Texas University Chancellors Brace for Budget Cuts

Here are some numbers that every chancellor of a university system in Texas knows by heart: Out of $1,250,250,767 that Texas cut out of its current, 2010-11 biennial budget, $518,424,781 was drained from higher education. That’s 41.47 percent of the 5 percent total reduction among all state agencies demanded by the state's leadership. Higher ed’s overall share of the state’s budget, meanwhile, is 12.5 percent. 

The chancellors are adamant that their institutions not be hit disproportionately in the next round of cuts.

Of the state’s six chancellors, four — Mike McKinney of the Texas A&M University System, Lee Jackson of the University of North Texas System, Kent Hance of the Texas Tech University System and Brian McCall of Texas State University System — served in the Texas Legislature. McKinney was also Gov. Rick Perry’s chief of staff. They all agree that the 82nd legislative session — with the state facing a budget shortfall of between $15 billion to $27 billion — will be the toughest they’ve seen.

In the coming months, the chancellors — a group that also includes Francisco Cigarroa of the University of Texas System and Renu Khator of the University of Houston System — will come to the table fully aware that there is less to go around than in past years. The Texas House is starting from a base budget that includes a $594 million drop from current levels of university funding. In the community college community, talk of shutting down institutions has already begun. If the same numbers appear in the final budget, as state Rep. Mike Villarreal, D-San Antonio, has noted in his criticism of the bill, the state's largest financial aid program will serve 69 percent fewer students in 2013 than 2011. In short, it's pretty bleak.

“We’ve been very much together in times of growth,” Jackson says. “Whether we can remain together in times of retrenchment remains to be seen.”

 

When it comes to the case to be made on behalf of higher ed, McCall insists, “There is no division amongst the chancellors,” though he acknowledges that each one has been hired to promote his own system. McKinney puts it this way: His check may come from Texas A&M, but he says he really works for all the people living in this state. "It would be wrong for me to do something that benefits the Texas A&M University System that harms the rest of the state," he says. "We're not going to be that selfish. But we think that a lot of things that benefit A&M also benefit the rest of the state."

Some specific issues inspire widespread agreement among higher ed officials. All institutions would like to cut back on the costs incurred by state-mandated reporting of a variety of metrics they feel are duplicative and unnecessary, for instance. But other potential changes provoke mixed reactions among the group.

For example, some lawmakers and state education officials are talking about altering the formula for how the state allocates money to universities, moving from one based on enrollment to one that rewards high graduation rates. Officials from the University of Houston System intend to make the case that the expected cuts in state funding is already an enormous challenge even without changing the formula. Over in College Station, McKinney says, “My personal prejudice is that the best time to do things is when it’s hard. We’ve already proven that when we’re flush, when we have lots of money, we won’t make hard decisions."

But first things first. They are at least unified around the basic pitch to lawmakers for this session: a plea for fairness. 

Texas Tech’s Hance says the universities are not opposed to cutting their budgets. He anticipates that the 7.5 percent cuts they’ve made in the last year could ultimately be one half to one third of what the total will be when all is said and done. “But we don’t want the budget balanced on our backs,” he says. “If they’re going to cut us, they ought to cut transportation, public education, welfare, health, and everybody else.”

What worries UNT’s Jackson is the discussions that have cropped up in states like California, Florida and Nevada — states suffering through even deeper, more protracted budget problems. “They have discussed what are in effect rationing plans,” he says. These include limiting enrollment, restricting transfers from community colleges and deferring pursuits of lofty goals like recruiting top faculty. Such measures have yet to be discussed in Texas, which, Jackson says, has been emphasizing “more enrollments, more degrees, more research and more student access” even as cuts loom. “You can’t have a lot of expectations and not recognize the cost,” he says.

Barry McBee, vice chancellor for governmental relations for the UT System, notes that for his system, every 5 percent cut amounts to $500 per student at academic institutions and $7,000 per student at medical and nursing institutions. But the loss, he says, is greater than those numbers indicate — because unlike other areas of the budget, money spent on higher education is money invested. 

