AUSTIN – The University of Texas System Board of Regents today (Aug. 24) approved a $13.1 billion operating budget for the 2012 fiscal year. This represents a 2.5 percent increase, or $319 million, from the 2011 fiscal year.
“The proposed budget is indicative of these challenging times. While the System must operate with reduced levels of state appropriations, Texas continues to grow and so does our student population,” UT System Chancellor Francisco G. Cigarroa, M.D., said. “Because of advanced planning by UT System presidents and their leadership teams, our institutions have successfully identified and are pursuing various strategies to manage their reduced budgets. We must be as innovative and productive as possible to advance excellence within a setting of declining traditional revenue streams.”
Accounting for three-fourths of the budget increase for the new fiscal year are academic support (15.8 percent or $85 million); hospitals and clinics (2 percent or $68 million); and depreciation and amortization (10.5 percent or $85 million).
Increases in academic support are due to UT System’s continued commitment to excellence and principally relates to funds dedicated to priority academic development programs and student success initiatives. Hospital and clinics expenses are primarily a result of growing patient care costs, while increases in depreciation and amortization are largely due to the completion of several campus construction projects.
Revenue used to finance the operating budget is $13.4 billion for the 2012 fiscal year, up 2.8 percent ($369 million) from FY 2011. Funds necessary to finance the budget are primarily derived from four major sources: hospitals, clinics and professional fees; federal, state and private sponsored programs; state appropriations; and tuition and fees.
Revenue growth stems primarily from tuition and fees (7.8 percent or $99 million), net sales and services of hospitals and clinics (2 percent or $76 million) and net investment income (14.1 percent or $109 million).
Revenue growth from tuition and fees occurs largely as a result of enrollment changes and modest increases in tuition and fees adopted by the UT System Board of Regents in 2010. Growth in patient care activities continue to be a major driver of this year’s revenue increases. Growth in budgeted investment income primarily results from the recently increased distribution to the Available University Fund at UT System Administration and endowment distribution growth at UT Southwestern Medical Center and UT MD Anderson Cancer Center.
These areas of growth were offset by a 3.4 percent ($67 million) reduction in budgeted state appropriations that were enacted by the 82nd Legislature. For the 2012 fiscal year, state general revenue will amount to 14.5 percent of the total expense budget, down from 15.4 percent in the 2011 fiscal year.
Consistent with the UT System goal to redirect resources toward high-priority, mission-critical activities, administrative expenses will decrease by 1.4 percent this year, while instruction and academic support will increase by 3.1 percent.
Along with the operating budget, the Regents approved $30 million of Permanent University Fund bond proceeds for the Library, Equipment, Repair and Rehabilitation (LERR) program. The LERR program is used by eligible institutions to acquire library materials, capital equipment, and to complete small repair or rehabilitation projects.
The Faculty Science and Technology Acquisition and Retention (STARs) Program, acknowledged as one of UT System’s most successful programs, was appropriated $20 million. STARs Program funds come from bond proceeds backed by the Permanent University Fund.
The Regents also authorized $243.6 million of funding for strategic priorities within the UT System in support of Chancellor Cigarroa’s framework action plan for advancing excellence that was also adopted today.