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Money being put into a lab beaker

Proposition 5 passed on Nov. 7, launching a new endowment called the Texas University Fund.

Photo illustration by Justin Morrison/Inside Higher Ed | Getty Images

Harrison Keller, the commissioner of higher education in Texas, was “thrilled” when voters approved a state proposal earlier this month to establish a $3.9 billion endowment to support the state’s “emerging” research institutions.

“The proposition was a strong endorsement of the vision that the board has laid out in our state’s strategic plan for higher education,” Keller said.

The initiative, Building a Talent-Strong Texas, is focused on supporting academic research and innovation, increasing degree attainment, and keeping graduates working in the state.

The new endowment is called the Texas University Fund, or TUF, and was approved by over 60 percent of voters on Nov. 7. It is designed to support four “emerging” institutions across the state—Texas Tech University, Texas State University, the University of Houston and the University of North Texas—and help boost their research capabilities and enhance their reputations locally and nationally.

Texas has the world’s 8th largest economy but is home to only three of the world’s top 200 higher education institutions (Texas A&M, the University of Texas at Austin, and Rice University.) By comparison, California has the fifth largest economy and is home to eight of the world’s top universities and colleges.

“If we’re going to remain competitive as a state and continue to advance and expand opportunity for Texans, we have to invest in that research, development and infrastructure,” Keller said.

Efforts to create the independent fund have been years in the making, driven heavily by a growing sense of resentment among college leaders and other administrators at the so-called emerging institutions over the massive gap in state support between them and Texas A&M and UT Austin, the two wealthiest of the public universities.

A&M and UT have had exclusive access to a $32 billion state endowment known as the Permanent University Fund (PUF) for almost 150 years. The fund was established on a 2.1-million-acre land trust to support the founding of the institutions. The plot of land was considered largely useless desert until the Santa Rita oil well was discovered on it in 1923. The endowment has since increased 445 percent.

PUF now makes UT the richest public university system in the country and if trends continue, the endowment is on track to become the largest of any U.S. higher ed institution, public or private.

Shreekanth Mandayam, vice president for research at Texas State University, described PUF as “transformational” and said it helped Texas A&M and UT Austin recruit distinguished faculty and fund the research opportunities and state-of-the-art facilities that drew them there.

Mandayam and others believe the creation of the Texas University Fund will enable his and the other three institutions to become as research-focused, academically rigorous and nationally respected as the state’s two flagship institutions.

“This passage of the endowment is a game changer,” Mandayam said. “Every dollar invested in higher education in this manner will return tenfold back in tax-paying citizens, in jobs that are created and in local economic impact.”

The endowment also gained one last boost of support in 2021, when UT announced that it would be leaving the Big 12 NCAA Conference to join the Southeastern Conference. Lawmakers introduced the bill to create TUF a month later, a decision some viewed as a response to the conference swap.

Neal Smatresk, president of the University of North Texas, said in an email that his institution, which is the third largest in the state and has nearly 47,000 students, is helping drive the economy in a rapidly growing region.

“The Texas University Fund will help us accelerate our research innovation, keep more of our top talent in Texas, elevate our national rankings and propel UNT to greater national prominence,” he said.

Supported by Surplus

TUF is backed by a constitutional amendment authorizing the state to invest $100 million annually from interest accrued on the state’s rainy day fund. The endowment will also receive a one-time allotment of $3 billion from the state’s record $32.7 billion budget surplus, and an additional $900 million from the National Research University Fund, a smaller endowment created more than a decade ago for similar purposes. No new taxes will be required to sustain TUF.

Institutions must have spent at least $20 million on federal or private research and awarded an average of at least 45 doctoral degrees annually during the previous three years to qualify for TUF support.

According to state budget figures, Texas Tech would receive $44 million in the first year, UH would receive $48 million, Texas State could get $22 million and UNT would receive $21 million. Keller said the first round of distributions is anticipated in January.

The legislation that created the TUF also leaves a path for more institutions to become eligible in the future, and for those that are already eligible to receive larger allocations as they increase their research productivity. State lawmakers would be required to appropriate additional funds to pay for such expansions.

‘Catalyst’ of Growth

University administrators stressed that in addition to boosting the number of top-ranked universities in the state, the fund will help them retain students, train and prepare more people to meet state and regional labor demands and fuel economic growth.

Texas currently has one of the largest net out-migrations of students in the U.S., according to a report by Gov. Greg Abbott’s office on the advantages of investing in higher education. The state loses about 20,000 first-year students to out-of-state institutions each year, according to the National Center for Education Statistics.

Increasing the number of elite universities in Texas can help reverse the loss of students and attract more students with top grades from across the country, increasing both the volume and quality of the Texas workforce, the report concludes.

“Students in this state need to see institutions here as their best options,” said Texas Tech President Lawrence Schovanec. “And I do believe as we invest these funds and the other resources we have to grow the strength of our academic programs, to elevate our levels of student success … it will help us in this very competitive world.”

Jason Smith, vice chancellor of government relations at the University of Houston, noted that much of the institution’s research is focused on energy, oil and gas, and investing in more research in those areas will help drive economic development.

“The University has a focus on research that is directly related to our state and particularly Houston’s economy,” Smith said. “We can be a catalyst for further economic growth in the city through these new dollars.”

Some higher ed experts worry that the expansion of research—and the related costs—could take focus away from student outcomes and accessibility for thousands of young people, many of whom are Latino and Black.

“Institutions are incentivized for spending more money on research activities (faculty, research, and graduate programs) so non-research dollars must also be protected,” Miranda Wilson, an education research analyst at Rice University, said in an email. “When non-research dollars are not secured, it can result in unintended consequences for vulnerable student groups.”

Wilson published a report through the University of Houston Education Research Center in 2020 highlighting the potential trade-offs that could result from increased spending on research at state universities.

Joni Finney, director of the Institute for Research on Higher Education at the University of Pennsylvania, published a report in 2012 flagging some of the same concerns.

“Boosting research and prestige at public universities is an expensive undertaking that will take funds away from the state’s efforts to increase college enrollment and produce more graduates ready for tomorrow’s jobs,” the report states.

Finney doesn’t buy assertions that the endowment will allow previously reserved funds to be directed to student success efforts.

“Internal forces in institutions will always push toward research. Because that’s what faculty want,” she said. “Maybe there’ll be a few dollars redirected, but thinking that this will be a replacement … that’s just never going to happen.”

Propelled Forward

Texas Tech, along with the other institutions that qualify for TUF, had already been on a research growth trajectory even before the fund was approved. The university received $83 million in federal awards for research in FY23, a 126 percent increase since 2018.

Schovanec, the university’s president, said the additional state funds will “absolutely” propel further growth and external investment.

“We’ve doubled federal research expenditures,” he said. “But it’s an amount that is still too small.”

He anticipates 40 percent of the funds the university receives will go toward new faculty hires. University of Houston administrators plan to add more than 150 new faculty positions over the next five years.

Texas State currently has 12 PhD programs, but Mandayam said a university of its size should have 40 doctoral programs. He plans to double the number of programs, and at least quadruple the number of graduate students from 600 to 2,400 by 2029.

“PhD programs are expensive and so right now we have used our own reserves to invest in them,” Mandayam said. “Now we have the state as an amazing partner investing in us.”

Mandayam believes private philanthropies will also increase their support of the universities funded by the TUF.

“As we increase our rankings and our standings, this will attract private philanthropy” he said.

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