In 1971, the Legislature began using bonds secured with the tuition revenue of public universities as part of the state’s funding for capital expansion in public higher education. Two types of bond are used—revenue financing system bonds and tuition reve- nue bonds (TRBs). Both are secured with pledged future revenues of the university issuing the bonds.

The one difference between these two types of bonds explains the controversy surrounding TRBs. Unlike revenue financing system bonds, which are repaid by the university, TRBs are repaid in full—principal and interest—by the Texas Legislature.

No law or statute requires the Legislature to service TRB debt. Still, the Legislature does so with such regularity that the state’s assumed responsibility for TRB debt service is often described as a custom or tradition. In 2015, with $2.2 billion of previously issued TRB debt outstanding, the Legislature authorized HB 100, the single largest TRB bill in Texas history, set to cost $3.109 billion in principal and $2.24 billion in interest. By comparison, the Legis- lature appropriated approximately $2.6 billion to retire TRB debt from 1971 to 2014.