Office of the Chancellor THE UNIVERSITY of TEXAS SYSTEM 601 Colorado Street Austin, Texas 78701-2904 Phone: 512.499.4201 March 2, 2016 The Honorable Greg Abbott Members of the Texas Senate Governor, State of Texas Post Office BOX 12068 State Capitol, Room 2S.1 Austin, Texas 78711 Austin, Texas 78711-2428 The Honorable Dan Patrick Members of the Texas House of Representatives Lieutenant Governor, State of Texas Post Office Box 2910 State Capitol, Room 2E.13 Austin, Texas 787 68?2910 Austin, Texas 78701 The Honorable Joe Straus Members of the Texas Higher Education Speaker Coordinating Board Texas House of Representatives 1200 E. Anderson Lane State Capitol, Room 2W.13 Austin, Texas 78752 Austin, Texas 78768-2910 Dear State Leadership: Last month, 35 former University of Houston (UH) System regents sent you a letter regarding The University of Texas System?s plans for 330 acres being purchased in southwest Houston. I read the letter with particular interest, and while I understand concerns and their passion for their school, much of what was in the letter is inaccurate. As you know, we are just now forming the Task Force of Houston leaders who will address how best to use this property for the benefit of all Houstonians and Texans. To state that we have already identi?ed the name and the plans for the property is not true. The letter wrongly accuses the UT System of a number of transgressions, including the intent to build a Houston? campus and of moving forward with plans for academic programs without properly consulting with the Legislature and the Texas Higher Education Coordinating Board. None of these assertions is accurate. My vision for this property is the creation of an intellectual and innovative hub that will propel Houston to serve as a national and global epicenter of collaboration for researchers, industry, and entrepreneurs. But what the site will ultimately look like and how it will be used is still to be determined. To help conceptualize how we can best use the land for the benefit of the city, Texas, and the nation, Houstonians and Texans with an impeccable track record of commitment to the good of their state have agreed to advise the The University of Texas at Arlington - The University of Texas at Austin - The University of Texas at Dallas - The University of Texas at El Paso The University of Texas of the Permian Basin The University of Texas Rio Grande Valley The University of Texas at San Antonio The University of Texas at Tyler - The University of Texas Southwestern Medical Center - The University of Texas Medical Branch at Galveston The University of Texas Health Science Center at Houston The University of Texas Health Science Center at San Antonio The University of Texas MD Anderson Cancer Center - The University of Texas Health Science Center at Tyler Honorable State of Texas Leadership March 2, 2016 Page 2 UT System. I personally invited officials from the University of Houston to appoint a representative to join the Task Force, but they declined, so any allegations of the UT System not being transparent are unfounded. There were several points in the former UH regents? letter that need correction or clarification. Let me provide that here: - Contrary to the allegation that our efforts will result in a duplication of services, the UT System is not establishing a Houston-based campus that would dilute higher education in Texas. I will specifically charge the Task Force to not recommend any academic programs that duplicate what is already available in Houston unless there is a demonstrated need that has not and is not being met. Isn?t this what higher education has a responsibility to do? - Contrary to the allegation that we are not being transparent and are setting a dangerous precedent, we have pledged to, and will, work closely with the Texas Higher Education Coordinating Board before embarking on any potential academic programs. In fact, the THECB is represented on the System?s Task Force to ensure that any recommendations are in alignment with the mission and goals of the THECB, including its goal for Texas higher education to achieve parity with leading states and other countries. Furthermore, this UT System effort in Houston is a generational one. We can either sit back and only do what we?re doing now, or we can strategically and carefully balance our educational and research missions of today with responsibly looking to meet our state?s needs in the future. This is what UT and Texas have done in the Rio Grande Valley, an area where more educational opportunities are needed. Both the UT and systems recently opened campuses there. Are we really convinced that Houston, the fourth largest and most international city in the US, has all it needs in terms of intellectual and innovative horsepower for the decades ahead? Do the former regents really believe that Houston would not benefit greatly from world-class collaboration, with UH as an active and critical participant? - The former regents ask to be granted access to the Permanent University Fund or another permanent funding source of equal value. They assert that the playing field of Texas higher education is tilted in this regard, when capital funding is in fact quite level. Yes, the UT and systems are fortunate to bene?t from the PUF, which backs bonds that provide for construction and capital expenses at the UT System?s 14 institutions and at 11 institutions and agencies of the Texas University System. But the Texas Constitution provides constitutionally dedicated capital