January 25, 2005

Texas General Land Office

The Texas General Land Office has released an internal audit of the State Power Program that the GLO says has led to significant improvements in how the popular program operates. Text

"Conducted over the summer and published on June 24, the internal audit suggested changes in how the State Power Program could report data and manage gas," said a news release.  "Upon its completion in June, the audit was submitted to the Governor's Office of Budget and Planning, the Legislative Budget Board, the Texas State Auditor's Office and the Sunset Advisory Commission."

Changes made to the program following the audit include:
· Purchase of a gas management software system
· Reallocation of staff
· New accounting procedures
· Creation of a comprehensive operations manual for the program.

"We took a good hard look at this program and we found some areas where it had outgrown its procedures," said Jerry Patterson, Commissioner of the Texas General Land Office. "We've taken steps to correct these issues. This audit has really helped us make a good program better."

After reviewing the changes made to the program, Helen Young, Director of Internal Audit at the Land Office, wrote in a January 24 internal memo, "Based on our review of the documentation you have provided and meetings with program personnel, our preliminary assessment is that management is addressing the issues identified in the audit report "

"Since its inception in 2000 under former Land Commissioner David Dewhurst, the program has managed to not only save local school districts tens of millions of dollars on their power bills, it has also made money for the state's Permanent School Fund," said the news release.  "In Corpus Christi, school officials saved $750,000 in just one year. The savings for Plano schools is about $300,000 annually. In the Lower Rio Grande Valley, taxpayers in the Edinburg Consolidated Independent School District saved about $1.5 million on electricity."

"This program is the best example of government doing business as a business that I know of," Patterson said.

The State Power Program uses gas from state lands to generate electricity. This electricity is then sold to public customers, such as schools and universities. The proceeds from these power contracts flow directly into the state's Permanent School Fund, which pays for the state's share of public education.

Patterson notes that a recent survey of the program's customers showed 90 percent of respondents are happy with the program, and almost two-thirds would recommend it to their colleagues. 

"And - like Galveston Independent School District recently did - 97 percent said they'd likely continue to contract with the State Power Program," the news release added.

"I have felt since de-regulation that the State of Texas should mandate that school districts use GLO," said Harriet Villalpando, assistant superintendent for Finance and Operations in Edinburg.  "Because the electricity is owned by the state and any profit goes into the Permanent School Fund, any profits for the state and any savings to districts goes directly to education."

The State Power Program counts 171 school districts among its 338 public customers. The program's early success, in fact, caused growing pains that resulted in Land Office staff limiting the number of customers the program accepted. 

Patterson said the improvements have now cleared the way to allow the program to begin accepting new customers.

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