- Executive Summary
- Summary of Costs and Savings by Recommendation (Exhibit 3)
On April 9, 2002, the Houston Community College System (HCCS) Board of Trustees approved a resolution requesting a performance review by the Comptroller's office and agreed to pay 25 percent of the estimated $500,000 project cost. In May 2002, after carefully considering HCCS' request, Comptroller Carole Keeton Strayhorn announced her intention to conduct a Texas School Performance Review (TSPR) of HCCS.
Onsite work began on October 28, 2002. After seven months of work, this report identifies exemplary programs as well as areas for improvement. If fully implemented, the Comptroller's 114 recommendations could save the college a net of more than $43.1 million over the next five years-savings that could be directed toward improving education in the college classroom.
Expanding TSPR for Higher Education Institutions
The general powers of the Comptroller enable the agency to audit any entity receiving state funds. In 1999, shortly after Comptroller Strayhorn took office, performance reviews of Texas Southern University and the El Paso Community College were released. These two reviews provided TSPR valuable experience in the higher education arena. However, it was not until Rider 19 of the 2002-03 General Appropriations Act provided legislative intent for higher education reviews that the Comptroller moved forward to expand TSPR's mission to include ongoing reviews of higher education. Rider 19 says the Comptroller's office "may conduct performance reviews of general academic teaching institutions during the 2002-03 biennium. Performance evaluations shall, at a minimum, consist of a review of fiscal and management operations; student services; curriculum; and benchmarks with respect to peer institutions." Under the new expanded authority, Comptroller Strayhorn released a review of Austin Community College in November 2002.
TSPR, in cooperation with the Texas Higher Education Coordinating Board (THECB) and the Texas Association of State Senior College and University Business Officers, as well as individuals working in higher education institutions, developed a comprehensive set of audit protocols to use in higher education reviews.
Drawing upon her goal of driving more of every education dollar directly into the classroom, Comptroller Strayhorn directed TSPR staff to quickly and systematically share best practices and exemplary programs learned from these reviews with all the state's colleges and universities and with anyone else who requests such information. Best practices as well as the audit protocols can be found on the Comptroller's A+ Ideas for Managing Schools (AIMS) Database at www.aimsdatabase.org.
Under Comptroller Strayhorn's approach, consultants and the TSPR team will work with colleges and universities to:
- ensure students and faculty receive the support and resources necessary to succeed;
- identify innovative ways to address the college's and university's core management challenges;
- ensure administrative duties are performed efficiently, without duplication, and in a way that fosters education;
- develop strategies to ensure the college's and university's processes and programs are continuously assessed and improved;
- challenge any process, procedure, program or policy that impedes instruction and recommend ways to reduce or eliminate obstacles; and
- put goods and services to the "Yellow Pages Test": government should do no job if a business in the Yellow Pages can do that job better and at a lower cost.
Finally, Comptroller Strayhorn has opened her door to Texans who share her optimism about the potential for higher education, and she welcomes any suggestions to improve Texas colleges and universities at any time. The Comptroller believes colleges and universities deserve all the attention and assistance they can receive.
For more information, contact TSPR by calling toll-free 1-800-531-5441, extension 5-3676, or see the Comptroller's Web site at www.window.state.tx.us.
TSPR in HCCS
The Comptroller contracted with Gibson Consulting Group, Inc., an Austin-based consulting firm, to conduct the review. The review team interviewed college employees, faculty, board members, business leaders and community members and conducted public forums at all five HCCS campuses on October 28, 29 and 30. To obtain additional comments, the review team distributed surveys and conducted focus group sessions with various college and community organizations.
At the board's direction, the chancellor formed a Community Commission, consisting of 13 business, education and community leaders to provide insights to the TSPR team and ultimately assist HCCS to fully implement the recommendations.
The review team received 373 written survey responses from 158 faculty, staff and administrators and 215 students. In addition, TSPR conducted a random telephone survey of 750 area households. Details from these surveys and public forums appear in Appendices A through D. The Comptroller's office also received letters, e-mails and phone calls from faculty, students and community members.
HCCS selected several peer colleges for comparisons based on similarities in student enrollment, budget and other factors. The colleges selected included North Harris Montgomery Community College District, Alamo Community College District, Dallas County Community College District and Austin Community College.
Exhibit 1 shows comparative demographic and tax data for HCCS and selected peer colleges.
Exhibit 1 Source: Texas Higher Education Coordinating Board, Statistical Report; Legislative Budget Board; Texas Association of Community Colleges as of the years indicated.
