The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.
Rewritin’ ‘Rithmetic
The Texas Association of Business is speaking out against a new K-12 math curriculum proposed by the State Board of Education, arguing that the standards will hinder the future Texas workforce because they do not adequately prepare students for college or careers after graduation.
TAB president Bill Hammond wrote a memo to the SBOE and state legislators expressing “concerns that the standards were not particularly rigorous and were, in some places, poorly written to the point of being incoherent,” the Texas Tribune reported this week. If approved, the standards will be in effect for the next ten years.
The Bottom Line: Curriculum debates have become something of a tradition for the SBOE, as exemplified in high-profile dustups over social studies and science textbooks in recent years.
Texas is one of just five states that write their own standards rather than adopting the national core curriculum. “We do not need the federal government telling us what and when to teach our children,” SBOE chairwoman Barbara Cargill wrote in a recent newsletter.
Ed in the Sand
Texas’ education troubles extend beyond K-12 classrooms, according to a University of Pennsylvania report released this week. Just 32 percent of Texans ages 25 and older have earned at least an associate degree, ranking the state at 39th in the country in that category.
The report projects that by 2018, more than half of jobs in Texas will require post-secondary education or vocational training. “Unless more Texans earn certificates and degrees, and soon, Texas businesses will have no other choice but to look outside the state to find these workers,” the study concludes.
The Bottom Line: The state’s shortfall in education funding may be at the heart of the problem. The Penn report cautions against investing too heavily in university research at the expense of undergraduate resources, the Fort Worth Star-Telegram reported. Instead, the legislature should “push forward with efforts to move to performance-based funding for higher education,” offering rewards for increasing graduation rates and meeting other benchmarks.
Cobalt Blues
Houston-based Cobalt International Energy Inc. is at the center of an ethics investigation after reports that the company may have offered concealed shares to senior officials overseeing its operations in Angola. An article in Sunday’s Financial Times reported the head of Cobalt’s offshore oil partner and an Angolan general admitted held the shares but claimed they did not play a role in awarding the company’s drilling rights.
The incident “may raise questions about compliance with U.S. anti-bribery law,” according to Bloomberg. Cobalt denies any wrongdoing.
The Bottom Line: Cobalt shares “had tripled in value since it announced a big oil discovery off Angola’s coast late last year,” Reuters reported, but on Monday, its stock dropped 10 percent as investors reacted to news of the allegations.
Mind the Gap
The gap between men’s and women’s salaries is slightly smaller in Texas than it is for the U.S. as a whole, according to a report released this week by the National Partnership for Women & Families. The Dallas Business Journal found that women in Texas are paid eighty cents for every dollar a man earns, compared to the national average of 77 cents. That works out to a difference of $8,355 in median annual wages.
The Bottom Line: Another disheartening statistic: Just 7.5 percent of corporate board members at Houston companies are women, compared to the national average of 16 percent, according to a recent review. Also, more than a quarter of Houston’s 50 largest public companies have no women on their boards at all, the Houston Business Journal reports.
Winners of the Week: Oil and Gas Drillers
A Travis County district judge ruled last week that drilling equipment used for hydraulic fracturing should be exempted from state sales taxes, which Texas Comptroller Susan Combs says could cost the state as much as $4.4 billion in revenue. The decision reverses the current policy, which does not classify drilling as a manufacturing process and thus requires companies to pay taxes on equipment purchases, the Wall Street Journal reported.
Attorneys representing the industry say that “filing a refund claim is a low-risk, high-reward move for oil and gas companies,” according to the Houston Business Journal. Rebates to all the oil and gas companies in Texas—which could amount to $500 million per year—would also apply retroactively to the last four years. Combs says she is likely to appeal the ruling.
Loser of the Week: Jeff Skilling
The U.S. Supreme Court declined to throw a lifeline to former Enron executive Jeff Skilling this week, upholding his corporate fraud conviction and denying his second request for an appeal. Skilling was convicted in 2006 of nineteen counts of securities fraud and other financial crimes that led to the collapse of the Houston energy company. He is now serving a 24-year prison sentence in Colorado.
Skilling’s defense team, which had hoped for a new trial, argues that prosecutors applied the wrong standards during his initial sentencing. Skilling must now be resentenced by a U.S. district court, and some legal experts expect the prison term to be reduced to fifteen or sixteen years, the Houston Chronicle reports.
