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July 1999


On this page:
A Texas Blast-off
From the Comptroller: A Bold New Course
From Our Readers
Comptroller News
God bless Bob Bullock
Growing Grants

On Page 2:
Economic Climate
A fresh start for troubled schools
Reconstituted schools' performance improves

Texas stats -- Fiscal and economic data



Proposed spaceport could land spacecraft,
high-tech jobs in one of three Texas counties

A Texas Blast-Off


The rocket's red glare could light up the Texas sky--and the state's economy--if Texas lands a space-age airport.

Brazoria, Kenedy and Pecos counties have offered some of their wide open spaces for a spaceport, a facility where space shuttle-like spaceships would be launched to carry communications satellites and other cargo into orbit and return for another trip.

The counties and the Texas Aerospace Commission are campaigning to get Lockheed Martin Corp. or other aerospace companies to put a spaceport in Texas. The counties have contributed $400,000 to the effort, and the 1999 Texas Legislature authorized local governments to create spaceport authorities.

A Texas presence in the commercial space business--which could be worth about $200 billion over the next decade--would have a big impact on the state. The Texas Aerospace Commission estimates that a spaceport would have about 2,000 employees and as many as 16,000 in related industries.

"The arrival of the Johnson Space Center in Clear Lake turned an area that was mostly pastures into a community of 200,000 people," said Tom Moser, the commission's executive director. "Cape Kennedy in Florida has had the same type of growth."

The commercial space industry is just getting off the ground, and it faces economic and technical hurdles. And the Texas counties are competing against 31 sites in 15 states.

But aerospace companies are moving forward, developing aircraft, lining up customers and looking for sites. Some are looking seriously at Texas. Space Access Corp., based in Palmdale, Calif., is expected to decide where to put a spaceport in the next few months. Lockheed Martin Corp., based in Bethesda, Md., is expected to decide by the end of next year.

The companies want sites with enough open space for launches, an available workforce and launch trajectories to the south and east that do not fly over large population centers. All three Texas sites seem to fit the bill.

"When you look at the commercial demand, it looks like there's room for two spaceports," said Fred Welch, executive director of the Brazoria County Partnership Inc. "Both VentureStar (the Lockheed project) and Space Access could be in Texas."

What is a spaceport?
Spaceports are airports for the 21st century. Spacecraft, called reusable launch vehicles, take off, set a satellite in its orbit and return to the spaceport.

Maintenance, repairs and other services would be performed there. The vehicles would be like the space shuttle, but they would have no throwaway parts such as fuel tanks and boosters.

Spaceports may seem like something from Star Wars, but several are operating today. The Florida Spaceport, located at Cape Canaveral, launched a Chinese satellite in January. The Alaska Spaceport, set on Kodiak Island, has made one suborbital launch and expects to make another this year.

Six aerospace companies are designing reusable vehicles that would reduce the cost of launching a satellite to $1,000 a pound from $10,000 a pound.

With more than 1,700 satellites planned for orbit in the next 10 years, there seems to be plenty of work for spaceports. The cost of building such an operation ranges from $50 million to as much as $350 million.

The Texas connection
Texas has long been identified with the American space program because of the Johnson Space Center near Houston. Moser said a spaceport would increase the state's presence in the space race.

"We have a stake in the manned space flight sector on the government side of the industry," he said. "There is a lot more to the industry, including unmanned spacecraft development, satellite systems and reusable vehicles. Having a commercial spaceport would allow the state to dramatically expand its role."

The space authorities approved by the Legislature would operate much like airport or transit authorities, having the ability to grant tax incentives, borrow money to build roads and provide utilities and other services a spaceport would need.

Texas has decided not to pursue federal funding for the project. Moser said a privately funded project would be the right approach to put Texas at the forefront of the spaceport business. "Government involvement in a Texas spaceport would be minimal, with private companies funding about 90 percent of the cost," he said.

Brazoria, Kenedy and Pecos counties are following the model used in the 1980s to attract the U.S. Navy Homeport to Texas. Several communities banded together, knowing that probably just one would be chosen.

"The potential economic benefit from a spaceport is practically unlimited," according to Pecos County Commissioner Gregg McKenzie. "Launches in Florida attract about a million visitors a year, bringing about $260 million into the economy. There really isn't anything in this part of Texas that you could compare it to."