Demographic and Tax Data
HCCS and Peer Colleges
HCCS Alamo Austin Dallas North Harris
MontgomeryEnrollment Fall 2001* 34,714 42,044 27,577 50,191 29,386 2002-03 Appropriation ($ in millions) $133 $120 $77 $172 $78 M&O Tax Rate 2001-02 $0.081233 $0.0898 $0.05 $0.06 $0.076 Debt Service Tax Rate 2001-02 $0.0 $0.0148 $0.0 $0.0 $0.034 Total Tax Rate 2001-02 $0.081233 $0.1046 $0.05 $0.06 $0.11 Total Property Valuation 2001-02 ($ in millions) $68,655 $51,450 $45,905 $127,871 $57,541
* Represents students enrolled in credit only courses.TSPR obtained data on community colleges in general and HCCS specifically from the THECB, the state agency responsible for overseeing community colleges in Texas. The review team also obtained information from the Texas State Auditor's Office.
Many TSPR recommendations would have no direct financial impact, but would improve the college's operations; others call for additional investments to make such improvements. Cumulative net savings from all recommendations could reach more than $43.1 million by 2007-08.
Exhibit 3 provides a detailed list of costs and savings by recommendation.
Acknowledgments
The Comptroller's office and Gibson Consulting Group, Inc. wish to express their appreciation to the HCCS Board of Trustees, Chancellor Bruce Leslie and the many college employees and community members for their assistance and input during this review. The team would like to express a special thanks to Rebecca Giot, executive director, Financial and Budgetary Control, who served as HCCS' liaison to the review team. Ms. Giot arranged for office space, equipment and meeting rooms, organized meetings, responded to requests and made other valuable contributions to the review team's effort.
Community Colleges in Texas
Community colleges play a vital role in Texas providing technical and vocational programs; freshman and sophomore courses in arts and sciences; continuing adult education programs; compensatory education programs; workforce development programs; adult literacy classes; and other basic skills programs.
Two-year academic programs lead to either an associate of arts or an associate of science degree and feed into baccalaureate programs at four-year institutions. Two-year technical programs result in an associate of applied science degree, while programs of shorter duration lead to occupational certificates.
Community colleges respond to the employment needs of citizens, agencies, businesses and industry through customized and contract workforce instruction, courses for professional certification or licensure and general continuing education opportunities. The colleges work cooperatively with local public schools to provide greater educational options for high school students through school-to-work and tech-prep programs. School-to-work programs provide students opportunities for early career exploration and counseling. Tech-prep programs allow high school students to receive college credit for high quality technical courses. In addition, concurrent course enrollment programs allow advanced students to complete courses for concurrent credit in high school and college.
Community colleges represent the largest segment of Texas higher education. In its publication, Enrollment Forecasts 2000-2015 Texas Institutions of Higher Education, THECB predicts that community college enrollment will reach 1.2 million students by 2015. The projection includes 96,000 new community college students.
According to preliminary enrollment figures, THECB estimates community college enrollment at more than 500,000 in fall 2002. Out of Texas' 50 community college districts, 39 reported record enrollment this fall reflecting an increase of 66,750 students from fall 2000. In addition, more than 250,000 individuals enrolled in workforce training programs. THECB attributes the increased enrollments to the state's slow economic growth.
Community colleges receive funding through a combination of state appropriations, which are based on a contact or instruction hour formula, as well as property taxes, tuition and fees.
HCCS in Profile
Houston Community College System is the state's third largest community college system, the largest on the Texas Gulf Coast and the second largest singularly accredited community college system in the country, which means that it is accredited as one institution rather than as separate colleges. HCCS has five colleges with numerous campuses and centers to serve the Houston area.
A public referendum in May 1971 created HCCS under the governance of the Houston Independent School District (HISD). The college began with an enrollment of 5,700 students and conducted all classes at HISD facilities. In 1977, the Southern Association of Colleges and Schools (SACS) granted HCCS full accreditation.
In 1984, HCCS began its move toward independence from HISD when the HISD Board of Trustees allotted a portion of its property tax levies to HCCS for facilities, equipment and operating expenses. Two years later, Houston voters allocated a separate tax levy to HCCS for additional funding. In 1987, the Texas State Legislature granted HCCS authority to establish its own Board of Trustees, an action completed in 1989. The HCCS board consists of nine members from single member districts who serve staggered, six-year terms. On March 9, 1989, HISD officially transferred control of the college to the HCCS Board of Trustees.
