Fundamentals of University Resources

2008

Fundamentals of University Resources

2008

Financing Texas Higher EducationFinancing Texas Higher Education

BackgroundBackground

Financing Texas Higher EducationFinancing Texas Higher Education

BackgroundBackground TX System of public higher education serves TX System of public higher education serves 90% of the 1.2 million students enrolled in 90% of the 1.2 million students enrolled in higher education in Texas:higher education in Texas:

35 general academic teaching institutions (including law schools)

50 community & junior college districts 1 technical college with 4 main campuses 3 lower division state colleges 9 health related institutions (7 medical schools, 3

dental schools & various health/nursing units)

TX System of public higher education serves TX System of public higher education serves 90% of the 1.2 million students enrolled in 90% of the 1.2 million students enrolled in higher education in Texas:higher education in Texas:

35 general academic teaching institutions (including law schools)

50 community & junior college districts 1 technical college with 4 main campuses 3 lower division state colleges 9 health related institutions (7 medical schools, 3

dental schools & various health/nursing units)

Texas Higher Education Coordinating Board (THECB)

Texas Higher Education Coordinating Board (THECB)

Created in 1965; members appointed by the Governor for 6-year terms; started with 13, now at 6 (SB 286 – effective FY08).

Leadership and coordination to achieve excellence in higher education.

Recommends improvements; changes in the formula funding model; controls academic program duplication & unnecessary construction projects.

Oversight for state-sponsored financial aid programs.

Created in 1965; members appointed by the Governor for 6-year terms; started with 13, now at 6 (SB 286 – effective FY08).

Leadership and coordination to achieve excellence in higher education.

Recommends improvements; changes in the formula funding model; controls academic program duplication & unnecessary construction projects.

Oversight for state-sponsored financial aid programs.

Texas State Legislative Budget CycleTexas State Legislative Budget Cycle

State Legislature convenes every two years for 140 days during an odd numbered calendar year beginning January 2nd: 2007 = 80th Legislative Session for FY08 and 09 Budgets

2009 = 81st Legislative Session for FY10 and 11 Budgets

State budget is allocated for two years at a time: Appropriation is generally flat in the 2nd year with minor

adjustments in earmarked/pass-through revenues.

Fiscal Year begins September 1; number reference is the trailing year: 2007-2008 = FY08

State Legislature convenes every two years for 140 days during an odd numbered calendar year beginning January 2nd: 2007 = 80th Legislative Session for FY08 and 09 Budgets

2009 = 81st Legislative Session for FY10 and 11 Budgets

State budget is allocated for two years at a time: Appropriation is generally flat in the 2nd year with minor

adjustments in earmarked/pass-through revenues.

Fiscal Year begins September 1; number reference is the trailing year: 2007-2008 = FY08

General Appropriations Act (GAA)General Appropriations Act (GAA)

Funds allocated each biennium are detailed in the General Appropriations Act (GAA).

Academic institutions receive direct appropriations via funding formula and non-formula appropriations. Direct appropriations are identified in the informational strategies

of each institution’s bill pattern in the GAA. Revenue sources are referred to as the ‘method of finance:’

General Revenue General Revenue-Dedicated (Statutory Tuition/Certain Lab Fees)

Funds allocated each biennium are detailed in the General Appropriations Act (GAA).

Academic institutions receive direct appropriations via funding formula and non-formula appropriations. Direct appropriations are identified in the informational strategies

of each institution’s bill pattern in the GAA. Revenue sources are referred to as the ‘method of finance:’

General Revenue General Revenue-Dedicated (Statutory Tuition/Certain Lab Fees)

General Appropriations Act (GAA)General Appropriations Act (GAA)

GAA specifies how state funds are allocated, not how they must be spent. Institutions are not bound to spend appropriations

within a specified strategy. Exceptions:

TRB Debt service; Research Development must be used per Ed Code

§62.091.

Limitations: General Revenue can not be used to fund: Construction; Auxiliary purposes – e.g. Athletics, Parking, etc.

GAA specifies how state funds are allocated, not how they must be spent. Institutions are not bound to spend appropriations

within a specified strategy. Exceptions:

TRB Debt service; Research Development must be used per Ed Code

§62.091.

Limitations: General Revenue can not be used to fund: Construction; Auxiliary purposes – e.g. Athletics, Parking, etc.

