June 1, 2018

Volume 40, Number 9

The sometimesbitter, pushpull battle between public schools and charter schools is ongoing in Austin and around the state.  South of here, in the Lower Rio Grande Valley, a public school district is considering a plan that could give its campuses more flexibility and funding by adopting some charter schoollike policies.  This is one to watch.

Immediately after our deadline this week, the Pharr-San Juan-Alamo (PSJA) public school district teachers will vote on a plan that will create an Innovative Management Organization, or IMO.  If adopted, PSJA superintendent Daniel King says the IMO approach could result in additional funding for the school district.

Stay with me now.  The non-profit IMO will operate as an independent contractor to PSJA and will be responsible for delivering services to the district.  King calls this a way to merge the benefits of having charter status with the current public school system.  How will it work?

To achieve a middle ground, King proposes holding the IMO responsible not for fully running the campus, but for creating methods in which teachers and staff are more involved in the decisionmaking of their campuses, according to the McAllen Monitor.

The IMO will be overseen by its own governing board and operate as a separate entity from the district.  It will hire its own executive director.  If this plan is implemented district-wide, it would partner with 5-7 IMOs.

It gets complicated and maybe even a bit convoluted.  Space prevents us into delving too deeply into the pros and cons. But King estimates this plan would bring in about $906 additionally per child, per year, and if it is districtwide, it would mean $28 million annually.  This approach is made possible by Senate Bill 1882, passed by the Legislature.

Long a supporter of charter schools and frequent critic of public school operations, the Texas Public Policy Foundation praises this approach, saying not only would it result in more education dollars for the Valley, but it should also provide improved opportunities for teachers and better student outcomes.  It bears watching. Read more →

May 4, 2018

Volume 40, Number 5

Yes, median pay at Facebook really is about $240,000 a year.  The median is the midpoint at which half of workers make more and half make less.  $240,000 a year!  Median employee pay at Alphabet (parent company of Google) is $192,274How do we know these eye-popping numbers?  Congress required this disclosure to be made to the Securities Exchange Commission (SEC) starting this year as part of the DoddFrank law.  The objective was to compare employee salaries to their CEOs compensation to name and shame bad CEO actors.

Since this was the first year for the requirement to take effect, enterprising reporter Kathleen Pender dug up these numbers and published them this past weekend in the San Francisco Chronicle.  The problem is that the law is a bit obscure as to what is included in the compensation.  So Pender reports it is not quite apples-to-apples when you compare companies, even though the companies stand behind their SEC filings for their individual entities.

The employee totals are the most interesting numbers for Austin.  The CEO’s don’t live here.  Employee payrolls are of the utmost interest in the Austin area as these two companies are expanding their local workforces regularly.

But, let’s quickly look at the CEO figures.  Pender reports, “Facebook founder and CEO Mark Zuckerberg made 32 times what the median Facebook worker earned.  But, Zuckerberg only took a $1 salary last year and got no new stock grants (on top of the $70 billion in Facebook stock he already owns).  So where did the compensation figure come from?  His $8.8 million in compensation last year was mainly for his personal security detail and private aircraft use.

What about Alphabet’s CEO’s compensation?  Pender further reports, “its CEO and cofounder Larry Page took home his usual $1, producing a pay ratio near zero.”  Other CEO’s (not just tech) pull down annual salaries ranging in the eight-digit millions.

For this report, weve selected just a couple of companies with a major, growing presence in Austin.  The law was designed to single out companies perceived to be bad actors.  But, there are other ramifications.  Some “CEOs got pay envy” and sought more bucks.  As for employees, backlashes occurred when disgruntled workers found they were earning less than the median and poaching of employees is starting to occur.  Stay tuned. Read more →

March 16, 2018

Volume 39, Number 48

Despite much of Texas being hammered by Hurricane Harvey, 2017 was a recordbreaking year for residential real estate sales (the third year in a row, by the way).  And, sales activity across the state should be even more robust in 2018, according to the chief economist for the TexasA&M Real Estate Center and a longtime chronicler of residential real estate, Jim Gaines.  He has specific reasons for such a positive prediction.

“One of the big drivers will be from firsttime homebuyers finding opportunities in the market with more builders focusing on the entrylevel price point and lenders relaxing the requirements for first-time homebuyers,” Gaines predicted.  “Additionally the likelihood of more volatile interest rates in 2018 will influence homebuyers to buy now rather than later.”

This look-ahead is interesting.  But what about now?  How are sales holding up during the early part of the year?  Right here in the Austin metro?  For a change, we’re going to give you the stats on a city-by-city basis so you can see where the activity is taking place. These numbers reinforce Gaines’ prediction for the future.  This is a one-month snapshot, February 2018.  These are official Austin Board of Realtors single family home sales numbers.