HCCS' taxing authority includes Harris County, Missouri City and Fort Bend County. Although the system's 8.1 percent tax rate has increased by 22.9 percent since 1998, it is the 44th lowest in the state. The system adopted a $196.9 million 2002-03 budget that has recently been revised to $192.7 million to reflect a reduction in state appropriations and an increase in 2003 summer tuition.
In Fall 2002, the system's enrollment reached 54,749, which included non-credit, continuing education, adult literacy and semester hour credit students. HCCS offers instruction in 17 locations and serves students in its taxing district, as well as students from the system's service area including Alief, Katy, North Forest and Spring Branch. More than 50 percent of students live outside the system's taxing district and pay higher fees than in-district students. HCCS serves an ethnically diverse student population including 28 percent Anglo, 25 percent Hispanic, 23 percent African American, 12 percent Asian and 12 percent other.
HCCS' courses include general education (university transfer), workforce programs, customized training for businesses, continuing education and developmental education. The system offers 34 majors for associate degrees in arts and sciences and 67 areas of study for associate degrees in applied sciences or workforce certificates. THECB recognized 12 HCCS workforce programs as Exemplary and six as Near Exemplary based on enrollment, graduates, job placement, industry involvement and quality of instruction.
In 2002-03, HCCS employed 5,348 individuals, including 2,664 faculty (685 full-time and 1,979 part-time); 121 administrators; 501 professional - non-faculty, 77 counselors and librarians; 994 secretary/clerical (upper-level); 742 technical/para-professional; 246 service/maintenance; and three skilled craft.
HCCS provides excellent academic and workforce development programs, is committed to student success and is centralizing services to create a more efficient system.
As HCCS continues to improve its services and programs and looks toward future growth, it faces the following challenges:
- centralizing the organizational and reporting structure;
- implementing a strong human resource management system;
- improving financial monitoring; and
- maximizing use of data as a management tool.
Key Findings and Recommendations
Centralize the Organizational and Reporting Structure
Reduce the number of college presidents from five to three and create a system of three geographic areas for HCCS campuses. As the chancellor guides the system toward greater centralization and coordination of services, HCCS no longer needs to maintain five separate college presidents' offices. Although HCCS initially theorized that the five-college model established in 1992 would strengthen the system, it encouraged each president to compete for resources. The college presidents said that the model divided the system with presidents politicking to get college budget requests approved. By aligning the colleges into three geographic areas based on boundary lines that meet system and community needs, HCCS will strengthen the system and reduce administrative expenditures by more than $1.1 million annually.
Require college presidents to report to the vice chancellor for Educational Development to improve communication, coordination and accountability. HCCS' presidents and instructional administrators have differing opinions regarding the system's organizational structure, lines of authority and areas of responsibility and accountability. Several members of the chancellor's executive team said that system and college administrators share authority and responsibility for decisions and actions, while others said a hierarchical structure exists with the chancellor communicating expectations to the vice chancellors, who communicate them to college administrators and presidents. The college presidents report directly to the chancellor. The current organizational structure and lines of authority are difficult for college instructional administrators to follow, especially when system office goals conflict with college goals. Having the college presidents report to the vice chancellor for Educational Development instead of to the chancellor will help improve communication, service coordination and accountability, and emphasize the importance of the single institution concept.
Implement a Strong Human Resource Management System
Update the Human Resources Department strategic plan to include performance measures for efficiency, effectiveness and customer satisfaction. The Human Resources Department is not successfully implementing its strategic plan and is not being held accountable for performance. The department has been in a state of change since 2000-01. In October 2002, the Human Resources turnover rate equaled 8.2 percent, which was twice as high as the 4 percent for all HCCS staff. Establishing department performance measures will make Human Resource personnel and the department's leadership accountable for service quality and efficiency.
Eliminate annual employment contracts for all non-faculty staff except senior management positions. Every full-time HCCS employee has a contract that is renewed annually. Writing, distributing and filing more than 1,800 contracts every year has become a time-consuming and paper-intensive system process. In addition, the hiring and termination of contracted staff requires board approval. Reserving contracts for senior management positions will eliminate the need to prepare annual contracts for all non-faculty staff, allow the system to terminate chronic non-performing staff more efficiently and provide greater flexibility by reducing the board involvement in staffing decisions.
Institute annual evaluations of all faculty and staff by evaluators without any real or perceived conflict of interest. HCCS does not conduct performance evaluations annually for all positions and some faculty evaluators may have a conflict of interest. HCCS staff said that the evaluations occur at the discretion of supervisors and/or departments and are not conducted consistently throughout the institution. As a result, staff perceive inequitable and unfair employee-related decisions. Conducting annual evaluations will provide employees and management an opportunity to discuss ways to improve performance and establish future goals and objectives.