The perfect port
To bring a spaceport to Texas, the commission has to persuade an aerospace company that the state can give it the most bang for its buck.

The Texas sites have the basics: moderate climates, little chance of earthquakes, limited competition for airspace, clear landing approaches and ready, educated workforces. Available infrastructure--including road and rail access, utilities and a fuel supply--is also key.

More specifically, each of the three sites has many of the characteristics needed for a spaceport, including available space with a three-mile buffer zone and the ability to launch spacecraft safely into three major orbit trajectories to the south and east. Welch said the Brazoria County site is about 1,400 acres with plenty of buffer space, which he called "aerial easement."

The sites in Brazoria, Kenedy and Pecos counties were chosen from 14 Texas communities that asked to be considered as potential sites for a spaceport. Each site was evaluated by Aerospace Corp., a private firm hired by the counties.

Potential limitations
While the market may be ready for a spaceport, the technology might not, according to Dr. Mike Jacox of Texas A&M's Commercial Space Center for Engineering.

"There is a basic problem with the physics of a reusable launch vehicle," Jacox said. "You would have to carry all that weight up there, and bring it all back through re-entry, and that may not be possible. It really pushes the limits of a vehicle's structure."

Investing in a spaceport for reusable vehicles will be risky until such vehicles have been proven, Jacox said.

NASA and aerospace companies, however, are spending billions of dollars to develop reusable launch vehicles.

The VentureStar project, which Lockheed Martin is heading for NASA, is valued at more than $1 billion. In March, Northrop Grumman Corp. committed $30 million to developing the Kistler K-1 spacecraft, with another $30 million expected before the first test flight.

Competitors
California and Florida, Texas' chief competitors for the spaceport business, have strong aerospace histories of their own.

California was home to hundreds of aerospace companies and hundreds of thousands of jobs during the Cold War. In recent years, with defense cutbacks and the resulting mergers, the business is much smaller.

Florida counts on the presence of the Kennedy Space Center and Cape Canaveral to boost its chances.

Other states, including Montana, New Mexico and Oklahoma, have passed legislation allowing the creation of local spaceport authorities.

Fleets of the future
Lockheed Martin is developing the X-33, a half-sized prototype of the VentureStar. It should be ready for testing by next year. The full-scale ship could be ready for service in 2004. It is designed to take more than 50,000 pounds of payload into orbit.

The Space Access vehicle, about the size of a 747 jet, would require at least 4,000 workers to build, and about 2,000 to manage payloads, fuel and other operations.

Another company in search of spaceports is Washington, D.C.-based Kistler Aerospace Corp. Kistler and Northrop Grumman Corp. are developing a two-stage satellite launch craft called the K-1 that can be re-launched within days of its return to Earth.

Kistler has secured launch rights facilities in Australia and Nevada. Commercial flights are scheduled to begin in 2000.

Contributing to this article:
Greg Mt.Joy


From Our Readers

We want to hear from you! Beginning with this issue of Fiscal Notes, we are printing comments, letters and e-mails from our readers.

To contact us, call 1-800-531-5441, ext. 3-4900; or 463-4900 in Austin, or write to P.O. Box 13528, Austin, Texas, 78711-3528. Internet users may send comments to fiscal.notes@cpa.state.tx.us.


Dear Comptroller Rylander:

Just a word to thank you for the March 1999 issue of Fiscal Notes. I appreciate your dedicating this issue to calling attention to our public schools and the improved performance which we have seen during the past several years. While all of us are pleased at the progress, we also acknowledge that we cannot be satisfied with our current standing. There is much more work to be done.

In any event, I am grateful to your and your staff for placing a high priority on this type of reporting to your readers. Fiscal Notes is a well-prepared document that is read by many Texans. The information you have helped provide Texans assists in better decisions on behalf of boys and girls. Your interest is appreciated.

Sincerely yours,
Mike Moses
Commissioner of Education


From the Comptroller:
A Bold, New Course

Fiscal Notes has a new look. It is brighter, livelier and easier to read. We have updated our flagship publication to better reflect Texas as we enter the 21st century.