The big kahuna is Austin, due to sheer size.  Units sold in Austin in February 2018 totaled 604, with a median price of $366,710.  But, metro areas also posted impressive numbers:

#2 Round Rock sold 165, with a median sales price of $272,000

#3 Georgetown sold 129, with a median sales price of $300,000

#4 Leander sold 103, with a median price of $245,000

#5 Pflugerville sold 82, with a median price of $252,500

#6 Cedar Park sold 64 units, with a median price of $288,950.

The southern part of the metro also showed strength.

48 units sold in Kyle, with a median price of $209,500

41 units sold in Buda, with a median sales price of $250,000

44 units sold in Hutto, with a median sales price of $224,500.

Notice the trend?  Most units sold were in the $200,000 range.  Sales of pricier homes were limited.  Example:  West Lake Hills tallied only 3 sales (median price $1,100,000), 4 sales in Horseshoe Bay (median price $996,250), and 5 sales in Driftwood (median price $970,700). Read more →

December 8, 2017

Volume 39, Number 36

In a national presentation closed to the news media, Austin mayor Steve Adler outlined Austins actions preserving the environment as it relates to the citys transportation policy.  As he put it:  “Preserving our environment is a big priority in Austin.  Its huge.  But most Austinites, stuck in rush hour traffic every day, will tell you traffic is the most immediate, inyourface challenge.”  Lets look at some quotes he made available.

First of all, the mayor said “we’re going to need to reduce our transportation carbon footprint if we’re going to make a big difference fighting climate change.”  He ticked off a number of steps already taken, including passing “the biggest bond in city history.  It was bigger in fact than all the mobility bonds in the previous 20 years.  And it passed with 60% of the vote.”

He continued:  “We’re making better use of our existing roads, making them more efficient and safer.  Were putting scores of millions of dollars into active transportation; bikes, trails and sidewalks.  We’re managing demand by accurately recognizing the cost of parking and dynamically pricing toll lanes, paid for by automobiles and free for transit.”

“The lessons we’re learning are clear,” he told the C40 Climate Summit.  “Where we offer multiple, diverse transportation options, Austinites get out of their cars and ride bikes, take buses, and even walk.”

Where we dont offer those choices where we dont have protected bike lanes, frequent bus service, even sidewalks people stay in their cars, Adler said.  So, mayor, what is in Austin’s mobility future?  “Our challenge is to expand choices.”

For a picture of what he’s talking about, you need to look no further than the proposal announced Tuesday for the area known as The Drag, adjacent to UTAustin.  It will reduce car travel to one lane in each direction, while adding busonly and bike lanes with expanded sidewalks, eliminating parking along one-mile of Guadalupe St.  At a cost of $33.7 million.  To be sure, this is a unique area with tens of thousands of students within walking distance of UTAustin and shuttle buses bringing in others from greater distances.  But it is an example of the move to allocate city tax dollars to implement the overall plan to curtail car traffic. Read more →

November 10, 2017

Volume 39, Number 32

One of the worstkept secrets about living in the Austin area is the rising cost of homes.  It seems as if every residential real estate report that came out over the last few years highlighted higherandhigher median sales prices for homes.  The current numbers continue this trend.  In fact, for the year through September, the median sales price was up 7% over the same time frame a year ago.  But, wait.  The September 2017 median sales price was down by 1.8% from the previous month, August.  Whats happening here?

The population of the Austin area is still exploding.  The pace of sales in the metro area continues to rise.  The number of houses on the market (inventory) is still low.  And, the dollar volume of sales is up.  Let’s drill a little deeper with the help of economist Beverly Kerr, the VP/Research for the Austin Chamber of Commerce.

First of all, let’s examine whether Austin is an anomaly.  Kerr points out the National Association of Realtors (NAR) crunches price data numbers every quarter for existing single family homes for about 180 US metros.  Breaking it out to the 50 largest markets, it found Austin was the 17th most expensive major metro in the last quarter and the last calendar year.

 But, the NAR numbers also showed that while Austin was in the Top Ten for price appreciation between 2014 and 2016, over the last year, 36 major metros saw faster growth than Austin.  As an example, Austin’s price growth was 4.4% to rank 37th.  The highest, 16.5% was San Jose in California’s Silicon Valley.

As you know, the decision makers at Amazon in Seattle are trying to decide where to locate the giant company’s 2nd headquarters (it calls it Amazon HQ2).  One of the factors they will use to select a site is the cost of housing.  (Some Austin naysayers downgrade Austin’s chances due to rising housing costs.)  But, everything is relative.  Seattle has the nations 2nd fastest home price growth during the past year 13.4%.  Austin looks pretty good by comparison, with its 4.4% and 37th rank.  Just another factor to weigh.

