FY 2020 Strategic Plan Update and Budget Report

Approved 08/15/2019 

9 

20 

FY 2020 

Strategic Plan Update 

and Budget Report 

1

Place More Texans 

in Great-Paying Jobs 

2


CONTENTS 

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 

3

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 crossfunctional 

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 offcampus 

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. 

4


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. 

Fort Bend County Campus 

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. 

Marshall Campus 

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. 

North Texas Campus 

5

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 twoyear 

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. 

The TSTC Foundation 

Re-engineered 

Statewide Merger Launched 

North Texas Campus Opened 

East Williamson County 

Campus Opened 

Statewide Compensation 

Plan Launched 

50th Anniversary Celebrated 

$100+ Million in Gifts & Bonds 

for Facility Expansion 

6


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, 

“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. 

If the rate of change on the outside 

exceeds the rate of change on the 

inside, the end is near. 

- Jack Welch 

Merger of Accreditations 

Completed 

Fort Bend Campus Opened 

Strategic Plan 4DX Execution 

Framework Launched 

New Abilene Campus Opened 

Bond Rating Strengthened 

First Statewide 

Strategic Plan Adopted 

Product Mix Aligned 

86th Legislature Reaffirmed 

Returned-Value Funding 

7

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: 

HIGHER EDUCATION — GENERAL REVENUE 

(IN MILLIONS) 

General Academic 

Institutions 

2018–19 GR 2020–21 GR Difference % Change 

$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% 

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. 

8


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. 

9

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. 

Deploying 

FY 2018 

Forming 


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 

Coordinating 


Engage Stakeholders & 

Develop Strategic Plan 

Develop OneTSTC Approach 

Produce First Statewide 

Plan Inclusively with Crossfunctional 

& 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: 

Goal Scorecards 

Weekly Cadence of 

Accountability 

Meetings 

Assessments & Report-outs 

Operationalize & Sustain 

Statewide and Cross-functional 

Focus on Quality, Integrity 

& Continuous Improvement 

through SACSCOC 

Reaffirmation Process 

10


Integrating 


Decision Enabling 


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-engineering 


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 & 


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 

11

TSTC STRATEGIC PLAN IMPLEMENTATION TIMELINE 

Create 

Team 

Structure 

Statewide 

Launch of 

Phase 1 

Regent 

Strategy 

Meeting 

Weekly Cadence of Activity & Accountability 

Phase 1: Student Success: WIG 1 

Oct. 

2017 

Nov. 

Dec. 

Jan. 

2018 

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

Jan. 

2019 

Feb. 

Leadership 

Orientation 

& WIG 

Validation 

Team Training 

(Goals & 

Activities) 

Performance 

Assessment & 

Adjustment of 

Phase 1 

Transition 

Responsibility to 

Student Learning 

Coach 

Nomination 

& Training 

Launch of Scoreboard 

& New Cadence 

Shift of Focus 

to Enrollment & 

Persistence 

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 

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 

12


Strategic 

Planning Ad 

Hoc Review of 

Revised WIGs 

Data 

Collection 

& Report Out 

Performance 

Assessment & 

Adjustment 

of Phase 2 

WE ARE 

HERE 

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

Jan. 

2020 

Feb. Mar. Apr. May Jun. Jul. Aug. 

Phase 2: Organizational Health: WIG 3 

Leadership 

Orientation & 

WIG Validation 

Coach Nomination 

& Training 

Board Approval of 

Revised WIG Metrics 

Team Training 

(4DXOS) 

Launch & Review Enterprise Scoreboard for WIG 3 

Continue Cadence of 


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. 

13

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. 

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. 

14


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. 

ORIGINAL MEASURES 

REVISED MEASURES 

PLACE MORE TEXANS 

STUDENT SUCCESS WIG 1 

Increase the annual combined total 

wages of TSTC students entering 

the workforce by 60 percent 

by 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. 

STUDENT SUCCESS WIG WIG 1 1 

Increase Graduates 

Increase Increase the Graduate number of Wages TSTC 

graduates Increase from Enrollment 2,949 in Fiscal Year 

2016 Increase to 3,200 Persistence in Fiscal Year 2021. 

. Increase Net Contribution Margin 

FINANCIAL STABILITY WIG 2 

Eliminate WIG 2 from the strategic 

plan with continued monitoring during 

routine reporting to the Board of 

Regents. 

(Demoted) 

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. 

15

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. 

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. 

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. 

16


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. 

12 

Constructs 

Workgroup 

Strategic 

Supervision 

Workplace 

Community 

Information 

System 

Internal 

Communication 

Pay 

Benefits 

Employee 

Development 

Job 

Satisfaction 

Employee 

Engagement 

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. 

17

18


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. 

Student Lifecycle Performance Measure 

Fiscal Year 2018 

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. 

