Available University Fund

Photo Credit: Stephanie Tacy | Daily Texan Staff

UT’s portion of the Permanent University Fund (PUF) might be cut in half to help fund The University of Houston. 

Last week, Rep. Sylvester Turner (D-Houston) laid out a bill and constitutional amendment before the House Higher Education Committee that, if passed, would be a step toward adding UH to the PUF, an endowment that is currently designated to fund university operations at the UT and Texas A&M systems through the Available University Fund (AUF).

Chief financial officer Mary Knight said this could have a significant financial impact on the university.

“As far as the overall budget, a hundred million dollar reduction to any of our sources would be a very major reduction to the budget,” Knight said. “A lot of research and scholarships are funded from the AUF, so we would have to make reductions somewhere to be able to account for this.” 

Since the state constitution dictates that only UT and A&M receive the funds, the constitution must be amended to add UH to the short list of the fund’s recipients. Additionally, Turner’s complimentary bill must pass.   

Currently, $263 million of UT’s $2.658 billion budget comes from the PUF, according to Knight. UT receives two-thirds of the $17 billion fund, while A&M receives one-third of the money. Turner’s proposals would cut UT’s portion and transfer part of it to UH, granting each institution one-third of the fund. 

At Wednesday’s hearing, Turner said he thinks The University of Houston is underfunded compared to A&M and UT. This year The University of Houston received $143 million in general revenue state appropriations compared to about $262 million and $252 million at UT and A&M, respectively. 

The University of Houston, which is Texas’s third tier-one research institution alongside UT and A&M, should become Texas’s third flagship university, according to Turner. 

“We do need to have a major conversation, and we do need to find ways of making sure we have additional flagship universities that are funded at the same or similar levels to benefit other students as we move forward,” Turner said at the hearing Wednesday.

Shaun Theriot-Smith, civil engineering junior and University of Houston student government president, said he believes UH is deserving of the PUF funding but said it should not come at the financial expense of UT and A&M. 

“As far as the student perspective goes, any chance to increase funding for the University is always a good thing, but I don’t think any [UH] student is really interested in a situation which might compromise another University, such as UT or A&M,” Theriot-Smith said. “It would result in A&M or [UT] receiving a smaller slice of the pie, but there’s a way to apportion for [UH] in a way that would not compromise the financial stability of [UT] or A&M.” 

University spokesperson Gary Susswein declined comment on the legislation, which is pending in committee. 

Student government president Xavier Rotnofsky said he thinks legislators should consider the impact that cutting PUF funds will have on UT when engaging in a conversation around adding The University of Houston to the PUF. 

“Public institutions in Texas should be involved in the dialogue of appropriations, but we have to keep in mind the impact that cutting from PUF to UT would have considering the population size of not only UT-Austin but also the UT system as a whole,” Rotnofsky said. “We get a lot of our funding from PUF, so it’s a huge asset of ours. We have to keep in mind the impact of adding another entity.”

Recent increases in oil production in West Texas have also increased the amount of money available to the UT System, according to Scott Kelley, the System’s executive vice chancellor for business affairs.

From June 2013 to June 2014, the market value of the Permanent University Fund, or PUF, increased 19.4 percent — from $14.4 billion to $17.2 billion — according to reports from The University of Texas Investment Management Company, the organization that invests money for the UT System.

“Our revenues and the values of our assets in West Texas have grown substantially in recent years to allow for a larger endowment,” Chairman Paul Foster said after an August meeting of the Board of Regents.

PUF is an endowment containing 2.1 million acres in West Texas that was created to benefit UT and Texas A&M University systems. The proceeds from the sale of oil, gas, sulfur and water royalties are invested in the form of stocks, bonds and equity interest to establish the Available University Fund, or AUF. Two-thirds of these funds go toward the UT System and one-third goes to the Texas A&M system.

Kelley said horizontal drilling, a new oil drilling technique used to expose more surface area of oil bearing rock, can explain the increase in the value of the PUF on oil lands that were once thought to be in decline.

