In 1971, the Legislature began the practice of using bonds secured with the tuition revenue of public universities as part of the state’s funding for capital expansion in public higher education. Of the two types of bond used for this purpose—revenue financing system bonds and tuition revenue bonds—tuition revenue bonds (TRBs) have received much greater scrutiny, especially over the past decade.
The primary criticism of TRBs addresses the fact that unlike revenue financing system bonds, which university systems must service themselves, TRB debt service is historically covered with general revenue appropriations. Even though TRBs are structured as obligations of the universities that issue them, they are ultimately paid for—principal and interest—by Texas taxpayers.