San Marcos Mercury | Local News from San Marcos and Hays County, Texas

January 20th, 2011
Texas State chancellor braces for budget cuts

The Texas Tribune

Here are some numbers that every chancellor of a university system in Texas knows by heart: Out of $1,250,250,767 that Texas cut out of its current, 2010-11 biennial budget, $518,424,781 was drained from higher education. That’s 41.47 percent of the 5 percent total reduction among all state agencies demanded by the state’s leadership. Higher ed’s overall share of the state’s budget, meanwhile, is 12.5 percent.

The chancellors are adamant that their institutions not be hit disproportionately in the next round of cuts.

Of the state’s six chancellors, four — Mike McKinney of the Texas A&M University System, Lee Jackson of the University of North Texas System, Kent Hance of the Texas Tech University System and Brian McCall of Texas State University System — served in the Texas Legislature. McKinney was also Gov. Rick Perry’s chief of staff. They all agree that the 82nd legislative session — with the state facing a budget shortfall of between $15 billion to $27 billion — will be the toughest they’ve seen.

In the coming months, the chancellors — a group that also includes Francisco Cigarroa of the University of Texas System and Renu Khator of the University of Houston System — will come to the table fully aware that there is less to go around than in past years. The Texas House is starting from a base budget that includes a $594 million drop from current levels of university funding. In the community college community, talk of shutting down institutions has already begun. If the same numbers appear in the final budget, as state Rep. Mike Villarreal, D-San Antonio, has noted in his criticism of the bill, the state’s largest financial aid program will serve 69 percent fewer students in 2013 than 2011. In short, it’s pretty bleak.

“We’ve been very much together in times of growth,” Jackson says. “Whether we can remain together in times of retrenchment remains to be seen.”

When it comes to the case to be made on behalf of higher ed, McCall insists, “There is no division amongst the chancellors,” though he acknowledges that each one has been hired to promote his own system. McKinney puts it this way: His check may come from Texas A&M, but he says he really works for all the people living in this state. “It would be wrong for me to do something that benefits the Texas A&M University System that harms the rest of the state,” he says. “We’re not going to be that selfish. But we think that a lot of things that benefit A&M also benefit the rest of the state.”

Some specific issues inspire widespread agreement among higher ed officials. All institutions would like to cut back on the costs incurred by state-mandated reporting of a variety of metrics they feel are duplicative and unnecessary, for instance. But other potential changes provoke mixed reactions among the group.

For example, some lawmakers and state education officials are talking about altering the formula for how the state allocates money to universities, moving from one based on enrollment to one that rewards high graduation rates. Officials from the University of Houston System intend to make the case that the expected cuts in state funding is already an enormous challenge even without changing the formula. Over in College Station, McKinney says, “My personal prejudice is that the best time to do things is when it’s hard. We’ve already proven that when we’re flush, when we have lots of money, we won’t make hard decisions.”

But first things first. They are at least unified around the basic pitch to lawmakers for this session: a plea for fairness.

Texas Tech’s Hance says the universities are not opposed to cutting their budgets. He anticipates that the 7.5 percent cuts they’ve made in the last year could ultimately be one half to one third of what the total will be when all is said and done. “But we don’t want the budget balanced on our backs,” he says. “If they’re going to cut us, they ought to cut transportation, public education, welfare, health, and everybody else.”

What worries UNT’s Jackson is the discussions that have cropped up in states like California, Florida and Nevada — states suffering through even deeper, more protracted budget problems. “They have discussed what are in effect rationing plans,” he says. These include limiting enrollment, restricting transfers from community colleges and deferring pursuits of lofty goals like recruiting top faculty. Such measures have yet to be discussed in Texas, which, Jackson says, has been emphasizing “more enrollments, more degrees, more research and more student access” even as cuts loom. “You can’t have a lot of expectations and not recognize the cost,” he says.

Barry McBee, vice chancellor for governmental relations for the UT System, notes that for his system, every 5 percent cut amounts to $500 per student at academic institutions and $7,000 per student at medical and nursing institutions. But the loss, he says, is greater than those numbers indicate — because unlike other areas of the budget, money spent on higher education is money invested.