The Texas Higher Education Coordinating Board estimates that the state gets an eightfold return on every dollar invested in public higher education.  “We hate to pit ourselves against other parts of the budget,” McBee says, “but other parts of the budget do not represent the same opportunity.”

 

That’s why Texas State’s McCall, who only recently left the Legislature, is optimistic. “The legislature has always been good to higher ed in Texas,” he says. “There’s just too much cause and effect.”

Ultimately, Texas’s public universities will pass along at least some of the state budget cuts to their customers. “We either get the money from the student or the state,” Hance says. And the trend in recent years has been for students (and their parents) to bear a growing share of the load. In 1990, Texas Tech University received 56 percent of its total funding from the state. In 2010, it only received 36 percent. Much of the rest came from tuition and fees.

Meanwhile, many experts believe Texas universities should be expanding, not cutting back. With enrollments reaching record levels, it would take a $700 million increase in funding just to maintain current levels of service.

If the Texas State University System continues growing at its current rate, it will be 60 percent bigger by 2020.  That’s just one example of why many in the higher education community feel now — with historically low construction costs and interest rates — is the time to be issuing tuition revenue bonds to fund construction projects.

As precedent, McCall points to the famous UT Tower, built in the middle of the Great Depression. UT’s McBee concurs that such an investment  “would send a signal nationally that there’s still a long term strategy, vision and focus in Texas.” 

All told, the Texas public university systems have submitted a wish list of construction projects totaling more than $3 billion. Not all of them, if any, will ultimately get approval. Jackson says that even if the legislators can’t make major investments, he thinks they may be able to conduct “a pretty regular review and approve a list of needed facilities."

But new buildings are not at the top of everyone’s priority list. Hance acknowledges that his Texas Tech system needs some and recognizes that it’s a good time to build. But, he says, “it doesn’t make much sense to build buildings when you can’t fund day-to-day operations.”

The relative unity among the chancellors may be strained when it comes to issues that affect only a select group of institutions.

The highly touted state-sponsored race to become the next “national research university” — or tier-one school, as it’s commonly known — does not involve every institution. For the seven universities who are competing, it’s critically important. The University of Houston, for example, credits the legislation that created the competition for helping it set a new institutional record for awards won in research — $115 million — in the last year, paving the way for a recent announcement from the Carnegie Foundation for the Advancement of Teaching that it has upgraded UH to its highest classification for research universities, the same level as the University of Texas and Texas A&M University.

But McKinney, whose system has no dog in the race (Texas A&M is already a tier-one school), says, “We need to quit worrying about spending money toward prestige. If you do your job, prestige will follow.” 

The Texas A&M System may not worry about tier-one legislation, but like other systems, it has institution-specific issues for policymakers to address. It is the only one that includes state agencies — seven in total, including the Texas Forest Service — in addition to academic and health institutions. That means it is the only system that has to go through the sunset process, in which state agencies have to justify their continued existence. The University of Houston System’s governing board is one of only two in the state that is legally obligated to meet in April, though budgeting cycles often necessitate a follow-up in May. UT’s McBee says that any discretionary dollars that might become available unexpectedly should be given to the University of Texas at Austin — “as the flagship.”

The systems can deal with these individual issues and any minor differences “after the fact,” McBee says. The main push will be what he calls a “rising tide philosophy” about the overall importance of higher education.

But how receptive to that philosophy will the anti-spending, small government forces that control the state legislature be? Conservative legislators, state Sen. Tommy Williams, R-The Woodlands, and state Rep. Warren Chisum, R-Pampa, recently issued recommendations for balancing the budget that included slashing spending on central administration by 30 percent, reducing the state’s largest financial aid program by 20 percent, eliminating some of the money for tier-one development and more. Following its release, they applauded the base budget. In a survey conducted by the conservative Texas Public Policy Foundation, Texans strongly favored not only slashing administrative budgets, but delaying new facilities.

At least one chancellor promises that lawmakers won't hear him whining. "They have to make hard choices," McKinney says. "There's more good to be done than they have money to do. I'm certainly going to do my job not to make theirs harder."

Ed note: An earlier version of this story misstated the total amount universities have requested in construction as $4.6 billion. It has been corrected to $3 billion.

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