Mary Knight

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.”

Photo Credit: Chelsea Purgahn | Daily Texan Staff

For the fall 2015 semester, students will not see an increase in tuition, despite requests from the University administration, according to a report from the Office of Financial Affairs.

Tuition at UT is set to remain the same as levels in 2014, according to UT Chief Financial Officer Mary Knight. Traditional tuition for fall 2015 will be $4,905 for in-state and $17,360 for out-of-state students per semester. The optional fixed tuition rate, which gives students the option to pay one rate for all four years as an undergraduate, will be $5,291 for in-state and $18,275 for out-of-state students per semester. 

Legislative student bodies held public forums in fall 2013 to gauge student opinion on proposed tuition increases, Knight said. After student leaders and the University administration agreed on a proposal, it was sent to the Office of the Chancellor from the president. The chancellor brought the proposal before the UT System Board of Regents for deliberation.

The UT System Board of Regents voted to adopt a tuition plan in 2013 that covered tuition from fall 2014 through spring 2016, according to a meeting agenda from the Board of Regents.

Knight said the Board of Regents approved tuition increases that began in fall 2014 but decided against increasing tuition again for fall 2015.

“It’s in the Board of Regent’s hands, and last spring, the Board of Regents approved some increases for one year only, but they did not address the fall of 2015, so we are keeping the rates the same as the fall of 2014,” Knight said. “There were some [increases] that had been proposed, but the board did not address them in the spring of 2014, so none of those were officially approved.”

Kathleen Corder, exercise science and allied health profession sophomore, said she is glad the cost of tuition isn’t increasing.

“We’re already paying so much and as students, everything costs money, and we’re all broke, so saving just a little bit of money and not having the increase [in tuition] is good,” Corder said.

Chemistry senior Robert Wayne Jr. said the lower tuition at UT keeps the door open for hardworking students.

“It’s fantastic to keep it cheap because you want to keep the University competitive,” Wayne said. “Students receive all sorts of grants, and it allows them to put money toward something else, some other aspect of their life.”

UT System Chancellor William McRaven has voiced his support for affordability but warned that UT System institutions must balance price with the quality of education.

“This is a balancing act — to make education as affordable as can be but still as high quality as it can be,” McRaven said. “Frankly, the students that are looking for a high-quality education, if they don’t think that we’re giving them a high enough quality education, they will go outside the state.”

During the 1970s, nearly 85 percent of UT’s operating costs came from a budget appropriated by the state Legislature, according to a statement on the UT website. Today, however, the State provides for less than 20 percent of educational operations at UT.

Photo Credit: Chelsea Purgahn | Daily Texan Staff

Kevin Hegarty, UT’s vice president and chief financial officer, will step down from his position to become executive vice president and CFO at the University
of Michigan.

Mary Knight, associate vice president for finance, will serve as interim CFO until Hegarty’s position is filled.

Hegarty will make the transition from Texas to Michigan during this semester, pending approval from Michigan’s Board of Regents. His last day working on campus will be Feb. 26.

Since 2001, Hegarty has overseen finance, budget, real estate, information technology, open records, payroll and purchasing at UT. 

Mark Schlissel, president of the University of Michigan, spoke about Hegarty in a speech to Michigan’s Board of Regents.

“Mr. Hegarty is strongly committed to the role of public universities and brings a valuable combination of private sector and public higher education experience to the appointment,” Schlissel said. “I am confident he will serve our university well in meeting the challenges ahead.”

President William Powers Jr. said Hegarty has been a valuable resource to the University with regards to improvements in efficiency.

“Few people in our University’s history have served the campus with as much dedication and honor as Kevin,” Powers said. “He will be sorely missed and will always be a great friend. Kevin’s love for the Longhorns is exceeded only by his accomplishments improving the university, making us one of the most productive and efficient campuses in the nation and leading us through very challenging budget years.”

Hegarty has contributed to large-scale projects at UT, such as information technology, finance and procurement services and Shared Services, a plan to centralize the University’s human resources.

“If you look at any of the main initiatives that have happened at the University — things as big as the creation of the Dell Medical School — Kevin and his expertise [have] really been central to that,” UT spokesman Gary Susswein said. “This is a big loss for the university, but we wish Kevin well.”

Susswein said the search for Hegarty’s replacement will not begin until after the next UT president is in office.

Knight, who worked with Hegarty for the duration of his 13 years at UT, said she will continue to expand Shared Services while serving as interim CFO.

“We’ll continue to move forward with the Shared Services Initiative,” Knight said. “It’s currently in a pilot phase, so it has a relatively small impact on the campus as a whole.”

