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Impact of proposed budget cuts

January 28, 2011

Dr. Juliet V. GarciaWe have known for some time now that the state of Texas is suffering the effects of the greatest budget deficit in its history. The most recent budget deficit estimate is $27 billion. The House and Senate have now released their separate versions of the base budget bill. Both versions will have a severe and negative impact on higher-education funding in our state.

The following analysis is based on funding levels for UTB if the House version is not amended. The Senate version was released later this week and includes similar budget cuts. We are confident that changes to both versions of the budget will occur as a result of the upcoming hearings and during the session that continues through May. However, the character of the proposed cuts are of such a serious nature and could have such harmful impact to our work, I thought it best to lay them out clearly now.

During the next few weeks we will be making every effort to work with our legislators to recapture the funds so desperately needed by our students, our community university, and this region. We ask for your help in communicating the importance of sustained funding during this difficult time in our region.

House Bill 1 includes funding for UTB totaling $75 million for the biennium as compared to $94.8 million in the last session. Under HB 1, funding for UTB will decline by $19.8 million over the 2012-13 biennium or just under $10 million per year. Senate Bill 1 includes funding for UTB totaling $77.8 million as compared to $94.8 million, a $17.0 million reduction in the 2012-13 biennium, or $8.5 million per year.

Impact on Students

  • The Texas Grant assists students who have done their part by completing a college-preparatory curriculum and successfully passing their college entrance examinations, and who also are in need of financial assistance. Last year the grant given to freshmen attending universities was as high as $6,780, and for those attending community colleges it was $1,580.
      
    Both HB 1 and SB 1 propose reductions of 41% in available dollars for the Texas Grant. The reductions will mean 674 students (about one in four) of the new freshman class planning to come to UTB will have will have no Texas Grant dollars available to help pay their tuition and other costs, thus increasing their debt load or excluding them altogether.
       
    (Source: "Fewer college students to get financial aid under House and Senate proposals," The Statesman.)
  • UTB receives an estimated $26,000 in Texas work-study funding that is provided to 26 students. A 41% reduction in work-study funds proposed by both bills will eliminate valuable campus jobs for 11 students.
  • UTB students who qualify for the State's Top 10% program receive up to $2,000 annually. Approximately 166 students currently participate, collectively receiving just under $340,000 annually or $1.4 million over a four-year period. A reduction in the program proposed by both bills will eliminate $269,000 per year, which eliminates scholarships for 131 of the 166 students.
  • At the very time that we should be adding new degree programs to meet an urgent demand for new courses of study in our region, we would be forced to eliminate four degree programs and restrict enrollment in other high-demand programs.
  • Because of the overall budget reductions ranging from $8.5 million to $10 million per year in the next biennium, UTB would have to reduce staffing levels. The reduction of staff would mean a sharp reduction in services to students including reduced operating hours for the libraries, computer labs and tutorial centers.

Impact on Employees

  • UTB may be forced to lay off almost 150 staff and faculty.
  • HB 1 proposes a $4 million cut in employee health insurance which will mean an increase in premium cost for employees, or the equivalent of 377 employees losing health insurance coverage. SB 1 proposes a $2 million cut, which will mean an increase in premium cost, or the equivalent of 188 employees losing health insurance coverage. UTB annually provides $5,300 worth of health coverage to employees.

Impact on Research

  • Last year, our faculty received $16 million in research funds from outside Texas. Both bills propose cuts of $500,00 in state funding dedicated to supporting research activities, which will significantly reduce our capacity to apply for, receive and manage external research dollars.
  • Every grant we fail to receive means students have fewer opportunities to work on campus, to engage in research and to graduate.

