UNIVERSITY OF HOUSTON SYSTEM
2007 LEGISLATIVE AGENDA
Base Funding Issues
Increase Formula Funding: In an effort to equitably distribute funding to universities, the Legislature allocates money through two formulas: Infrastructure Support and Instruction and Operations. This money provides for the core functions of a university based on such factors as enrollment by level and discipline and predicted square foot needs.
As demands on universities continue to grow, it is imperative to provide adequate funding for basic educational services through the formulas.
Without sufficient resources universities will see increased student/faculty ratios, reduced class offerings, fewer mentoring opportunities resulting in longer time to graduation, faculty losses, fewer graduates and less research.
Formula changes: The Coordinating Board (CB) has adopted their formula recommendations to the Legislature. They recommend continuing the phase-in of the formula cost study that resulted in a change in the matrix and in significantly lower rates for certain disciplines.
The CB further recommends the following:
- Adjust to current costs and provide inflation adjustment to the various rates contained in the formulas. Estimated biennial cost is $548.7 million, an increase of 12.7 percent.
- Fully fund known enrollment growth that occurred during the 2004-2005 and 2006 2007 base periods. Estimated biennial cost is $65.3 million, an increase of 4.3 percent.
- Provide a results-based payment for projected growth through the 2008-2009 biennium. Estimated biennial cost is $34.2 million.
- Provide for reimbursement of costs incurred by Texas public universities which provided educational instruction to students displaced by Hurricane Katrina. Estimated cost to reimburse is $4.6 million.
Total recommended increase: $600,942,695 (15.3 percent)
Special Items: Continued support for Special Item funding, more appropriately called non-formula items, is of vital importance. They include such things as the Texas Learning and Computation Center, the Small Business Development Center and other activities that do not fall into formula funding categories.
Research Development Fund (Tier One)
In 2005, the Legislature restored appropriations to the Research Development Fund that had previously been vetoed by the Governor. These funds are of critical importance to the continued growth of Texas’ economy and advancement in significant areas such as bionanotechnology, materials science, life science and other areas requiring a highly-skilled workforce. The annual appropriation is based on the total return of the Higher Education Fund Endowment.
Capital Construction
Tuition Revenue Bonds (TRBs): In the 1990s the Legislature authorized tuition revenue bonds every other session and funded the debt service with general revenue. There were attempts to pass bonds in both the regular and special sessions in 2005. Legislative leadership recognizes the need for new construction and major renovations at aging campuses; however, they are reluctant to commit to mounting debt service. This was evidenced by the passage of bonds in 2003 (1) without any new appropriation to cover debt service (Tech medical school in El Paso) and (2) interest only appropriations (UH Tropical Storm Allison). In 2005, funding for the Allison bonds was restored but the El Paso money has yet to be provided.
Requests for TRB’s last session surpassed $3 billion. For that reason, the legislative leadership has considered limiting the appropriation for debt service by providing for institutional or external match.
Exceptional Item Requests for debt payment on approved projects (assuming 20 year bonds @ 6.5%):
- UH $5,228,353 per year
- UHCL 962,461 per year
- UHD 2,462,863 per year
- UHV 2,852,280 per year
Higher Education Fund (HEF): In 2005, the Legislature authorized an $87.5 million increase to the current $175 million annual HEF appropriation, which will be implemented in the FY08-09 biennium.
In the 3rd Called Session, Senator Steve Ogden introduced a bill to use part of the budget surplus to fund the HEF endowment and a related constitutional amendment. Under the constitution, once the endowment reaches $2 billion, general revenue appropriations may cease. Because the current appropriation exceeds the amount of revenue generated by a $2 billion endowment, the constitution would need to be amended in order to maintain funding levels, if the Legislature ultimately funds the HEF endowment
Tuition
Retain Authority to Set Tuition: With continued growth and unpredictable revenue streams, it is important that universities have the flexibility to assess appropriate charges in order to maintain course offerings and quality.
Financial Aid: Funding for financial aid is a critical need for UHS students. The success of TEXAS Grants program has been a mixed blessing. Because so many students continue to be qualified, the Legislature has not been able to fully fund the program. The CB is currently considering revisions to various programs in order to maximize financial aid dollars.