“Probably 20 years ago it was thought that the Permian Basin in West Texas was a mature [oil] field, and its best days were really behind it,” Kelley said. “The new technology — horizontal drilling and the ability to extract oil and gas from some of the shale that’s out there — has just created a whole new wave of production. We will probably have $1.2 billion dollars in revenue this year coming into the PUF from University lands, whereas four years ago it was maybe $200 million.”

Citing the fund’s growth, the regents decided not to increase in-state undergraduate tuition in May and approved an offset plan for the lack of increases in August. As UT-Austin is the only System institution that is legally able to directly use the AUF for academic operations, the System allocated $28.2 million in recurring revenue from the fund to the University.

“UT-Austin is very fortunate to be a beneficiary of the Permanent University Fund, especially when the fund is on such solid footing,” University spokesman Gary Susswein said in an email. “Recurring funding from the PUF and other sources is vital to our efforts to become the best public research university in the country.” 

Under the offset plan, the System decided to cover costs and activities traditionally undertaken by the other eight institutions.

In August, the growth in PUF also allowed the regents to approve an increase in PUF endowment distribution to AUF for the 2014 fiscal year, bringing the rate up to 7 percent. With the decision, academic institutions in the System will present proposals to Chancellor Francisco Cigarroa illustrating how they intend to use the additional funds.

Kelley said the policy distribution rate is 4.75 percent but can be raised higher in response to financial returns that exceed their benchmark over a three-year period.     

“With the increase in what’s happening in West Texas and with a look at the oil and gas assets, there was a determination by the board over the last couple of years to increase that distribution, not necessarily permanently, but on a one-time, year-to-year basis to 5.5 percent,” Kelley said.

Photo Credit: Aaron Berecka | Daily Texan Staff

In accepting the UT System’s operating budget for the upcoming fiscal year, the Board of Regents approved Chancellor Francisco Cigarroa’s proposal Thursday to utilize more of the System’s endowment to offset the lack of in-state tuition increases.

Prompted by Gov. Rick Perry, the Board of Regents decided in May against increasing in-state tuition costs at the University and the other eight System academic campuses.

Following the decision in May, Cigarroa and Scott Kelley, executive vice chancellor for business affairs, devised a plan to offset the cost of not raising tuition. Their now approved proposal will allocate $28.2 million in recurring revenue from the Available University Fund, or AUF, toward the University.

"A lot of work went into that offset plan and a lot of different scenarios were looked at," Chairman Paul Foster told reporters after the meeting Thursday. "One of the challenges was coming up with a plan that was recurring."  

The AUF stems from the public endowment known as the Permanent University Fund, or PUF, which is funded by the proceeds from the sale of oil, gas, sulfur and water royalties in West Texas and then invested in the form of stocks, bonds and equity interest. The return on these investments becomes the AUF, which is used to support both UT and Texas A&M University institutions.

Because UT-Austin is the only System institution that can directly receive AUF money, the System will cover costs and activities traditionally undertaken by the eight other UT academic campuses. The System intends to pay for costs related to property insurance and information technology and assume management of internal audit functions and digital library services, opening up $31 million for those institutions to use.

"It’s a very strategic initiative, so we don’t have to increase tuition for our students," Cigarroa said.

The regents also approved a one-time 1.5 percent increase in PUF distribution to AUF for the 2014 fiscal year. The decision brings the fiscal year’s distribution rate up to 7 percent. With the additional money available, the nine System academic institutions will each present proposals to Cigarroa over the next six months to show how they will use the money to increase both online and campus enrollment.

"Our revenues and the values of the our assets in West Texas have grown substantially in recent years to allow for a larger endowment," Foster said. "Our campuses have needs. We’re trying to increase access, which really means increasing enrollment. We’re trying to make an education available to a lot more kids, and we’ve got to find ways to fund that."

UT spokesman Gary Susswein said the University will review how it could spend the additional funding.

"We hope that this additional funding gives us what we need to maintain our levels of excellence at UT-Austin," Susswein said.

Overall, the System’s 2015 fiscal year budget will increase by $888 million in revenue to a total of $15.9 billion and increase by $1 billion in expenses to a total of $15.6 billion. The University will have a 6.8 percent increase in its share of the budget, totaling to more than $2.5 billion.