Impact on Community

  • Texas is already 36% below the national average in the availability of nurses. Yet every year, we turn away 200 qualified students from our nursing program due to a lack of space and faculty. Last year, we graduated 207 nurses. The elimination of the "Nursing Shortage" funds in HB 1 will cut our production by more than 16%, or by 32 new nurses each year. SB 1 does not eliminate nursing funding; however, it reduces the amount by 29% over the current biennium, or six less new nurses per year.
  • Budget reductions will impact our efforts to provide workforce training, business incubation support and expansion of commercialization activities. More than 67 businesses have been launched by our ITECC incubator, creating more than 600 jobs in our community. The impact of this investment has a ripple effect in the economy and our community will lose 820 jobs, reducing economic output by $83.8 million. In addition, the newly created businesses have provided internship and research opportunities for UTB students and hundreds of displaced workers have been trained to re-enter the workforce. Loss of funding to these initiatives would limit UTB’s ability to address the major economic and social issues of our important, fast-growing border region.

Impact Summary

In the 2009-10 academic year, our enrollment increased by 10.5%, or by 813 students. Our enrollment increases have continued this year at a rate of 7.9%, or 710 additional students. We have made great progress in growing the number of students that graduate every year. Last year alone, we graduated more than 2,000 students. But as a region, we are still far behind the rest of the state in college graduation rates.

The proposed funding cuts of $19.8 million to UTB may directly impact almost 200 campus jobs for employees and students, eliminate four programs, reduce essential services to students, reduce the availability of external research dollars, and, most importantly, keep almost 700 colleg- ready students each year from even enrolling.

Richard Fisher, the president of the Dallas Federal Reserve, spoke to freshman legislators recently about the Texas economy. His speech was titled, “Texas: What Makes Us Exceptional? Where Are We Vulnerable?” He concluded that it is investment in education that will guarantee our future’s success.

There is a lot of room for Texas to brag when we talk about our economy and our potential. But we also have vulnerabilities that keep Texas from reaching its full potential. The “good news,” according to the Beacon Institute, is that Texas scores high on overall tax burden, employment in high-tech industries, venture capital, IPOs, low unionization, unrestrictive minimum wages, exports, foreign direct investment and percent of population born abroad who come to work. The bad news: Texas was ranked near the bottom in most human capital measures. Texas is ranked dead last in the percent of the adult population that graduated from high school, 37th in percent of population enrolled in degree-granting institutions, 35th in academic R&D and 41st in science and engineering degrees awarded.

We know that incomes and net worth are directly correlated to educational attainment. We know that in the Knowledge Age in which we live, the mind is the capital plant of the modern economy. We all admire those who work with their muscles and by the sweat of their brow in pulling prosperity from the soil on our farms and ranches, or from deep beneath the earth in our mighty oil and gas sector. We rightly applaud those who help Texas produce almost 10 percent of the nation’s manufactured goods. But the world of today and tomorrow is driven by digits, not widgets. We will continue to move up the value-added ladder and stay ahead of the competition―not just from other states, but from China and the new emerging powers―only if we are able to nurture and harness Texas brains.

….if you wish for Texas to remain a beacon of entrepreneurialism and capitalist hope in today’s knowledge-based economy, the current budget dilemma must be resolved. And if you want Austin and all of Texas, in the words of that Brookings Institution report, to continue to “attract and retain high-skilled human capital,” it must not be resolved by cutting off your noses to spite your face by shortchanging education.

Throughout history, the people in our region have been denied opportunities to have access to higher education; they have been denied opportunities to participate in activities of research and discovery, and their access to medical services has been limited by the lack of qualified physicians and nurses. In the past two decades, with modest resources, we have been able to make real progress. Losing that momentum now would condemn the new generation to face obstacles that we thought we were now able to overcome.

At the time when Texas needs to be investing more in its human capital by expanding opportunities in higher education, these proposed reductions will stunt the progress and momentum of one of its youngest universities. Worse, the proposed reductions will betray the hopes of thousands of Texans who share the American dream and who are making their generation the one that ends the vicious cycle of illiteracy and poverty. Their hopes must be defended.

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Meetings

Monday, February 21, 2011
12:00 p.m.
SETB Lecture Hall

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