An Audit Report on the Higher Education Coordinating Board's Facility Management Processes
April 2006
Report Number 06-028
Overall Conclusion
The Higher Education Coordinating Board (Coordinating Board) complies with the majority of requirements in Texas Education Code, Section 61.0572, to help ensure the efficient use of construction funds at higher education institutions and to accommodate projected enrollments at those institutions. For example, as required by statute, the Coordinating Board has developed and published construction project standards, rules, and regulations and has determined formulas for space utilization.
Auditors identified two instances of noncompliance with the Texas Education Code:
- The Coordinating Board does not comply with Texas Education Code, Section 61.0583, which requires it to audit educational and general facilities inventory information that institutions self-report. Texas Education Code, Section 61.0583, specifies that facilities inventory audits should include verification of the accuracy of the facilities inventory square footage reported in each institution's budget request, confirmation that a project has received prior approval by the Coordinating Board (if required), and confirmation that an approved project is completed as specified in an institution's request for approval.
The Coordinating Board asserts that it does not have the resources necessary to conduct these audits. Ensuring that facilities inventory information is accurate is important because this information is a key factor in the Coordinating Board's evaluation and approval of institutions' applications for construction projects. This information also is used in determining appropriation funding. Incorrect facilities inventory information can result in significant financial responsibility for the State.
- The Coordinating Board does not notify the Governor as required by statute when projects that are to be funded through tuition revenue bonds do not meet standards. Of 48 construction project applications tested, 9 were to be funded fully or partially through tuition revenue bonds. Five of these nine projects did not meet one or more of the Coordinating Board's standards in areas such as space, cost, and efficiency. The Coordinating Board notified the Lieutenant Governor, Speaker of the House of Representatives, and Legislative Budget Board that these projects did not meet standards, but it did not notify the Governor as required by statute.
The Coordinating Board does not consistently comply with Texas Administrative Code (Title 19, Section 17.20 [1]), which requires construction projects and real property acquisitions to meet Coordinating Board standards as adopted by rule. Of the 48 construction project applications tested, 9 applications (which were not funded through tuition revenue bonds) did not meet one or more standards, but the Coordinating Board approved these 9 applications without conditions. Six other applications tested (which were also not funded through tuition revenue bonds) did not meet one or more standards, and the Coordinating Board approved them with conditions. Approving applications with conditions is allowable under Title 19, Texas Administrative Code, Section 17.30, but the Coordinating Board does not have a process to follow up and ensure that the conditions are satisfied.
The Coordinating Board also should strengthen certain controls related to its evaluation of institutions' applications for construction projects. It should train more personnel to evaluate applications, update its evaluation policies and procedures, and review certain calculations of campus space for accuracy.
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