Issues Related to the Provision of Housing and Utilities to Employees

Issues Related to the Provision of Housing and Utilities to Employees

April 7, 1997
The Honorable Mike Moncrief
Texas State Senate
State Capitol
Room 4E.2
Austin, Texas 78711
Dear Senator Moncrief:
Over 3,200 state employees receive free, state-subsidized housing and utilities; live in state-owned properties for
a nominal monthly rate; or receive monthly cash payments in lieu of in-kind housing benefits. Over 1,300 state
employees receive some form of educational assistance from their employing agencies. We question whether
there is a need for state-subsidized employee housing to the extent that it is currently provided. In many cases,
agencies’ educational assistance policies are not designed to ensure that agencies receive value, such as more
educated or competent employees, for the funds spent.
Our observations are the result of a review, completed at your request, of supplemental employee benefits.
Additional detail and recommendations are presented below.
Issues Related to the Provision of Housing and Utilities to Employees
Texas state government currently provides certain employees housing benefits in the form
of state-owned housing or cash payments. At the agencies reviewed, over 3,200 employees
receive free housing and utilities, live in state-owned properties for a nominal monthly rate,
or receive monthly cash payments of $175. (See Attachment 1.) Housing benefits were
reviewed at the following four agencies:
C
Texas Department of Criminal Justice (TDCJ)
C
Texas Department of Mental Health and Mental Retardation (TDMHMR)
C
Texas Youth Commission (TYC)
C
Texas Parks and Wildlife Department (TPWD)
The agencies’ primary justification for providing these benefits has been the need for
security and emergency response. However, two of the agencies (TDCJ and TDMHMR)
told us that none of their employees were required to live in agency-provided housing as a
condition of employment. Additionally, three of the agencies (TDCJ, TYC, and TDMHMR)
have multiple facilities with no available housing, yet employees perform duties similar to
those of employees receiving housing at other sites. These observations and other
information lead us to question whether there is a need for state-subsidized housing to the
extent that it is currently provided.
SAO Report No. 97-049

The Honorable Mike Moncrief
Texas State Senate
April 7, 1997
Page 2
Although two of the agencies reviewed have converted some of their former housing units
to other uses (TDCJ and TDMHMR), none of the agencies have performed a comprehensive
study of alternative uses for their properties. As a result, it is possible that the agencies may
not be making the best use of some of these state assets; additionally, in some instances the
provision of surplus rental properties to selected employees may be outside an agency’s
primary mission.
It appears that recovery of costs on housing properties has not been a priority for the
agencies. With most of the agencies reviewed, cost accounting for housing properties is
decentralized to the facility level. Agency attempts at cost/benefit analysis and monitoring
appear to be limited, and in some instances we were furnished with only estimates or partial
estimates of agencies’ costs (TDCJ, TDMHMR, and TPWD).
Based on the information provided, it appears that none of the agencies are recovering the
maintenance costs on their housing properties; moreover, the majority of housing recipients
receive utilities free of charge. In the instances where rent is charged, rates are generally well
below the fair market rate, and in some cases rental schedules have not been updated for
decades. In some instances standard lease agreements have not been required, and as a
result, agency assets and interests have not been adequately protected.

There are no statewide policies or guidelines governing the provision of housing benefits to
employees; agencies have been permitted to establish their own criteria. As a result, housing
benefits have been allocated inconsistently both within and between agencies. In some
instances there are no written policies or procedures for the selection of housing recipients,
nor is there an appeals process. Where policies exist, housing decisions may be subject to
a facility supervisor’s discretion, the availability of housing properties, or funding at a
facility. Inequities also arise from:
C
The lack of comparability between housing properties at different locations
C
The difference in value between the in-kind housing provided to some recipients
versus the cash payments provided to others
C
The failure in some cases to provide compensation to eligible recipients in the absence
of available housing
Except where employees receive a monthly cash allowance, none of the agencies currently
report the value of housing benefits provided in employees’ total compensation, impeding
attempts at salary comparisons. In the cases where residence in agency-supplied housing is
not essential for employees to satisfactorily perform their duties, the agencies’ failure to
report the fair value of housing benefits in employee compensation exposes both the
agencies and their employees to potential tax liabilities and penalties.

