With a dire financial forecast for the next two years, student concerns over tuition deregulation weighed heavily during a financial forum hosted by UT President Larry Faulkner Thursday.
Audience members asked Faulkner whether the administration could cut existing programs and projects and alter investment formulas to meet the reductions in state funding, instead of implementing tuition deregulation. The shortfall is estimated at $19 million in the current fiscal year with a $30 million shortfall for each year until the next legislative session in 2005.
Forrest Wilder, an English senior and UT Watch member, questioned the Board of Regents' recent approval of nearly $250 million in System-wide building projects.
Faulkner said he could not provide reasons for board approvals but said building projects warrant close review.
"We tried to closely examine the building projects," Faulkner said. "Some were through gifts that can't be used to operate the University."
John Pruett, an economics junior and UT Watch member, asked why the UT System is experiencing a shortfall with $3.5 billion in unrestricted funds and $7 billion in the Permanent University Fund.
Faulkner disputed the $3.5 billion figure and the term "unrestricted." He explained that as an endowment fund, the PUF cannot be spent. Instead, the System can only spend interest from the fund. Funds available to the University from the PUF amount to $117 million for the current fiscal year and will be reduced to $112 million in the next year.
"They will feed into the future, but they can't be spent," Faulkner said.
After the forum, Pruett said his question remained unanswered. He said the unrestricted funds could still be a source of funding, as well as better utilization of UT System land holdings.
"There are alternate means of raising the revenue besides cutting faculty and raising prices for students … They're not focusing on teaching and they don't care about curriculum," Pruett said.
Faulkner presented four options to meet the budget shortfalls: tuition deregulation or infrastructure fees, repeal of a state "research tax" and operational deregulation.
The Texas "research tax" requires that 50 percent of overhead dollars from federal research grants be returned to the state.
If the Legislature does not pass tuition deregulation, then infrastructure fees will become necessary to meet the University's needs, Faulkner said.
"Some degradation of the infrastructure that you're looking at is a result of the fact that we're not spending enough money on it," Faulkner said. "We knew that a year ago, and we tried to deal with it, but we'll have to find a way to deal with it another time."
Faulkner said tuition deregulation alone would not solve budget problems. He said reducing costs and operations are necessary.
"We cannot just shift costs from the Legislature to the students and parents," Faulkner said.
One audience member expressed concern about possible layoffs.
Faulkner responded that personnel reductions are likely given the University's financial straits. For the moment, these decisions are in the hands of the vice presidents, deans and program leaders until they submit their budget plans to the budget council on March 7.
"I can't tell you what the fallout will be," Faulkner said. "I think some of the fallout will be reduced employee levels."
Another audience member asked for comfort in light of the somber news.
"All the great universities have been through tough times and good times," Faulkner said. "There aren't any simple answers. In the end, I believe that the strength of this institution will manifest itself, the values of the the institution will manifest themselves … In the meantime, we have a lot of hard work to do."a
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