In today’s article on the 14 proposed amendments to the Texas Constitution, we’ll look at Proposition 5, which is about renaming the State University Research Fund and establishing an ongoing revenue source.
Breaking Down Proposition
The amendment would rename the National Research University Fund (NRUF) to the Texas University Fund. It would also allocate to the fund the interest, dividends, and investment earnings from the Economic Stabilization Fund (rainy day fund) from the preceding fiscal year. The total amount allocated in fiscal 2024 would be limited to $100 million. The annual limit would be adjusted for inflation each year but would be limited to a 2% growth rate. The amendment would also exclude money in the fund from the state appropriations limit. Expenses to manage the fund would be paid for by the fund.
The Texas State Legislature also passed House Bill 1595 (HB1595), the implementing legislation, which would take effect if the amendment passes. The bill would require the Texas Higher Education Coordinating Board (THECB) to determine the amount of each distribution, identify eligible institutions, and report the former to the state legislature and comptroller.
Kelly Damphousse, president of Texas State University in San Marcos: “There’s no reason a state as big and well resourced as Texas shouldn’t have more top research universities,” he said. “We’re striving to be an R-1 institution; right now, we’re R-2 … but whereas before we were moving toward that goal incrementally, this new funding will allow us to move much faster.
Notably in Proposition 5, the University of Texas and Texas A&M systems would be excluded from receiving money from the fund. The University of Texas and Texas A&M systems are already excluded from NRUF funding because they receive research funds from the Permanent University Fund (PUF), which was established in 1876 and funded by leasing revenue from state-owned lands in the western side of Texas, basically the oilfield. One-third of the available profit of the PUF is distributed to the Texas A&M system annually, and the remaining available funds are distributed to the University of Texas system. As of 2023, the PUF is valued at over $30 billion. When the NRUF was established with the adoption of Proposition 4 in 2009 it excluded the University of Texas and Texas A&M systems from funding.
According to Ballopedia, Proposition 5 was endorsed by the Greater Houston Partnership, Greater Austin Chamber of Commerce, North Texas Commission, Teaching Hospitals of Texas, Texas Association of Business, and Texas Business Leadership Council during the legislative process.
Harrison Keller, the Texas Commissioner of Higher Education: said, “The intent is to make these universities more competitive, strong and vital, especially in areas that will be important for regional and state economic development. … This conversation about equity in funding and boosting emerging research universities has been going on for over a decade among policy makers. TUF is the most substantial investment in a lasting structure that other campuses can use to be more competitive.”
Background to Proposition 5
During the 2023 legislative session, the 88th Texas State Legislature passed House Bill 1595—which was the implementing legislation for the amendment. HB 1595 was passed in the Senate by a vote of 30-1 on May 27 and in the House by a vote of 128-12 on May 28. The law would take effect if the amendment passes in the 2023 November Election.
The law would rename the National Research University Fund to the Texas University Fund (TUF) and authorize the Texas State Comptroller and the Texas Treasury Safekeeping Trust Company to manage the fund. The law lists Texas State University, Texas Tech University, the University of Houston; and the University of North Texas as eligible beneficiaries of the fund. A university would be eligible for the fund if it:
- does not receive funds from the state’s Permanent University Fund;
- spent on average $20 million in federal and private research funds during the last three fiscal years beginning on September 1, 2023;
- awarded on average at least 45 research doctoral degrees per academic year during the last three academic years.
The state legislature would be required to appropriate money to the TUF in an amount that ensures a stable and predictable stream of distribution for the eligible beneficiaries. The annual distribution to an institution from the fund cannot be less than the difference between (a) the quotient of the market value of the fund on September 1 of the fiscal year in which an institution would receive the first distribution divided by the difference between one and the institution’s percentage share of the fund for the state fiscal year in which the institution would receive the initial distribution and (b) the market value of the fund on Sept. 1 of the state fiscal year in which the institution would receive the initial distribution.
The law would limit the total amount distributed from the fund annually to 7% of the average net market value of the investment assets of the fund. The amount would be distributed to the permanent endowment for education and research base funding (75%) and to the research performance funding (25%).
The law would also change the eligibility of which institutions can receive money from the national research support fund by including institutions that are eligible for distributions from the Permanent University Fund, spent a minimum of federal and private funds on research projects, or awarded on average 45 research doctoral degrees during the last three academic years.
The Upper Chamber had 30 votes to 1, with 18 Republicans in favor and 1 Republican against, 12 Democrats in favor. In the Lower Chamber, 110 votes in favor, 75 Republicans 35 Democrats, against was 24 Democrats and 6 Republicans. Total of nine no votes, 4 Republicans and 5 Democrats.
A “YES” vote supports renaming the National Research University Fund to the Texas University Fund and allocating annually the interest income, dividends, and investment earnings from the state’s rainy day fund to the university fund to support research activities at state universities.
A “NO” vote opposes renaming the National Research University Fund to the Texas University Fund and establishing an ongoing revenue source for the fund.
Disclaimer: TownTalk does not support or endorse a “YES” or a “NO” to these propositions. The information provided in this article is for informational purposes only.
