deficit)

FY 2018 Actual

FY 2019 Forecast

FY 2020 Budget

FY 18 FY 19

Operating Revenues

Total Operating Revenues

Operating Carryforward / Reserves

Expenditures

(19,508,080)

(1,504,311)

(115,260)

EndingBalance

4,432,611

1,657,541

226,851

(1,582,601) 2,926,523

(1,111,651) 1,800,163

(6,182,439) 44,412

537,848

1,097,542

155,522

26,680,176

29,144,640

FY 20

Budget Actual Budget Forecast Budget

State Appropriations & HEAF 89,953,532 91,517,381 90,538,324 90,507,466 111,950,795

Benefits Appropriations 9,050,000 9,078,767 9,100,000 9,084,690 9,858,000

Tuition 44,962,573 42,393,649 45,428,342 44,391,734 47,281,046

Student Financial Assistance 25,221,085 35,567,703 32,819,587 33,727,542 33,190,901

Auxiliary Enterprises 12,837,787 12,319,141 13,047,100 12,011,431 12,349,341

Debt Service 4,827,151 5,054,564 4,750,856 4,824,754 4,756,240

Fees & Educational Sales 4,599,392 4,993,523 6,855,780 4,512,718 4,336,150


Grants & Contracts 4,922,987 4,813,557 5,285,768 5,232,910 5,194,295

Donations 0 1,264,574 2,387,345 1,480,423 1,500,000

Other 35,619 889,058 425,560 1,105,507 1,053,500

205,356,376 213,467,037 216,544,766 211,680,470 235,710,091

2,361,131 0 4,773,573 0 4,310,000


Instruction 72,008,488 69,141,233 71,329,885 65,068,175 75,612,486

Financial Aid 30,565,341 39,163,312 38,274,914 39,461,224 39,687,490

Student Services 36,439,213 34,618,109 35,547,805 32,120,442 41,950,478

Finance 8,746,836 8,435,561 8,943,051 8,702,521 10,866,070

Admin Advancement & Communications 5,996,380 6,123,055 5,808,519 5,059,654 7,099,381

General Counsel 2,606,099 2,461,552 2,429,011 2,373,458 3,095,440


Internal Audit 365,646 358,443 374,034 376,003 382,121

Office of the CEO 986,154 948,690 1,046,835 1,183,234 1,426,127

Shared Benefits Statewide 18,387,241 18,968,220 19,828,201 19,229,610 19,884,672



Insurance 559,922 382,141 572,922 680,787 702,396

Utilities 6,188,682 5,965,482 5,993,476 5,485,928 6,228,572

IT Shared 2,217,342 2,004,485 1,900,780 2,032,372 5,063,078

Grants 1,549,688 1,342,143 1,527,954 2,051,864 528,523


207,717,507 210,462,122 221,318,339 205,516,881 240,020,091

0 3,004,915 0 6,163,589 0

Capital Expenditures & Budget Beginning Increases / Balance Transfers

Bond Proceeds 23,740,496 200,195

Insurance Proceeds - 1,772,801

Capital Reserve Accounts (174,779) 1,905,941

Bond Proceeds 4,432,611 76,513

Insurance Proceeds 1,657,541 1,254,273

Capital Reserve Accounts 226,851 6,000,000

Demo Appropriation - 29,644,640 (500,000)

Bond Proceeds 2,926,523 35,000 (2,423,675)

Insurance Proceeds 1,800,163 - (702,621)

Capital Reserve Accounts 44,412 3,000,000 (2,888,890)

Demo Appropriation 29,144,640 - (2,464,464)

Total Operating Expenditures

Operating Budget Margin (Deficit)

FY 2018 Actual

FY 2019 Forecast

FY 2020 Budget

FY 18 FY 19

Operating Revenues

Total Operating Revenues

Operating Carryforward / Reserves

Expenditures

(19,508,080)

(1,504,311)

(115,260)

