UH, Tech ask state for $1B in proposal

The University of Houston and Texas Tech University systems plan to ask the Texas Legislature to create their own permanent endowment after years of trying and failing to access the massive $21 billion investment trove reserved for the University of Texas and Texas A&M University systems.

The request for a new $1 billion endowment comes as the state eyes a $27 billion surplus — and Lt. Gov. Dan Patrick has already voiced some support for the idea of a new fund that would funnel more money to schools that aren’t UT-Austin and A&M.

UH System Chancellor Renu Khator said that her system and Texas Tech’s are best poised to benefit from a new endowment: The University of Houston this year has raised its external research funding to $250 million, while Texas Tech sits on the verge of $200 million. That positions the two systems’ flagships to crack the country’s “Top 50” rankings for best public universities — as long as they receive some additional help from the state, she added.

“We two are at that point where we have gone to the next milestone,” Khator said at a Board of Regents meeting Thursday. “So I think it’s time that Texas thinks about … how can we raise their research profile from $200 million to $400 million? In order to do that, we have to do things differently, for which we really need a predictable investment pool.”

UH and Texas Tech have long attempted to tap into the coveted “Permanent University Fund,” a pool of money that collects oil and gas royalties from 2.1 million acres of state-owned land in West Texas. While the state-managed “PUF” investments last year resulted in about $1.1 billion of distributions to UT-Austin and Texas A&M, its sole beneficiaries according to the state constitution, no other university system has been able to draw enough legislative support for inclusion in the fund.

Schools that don’t have access to the PUF say it has kept them from performing at the same level as A&M and UT-Austin, whose system leaders opposed the plan for fear it would lessen their own success.

The University of Houston and Texas Tech systems’ past attempts related to the Permanent University Fund include becoming beneficiaries themselves, or using money from the fund to finance a separate endowment. The latest plan does neither: The schools are asking Texas for a $1 billion contribution to start the fund from its budget — a feasible number given the state’s revenue surplus, said Jason Smith, UH vice chancellor for governmental relations.

Similar to the PUF, UH and Texas Tech’s proposed endowment would be managed by the state, he said.

“Every session we’re kind of at the behest (of the legislature), and we can’t have these long-term investment strategies in our research portfolio that we need to really get to that next level,” Smith said. “But now that we’re in a position where there is so much revenue, there’s an opportunity here to say we don’t need to take away from someone else in order to advance us.”

The plan could see some traction after Patrick on Wednesday floated support for a new endowment to support schools other than UT-Austin and Texas A&M, although he didn’t provide additional details.

Mark Jones, professor in Rice University’s Department of Political Science, said he doesn’t believe that Texas A&M and UT-Austin would oppose the plan with the same force they showed in previous years, aside from possibly feeling a threat to their status. University systems that are potentially excluded from a new endowment, such as Texas State University and the University of North Texas, would likely push back harder.

A permanent endowment would still go a long way for UH and Texas Tech, ramping up their research capacities, creating endowed professorships and establishing endowed funds for laboratories, the professor said.

“This wouldn’t level the field, but it would make it a more level playing field in providing UH and Texas Tech some of the additional resources and riches that UT and A&M enjoy,” Jones said.

Legislators may bite at the plan if it means improving Texas’ higher education landscape compared to other states, UH officials said. Texas universities have fallen behind in ranked lists, with only the UT-Austin and Texas A&M University ranking in U.S. News & World Report’s top 50 public universities in the country. California has nine.

“It’s kind of embarrassing for the state of Texas,” UH System Chairman Tilman Fertitta said. “We’ve really kind of partnered up with Texas Tech in saying, ‘We’re the next two public universities that should be afforded this.’”

Jones said a new endowment would also help Texas Tech and UH reach membership in the Association of American Universities, an organization of elite research institutions. Rice, UT-Austin and Texas A&M are Texas’ only members, and a state with the economy and population of Texas should have more than three elite universities, Jones said.

“The only hope that UH and Tech have of reaching AAU status is by a pretty powerful infusion of funds,” he said.

A new endowment would likely fund all schools in the designated systems, just as the Permanent University Fund does. (The UT-Austin and A&M flagships have historically received the greatest shares compared with their sister schools.)

The Texas Tech University flagship in Lubbock enrolled more than 40,000 students this fall, with thousands more at four other system institutions. The UH System has four total campuses, including the flagship whose enrollment exceeded 46,000 students.

“We value the relationships our leadership at the Texas Tech University System have established and developed throughout the years with leaders at the University of Houston System,” Texas Tech University System officials said in a statement. “Our university systems — and component institutions — share many similar strengths and interests, the most significant being the commitment to deliver the highest quality of an educational experience to the thousands of students who attend our universities. We look forward to continuing to pursue strategic and collaborative partnerships across our great state, including mechanisms and funding models that allow us to find solutions that meet the needs of our students, universities and the communities we serve.”