In discussing the budget with the regents, Cigarroa said the increase for the University accounts for the accommodation of the Dell Medical School and a more accurate research budget, which he said was under-budgeted for the 2014 fiscal year.

At Thursday's meeting, the regents approved the creation of a neuroscience institute, an engineering institute in Houston and allocated more than $2.5 million to expanding System-wide suicide prevention programs for students.

The UT System allocates more than one-third of the money in the Available University Fund directly to UT-Austin, and the campus is growing more dependent on these allocations as state funding shrinks. 

While the funding the University receives from the UT System only makes up about 7 percent of the University’s $2.48 billion annual budget, the campus remains the largest recipient of System funds, using the allocations for projects as far-ranging as the Dell Medical School and the Engineering Education Research Center.

Scott Kelley, the UT System executive vice chancellor for business affairs, said roughly 45 percent of the money is intended to fund “excellence,” lending UT a competitive edge, especially when the University attempts to attract faculty. 

“If we’re recruiting a biologist, they might want a lab re-fitted — we can get money to fix up a lab, buy equipment for research,” Kelley said. 

The 2.1 million acres of oil-rich land that make up the Permanent University Fund, a 137-year-old state endowment, support the UT and Texas A&M systems. Though the fund itself cannot be spent, as mandated by the Texas Constitution, profits from land lease sales and oil and gas production revenue are invested. A portion of the returns from these investments make up the Available University Fund. For the fiscal year ending in August, the AUF had almost $644 million.

Once the AUF total is determined, two-thirds of the money is allocated to the UT System for the Board of Regents to then allocate to the System’s nine academic institutions and six medical schools.

Still, Kelley said, the money from the fund is not enough to comprise an entire operating budget.

“[The AUF], spread among institutions, makes a lot of difference at the margin, but it is not transformational,” Kelley said. “The fund doesn’t replace basic needs for appropriation, or for tuition — it helps us in those marginal areas, but it’s not going to pay for the institution.”

AUF money, gifts and endowments take on a new importance in the face of decreasing state funding for the University. In the 1984-85 school year, state general revenue represented 47 percent of UT’s operating budget. Today, it represents 13 percent.

While 45 percent of the UT System’s AUF money is already distributed to UT, the University’s portion of the fund could increase over the next few years with the creation of the Dell Medical School. 

Last year, the Board of Regents committed additional funding for the creation of the Dell Medical School. This contribution, forecast to begin in 2014, will total $25 million annually for the next several years and will eventually increase once the school is established.

Mary Knight, UT’s associate vice president for financial affairs, said the money allocated to the medical school will initially be used for start-up activities and salaries because the school is still at the beginning of the development process.

“We don’t quite have a dean yet, but [the medical school steering committee] is using it now for kind of start-up activities … there are people who are appointed to work there, some full-time, some part-time — and those people are being paid from the funds,” Knight said. 

Beyond the money directly given to UT, a portion of the UT System funds are also allocated for System-wide initiatives that also benefit the University. For the 2012 fiscal year, such projects included $50 million for the Institute of Transformational Learning, an organization created by the board to build the System’s online learning efforts. UT professors currently teach four massive open online courses — better known as MOOCs — which each cost $150,000 to develop, as part of the System’s online learning initiative.

The System also designated $10 million to purchase stock in MyEdu, an online course directory, with the intention of increasing graduation rates by facilitating course schedule planning for students.

Though some money from the AUF helps fund construction projects at all UT institutions, the money alone is not sufficient to fund new projects like the planned Engineering and Education Research Center. This leaves system institutions dependent on state funding.

The engineering building, and other planned UT construction projects, did not receive expected state funding through tuition revenue bonds earlier this year. A package of tuition bonds that would have provided more than $2.5 billion to campus construction projects statewide was not approved despite bipartisan support during the regular legislative session and the Texas Legislature’s two special sessions this year. 

Knight said the budgeting process usually depends on several variables but has been more difficult in recent years because of decreased state funding.

“We go through a legislative session and don’t know until the very end what our state general revenue is going to be, and we’re dependent on the regents for tuition, and that’s just part of what we have to deal with,” Knight said. “Uncertainty is just part of the budgeting process right now.”

