University of Texas System regents signed off Friday on plans to allocate space — at no charge until December 2019 — in the system’s downtown Austin building to the U.S. Army for its Futures Command, which is tasked with leading a modernization of military technologies and building partnerships with innovators in academia and industry.
The regents also voted, as expected, to boost the payout from a higher education endowment to just more than $1 billion, a record sum. The endowment, known as the Permanent University Fund, benefits campuses in the UT System and Texas A&M University System.
In allocating space for free temporarily to the Army, regents declared that the action serves a public purpose. The Army has begun occupying part of the building’s 15th floor and will expand on that floor and into undeveloped space on the 19th floor in the next six to nine months, said Dan Sharphorn, the system’s vice chancellor and general counsel.
“We’re letting them use our lunchroom, gym, parking — and they get to wear those cool uniforms,” Sharphorn said.
The Army will pay rent starting in December 2019 under lease terms to be negotiated, he said, adding, “It gives us what ought to be a long-term, reliable tenant.”
Addressing the Board of Regents in advance of the vote, Lt. Gen. Eric J. Wesley said the Futures Command will be the steward of up to $10 billion a year in military investments in an effort “to change our culture” and “to change the way we do business. We will do that alongside of the University of Texas.”
And in a nod to Bill McRaven, a retired four-star admiral who stepped down as UT System chancellor at the end of May, Wesley added, “The ratio of generals to admirals is going up.”
The payout of $1.014 billion from the Permanent University Fund amounts to 5.7 percent of the $17.8 billion fund, which holds stocks, bonds, other securities and revenue from UT System-owned oil lands in West Texas. Under the Texas Constitution, UT System campuses get two-thirds of the payout and Texas A&M System campuses get one-third. The 2018 payout of $887.3 million was the previous record.
The regents also approved a $19.5 billion budget for the 14-campus UT System for the fiscal year beginning Sept. 1, a $1.2 billion increase over the current $18.3 billion budget. The new budget includes a reduction, both in dollars and number of employees, for the system’s administration, which has come under criticism for its size from some state lawmakers and some regents.
The system administration’s new budget will be $220 million, a reduction of $42 million, or 16 percent, from this year’s $262 million. The administration will have 696 employees, 42 fewer than now. With previous staffing reductions, the administration headcount will be close to what it was in 2014.
“This is a story of significant size reduction here at the UT System,” said Larry Faulkner, interim chancellor.
The regents deferred discussion of a committee’s review of the organization of system administration until a later meeting. They also deferred a discussion on a panel’s review of efforts to sell about 300 acres in Houston purchased for a now-scuttled plan to develop a data science center.