EndingBalance

4,432,611

1,657,541

226,851

(1,582,601) 2,926,523

(1,111,651) 1,800,163

(6,182,439) 44,412

537,848

1,097,542

155,522

26,680,176

29,144,640

FISCAL YEAR 2020ANNUAL OPERATING BUDGET

24

OPERATING REVENUES TSTC’s budget is derived from several sources of funds. State appropriations are the most significant line item contributing 50 percent toward the College’s mix of total revenues. Student tuition is the second largest category of revenues, contributing 21 percent of the total. Student financial assistance flows through the College but is directly applied to students’ accounts. Other fees and sales including airport revenue, industry relations, pilot training, housing and retail combine to account for 9 percent of total revenue.

The illustration below demonstrates the relative contributions from the different sources of funds:

Other*Auxiliary Enterprises 5%Debt Service 2%Fees & Educational Sales 2%Industry Relations 2%Grants & Contracts 2%Donations & Others 1%

Revenues

15%Student

FinancialAssistance

21%Tuition

50%State

Appropriations

14%Other*

Other*Auxiliary EnterprisesDebt ServiceFees & Educational SalesIndustry RelationsGrants & ContractsDonations & Others

5%2%2%2%2%1%

25

Approved 08/15/2019

State Appropriations & HEAF

General revenue appropriations for Fiscal Year 2020 are $111.9 million, an increase of $21.3 million, or 23 percent, over Fiscal Year 2019. General revenue appropriations are largely determined by two funding formulas: TSTC’s Returned-Value Formula and the Infrastructure Formula. Other strategies included in appropriation funding are considered “non-formula support”, which include the Small Institution Supplement, Institutional Enhancement and Startup Funding. Lastly, Fiscal Year 2020 funding under the Higher Education Assistance Fund (HEAF) appropriation is at the same $8.7 million level that was funded in Fiscal Year 2019.

The 86th Legislative Session proved to be a major accomplishment for TSTC. Significant successes include:

36% commission rate was fully paid on graduate wages, which translated to an increase of $19.1 million in the Returned-Value Formula funding for Fiscal Year 2020, a 40% increase over the prior year.

Dual Credit was funded for the first time as a bill pattern line item following implementation of the Returned-Value Formula.

Non-formula support strategies including the Small Institution Supplement and Institutional Enhancement combine for an increase of $2.7 million, a 55% increase over Fiscal Year 2019.

Other*E&G Space Support 5%Startup Funding 5%Small Institution Supplement 4%Institutional Enhancement 3%System Office Operations 2%Dual Credit 1%

13%Benefits

8%HEAF

20%Other*

Revenues:Appropriations

59%Returned-Value

Formula

Other*E&G Space SupportStartup FundingSmall Institutional SupplementInstitutional EnhancementSystem Office OperationsDual Credit

5%5%4%3%2%1%

26

Tuition

TSTC is expected to continue its trend of increasing tuition through Fiscal Year 2020. Fiscal Year 2019 tuition revenue was slightly short of plan but up nearly 5% over the previous year. Several factors influenced the tuition revenue changes during Fiscal Year 2018 including the following:

Tuition decreases from declines in enrollment driven by the closure of low-performing programs

Increases in tuition linked to higher persistence rate; i.e., more returning students

Increases in tuition pricing reflects strategies such as tiered pricing

During Fiscal Year 2015, the Board of Regents approved the formatting in pricing structure for semester credit hour programs from a conventional, cost-recovery model to a market- driven model in support of a comprehensive enrollment management strategy. This included a new, tiered pricing approach.

Debt Service Revenue

TSTC receives funding through appropriations as well as through joint venture partners that assist with ongoing debt service. Budgeted debt service and lease expenses for Fiscal Year 2020 are approximately $1 million higher than Fiscal Year 2019 levels of approximately $10.7 million. The Fiscal Year 2020 increase is for lease expenses to acquire permanent ownership of the Fort Bend Industrial Technology Center. Of the total debt service, $3.75 million is funded through state appropriations and $1.0 million is funded through partner contributions.

