Report of the Negotiated Rulemaking Committee on Tuition Revenue Bond (TRB) Debt Service Allocation

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1 Report of the Negotiated Rulemaking Committee on Tuition Revenue Bond (TRB) Debt Service Allocation October 2015 Background House Bill 1 passed by the 84th Texas Legislature, Regular Session, specifically Article III Special Provisions Section 64, requires the Texas Higher Education Coordinating Board ( THECB or Board ) to present an allocation plan for the appropriations made for debt service on the authorized tuition revenue bonds to the Legislative Budget Board by January 1, Texas Education Code directs the THECB, through the negotiated rulemaking (NRM) process, when adopting a policy, procedure, or rule relating to the allocation or distribution of funds, including financial aid or other trusteed funds. The THECB engaged in NRM to develop the allocation plan. Convening In identifying persons likely affected by the allocation plan, a memo (see Appendix A) was sent June 30, 2015 via to the chancellors at Texas A&M University System, Texas State Technical College System, Texas State University System, Texas Tech University System, University of Houston System, University of North Texas System and The University of Texas System, and the presidents at Midwestern State University, Stephen F. Austin State University, Texas Southern University, and Texas Woman s University soliciting their interest and willingness to participate in the NRM process, or to nominate a representative from their campus. From this effort, 11 individuals volunteered or were nominated to participate on the TRB Debt Service Allocation negotiated rulemaking committee (NRMC). The stakeholders who could be significantly affected by this rule and should be represented on this committee were identified as: 1) Texas A&M University System; 2) Texas State Technical College System; 3) Texas State University System; 4) Texas Tech University System; 5) University of Houston System; 6) University of North Texas System; 7) The University of Texas System; 8) Midwestern State University; 9) Stephen F. Austin State University; 10) Texas Southern University; 11) Texas Woman s University; and 12) Texas Higher Education Coordinating Board. Notice of Intent On August 28, 2015 a Notice of Intent (NOI) to engage in NRM was published in the Texas Register for 10 days with a public comment deadline of September 8. The NOI (see Appendix B) included a list

2 of stakeholders and proposed membership for the NRMC. The THECB received one comment which is summarized below: Comment: Texas Woman s University requested B.J. Crain, Interim Vice President for Financial Administration be appointed to the committee. Response: Recommendation accepted. On September 9, 2015 the Alternative Dispute Resolution (ADR) Coordinator appointed 12 committee members (see Appendix C) to represent the agency and stakeholders. Additionally, the ADR Coordinator appointed Kristen Kramer, Deputy Assistant Commissioner, Student Success, as facilitator for the NRMC, subject to the approval of the committee (see Appendix D) Negotiated Rulemaking Committee Meeting The NRMC met on September 30, 2015 at 9:30 a.m. via audio conference. The following topics were discussed and/or agreed to by the committee: 1. Introductions 2. Brief Overview of the Negotiated Rulemaking Process: What it is, What it s not 3. Brief Overview of Roles and Responsibilities A. Role of Facilitator B. Role of Sponsor Agency Technical and administrative support C. Role of Committee Members Representative role Commitment to negotiate in good faith 4. Consideration of Facilitator 5. Procedural Issues A. Discussion and Consideration of Ground Rules B. Discussion and Consideration of Definition of Consensus 6. Discussion of Draft Tuition Revenue Bond Debt Service Allocation Plan 7. Consideration of Proposed Tuition Revenue Bond Debt Service Allocation Plan The full committee reached consensus on the proposed allocation plan. Allocation Plan The allocation plan was considered and adopted (see Appendix F) at the October 22, 2015 Board meeting (Agenda Item VI-D) and the committee was disbanded. Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 2 of 13