For the first time, we have contracted the printing of Fiscal Notes to a private vendor. I am committed to my Yellow Pages test.

Government should do no job if there is a business in the Yellow Pages that can do that job better and at a lower cost. By turning to a private vendor, we are introducing competition to government, saving money and delivering a better product.

Over the coming months, we are going to put other state products and services to the same test, ensuring that we offer the best at the lowest cost. I am committed to challenging the status quo at all levels of government and in all areas of the Comptroller's office.

Fiscal Notes has a long, proud history. Bob Bullock started it in 1975 when he took office as Comptroller of Public Accounts. The goal was to provide taxpayers and state officials with accurate information about economic research and development in our state.

We will continue to share this information with you and to look for ways to improve Fiscal Notes as well as our other publications. And we are going to do it at the lowest cost. We hope you like the revamped Fiscal Notes and we hope you share your comments, ideas and suggestions with us.

Ralph Waldo Emerson said that a truly great person is one who doesn't remind you of anybody else. Bob Bullock doesn't remind you of anybody else!

I extend my heartfelt condolences to the Bullock family and especially to Jan.

I will miss him dearly and so will every Texan.

Gov. Bullock was the quintessential Texan, a man of vision, a leader who did right and risked consequences, a person of character and courage. Gov. Bullock never shied from the truth nor from his responsibilities.

As a Texan, I am indebted to Gov. Bullock for the leadership he showed the state over more than two decades. As Comptroller, I am indebted to Gov. Bullock for the office I hold.

When he became Comptroller in 1975, the office was an outmoded relic. He brought to it sophistication and technology and built the premier fiscal, tax and information agency in the nation.

On page 5, Deputy Comptroller Billy Hamilton remembers Bob Bullock. God bless Gov. Bullock.

-CAROLE KEETON RYLANDER
Texas Comptroller of Public Accounts


10 Principles for Texas
in the New Century

* Develop a better-educated workforce
* Direct more of every education dollar into the classroom
* Raise the bar on student performance
* Cut taxes in Texas
* Introduce competition into Texas government
* Improve government performance and accountability
* Reduce the size of government
* Bring common sense to regulations
* Use technology to cut costs and increase quality
* Return control to communities and individuals


Comptroller News
TSPR gets Innovations' nod

The Texas School Performance Review (TSPR) has been named a semifinalist in the 1999 Innovations in American Government awards program. The awards, sponsored by the Ford Foundation and administered by the John F. Kennedy School of Government at Harvard University, are recognized as one of the nation's most prestigious public-service awards programs.

TSPR, which is administered by the Comptroller's office, has studied more than 30 school districts and has proposed about 3,000 ways to reduce costs and administrative overhead, streamline operations and improve education services. TSPR recommendations account for more than $340 million in possible savings to local taxpayers.

"TSPR is the nation's first state-level vehicle for improving the management and finances of public school districts," the awards program said in its announcement. "TSPR's primary objective is to channel more education dollars to the classroom."

Twenty-five finalists will be chosen in late summer, and the 10 winners will be named by mid-October. Finalists qualify for Ford Foundation grants of $20,000, and winners are eligible to receive another $80,000 to publicize and replicate the program nationally.


Newest audit targets San Antonio ISD

Texas Comptroller Carole Keeton Rylander announced a Texas School Performance Review for the San Antonio Independent School District, citing unstable academic performance and financial disarray. It is the first audit without a formal request from a school district.

Rylander has set new criteria for school audits, giving priority to districts with poor academic and/or financial performance and where the greatest number of students would benefit.

"I will not allow the school children and taxpayers of San Antonio to suffer because of apparent mismanagement," Rylander said.

SAISD is the sixth largest district in the state, but ranks last in academic performance of the biggest districts.


New report reviews food service practices

Food for Thought: Ideas for Improving School Food Service Operations, a report from the Comptroller's office, shows how schools can better manage food service, thereby freeing up dollars for classroom construction. The report contains the best practices identified during the past eight years of reviews.

A recommendation is that districts should put their food service operations to the yellow pages test. Conducting regular cost/benefit analyses helps districts better understand their costs. Districts that do outsource food service operations must be vigilant in keeping their vendors accountable.