The Honorable Mike Moncrief
Texas State Senate
April 7, 1997
Page 3
Recommendations:
The Legislature may wish to provide additional guidance at a statewide level concerning the
provision of housing benefits to employees. Such guidance could include legislative
expectations with respect to:
C
The purpose of providing housing to selected employees, the establishment and
documentation of the need to provide these benefits relative to an agency’s mission,
and the identification of specific positions and job responsibilities for which residence
is essential
C
The evaluation of the best uses of agency housing properties
C
The administration of housing benefits, including the management of properties,
protection of state and agency interests in housing agreements, and the accounting for
and recovery of costs
C
Ensuring equity in the allocation of benefits among eligible recipients, and the
valuation and reporting of benefits in employee compensation
C
The satisfaction of existing tax liabilities
Issues Related to the Provision of Educational Assistance to Employees
The Legislature has provided some limited guidance governing the provision of educational
assistance benefits to employees through the State Employee Training Act (Act); however,
under the Act agencies establish their own written policies with respect to eligibility, the
extent of assistance provided, any provisions for repayment of benefits, and other terms and
conditions.
Policies vary considerably among agencies with respect to eligibility for assistance, and the
type and extent of educational assistance varies significantly from one agency to another.
(See Attachment 2.) For example, some agencies offer no assistance, while at least one
agency routinely pays thousands of dollars per employee per year to enable selected
employees to earn advanced degrees. While most agencies spend significantly less, at least
two of the agencies surveyed spend in excess of $1 million per year for educational
assistance. These two agencies’ policies also provide for educational assistance to
prospective employees.
In many cases, policies are not designed to ensure that agencies receive value, such as more
educated or competent employees, for the funds spent. Some agencies do not require either
continued employment or repayment of the assistance provided.

The Honorable Mike Moncrief
Texas State Senate
April 7, 1997
Page 4
The State Employee Training Act requires agencies to file rules governing their educational
assistance programs with the Governor’s Office prior to the expenditure of funds. Many of
the agencies surveyed, however, have failed to comply with this requirement. Two agencies
filed only after we made an inquiry. Another agency was unable to locate and produce a
copy of its educational assistance policy although its rules have been in place for decades
and funds continue to be expended.
Administration of educational assistance programs appears to be weak in some cases. We
found that some agencies do not monitor educational assistance benefits on an agencywide
basis, but instead delegate administration of their programs to subordinate levels. During
our review, one agency discovered that although its academic stipend program had
supposedly been eliminated, one regional office continued to offer the program through
fiscal year 1995. At another agency, it appears that appropriate controls were not developed
to ensure the agency’s educational leave program was properly used by staff.
We found inconsistencies in accounting and reporting, and in some cases we were unable to
obtain consistent, comprehensive information from the agencies. Several agencies were
unable to identify recipients of assistance or associated costs. Incomplete accounting also
affects the state classification system and salary comparisons since some agencies do not
include educational assistance payments in reported employee compensation.
Potential inequities exist in the allocation of benefits within agencies. Although agencies
generally have criteria for evaluation and selection of recipients, some agencies do not
appear to have codified these in the form of written guidelines or procedures. In addition,
it appears that only five agencies have incorporated a formal appeals process into their
policies. In one case, agency policies are subject to supervisor discretion and leave room for
waiver of terms. The receipt of benefits by eligible employees may also be subject to the
availability of funds at given locations within an agency.
Recommendations:
The Legislature may wish to provide more guidance at a statewide level concerning
provision of educational assistance. Such guidance could include legislative expectations
with respect to:
C
The purpose of providing educational assistance and the establishment and
documentation of the need to provide these benefits relative to an agency’s mission