3 Appendix A: Convening Memo Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 3 of 13

4 Appendix B: Notice of Intent Texas Higher Education Coordinating Board Notice of Intent to Engage in Negotiated Rulemaking - Tuition Revenue Bond Debt Service Allocation House Bill 1 passed by the 84th Texas Legislature, Regular Session, specifically Article III Special Provisions Section 64, requires the Texas Higher Education Coordinating Board ("THECB" or "Board") to present an allocation plan for the appropriations made for debt service on the authorized tuition revenue bonds (TRB) to the Legislative Budget Board by January 1, The THECB intends to engage in negotiated rulemaking to develop the allocation plan. This is in accordance with the provisions of Texas Education Code In identifying persons likely affected by the allocation plan, the Convener of Negotiated Rulemaking sent a memo via to the chancellors at Texas A&M University System, Texas State Technical College System, Texas State University System, Texas Tech University System, University of Houston System, University of North Texas System and The University of Texas System, and the presidents at Midwestern State University, Stephen F. Austin State University, Texas Southern University, and Texas Woman's University soliciting their interest and willingness to participate in the negotiated rulemaking process, or to nominate a representative from their system/campus. From this effort 11 individuals responded (out of 12 affected entities) and expressed an interest to participate or nominated someone from their system/campus to participate on the negotiated rulemaking committee for TRB debt service allocation. The positions held by the volunteers and nominees include a Chancellor, Chief Financial Officers, Vice Chancellors/Presidents of Finance, and a Director of Finance and Resource Planning. This indicates a probable willingness and authority of the affected interests to negotiate in good faith and a reasonable probability that a negotiated rulemaking process can result in a unanimous or, if the committee so chooses, a suitable general consensus on the proposed plan. The following is a list of the stakeholders who are significantly affected and will be represented on the negotiated rulemaking committee for TRB debt service allocation: 1) Texas A&M University System; 2) Texas State Technical College System; 3) Texas State University System; 4) Texas Tech University System; 5) University of Houston System; 6) University of North Texas System; 7) The University of Texas System; 8) Midwestern State University; 9) Stephen F. Austin State University; 10) Texas Southern University; and 11) Texas Higher Education Coordinating Board. The THECB proposes to appoint the following 11 individuals to the negotiating rulemaking committee for TRB debt service allocation to represent affected parties and the agency: University Marilyn Fowle, Vice President for Business Affairs, Midwestern State University Danny Gallant, Vice President for Finance and Administration, Stephen F. Austin State University Craig Ness, Vice President for Administration and Finance/CFO, Texas Southern University System Billy Hamilton, Executive Vice Chancellor/CFO, Texas A&M University System Mike Reeser, Chancellor, Texas State Technical College System Daniel Harper, Deputy Vice Chancellor for Finance, Texas State University System Jim Brunjes, Vice Chancellor/CFO, Texas Tech University System Terry Hull, Associate Vice Chancellor for Finance, The University of Texas System Raymond Bartlett, Vice Chancellor of Finance, University of Houston System Susan Sherman, Assistant Vice Chancellor for Financial Planning and Reporting, University of North Texas System Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 4 of 13

5 Texas Higher Education Coordinating Board Thomas Keaton, Director, Finance and Resource Planning Meetings will be open to the public. If there are persons who are significantly affected by the TRB debt service allocation plan and are not represented by the persons named above, those persons may apply to the agency for membership on the negotiated rulemaking committee or nominate another person to represent their interests. Application for membership must be made in writing and include the following information: Name and contact information of the person submitting the application; Description of how the persons are significantly affected by the allocation plan and how their interests are different than those represented by the persons named above; Name and contact information of the person being nominated for membership; and Description of the qualifications of the nominee to represent the person's interests. The THECB requests comments on the Notice of Intent to engage in negotiated rulemaking and on the membership of the negotiated rulemaking committee for TRB debt service allocation. Comments and applications for membership on the committee must be submitted by September 8, 2015 to: Mary E. Smith, Ph.D. Alternative Dispute Resolution Coordinator Texas Higher Education Coordinating Board P.O. Box Austin, Texas Fax: (512) TRD William Franz General Counsel Texas Higher Education Coordinating Board Filed: August 19, 2015 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 5 of 13

