January 26, 2009


B. Questions to the President.

From Dan Freed (professor, mathematics)
I have the following question for the president: Please comment on how you expect the growing global financial crisis to affect the university. What will be the effects in the remainder of this academic year? What are the most important issues before the legislature in the upcoming session which will affect the university financially? What cutbacks do you anticipate over the next few years?

President Powers said he had intended to talk about the financial situation and related legislative issues and would do so in the context of Professor Freed’s questions. He said the press coverage of his recent presentation to the Staff Council had been accurate although the headline sounded more negative than the article’s content, and he encouraged Council members to read the article. With regard to the Capital Campaign, President Powers reported the fall response produced improved results over the same period in 2007. He was cautiously optimistic about the fund raising effort but said, “It’s going to be a challenge as we go forward, and we’re doing some things to recognize that.” As far as funding from the state, President Powers said the originally projected surplus did not materialize due the economic downturn, which is putting budgetary pressures that will affect university-funding levels. Although his interactions with state leaders thus far has indicated there is recognition regarding areas where additional resources for higher education are greatly needed, he thought the upcoming budget decisions would be challenging. The one bright spot, according to President Powers, is that he expects UT Austin will face less financial difficulties than many other higher education institutions across the country, where substantial budget cuts and tuition increases are likely to occur. He said this comparative advantage would greatly help the university in recruiting and retaining excellent faculty members and graduate students.

President Powers said budget forecasting is done over at least a six-year period, and the central administration, deans, and unit leaders have been making more detailed projections for the upcoming 2009-10 budget; however, he expected UT Austin’s funding to be “down substantially from those projections,” which would result in “a challenging budget picture for us.” President Powers emphasized that the projections could be volatile during the coming months depending on what transpires in the financial markets, but he would apprise the Faculty Council and Faculty Council Executive Committee of any changes as they occur. The projections for UT Austin included in the base budgets released by the Senate and House are “up by about a quarter of a percent per year,” according to President Powers. Since most of the funding for higher education is based on a formula that rewards growth in enrollment, he said there would be an effort to get upward adjustments from the base projections. He said the 4.95% tuition increase that the regents have already approved for next year would be adversely impacted if a total tuition freeze were imposed by the legislature, but there are other proposals under consideration, including various tuition caps. He said the proposals varied in how they address affordability and funding needs, but he thought the legislators understood the overall funding package was what mattered to the university. President Powers reported that planning currently underway at UT Austin includes the 4.95% tuition increase and the 0.25% increase in formula-based general revenue, but it assumes a reduction in proceeds from the Available University Fund. These estimates, according to the president, will produce a small increase over the 2008-09 budget but a significant shortfall when compared to the 2009-10 projected budget. President Powers said this means careful financial management is essential, but the situation here in Texas is much better than the 10-15% annual budget cuts being enacted in other states. Although a hiring freeze has not been imposed across the UT Austin campus, the president said the vice presidents and deans had been directed to carefully evaluate hiring requests. He said layoffs were not expected, but units on campus would be free to use and reallocate their resources as they think would best meet their respective needs and future plans. Due to the unpredictability of the economy, policies regarding salary levels, raises, and possible lay-offs would depend on how funding levels and the budget evolve over time.

President Powers emphasized that he did not want UT Austin to merely “tread water” during these difficult times, but he wanted strategic planning and priority setting to “move the university ahead” by achieving progress toward important goals, such as increased support for faulty members and graduate students. He said the silver lining during these difficult times is that we are now in a better relative position than many public higher education institutions in other states. He credited this relative competitive advantage to the political leadership here in Texas that brought forward into the current year a $12-14 billion surplus. He also credited UTEMPCO’s investment policies and performance that resulted in losses that were less damaging during the economic downturn than those experienced in many other states. In addition, he recognized leaders of the UT System and UT Austin for adopting long-term planning perspectives that had been helpful in evening out some of the volatility in available resources from year to year.

With regard to the top 10% legislation, President Powers said he had talked with a number of legislators and was “cautiously optimistic something constructive will be done on it, but we’re still very early in that process.”

From Tom Palaima (professor, classics and UT COIA representative)
Here is a question for the president that I hope he will answer after consulting with appropriate parties in our NCAA programs: Working from official athletics program reports for 2006-07, UT and two peer competitors (in academic quality and big-time sports programs) have the following comparisons:

11 sports 511 participants TOTAL UGRADS 33,063 1 NCAA athlete per 64.7 students
18 sports 849 participants TOTAL UGRADS 34,982 1 NCAA athlete per 41.2 students
16 sports 763 participants TOTAL UGRADS 24,631 1 NCAA athlete per 32.2 students With its revenues of over $125 M and with a surplus reserve, why does not UT offer more NCAA athletics experience to more students?

With its revenues of over $125 M and with a surplus reserve, why does not UT offer more NCAA athletics experience to more students?

President Powers agreed that UT Austin offers fewer students the opportunity to compete in athletics than some of its major competitors even when the level of athletic funding is similar at the institutions, but he then added this had been a part of UT’s plan for many years. He said the priorities of UT’s athletics were the following: (1) to provide consistency with the academic experience for both the campus and the student athletes, (2) to be successful in competition, which did not imply “winning all the time,” and (3) to have a basis of support for the program that remains financially sound. President Powers reminded the Council that UT’s athletics is one of a very few programs in the United States that does not need to receive a financial subsidy from the university to exist and has actually contributed $5.2 to $5.4 million of its profits to support academic endeavors over the last two years. He reported that the funds had helped establish the new School of Undergraduate Studies and supported a variety of programs across campus. He said funding from athletics was being used for the renovations of Main 212, where the Faculty Council regularly meets and other university functions are frequently held. He said the continued self sufficiency of athletics was very important and had provided additional funds to the university through fees paid for accounting and administrative services, as well as payments for Saturday parking on campus. He also pointed out that a few of the popular, well-supported sports subsidize the remainder of the athletics program, including the women’s teams and some Olympics sports. President Powers said limiting the number of sports in which UT Austin competes had contributed to the success of the overall athletics program and its strong financial footing. He pointed out that some major universities that have traditionally competed in a wide variety of different sports, including Ohio State, Michigan, and Stanford, are currently reassessing whether they can continue supporting so many different sports in the future due to funding constraints. President Powers said UT needed to be very cautious about adding new competitive sports because he thought the business model of focusing on fewer sports and performing them well had contributed to the financial self sufficiency and overall success of UT’s athletic program.

Return to main minutes.