Correction: Because of an editing error, the graphic on an earlier version of this story used an incorrect logo. The logo should have been from UT-Permian Basin in Odessa.

Regent related amendments in budget bill left untouched by Rick Perry

 Texas Gov. Rick Perry vetoed more than 20 bills Friday, but he left two amendments targeted at the UT System Board of Regents untouched. 

The amendments, part of SB 1, the state budget bill, were added by Rep. Jim Pitts, R-Waxahachie. Earlier this year, Pitts accused the regents of orchestrating a witch hunt to oust UT President William Powers Jr., an accusation echoed throughout the regular session. The amendments would limit how the regents can spend money, a power the state has not regulated in much detail.

One amendment prevents regents that have not been confirmed by the Senate from using appropriated funds for travel.

Another amendment eliminates board discretion over how to use money from the Available University Fund, a special fund only available to UT and Texas A&M University's flagship institutions. Until now, the UT System board has had discretion over how to use money from the fund. The amendment restricts the UT System's use of the fund to construction, major repairs and rehabilitation, equipment, maintenance, operation, salaries and support.

Perry dished out 10 line-item vetoes in the budget bill Friday night, but Pitts' two amendments made it through unscathed — for now. The governor has until June 16 to veto legislation or let it become law without his signature. 

Although the UT System Board of Regents set the University’s tuition in May, tuition policies across the System for the coming years will top the agenda at the board’s meetings Wednesday and Thursday.

The regents will discuss the progress of the new medical school in Austin and examine the costs and benefits of a guaranteed tuition option, among other issues. 

The System’s recently-announced effort to review policies concerning relationships between teachers and students does not appear on the agenda. 

The board will begin its agenda with discussion and “appropriate action” to recommend a guaranteed tuition option on all UT-System campuses and a report on UT System strategies to reduce undergraduate tuition.

As the board decided in May, UT-Austin students will not experience a rise in tuition for the next two years. Students at three other UT campuses will also see a 0.0 percent tuition increase for the fall 2013 semester, while other campuses will experience minimal increases. As a result of unprecedented allocations from the Available University Fund, eight of the nine UT System academic campuses will raise tuition for fall 2013 at a rate lower than they were approved for by the board.

UT-Arlington, UT-Permian Basin and UT-Tyler will not increase their fall tuitions at all, although the board had approved a raise of at least two percent for all three campuses. The UT-Brownsville, UT-El Paso, UT-Pan American and UT-San Antonio campuses will all raise tuition by less than one percent. 

UT-Dallas will raise fall tuition by 2.93 percent, which a System press release attributed in part to the campus’s four-year guaranteed tuition policy for incoming freshmen. 

UT-Austin does not currently offer a fixed-rate tuition option, though Governor Rick Perry has been vocal about his support for freezing rates and several state representatives have filed bills related to the issue.

Mary Knight, University associate vice president and budget director, said she could imagine several benefits to offering a fixed-rate option, but emphasized that such a plan would take careful consideration.

“From a financial planning perspective, it is important to have clarity on what [a student’s] bill is going to be,” Knight said. “But so much will depend on what the legislature passes. We would prefer to have the possibility of offering it, but we don’t want it to be required.”

The eight campuses who will raise their tuitions at lower-than-approved rates will do so in large part because of allocations from the AUF made by the Board of Regents in May. According to the state constitution, UT-Austin is the only campus allowed to receive fund money to finance “excellence in its operations.” The System can grant fund money to other campuses in special circumstances to fund capital projects or other one-time purchases. 

Board chairman Gene Powell said the decision to allocate AUF funds was in line with the System’s broader mission. 

“The board is focused on the goals of the Chancellor’s Framework for Excellence, and two of the major tenets of the framework are accessibility to higher education and affordability,” Powell said in a statement. 

The board has not yet decided if it will utilize similar strategies going forward. 

“[That decision] is up to the board, but the regents have been very clear that holding the line on tuition is a chief priority,” System spokeswoman Jenny LaCoste-Caputo said.

Published on February 13, 2013 as "Texas schools keep tuition at the same rate". 