Formula Funding in TexasFormula Funding in Texas

Tool used by the Legislature since 1950’s to allocate most of the funds for public universities. Over time, the formula became more and more complex Simplified in 1997 (Senator Ratliff)

Not intended as restricted budget line item Universities may allocate to a college or department more or less than the amount

‘earned’ through the formula.

Intended to fund most Educational & General budget items: 62% of all state appropriations for general academic institutions are allocated via 2

funding formulas and 2 supplements.

Tool used by the Legislature since 1950’s to allocate most of the funds for public universities. Over time, the formula became more and more complex Simplified in 1997 (Senator Ratliff)

Not intended as restricted budget line item Universities may allocate to a college or department more or less than the amount

‘earned’ through the formula.

Intended to fund most Educational & General budget items: 62% of all state appropriations for general academic institutions are allocated via 2

funding formulas and 2 supplements.

Source: THECB Presentation: Introduction to the Texas Public University Funding Formula (November 2001) http://www.thecb.state.tx.us/AdvisoryCommittees/HEP/FormulaBriefingHindmanNov27.ppt

State Appropriations: Formula FundingState Appropriations: Formula Funding

Instructional and Operations (I/O) Formula Based on Weighted SCH (Base Year)

• Teaching Experience Supplement Additional weight of 10% to undergraduate SCHs taught by tenured or tenure track faculty

• Small Institution Supplement (under 5,000)

Infrastructure Support Formula Based on utility cost & square footage of E&G space for Operation & Maintenance of Plant (Facilities)

Instructional and Operations (I/O) Formula Based on Weighted SCH (Base Year)

• Teaching Experience Supplement Additional weight of 10% to undergraduate SCHs taught by tenured or tenure track faculty

• Small Institution Supplement (under 5,000)

Infrastructure Support Formula Based on utility cost & square footage of E&G space for Operation & Maintenance of Plant (Facilities)

82.9%*

17.1%*

*of total made available to fund the formula

Funding Caps (SCHs that are not Funded)

Funding Caps (SCHs that are not Funded)

SCH are excluded from the formula funding base as for: Doctoral Cap –doctoral hours accumulated by individual

students in excess of 99 hours.

Undergraduate Hour Cap – SCH earned by a resident undergraduate student that exceeds by at least 45 hours the number of SCH required for completion of the student’s degree program.

Developmental Education Cap – developmental hours accumulated in excess of 18 SCH.

Third Time Enrollment Cap – credit hours attempted by a student for the third time.

SCH are excluded from the formula funding base as for: Doctoral Cap –doctoral hours accumulated by individual

students in excess of 99 hours.

Undergraduate Hour Cap – SCH earned by a resident undergraduate student that exceeds by at least 45 hours the number of SCH required for completion of the student’s degree program.

Developmental Education Cap – developmental hours accumulated in excess of 18 SCH.

Third Time Enrollment Cap – credit hours attempted by a student for the third time.

State Appropriations: Formula FundingState Appropriations: Formula FundingStarting Point – funding for 35 Academic Institutions:Starting Point – funding for 35 Academic Institutions: State General Revenue + Local Funds (Statutory tuition + certain lab fees) = Funding Rate

Statewide Weighted Semester Credit Hours Per

WSCH$59.02

Funding for UTSA:Funding for UTSA: UTSA’s WSCH * Funding Rate per WSCH (less SCH capped)

= I/O Formula Funds Appropriated to UTSA

Formula Strengths: cost based, emphasizes instructional mission.Formula Weaknesses: hurts growing institutions – adjustments occur every 2 years; motivates creation of graduate programs; doesn’t reward quality or student success; validity of weighting not demonstrated.

Starting Point – funding for 35 Academic Institutions:Starting Point – funding for 35 Academic Institutions: State General Revenue + Local Funds (Statutory tuition + certain lab fees) = Funding Rate

Statewide Weighted Semester Credit Hours Per

WSCH$59.02

Funding for UTSA:Funding for UTSA: UTSA’s WSCH * Funding Rate per WSCH (less SCH capped)

= I/O Formula Funds Appropriated to UTSA

Formula Strengths: cost based, emphasizes instructional mission.Formula Weaknesses: hurts growing institutions – adjustments occur every 2 years; motivates creation of graduate programs; doesn’t reward quality or student success; validity of weighting not demonstrated.In FY08-09 biennium, of the $47.4M in new formula funding, $28.4M was

‘Hold Harmless’ funding. It will be difficult for us to ever catch up.

