Prepared Remarks
Jay Gogue
Chancellor, University of Houston System
President, University of Houston

Legislative Appropriations Request ( LAR ) Hearing
Before Governor’s Office of the Budget and Legislative Budget Board

Hilton University of Houston Hotel
September 18, 2006

Overview of the UH System

The UH System is the largest provider of university services in the Houston metropolitan area:

  • The total budget is $984 million.
  • Total enrollment exceeds 56,000 students, of which no single ethnic group constitutes a majority.
  • Annual degrees awarded are 11,317.
  • Annual research awards are approximately $83 million.
  • The total number of faculty and staff exceeds 8,500.

Impact of the UH System on the Houston Metropolitan Area

This spring, Dr. Barton Smith, a University of Houston economist, published a case study on the economic impact of the UH System universities (UH, UHCL, UHD) on the Houston metropolitan area. His findings include:

Economic Variable Total Gain*
Real Gross Domestic Product
$1.37 billion
Sales
$3.13 billion
Real Income
$1.09 billion
Employment
23,920
Population
29,800

*Average for FY 2002 through FY 2004

UH–Victoria has a similar impact on the Victoria economy:

Economic Variable Total Gain*
Real Gross Domestic Product
$66 million
Sales
$150 million
Real Income
$52 million
Employment
1,151
Population
1,434

*Average for FY 2002 through FY 2004

Also, the $288 million invested by the state in the UH System universities produces a “rebate” of $127 million in the form of increased state revenues, making the net cost to the state about half of the legislated appropriations.

Equally important, although more difficult to quantify, the study indicates that the UH System universities contribute to the Houston economy in many other ways:

  • Educating Houstonians and enhancing local human capital: From 1990 to 2000, the number of persons holding a bachelor’ s degree in Houston increased by 250,000. The UH System’ s contribution was 14%.

  • Research synergies in:
    • Medical research and education
    • Aerospace/NASA
    • Energy and environment
    • Homeland security and public safety

  • Community Partnerships: There are close to 600 programs, departments, institutes, and other activities that touch individuals and organizations in the greater Houston area.

One important partnership for the UH System is with NASA, on behalf of which we receive special item funding for two programs:

  • Aerospace Scholars Program: Through the Aerospace Scholars program, NASA provides aerospace education opportunities to middle school and community college students and teachers. More than 3,100 students have participated in the program since 1999.

  • Technology Outreach Program: Through the Technology Outreach Program, NASA scientists and engineers assist small business with technology development and commercialization. The program leverages state funds with free engineering support from aerospace contractors at a ratio of 15 to 1.

On behalf of NASA, exceptional item funding in the amount of $260,881 per year has been requested to expand the outreach of both of these programs.

Despite the good news about the UH System, there were some major warnings in the case study, as well:

  • In 1990, Houston was near the average in terms of educational attainment – the percent of the population 25 years and older holding a bachelor’s degree – compared to nine other cities identified as economic competitors.

  • By 2000 Houston had slipped to one percentage point below the average (not because we weren’t increasing educational attainment, but because other cities were doing it better).

  • For Houston to simply maintain its position with these other cities, we must increase the number of people with bachelor’s degrees by almost 39,000 per year over the next five years.

  • At current production levels from the UH System, other local universities and in–migration of persons with bachelor’s degrees from outside the city, we will cover only 70% of these needs.

Overview of the University of Houston

  • UH is the largest comprehensive research university in the Houston metropolitan area.

  • UH is the most ethnically diverse major research university in the U.S.

  • The total budget is $717 million.

  • Total enrollment is approximately 34,000 students, of which no single ethnic group constitutes a majority.

  • Annual degrees awarded are 6,833.

  • Annual research awards approximately $80 million.

  • The total number of faculty and staff exceeds 6,300.

    • UH System / University of Houston Legislative Priorities

    As Professor Smith’s study shows, the University of Houston System and public universities, in general, are a very sound investment for the state of Texas, but one that will require additional support in the years ahead if we are to effectively close the educational gaps.

    Other studies indicate that the Houston metropolitan area will add another 1.4 million persons by 2015, 800,000 of which will be of Hispanic descent. Accommodating a corresponding level of enrollment growth at our universities will require major investments in faculty, staff, facilities and other infrastructure.

    To that end, the UH System has identified the following priorities for the 80th Texas legislative session:

    1. Increase base funding to support:
      • Enrollment growth
      • Increasing costs of goods and services
      • Faculty and staff salaries
      • Insurance
      • Utilities (budget increase for FY07: $6 million)

    2. Return of the 10% reduction taken from UH special items. Impact of the reduction may include decreases in:
      • Research productivity
      • Leveraged resources from federal and industrial sources
      • Technology transfer
      • Public school outreach
      • Research opportunities and internships for students
      • Public policy research utilized by the Legislature
      • Collaborations with Texas Medical Center, NASA, and other organizations
      • Economic development activities

    3. Tuition Revenue Bond Debt Service:
      • $60 million in TRBs was authorized to modernize undergraduate science labs, some of which haven’t been renovated since the 1960s.
      • Doing so is needed to provide a 21st century education, attract students to UH, and address health/safety issues.
      • Total UH debt service for the 2008–2009 biennium will be $10.5 million.

    4. Increase funding for the Higher Education Fund (HEF) from $175M to $225M (as authorized during the last legislative session). The UH System uses HEF resources to fund:

      • Classroom renovations
      • Research lab renovations
      • IT infrastructure
      • Library acquisitions

    5. Fully fund the Research Development Fund: RDF funds are critical to the University of Houston’ s goal of becoming a tier–one research university.