6 Appendix C: Committee Roster Midwestern State University, Marilyn Fowle, Vice President for Business Affairs Stephen F. Austin State University, Danny Gallant, Vice President for Finance and Administration Texas A&M University System, Billy Hamilton, Executive Vice Chancellor and Chief Financial Officer Texas Higher Education Coordinating Board, Thomas Keaton, Director, Finance and Resource Planning Texas Southern University, E. Craig Ness, Vice President for Administration & Finance/ Chief Financial Officer Texas State Technical College System, Mike Reeser, Chancellor Texas State University System, Daniel Harper, Deputy Vice Chancellor for Finance Texas Tech University System, Jim Brunjes, Vice Chancellor and Chief Financial Officer Texas Woman's University, B.J. Crain, Interim Vice President for Financial Administration The University of Texas System, Terry Hull, Associate Vice Chancellor for Finance University of Houston System, Raymond Bartlett, Vice Chancellor of Finance University of North Texas System, Susan Sherman, Assistant Vice Chancellor for Financial Planning and Policy Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 6 of 13

7 Appendix D: Facilitator Kristen Kramer, Ph.D. Deputy Assistant Commissioner, Student Success Division of College Readiness and Success (B.A., The University of Texas at Austin; M.A., Ph.D., Duke University) Dr. Kramer spent over a decade teaching and developing curriculum for undergraduate foreign language and literature and several years editing for a scholarly journal. Before her academic career, she coordinated academic enrichment programs for at-risk middle and high school students in Texas. She joined the Texas Higher Education Coordinating Board in 2007, focusing on college readiness initiatives and on developing strategies for implementing the Texas College and Career Readiness Standards. Still involved in working with colleges and school districts to improve alignment, she currently also oversees developmental and adult education, the Texas Success Initiative, and student success initiatives, working with colleges to identify and implement promising practices for improving student persistence, success, and postsecondary completion. She has completed mediation training from The Dispute Resolution Center of Austin. Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 7 of 13

8 Appendix E: Proposed Plan The methodology proposed by the THECB is to proportionalize the annually available $240 million in debt service starting in FY 2017 as directed in HB1 (84th, RS). First, each project was considered as a percentage of all projects approved in HB100. Next, the percentage an individual project represented as a function of all approved projects was multiplied by the total available ($240 million) to determine the relative share of the available funds should be attributed to a given project. The Negotiated Rulemaking Committee on TRB Debt Service Allocation reached full consensus on this allocation plan at their September 30 meeting. The allocation plan will be recommended for approval at the October 22 Board Meeting. Proposed TRB Debt Service Allocation (HB 100) Institution Proj_Name Project Amount as stated in HB 100 Percent of total Proportional Annual Debt SVC allocation Texas A&M University - Nursing and Health Sciences $48,000, % $ 3,712,594 Commerce Texas A&M University - Corpus Life Sciences Research and $60,000, % $ 4,640,742 Christi Engineering Texas A&M University - Educational Complex $60,000, % $ 4,640,742 Kingsville Texas A&M University - Academic and Student Service $32,000, % $ 2,475,062 Texarkana West Texas A&M University Agricultural Sciences Complex $38,160, % $ 2,951,512 West Texas A&M University Renovation of the Amarillo $7,200, % $ 556,889 Center Texas A&M University System Dental Clinic Facility at the $72,000, % $ 5,568,891 Health Science Center Baylor College of Dentistry Texas A&M University System Multidisciplinary Research and $72,000, % $ 5,568,891 Health Science Center Education Facility in Bryan, Texas Texas A&M International Library Renovation through the $55,200, % $ 4,269,483 University addition of instructional and support space Prairie View A&M University Fabrication Center and capital $28,632, % $ 2,214,562 improvements Tarleton State University Applied Sciences $54,000, % $ 4,176,668 Tarleton State University Texas A&M University Texas A&M University at Galveston Texas A&M University - Central Texas Texas A&M University - San Antonio The University of Texas at Austin The University of Texas - Rio Grande Valley Southwest Metroplex in Tarrant County $39,600, % $ 3,062,890 Biocontainment Research $75,000, % $ 5,800,928 Facility Classroom and Laboratory $60,000, % $ 4,640,742 Facility and Campus Infrastructure Multipurpose $36,000, % $ 2,784,445 Science and Technology and Campus Infrastructure Renovation of Robert A. Welch Hall Multipurpose Academic Center at the Campus in Brownsville $75,000, % $ 5,800,928 $36,432, % $ 2,817,859

