Texas voters have voted resoundingly in favor of Proposition 5, a constitutional amendment that establishes the Texas University Fund, a $3.9 billion endowment meant to help “emerging” research universities in the state boost their research capacity and output. With 75% of the vote counted, the measure was winning by a margin of 65% to 35%.
A primary aim of the amendment is to make Texas more competitive with other states like California and Florida in terms of the number of nationally ranked research institutions it can claim. A column in the Dallas Morning News written by two state senators called it “an investment in Texas’ future that we cannot afford to pass up.”
Proposition 5, which was a legislatively referred ballot initiative, renames the National Research University Fund to the Texas University Fund. To fund it, Texas lawmakers will allocate $3 billion from the state’s budget surplus. Another $900 million will be added from the former National Research University Fund.
Prop 5 will also allocate the interest, dividends, and investment earnings from the state’s rainy day fund from the preceding fiscal year. The total amount allocated in fiscal 2024 would be limited to $100 million. The annual limit would be adjusted for inflation each year but would be limited to a 2% growth rate.
Currently, four public institutions are eligible to receive proceeds from the new endowment – Texas Tech University, Texas State University, the University of Houston and the University of North Texas. To qualify, a university must have spent at least $20 million on federal or private research each year for the preceding three years and have awarded an average of at least 45 doctoral degrees annually during the previous three years.
According to The Texas Tribune, initial estimates are that Texas Tech University would receive $44 million in the first year; the University of Houston would receive $48 million; Texas State University’s distribution would be $22 million and the University of North Texas would receive $21 million.
In subsequent years, up to 7% of the investment assets would be doled out to the universities. Three-fourths of that amount would be distributed to the endowment, with Texas Tech and the University of Houston each receiving one-third, and the University of North Texas and Texas State splitting the other third. The remaining 25% of the distribution would be allocated to the universities based on how much research funding they generate and how many doctoral degrees they award.
The University of Texas and Texas A&M systems are excluded from receiving money from the new fund because they receive research funds from an existing endowment called the Permanent University Fund (PUF), established in 1876 and funded by leasing revenue from state-owned lands in West Texas.
One-third of the available profit of that fund is distributed to the Texas A&M system annually, and the remaining available funds are distributed to the University of Texas system. As of 2023, the PUF is valued at over $30 billion.
The Texas State Legislature also passed implementing legislation in the form of House Bill 1595, which will now take effect. It requires the Texas Higher Education Coordinating Board to determine the amount of each distribution, identify eligible institutions, and report the former to the state legislature and comptroller.
One major selling point for Proposition 5, which enjoyed bipartisan legislative approval and was supported by a broad coalition of economic development organizations, hospitals and major newspapers in the state, was that it does not require any new taxes to pay for it.
State officials applauded the outcome. In a post on his X (Twitter) account, Governor Greg Abbott wrote, “Texas voters approved a constitutional amendment to bolster funding for our state’s leading research universities. Thanks to their support, Texas will remain the #1 state in the nation for Tier 1 research universities.”
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