The Texas Higher Education Coordinating Board estimates that the state gets an eightfold return on every dollar invested in public higher education. “We hate to pit ourselves against other parts of the budget,” McBee says, “but other parts of the budget do not represent the same opportunity.”

That’s why Texas State’s McCall, who only recently left the Legislature, is optimistic. “The legislature has always been good to higher ed in Texas,” he says. “There’s just too much cause and effect.”

Ultimately, Texas’s public universities will pass along at least some of the state budget cuts to their customers. “We either get the money from the student or the state,” Hance says. And the trend in recent years has been for students (and their parents) to bear a growing share of the load. In 1990, Texas Tech University received 56 percent of its total funding from the state. In 2010, it only received 36 percent. Much of the rest came from tuition and fees.

Meanwhile, many experts believe Texas universities should be expanding, not cutting back. With enrollments reaching record levels, it would take a $700 million increase in funding just to maintain current levels of service.

If the Texas State University System continues growing at its current rate, it will be 60 percent bigger by 2020. That’s just one example of why many in the higher education community feel now — with historically low construction costs and interest rates — is the time to be issuing tuition revenue bonds to fund construction projects.

As precedent, McCall points to the famous UT Tower, built in the middle of the Great Depression. UT’s McBee concurs that such an investment “would send a signal nationally that there’s still a long term strategy, vision and focus in Texas.”

All told, the Texas public university systems have submitted a wish list of construction projects totaling more than $4.6 billion. Not all of them, if any, will ultimately get approval. Jackson says that even if the legislators can’t make major investments, he thinks they may be able to conduct “a pretty regular review and approve a list of needed facilities.”

But new buildings are not at the top of everyone’s priority list. Hance acknowledges that his Texas Tech system needs some and recognizes that it’s a good time to build. But, he says, “it doesn’t make much sense to build buildings when you can’t fund day-to-day operations.”

The relative unity among the chancellors may be strained when it comes to issues that affect only a select group of institutions.

The highly touted state-sponsored race to become the next “national research university” — or tier-one school, as it’s commonly known — does not involve every institution. For the seven universities who are competing, it’s critically important. The University of Houston, for example, credits the legislation that created the competition for helping it set a new institutional record for awards won in research — $115 million — in the last year, paving the way for a recent announcement from the Carnegie Foundation for the Advancement of Teaching that it has upgraded UH to its highest classification for research universities, the same level as the University of Texas and Texas A&M University.

But McKinney, whose system has no dog in the race (Texas A&M is already a tier-one school), says, “We need to quit worrying about spending money toward prestige. If you do your job, prestige will follow.”

The Texas A&M System may not worry about tier-one legislation, but like other systems, it has institution-specific issues for policymakers to address. It is the only one that includes state agencies — seven in total, including the Texas Forest Service — in addition to academic and health institutions. That means it is the only system that has to go through the sunset process, in which state agencies have to justify their continued existence. The University of Houston System’s governing board is one of only two in the state that is legally obligated to meet in April, though budgeting cycles often necessitate a follow-up in May. UT’s McBee says that any discretionary dollars that might become available unexpectedly should be given to the University of Texas at Austin — “as the flagship.”

The systems can deal with these individual issues and any minor differences “after the fact,” McBee says. The main push will be what he calls a “rising tide philosophy” about the overall importance of higher education.

But how receptive to that philosophy will the anti-spending, small government forces that control the state legislature be? Conservative legislators, state Sen. Tommy Williams, R-The Woodlands, and state Rep. Warren Chisum, R-Pampa, recently issued recommendations for balancing the budget that included slashing spending on central administration by 30 percent, reducing the state’s largest financial aid program by 20 percent, eliminating some of the money for tier-one development and more. Following its release, they applauded the base budget. In a survey conducted by the conservative Texas Public Policy Foundation, Texans strongly favored not only slashing administrative budgets, but delaying new facilities.