9 The University of Texas - Rio Grande Valley The University of Texas Southwestern Medical Center The University of Texas Health Science Center at San Antonio The University of Texas M.D. Anderson Cancer Center The University of Texas Medical Branch at Galveston The University of Texas at Arlington Interdisciplinary Engineering Academic Studies in Edinburg $30,600, % $ 2,366,778 Construction and Renovation $80,000, % $ 6,187,656 of a Vivarium and Academic and Laboratory Facilities Facility renewal and $80,000, % $ 6,187,656 renovation Sheikh Zayed Bin Sultan Al $70,000, % $ 5,414,199 Nahyan Health Education Center $67,800, % $ 5,244,039 Science and Engineering Innovation and Research $70,000, % $ 5,414,199 Engineering $70,000, % $ 5,414,199 The University of Texas at Dallas The University of Texas at El Interdisciplinary Research $70,000, % $ 5,414,199 Paso Facility The University of Texas at San Instructional Science and $70,000, % $ 5,414,199 Antonio Engineering The University of Texas at Tyler STEM $60,000, % $ 4,640,742 The University of Texas Health Science Center at Houston The University of Texas Health Science Center at Tyler The University of Texas of the Permian Basin University of Houston University of Houston University of Houston - Clear Lake Renovation and Modernization of educational and research facilities $80,000, % $ 6,187,656 Renovation and Modernization $14,800, % $ 1,144,716 of educational and research facilities Engineering and Kinesiology $48,000, % $ 3,712,594 s Health and Biomedical New Academic in $54,000, % $ 4,176,668 Sugarland, TX Health Sciences and $24,624, % $ 1,904,561 Classroom in Pearland, TX STEM and Classroom $54,000, % $ 4,176,668 University of Houston - Clear Lake University of Houston - Science and Technology $60,000, % $ 4,640,742 Downtown University of Houston - Victoria Academic expansion and land $60,000, % $ 4,640,742 acquisition University of Houston System Construction of a building and $46,832, % $ 3,622,254 land purchase near Katy Lamar University Science $60,000, % $ 4,640,742 Lamar State College - Orange Multipurpose Education $10,000, % $ 773,457 Lamar State College - Port Expansion of Technology $8,080, % $ 624,953 Arthur Program Facilities Lamar Institute of Technology Construction and Renovation $12,500, % $ 966,821 of the Technical Arts s Texas State University - San Engineering and Science Marcos Texas State University - San Health Professions in $48,600, % $ 3,759,001 Marcos Round Rock, TX Sam Houston State University Biology Laboratory $48,000, % $ 3,712,594 Sul Ross State University University of North Texas System Renovation and Modernization of Educational and Related Facilities and Infrastructure Renovations of College of Law s $6,240, % $ 482,637 $56,000, % $ 4,331,359 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 9 of 13

10 University of North Texas Construction and Renovation $70,000, % $ 5,414,199 of College of Visual Arts and Design Facilities University of North Texas at Student Learning and Success Dallas Center University of North Texas Interdisciplinary Research $80,000, % $ 6,187,656 Health Science Center at Fort Worth Texas Woman's University Laboratory $37,997, % $ 2,938,905 Midwestern State University Academic Expansion and $58,400, % $ 4,516,989 revitalization Stephen F. Austin State Science, Technology, $46,400, % $ 3,588,841 University Engineering, and Mathematics Research Texas Tech University Health Lubbock education, research, $60,264, % $ 4,661,161 and technology facilities Texas Tech University Health Permian Basin Academic $14,256, % $ 1,102,640 Facility Texas Tech University Health Amarillo Panhandle $5,715, % $ 442,031 Clinical/Hospital Simulation Texas Tech University Health El Paso Medical Science $75,520, % $ 5,841,147 at El Paso II Texas Tech University Experimental Sciences High $70,000, % $ 5,414,199 Tech Interdisciplinary Research Angelo State University College of Health and Human $21,360, % $ 1,652,104 Services Texas Southern University Robert J. Terry Library $60,000, % $ 4,640,742 West Texas Harlingen Waco Marshall Industrial Technology Center $12,000, % $ 928,148 Phase II of the Engineering Technology Center Renovation $3,750, % $ 290,046 Fort Bend Campus #2 $14,950, % $ 1,156,318 Purchase and Renovation of the North Texas Technology Center Annual debt service total $ 240,000,000 $11,040, % $ 853,897 $3,102,952, % $ 240,000,000 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 10 of 13

