Winter 2004

Fiscal Finesse

The Legislature Giveth and The Legislature Taketh Away

 During the 2003 legislative sessions, a fractious congressional redistricting battle captured media headlines, but Texas law-makers also wrestled publicly with thorny budgetary issues that will drive the state’s fiscal course the next two years. The emergent state budget forced cuts in many state programs, including universities. For The University of Texas at Austin, the total loss of state revenues amounted to near $20 million per year. 

 UT Austin president Larry Faulkner called the result one of “long-term promise and short-term challenge.” In support of the former, he cited two powerful strategic gains: 

 •  granting authority to the Board of Regents to set tuition

 •  100 percent return to the university of indirect costs recovered from the federal government and other granting agencies, with the stipulation that such monies support research. In the past, 50 percent of indirect costs generated by faculty through research contracts went into the state’s general revenue fund.

 The latter was achieved in part through the efforts of UT Austin engineering alumnus Bill Ratliff (B.S.C.E., ’60), then chair of the Texas Senate’s state affairs committee, working with Speaker Tom Craddick and Rep. Geanie Morrison.   

 The College of Engineering will greatly benefit from both developments. However, for the short-term, the college was asked to take a $2 million recurring reduction in state revenues. That loss of funds has substantially curtailed efforts in faculty hiring, teaching assistant support, and other areas.

 Even before the current cutbacks, the generous support of private donors has played a crucial role in keeping the College of Engineering competitive with the nation’s finest schools, despite significantly lower funding than our peer institutions.

  The bar graph on the next page was used in the last legislative session to tell the story of UT Austin’s difficult position in competing with its peers. It illustrates UT Austin’s position among five other leading public universities in terms of resources available from state appropriations, tuition and fees, and, in the case of UT Austin, income from the Permanent University Fund (PUF).

 The bar graph also demonstrates that income from the PUF remains a useful, but far from dominant, part of our support. UT Austin remains largely dependent on state funding and tuition and fees, as do our peer institutions.

 On the high end, the University of Michigan, which relies principally on tuition, expends approximately $23,000 to educate each student per year. Close behind, the University of California at Berkeley derives most of its support from state appropriations.  

By contrast, UT Austin—with state appropriations and tuition/fee sources nearly equal—expends about $13,000 to educate a student, despite the contribution of a unique resource, the Permanent University Fund. 

 The gap of $10,000 between UT Austin resources and those of the University of Michigan or UC Berkeley remains too steep to bridge by mere belt-tightening. Consequently, the new freedom to raise tuition is vitally important. The bill passed by the Legislature authorizes the boards of regents of state institutions of higher education to determine tuition.

 To set in place a new tuition schedule, President Faulkner formed a Tuition Policy Advisory Committee co-chaired by the executive vice president and provost, and the vice president and chief financial officer, and composed of students and campus officers working together to determine and review tuition policy. The committee makes recommendations to the president, on a three-year rolling basis. 

In November the Board of Regents of The University of Texas System approved the UT Austin committee recommendations for spring tuition increases after receiving assurances that adequate financial aid would be available to help students pay for the new costs. UT Austin will use a flat-rate tuition plan that allows the cost per credit hour to go down as students increase the number of hours taken during a semester. The plan also includes other major financial incentives for students to increase their course loads and graduate on time. The new tuition plan will increase tuition $360 for the spring 2004 semester, and more increases may follow. Students from low income families will be exempt from these increases, and students from middle income families will be partially exempt. 

 There is no question that setting tuition will greatly impact the future of the College. However, the College would not be the top 10 program it has become without the contributions of its many friends and alumni. Both remain necessary to become the top public engineering college in the nation.