At least one chancellor promises that lawmakers won’t hear him whining. “They have to make hard choices,” McKinney says. “There’s more good to be done than they have money to do. I’m certainly going to do my job not to make theirs harder.”

REEVE HAMILTON is a reporter for the Texas Tribune where this story was originally published. It is reprinted here through a news partnership between the Tribune and the San Marcos Mercury.

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8 thoughts on “Texas State chancellor braces for budget cuts

  1. Hopefully higher ed will not take the brunt of the cuts as they did the last time.

    It’s hard to compete for a good job without a college degree, more people want to sign up for college, yet the state is going to cut both colleges and student aid. That sounds to me like a recipe for disaster, or at the very least nothing more than minimum wage jobs created in TX. At this rate colleges will have to become smaller, more restrictive in enrollment, and charge higher tuition.

  2. Below is an excerpt from a recent Austin Statesman story. I guess not everyone is worried about budget cuts

    “The system’s chancellor, Brian McCall , who assumed the post in April, makes less than his predecessor. McCall gets $450,000 in salary — $494,596 when housing, car, cell phone, club dues and credit card allowances are added. His predecessor, Charles Matthews, made $500,000 in salary and $540,396 in total compensation.

    A&M System Chancellor Mike McKinney , who got no raise for 2011, receives a salary of $533,817, plus deferred compensation of $150,000 and a “communication allowance” of $1,620, for a total of $685,437. “

  3. So it seems that the top dogs in many places in America – university execs, university athletic coaches (Mack Brown, for example), corporate execs, etc. are all paid way too much more than the intermediate managers and line workers. Think how much cheaper colleges might be if their top managers were paid as the rest of the industrialize world pays their top managers. And would there be additional large savings if college tenure was eliminated? Just wondering…

  4. Charlie,

    I don’t think administration compensation is the crux of the problem. At certain schools it might be, I don’t know. At UT Austin, the president gets around $700K in salary and benefits. At Texas State I think she gets about half that. Given the size of those institutions I think those are fair salaries for the leadership. Here is the UT administration pay scale:

    and the faculty pay scale

    Average UT faculty salary is $96K. It looks like a small number of full tenured professors are getting paid quite a bit, making the average look better than the mean. I’ve never taught there, but I have at TxState. You can basically imagine every UT salary 40% lower and that’s more or less what their counterparts at TxState are getting paid. At the smaller colleges & community colleges you can divide the UT average salary by 4 or 5, since they employ a lot of part-time adjuncts.

    If UT cut those full professor salaries by ~30% it would save around 3.5 million per year. At most I don’t see how you could squeeze more than $10 million out of faculty salary cuts. UT’s operating budget for FY11 was $2.1 Billion. That’s not much of a savings and would result in a reduction of prestige for UT. To maintain its standings it needs to be able to recruit the best faculty nationally. So they could cut a few million from prof salaries but lose exponentially more than that due to the effects.

    UT already cut 5% from FY10 to FY11 and laid off some 600 employees.

  5. As for athletics, it’s my understanding Longhorn athletics are separate from the UT-Austin budget & athletics benefit from merchandising, etc… It might help if athletics had to pay in to the university general fund. At smaller institutions, I think athletics are a net drag but they bring other benefits. A successful athletic program helps raise a schools profile immensely, ie: Boise State improved in basically every category over the past 5 years.

  6. I admit that it take a lot of a-little-here and a-little-there to add up to billions. But that is exactly what will happen this year in the (painful) Texas budgeting process. I believe that Perry has made things so much worse with his “we don’t need Federal ….” actions. Already Texans have suffered with being one of the worst states for education and maybe the very worst for citizens lacking health insurance. He crowed nation wide about how much better off Texas was during the recession. He knew full well that huge Texas deficits were on the way, but the every-two-year Texas budgeting process allowed him to lie, lie, and lie again. I believe the election results showed that the ladies really liked his big hair, and that female vote got him re-elected.

  7. Charlie, we can agree that Perry has messed stuff up, and education is TX is bad. But I blame the democrats for running horrible campaigns in TX year after year. They haven’t run a decent campaign since Ann Richards.

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