State Appropriations: Formula Funding State Appropriations: Formula Funding

Instructional and Operations (I&O) Formula Uses total weighted Semester Credit Hours (SCH) produced during base period: 12 months immediately preceding & including the Legislative session)

Summer 2008, Fall 2008 and Spring 2009 determine formula funding for FY2010 and 2011 (next biennium)

Weights based on SCH by: Level of course (Lower/Upper/Masters/PhD) Discipline

Instructional and Operations (I&O) Formula Uses total weighted Semester Credit Hours (SCH) produced during base period: 12 months immediately preceding & including the Legislative session)

Summer 2008, Fall 2008 and Spring 2009 determine formula funding for FY2010 and 2011 (next biennium)

Weights based on SCH by: Level of course (Lower/Upper/Masters/PhD) Discipline

Formula Funding Weights Reflect the Formula Funding Weights Reflect the Variable Costs by Discipline and LevelVariable Costs by Discipline and LevelFormula Funding Weights Reflect the Formula Funding Weights Reflect the

Variable Costs by Discipline and LevelVariable Costs by Discipline and Level

Example: (SCH x Weight x Rate per weighted SCH) Example: (SCH x Weight x Rate per weighted SCH) ** Rate set by the Legislature Rate set by the Legislature

Liberal Arts Freshman taking 15 hrs =Liberal Arts Freshman taking 15 hrs = 15 SCH x 1.0 x $59.02 = $885.30 <less tuition>, net = $135.3015 SCH x 1.0 x $59.02 = $885.30 <less tuition>, net = $135.30 Science Masters student taking 9 hrs = Science Masters student taking 9 hrs =

9 SCH x 7.29 x $59.02 = $3,872.30 <less tuition>, = $2,972.309 SCH x 7.29 x $59.02 = $3,872.30 <less tuition>, = $2,972.30

Example: (SCH x Weight x Rate per weighted SCH) Example: (SCH x Weight x Rate per weighted SCH) ** Rate set by the Legislature Rate set by the Legislature

Liberal Arts Freshman taking 15 hrs =Liberal Arts Freshman taking 15 hrs = 15 SCH x 1.0 x $59.02 = $885.30 <less tuition>, net = $135.3015 SCH x 1.0 x $59.02 = $885.30 <less tuition>, net = $135.30 Science Masters student taking 9 hrs = Science Masters student taking 9 hrs =

9 SCH x 7.29 x $59.02 = $3,872.30 <less tuition>, = $2,972.309 SCH x 7.29 x $59.02 = $3,872.30 <less tuition>, = $2,972.30

Liberal Arts 1.00 1.77 4.01 9.94 Science 1.67 2.93 7.29 20.05 Fine Arts 1.50 2.51 5.65 9.78 Business 1.18 1.68 3.70 19.08 Engineering 2.46 3.51 7.39 17.05 Teacher Ed 1.33 1.79 2.68 7.70

DoctoralLower Division

Upper Division

Masters

Liberal Arts 1.00 1.77 4.01 9.94 Science 1.67 2.93 7.29 20.05 Fine Arts 1.50 2.51 5.65 9.78 Business 1.18 1.68 3.70 19.08 Engineering 2.46 3.51 7.39 17.05 Teacher Ed 1.33 1.79 2.68 7.70

DoctoralLower Division

Upper Division

Masters

State Appropriation as a % of Total Revenue has Declined

State Appropriation as a % of Total Revenue has Declined

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

FY 02 41%

FY 03 40%

FY 04 33%

FY 05 27%

FY 06 30%

FY 07 27%

FY 08 28%

State Appropriations

Total Revenues

State Funding Variance by UT CampusState Funding Variance by UT Campus

State Appropriations

FY 2001 2002 2003 2004 2005 2006Arlington 5,400$ 5,700$ 4,900$ 4,600$ 4,600$ 4,900$ Austin 6,200 6,300 5,900 6,000 6,200 6,500

Brownsville (2) 2,700 2,900 3,200 2,900 3,100 3,000

Dallas 6,100 6,100 5,700 5,700 5,500 6,100 El Paso 5,600 5,400 5,200 4,800 4,800 5,200 Pan American 4,700 4,700 4,500 4,200 4,000 4,400 Permian Basin 9,100 8,300 7,400 6,500 6,200 6,300 San Antonio 4,800 4,900 4,400 3,900 3,800 4,400 Tyler 7,900 9,000 7,600 6,900 6,000 6,500

Per Full-Time Equivalent Student (1), Real DollarsUT Academic Institutions

(1) Full-Time Equiv alent students = 30 undergraduate semester credit hours (SCH) or 24 master's or

professional SCHs or 18 doctoral SCHs.