For more information about Food for Thought, contact TSPR at 1-800-531-5441 ext 3-4900, or via e-mail at wosg@cpa.state.tx.us.


Tax exemption proposed for tuition plans

Legislation pending in the U.S. Senate would make all withdrawals from the Texas Tomorrow Fund tax exempt. Sen. Phil Gramm, R-Texas, is a sponsor of the legislation.

"Under current law, many parents have to write tax checks to the government just as they are making the first tuition payments for their sons and daughters," Gramm said. "The government should be encouraging Texas families to send their children to college, not making it tougher by hitting them with a tax bill just as the kids start school."

The proposal would exempt from taxes interest earned on deposits to the account. Money deposited in the account is already exempt.

The Texas Tomorrow Fund guarantees payment of tuition and fees at today's prices, regardless of future increases.

Nearly 80,000 Texas families have enrolled in the fund since it was created in 1995 by the Texas Legislature. For more information, go to http://www.texastomorrowfund.com.


Ex-comptroller left heritage of
greater efficiency, effectiveness

God Bless Bob Bullock

By Billy Hamilton, Deputy Comptroller


I have served three Comptrollers in three decades, and yet, in 1976, when I came to work for this agency, I didnt really know what the Comptroller's office did--or amazingly, it now seems through the long years--who the Comptroller was.

No matter. I soon found out. I worked in the Planning and Research Division then, and we did a controversial paper on refinery taxation--about as popular then as now--and were summoned to meet with the Comptroller himself, Bob Bullock.

He was a younger man then, obviously. If my math is right, he was actually younger then than I am now. But he was a looming presence. He wasn't large physically, but he was imposing in a way that went beyond physical. He scared the pants off me then.

And yet, in many ways, he is the most important single person in my life, setting aside my parents and my family. He gave me the career I have followed, and he taught me most of what I know about government.

He was the most decisive person I have ever known--sometimes wrong, but never in doubt, you might say. I was his chief revenue estimator in the worst days of the economic slump of the 1980s. We had no idea what was going on with the economy or what to do about it. But you would never have known that by listening to him in public. He convinced people that our repeated cuts in our revenue estimates were part of a brilliant political scheme that only he understood. Who knows? Maybe it was. As the old movie line goes: "When the legend is better than the facts, print the legend."

Bob Bullock--always Mr. Bullock to me, I never got the hang of Governor Bullock--was a consummate politician of what we like to think of as the "old school." If he was ever blow-dried and shined up for media presentation, I never saw it. If he ever gave an evasive answer when he could speak the gut-wrenching truth, it would surprise me. He was bitingly funny, sometimes crude and, at the same time, unfailingly gracious in a way that is nearly a lost art today.

In this agency, we pride ourselves on our technology and our ability to put legislative directives into action quickly and effectively. That is one of his legacies.

But that is not his only legacy. He was a leader who also was a good manager. He had an inestimable ability to make the things he did seem freighted with importance. By extension, he made the things we did seem important. More significantly, he cared about this state and its people. You may have seen the "God Bless Texas" stickers he distributed. To him, the sentiment wasn't a matter of political convenience. It was a matter of personal faith.

He taught me that government is both bad and good at the same time, but that we, at least, should make our part as good as possible. He taught me government has the capacity to make a lasting positive difference in people's lives. He taught me to look for the best people and demand their best. He taught me that people are capable of greater levels of effort and achievement than they can imagine. You just have to lead them.

Of course, his reputation was that curious mix of grand and petty that is the hallmark of legendary figures. He was unfailingly generous to friends and unfailingly mean to enemies. But you knew where you stood. Read old news stories about him, and you will read endless comments by people who agreed to talk on the condition that they remain anonymous. Personally, on the occasions I was asked about him, I always commented on the record. Then I prayed that no one else made a rude anonymous comment that might appear to have come from me.

I was once given the task of calling a good friend to tell him that he was in the doghouse with Mr. Bullock. I couldn't think what to say, so I started in a joking way: "Stand by for a message from the Comptroller of Public Accounts." There was utter silence on the line for about 15 seconds followed by a soft expletive. On the other hand, it was better to hear it from me than from the man himself.

