Texas’ financial surplus could be used for new UH endowment
The University may be in for a windfall this legislative session, as lawmakers are considering granting UH a $1 billion endowment from the state’s near $30 billion surplus.
The 88th Texas legislative session begins on Jan. 10. A top priority for representatives will be deciding how to allocate the state’s sizable surplus, part of which Lt. Gov. Dan Patrick said he’d like to see go to universities like UH and Texas Tech.
“I’m supportive of setting an endowment, with some of this money, to create a new PUF for other schools,” Patrick said. “Because we want all of our schools to be great. Not everyone can go to Texas. Not everyone can go to A&M.”
Currently, Texas A&M University and the University of Texas are the sole beneficiaries of the state’s Permanent University Fund. The PUF was created in 1876 when the state set aside large amounts of land in west Texas to help fund higher education. This land has since been leased to oil and gas companies which generate revenue for the PUF.
The $1 billion fund would be invested in increasing UH’s faculty, which will help the University further climb the national college rankings, said UH Vice Chancellor of Governmental Relations Jason Smith.
“The idea is to invest this money strategically in becoming a top 50 public university. One thing we need to do to achieve that is to hire additional faculty that would reduce our student-to-faculty ratio,” Smith said. “Right now, I think we’re at 22-to-1, and to achieve a top 50 public ranking, we need to reduce that to 20-to-1 or below.”
Aside from faculty spending, Smith also said the University needs to expand its research operations in order to hit its top-50 target.
“The other piece of that is to invest heavily in our research portfolio. This year, we will likely achieve $250 million of research,” Smith said. “To become a top 50 public university, we believe we need to get to at least $400 million of research.”
The proposed endowment would represent just a portion of the total surplus lawmakers will need to allocate this legislative session. State politicians are also considering using the funds for further investment in Texas’ power grid, as well as lowering property taxes.
UH political science professor and co-host of Houston Public Media’s Party Politics Brandon Rottinghaus said consumer spending in the wake of COVID, combined with record-setting inflation, are the largest contributing factors to the state’s surplus.
“There’s been a resurgence of people buying stuff, post-COVID. And because inflation is so high, the amount of sales tax being collected is much higher than in the last biennium,” Rottinghaus said. “The money is basically generated from increased inflation, which has hurt people’s pocketbooks. So, the state has more money, but people are paying more to buy things.”
Whatever the money’s source may be, politicians will need to allocate it carefully. With inflation gradually declining, Rottinghaus believes the next legislative session will have access to a much tighter coin purse.
“Inflation seems to be leveling off. So, I don’t think you’ll see the same artificial increase in revenue that you do in the next biennium,” Rottinghaus said.