The 79th Legislature increased funding for the general academics by $318.4 million over the 2004-05 biennium, which represents an 8.9 percent increase in General Revenue. The changes in formula funding and non-formula funding are described below. The table below itemizes the funding for the A&M System academic institutions.
A&M System General Academic Institutions
General Revenue Funds, in millions
Senate Bill 1 Appropriations for 2006-07
Compared to 2004-05 Expended/Budgeted Level
|General Academics ||2006-07 * ||Change ||% Change
|Texas A&M University
|Texas A&M Univ. at Galveston
|Prairie View A&M University
|Tarleton State University
|Texas A&M University – Corpus Christi
|Texas A&M University - Kingsville
|Texas A&M International University
|West Texas A&M University
|Texas A&M - Commerce
|Texas A&M - Texarkana
|A&M System Academics
Notes: *2006-07 includes $42.8m in Research Development Funds that are now appropriated directly to the institutions. In 2004-05 these funds were appropriated separately (and subsequently vetoed and reinstated for FY05 only).
- The formula base for 2004-05 that is used for comparison includes the 2004-05 Formula Hold Harmless; HB1, 78th Legislature, Regular Session, Article III Special Provisions, Section 56 reductions; and the GR added in the 2004-05 biennium to implement the change in policy regarding indirect cost recovery.
- The 5 percent mandated LAR reduction was restored to the formulas.
- $160.1 million in new funding was added to the formulas to cover growth and to provide an enhanced level of formula funding for institutions.
- The Legislature changed the methodology used for determining the proportional amount of Other Educational & General Income associated with Higher Education Group Insurance Premiums that is used to fund the formulas. During the session, it was discovered that the proportionality used to calculate the Other E&G Income group insurance deduction from the formulas was inconsistent among the institutions. The LBB had based this deduction on data reported in the group insurance schedule in the LARs. These data were inconsistent among institutions and did not correspond to the proportionality ratio that is reported to the State Comptroller in the Accounting Policy Statement 011 (APS 11) and the ratio that is used for the actual proportional payment for all benefits. The Legislature directed that APS 11 be used to calculate the group insurance proportionality. Since this is the same proportionality ratio used for other benefits (TRS, ORP, and OASI), this action brought about consistency in proportionality for all benefits.
- In addition, it was determined that institutions were reporting their indirect cost recovery funds differently in their APS 11 reports. In order to maintain consistency among institutions, the institutions submitted revised APS 11 calculations that excluded the indirect cost recovery funds from the proportionality ratio. Therefore, in determining the Other E&G Income deduction for health insurance from the formulas, the revised calculations that excluded indirect cost recovery funds from the Other E&G deduction were used.
- The other impact of making the change from using the LAR schedule to the APS 11 ratio is that it excluded the AUF funds from impacting the proportionality calculation. In reviewing the LAR data, it was discovered that the three institutions that receive AUF funds were including a portion or all of their AUF associated personnel in the LAR group insurance schedule. When the LAR schedule was used to determine the proportionality, this had the impact of allowing the institutions to earn GR through the formulas for the Other E&G being deducted for health insurance associated with AUF employees. The Legislature made the policy decision to use the APS 11 proportionality calculation to ensure that the AUF was not impacting the GR distribution of the formulas.
- Hold harmless funding is provided to UT Austin ($8.5 million) related to excluding AUF employees from the group insurance proportionality calculations. Hold harmless is also provided to A&M Texarkana ($0.7 million) and Angelo State University ($0.4 million) for losses in GR formula funding for those institutions. A&M Texarkana’s loss in formula funding was due to increases in Estimated Other E&G Income and a 9.8 percent decline in their relative utilities rates. They experienced an increase in weighted semester credit hours of 7.3 percent and an increase in predicted square feet of 6.6 percent.
- Non-formula items include tuition revenue bond debt service, all special items, Institutional Enhancement, Workers’ Compensation Insurance/ Unemployment Compensation Insurance, Excellence, and Office of Civil Rights Priority Plan.
- Tuition revenue bond debt service on existing authorized bonds was fully funded. This was an increase of $49.9 million over the 2004-05 biennium.
- For all other non-formula items, 4.5 percent of the pre-session mandated 5 percent reduction to non-formula items was restored. However, each individual non-formula line item was not restored; instead the sum of the restored amount was added to each institution’s Institutional Enhancement line item. The amount funded for each non-formula item was based on how each institution spread the 5 percent non-formula reduction in preparing the Legislative Appropriations Request.
- For Prairie View A&M University and Texas Southern University, $3 million and $1.6 million respectively in unexpended balances for the Office of Civil Rights Priority Programs was appropriated.
- New or increased special items include:
- Texas A&M University - $20 million in Institutional Enhancement for Faculty Reinvestment
- Texas A&M-Kingsville – $510,000 for the King Ranch Institute for Ranch Management
- West Texas A&M University – $40,000 for the Small Business Development Center
- The University of Texas at Austin
- $2.1 million for the Bureau of Economic Geology
- $14.6 million for Institutional Enhancement
- University of Houston – $5 million for Faculty Excellence
- Texas Tech University
- $5 million for Faculty Excellence
- $400,000 for the Hill Country Educational Network
- University of North Texas System / South Dallas – $3 million for new faculty
- Stephen F. Austin State University – $1.7 million for Rural Nursing Initiative
Comparison of A&M Academics with UT and All Academics
Appropriations and Enrollment
| ||Change in WSCH ||Change in GR funding ||Spread*
|A&M System Academics
|UT System Academics
|All General Academics
*The spread reflects the effective change in funding once changes in weighted semester credit hours are accounted for.
Research Development Fund
For the 2004-05 biennium, the Research Development Fund was appropriated as a separate item of appropriation similar to the Higher Education Fund and was to be allocated by the Coordinating Board at a later date. However, the fund was vetoed by the Governor for the 2004-05 biennium and restored via budget execution for only the 2005 fiscal year. For the 2006-07 biennium, the Legislature allocated the funds to each institution and appropriated $42.8 million in a new goal within each institution’s bill pattern.
Indirect Cost Recovery
In the 78th Legislature, HB1887 was passed which prohibited Indirect Cost Recovery funding to be used as a method of finance in the formulas. Prior to the 2004-05 biennium, 50 percent of an academic institution’s indirect cost recovery funds were used as an offset to the GR earned by that institution in the formulas and the other 50 percent was included as a line item of appropriation. The 79th Legislature further implemented the policy change of allowing institutions “to keep” their earned indirect cost recovery by completely eliminating it from the funds appropriated through the institution’s bill pattern.