Tuition Trends2017 2018 2019 - Forecast 2020 - Plan

36.7M 45.0M 45.4M 47.3M

42.4M▲9%

44.4M▲5%

39.0M

47.3M▲7%

Planned Actual Higher than Budget Actual Lower than Budget Target

27

Approved 08/15/2019

Auxiliary Enterprises & Industry Relations

2018Budget Actual

2019Budget Forecast

2020Budget

Airport Revenue

Expense

Margin

SkillsEngine Revenue

Expense

Margin

Housing Revenue

Expense

Margin

IndustryRelations

Revenue

Expense

Margin

RetailOperations

Revenue

Expense

Margin

(59,765)

(916,239)

856,474

(158,850)

(1,129,850)

971,000

453,460

(654,899)

1,108,359

126,158

(793,842)

920,000

192,617

(777,383)

970,000

(1,026,638)

(1,513,256)

486,618

(1,137,380)

(1,628,877)

491,497

(543,057)

(1,287,073)

744,016

(403,986)

(1,608,750)

1,204,764

(331,253)

(1,611,253)

1,280,000

(299,148)

(5,290,999)

4,991,851

130,540

(4,959,460)

5,090,000

535,295

(5,097,707)

5,633,002

520,691

(5,264,309)

5,785,000

381,496

(4,858,504)

5,240,000

134,245

(5,440,875)

5,575,120

(233,660)

(9,179,910)

8,946,250

338,586

(4,462,709)

4,801,295

(178,910)

(6,085,014)

5,906,104

382,750

(3,857,073)

4,239,823

187,326

(6,055,267)

6,242,593

129,585

(6,770,415)

6,900,000

303,828

(5,136,394)

5,440,222

367,561

(5,801,839)

6,169,400

335,016

(5,460,825)

5,795,841

Profit Centers Three Year Trend Analysis

28

Airport

Revenues associated with airport operations are generally derived from ground leases to airport tenants at the TSTC Waco Airport. Commercial development of the airport remains a long-term strategy for the College, with a focus on commercial and industrial partnerships within the aerospace industry, in addition to other commercial activities that align with TSTC’s curriculum.

SkillsEngine

After a 53% increase in Fiscal Year 2019 revenues over the prior year, TSTC’s Austin-based SkillsEngine anticipates that revenues will continue the upward trajectory in Fiscal Year 2020. Operational highlights for Fiscal Year 2019 included a maturing product; positive response from the marketplace in educational institutions, state education agencies and state workforce agencies; high rate of contract renewals; and emerging opportunities to enter other markets (e.g., employer). Internally, TSTC began to leverage SkillsEngine for high profile projects such as the development of new curriculum in the Performance-Based Education modality, integration into the SACSCOC Reaffirmation Quality Enhancement Plan (QEP) initiative and others. Additional capital needs are anticipated for further development, sales capacity scale-up and market penetration strategies, but are not proposed in this budget request.

Housing

TSTC anticipates housing profits to exceed expectations for Fiscal Year 2019, a marked improvement over the previous fiscal year’s performance. Revenues are derived from student housing located on TSTC campuses in Harlingen, Marshall, Sweetwater and Waco. The statewide housing operation has a substantial portfolio of housing at TSTC in Waco, including individual-lease housing for students in residence hall, suite and apartment style facilities. The Waco campus also includes 754 houses and duplex units, which were formerly used as military housing. Leadership has determined that the age and condition of these facilities has diminished the long-term viability of the related housing operation. Unfortunately, the existence of hazardous

materials has culminated in the planned removal of these aged facilities.

In connection with the evaluation of development and/or renovation strategies related to the former military housing at TSTC in Waco, leadership quantified the liability pertaining to hazardous materials contained in all facilities and related water infrastructure. The total estimate for abating, demolishing and replacing the related infrastructure is approximately $30 million. TSTC petitioned the 86th Legislature for funding to address the liability in the Legislative Appropriation Request. This funding request was granted through the Supplemental Appropriation approved by the 86th Legislature.