Knight commended Hegarty for his ability to work closely with faculty and administrators on campus.

“He’s got fabulous working relationships with the deans and the vice presidents and really has the attitude of ‘we are here to help with the academic and research mission, and we want to do our jobs well so that the mission of the University can be accomplished,’” Knight said.

Radio-television-film senior lecturer Anne Lewis helped author a letter to President William Powers Jr. opposing Shared Services. The letter has been signed by more than 100 faculty member in order to halt the possibility of approximatley 500 jobs being eliminated in the centralization process.

Photo Credit: Shelby Tauber | Daily Texan Staff

President William Powers Jr. received a letter signed by more than 100 faculty members opposing Shared Services on Tuesday. 

The letter — authored by radio-television-film senior lecturer Anne Lewis, English associate professor Mia Carter and law professor Julius Getman — petitions Powers to withdraw his endorsement of Shared Services, which he issued March 31.

Shared Services is a plan designed to save money by centralizing University human resources, information technology, procurement and finance services in various ways across campus. Kevin Hegarty, executive vice president and chief financial officer, has said approximately 500 jobs will be eliminated in the centralization process, primarily through attrition and retirement. 

Powers’ endorsement of the final report and findings of the Shared Services Steering Committee launched the first two pilot versions of the plan in the College of Education and the Office of the Provost. According to Mary Knight, associate vice president for financial affairs and member of the Shared Services Steering Committee, members of the committee have been meeting with the business officers of both departments to discuss the specifics of the pilot. 

According to Lewis, the letter from some faculty members is a more formal expression of an online petition opposing Shared Services with more than 1,000 signatures from students, faculty, staff and other members of the community. 

The letter focuses on various aspects of Shared Services, including the impact it could have on the support systems that exist between staff and faculty in a department. 

“A lot of [staff] have been at this university for a long time, and a lot of them have been in that department for a long time,” Lewis said. “They do multiple functions: They take care of each other, [and] they take care of us. It’s a creative function. We build these departments that way.”

Another concern listed in the letter is the involvement of Accenture, a consulting firm with a controversial history. The University has paid Accenture more than $4 million to assist in data collection and organization. Accenture also worked with the Committee on Business Productivity, the group that first recommended Shared Services. Two members of the Committee on Business Productivity and one member of the steering committee are former Accenture employees.

Communication between the administration and campus is another concern, according to Lewis. She said she questions whether the various meetings UT administrators had with the campus before pursuing implementation were genuine attempts to hear campus feedback. 

“Was the approach to campus really an attempt to have a discussion where Shared Services, or this approach to saving money, would be taken off the table and other options could be explored, or did it come to campus as a done deal with those town halls really being a PR effort to sell the campus on this?” Lewis said. “There are some things in the process that I could point to that lead me to the second.”

Knight said she is open to any conversations members of the faculty want to have about Shared Services.

“I hope most of campus is willing to give us a chance to show how it will work and how we really do want to engage the staff on campus and the faculty who will be using the services,” Knight said. 

Lewis said opposing Shared Services, regardless of whether she is completely against it, feels like the right thing to do. 

“I would hate to say that I’m totally against Shared Services,” Lewis said. “I’m not sure that’s even the point. It just feels like you’re kind of on a train that’s moving forward, and there’s very little that you can do to steer it without just standing in front of it.”

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.

President William Powers Jr. speaks in the Avaya Auditorium in January. He called for increasing UT’s efficiency by cutting costs.

Photo Credit: Pu Ying Huang | Daily Texan Staff

Committees established by the University are set to deliver efficiency reports five months from now in response to proposals to restructure non-academic functions at UT.

In January, President William Powers Jr. released findings from an outside commission of industry leaders he appointed to examine ways the University could cut costs as state funding to UT declines. In its report, the Committee on Business Productivity claims that various changes to administrative functions, assets and commercialization practices could save the University $490 million over the next decade.

A task force headed by Kevin Hegarty, vice president and chief financial officer, has now developed several committees and subcommittees that will consult with staff members, students and industry professionals on ways to increase efficiency in University operations and address the proposals. Several options are available, including centralizing functions, raising rates or outsourcing labor in some services.

A number of student groups on campus have rallied against the proposals in multiple protests and meetings since January. Members of United Students Against Sweatshops, who met with Hegarty in May, have been especially concerned with the involvement of Accenture, a consulting company, in crafting the efficiency proposals.

The state terminated a contract with Accenture in 2008 after the company mishandled the management of Texas’ food stamps and children’s health care programs. Stephen Rohleder, a UT alumnus and executive at Accenture, chaired the Committee on Business Productivity.

