FY23 Strategic Plan and Budget Report

APPROVED 08/18/2022
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FY23 appropriation revenues were determined in the 87th regular legislative session
through the General Appropriations Act, which was finalized in May 2021. Debt Service
appropriations decrease in FY23 as twenty-year bonds issued in 2002 were paid in full the
prior year.
Tuition revenue saw a strong improvement in FY22 as TSTC’s enrollment rebounded from the
pandemic dip. The FY23 tuition revenue budget increases approximately 5% over FY22, as
the positive momentum in enrollment is expected to continue.
Student Financial Aid revenue and expense, both saw big increases in FY22 as a result of
CARES Act federal aid going directly to students. That aid is mostly exhausted and slight
increases in these categories, compared to prior “normal” years, correlate to expected
increases in enrollment and tuition.
Supplemental sources of revenue were hit hardest by the pandemic, as many auxiliary
operations and industry relations activities went significantly dormant. Revenue projections
for these categories in FY23 are mostly conservative, as long-term impacts from the
pandemic to these operations are still unknown.
Grants revenue, as well as Grants expense, have seen major increases and changes the last
few years as a result of CARES Act funding. A majority of this funding was expended in FY21
and FY22, but supply chain issues and other external factors will push the remaining revenue
and related expenditures into FY23.
TSTC routinely utilizes accumulated reserves for various purposes. In FY21, $5.9 million of
CARES Act lost revenue funds were deposited into reserves to be used in future years. In
FY22, $5.5 million of reserves were utilized for early debt retirements, as well as to fund
scholarships from accumulated balances in restricted funds. In FY23, TSTC plans to use
reserves of approximately $5 million to balance the operating budget.
Expense budgets for the primary operating divisions of the College are generally elevated
compared to prior years. As competitive salaries are increasing nationwide and inflation has
begun to materially impact operating costs, budgets must increase for TSTC to continue to
deliver high quality technical training while also improving employee pay where possible.
The expense budget for the Instructional division of the College continues to increase year
over year, although FY22 forecasted actual expenses are higher than the FY23 budget. This
variance is the result of an early retirement of debt related to equipment purchases for the
Fort Bend and North Texas campuses. The entire balance of the debt of $4.2 million was paid
off in FY22, which frees up approximately $2 million annually in future budgets for other
instructional initiatives. Also, FY22 forecasted expenses and the FY23 budget each include a
$1.8 million payment as a part of a three-year aircraft fleet replacement program.
In an effort to improve facilities and maintain a higher standard of quality for the look and
feel of its campuses, TSTC is investing an additional $4.5 million per year (beginning in FY23)
to address deferred maintenance and allow for scheduled equipment upgrades.
As mentioned in Note F, TSTC retired various outstanding debts in FY22, including lease
purchases at Fort Bend and Marshall. Also, in March 2022, certain bonds were refunded to
take advantage of lower interest rates. As a result, the total debt service budget in FY23 is
$1.3 million lower than FY22.
TSTC utilizes a strategic pool each year to respond to rapid changes in operations and
allocate budget increases throughout the year. For FY23, the $11 million pool includes $3.0
million for anticipated cost increases due to inflation, $3.5 million for pay-for-performance
salary increases, and $4.5 million to fund new positions as enrollment is expected to
continue to grow.
STRATEGIC PLAN & BUDGET REPORT
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