As TSTC anticipates how to continue to supply housing for the demand created by the removal of the military housing, administration is working closely with the Board of Regents in evaluating new housing development options.

Industry Relations

Revenues for Fiscal Year 2019 came in lower than expected, falling short by 23% of the budgeted amount. However, the department reduced expenditures, leading to a forecasted surplus of $338 thousand. Fiscal Year 2020 is expected to perform in a similar manner with an expected margin of $382 thousand.

Retail Operations

TSTC conducts two essential retail operations that directly serve the students of the traditional college operations: food service and campus stores. Revenues from retail operations were short of expectations by $729 thousand in Fiscal Year 2019, with a margin short of plan by $63 thousand. This shortage is consistent with the decline in enrollment during the same period. Management’s expectation is a slight increase in retail revenues and margin in the coming year.

29

Approved 08/15/2019

OPERATING EXPENDITURESTotal operating expenditures budgeted for Fiscal Year 2020 are $240 million, compared to $221 million budgeted for Fiscal Year 2019. The increase in expenditures is primarily funded by increased state appropriations. Fiscal Year 2020 spending priorities include investments in strategic compensation adjustments, increased operating capacity, instructional innovation, improved business processes, enhanced branding and addressing urgent infrastructure and deferred maintenance needs.

The narratives and tables that follow provide greater detail about expenditures in the major organizational areas of the College. The areas of growth, depicted in the following chart, are primarily student-facing functions. Additional growth is attributed to the strategic investments listed on page 5 of this report.

Instruction Student Services Finance Financial Aid Shared Resources Statewide Admin Statewide Benefits

2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020

69.1M

65.1M

75.6M

34.6M32.1M

42.0M

10.9M8.4M 8.7M

39.2M 39.5M 39.7M

20.4M22.0M

29.1M

10.6M13.1M

9.8M

28.0M 28.3M 29.7M


30

Instruction

The Instruction function represents the core educational activities of the College. A majority of the instructional departments have stable to moderately increased budgets for Fiscal Year 2020 compared to prior years, although Fiscal Year 2020 expenditures are budgeted over $10.5 million higher than the Fiscal Year 2019 forecasted actual expenses. Much of the unspent funds in Fiscal Year 2019 related to unfilled positions, with a tight labor market and skills gap both contributing to a growing challenge in keeping the division fully staffed. To combat this challenge, TSTC is making significant adjustments to compensation, increasing recruiting capacities and using a more collaborative effort to get and keep important positions filled.

The Instruction division maintains a reserve pool to quickly address capacity constraints. Specifically, the pool funds new capital equipment outlay, facility modifications and upgrades for labs and classrooms, Perkins Grant expenditures, debt service on financed equipment purchases and positional needs such as adjunct instructors and overload pay. For Fiscal Year 2020, additional resources are added to the pool to fund strategic opportunities and partnership development.