Hegarty said the University had established a trustworthy relationship while working with Accenture, and the University had full control over the direction of the future implementation of proposals.

“You may have one opinion of the brand, but what matters is the people,” Hegarty said. “What we have found when working with Accenture are people we know now we like who have deep experience at institutions like ours, Berkeley and UNC.”

Mary Knight, associate vice president in the Office of the Chief Financial Officer, will head the committee on shared services, which will examine ways to centralize administrative services and business functions. 

A former managerial employee told The Daily Texan in February he believed he had been fired because the University did not want to pay his state benefits. Knight said these situations would be unlikely during future centralization efforts, which she said would rely on natural employee attrition.

“Although there might be isolated cases, I don’t know of any situations where decisions [on layoffs] have been made based on benefits,” Knight said. “A lot of the benefits are paid centrally anyways, so leadership is not looking at who costs more based on insurance coverage.”

One department facing changes is Parking and Transportation Services, which could either outsource some of its functions or raise rates by as much as nine or 10 percent a year for the next 15 years, said Bob Harkins, associate vice president for campus safety and security and chairman of the parking committee.

Harkins said the difficult choices between raising rates or outsourcing services echo patterns in other states where financial resources for higher education have tightened, such as Arizona and Ohio, and could pose some additional financial burden on students.

“I think quite frankly everybody is going through the whole outsourcing bit,” Harkins said. “How much more can we ask the students to pay until we price ourselves out of business, and how much can we afford to pay for the quality education that constitution of the state of Texas calls for?”

Because of inaction on the part of the UT System Board of Regents to address a proposed increase in graduate school tuition, the University Budget Council has decided not to increase graduate tuition for the fall 2013 semester. 

“We had no other choice,” said Michael Morton, president of the Senate of College Councils and the student representative on the budget council. “We can’t raise tuition without [the board’s] authorization, and if they’re going to take up that issue well after we need to publish tuition rates for graduate students, this is really the best option.”

Regents typically set tuition for all of the System’s schools for two-year periods on even-numbered years. In May 2012, the board froze undergraduate tuition for Texas residents for two years, but did not take similar actions for graduate tuition. The board passed a 3.6 percent increase on graduate tuition for the 2012-2013 school year but reached no decision on a similar 3.6 percent increase proposed by the Tuition Policy Advisory Committee for the 2013-2014 school year. 

Mary Knight, associate vice president of the budget office and UT budget director, said it is not typical for the University to be unclear about tuition rates in April. 

“It is an unusual situation,” Knight said. “Normally, we would have a tuition increase decision within a January or February time frame.”

Knight said one reason the committee decided to hold tuition rather than waiting for Regent action was a matter of legality. 

“Graduate students are going to be registering soon, and we wanted students to know what their tuition was going to be in the fall,” Knight said. “There are also legal requirements about notifying students of tuition rate when they register, and not increasing tuition after that period.” 

Registration for continuing students, including graduate students, begins April 15. 

Another budgeting decision for the 2013-2014 school year will be to provide graduate benefits in the form of nontaxable tuition reductions, according to Knight. Previously, benefits were reimbursed through payroll and were subject to tax. 

Michael Redding, outgoing president of the Graduate Student Assembly, said although he was pleased the tuition question has been resolved for the coming semester, he does not feel the solution addresses a larger problem: inaction from the Board of Regents.

“The way I look at it, all the other drama regarding our Regents aside, there are three or four really critical things a regent does,” Redding said. “One of those things is set tuition. They’ve completely dropped the ball on one of their core responsibilities, and that is a huge problem.”

Beyond a question of numbers, Redding said he feels the delayed tuition decision reflects the attitude of the regents toward graduate students.

“There has been a distinct lack of concern from this group of regents for graduate students,” Redding said. “Most graduate students are not Texas residents, and neither are out-of-state students, obviously, so we don’t represent their constituents, if you’re looking at it politically.”

UT President William Powers Jr. and representatives from the UT System did not respond to requests for comment. In an interview last week, System spokeswoman Jenny LaCoste-Caputo said she was not sure when the board would discuss tuition rates but believed there had been discussion about putting the issue on the agenda for the May 8 regents meeting. 

General revenue funds for UT are calculated as a percent of state higher education allocations. Recommendations are shown as averages of initial House and Senate budget proposals.
Source: Texas Legislative Budget Board.

The University would face a cut of almost 3 percent in state funds if Texas legislators follow budget recommendations released last week, although the budget may change during the legislative process.

