Higher Education Fund »

The 81st Legislature passed HB 51 by Branch/Zaffirini, which, among many other policies, updated the Higher Education Fund allocation.  The revised allocation corrects inaccurate allocations due to errors made last biennium.  The bill also updates the allocation for the next  5-year period based on the Coordinating Board recommended 3-factor HEF model.  The following table compares the FY2008 annual allocation with the FY2009 and FY2010 updated allocation, and the FY2011 and beyond annual allocation:

  Annual Allocation for FY2008 Annual Allocation for 2009 and 2010 Change: 2009 and 2010 from 2008 Annual Allocation for 2011 and Beyond Change: 2011 from 2008
UT Pan American 12,882,348 13,176,800 294,452 12,311,123 (865,677)
UT Brownsville 4,186,790 4,284,677 97,887 5,057,420 772,743
A&M  - CC 8,278,993 8,471,116 192,123 7,139,067 (1,332,049)
A&M  - K 5,052,232 5,167,540 115,308 5,046,885 (120,655)
A&M International 3,130,211 3,202,241 72,030 3,796,436 594,195
West Texas A&M 4,776,890 4,886,159 109,269 4,652,995 (233,164)
A&M - Commerce 5,345,678 5,684,047 338,369 5,193,232 (490,815)
A&M - Texarkana 1,646,352 1,684,587 38,235 1,307,907 (376,680)
UH 35,276,140 36,091,538 815,398 35,885,768 (205,770)
UH-Clear Lake 6,001,337 5,355,874 (645,463) 5,214,167 (141,707)
UH-Downtown 9,628,151 9,548,995 (79,156) 7,435,238 (2,113,757)
UH-Victoria 2,282,883 2,335,692 52,809 2,393,921 58,229
Midwestern State 3,434,348 3,810,377 376,029 3,559,433 (250,944)
UNT 26,137,233 27,122,687 985,454 27,846,476 723,789
Stephen F. Austin 7,025,771 6,907,643 (118,128) 8,425,937 1,518,294
Texas Southern 11,156,463 11,283,387 126,924 8,894,700 (2,388,687)
Texas Woman's 8,424,209 8,615,167 190,958 10,169,695 1,554,528
Texas Tech 26,829,477 27,446,656 617,179 23,936,088 (3,510,568)
Angelo State 3,585,802 3,667,497 81,695 3,743,027 75,530
Lamar University 11,210,508 8,028,333 (3,182,175) 8,330,933 302,600
Sam Houston State 9,916,306 10,184,001 267,695 11,893,110 1,709,109
Texas State University 19,799,276 20,258,248 458,972 21,863,258 1,605,010
Sul Ross 2,043,772 2,090,896 47,124 1,625,061 (465,835)
Sul Ross RGC 379,831 388,203 8,372 445,380 57,177
LUIT Incl. in Lamar 1,825,332 1,825,332 2,332,463 507,131
Lamar - Orange 1,115,048 1,140,745 25,697 1,235,752 95,007
Lamar - Port Arthur 1,190,119 1,217,124 27,005 1,244,694 27,570
TSTC 5,775,000 5,775,000 0 5,775,000 0
UNT HSC 8,139,391 7,994,676 (144,715) 8,771,265 776,589
TTU HSC 17,849,441 14,854,762 (2,994,679) 16,973,569 2,118,807
Statewide Total, HEF 262,500,000 262,500,000 0 262,500,000 0

The Coordinating Board's 3-factor model uses the factors of space deficit, facilities condition, and institutional complexity to determine an institution's annual allocation of HEF funding.  In their recommendations to the 81st Legislature, the Coordinating Board changes how an institution's space deficit is calculated.  In the past the space deficit was determined by the amount of space predicted by the space model for each institution less the amount of space on-line.  The recommendation counts both the current space plus any space that is approved but not yet online.  Inclusion of approved space significantly reduces the space deficit numbers for institutions that have construction projects in the pipeline and result in a lower annual HEF allocation.

HB 51 also clarifies that the University of North Texas - Dallas is eligible to participate in the Higher Education Fund when they begin operations as a general academic institution.   The allocations listed in statute made no specific allocations for UNT-Dallas.

Available University Fund

Estimated earnings in SB 1 for the Available University Fund increase by $46.2 million.  These estimates were based on data from the Legislative Appropriations Request submitted by the UT System in August 2008, prior to the sharp market downturn.

The estimated AUF distributions for FY 2010 and FY 2011 are estimated at $516.4 million and $483.4 million, respectively.  This represents a decrease in available university fund amounts of almost $20 million as compared to the 2008-09 biennium.  Because of the declines in the market value of the Permanent University Fund, future distributions are expected to decline further or be frozen.  The constitution provides that distributions must not be increased if the purchasing power of the Permanent University Fund is not maintained for any rolling 10-year period.  Due to the limitations on distributions from the PUF, excellence funding for Texas A&M University and Prairie View A&M University will not be increased and no new allocations for PUF-funded capital improvement projects will be recommended.

Higher Education Group Insurance

Higher Education Employees Group Insurance (HEGI) provides health benefits coverage to higher education employees based on which of the following three systems administers their health insurance coverage plan:   the University of Texas System (UTS), the Texas A&M University System (TAMUS), or the Employees Retirement System (ERS). The ERS Group Benefits Program provides coverage to eligible  employees of all higher education institutions that are not part of either the UTS or the TAMUS. The 2010-11 state appropriations for HEGI include in a General Revenue Funds increase of $171.91 million, and fund premium contribution rates at 97.5 percent of ERS general state employee premium rates for state institutions participating in the ERS Group Benefits Program, 83.5 percent for community colleges participating in the ERS Group Benefits Program, and 95 percent of ERS general state premium rates for component institutions within the UTS and the TAMUS. HEGI contributions also provide rate increases of 6.5 percent in fiscal year 2010 and 6.8 percent in fiscal year 2011 for all higher education institutions.

Retirement Benefits

State retirement contributions for the Teachers Retirement System (TRS) and the Optional Retirement Program (ORP) are 6.4 percent of payroll, down from 6.58 percent. TRS increases by $190.2 million to reflect assumed payroll growth of 5 percent annually in fiscal years 2010 and 2011 in public education and 7 percent annually in fiscal years 2010 and 2011 in higher education payroll.  In Article IX, TRS is allocated an additional $120.5 million in funding for the 2010-11 biennium.  Based on authorization in HB 3347 by Truitt/Duncan, and contingent upon an Attorney General's opinion allowing it, this funding is allocated for a one-time payment to eligible members equivalent to their monthly benefit but not to exceed $500. Absent an Attorney General's opinion allowing the one-time payment, the funding is to be transferred to TRS and used to increase the state contribution rate from 6.4 percent to 6.644 percent.

Funding for ORP increases by $9.1 million in All Funds and $7.8 million in General Revenue.  This funding assumes a 6.4 percent state contribution rate and reflects estimated payroll growth of 3.0 percent.   Employee contributions remain at 6.65 percent for ORP participants.  Grandfathered participants in ORP may continue to receive an institutionally funded supplement to the state base rate in ORP for an employer contribution of  7.31 or 8.5 percent depending on date of employment.   Because the state base rate will be going down from 6.58 percent to 6.4 percent, the institutionally funded supplement , if provided, increases from .73 to .91 percent, or 1.92 percent to 2.1 percent, respectively.