Update: Can Tier-One Contenders Reach Consensus on Prize Money?

There's a substantial cash prize awaiting Texas' seven emerging research universities, if they can meet the state's criteria to be considered "tier one." But there's no way to get at it right now, and there won't be unless they can all reach an agreement.

With the approval of Texas voters in November 2009, the dormant Higher Education Fund was converted into the National Research University Fund, currently valued at approximately $613 million. To gain access to the fund, universities must meet several benchmarks.

When they established the financial incentives for certain schools to become tier-one institutions, legislators did not realize the participants would meet their criteria so rapidly. Two years later, the University of Houston is considered to be imminently eligible, with Texas Tech University and the University of Texas at Dallas following close behind.

The lower chamber of the Legislature already passed House Bill 1000 by House Higher Education Committee Chairman Dan Branch, R-Dallas. It establishes a system so that when a university becomes eligible for the fund, a 4.5 percent payout is made for the biennium (currently, that amount would be about $28 million.) If one school is eligible, the total is divided in half, with half going to the school over the course of the biennium and the other half going back into the fund. If there are two schools, the money is divided into thirds. If three, then fourths. And so on.

"We had a consensus when it left here," Branch said of his plan, which he said corresponded to his priorities of rewarding the winner of the race while allowing the fund to continue to grow.

Other lawmakers have proposed alternate methods. State Sen. Robert Duncan, R-Lubbock, has proposed a model in which an eligible institution gets one-seventh of the payout and then a quarter of what remains after each eligible institution gets its seventh. Any funds not allocated would return to the fund. Meanwhile, state Sen. Rodney Ellis, D-Houston, has proposed a model that would distribute the entire payout to eligible institutions relative to a three-year rolling average of their restricted research expenditures.

When HB 1000 came up in the Senate Higher Education Committee last Wednesday, it became clear that the preference of the leading institution — UH — might be for a system that would allow it a bigger payday. In her comments before the committee, UH President Renu Khator explained that she supported a model that, like Ellis' proposal, distributed the full payout rather than putting some money back in the fund. She argued it represented a better investment for the state because putting money into academic institutions, all of which are facing significant budget cuts, tends to yield a significant return. "If we grow Texas’ economy, there is a chance we can grow this fund as well," she later told The Texas Tribune.

Duncan argued that NRUF, as it is called, was intended to be a long-term fund, not a source of short-term cash. "Building a research university as I understand it, doesn’t happen overnight," he said. He and others argued that money needed to return to the fund to allow it to grow.

"We have to find a reliable new source of funding somewhere," Khator said, noting that returning a few million dollars at a time wouldn't grow the fund in a significant way.

Senate Higher Education Chairwoman Judith Zaffirini, D-Laredo, observed that the seven institutions participating in the competition were represented by a total of 21 senators, virtually guaranteeing passage of a bill that distributes the fund should it make it to the Senate floor. However, one university could tank the effort if it chose, and so — even though there's enough support on the committee to move the bill — Zaffirini will let it proceed if there is consensus among the seven universities about which approach to take. 

She noted that they managed to get consensus on the original tier-one bill, Branch's House Bill 51, in 2009. "It wasn't easy," she told the Tribune. "We worked hard on it."

There's at least an agreement that a bill should pass, if not the specific one. University of Texas at Arlington President Jim Spaniolo told lawmakers that failing to pass a bill would send an "injurious message" regarding the state's effort to boost its tier one universities — of which there are currently three, including one private institution. The other presidents present at last week's hearing agreed.

The issue is scheduled to come up in Zaffirini's committee again today. She told the Tribune on Monday that she had yet to hear that an agreement on a specific plan had been reached, and sources say there has not been much discussion in the last week among the university presidents on the matter.

Khator told the Tribune that, at this point, she believes it is up to the senators. "I’ve provided as much information and perspective as I could," she said, indicating that ultimately, UH would accept whichever approach the lawmakers favored. "Whatever happens, we will be happy," she said.

Update: On Wednesday morning, the bill was — once again — left pending in committee as the senators await a consensus.

Zaffirini indicated that as soon as one was reached, the committee could easily meet at her desk and pass it out. However, she said she has no interest in passing it and then trying to work it out, saying it needs to be written in committee. The lawmakers also indicated that they would be open to new proposals as long as all seven institutions agree to it.

Duncan offered a bit of advice to the seven institutions, and particularly UH. "When one's on their own," he said, "it's easier to move to those who are together."