The Texas House of Representatives would allocate $478.8 million in state general revenue funds to the University during the 2014-15 biennium, while the Senate would allocate $483.8 million over the biennium. 

Both of the initial proposals are about $9 to $14 million less than the $492.5 million the Legislature allocated to UT in the last biennium. 

The Legislative Budget Board prepared the proposals. The board is a permanent joint committee of the Legislature that drafts budget and policy recommendations for legislative appropriations. Legislators use the proposals as a foundation for determining a final amount to allocate to various state agencies and programs. 

Mary Knight, associate vice president and University budget director, said the decrease could be caused by funds being allocated to other universities that are growing faster than UT.

“If some are growing more than UT-Austin, we may get a smaller portion of the overall pie,” Knight said.

In addition to general revenue funds, the University also receives $50 million to $52 million annually from the Legislature to pay employee benefits, Knight said.

Knight said the Legislature’s funding recommendations are preliminary and may not accurately indicate how much legislators will approve in their final budget.

The Senate Finance Committee is scheduled to discuss state appropriations to UT when it meets Monday.

President William Powers Jr., UT System Chancellor Francisco Cigarroa and members of the UT System Board of Regents will likely be called to the Legislature to explain the University’s and other system universities’ funding priorities, but the Legislature ultimately controls how much funding the University receives, Knight said.

“There’s really no way to speculate,” Knight said. “It’s all up to legislative decisions they’re going to be making.”

In past legislative sessions, final funding for UT differed from initial recommendations.

In 2011, the House recommended allocating $473.2 million to UT for the 2012-13 biennium and the Senate proposed $493.3 million before the Legislature approved $492.5 million in their final budget.

In 2009, the House and Senate both recommended allocating $541.3 million to the University for the 2010-11 biennium before the Legislature approved $571.7 million.

During the past three years, state funds accounted for 13 to 14 percent of the University’s annual operating budget, according to budget presentations available on the UT Budget Office’s website.

Under both House and Senate proposals, UT’s budget makes up about 3.2 percent of the state’s total higher education budget, which is slightly above the 3.1 percent of Texas A&M’s proposed allocation. The two flagship universities received almost 1 percent more than the University of Houston and Texas Tech University, which are the next two largest public universities in the state. 

Published on January 23, 2013 as "UT faces possible budget cuts". 

University officials say UT could feel repercussions from the automatic tax increases and spending cuts set to kick in as part of the fiscal cliff on Jan. 2, 2013.

If the U.S. Congress does not act, the expiration of five tax measures will cause $500 billion in tax increases and $200 billion in spending cuts. The drastic financial repercussions could put the country on a fiscal cliff by depressing an already sluggish U.S. economy.

Tom Melecki, director of Student Financial Services, said Congress’ inaction could reduce a percentage of funding awarded to the Department of Education, which in turn distributes funds to the programs it administers, including student financial aid programs.

“There’s very little outlining current law about what happens to financial aid programs if we go over the fiscal cliff,” Melecki said. “We’re reading everything we can about what might happen in Washington, but we’re scratching our heads like everyone else. One of my concerns is that changes might take effect immediately.”

Melecki said there will be no immediate cut to Federal Pell Grants, the University’s largest source of student grants, but federal loans and work-study funding could see cuts when students return to campus in January if federal spending is reduced by the fiscal cliff.

In 2011-2012, the University received almost $237 million in federal funding for financial aid programs, $9.6 million of which was Pell Grants distributed to 11,569 students based on financial need. Funding for federal direct subsidized and unsubsidized loans totaled $112.2 million, and $2.1 million was awarded as work-study.

One proposal to avert the fiscal cliff involves increasing the federal subsidized loan interest rate from 3.4 percent to 6.8 percent, Melecki said.

Last year, 1,122 UT students had work-study jobs and earned $3 million. Federal funding for the work-study program, which Melecki said has been suffering reductions every year for the past six years, pays 70 percent of a student’s salary. The University is responsible for the remaining 30 percent.

“My office employs 25 work-study students,” Melecki said. “If there’s a cut back in federal money, I don’t think we can afford to take that up [from 30 percent] to even 35 percent to maintain the same number of jobs if cuts are made.”

Mary Knight, UT associate vice president of financial affairs, said the University has no definitive details about potential cuts but is aware of the possible impacts on student financial aid, research and payroll.

“Payroll tax changes, [including] social security and withholding taxes, could impact [or] reduce faculty and staff take home pay,” Knight said.

In 2010, the payroll tax was temporarily cut from 6.2 percent to 4.2 percent. The tax measure is set to expire at the end of 2012 and could cost the country $115 billion next year.

