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Texas A&M, UT-Austin leaders speak out against proposed further split of PUF

Texas A&M, UT-Austin leaders speak out against proposed further split of PUF

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Representatives from The Texas A&M University System and The University of Texas System made their case this week against the idea of making room in the Permanent University Fund for other systems, such as Texas Tech and the University of Houston.

State Rep. Carol Alvarado, D-Houston, who was the author of House Joint Resolution 110, said during a meeting of the House Higher Education Committee on Wednesday she has no intention of bringing it to a vote this session, but rather just wanted to start a conversation that can continue in the years to come.

Established in 1876 by the Constitution of the State of Texas, the PUF is an endowment of roughly 2.1 million acres of land across the state that provides invested funds managed by the recently renamed University of Texas/Texas A&M Investment Management Company. A percentage of the earnings on those investments are then distributed among the participating universities. The fund was valued at $17.5 billion in 2015. It has grown by roughly five times since 1990, when it was valued at around $3.5 billion.

Any change to the fund -- including the addition of a new system to its benefits -- would require a constitutional amendment or two-thirds vote approved by the legislature.

Alvarado said the move as drafted would cap funding levels for the PUF at their levels as of Aug. 31, 2019. She said 99 percent of additional dollars yielded by the fund would then be allocated "for the support and maintenance" of U of H and Texas Tech.

She compared the conversation to the one held around the state's Rainy Day Fund and said she only hopes this will "open up the discussion" about other ways to use the PUF.

"This is not an effort to take away from what any university has or is receiving from this PUF," Alvarado said. "It is to simply look at what we could do when the cap exceeds and where those funds go and having the ability to create a second tier to adequately fund some of our other fine institutions."

A&M System Chancellor John Sharp and regents Charles Schwartz and Cliff Thomas were joined by representatives from the UT System in testifying in opposition to the move.

"For more than a century, outstanding universities have been a source of pride for Texas and for very good reason," Sharp said. "We have in Texas A&M and the University of Texas at Austin two of the finest public universities not just in the nation, but the world."

Sharp said the A&M System most recently received roughly $300 million from the PUF.

He said a move to further split the fund would be detrimental to the systems' abilities to continue their current paths of growth and pursuit of high-caliber research -- particularly at the two flagship universities.

"Without that fund, UT and A&M would have to rely entire on tuition and state revenues for their support," Sharp said. "...There is no easy way to say it: HJR 110 turns its back on this tradition of excellence. It would water down the Permanent University Fund so that it would be just another source of funding for higher education."

The committee also heard input from University of Houston professor David Francis, who said he believes HJR 110 to be "about the future of higher education in Texas."

"The bill would provide a way to ensure Texas universities that have achieved excellence can remain nationally competitive at the lowest cost to taxpayers," Francis said. "The State of Texas needs for institutions like the University of Houston and Texas Tech to also remain excellent, nationally competitive and affordable. The difference in state-sponsored support that results from PUF will eventually make this impossible for non-PUF institutions."

Francis said the concept proposed by Alvarado could even be replicated in the future, using growth from both tiers of the fund to create a third or more.

Closing the discussion, Alvarado said she hopes to see the conversation continue on as they move forward in seeking to define new ways of funding Texas universities.

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