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University of Houston System

As the global economy becomes increasingly driven by the creation of new knowledge and technological innovation, success for the Houston metropolitan area depends increasingly on the existence of a highly-skilled, professional workforce and cutting-edge research and development. As the region's largest provider of comprehensive (baccalaureate to doctorate) higher education services, the University of Houston System must play a primary role in meeting these needs. In short, we must expand access to our universities to all qualified students; we must ensure their success by the completion of a degree; we must deliver programs that correspond to workforce needs; we must conduct research that is relevant to industry and society; and we must do it all with limited resources and in a way that demonstrates accountability to our students and the people of Texas.

To fulfill these mandates, the UH System has four universities – the University of Houston, UH-Clear Lake, UH-Downtown, and UH-Victoria. The University of Houston is the system’s comprehensive research university, offering programs from the baccalaureate through the doctorate. UH-Clear Lake and UH-Victoria are upper-level/master’s universities located in Southeast Houston and Victoria (although UHV has a large presence in Southwest Houston and reaches many students in Houston and beyond through extensive online programs). And UH-Downtown is a predominantly undergraduate institution with a growing number of master's programs. The UH System Administration is responsible for coordinating the operations of the universities, as well as providing select centralized services (e.g., general counsel, board of regents, auditing).

In meeting the needs of the Houston metropolitan area, the UH System is making significant progress. Over the past five years, enrollment system-wide has increased from 54,907 to 56,762 (3.4%) and the number of degrees awarded has increased from 9,536 to 11,735 (23.1%). In addition, last year research awards system-wide were $95.9 million. Among universities nationwide, the UH System remains a model of diversity and a reflection of the city it serves. In fall 2007, the UH System student body was 15.8% African-American, 15.3% Asian, 22.5% Hispanic, and 38.3% white.

The UH System is also aggressively expanding access to its degree programs through off-campus centers. The pattern of population growth in Houston over the past 20 years has been away from the center of the city in favor of the surrounding suburbs, particularly in the region’s “western hemisphere.” Unfortunately, as a result of distance, traffic, work and family responsibilities, students who live in these areas often find it difficult if not impossible to pursue a college education at our universities’ main campuses, which, in the case of UH and UH-Downtown, are centrally located. To meet the needs of these students we have developed the UH System at Sugar Land and Cinco Ranch, both of which enjoy permanent facilities and broad community support in the southwestern and western parts of the metropolitan area. UH-Clear Lake has also begun to offer programs in Pearland, a high-growth community in the southern part of the region. What remains underserved is Northwest Houston, an area with a population of 1.4 million people (larger than the city of San Antonio) and no permanent university in the region. Currently, the UH System is engaged in discussions with other universities in close geographic proximity to Northwest Houston as to how the area’s needs for baccalaureate and master’s level education can best be met. We anticipate program delivery as early as fall 2009.

Given the breadth of the UH System institutions and the significant amount of expansion we are undertaking, coordinated planning is essential if we are to fully serve our constituents. In May of this year, at the conclusion of Dr. Renu Khator's first 100 days as UH System Chancellor, a planning retreat was held with the UH System Board of Regents to discuss the future direction of the UHS universities. An important outcome of the retreat was the establishment of the following three UH System goals:

1. Student Access and Success
   The UH System will commit to providing access to the people of the Greater Houston Region and the state. Each university within the system will make student success its top priority and will hold itself publicly accountable for achieving this goal.
2. National Competitiveness
   The City of Houston (and the Greater Houston Region) will be known for having one of the best metropolitan systems of higher education in the nation.
3. Community Advancement
   The UH System will be the engine of social and economic advancement of the metropolitan region and the state. Each university within the system will engage with its community and will hold itself accountable for contributing toward community advancement.

In addition to guiding UH System planning in the coming years, these goals also further the state’s goals for higher education identified in “Closing the Gaps.”

As we look to the future, the needs of our constituents and the goals we have established for serving them necessitate greater resources than our universities currently possess. By 2015, demographic forecasts predict the Houston metropolitan area will add another 1.4 million persons. Accommodating a corresponding level of enrollment growth at our universities will require tremendous investments in faculty, staff, facilities and other infrastructure. Therefore, we ask that the Legislature consider the items listed below as areas of critical concern to the University of Houston System:

