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For years, the University of Texas at Austin and Texas A&M University have represented Texas as the top two public research institutions in the state. Those who support schools with colors other than burnt orange or maroon lament that the schools have gained prestige by tapping a $32 billion endowment that helps them attract top faculty, increase research funding and construct new buildings.

This year, Texas lawmakers established a new path for other public universities interested in joining the Longhorns and Aggies in the upper echelon of nationally ranked schools.

They created the Texas University Fund, a $3.9 billion endowment to help other “emerging” research universities across the state enhance their research capabilities with the goal of joining the top public institutions across the country.

Proposition 5, a constitutional amendment to authorize the state to create the new endowment, is in front of Texas voters in the Nov. 7 election. Early voting started this week on that and 13 other proposed amendments to the Texas Constitution.

To back Proposition 5, lawmakers put a one-time allotment of $3 billion from the state’s budget surplus toward the fund. An additional $900 million will be rolled into this new endowment from the National Research University Fund, created more than a decade ago to finance research universities. If approved by voters, the state would also contribute $100 million annually from interest accrued on the state’s rainy day fund.

The endowment, to be managed by the Texas Treasury Safekeeping Trust Co., does not require any new taxes to pay for it.

State officials say increasing the number of top-ranked universities in the state will drive local and statewide economic growth and keep Texas competitive.

“We're the eighth-largest economy in the world,” said Texas Higher Education Commissioner Harrison Keller. “We need more research universities that are able to compete with the strongest research and development institutions in the world.”

Currently, California has nine schools on the list of the top 50 public universities, according to the U.S. News and World Report, where faculty research heavily factors into rankings. Florida has three universities on the list.

“There’s a correlation there,” said Texas Tech President Lawrence Scovanec. “They're more competitive for those federal investments in research because they're performing at a very high level, and I think the Legislature wanted to see Texas have more schools at a preeminent level.”

Public universities have two main goals: educating students and advancing knowledge through research that betters society.

Large grants require matching funds, and universities need to show that they can provide some financial commitment as well. The TUF funds will allow qualifying schools to become more competitive for grants.

So far, four public universities qualify to receive money from the endowment: Texas Tech University, Texas State University, the University of Houston and the University of North Texas. To qualify, schools must have spent at least $20 million on federal or private research annually for the preceding three years and awarded an average of at least 45 doctoral degrees annually during the previous three years.

The university that is next closest to qualifying to enter the new fund is Texas A&M University at Corpus Christi, Keller said.

Jason Smith, vice president of governmental affairs at the University of Houston System, said that without a steady stream of funding at the level the TUF fund could provide, the university has had to make difficult decisions on whether to spend money on research or to improve student services, like mental health counseling or tutoring. Investing in research brings in more federal funding, improves national rankings and attracts more competitive students and top faculty, he said.

“We probably can't invest like we should or like Texas A&M and UT can in academic counselors and mental health services and all the things you need at a university now for your students to be successful,” Smith said. “We needed to do that to build our research capabilities in order to draw down more federal funds and improve our rankings and attract more competitive students.”

Improving the academic stature and national reputation of these emerging research institutions also makes them more attractive places to enroll, which has a positive economic impact, Smith said.

“There's not enough space at UT and Texas A&M for all of the students that we need to educate in our state and keep them in our state,” he said, pointing to the tens of thousands of students who leave Texas annually for colleges elsewhere, never to return.

If the research fund is approved, early estimates show, Texas Tech would receive $44 million in the first year; UH would receive $48 million; Texas State could get $22 million and UNT would receive $21 million, according to state budget figures.

Each year, the comptroller would appropriate up to 7% of the investment assets of the fund for distribution to the universities. Three-fourths of that money would be distributed to the endowment and then sent to the schools. Tech and UH would each receive one-third of that money, while UNT and Texas State would split the remaining third.

The remaining 25% of the distribution would be provided to the four schools based on performance. Within that performance funding tier, 85% of the money would be distributed to the universities based on the annual money spent on research, and 15% would depend on the number of doctoral degrees awarded.

Lawmakers designed the TUF fund so that if another university meets the benchmark qualifications, or if a university already receiving funding improves its performance and qualifies for more funding, the state is required to add money to the TUF. The goal is to avoid what happened to the previous research fund, known as NRUF, which was created more than a decade ago to improve research at schools other than UT-Austin and Texas A&M. But that fund was designed so that, as more universities qualified, the amount of money for each school declined.

When Texas Tech and UH first qualified in 2012, they each received around $16 million per year from the National Research University Fund. Last year, that amount was closer to $7 million.

If a majority of voters approved Proposition 5, universities will be required to spend fund money on research activity. UH said it plans to renovate an existing research facility and add faculty. Texas Tech said it plans to add 100 to 150 faculty over the next decade. UNT President Neal Smatresk said the money would help the school increase enrollment and meet workforce needs in North Texas. Texas State officials said they plan to recruit more faculty whose research focuses on artificial intelligence, life sciences, energy and semiconductors.

“It will also allow more Texas students to remain in state for their education and gain high-demand, high-tech skills so that they may play critical roles in filling the workforce demands of major industries moving into Texas,” Shreek Mandayam, vice president for research at Texas State, said in an email.

Disclosure: Texas A&M University, Texas Tech University, University of Texas at Austin, University of Houston and University of North Texas have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

The Texas Tribune partners with Open Campus on higher education coverage.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2023/10/26/texas-proposition-5-research-fund/.

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