William H. McRaven, Chancellor


Dear Friend of the System ,

Last week I had the opportunity to present the University of Texas System Operating Budget for fiscal year 2017 to the Board of Regents.  I would like to share some of the highlights with you, because it’s important that all our supporters understand where our money comes from, how it is spent, and the steps we are taking to ensure that the resources with which we are entrusted are managed both responsibly and effectively on behalf of the people of our state.

When it comes to scale and impact, the UT System is without peer in Texas.  Last year our fourteen institutions educated more than 221,000 students, provided health care to millions of patients, and conducted more than $3 billion in research.  UT’s health institutions and hospitals had more than 7.2 million patient visits, and we opened two new medical schools, now accounting for six of the state’s ten public medical schools.

The Regents approved a 2017 budget of $17.9 billion, which represents an increase of 5.4% over last year.  The principal reason our budget went up is simple: more students are attending our universities and more patients are receiving care at our health institutions and hospitals.  In 2017, we expect to spend $280 million more on instruction and academic support than we did in 2016, and $381 million more on hospitals and clinics.

Costs are but one side of the ledger, of course.  We expect our revenue in 2017 to reach $18.3 billion – a 7.6% increase from 2016.  To put that amount of revenue in perspective, if the UT System were a business, it would rank approximately 160th on the Fortune 500 list of large U.S. companies. 

Many people don’t realize that about two-thirds of the System’s revenue comes from our health institutions.  Of the more than $12 billion we budgeted for health institutions in 2017, more than 60% of their revenue will come from hospitals, clinics, and professional fees. Federal, state, local and private sponsored programs will account for about 17%, with state appropriations bringing in 10% of their funding, and tuition and fees accounting for a little over one percent.

On the academic side, we expect revenues of approximately $5.6 billion – with the three biggest sources being tuition and fees (27%); federal, state, local and private sponsored programs (24%); and state appropriations (19%).  It’s worth noting that over the last decade, the share of revenue coming from state appropriations has dropped from 25% to 19% while, not coincidentally, the portion from tuition and fees rose from 25% to 27%. 

In addition to the budget, the Regents approved the use of $30 million in Permanent University Fund (PUF) bond proceeds for the STARs (Science and Technology Acquisition and Retention) program.  It’s hard to think of a smarter or more effective use of our resources than STARs. Not only is the roster of professors and researchers it has recruited to UT institutions (or prevented from leaving) beyond impressive, the money invested in STARs thus far has yielded a phenomenal return.

As the UT System’s chief executive, part of my job is to identify investments like STARs where doubling down on our investments makes sense.  But just as importantly, I have a duty to acknowledge and address areas where we need to take a closer look at how we allocate our resources.

One issue that has raised questions is the number of people employed by the UT System Administration. That number has increased over the past few years, in part because a number of operational functions that had been performed on the academic campuses were shifted, along with more than 150 personnel, to the UT System Administration payroll. This was done to centralize critical services and to help defray costs previously assumed by the campuses, allowing them to redirect those funds toward student success.   I think we can, and should, create a leaner System Administration without sacrificing the service and support we provide to the fourteen institutions.  To make that happen, we plan to reduce headcount by at least 130 Full Time Equivalent positions, by the end of the 2017 fiscal year.  Some of that has already been accomplished through a soft hiring freeze.  In addition, we have established a voluntary separation incentive program and in the months to come we will explore outsourcing opportunities and, if necessary, a reduction in force. 

We are working hard, on multiple fronts, to make sure as we are running the UT System with as much, if not more, financial discipline as any private sector enterprise.  Among other things, we have gone back and looked at dozens of PUF-supported initiatives, including some approved by the Board of Regents more than eight years ago, and examined whether the funds dedicated to some of those projects might produce a bigger impact elsewhere.  We’ll be coming to the Board with our ideas this November.

To make sure we are leveraging the PUF as strategically as possible, I have asked all the institution presidents to submit a five-year plan that prioritizes campus capital projects. Also, to lower our borrowing costs and ultimately free up cash to support the campuses, we are refinancing much of our debt – that is, issuing new debt at today’s low interest rates and using the proceeds to retire older, higher cost bonds.

While this is just a small sampling of our efforts, I realize it may be more detail than you care to know.  But it’s important to me that you understand how seriously we take our responsibility, and how hard we’re working to make every dollar entrusted to us count for the people of Texas.

Let me close, as always, for thanking you for all you do for the UT System.  We are blessed with the most tremendous network of supporters, and my team and I are determined to earn your continued support and trust.

Take care, 

William H. McRaven, Signature

Bill McRaven


Recent One-on-One Blog Posts

Recent UT System News

 

e-mail us your commentsI'm always interested in your ideas and suggestions.
Please e-mail me with your comments.

Giving to UT System

Office of the Chancellor
The University of Texas System, 601 Colorado Street , Austin, Texas 78701

Did someone forward you this message?
To receive this e-newsletter or others directly from the UT System, please subscribe.
If you do not wish to receive future email updates, please unsubscribe.
Please feel free to review our privacy policy.
View this email on a webpage.