1. Base Formula Funding
   As demands on our universities grow, it is imperative to provide adequate resources for basic educational services through the formulas. The University of Houston makes the following specific recommendations with regard to formula funding:
• To maintain the current level of services, adopt the Formula Advisory Committee’s recommendation of increasing base formula funding by $478 billion (which covers the costs of inflation and enrollment growth).
• Keep base formula funding separate from incentive formula funding, in order to ensure that universities have the predictability and consistency needed (in terms of base resources) to plan for, budget and operate their institutions effectively.
• Continue to calculate semester credit hours for base formula purposes on the basis of courses in which students enroll rather than courses they complete. Using the “courses completed” model would cause a major redistribution of resources away from institutions with the greatest need of financial support to enhance student success and timely graduation.
2. Funding for Special Items and Exceptional Items
   Each year the Legislature funds numerous programs at the UH System universities that fall outside the scope of formula funding. These programs have a tremendous impact on our academic programs, research endeavors and the communities we serve. The UH System recommends continuation of special item funding and consideration of our requests for exceptional item funding.
3. Research Development Fund and Texas Competitive Knowledge Fund
   The Research Development Fund and the Texas Competitive Knowledge Fund are of critical importance to the continued growth of Texas’ economy and advancement in significant areas of research and industry. They are also the primary resources through which the University of Houston funds its goal of becoming the state’s third tier-one university. We therefore recommend increased appropriations to both of these funds.
4. Tuition Revenue Bonds
   Maintaining quality in our classrooms, laboratories, libraries and equipment is critical to achieving the UH System’s goals of academic and research excellence. And as the number of students and faculty at our institutions grow, so too does the need for expanded and better infrastructure. Tuition revenue bonds are vital for addressing these needs.
5. Financial Aid/TEXAS Grants
   In addition to resources for university operations, state funding for student financial aid is essential if Texas is to expand access to higher education and facilitate student graduation. This is especially true at the UH System institutions, where the education of many of our students is not paid for by their families. Rather our students typically work to pay for college and rely heavily on financial aid. Therefore, the UH System encourages the Legislature to increase funding for TEXAS Grants.

Approach to 10 Percent Base Reduction
As requested, the UH System Administration has developed a scenario through which 10 percent of base resources has been reduced from designated groups of funds. For the UHSA this totaled $520,745, the loss of which would have a significant negative impact on our ability to support the UHS universities in achieving their goals, as well as those identified in “Closing the Gaps.” Due to the small size of the UHSA appropriation, the most effective way to cut our appropriation was across the board, to prevent unsustainable harm to any of our system offices and programs.

Finally, while we believe that increased funding for higher education and the University of Houston is important to the future of Texas, we also realize that universities must be good stewards of the dollars with which they are entrusted. The University of Houston System is committed to this principle. Accomplishing our goals, we believe, is predicated on effective management of resources, which our institutions strive to achieve.

Board Members	Term Expires	Hometown
Dennis D. Golden	August 31, 2009	Carthage
Lynden B. Rose	August 31, 2009	Houston
Calvin W. Stephens	August 31, 2009	Dallas
Carroll Robertson Ray	August 31, 2011	Houston
Welcome W. Wilson	August 31, 2011	Houston
Jim P. Wise	August 31, 2011	Houston
Nelda Luce Blair	August 31, 2013	The Woodlands
Jacob Monty	August 31, 2013	Houston
Mica Mosbacher	August 31, 2013	Houston
Tamara K. Goodwin	May 31, 2009	Houston

System Office Operation (Existing Item)

Description and Justification
Established by Acts 1977, 65th Legislature, as codified in Section 111.20 of the Texas Education Code, the University of Houston System Administration provides leadership, coordination, support and some centralized services for the four universities in the UH System. The UH System's mission is to serve the full range of educational and research needs of Houston, the Gulf Coast Region and the State of Texas with programs of highest quality and efficiency.

Factors Impacting Strategy
The rapid demographic changes facing Houston and Texas present both social and economic challenges for the state and its public universities. The University of Houston System is the largest single source of professional and technical talent for the Gulf Coast Region, providing the intellectual as well as the research, technological and cultural base for the area. The UH System contributes greatly to the economic future of the state by preparing the workforce with academic programs serving all populations in the region and expanding the research and technology base.

The role of the UH System Administration has been reviewed by the Board of Regents to ensure the greatest responsiveness, effectiveness and efficiency of services to the community and the four universities. The Board has combined the top two positions in the System, the Chancellor and the President of the University of Houston , into a single Chief Executive to effect greater cooperation, coordination and efficiency. This new management model will continue to bring the universities together for shared services where economically beneficial; for system-wide initiatives, such as partnerships with community groups, public and private schools, corporate and industrial organizations; and for coordinating support from private individuals and corporations as well as federal, state and local governments.

	Appropriated		Requested
	FY08	FY09	FY10	FY11
Base Dollar Funding	$1,761,563	$1,764,651	$1,763,107	$ 1,763,107
Exceptional Funding
Total	$1,761,563	$1,764,651	$1,763,107	$1,763,107