Federal research funding plays a vital role in research at higher institutions, but funding cuts related to the fiscal cliff could reduce grant money universities receive from major research agencies.

In 2011-2012, the National Science Foundation, the National Institutes of Health and the National Endowment for the Humanities awarded UT $166.4 million in research grants. The three government research agencies may each be subject to a 7.6 percent cut to mandatory spending and an 8.2 percent cut to discretionary spending.

“It is possible that funding for current federal grants could end before the research work is completed,” Knight said.

It is unknown if federal research agencies will implement cuts by eliminating existing grants, not providing new grants, providing less grants or cutting grants by a uniform percentage, Barry Toiv, vice president for public affairs for the Association of American Universities, said.

The Association of American Universities is a group of 62 public and private research universities, including UT, that advocates on issues important to research-intensive universities, including funding.

“What we do know is that considerably less research will take place,” Toiv said. “That is bad for long-term health advances, bad for national security and bad for the nation’s long-term economic growth.”

Governor Rick Perry’s call for Texas agencies to cut spending over the next two years has prompted a statewide search for fiscal inefficiencies, a search UT will undertake in the next few months. It is currently unclear how these reductions will affect universities across Texas.

Perry and the Legislative Budget Board, a committee of the Texas Legislature that oversees budget analyses and recommendations, sent a letter June 4 directing Texas agencies to keep their 2014-15 budgets below the 2012-13 biennium expensed and budget total. It also called on state agencies to identify proposals to further reduce budgets by 10 percent. These proposals will ultimately be decided upon when the budget board meets in January.

Mary Knight, associate vice president of the UT budget office, said a 10 percent reduction for UT would amount to a $59 million cut over two years. Knight said it is unclear how UT will be affected if the Legislative Budget Board approves the reduced budget proposals.

Officials in the governor’s office said every agency in Texas is being asked to search for inefficiencies within their budgets and to propose reductions.

Knight said UT has an ongoing five-year budget planning process that involves deans from respective college and vice presidents who collaborate with the president and provost to determine strategic priorities for each unit of the University.

“At this point, the reductions are part of a planning process for next legislative session,” Knight said. “Until the legislative session begins in January of 2013, we will not have the details of how this may impact UT Austin.”

Michael Morton, president of the Senate of College Councils, said it is difficult to determine where the cuts will be made within the University at this point if the Legislature asks state institutions to cut their budgets.

In the 2011 legislative session, the Texas Legislature cut 17.5 percent of UT’s budget, or $92 million, over two years. Morton said cuts made in the last budget cycle resulted in the loss of valuable administrators and staff members. He is a member of the President’s Student Advisory Council, a group of 12 students who guide the University president in matters relating to student interests, including finances and tuition.

Morton said UT is currently already operating at minimal costs, making additional cuts especially harmful.

“There’s a lot of little things that I don’t think people realize are affected by the cuts,” Morton said. “It does take a toll on people and it does take a toll on the university because we’re receiving less and less state funding.”

A 2.6 percent tuition increase proposed by President William Powers Jr. was denied by the UT Board of Regents in May, which Morton said would have made up some of the ground lost by budget cuts.

“I supported the tuition increase of 2.6 percent,” Morton said. “It was a modest increase for the situation that we, as an institution, are in. Ultimately, I thought it was better in the long run for the institution and better for students. Obviously no one wants a tuition increase in an already poor economic climate, which is why state funding is so critical and why we need to continue to get that message heard at legislature.”

Lucy Nashed, spokeswoman for the governor’s office, said Perry has asked universities to avoid raising tuition in the future if the reduced budget proposals are approved. Nashed said Perry has been very vocal about keeping tuition rates frozen.

“Tuition shouldn’t be the first place universities look to raise to revenue,” Nashed said. “He’s still calling on universities to find deficiencies. There’s still a lot that can be done before tuition needs to be increased.”

Nashed said the governor’s overarching vision for the state is to maintain fiscal discipline and to streamline government operation. She said not raising taxes for Texas residents is one of Perry’s goals outlined for this upcoming budget cycle.

“He has asked lawmakers to keep this [goal] in mind, and now we’re just asking agencies to take a look at their budgets and see what savings they could find,” Nashed said. “It’s basically just kind of setting the stage.”

Preservation of the state’s Economic Stabilization Fund is another of Perry’s priorities, Nashed said. Often referred to as the Rainy Day Fund, it is set aside for state emergencies such as natural disasters. According to the Legislative Budget Board’s 2012-13 revenue outlook, the Rainy Day Fund was at a balance of $8.2 billion and is projected to increase to $9.6 billion by the end of the 2013 fiscal year.