Reduce the number of clerical staff and implement the use of staffing formulas. HCCS lacks a staffing formula for clerical positions, resulting in an excessive number of clerical staff. With 351 full-time and 652 part-time clerical staff, which represents 18.8 percent of all employees, the system employs the highest number among its peer colleges. Staffing formulas will help the system maintain control over staffing levels, increase accountability and reduce overall clerical staff levels for an annual savings of nearly $4.5 million.
Improve Financial Monitoring
Develop and implement a budget allocation process that involves colleges and departments. HCCS' budget process does not ensure equitable distribution of funds to the colleges. To determine budget requests, some colleges use an extensive planning process to discuss and rank their priorities. However, one college and several departments simply submit the current budget with minor changes. Since the system does not allocate funds based on the number of students served or the differences in courses and additional needs of specialized programs, the amounts distributed to colleges and departments vary significantly. Developing a budget allocation model, based on the number of program participants and related factors, would help ensure equitable distribution of funds.
Develop long-range cash forecasts and automate daily cash-flow forecasting procedures. HCCS does not prepare long-term cash forecasts. In addition, the system's daily manual cash flow forecasting procedure does not effectively ensure HCCS can meet its daily cash obligations. Although the financial computer system includes a cash forecasting function, HCCS does not use it. As a result of insufficient funds, the system's depository bank has not honored some HCCS checks. By automating daily cash flow forecasting and focusing on long-term forecasts, HCCS will have more accurate information for decision-making and planning.
Use workers' compensation claims loss information to develop an education program to reduce the number and severity of claims. HCCS does not analyze data to identify trends relating to workers' compensation claims. Although the system has had a 3.7 percent decrease in the number of claims from 1999-2000 to 2001-02, it has experienced a 69.9 percent increase in the cost per claim. By monitoring and reviewing information to identify trends, HCCS can better educate employees on ways to prevent accidents resulting in fewer and less costly claims.
Maximize Use of Data as a Management Tool
Compile and use data to coordinate scheduling, develop more effective course schedules and increase the average class size. HCCS' scheduling process does not offer convenient options for students or maximize class size. Departments at each college schedule classes independently, which results in duplicate offerings and subsequent class cancellations. Some students are left without options for completing coursework as scheduled. By compiling historical data on the sections offered successfully in previous semesters and using the data to coordinate scheduling, HCCS can increase average class size by at least one student, increase efficient use of existing facilities and save nearly $1.7 million annually.
Create a commodity code data item in the financial management system and assign buyers to specific commodities to ensure compliance with statutory purchasing limits.HCCS currently risks violating statutory purchasing laws that require bids for aggregate purchases of more than $25,000 in a fiscal year. HCCS assigns buyers purchasing responsibility by college, system and/or dollar amount. When several buyers oversee similar purchases, it becomes difficult to effectively monitor cumulative purchases of a single commodity. By accounting for purchases by commodity code, which organizes by purchase type, the system can monitor cumulative purchases on a regular basis.
Provide ongoing hands-on training for users of the financial management system.HCCS does not adequately train users on the financial management system that is used for business and student records. The Application Development group produces pamphlets for user training but does not provide one-on-one training to users. Staff from Student Services, Purchasing and Asset Management expressed a need for additional training to improve overall use of the computer system. Assigning the director of Administrative Services and Project Office to coordinate training will ensure identification and prioritization of training needs, development of reference materials for all functional areas and coordination of the training delivery to staff members, which results in users increasing understanding and use of the system.
Implement a construction program management system to manage, track and report construction projects.The Construction Management Department is inadequately equipped to manage large-scale construction projects. The Construction Management Department is a four-person group that cannot manage the volume of projects anticipated for the future without outsourcing project management functions. Implementing a construction program management system will provide HCCS with the adequate tools to manage multi-million dollar construction programs at a cost of $12,470 annually beginning 2004-05 and including a one-time software purchase of $22,450.