16,111 

4.10% 

Number of 

Applications 

78% 

0.44% 

Persistence 

3,046 

.52% 

Number of 

Graduates 

2,218 

.05% 

Number of Graduates 

Found Working 

4,321 

2.15% 

New-Student 

Cohort 

38% 

1% 

Graduate Rate 

81.30% 

.92% 

Percent of Graduates 

Found Working 

$ 

$37,069 

4.85% 

Average Wage 

19

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. 

20


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 

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. 

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. 

MEASURE 

PLAN 

EXECUTE 

BUDGET 

21

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: 

7% 

Statewide 

Administration 

17% 

Grants & 

Financial Aid 

5% 

Finance 

Operating 

Budget 

32% 

Instruction 

18% 

Student 

Services 

21% 

Shared 

Resources 

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. 

22

FISCAL 

Operating Revenues 

YEAR 2020 

ANNUAL OPERATING BUDGET 


FY 18 FY 19 


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 FY 18 35,567,703 FY 19 32,819,587 33,727,542 FY 20 

33,190,901 

Operating Revenues Auxiliary Enterprises Budget 12,837,787 Actual 12,319,141Budget 13,047,100 Forecast 12,011,431 Budget 12,349,341 

State Debt Appropriations Service & HEAF 89,953,532 4,827,151 91,517,3815,054,56490,538,324 4,750,856 90,507,466 4,824,754 111,950,795 4,756,240 

Benefits 

Fees & 

Appropriations 

Educational Sales 

9,050,000 

4,599,392 

9,078,767 

4,993,523 

9,100,000 

6,855,780 

9,084,690 

4,512,718 

9,858,000 

4,336,150 

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

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

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

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

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

Debt Donations Service 4,827,151 5,054,564 0 1,264,574 4,750,856 2,387,345 4,824,754 1,480,423 4,756,240 1,500,000 

Fees Other & Educational Sales 4,599,392 35,619 4,993,523 889,058 6,855,780 425,560 4,512,718 1,105,507 4,336,150 1,053,500 

Total Operating Industry Revenues Relations 8,946,250 205,356,376 5,575,120 213,467,037 5,906,104216,544,766 4,801,295 211,680,470 4,239,823 235,710,091 

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

Operating Carryforward / Reserves 

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

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

4,310,000 

Operating Expenditures 

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

Total Operating Instruction Revenues 

205,356,376 72,008,488 213,467,037 69,141,233 216,544,766 71,329,885 211,680,470 65,068,175 235,710,091 75,612,486 

Operating Carryforward Financial / Reserves Aid 2,361,131 30,565,341 39,163,312 0 4,773,573 38,274,914 0 39,461,224 4,310,000 39,687,490 

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

Instruction Finance 72,008,488 8,746,836 69,141,2338,435,56171,329,885 8,943,051 65,068,175 8,702,521 75,612,486 10,866,070 

AdminFinancial Advancement Aid & Communications 30,565,341 5,996,380 39,163,3126,123,05538,274,914 5,808,519 39,461,224 5,059,654 39,687,490 7,099,381 

Student General Services Counsel 36,439,213 2,606,099 34,618,1092,461,55235,547,805 2,429,011 32,120,442 2,373,458 41,950,478 3,095,440 

Finance 

Government Affairs 

8,746,836 8,435,561 

755,356 

8,943,051 

747,428 

8,702,521 

737,613 

10,866,070 

850,338 1,065,210 

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

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

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

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

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

SharedInternal Benefits Audit Statewide 365,646 18,387,241358,443 18,968,220 374,034 19,828,201 376,003 19,229,610 382,121 19,884,672 

Office Benefits of the Appropriation CEO Match 986,154 9,050,000948,6909,078,767 1,046,835 9,100,000 1,183,234 9,084,690 1,426,127 9,858,000 

Shared Benefits Debt Service Statewide & Leases 18,387,241 10,831,119 18,968,220 10,723,50119,828,201 10,676,435 19,229,610 11,756,581 19,884,672 11,570,047 

Benefits Insurance Appropriation Match 9,050,000559,922 9,078,767 382,141 9,100,000 572,922 9,084,690 680,787 9,858,000 702,396 

Debt Service & Leases 

Utilities 

10,831,119 10,723,501 10,676,435 

6,188,682 5,965,482 

11,756,581 

5,993,476 

11,570,047 

5,485,928 6,228,572 

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

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

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

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

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

Grants Strategic Pool (to be allocated) 1,549,688464,000 1,342,143 - 1,527,954 7,226,904 2,051,864 528,523 - 5,000,000 

Total Operating Strategic Expenditures Pool (to be allocated) 464,000 207,717,507 210,462,122 - 7,226,904221,318,339 - 205,516,881 5,000,000 240,020,091 