From those experiences, I learned to be thorough and prepared. I learned to think ahead and anticipate contingencies. I learned to think on my feet. Once he asked me down to his office just to talk about the economy and what government could do to improve it. I rattled off several possibilities and then, stupidly, said: "There are a lot of possibilities. What do you want me to do, Mr. Bullock?" He looked at me coldly, slowly rose from his chair and made me trade seats with him. I looked at him from his own chair behind his big desk. He said calmly: "Now, Mr. Comptroller, what do you want ME to do?"

I was 32 years old, and my career flashed before my eyes. I thought quickly. Take the rest of the day off, I said. He wanted to look mad but couldnt. He smiled and I lived to fight another day. I learned to think on my feet. It was what he wanted.

I am not sure I know what greatness is. But I think if there is a definition that doesn't require sainthood as a qualification, Bob Bullock should be included--this most human of men; this most visionary of leaders. He was a great friend to Texas, a great leader of this agency, and a person I am deeply honored to have known. There are a lot of us around who worked for him, many of us when we were just starting in our careers. Some revere him; some no doubt don't. But we all learned from him, often the hard way. I think of a phrase I once heard used in another context, but it makes sense here: "In our youth, our hearts were touched by fire."

In late 1982, Mr. Bullock interviewed me for the job of chief revenue estimator. It was the first time I was ever alone with him. I guess it went well. I got the job, but I was worried because I was following an estimator who was arguably the best in the business. Later that day, I received the first of what would be a long line of memos from the Comptroller on his trademark blue stationary (they were called blue zingers). All it said was: "If you follow in a man's footsteps, you will not pass him."


Legislature agrees to new
higher ed financial aid programs

Growing Grants

The 1999 Texas Legislature created a grant program designed to bring more minority students into the state's college classrooms.

Called the Toward EXcellence, Access and Success (TEXAS) grant, it could become the state's biggest need-based financial aid program as it is phased in over several years.

It started out as a $100 million program, but the Legislature tempered the spending in the main appropriations bill. There will be $18 million available in 2000 and the amount could rise to $92 million in 2004.

The program comes as minority enrollment has dropped in the wake of the Hopwood decision, in which the Fifth U.S. Circuit Court of Appeals abolished affirmative action programs. Legislators and college administrators have been seeking ways to increase minority enrollment.

"The TEXAS Grant program sends our children the signal that, if you work hard, you will have the opportunity to go to college," said State Sen. Rodney Ellis, D-Houston, who authored the legislation with State Rep. Henry Cuellar, D-Laredo.

Additionally, authors of the bill said that the grant program should help more minorities afford college educations.

The creation of the TEXAS grant program comes after numerous studies and reports were prepared for the Legislature calling for additional state aid for students to attend colleges and universities. The Texas Higher Education Coordinating Board, interim House and Senate education committees and the Commission on a Representative Student Body (a study group chaired by former Lt. Governor Bill Hobby) pointed to a lack of financial aid for students as a major challenge facing the state's higher education system.

The TEXAS grant program is expected to help about 30,000 students get a college education. They must maintain a 2.5 grade-point average or better over four years to retain the grant.

The amount of the grant is determined by the Texas Higher Education Coordinating Board as the average statewide amount of tuition and fees that a full-time student would pay. That's about $2,400 at a public university.

Public universities and colleges are required to accept the grant as the student's full payment--even if the costs are higher. The institutions, however, may seek additional money from other sources.

The TEXAS grant also helps students become better prepared by requiring recipients to complete the State Board of Education's recommended high school curriculum. Students who take that curriculum have a better chance of succeeding in college.

The bill also sets up a grant program to encourage students to become teachers. Teach for Texas grants are awarded to juniors and seniors in college who promise to teach in schools or subjects in which there are shortages.

A recipient must teach full-time for five years to complete the obligation. A student can receive both the TEXAS grant and Teach for Texas grant. If the student does not teach, the grant becomes a loan, which the student must repay with interest.

The bill also:
* Creates a Center for Financial Aid Information, a one-stop shop with a toll-free phone number where students can learn more about financial aid.
* Requires school districts to notify middle school and high school students and parents of information about financial aid.

Contributing to this article:
Jeff Cole


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