The Honorable Mike Moncrief
Texas State Senate
April 7, 1997
Page 5
C
The administration of educational assistance benefits, including the protection of
state and agency interests in accounting for and recovering costs, equity in the
allocation of benefits among eligible recipients, and the reporting of benefits in
employee compensation
C
Ensuring that agencies and the State receive value for monies spent in providing
educational assistance to employees
If you have questions concerning our work, or if we can be of other assistance, please contact Charlie Hrncir at
479-4729.
Sincerely,
Lawrence F. Alwin, CPA
State Auditor
LFA/rmn
attachments
cc:
Legislative Audit Committee Members

Summary of Number and Type of Residential Units
Number and Type of Residential
Number of Units Occupied or
Agency
Units
Vacant
TDMHMR
105 Units
105 Units
101 Houses
87 Occupied
4 Duplex Units
4 Vacant
13 Agency
Use
1 Condemned
TDCJ
896 Units
896 Units
123 Houses
800 Occupied
448 Duplex Units
96 Vacant
300 Fourplex Units
5 Apartments
20 Mobile Homes
401 Trailer Spaces
401 Trailer Spaces
328 Occupied
73 Vacant
2,118 Quarters1
2,118 Quarters1
1,713 Occupied
405 Vacant
TPWD
208 Units
208 Units
189 Houses
201 Occupied
2 Apartments
7 Vacant
10 Mobile Homes
3 Cabins
4 Quarters
12 Trailer Spaces
12 Trailer Spaces
12 Occupied
0 Vacant
TYC
64 Units (all Houses)
64 Units (all Houses)
59 Occupied
5 Vacant
17 Trailer Spaces
17 Trailer Spaces
9 Occupied
8 Vacant
1Bachelor’s quarters or barracks-type housing.

This information was provided by the agencies and has not been independently
verified by the State Auditor’s Office.
ATTACHMENT 1: SUMMARY OF HOUSING BENEFITS
AT FOUR STATE AGENCIES
APRIL 1997
PAGE 1

Summary of Benefit Types and Number of Recipients
Number Receiving
Number Receiving
Cash in Lieu of
Agency
Free Housing
Housing
Number Paying Rent2
Effective Date
TDMHMR
30 (utilities paid)
54 ($175 per
61 ($247.29 per
The $175 cash payment
month)
month ;
3
received in lieu of housing
utilities paid)
was established in 1973.
The rental fee schedule for
TDMHMR has been in effect
since 1988 and has not
been revised.
TDCJ
125 (utilities paid)
not applicable
326 ($25-$50 per
The rental fee schedule for
month )
4
TDCJ has been in effect
361 (½ utilities
since 1986 and is currently
paid)
being revised.
1,713 (quarters only)
316 (trailer space
only)
TPWD
not applicable
not applicable
201 ($50-$60 per
The rental fee schedule for
month ;
5
TPWD has been in effect
utilities paid)
since the mid-seventies and
has not been revised.
12 ($20 per
month for
trailer spaces)
TYC
19 (utilities paid)
13 ($175 per
40 ($25 per
The $175 cash payment
month)
month;
and rental fee schedule for
utilities paid)
TYC has been in effect
since the mid-sixties and
9 ($15 per
has not been revised.
month for
trailer spaces;
utilities paid)
In all cases, rent is below fair market value.
2
Rental payments range from $104 per month to $434.70 per month; $247.29 is the average
3
payment.
Rental payments range from $25 per month to $100 per month; the average payment is
4
between $25 and $50 per month.
Generally, rental payments are up to $70 per month; the average payment is $50.60 per month. In one
5
instance, an employee pays $100.
This information was provided by the agencies and has not been independently verified by the State
Auditor’s Office.
ATTACHMENT 1: SUMMARY OF HOUSING BENEFITS
AT FOUR STATE AGENCIES
APRIL 1997
PAGE 2