18 budget 18 actual 19 budget 19 forecast 20 budget

Academics 11,546,573 11,397,188 10,842,609 10,737,077 10,918,052

Aerospace 5,210,513 5,207,632 5,981,903 4,366,154 5,574,510

Allied Health 4,372,943 4,778,651 4,383,302 4,598,388 4,798,908

Digital Transformation 5,670,037 5,937,957 5,736,144 5,563,322 6,125,242

Construction / Safety 1,285,852 1,385,438 1,483,456 1,529,104 1,609,266

Electrical Instrumentation 5,609,526 5,798,836 5,753,640 5,922,671 5,830,496

Industrial Manufacturing 6,360,646 7,114,838 7,260,105 7,433,576 7,429,310

Transportation 3,947,657 4,278,432 3,925,564 3,961,931 4,008,583


Instructional Sales 4,065,234 4,040,882 4,385,721 3,863,065 4,453,565

Provosts and Admin 3,784,463 3,488,030 3,821,493 4,026,556 4,952,267

Vision and Alignment 2,884,554 2,473,363 2,570,762 2,458,440 3,631,264

C4EO 1,935,285 1,700,056 1,798,557 1,605,318 1,815,105

Instructional Pool 6,155,295 6,099,055 7,301,615 4,539,864 10,608,845

TOTAL 72,008,488 69,141,233 71,329,885 65,068,175 75,612,486


Airport 1,129,850 916,239 793,842 654,899 777,383

Housing 4,959,460 5,290,999 5,264,309 5,097,707 4,858,504

Enrollment Management 8,773,817 8,471,842 8,547,307 7,973,736 10,615,936

Information Technology 4,965,518 4,347,574 4,547,818 4,305,020 5,218,931

Facilities and Planning 9,318,714 9,020,337 10,082,064 8,462,182 15,018,899

Retail Operations 7,291,854 6,571,118 6,312,465 5,626,898 5,460,825

TOTAL 36,439,213 34,618,109 35,547,805 32,120,442 41,950,478


Pell Grants 20,500,000 30,017,608 28,650,000 28,872,766 28,650,000

Equal Opportunity Grants 3,146,750 3,327,382 3,150,733 3,171,993 3,295,256

College Work Study 507,756 431,097 73,686 453,158 500,000

College Access Loans 680,000 711,016 650,000 673,167 650,000

Instiutional Scholarships 822,227 981,847 591,753 957,477 500,000

Tuition Set Asides 4,908,608 3,694,362 5,158,742 5,332,663 6,092,234

TOTAL 30,565,341 39,163,312 38,274,914 39,461,224 39,687,490

Instruction

Student Services

Financial Aid

31

Approved 08/15/2019


Academics 11,546,573 11,397,188 10,842,609 10,737,077 10,918,052

Aerospace 5,210,513 5,207,632 5,981,903 4,366,154 5,574,510

Allied Health 4,372,943 4,778,651 4,383,302 4,598,388 4,798,908





Transportation 3,947,657 4,278,432 3,925,564 3,961,931 4,008,583





C4EO 1,935,285 1,700,056 1,798,557 1,605,318 1,815,105


TOTAL 72,008,488 69,141,233 71,329,885 65,068,175 75,612,486


Airport 1,129,850 916,239 793,842 654,899 777,383

Housing 4,959,460 5,290,999 5,264,309 5,097,707 4,858,504





TOTAL 36,439,213 34,618,109 35,547,805 32,120,442 41,950,478


Pell Grants 20,500,000 30,017,608 28,650,000 28,872,766 28,650,000






TOTAL 30,565,341 39,163,312 38,274,914 39,461,224 39,687,490

Instruction

Student Services

Financial Aid

Student Services

The Student Services function supports the core operations of the College by shaping the environment and experience of the student. The division oversees campus facilities, information technology, and auxiliary enterprises that include housing, food service, campus store and airport operations. Specifically related to students, the division oversees enrollment services that manage the flow of students through stages from student applicants to new students to retained students. The division also oversees student activities that facilitate development and discipline issues.

TSTC will make a significant injection in student service capacity in Fiscal Year 2020 specifically targeted at enrollment management. This includes staffing increases in recruiting, admissions and financial aid advisors, new funds for supporting Performance-Based Education (PBE) enrollment management and increased costs associated with default management.

Increased budgets for Facilities and Planning address long overdue deferred maintenance issues and include expenses for a master plan at each campus across the state, network infrastructure upgrades and fleet replacements. Also, new expenditures are planned in select classrooms and labs to adapt teaching environments to accommodate PBE.