Photo Credit: Natasha Smith | Daily Texan Staff

University Lands, operated through the UT System’s Office of Business Affairs, sold a combined $72 million in oil and gas leases during its 2012 semiannual sales.

The leases come on the heels of University Lands’ most lucrative sales in history in 2011, when lease sales totaled $560 million.

Jim Benson, executive director of University Lands, said total sales were less this year because less acreage was available to lease.

“Of our total land mass of 2.1 million acres, 1.6 million are in production in the Permian Basin, and of that 1.4 million are under leased or currently in production,” he said.

The September 2012 sale offered 49,007 acres, just a little more than an eighth of the September 2011 sale when University Lands offered 372,163 acres for lease to oil and gas companies.

University Lands is responsible for the 2.1 million acres of land that make up the Permanent University Fund, a state endowment funded by the investment of lease sale profits and revenue from production on the land. The land is leased for multiple purposes, including oil and gas production and for surface uses. 

The UT System and the Texas A&M University System are beneficiaries of the PUF.

The UT Investment Management Company invests sale profits and lease revenue in various industries including oil, gas and gold on behalf of the System. Returns on investment go straight into the Available University Fund, which usually makes up about 8 percent of UT’s operating budget.

The UT System receives two-thirds of returns on investment while the A&M System receives one-third.

The University received $205 million in returns through the Available University Fund for the 2012 fiscal year operating budget — up almost $26 million from 2011.

Mary Knight, associate vice president and UT budget director, said fluctuations in lease sale profits are smoothed over time because Available University Fund estimates are based on 12 previous financial quarters rather than only the previous year.

“Long-term declines could have a major impact on the recurring budget and could require budget reductions across all colleges, schools and departments, including research and student scholarships,” she said.

Bruce Zimmerman, CEO of the UT Investment Management Company, said the company is not looking to invest in new industries.

The bulk of revenue generated from the lands is from oil production, Benson said. University Lands receives 25 percent of royalties from all oil and gas production on its leased land and produced almost $1 billion in revenue last year. He said $600 million was from oil and gas.

“While it’s kind of exciting to see big oil and gas lease sales, the real revenue comes from long-term production on the land,” Benson said. “Of all these new leases companies buy, the ultimate goal is to get them to drill.”

The sale is a sealed bid process in which companies bid on land where they think they can hit oil. Permanent University Fund lands are primarily located in 24 counties, mostly in West Texas.

Benson said many major companies have production operations on University Land tracts.

“We get newcomers every year, but a lot of the same companies are consistently drilling and producing on our land in the Permian Basin for years,” he said.

ConocoPhillips Company, Approach Oil & Gas Inc. and Angelle & Donohue Oil & Gas Properties Inc. are among the leaseholders.

Oil was first discovered on Permanent University Fund land in 1923 in Reagan County, according to University Lands.

Printed on Friday, October 12, 2012 as: University Lands' revenue dereases

UT System Board of Regents member Alex M. Cranberg and Executive Vice Chancellor for Business Affairs Scott C. Kelley applaud during the meeting.

Photo Credit: Rebecca Howeth | Daily Texan Staff

In an unprecedented decision, the UT System Board of Regents declined part of the University’s recommendation to increase tuition at a meeting Thursday, but did not do so for any other UT System institution. The regents froze tuition for in-state undergraduates for the next two academic years and raised tuition for all other students.

This concluded the second day of one of the six regular meetings that occur each year and is the latest the regents have set tuition since 2004. The regents approved a 2.1 percent increase for out-of-state undergraduates, instead of the proposed 2.6 percent increase, for the next two academic years. The regents approved a 3.6 percent increase for graduate students that followed President William Powers’ recommendation, but only for one year. In the plan, the University will still receive funds that the proposed 2.6 percent increase for in-state undergraduates would have generated. Regents Chairman Eugene Powell said the gap will be made up with funds from the Available University Fund, the investment income from West Texas oil lands that are managed by the UT System.

The University is the only UT institution that can use the AUF funds in this way, according to UT System Board of Regents press release. The endowment will provide an additional $6.6 million for each of the next two academic years. Powell said the University should not count on the funds for more than two years because they may not be available at that point.

