UT regents expected to tap endowment to keep tuition flat

University of Texas System regents are poised to dip into the permanent university endowment to keep tuition flat for in-state students at the Austin flagship and eight other academic campuses.

For UT-Austin in particular, that would be something of a bonanza: $28 million in additional annual funding — or $22 million more than the $6 million its proposed tuition increase would have added to the budget.

“It is extremely welcomed and appreciated,” UT-Austin President Bill Powers said.

The Board of Regents is expected to approve the plan Thursday.

The plan came about as a result of nudges from Gov. Rick Perry, growing revenues from university oil lands in West Texas, some creative accounting to comply with the Texas Constitution and UT-Austin’s special status under the Constitution as “a university of the first class.”

The campuses had negotiated in-state tuition increases with UT System officials. At UT-Austin, that would have raised charges by 2.1 percent, or $104, to $5,003 per semester for undergraduates from Texas. But the regents voted unanimously against higher charges in May, hours after Perry called for a freeze on prices.

The Constitution bars using proceeds from the multibillion-dollar Permanent University Fund for university operations, except at the Austin campus and the UT System administration. So, system officials came up with the idea of allocating additional endowment proceeds to the system for shouldering certain auditing, property insurance, information technology, digital library and data center expenses at the eight other campuses.

Forty-eight audit employees at those campuses would become UT System employees. They would remain on their campuses but report to the system’s audit office, said Chancellor Francisco Cigarroa.

The plan would free up a total of about $31 million for the eight campuses, more than covering the additional $18 million in revenue they would have realized from their proposed tuition increases.

UT-Austin would get $28 million because of a state requirement entitling it to the largest share of endowment proceeds.

“The funding will help with our ongoing student success initiatives and will also be used to support graduate students and faculty in various departments,” said UT-Austin spokesman Gary Susswein.

The plan, if approved, would mark a moment of rare agreement on higher education policy between Perry and Powers. The UT-Austin president has long encouraged system officials to dip deeper into the endowment in light of ballooning oil and natural gas revenues from the West Texas lands. Those revenues are expected to exceed $1 billion for the first time in the budget year that ends Aug. 31.

The plan entails a 5.5 percent payout from the endowment, in contrast with the 4.75 percent recommended by the regents’ investment arm, the University of Texas Investment Management Co.

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