Summary of Educational Assistance Benefits
at Thirty State Agencies
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Office of the Governor
N/A
No educational assistance offered.
Office of the Attorney
No
Educational leave of up to three hours per week for
General
classes during work hours is allowed for any non-
attorney or non-law clerk at the Office of the Attorney
General (OAG).
An employee must complete courses with a passing
grade, or the employee will be required to reimburse
the OAG for the educational leave time. Employees
also sign a written agreement that they have a moral
commitment to the OAG to remain available for
employment by the OAG for a period of time at least
equal to the length of the course period.
General Services
No
Tuition assistance is available for no more than two
Commission
college-level courses, with a maximum reimbursement
of $300 per course. Work hours may be adjusted to
accommodate classes.
Employees must agree to remain an employee of the
General Services Commission (GSC) for a minimum
period of three months after completion of each
course taken under state sponsorship. An employee
must agree to repay, in a lump sum or other
arrangement, the amount of money expended by the
GSC if the individual for any reason, except
circumstances beyond his or her control, fails to
complete the courses or otherwise defaults in any
provisions of the agreement.
Comptroller of Public
Yes
Reimbursement of up to 100 percent of tuition and
Accounts
compulsory student fees for GED and college-level
courses is available. Flexible schedule is allowed.
General Land Office
Yes
Reimbursement of college-level course tuition (up to 6
hours per semester for full-time employees and up to 3
hours for part-time employees) is provided.
Reimbursement for review courses and exams may be
arranged through the program area’s training budget.
Should the employee voluntarily terminate within one
year after course is completed, the employee will be
expected to reimburse the General Land Office for at
least one-half of the total funds received.
ATTACHMENT 2
APRIL 1997
PAGE 3

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Texas Workforce
Yes
Reimbursement of tuition and fees is available for
Commission
satisfactory completion (grade “C” or better for credit
courses or “Passing” for non-credit courses) of one or
more courses per semester, up to a maximum of $150
per semester. Maximum for each employee of $450
per year unless approved by Director of Finance.
Teacher Retirement
Yes
There is a subsidy program (tuition and fees) for full-
System
time, regular employees pursuing education at an
accredited educational institution. The maximum is
$600 per term per employee.
Employees must agree to continue working for the
Teacher Retirement System (TRS) for a period of time
after completing their course of study. The length of
time shall approximate the period of time taken to
complete the course work and shall be determined at
the time of approval by TRS’s education assistance
committee. If an employee fails to complete a course
successfully or to fulfill other terms of the agreement,
he or she must reimburse TRS for all agency-paid
expenses pertaining to that course.
Department of Human
Yes, but agency
Reimbursement is provided for some job-related
Services
was unable to
classes—up to three hours per semester. Employees
locate them.
may take educational leave for classes during work
hours.
In the stipend program, employees receive a salary
while attending school full-time. Moving and some
travel expenses are also paid. There were no program
participants in fiscal year 1996.
With respect to the stipend program only, at the time
of selection the employee signs an agreement to
repay the stipend through full-time employment with
the Department of Human Services for a period of two
months for each month on stipend. If the employee
voluntarily terminates before full repayment of two
months of full-time employment for each month on
stipend, the terms of the contract must be complied
with by repayment of the remaining amount of the
stipend dollar for dollar. If the employee fails to
complete the training program, all funds received
must be repaid.
ATTACHMENT 2
APRIL 1997
PAGE 4