32


Academics 11,546,573 11,397,188 10,842,609 10,737,077 10,918,052

Aerospace 5,210,513 5,207,632 5,981,903 4,366,154 5,574,510

Allied Health 4,372,943 4,778,651 4,383,302 4,598,388 4,798,908





Transportation 3,947,657 4,278,432 3,925,564 3,961,931 4,008,583





C4EO 1,935,285 1,700,056 1,798,557 1,605,318 1,815,105


TOTAL 72,008,488 69,141,233 71,329,885 65,068,175 75,612,486


Airport 1,129,850 916,239 793,842 654,899 777,383

Housing 4,959,460 5,290,999 5,264,309 5,097,707 4,858,504





TOTAL 36,439,213 34,618,109 35,547,805 32,120,442 41,950,478


Pell Grants 20,500,000 30,017,608 28,650,000 28,872,766 28,650,000






TOTAL 30,565,341 39,163,312 38,274,914 39,461,224 39,687,490

Instruction

Student Services

Financial Aid

Financial Aid

Although much of the financial aid expenditures of the College pass through from Federal and State assistance programs directly to students, TSTC plays a major role in facilitating the application for, awarding of and disbursement of this aid. A majority of TSTC students receive Pell Grants, which comprises a large part of the financial aid budget. Institutional scholarships, those provided from the College’s own funds and funds received from The TSTC Foundation, are budgeted nominally and typically increase from the original projection once enrollment decisions are made.

33

Approved 08/15/2019


Human Resources 2,319,547 2,345,562 2,457,454 2,425,858 2,954,641

Accounting / Reporting 1,902,016 1,737,000 1,932,964 1,882,681 2,234,984

Budget and Analytics 1,524,556 1,330,767 1,382,298 1,350,274 1,865,080

Admin 430,748 372,529 375,076 491,712 636,590

Institutional Effectiveness 652,528 841,413 875,238 754,235 910,436

Procurement 1,917,441 1,808,290 1,920,021 1,768,116 2,264,339

TOTAL 8,746,836 8,435,561 8,943,051 8,672,876 10,866,070


Advancement & Communications 5,996,380 6,123,055 5,808,519 5,059,654 7,099,381

General Counsel 2,606,099 2,461,552 2,429,011 2,373,458 3,095,440


Internal Audit 365,646 358,443 374,034 376,003 382,121

Office of the CEO 986,154 948,690 1,046,835 1,183,234 1,426,127

TOTAL 10,709,635 10,639,168 10,396,012 9,842,687 13,068,279


Benefits Statewide 18,387,241 18,968,220 19,828,201 19,229,610 19,884,672



Utilities & Insurance 6,748,604 6,347,623 6,566,398 6,166,715 6,930,968

IT Shared 2,217,342 2,004,485 1,900,780 2,032,372 5,063,078

Grants 1,549,688 1,342,143 1,527,954 2,051,864 528,523


TOTAL 49,247,994 48,464,739 56,826,672 50,321,832 58,835,288

Shared Resources

Finance

Statewide Administration

Finance

The Finance division serves as an administrator over all financial and human capital transactions for the College. Additionally, Institutional Effectiveness provides facilitation and quality control over the institutional compliance and planning programs, including TSTC’s compliance with the requirements promulgated by the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC).

An increase in expenditures is expected across several of the Finance divisions. The 2020 SACSCOC re-accreditation, related site visit and QEP implementation will significantly increase costs across the division for Fiscal Year 2020. The enhanced focus on employee engagement identified in WIG 3 of TSTC’s strategic plan merits additional investments in Human Resources to increase recruiting capacity and implement a new management training program. Finally, we are building more capability in procurement by increasing our investment in travel, processes, contract management and administration.

