The Texas governor’s office and state community colleges have come to an agreement on insurance funding.

That consensus, which was reached last week, will award the $154 million which was cut from state community college insurance funding back to those colleges.

Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Tom Craddick have announced an agreement to allocate $99 million for the state’s share of health benefits, a one-time $55 million transitional payment to community colleges for fiscal year 2009, and the development of an incentive funding program for community colleges.

“It’s being done in such a manner that each institution will get the full share of funding that it lost,” TVCC president Ron Baugh said. “For us, that was $1.7 million.

“In the next year it means we are going to be back to where we thought we were going to be originally, which certainly lets us breathe a sigh of relief.”

The argument over insurance funding came to a head in June, when Perry surprised the community college world by vetoing the $154 million in insurance premiums from the state’s budget.

Currently, the state funds insurance premiums for the state’s community college faculty members and professional personnel. The insurance for other community college employees, such as maintenance and cafeteria personnel, is covered by local funds, such as taxes. However, after Perry’s veto, the insurance premium payments for community college employees covered by the state were cut for the 2009 fiscal year, with a question as to whether that cut would continue in future years.

At the center of the argument was whether or not community colleges were correctly utilizing the state’s insurance payments.

“Community colleges have (used) millions of state dollars annually to pay the benefits of non-state paid employees. To get money for these employees, community colleges falsified their appropriations requests. As a result, their appropriation for fiscal years 2008-09 is approximately $126 million too high,” said Perry in a statement right after the veto.

The debate was basically a difference of opinion, said Baugh. He said the governor’s office has said that since the state pays about a third of the cost of running a community college, the state should only pay part of the insurance costs as well. Colleges are required to provide the same insurance package as other state employees receive, but the governor has said some of the insurance funds for faculty and administrative professionals should come from local money such as tuition and fees and taxes.

The term describing that fractional style of funding is proportionality. The definition of proportionality has been much debated in Austin in the past few months, as colleges and the state attempted to come to an agreement.

Following Perry’s veto, community colleges, including TVCC, immediately began to file complaints with the state, saying they were not abusing their insurance payments.

Following those complaints, a series of meetings was held in Austin to discuss the issue. Those meetings ended in a restoration of funds, at least for now.

Baugh said at TVCC, the board and the staff is very grateful to local State Representative Betty Brown, District 3 Senator Robert Nichols and District 2 Senator Bob Deuell. All three, said Baugh, submitted letters of complaint on behalf of TVCC.

“They were a component part of causing the governor, the lieutenant governor and the speaker of the house to be committed to finding a solution to this problem,” said Baugh.

But the debate over proportionality and what incentive funding should be offered to community colleges is not over.

To start, colleges who are shown to have misused the insurance payments will still receive their funding. However, they will get a lesser amount of the $99 million. Instead, their payments will be held until the $55 million allocation goes into effect.

“To the colleges that are going to get the larger portions of the $55 million, I think there is a message being sent that you better get it right,” said Baugh.

“I am pleased a consensus was reached on appropriate health benefit funding. And, I am encouraged that we not only clarified the truth-in-budgeting standard for community colleges, but we were also able to place a greater emphasis on achievement through incentive funding,” said Perry.

Additionally, the governor, in consultation with Lt. Gov. David Dewhurst and House Speaker Tom Craddick, will appoint a task force to make recommendations, to be considered by the 2009 legislature, on how future incentive funds should be allocated.

Whether TVCC will get most of its funding back in the $99 million or the $55 million is still up in the air, said Baugh.

“I believe we were on the right side of the proportionality issue, but it will be interesting to see how that bears out,” said Baugh.

“Community colleges are the backbone of our higher education system,” said Dewhurst in a written statement. “That's why it was critical to me that we restore the vetoed funds and ensure higher education in Texas remains affordable and accessible to anyone who wants it, without putting any extra financial burden on students or taxpayers.”

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