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Employees Retirement
Yes
Tuition reimbursement is available for up to $456 per
System
semester for job-related college courses.
As a condition for reimbursement, employees agree to
remain employed with the Employees Retirement
System (ERS) for six months after completion of the
course. If an employee decides to leave during this six-
month period, the employee may reimburse ERS for
the amount he or she was reimbursed under the
program.
Rehabilitation
No
Reimbursement of required tuition and course fees up
Commission
to $500 per semester is available.
One hour of educational leave per week may be
granted under certain circumstances.
Additional time off may be granted, but must be
made up.
Employee may use Rehabilitation Commission
resources for the course work.
Employees are expected to continue working at
Rehabilitation Commission for at least 24 months after
completing an agency-paid course. If an employee
terminates within a 24-month period, the employee
must reimburse the Rehabilitation Commission for the
tuition and fees paid on the employee’s behalf.
Department of Housing
No
Reimbursement is available for qualified expenditures
and Community Affairs
of up to $300 per semester. Executive director may
also grant time off or allow adjustment of work
schedule to complete training.
An employee must continue employment with the
Department of Housing and Community Affairs for the
duration of the course and at least one year
thereafter, or repay the financial assistance provided
for the course based on a prorated scale.
Department on Aging
Yes
Up to $100 per semester for college courses for
academic credit is available.
Lottery Commission
Yes
Employees may be reimbursed for up to $750 per
semester for up to three semesters per fiscal year.
Employees are expected to retain their regularly
scheduled work hours.
ATTACHMENT 2
APRIL 1997
PAGE 5

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Department of Public
N/A
No educational assistance offered.
Safety
Department of
Filed
Tuition reimbursement of up to $250 per semester ($500
Insurance
December 19, 1996
per semester with special approval) or
educational leave up to 6 hours per week is available.
Railroad Commission
N/A
No educational assistance offered.
of Texas
Alcoholic Beverage
No
Alcoholic Beverage Commission will allow employees
Commission
to take time away from work (not to exceed four hours
per week including travel time).
Employee is required to make up the time.
Texas Department of
N/A
No educational assistance offered.
Commerce
Department of Health
Yes
Educational leave is available for up to six hours per
week for class. There are some restrictions.
Reimbursement of up to $450 per fiscal year is provided
for tuition and fees.
Educational stipends are available in the form of 75
percent of salary to attend school full-time for up to 12
months. Other reimbursements include tuition and
fees, travel costs for one round trip to and from the
educational institution, and other costs as approved.
Participants in this program are obligated to work for
Texas Department of Health (TDH) three months for
each one month in the program.
The educational study program provides up to 100
percent of tuition, fees, and books, and up to 15 hours
of educational leave per week for a maximum period
of two years. This program is limited to one or two
employees per year per TDH Associateship, Region,
and Hospital. Participants are obligated to work for
TDH one month for each one month in the program.
Commission on
Yes
Educational leave of up to six semester hours per
Alcohol and Drug
session. Leave must be made up by employee.
Abuse
ATTACHMENT 2
APRIL 1997
PAGE 6

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Department of
Yes
Tuition reimbursement is available for job-related
Protective and
classes. Stipends for full-time attendance at a
Regulatory Services
graduate school in order to complete or obtain a
graduate degree in social work are available.
Employees participating in the stipend program are
required to sign a contract agreeing to obligate
themselves to employment at the Department of
Protective and Regulatory Services (PRS) at the rate of
two months of employment for each month of
educational stipend. If the employee leaves the
employment of PRS prior to completion of his or her
degree program, or prior to the end of his or her
contractual employment period after completion of
his or her degree program, the employee is
contractually obligated to reimburse PRS for the
monies expended during his or her participation in the
stipend program less any months which have been
repaid in service.
Department of
Yes
Reimbursement is available for tuition and fees only.
Agriculture
Water Development
No
Educational leave is provided. Some restrictions apply.
Board
Reimbursement for tuition, books, and other course-
related materials is provided upon completion of
course with grade of at least a “C” for undergraduate
and grade of at least a “B” for graduate course work.
Natural Resource
No
Reimbursement for tuition and possibly textbooks is
Conservation
provided.
Commission
Work hours can be adjusted to attend school.
ATTACHMENT 2
APRIL 1997
PAGE 7