(2) Brow nsv ille operating rev enues from local community college tax district are not included.

Funding Sources of UTSA Operating BudgetFunding Sources of UTSA Operating Budget State Appropriations: General Revenue – (“sum certain”)

Formula Funding (~71%), Special Items, Benefit Cost Sharing

THECB Transfers: TX Grant (TPEG), Work-study, etc.

Statutory Tuition, Certain Lab Fees Other

E&G: General Revenue-Dedicated – (“estimated”) funds ~29% of the formulae & TPEG

Designated Tuition & Fees, Misc. Revenue Indirect Cost Recovery: Facilities & Admin Overhead

Auxiliary Enterprise Funds (29-accts) Restricted Funds: Gifts (30-accts) Grants/Contracts

(26-accts) Financial Aid (26-accts: not sourced from Designated Tuition or TPEG)

Designated Funds19-accounts

State Funds 14-accounts

UTSA FY 2008 Operating Budget All Revenue Sources - $404,292,502

UTSA FY 2008 Operating Budget All Revenue Sources - $404,292,502

State Appropriations

$114.6M (28%)

Designated Funds:Designated Tuition,

Misc. Fees including F&A/Indirect Cost

Recovery

$145.1M (36%)

Statutory Tuition & Fees $40.7M

(10%)

THECB-Tx Grant Pgm, CWS & TARP/TATP$6.3M (2%)

Auxiliary Enterprise:Athletics Fee, University

Ctr Fee, Parking,

Housing, Food Service,

UTSA Card, Child

Dvlpmt, ITC Store

$28.7M (7%)

Restricted: Gifts $6.5M (2%)

Restricted: Financial Aid $29.8M / Grants & Contracts $32.5M

Total = $62.3M (15%)

Statutory TuitionStatutory Tuition Rates established by Ed Code ($50/SCH since Fall 2005 for

resident undergraduate students) Same rate for all UT institutions.

Graduate students pay 2 times undergraduate rate, referred to as Graduate Incremental Tuition.($100/SCH since Fall 2005)

Non-resident students pay rates equal to the average non-resident tuition at the 5 most populous U.S. states. Rates are determined by THECB per §54.051(d) of the Texas Ed Code

Statutory Tuition is a revenue source for the I/O formula (in an amount estimated in the General Appropriations Act.) Institution bears impact of any over or under collection of Institution bears impact of any over or under collection of

budgeted revenue – worse for campuses who lose enrollment.budgeted revenue – worse for campuses who lose enrollment.

Rates established by Ed Code ($50/SCH since Fall 2005 for resident undergraduate students) Same rate for all UT institutions.

Graduate students pay 2 times undergraduate rate, referred to as Graduate Incremental Tuition.($100/SCH since Fall 2005)

Non-resident students pay rates equal to the average non-resident tuition at the 5 most populous U.S. states. Rates are determined by THECB per §54.051(d) of the Texas Ed Code

Statutory Tuition is a revenue source for the I/O formula (in an amount estimated in the General Appropriations Act.) Institution bears impact of any over or under collection of Institution bears impact of any over or under collection of

budgeted revenue – worse for campuses who lose enrollment.budgeted revenue – worse for campuses who lose enrollment.

Designated TuitionDesignated Tuition

In 2003, the legislature ‘deregulated’ designated tuition rates to counteract declining state revenue.

Considered a local source of revenue; rates are set by by the Board of Regents & vary by institution

FY 07 = $92.25/SCH FY 08 = $101/SCH FY09 = $110 /SCH proposed 20% of the amount collected from paid resident UG and 15% from

resident GR over $46/SCH is set aside for student financial aid.

Very important revenue stream Only discretionary source of new revenue in the 2nd year of the

biennium to fund merit, mandatory cost increases, new faculty, strategic initiatives, etc.

In 2003, the legislature ‘deregulated’ designated tuition rates to counteract declining state revenue.

Considered a local source of revenue; rates are set by by the Board of Regents & vary by institution

FY 07 = $92.25/SCH FY 08 = $101/SCH FY09 = $110 /SCH proposed 20% of the amount collected from paid resident UG and 15% from

resident GR over $46/SCH is set aside for student financial aid.

Very important revenue stream Only discretionary source of new revenue in the 2nd year of the

biennium to fund merit, mandatory cost increases, new faculty, strategic initiatives, etc.

Mandatory & Incidental FeesMandatory & