Regents approve $14.6 billion operating budget for UT System

AUSTIN – An emphasis on high-quality and affordable higher education, providing excellent patient care and investing in research benefitting society are all reflected in the $14.6 billion operating budget approved today by The University of Texas System Board of Regents for the 2014 fiscal year.

 The total budget is up 5 percent, or $690 million, from the 2013 fiscal year.

“As Texas continues to grow at an amazing speed, our student population, patient needs and research efforts also continue to expand and multiply,” Chancellor Francisco G. Cigarroa, M.D., said. “More and more Texans are seeking a higher education, care and treatment in one of our health facilities and solutions to vital questions addressed by our world-class faculty and researchers.”

The $690 million increase includes $220 million for instruction and academic support; $203 million for hospitals and clinics; and $123 million for depreciation – largely a result of the completion of several campus construction projects.

Additional resources for instruction and academic support illustrate UT System’s continued commitment to excellence. The increase includes backing for new academic and medical faculty, money earmarked for priority programs such as the medical school at UT Austin and enrollment growth, particularly at UT Dallas.

The increase for hospital and clinic expenses is primarily to meet growing patient care demand and investments in health care quality and delivery.

Though expenses are on the rise, major cost savings are being achieved throughout the UT System as a direct result of implementing Chancellor Cigarroa’s Framework for Advancing Excellence.

Targeted efforts to be as efficient as possible, employing innovative approaches that allow UT institutions to pool their resources and finding new, inventive sources of revenue saved the UT system $383 million in 2012. Executive Vice Chancellor for Business Affairs Scott Kelley estimates that current efforts will have saved UT System nearly $4 billion by 2016.

“We must continue to be as innovative and productive as possible to advance excellence within a setting of declining traditional revenue streams,” Cigarroa said.

The budget is financed primarily by revenue from four major sources: hospital, clinic and professional fees make up nearly 40 percent; federal, state, local and private sponsored programs account for 20 percent; state appropriations are 13.7 percent; and 10 percent of the budget comes from tuition and fees

State appropriations are up $162 million from last year thanks to additional appropriations by the 83rd Texas Legislature.  State general revenue will amount to 14.1 percent of the total expense budget, compared to 13.6 percent in 2013 fiscal year.

Revenues include a projected 2 percent bump in tuition and fees, almost entirely attributable to enrollment growth. In May 2012, the UT System Board of Regents took an unprecedented step to allocate $6.6 million to UT Austin for each of the next two years in lieu of resident undergraduate tuition and fee increases. The Board also allocated $16 million to the UT System Administration for fiscal years 2013 and 2014 with instructions to use the money to eliminate or greatly reduce proposed tuition and fee increases for the other eight academic institutions. Undergraduate students at four UT campuses, including UT Austin, will see no increase in tuition this year thanks to the strategy. Tuition and fees at most other campuses increased by only a fraction of the rate approved by the Board last May.

“The Board is focused on the goals of the Framework for Advancing Excellence, and two of the major tenets of the Framework are accessibility to higher education and affordability,” Regents Chairman Gene Powell said. “This Board is committed to ensuring that we minimize the burden of ever-escalating fees and tuition for all our students at all our institutions.”

The areas of growth in revenue were offset by a 5 percent reduction in federal sponsored programs due to the anticipated reduction related to federal budget cuts, sequestrations and declines in Pell Grant funds. That 5 percent represents a $91 million reduction.

For the first time, the budget includes the Darrell K. Royal Texas Alzheimer’s Initiative.  UT System will work with the Texas Council on Alzheimer’s Disease and Related Disorders to administer the funds. The Texas Legislature appropriated $9.2 million for the 2014-15 biennium for the initiative.

Along with the operating budget, the Regents approved $30 million of Permanent University Fund (PUF) bond proceeds for the Library, Equipment, Repair and Rehabilitation (LERR) program. The LERR program is used by eligible institutions to acquire library materials and capital equipment and to complete small repair or rehabilitation projects.

Regents also approved $20 million of PUF bond proceeds for the highly successful STARS (Science and Technology Acquisition and Retention) program, designed to attract and retain the highest quality faculty. The STARS program is widely credited with helping UT institutions recruit and retain world-class professors and researchers, adding to the caliber of UT faculty, and ultimately, to the strength of UT students.

“This budget reflects the principles and priorities of the UT System,” Powell said. “It invests in our students, patients and faculty and enhances the excellence of all University of Texas institutions.”

About The University of Texas System

Educating students, providing care for patients, conducting groundbreaking research and serving the needs of Texans and the nation for more than 130 years, The University of Texas System is one of the largest public university systems in the United States, with nine academic universities, six health institutions and a fall 2012 enrollment of roughly 216,000. The UT System confers more than one-third of the state’s undergraduate degrees, educates two-thirds of the state’s health care professionals annually and accounts for almost 70 percent of all research funds awarded to public universities in Texas. The UT System has an annual operating budget of $13.9 billion (FY 2013) including $3.1 billion in sponsored programs funded by federal, state, local and private sources. With more than 87,000 employees, the UT System is one of the largest employers in the state.


Background Materials