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Texas Department of
Yes
Education Assistance Program; Master’s of Science in
Transportation
Civil Engineering (MSCE); Master’s Program (New,
approved November 21, 1996, no students)
Conditional Grants Program provides grants to women
and minorities to pursue degrees in civil engineering
and other disciplines, with the agreement to work for
the Texas Department of Transportation (TxDOT) for
two years upon graduation.
Benefits vary for the different programs ranging from
tuition only, to tuition plus books and fees, to salaries
and travel and relocation expenses for the master’s
program.
In addition, employees are allowed use of
departmental copiers, computers, and other office
machines for college work.
Educational assistance is conditional upon (1) the
employee agreeing to work for TxDOT for a minimum
of two years for an associate’s or bachelor’s degree
and three years for a graduate degree, commencing
30 days following the date of the employee’s receipt
of the degree; (2) employee’s adhering to the terms
and conditions of the educational assistance
agreement and requirements for continued eligibility;
and (3) completing and passing each individual
course.
TxDOT will cancel the student’s educational assistance
agreement and require the student to repay all funds,
not to include salary, received from TxDOT if the
student withdraws from the institution, is removed or
prohibited from attending the institution, fails to
comply with one or more terms of the educational
assistance agreement, or is terminated for poor
performance or behavior during the duration of the
agreement, including the required employment
period.
TxDOT has the most extensive array of educational
assistance of all the agencies surveyed.
ATTACHMENT 2
APRIL 1997
PAGE 8

Summary of Educational Assistance Benefits
at Thirty State Agencies, continuing
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Texas Department of
No
(1)
Educational leave or educational duty
Mental Health and
assignment
Mental Retardation
(2)
Reimbursement for tuition, registration fees, and
other education-related costs
(3)
Academic stipends
Educational assistance and employee obligation
agreements for academic stipends state that upon
successful completion of the program the trainee
agrees to return to Texas Department of Mental Health
and Mental Retardation (TDMHMR) employment for a
designated period of time. Should the trainee fail to
successfully complete the program, the trainee shall
pay TDMHMR liquidated damages equal to all monies
received under the agreement, or, at TDMHMR’s
option, return to regular employment for a designated
period of time. If, after successful completion of the
program, the trainee fails to comply with the
employment obligation, the trainee agrees to pay an
amount determined using a prorated formula.
Texas Youth
Yes
Reimbursement of tuition of up to $500 per semester is
Commission
available for completing a course with a grade of at
least a “C.” There is a stipend in effect to the extent of
up to 8 hours off per week to attend classes.
Employees receiving time off or tuition reimbursement
are expected to repay the Texas Youth Commission
(TYC) with one month of continued employment
service with TYC for every semester hour taken and for
any amount in time off approved. Employees who
receive both tuition reimbursement and time off must
complete a separate repayment period for each type
of assistance received. Employees in the process of
repaying obligations to TYC in employment time, who
decide to resign, must pay the remaining obligation.
Department of Criminal
N/A
No educational assistance offered.
Justice
Texas Education
Yes
Texas Education Agency allows employees to be on
Agency
flextime to attend classes. However, employees are
still expected to work 40 hour weeks.
ATTACHMENT 2
APRIL 1997
PAGE 9

Summary of Educational Assistance Benefits
at Thirty State Agencies, concluded
Rules filed with
Governor’s
Office?
Type of Educational Assistance
Agency
Texas Parks and
Yes, approved
Reimbursement of tuition of up to $500 per semester for
Wildlife Department
December 12, 1996
completing a course with a grade of at least a “C” is
provided. There is a stipend in effect to the extent of
up to 8 hours per week off to attend classes.
Employees approved for educational assistance,
including tuition reimbursement, special scheduling, or
leave must agree to regular employment with the
Texas Parks and Wildlife Department (TPWD) for one
month of continued employment for each semester
hour of course work approved for assistance. If an
employee defaults in any provision of the agreement
between TPWD and the employee, then the
employee is obligated to repay the cost of
educational assistance in a lump sum or through an
alternate arrangement approved by TPWD.
The information contained in this table was compiled based on responses provided by agencies to
standard questionnaire. Responses not independently verified.
ATTACHMENT 2
APRIL 1997
PAGE 10