Bigger schools escape big cuts

State’s budget not as dire as initially feared

The state’s top universities dodged major revenue cuts this session, but regional universities from the Rio Grande Valley to Clear Lake to Victoria weren’t as lucky.

In a tight budget cycle, losses of a few million dollars at some universities statewide will force these institutions to reevaluate programming and potentially eliminate positions. The $216.8 billion state budget awaits Gov. Greg Abbott’s signature after being passed by the House and Senate.

Even reductions of up to 10 percent, however, are far more forgiving than projections at the beginning of the session, when public universities feared that to stay afloat financially, they would need to lay off faculty, shut down classes and reduce services such as advising students.

Texas universities bring in revenue from two main sources, state appropriations and student tuition and fees. The state distributes money to universities through a formula largely based on enrollment and a separate channel called special item funding, which supports specific university programs such as research centers and specialized institutes.

Senators initially considered cutting hundreds of millions of dollars in special item funding and placing mandatory caps on tuition increases.

But the most severe of these limits never came to fruition. The budget cut a portion of special item funding but kept the structure of state allocations largely intact. Lawmakers added one-time payments to universities to cushion otherwise sharp declines. And the bill that would have capped tuition never passed out of a House committee. Politicians pledged to review the funding process between sessions.

“Talking to most of the universities, they were very grateful of where they ended up in light of what it was looking like early on,” said Rep. John Zerwas, a Katy Republican who led the House’s budget-writing committee.

The University of Houston-Victoria, which saw a 10 percent reduction to formula funding and special items, will evaluate program performance and trim its budget.

Session seen as ‘hiccup’

The formula funding system presents a challenge for smaller universities like UH-Victoria because it is largely based on prior semesters’ enrollment, which retroactively rewards growth, said Wayne Beran, its vice president for administration and finance. Special items can provide startup money at the outset of starting new programs, he said. They “really help institutions get to the next step.”

He said he sees this session as just a “hiccup” for the university. “We have to thin down our budget, but we’ll keep these areas alive and going until the state can come back and re-fund it.”

High-powered research institutions like the University of Houston, Texas A&M University and the University of Texas at Austin did not see reductions this session, an unexpected respite for public institutions that feared a drop in state allocations and tuition revenue could limit their ability to teach, research and compete for faculty and students nationwide.

“It’s absolutely a relief,” said Jason Smith, UH’s vice chancellor for government relations. “It was a very serious concern for all of our universities when the first Senate budget came out, but they took a very different approach from the House.”

Still, he noted the disparities in funding for UH and the University of Houston-Downtown, which gained funding slightly, and UH-Victoria and the University of Houston-Clear Lake, which saw a 10 percent drop in formula funding and special items.

“The smaller regional universities and others across the state seem to be losing out,” he said.

Texas Southern University saw losses in formula funding and special item funding that it recovered through a one-time payment — dubbed “hold harmless” funding. State money, then, will be constant year over year.

“We were ecstatic about the fact that we were held harmless,” said Dominique Calhoun, director of government relations. “Many institutions took cuts. … To have a cut when you’re moving forward as an institution would put the university in a bad position.”

Calhoun said alumni, students, staff and faculty called elected officials and expressed what cuts would mean for TSU.

‘An endangered species’

Similarly, the University of Texas at Austin saw a drop in formula funding and special item funding that was recovered by a separate $55 million payment, keeping funding about steady.

UT-Austin President Gregory Fenves wrote in a campus letter that the university will reduce its budget thoughtfully over the next two years, assuming the $55 million is a onetime offering.

“With the decrease in UT’s recurring base budget, the reality is that we — the leadership, faculty and staff — must allocate our resources more efficiently,” Fenves wrote. “Over the coming months, we will develop strategies to improve our operations and refine priorities.”

Lawmakers said they would scrutinize the entire higher education funding process over the interim, possibly to change which types of initiatives can receive special item funding.

“They’re an endangered species,” said Raymund Paredes, the state’s higher education commissioner, of special items. “There’s going to be some refinement of what that category means in the interim.”

Some special item funding supports programs that universities call startups for more than a decade.

Lawmakers criticized that practice this year as “over the top,” Zerwas said. He said the interim review would allow universities to weigh in on how the state will support them.