The regents did not follow Powers’ recommendation to increase in-state undergraduate tuition by 2.6 percent each year for the next two academic years, and both out-of-state students and graduate students would have faced a 3.6 percent tuition increase each year for the next two academic years. The email Powers sent out yesterday inaccurately referenced the recommendations Powers proposed for out-of-state undergraduates in December.

Powers said the AUF funds will help to some degree, but it is not a recurring source of revenue like the revenue generated by tuition. He said recurring revenue is necessary to establish and maintain programs that the UT System desires.

“Every penny of it is needed and would be put towards student success,” Powers said. “I am disappointed that our very thoughtful proposal was not adopted. It was very carefully worked out in consultation with students.”

Powell commended programs aligned with UT System Chancellor Francisco Cigarroa’s Framework for Excellence Action Plan that debuted Aug. 25, 2011, which aims to increase productivity and efficiency. However, he said the tuition rates that were approved will provide a bridge between implementing the programs and the cost savings that the programs will eventually produce.

“This has not been an easy process, but we want to continue our responsibility to have the finest institutions in America,” Powell said.

Powell said setting tuition rates is a delicate balancing act and a tremendous number of compromises were weighed and balanced in order to maintain tier-one research status and control affordability.

Printed on Friday, May 4, 2012 as: Regents decline tuition proposal

The investment firm for the UT System committed $200 million to Post Oak Energy Capital, a company that invests in the North American oil and gas industry.

Last week, The University of Texas Investment Management Company committed the money to Post Oak over the next three years. UTIMCO is the entity which invests endowments for the UT System and the Texas A&M System.

Part of the commitment to Post Oak is from the Permanent University Fund, which is a public endowment based upon West Texas land grants. A portion of UT Austin’s budget comes from the PUF, which UTIMCO manages.

Mary Knight, associate vice-president and budget director for the University, said UT-Austin’s portion of the Permanent University Fund goes into the Available University Fund. For 2011 to 2012, the AUF is expected to provide about 13 percent of the academic core that goes towards University needs, like salaries and maintenance.

“UTIMCO provides estimates for AUF and endowment income,” Knight said. “We use their estimates for investment payouts to prepare the AUF and endowment budgets.”

Post Oak managing director Frost Cochran said in a press release that the company’s management team has extensive experience in the energy industry, which now includes the support of UTIMCO.

“This significant commitment from a sophisticated energy investor allows us to continue to build our investment model during a period of modest competition and high-quality deal flow.”

Mark Warner, UTIMCO managing director of natural resource investments, said UTIMCO actively invests in the energy industry. Warner said UTIMCO knows Post Oaks professionals, and the company has a very good reputation. The commitment is unique, Warner said, because Post Oak targets smaller energy companies that cannot find money as easily as larger energy companies.

“We believe that portion of the private market is much less competitive,” Warner said.

Warner said he expects the Post Oak commitment to help grow the endowment funds that funnel into the UT and Texas A&M Systems, which is the objective of UTIMCO.

“This was their first attempt to raise a fund, and we decided we could craft a partnership that would meet their needs and fulfill our objectives,” Warner said. “We expect the appropriate risk-adjusted returns for the strategy.”  

Printed on Tuesday, November 22, 2011 as: UT System invests $200m in energy company

UT Board of Regents Chairman Colleen McHugh likes to live comfortably when she travels on university business.

McHugh ran up $950 in charges in January at the Montage Beverly Hills hotel while in California to attend the BCS National Championship game between UT and the Alabama Crimson Tide. She also reported $687 in airfare expenses for that trip.

The costs weren’t unusual for McHugh, who spent more than $22,000 in UT System funds to attend official University or UT System events in 2009 alone, according to reports obtained by The Daily Texan. Those costs included $12,578 in lodging for football games and board meetings that year, mostly at the Four Seasons Hotel Austin.

McHugh is not the only regent to rack up large expense bills. Three other regents have spent at least $10,000 in UT System funds in a single year on official business since 2005, her first year on the board. But McHugh — who could not be reached for comment — has reported expenses of $10,000 in four separate years herself, not including $8,822 in the first half of 2010.

Though the University has had to pinch pennies to avoid laying off employees and cutting classes, in 2008 and 2009 the UT Regents spent $116,750 of the system’s endowment payout on top-dollar luxury hotels, travel to football games and other travel expenses related to official duties.

Regents are reimbursed for travel and hotel expenses from the Available University Fund, the UT System’s return on investment of its endowment assets. At UT, the endowment payout funds internship programs, technology services, library services and visiting lecturers — but in recent years, because state funding has not kept up with rising costs, UT has relied on AUF money for electricity and similar expenses.
UT System spokesman Anthony de Bruyn said the regents — who are unpaid for their work — volunteer their time and effort to support UT and attend UT football games as part of their official duties.

“It provides them opportunities for engagement with other friends and supporters of the University such as donors and alumni,” de Bruyn said.

Faculty across the UT System have had to cut back on their own travel expenses, and some say they wish to see the regents share in that fiscal discipline.

James Ramirez, a travel and purchase information specialist with the state comptroller’s office, said unlike other state employees who travel exclusively on the taxpayer’s dime, the regents have no technical limit on what they can be reimbursed for out of the AUF, according to the Texas Education Code.

“As far as reasonable expenses, it could be almost anything,” Ramirez said. “Generally, we find that the Board of Regents are the ones that really take advantage of everything.”

UT System travel-expense reports from the past five years show that the regents often frequented high-end hotels such as the Four Seasons in Austin, the Ritz-Carlton in California and the Walt Disney World Resort in Florida.

Lodging expenses were even higher for football games. Since 2005, the regents averaged $570 per hotel visit for UT football games, and 18 of those charges were more than $900. Hotel stays unrelated to football games cost $335 on average. In Austin, the regents spent a total of $122,000 at the Four Seasons over five years, mostly for football games and board meetings.

Former regent John Barnhill, a retired executive vice president of Blue Bell Creameries, reported the largest expense when he was reimbursed for $1,669 in 2006 for a stay at California’s Ritz-Carlton Hotel, Marina Del Rey during the Rose Bowl. He reported $1,065 in other travel expenses for the game.

Other regents filed only a few expenses or did not file any since 2005. Former Regent James Huffines, who spent four and a half years as chairman of the board, never filed one expense report in the five years of data acquired by The Daily Texan. Huffines declined to comment for this story.

Former Student Regent Ben Dower, a UT law student, said he saw several important conversations between the regents and alumni in the football stadium skybox with the other regents. Dower said it is not enough to send a letter or an e-mail to high-level donors who may donate $1 million to UT, and the regents must help foster a relationship between the alumni and UT.

“You have to keep these people involved and give them a vested interest in the institution so that they feel like they’re not just giving money, they’re participating in an ongoing relationship,” he said. “This isn’t about the game to them. They’re working on a whole other level.”

Classics professor Thomas Palaima, a former UT Faculty Council chairman, said it is hard to understand how expenses such as McHugh’s could be justified as a legitimate business expense for the University. He said business can be conducted at regular meetings, and there’s no need to charge the University for $300-a-night rooms.

“I don’t understand why the regents can’t be setting an example of frugality,” Palaima said.

Todd Richardson, a literature professor at the University of Texas of the Permian Basin, said faculty travel has been on the chopping block during tight budgetary times.

“Ideally, faculty would like to see everyone share that burden equally,” Richardson said. “We certainly like to think that we’re all in this together for the good of the students of Texas and that everyone will be willing to make sacrifices.”

Robert Hard, an associate anthropology professor at the University of Texas at San Antonio, said the system is facing large deficits, but he understands the regents’ job is to entertain and build relationships with people in the Legislature.

“Part of their job is to have good relationships with people, and this is how they do it,” he said.

In the grand scheme of things, the regents run up large expenditures because funds are classified as discretionary, so there is less of a feeling that one has to use the money wisely or carefully, Palaima said.

“If you earn money by working in a steel mill and at the end of the week you earn $800, you’re going to spend that money in a different way than if somebody walks up to you and says, ‘Hey, here’s $800, I just found it, you can use it however you wish,’” he said.

— Additional reporting by Ryan Murphy