So it does appear, at least for the time being, Austins residential housing market is slowing a tad.  Kerr notes September’s housing inventory was at 3.0 months (six months being an equal buying/selling benchmark).  But up until this June, Austin had less than three months inventory on the market since November 2012.  Yeah, slowing a bit.  But still robust. Read more →

August 4, 2017

Volume 39, Number 18

For the first time in 2017, a travel warning has been issued for a favorite destination of Austinites, Mexico.  No, it doesnt have anything to do with drug cartel violence.  This warning cautions those vacationing in popular resorts about possible tainted or low quality alcohol.  What?  Yep, seems several dozen imbibing Americans have been stricken after as little as one or two drinks.  In fact, one US citizen died.

The USState Department singled out vacation resorts near Cancun and Playa del Carmen.  Those who have been affected by the booze claimed to have a drugginglike sensation, memory loss, becoming ill, and/or blacking out.



For a further update on what is happening in Mexico, who better to turn to than a former US Ambassador to Mexico with deep ties to Austin former Texas Secretary of State and president of the Texas Exes, Tony Garza.

Garza says “over the past few weeks, there has been some great news coming out of Mexico’s energy sector.”  He specifically mentioned a “consortium of international energy companies had discovered enormous shallow water oil reserves,” and said he met with USEnergy Secretary Rick Perry about “our strong and vitally important crossborder energy integration.”

But, his brutally-honest assessment also includes some bad news.  “The countrys murder rate has skyrocketed this year, with 11,155 people killed from January through May alone (a 32% increase from last year).”  He further said:  Governmental “corruption allegations have also shown no signs of abating.”

Additionally, he cites uncertainty surrounding NAFTA trade renegotiations.  Austin and Texas are heavily involved in NAFTA trade deals.  But, this entire subject is caught up in the push-pull of international and national politics.  So, who knows where negotiations will end up.

Garza importantly raises a “timing” red flag.  Discussions are scheduled to begin in early fall.  “But the negotiators will have to move fast,” Garza warns.  “Theyll be under intense pressure to wrap up discussions by early 2018, before Mexicos presidential campaign picks up steam.”  Check out the next items for related Austin energy developments. Read more →

May 12, 2017

Volume 39, Number 6

After a big brouhaha over quietly acquiring 300plus acres of prime Houston property in 2015, the UTSystem backed down in March and said it would no longer try to develop a university campus on land near the Texas Medical Center.  The UTSystem still owns the land.  Now what?  Various Houston entities are eyeing this valuable piece of dirt.  And one of the possibilities involves the UTSystem.

First of all, no decisions have been announced publicly.  But recently, the mayor of Houston Sylvester Turner joined by the Chair of the University of Houston Board of Regents Tilman Fertitta, endorsed the idea of a Data Science Institute on the property.

(FYI, Fertitta was one of the loudest voices decrying the UTSystem’s “encroachment on UH’s territory.”  UTSystem chancellor Bill McRaven was roundly criticized for not checking with state officials, including Houston’s leaders and legislators.)

The participants in this enterprise are proposing to include UH, Rice University, Texas Southern University, Texas A&M and the UTSystem.  To be clear, this isn’t the first time this Institute idea was floated.  But it’s gained a bit more credibility now that the Mayor and the UH Regent Chair jumped out front.

Earlier this year, backers claimed the Institute would, according to the Houston Chronicle, “bolster Houstons energy and health sectors, envisioning collaboration with industry and national laboratories.  Proponents said the Institute’s work could lead to a more efficient and sustainable energy distribution, and smarter health care delivery.”

If realized, it would be a big deal for Houston.  Fertitta, after his earlier opposition to working with the UTSystem, said he now would have no problem participating in the Institute if the other universities were involved.  But at this point, there has been no comment from any of the other universities, including the UTSystem.

The Institute proposal has so many moving parts it could fall apart at any point.  And if it does move forward, the governor and key Houston legislators would have to approve.  Also, as one observer put it:  if UH or the UTSystem balk, it would never get off the ground. Read more →

April 28, 2017

Volume 39, Number 4

Its probably not accurate to describe it this way, but it seems fitting:  Travis County is, in effect, a laboratory for UTAustins Dell Medical School.  Many activities at DellMed are focused on the health needs of Travis County.  To determine which avenues to pursue, DellMed is relying on recent research about the more than 1.2 million people who live in the county.  The findings of this research are instructive.

For instance, did you know the leading cause of death in Travis County?  Or the second leading cause?  And, according to the 2017 Critical Health Indicators Report, compiled by Austin Public Health, these two causes of death account for a whopping 40% of all deaths in Travis County.

Cancer is the leading cause of death in Travis County, killing 1,131 people in 2014 (the most recent year for which data is available).  Not surprisingly, the #2 cause is heart disease.  So DellMed, partnering with several entities, is “working to position primary care physicians to lead the fight against these and other debilitating illnesses.”