    6. Continue to fund special items and consider funding exceptional item requests.

    UH Special Items

    UH programs funded through special items fall into three major categories:

    • Research
    • Public service
    • Institutional support

    Key features of UH research special items include:

    • Use of state funds to leverage federal funds
    • Technology commercialization
    • Partnerships with key Houston industries (energy, health care, biotechnology, aerospace)
    • Education of graduate and undergraduate students
    • Outreach to public schools

    UH research special items:

    • Texas Center for Superconductivity at the University of Houston (TCSUH): Conducts multi–disciplinary research and education in high–temperature superconductivity and related materials.

      Accomplishments: Published over 500 manuscripts and awarded 371 advanced degrees in the sciences and engineering over the past five years.

    • Center for the Commercial Development of Space (Center for Advanced Materials): Promotes research, technology development, and commercialization of thin film materials developed terrestrially and in space.

      Accomplishments: Ten new products, five spin–off companies, training of over 120 undergraduate and graduate students, and 21 patent applications over the past five years.

    • Texas Learning and Computation Center (TLC2): Supports interdisciplinary research, education and training in the computational sciences and engineering.

      Accomplishments: Contracts and grants in excess of $1 million from DARPA and DOD for infra–red imaging that will aid in identifying potential acts of terrorism.

    • Institute for Space System Operations (Houston Partnership for Space Exploration): Supports joint aerospace research activities conducted by UH, UH–Clear Lake, NASA and industry.

      Accomplishments: $6.9 million in new grants and contracts in FY05.

    UH public service special items include:

    • Small Business Development Center: Provides free business counseling, seminars, government procurement assistance, and technology development to entrepreneurs and the small business community.

      Accomplishments: Counseled clients generated over $252 million in new sales and created almost 4,000 new jobs from 2004 to 2005.

    • Health Law & Policy Institute: Conducts health policy research on behalf of the Legislature and provides health policy interns to legislative offices.

      Accomplishments: Produced a dozen policy research reports on behalf of the Texas Legislature during the 79th session.

    • Center for Public Policy: Analyzes data for public policy issues affecting the Houston metropolitan area and Texas. Runs the Mickey Leland Congressional Internship Program in Washington, DC.

      Accomplishments: Nearly 500 students have been placed in local city, county, state and federal government offices through the Local Government Internship Program.

    • Partnership to Support Public Schools: Funds programs that enhance the quality of public school education, including the Consistency Management/Cooperative Discipline program, which works to improve the quality of public schools through better classroom management, and the TIMES program, which works to improve the English reading skills of Spanish speaking school children.

      Accomplishments: TIMES was awarded $24.5 million in grants and contracts during FY 2006.

    UH institutional support special items include:

    • Faculty Excellence: UH receives $2.5 million per year for faculty excellence. These resources enable the university to accomplish the following:

      • Create new faculty positions
      • Increase research productivity
      • Reduce student/faculty ratios
      • Facilitate UH’ s goal of becoming a tier–one university.

    UH Exceptional Items

    The University of Houston has requested exceptional item funding for several existing and new programs. In the interest of time I will discuss the two most important of these briefly.

    Faculty Excellence

    • As indicated earlier, new faculty positions are needed to educate more students, increase research productivity, reduce student/faculty ratios, and accomplish the university’ s goal of becoming a tier–one research institution.

    • This year the university has developed a plan to hire 150 new faculty members over the next few years.

    • An increase of faculty excellence funding of $13.5 million over the biennium is requested to help us implement this plan.

    Compensation for Hurricane Katrina Expenses

    • In fall 2005, the University of Houston enrolled 930 students affected by Hurricane Katrina, more than any university outside of Louisiana.
    • In addition, we opened our campus to Loyola University administrators and law faculty so they could teach their courses.
    • In meeting these needs, the University of Houston incurred costs of approximately $4.6 million, for which we have received only $2.1 million in payment from students, scholarships, and the federal government.
    • To make the university whole, we respectfully request an appropriation of $2,548,661 in one–time funds during FY 2008.

    Conclusion: Student Success and TEXAS Grants

    In conclusion, I would like to talk about student success.

    One of the greatest challenges facing the State of Texas and the University of Houston today is ensuring that students, once they enroll, complete their bachelor’ s degree as quickly as possible and become productive members of the workforce.

    To promote timely graduation, the state has created the B–On–Time loan program and a rebate program for students who graduate with minimal excess hours.

    The University of Houston is taking numerous steps to promote timely graduation, as well.

    This charge has been led by our regents, who have identified the creation and implementation of a UH enrollment management plan as one of their top strategic initiatives.

    UH student success initiatives:

    • Graduation pledge and 4–year graduation contract for FTIC freshmen
    • Plan to increase the number of academic advisors on campus (to be implemented this year)
    • Alternate weekend and summer pricing strategies
    • Tripling of merit–based scholarship offers to FTIC freshmen
    • Merit–based scholarship program for high–achieving community college transfer students
    • JUMP program, through which FTIC freshmen get a head–start on their college education by completing six credit hours in the preceding summer (~200 participants this summer)

    As many of you know, students at the University of Houston are not the traditional 18– to 24–year–olds who attend full time and are supported by their parents.

    Many of our students work while attending school, have families to support, and are the first generation of their families to go to college.

    With important priorities and challenges such as these, it is incumbent upon the University of Houston to take the additional steps needed to ensure our students succeed.

    In addition to the initiatives I have just described, TEXAS Grants are an invaluable way in which we support students and promote timely graduation.

    The University of Houston will encourage full funding of the TEXAS Grant program during the next legislative session.

    I will be happy to respond to any questions.