funding for Texas universities. The former regents did not mention in their letter that institutions not benefitting from the PUF, including the institutions of the University of Houston System, participate in a constitutional appropriation of almost $400 million a year to the Higher Education Assistance Fund, or HEAF, for the same purposes for which PUF bonds are issued. And HEAF funding is guaranteed, appropriated by the Honorable State of Texas Leadership March Page 3 2, 2016 constitution itself ?out of the first money coming into the state treasury.? In contrast, the bond capacity of the PUF is highly variable and depends on investment performance and the amount of outstanding bonded indebtedness. Over the last 10 years, general academic institutions that benefit from the PUF have been allocated on average about $596 per student in PUF bond proceeds, while HEAF funding for general academic institutions has averaged about $660 per student. And these figures do not re?ect the action of the 84th Legislature that increased HEAF funding from $262.5 million a year to the current $893.75 million. In addition, the Legislature and voters have recognized the need to provide additional funding for the state?s emerging research universities. In 2009, they created the National Research University Fund, or NRUF, permanently endowed initially with $450 million and which has increased in value over time. The NRUF is designed to provide a dedicated, independent and equitable source of funding to enable emerging research universities to achieve national prominence as major research universities. Currently, the University of Houston and Texas Tech University have qualified for funding from NRUF. The funds from the RUF are even more ?exible than the PUF, as they can be used for the support and maintenance of any educational and general activities that promote increased research capacity at the university. The path forward to secure additional funding for the University of Houston and other emerging research universities is clear: invest more dollars in NRUF. Contrary to the allegation that the UT System is misallocating resources by short- changing our own UT institutions, thanks to careful long?term strategic investments by the regents and the extraordinary leadership of our presidents, we recently celebrated the achievements of UT Dallas and UT Arlington as they joined the University of Houston, Texas Tech, and the University of North Texas among the ranks of the Carnegie Classification?s ?highest research activity? institutions. While UT Austin, Rice, and Texas remain Texas? only members in the American Association of Universities?the top echelon of North American research institutions?we always remain focused on the continued ascendancy of our emerging research institutions, as well as our health institutions and comprehensive academic universities. California and New York continue to outpace Texas, both in the Carnegie Classification of tier one institutions and membership in the AAU, but we remain laser focused on ensuring Texas can rise competitively through education, research, and patient care. Presidents of our four emerging research institutions referenced by the former regents are all very supportive of the Houston endeavor and see it as a new opportunity to expand collaborations for their students and faculty, which will make them better institutions. And at its recent meeting in Galveston, the UT regents made additional investments specifically in our four emerging research institutions to augment resources for which they?re eligible through the state?s important TRIP Honorable State of Texas Leadership March 2, 2016 Page 4 program. The regents also made investments in our Quantum Leap ?War for Talent? to ensure our institutions? success in recruiting and retaining faculty and researchers who are nationally recognized stars and rising stars. We in no way want to stand in the way of the University of Houston?s impressive trajectory, and we applaud its extraordinary leadership role in Houston. In fact, we want to find ways to partner together to provide more opportunity for Texans. It takes two or more to collaborate. While we respect the views of current and former regents and its administration, we remain compelled to move forward, following all state laws and THECB policies, in serving the people of Texas. We acknowledge that active campaigns are underway to encourage political action committee, alumni association, and others to petition the Texas Legislature and the THECB to slow or stop our efforts. We only ask that we all allow facts, not unfounded allegations and predetermined conclusions, to prevail. As chancellor, I cannot prioritize the needs of any single institution above the needs of our state?s responsibility to its citizens. We are Texas. What we offer should be the best in the nation. The nation and world should be turning to Texas for the next breakthrough, the next discovery, the next great idea. At the UT System, we?re exploring ways to push Texas to this next level, and we aspire to do this by partnering with great minds from all universities, industries, and organizations who wish to participate. We must think big, act boldly, and embrace new ideas to be leaders in higher education, research and discovery. This is what we are attempting to accomplish, and we are doing so with the best interest of Texas as our paramount priority. spect ly su itte William H. McRaven Chancellor WHM/jbp cc: The University of Texas System Board of Regents