11 Appendix F: Adopted Plan AGENDA ITEM VI-D Consideration of adopting the Negotiated Rulemaking Committee s recommendation to the Board relating to the allocation Tuition Revenue Bond (TRB) funds to institutions of higher education RECOMMENDATION: Approval Background Information: House Bill (HB) 100, 84th Texas Legislature, Regular Session, authorized capital projects totaling $3.1 billion for institutions across the state. The bill did not specify the annual debt service reimbursement for each institution; rather, the total amount authorized for this purpose was addressed in HB 1, 84th Texas Legislature, Regular Session, as $240 million trusteed to the Texas Higher Education Coordinating Board (THECB) for allocation in Fiscal Year The THECB is required to present a plan for allocation to the Legislative Budget Board (LBB) by January 1, 2016, and no funds may be expended without the prior written approval of the LBB. The allocation methodology proposed for these funds were reviewed and approved by the Negotiated Rulemaking Committee on Tuition Revenue Bond Debt Service Allocation on September 30, The report of the Negotiated Rulemaking Committee is available at the offices of the Texas Higher Education Coordinating Board located at 1200 E. Anderson Lane, Austin, Texas. Tom Keaton, Director of Funding, Strategic Planning and Funding, will be available for questions. ****************************************************************************************************************************************** The methodology proposed by the THECB is to proportionalize the annually available $240 million in debt service starting in FY 2017 as directed in HB1 (84th, RS). First, each project was considered as a percentage of all projects approved in HB100. Next, the percentage an individual project represented as a function of all approved projects was multiplied by the total available ($240 million) to determine the relative share of the available funds should be attributed to a given project. Proposed TRB Debt Service Allocation (HB 100) Institution Proj_Name Project Amount as stated in HB 100 Percent of total Proportional Annual Debt SVC allocation Texas A&M University - Nursing and Health Sciences $48,000, % $ 3,712,594 Commerce Texas A&M University - Corpus Life Sciences Research and $60,000, % $ 4,640,742 Christi Engineering Texas A&M University - Educational Complex $60,000, % $ 4,640,742 Kingsville Texas A&M University - Academic and Student Service $32,000, % $ 2,475,062 Texarkana West Texas A&M University Agricultural Sciences Complex $38,160, % $ 2,951,512 West Texas A&M University Texas A&M University System Health Science Center Texas A&M University System Health Science Center Texas A&M International University Prairie View A&M University Renovation of the Amarillo Center Dental Clinic Facility at the Baylor College of Dentistry Multidisciplinary Research and Education Facility in Bryan, Texas Library Renovation through the addition of instructional and support space Fabrication Center and capital improvements $7,200, % $ 556,889 $72,000, % $ 5,568,891 $72,000, % $ 5,568,891 $55,200, % $ 4,269,483 $28,632, % $ 2,214,562 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 11 of 13