34


Human Resources 2,319,547 2,345,562 2,457,454 2,425,858 2,954,641

Accounting / Reporting 1,902,016 1,737,000 1,932,964 1,882,681 2,234,984

Budget and Analytics 1,524,556 1,330,767 1,382,298 1,350,274 1,865,080

Admin 430,748 372,529 375,076 491,712 636,590

Institutional Effectiveness 652,528 841,413 875,238 754,235 910,436

Procurement 1,917,441 1,808,290 1,920,021 1,768,116 2,264,339

TOTAL 8,746,836 8,435,561 8,943,051 8,672,876 10,866,070


Advancement & Communications 5,996,380 6,123,055 5,808,519 5,059,654 7,099,381

General Counsel 2,606,099 2,461,552 2,429,011 2,373,458 3,095,440


Internal Audit 365,646 358,443 374,034 376,003 382,121

Office of the CEO 986,154 948,690 1,046,835 1,183,234 1,426,127

TOTAL 10,709,635 10,639,168 10,396,012 9,842,687 13,068,279





Utilities & Insurance 6,748,604 6,347,623 6,566,398 6,166,715 6,930,968

IT Shared 2,217,342 2,004,485 1,900,780 2,032,372 5,063,078

Grants 1,549,688 1,342,143 1,527,954 2,051,864 528,523


TOTAL 49,247,994 48,464,739 56,826,672 50,321,832 58,835,288

Shared Resources

Finance



The divisions comprising Statewide Administration provide strategic support and oversight to the core operations of the College. TSTC is promoted to a wide variety of stakeholders through legislative and other external relations, branding, communications and advancement. Fiscal Year 2020 budgeted expenses for Advancement & Communications are increased to enhance TSTC’s brand with a new website and improved outreach. Also, modest increases are seen in the Office of General Counsel to enhance safety and security and in the Office of the CEO to improve internal communication with employees.

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Approved 08/15/2019





Insurance 559,922 382,141 572,922 680,787 702,396

Utilities 6,188,682 5,965,482 5,993,476 5,485,928 6,228,572

IT Shared 2,217,342 2,004,485 1,900,780 2,032,372 5,063,078

Grants 1,549,688 1,342,143 1,527,954 2,051,864 528,523


TOTAL 49,247,994 48,464,739 56,826,672 50,321,832 58,835,288

Shared Resources

Shared Resources

Within Shared Resources are several significant, routine and required expenditures. The employee benefits expenses budgeted in Shared Resources represent the portion of benefits (payroll taxes, retirement, insurance) that are reimbursed with appropriated funds from the state. An increase is planned in this line item in Fiscal Year 2020, in correlation with budgeted compensation increases. IT Shared includes a new investment of $3 million to begin a business process transformation project, and includes replacement of TSTC’s Enterprise Resource Planning (ERP) computing system.

Each year, a Strategic Pool is set aside in the budget to allow for compensation increases and other priorities that arise throughout the year. In Fiscal Year 2019, much of the pool was used for faculty compensation adjustments, along with numerous facilities repairs across the state. The Fiscal Year 2020 pool will be solely focused on compensation increases for both faculty and staff.

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Exhibits

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Approved 08/15/2019

EXHIBIT I: TSTC Definitions

SACSCOC – Southern Association of Colleges and Schools Commission on Colleges, TSTC’s accrediting agency.

QEP – Quality Enhancement Plan is an SACSCOC required initiative that addresses issues that contribute to institutional improvement.

Minute Order – Minute Orders are the documentation of action by the Board of Regents.

Ad Hoc – A committee assigned by the Chairman of the Board of Regents to focus on a specific topic.

4DX – Four Disciplines of Execution, a book by Chris McChesney, Sean Covey and Jim Huling that outlines an operating model for execution.

4DXOS – Four Disciplines of Execution Operating System, the system used to input and track company wide efforts around execution and Franklin Covey’s operating model.

WIG – Wildly Important Goal, a Franklin Covey term from the book 4 Disciplines of Execution.

Whirlwind – A Franklin Covey term implying secondary goals that describe the quality and effectiveness of each unit’s administrative operations.

Scoreboard – Another Franklin Covey term. Scoreboards are used to track progress on lead measures and encourage continued engagement.

SEE – Survey of Employee Engagement, an annual survey that TSTC participates in to gather data on the teammates perception of the College.

Capability or Maturity Model – The sequential progression of growth and maturity of a division of the College.

ERP – Enterprise Resource Planning software used to transform business processes, people and technology.

Pipeline – The progression of a student through TSTC from time of application to measuring wages in a placed job in the Texas workforce.

Program Vitality – The analysis of enrollment, graduation, job placement, persistence, student wage reports and other metrics to inform program mix.

Scorecard – A periodic report of key student success and performance indicators and outcomes designed to support the strategic direction of the College’s Student Learning division.

PBE – Performance-Based Education is an instructional delivery modality that allows students to accelerate through a program.