Total Operating Expenditures 

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

Operating Budget Margin (Deficit) 

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

Operating Budget Margin (Deficit) 

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

Capital Expenditures & Budget Beginning Increases / 

Capital Expenditures & Budget Beginning Increases / 

Ending 

Balance 

Balance 

Transfers 

Transfers Expenditures 

Expenditures 

Balance 

Bond Bond Proceeds Proceeds 23,740,496 23,740,496 200,195 200,195(19,508,080) 

(19,508,080) 4,432,611 


Insurance Proceeds - 1,772,801 - 1,772,801 (115,260) (115,260) 1,657,541 

Actual 

Capital Reserve Accounts Accounts (174,779) (174,779) 1,905,941 1,905,941(1,504,311) 

(1,504,311) 226,851 

Ending 

Balance 

4,432,611 

1,657,541 

226,851 



Forecast 

Forecast 





Bond Proceeds 4,432,611 76,513 

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

Bond Proceeds 4,432,611 76,513 

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

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

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

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

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

Capital Reserve Accounts 226,851 6,000,000 

(6,182,439) 44,412 

Capital Reserve Accounts 226,851 6,000,000 

(6,182,439) 44,412 

Demo Appropriation - 29,644,640 (500,000) 29,144,640 

Demo Appropriation - 29,644,640 (500,000) 29,144,640 

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

537,848 

Insurance Bond Proceeds 1,800,163 2,926,523 - 35,000 (702,621) (2,423,675) 1,097,542 

Capital Insurance Reserve Proceeds Accounts 44,412 1,800,1633,000,000 -(2,888,890) 

(702,621) 155,522 

Demo Appropriation 

Capital Reserve Accounts 

29,144,640 

44,412 

- (2,464,464) 

3,000,000 

26,680,176 

(2,888,890) 

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

537,848 

1,097,542 

155,522 

26,680,176 

23

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: 

21% 

Tuition 

15% 

Student 

Financial 

Assistance 

50% 

State 


Revenues 

14% 

Other* 

Other* 

Auxiliary Enterprises 5% 

Debt Service 

2% 

Fees & Educational Sales 

2% 

Industry Relations 

2% 

Grants 

Grants 

& Contracts 

Contracts 

2% 

2% 

Donations & Others 1% 

Donations Others 1% 

24


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. 

13% 

Benefits 

8% 

HEAF 

Revenues: 


20% 

Other* 

Other* Other* 

E&G Space Space Support Support 5% 

Startup Funding 

5% 

Small Institutional Supplement 

4% 

Institutional Enhancement 

3% 

System Office Operations 

2% 

Dual Credit 

1% 

59% 

Returned-Value 

Formula 

25

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 

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. 

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 marketdriven 

model in support of a comprehensive 

enrollment management strategy. This included a 

new, tiered pricing approach. 

Tuition Trends 

2017 2018 2019 - Forecast 2020 - Plan 

42.4M 

▲9% 

44.4M 

▲5% 

47.3M 

▲7% 

39.0M 

36.7M 45.0M 45.4M 47.3M 

Planned Actual Higher than Budget Actual Lower than Budget Target 

26

27 


Auxiliary Enterprises & Industry Relations 

2018 


Actual 

2019 


Forecast 

2020 


Airport 

Revenue 

Expense 

Margin 

SkillsEngine 

Revenue 

Expense 

Margin 

Housing 

Revenue 

Expense 

Margin 

Industry 

Relations 

Revenue 

Expense 

Margin 

Retail 

Operations 

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

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 Austinbased 

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 scaleup 

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. 

28


OPERATING EXPENDITURES 

Total 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. 

Operating Expenditures 

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

75.6M 

69.1M 

65.1M 

42.0M 

39.2M 39.5M 39.7M 

34.6M 

32.1M 

20.4M 22.0M 29.1M 

28.0M 28.3M 29.7M 

8.4M 8.7M 

10.9M 

10.6M 

9.8M 

13.1M 

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

29

Instruction 

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 

Instruction 

Student Services 

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. 


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 

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 Financial classrooms, Aid 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. 


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 

30



Instruction 

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. 


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 

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. 

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 

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. 

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 




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

Financial Aid 


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 

31




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

Financial Aid 


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 

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. 

32


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. 

Finance 


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 

Statewide Administration 


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





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

Shared Resources 


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 

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 

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

33 

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

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 





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



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. 





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 

34



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. 






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 

35

Exhibits 

36


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. 

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. 

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. 

37

EXHIBIT II: TSTC Fund Accounting 

TSTC Funds 

Fund Numbers 

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. 

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. 

38

39 

Approved 08/15/2019

© Copyright Texas State Technical College, All rights 

reserved. Published July 2019. 

Texas State Technical College (TSTC) is accredited by 

1 

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.

FY 2020 Strategic Plan Update and Budget Report

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