12 Tarleton State University Applied Sciences $54,000, % $ 4,176,668 Tarleton State University Texas A&M University Texas A&M University at Galveston Texas A&M University - Central Texas Texas A&M University - San Antonio The University of Texas at Austin The University of Texas - Rio Grande Valley The University of Texas - Rio Grande Valley The University of Texas Southwestern Medical Center The University of Texas Health Science Center at San Antonio The University of Texas M.D. Anderson Cancer Center The University of Texas Medical Branch at Galveston The University of Texas at Arlington Southwest Metroplex in Tarrant County $39,600, % $ 3,062,890 Biocontainment Research $75,000, % $ 5,800,928 Facility Classroom and Laboratory $60,000, % $ 4,640,742 Facility and Campus Infrastructure Multipurpose $36,000, % $ 2,784,445 Science and Technology and Campus Infrastructure Renovation of Robert A. Welch $75,000, % $ 5,800,928 Hall Multipurpose Academic Center $36,432, % $ 2,817,859 at the Campus in Brownsville Interdisciplinary Engineering $30,600, % $ 2,366,778 Academic Studies in Edinburg Construction and Renovation $80,000, % $ 6,187,656 of a Vivarium and Academic and Laboratory Facilities Facility renewal and $80,000, % $ 6,187,656 renovation Sheikh Zayed Bin Sultan Al $70,000, % $ 5,414,199 Nahyan Health Education Center $67,800, % $ 5,244,039 Science and Engineering Innovation and Research $70,000, % $ 5,414,199 Engineering $70,000, % $ 5,414,199 The University of Texas at Dallas The University of Texas at El Interdisciplinary Research $70,000, % $ 5,414,199 Paso Facility The University of Texas at San Instructional Science and $70,000, % $ 5,414,199 Antonio Engineering The University of Texas at Tyler STEM $60,000, % $ 4,640,742 The University of Texas Health Science Center at Houston The University of Texas Health Science Center at Tyler The University of Texas of the Permian Basin University of Houston University of Houston University of Houston - Clear Lake University of Houston - Clear Lake University of Houston - Downtown University of Houston - Victoria University of Houston System Renovation and Modernization of educational and research facilities $80,000, % $ 6,187,656 Renovation and Modernization $14,800, % $ 1,144,716 of educational and research facilities Engineering and Kinesiology $48,000, % $ 3,712,594 s Health and Biomedical New Academic in $54,000, % $ 4,176,668 Sugarland, TX Health Sciences and $24,624, % $ 1,904,561 Classroom in Pearland, TX STEM and Classroom $54,000, % $ 4,176,668 Science and Technology Academic expansion and land acquisition Construction of a building and land purchase near Katy $60,000, % $ 4,640,742 $60,000, % $ 4,640,742 $46,832, % $ 3,622,254 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 12 of 13

13 Lamar University Science $60,000, % $ 4,640,742 Lamar State College - Orange Multipurpose Education $10,000, % $ 773,457 Lamar State College - Port Expansion of Technology $8,080, % $ 624,953 Arthur Program Facilities Lamar Institute of Technology Construction and Renovation $12,500, % $ 966,821 of the Technical Arts s Texas State University - San Engineering and Science Marcos Texas State University - San Health Professions in $48,600, % $ 3,759,001 Marcos Round Rock, TX Sam Houston State University Biology Laboratory $48,000, % $ 3,712,594 Sul Ross State University University of North Texas System University of North Texas Renovation and Modernization of Educational and Related Facilities and Infrastructure Renovations of College of Law s Construction and Renovation of College of Visual Arts and Design Facilities Student Learning and Success $6,240, % $ 482,637 $56,000, % $ 4,331,359 $70,000, % $ 5,414,199 University of North Texas at Dallas Center University of North Texas Interdisciplinary Research $80,000, % $ 6,187,656 Health Science Center at Fort Worth Texas Woman's University Laboratory $37,997, % $ 2,938,905 Midwestern State University Academic Expansion and $58,400, % $ 4,516,989 revitalization Stephen F. Austin State Science, Technology, $46,400, % $ 3,588,841 University Engineering, and Mathematics Research Texas Tech University Health Lubbock education, research, $60,264, % $ 4,661,161 and technology facilities Texas Tech University Health Permian Basin Academic $14,256, % $ 1,102,640 Facility Texas Tech University Health Amarillo Panhandle $5,715, % $ 442,031 Clinical/Hospital Simulation Texas Tech University Health El Paso Medical Science $75,520, % $ 5,841,147 at El Paso II Texas Tech University Experimental Sciences High $70,000, % $ 5,414,199 Tech Interdisciplinary Research Angelo State University College of Health and Human $21,360, % $ 1,652,104 Services Texas Southern University Robert J. Terry Library $60,000, % $ 4,640,742 West Texas Harlingen Waco Marshall Industrial Technology Center $12,000, % $ 928,148 Phase II of the Engineering Technology Center Renovation $3,750, % $ 290,046 Fort Bend Campus #2 $14,950, % $ 1,156,318 Purchase and Renovation of the North Texas Technology Center Annual debt service total $ 240,000,000 $11,040, % $ 853,897 $3,102,952, % $ 240,000,000 Report of the Negotiated Rulemaking Committee on TRB Debt Service Allocation Page 13 of 13

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