The research also disclosed interesting facts about you and your neighbors.  Can you guess the percentage of the 1.2 million Travis County residents who have a weight problem?  More than half of all residents 58% — are overweight or obese.  What other factors impact the personal health of county residents?  Well, 14% smoke and 8% have diabetes.

On the positive side, the study found fewer highschoolers are using tobacco, and vaccines have reduced the number of Travis County residents with hepatitis and mumps.  Also, lung cancer mortality rates are declining.

DellMed is not only focusing on curing and treating illnesses and disease, but is “developing a model that shifts the focus from treating sickness to helping patients stay healthy.”  It talks about delivering “robust preventive care.”  How is it planning to do this?

It hopes to increase access to vaccines and screenings.  DellMed leaders are focusing on the social, economic and environmental causes of health problems.  As a result, one of its goals is to “reduce the onset of chronic illnesses, helping people to get and stay healthy.”  Travis County is the “laboratory” for these and other initiatives that will ultimately have wider impact. Read more →

April 21, 2017

Volume 39, Number 3

For decades Texans have been told that by 2050, more than half of the states residents will be Hispanic.  Only onethird or even fewer will be white.  One of the challenges is to close gaps in educational achievement between Hispanic students and whites.  So, has there been progress in this regard?  Ummm yeah but.

We remember writing population projections more than two decades by thenGovernor George W. Bushs State Demographer Steve Murdock.  He was singing the Hispanic-majority song back then (and probably even before that).  And in an appearance before the State Legislature this year, Murdock was repeating the same verses.

He has made it a project to urge the Legislature to recognize this inevitable trend and to do more about it.  Hes worried about an uneducated workforce and its resulting impact on the states economy and social services.  So, Steve, has there been progress?

Start with this:  in 1990, 45% of Hispanics in Texas had high school diplomas and 7% had college degrees.  This compared to whites’ 82% with high school diplomas and about 25% with college degrees.  Twentyfive years later, Hispanics with a high school diploma had increased to 62% and to 13% with a college degree.

Murdock calls it only “moderate” progress.  In face of this progress, a Texas education official goes even further with his concerns.  “Unless we accelerate the rate of improvement, were going to fall further behind even as we get better,” claims Raymund Paredes the Texas Commissioner of Higher Education.

Paredes told the Texas Observer:  “The challenges are growing at a much faster rate than were applying solutions.”  Paredes says the state is applying “arithmetical solutions to geometric problems.”

If Texas continues to close the achievement gap at today’s rate, Murdock predicts the state’s poverty rate will climb from 18% to 20%.  But if “parity” is achieved, he says the percentage of households in poverty will drop to about 12%.  “Unless we reverse the trends were seeing now, we will be a poorer, lesseducated state.  Thats not a political or philosophical statement, thats just grinding out the numbers.  And it certainly is sobering.” Read more →

January 20, 2017

Volume 38, Number 41

Because UTAustin is worldrenown, it often overshadows most of the 13 other institutions in the UTSystem.  Understandable.  After all, UTAustin is the flagship university in the wellregarded UTSystem.  But other institutions, especially those that specialize in health care, are exceptional in their own way.  So, if they are all part of the same System, why not develop a collaboration to make them all even better?  This is happening as we speak, thanks to a new initiative by UTSystem Chancellor Bill McRaven.

The odds are you have not heard about it, but it could be a big deal.  It’s called the UT Health Care Enterprise.  “We intend to leverage the size and expertise of all our health institutions to ensure we are providing Texas, the nation and the world with the finest health care possible,” said McRaven when the UTSystem Regents recently approved the collaborative project.

That approval carried with it an allocation of $45 million in Permanent University Fund (PUF) bonds for a cancer collaboration to be divided almost equally between five locations:  UTAustins Dell Medical School, the famed MD Anderson Cancer Center, UT Health San Antonio, UT Health Northeast and UT Medical Branch in Galveston.

“We have an opportunity to develop System-wide service lines and combine MD Andersons worldleading cancer expertise with the unique strengths of four additional UT health institutions,” McRaven observed.

McRaven has been pushing for two years now to make the most of the UTSystem collective strengths.  This is now the UTSystems firstofitskind crossinstitutional collaboration.

The PUF dollars for this Health Care Enterprise are not subject to action by the Texas Legislature.  But, realizing full well the Legislature, now convening in Austin, is looking at a tight budget situation as it decides to allocate resources for higher education and other state needs, the Chancellor is saying all the right things.

Such as:  “While we have bold plans at the UTSystem, we know we dont have a blank check.  So we are going to be relentless when it comes to prioritization – to making sure we’re allocating our resources efficiently and effectively.”  It will be instructive to watch the ultimate budget allocations for the UTSystem, as well as UTAustin, in the months ahead. Read more →