Exemplary Programs and Practices
TSPR identified numerous "best practices" in HCCS. Through commendations in each chapter, this report highlights model programs, operations and services provided by HCCS administrators, faculty and staff members. The Comptroller encourages other colleges and universities throughout Texas to examine these exemplary programs and services to see if they can be adapted to meet their own needs. TSPR's commendations include the following:
HCCS' insurance consultant provides cost-effective expertise to ensure that the system is adequately protected against loss. HCCS contracts with a consultant for an annual $35,000 fixed fee to provide professional advice regarding insurance specification preparation, bid proposal review to identify the best coverage at the best price and assistance with claims. The consultant works closely with the recently created Risk Management Department to provide this needed expertise at a reasonable cost. The five-year contract with annual board approval allows HCCS to continually evaluate the effectiveness of the consultant's services
Lunch-n-Learn sessions have improved the efficiency of the purchasing process and increased overall customer satisfaction. The Purchasing Department regularly presents Lunch-n-Learn information sessions to explain and clarify purchasing policies and procedures and respond to customer concerns. The sessions were designed to address a lack of customer confidence in the Purchasing Department's services. The sessions have improved customer service and satisfaction.
The Information Technology Department (IT) tests and monitors HCCS' network and application infrastructure every half hour, 24 hours a day to respond and resolve issues with the system. The IT Department created a performance monitoring and testing system for its entire network and application infrastructure. Instead of waiting for user reports of power outages, the IT Department finds and documents outages as they occur. By monitoring the network system, the IT Department improves its ability to identify and correct problems for users.
HCCS effectively developed a community partnership to fund construction of a shared assembly space. In developing the West Loop campus, HCCS partnered with Christ the King Presbyterian Church to leverage construction funding without affecting building use. HCCS worked with the church to build a 600-seat auditorium. The church provided the $1 million build-out cost in exchange for exclusive use of the facility on Sunday mornings. The church, which does not affect the schedule of the campus, helped fund a unique space for the system.
The Fine Arts Department increased theatre facility rental income while enhancing the system's image in the community. The Fine Arts Department increased its rental income from $15,000 in 2000-01 to $48,000 in 2001-02. The theatre manager developed a contract template to use for all rental contracts. The contract specifies the HCCS staff to be on duty during the rental period, the insurance requirements, minimum charges for the facility and a fee schedule that itemizes all rental charges. A non-refundable deposit is required to execute the rental contract. The theatre also rents out specialty items including a dance floor, fog machine, hazer, mirror ball, wireless microphone, grand piano, electric piano, projection screen and follow spot at a daily rate. Theatre personnel are available to provide groups renting the facility audio and sound engineering, lighting and set design.
The HCCS council of presidents facilitates communication, dialogue and collaboration for a singularly accredited system with multiple colleges, campuses and centers. The presidents' council has enhanced communication and collaboration among the college presidents and their campuses. In 2001, the five college presidents began meeting to discuss issues and subsequently organized a presidents' council that meets weekly. The presidents share their concerns and discuss policies, issues and initiatives that impact their respective colleges. The HCCS Colleges to Standard initiative serves as an example of collaboration among the college presidents that resulted from the presidents' council. The presidents agreed that they needed a set of standards to ensure equity among the five colleges and, as a result, the Colleges to Standard was developed and formally adopted as part of the system's strategic plan.
Savings and Investment Requirements
Many of TSPR's recommendations would result in savings and increased revenue that could be directed to improve classroom instruction. The savings identified in this report are conservative and should be considered minimums. Proposed investments of additional funds usually are related to increased efficiencies, savings or improved productivity and effectiveness.
TSPR recommends 114 ways to save HCCS more than $45.1 million in gross savings over a five-year period. Reinvestment opportunities would cost the college more than $2 million during the same period. Full implementation of all recommendations in this report could produce net savings of more than $43.1 million by 2007-08. (Exhibit 2)
Exhibit 2
Summary of Net Savings
TSPR Review of Houston Community College System
Year Total 2003-04 Initial Annual Net Savings
2004-05 Additional Annual Net Savings
2005-06 Additional Annual Net Savings
2006-07 Additional Annual Net Savings
2007-08 Additional Annual Net Savings
One Time Net Savings/(Costs)$3,845,599
$9,262,987
$9,765,917
$10,388,847
$10,767,114
($902,230)TOTAL SAVINGS PROJECTED FOR 2003-08 $43,128,234 A detailed list of costs and savings by recommendation appears in Exhibit 3. The page number for each recommendation is listed in the summary chart for reference purposes. Detailed implementation strategies, timelines and estimates of fiscal impact follow each recommendation in this report. The implementation section associated with each recommendation highlights the actions needed to achieve the proposed results. Some items should be implemented immediately, some over the next year or two and some over several years.
TSPR recommends the HCCS board ask college administrators to review the recommendations, develop an implementation plan and monitor its progress. As always, TSPR staff members are available to help implement these proposals.
EXECUTIVE SUMMARY