Texas universities forced to trim their budgets, even with big state cuts averted

The massive state funding cuts Texas higher education officials dreaded never materialized this year. But that doesn't mean their public universities are out of the woods. 

Most of them — even some that received slight funding boosts from the state — are asking their staffs to cut costs for the upcoming school year.

University of Houston President Renu Khator has asked academic departments to cut 2.5 percent from their budgets. University of Texas at Austin President Greg Fenves ordered a $20 million spending cut, which amounts to a 2 percent reduction. Texas A&M University administrators are sticking with a planned 1.5 percent cut, while Texas Tech University departments were told to trim 1 percent from their budgets.

Combined, they amount to tens of millions of dollars in of cuts.

In some cases, the savings may be reallocated to other university priorities, such as pay raises. But employees say the exercise of making them is still painful, given that they have been told to be cost-conscious for years.

“It hurts,” said Michael Olivas, a law professor at the University of Houston and director of the school’s Institute for Higher Education Law and Governance. “And once you start doing those cuts over a couple of years, it becomes very difficult.”

The reductions are happening even though general state funding for higher education over the next two years climbed by 1.6 percent in the state budget signed by Republican Gov. Greg Abbott in June. That’s a marked improvement over the 6 to 10 percent cuts that were initially on the table, and many university officials expressed relief.

But the overall state funding increase only paints part of the picture. Sixteen of Texas’ 43 public universities and system administrative offices still saw a reduction in state funding. Many of the universities that saw an increase in state funding still didn’t get enough to keep up with inflation and enrollment growth.

And there's great uncertainty about the future. Higher education leaders in the Texas Legislature are gearing up to spend the next 18 months exploring possible overhauls to how they fund higher education. Some campuses worry that if state formulas change, their funding could be slashed.

Meanwhile, President Donald Trump’s proposed federal budget calls for reductions in financial aid and research funding, both of which contribute to universities' bottom lines. 

Most Texas universities wont finalize their budgets until their board of regents meetings in August. But preparations have been underway for months. 

In a June letter to faculty and staff announcing budget cuts at UT-Austin, Fenves cited this environment of uncertainty. A portion of the university's anticipated $20 million in savings will be reallocated to pay for merit-based raises for faculty and staff, he said. But it will also be used to cover inflation and increased operating costs, despite UT-Austin receiving a 1 percent increase in state funding for the next two years.

“There are tough decisions to make, but we will make them thoughtfully and with the best interests of the university and our community in mind,” Fenves wrote in the letter.

A similar message went out at the University of Houston, which has received a 3 percent increase in general state funding for the next two years. Spokesman Mike Rosen said each department will have to submit proposed cuts, but some might not end up being made. The university wants to preserve academic departments; non-academic units have been ordered to trim their budgets by 3.5 percent.

“What we are going through is really a budgeting reallocation in order to ensure that the primary goal of educating students is being met,” he said.

Other campuses have identified specific areas for reductions. Texas Tech urged administrators, faculty and staff to consider paring back travel costs and food and entertainment expenses. The University of Texas at San Antonio has extended a hiring freeze to August 2018.

Those kinds of reductions are nowhere near unique in higher education. Universities in states like Illinois and Louisiana have dealt with much more severe cuts in recent years. Many states across the country are dealing with declining enrollment, while Texas universities keep growing in size.

But Olivas said the budgeting situation makes it hard for Texas' universities to take advantage of other states’ struggles and raise their profiles.

“It’s difficult to get ahead, and every institution that is losing money is also losing because of inflation,” he said. “Texas continues to sort of be stuck in the middle of the path.”

Disclosure: Texas A&M University, the University of Houston, Texas Tech University, the University of Texas at San Antonio and the University of Texas at Austin have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.