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EXHIBIT II: TSTC Fund Accounting

Summary

TSTC budgets are essentially expenditure plans. TSTC expenditure plans must be balanced against revenues for each fund, including use of prior revenues within a fund balance.

TSTC establishes budgets at the unit level. Once budgets are established, TSTC maintains fiscal control by monitoring expenditures against the budget.

The Board adopts an original budget for each fiscal year. During the year, the budget is adjusted to account for any necessary changes, including new gifts, grants and other revenue sources as they occur. Some budget changes require Board approval ($250,000 or over/$500,000 or over for construction projects), but smaller ones do not.

Definitions

Budget – An expenditure plan.

Contribution Margin – Revenue minus direct cost. Describes the unit’s ability to cover variable or direct costs with revenue.

Fund – A sum of money saved or made available for a particular purpose.

Fund Accounting – The accounting for funds that serve different or separate purposes. In effect, accounting for various funds can be compared to accounting for different companies or different divisions of a company. All transactions are separately accounted for to keep the fund balances separate even though actual cash from some of the funds may be co- mingled in local bank accounts.

Fund Accounting Equation – Beginning Balance + Revenues – Expenditures = Ending Balance.

Unit – An account code that is associated with a department or unique purpose. Any number of units make up a TSTC fund.

TSTC Funds

Fund Numbers

1. Education & General (E&G) – Appropriated by the state of Texas, kept in and expended from state treasury. Includes state tuition collected by TSTC (Fund 237) and general revenue of the state (Fund 001) for the purpose of instruction, student development, administration, operating and maintenance of plant, employee benefits and other authorized uses.

2. Loan Funds – Gifts and tuition set-asides for student loans. Not budgeted. These funds are kept in TSTC local bank accounts.

3. Designated Funds – Funds for instruction, administration, operating and maintenance of plant, capital improvements, student services and other College uses. These funds are kept in TSTC local bank accounts.

4. Auxiliary Funds – Includes funds related to TSTC operations that charge for services provided such as bookstores, food service, housing, airport and lease of property. These funds are kept in TSTC local bank accounts.

5. Endowment Funds – Includes gifts or funds raised for providing long-term revenue for the College, from which only earnings are expendable. These funds are generally transferred to another fund prior to expenditure, not budgeted in Fund 5. These funds are kept in TSTC local bank accounts.

6. Restricted Funds – Gifts and grants to be used for specific purposes defined by the external originating source: federal, state and local governments or private sources. These funds are kept in TSTC local bank accounts, but most operate on a reimbursement basis.

7. Agency Funds – Funds which are other peoples’ money; administered by TSTC acting as custodian, such as for student organizations, The TSTC Foundation, etc. These funds are kept in TSTC local bank accounts. Budgets are set by the organization served.

8. Plant Funds – Funds set aside for construction, renovation, repairs and debt service. Plant funds are unique in that they generally originate in the other funds and are then moved into plant funds through the budgeting process. Includes both funds held in the state treasury as well as funds in TSTC local bank accounts.

9. Balance Sheet Accounts – This fund is a repository for all TSTC balance sheet accounts including assets, liabilities and net assets.

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Approved 08/15/2019

© Copyright Texas State Technical College, All rights reserved. Published July 2019.

Texas State Technical College (TSTC) is accredited by the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) to award Associate Degrees and Certificates of Completion. Contact the Southern Association of Colleges and Schools Commission on Colleges at 1866 Southern Lane, Decatur, Georgia 30033-4097 or call 404-679-4500 for questions about the accreditation of Texas State Technical College.

Equal opportunity shall be afforded within TSTC to all employees and applicants for admission or employment regardless of race, color, gender, religion, national origin, age, genetic information, disability or veteran status. TSTC will make reasonable accommodations for persons with disabilities. TSTC’s policy is that, in all aspects of its operations, each person with a disability shall be considered for admission or access to or treatment or employment in its programs and activities in accordance with Part 84 of Title 45, the regulation implementing Section 504 of the Rehabilitation Act of 1973.

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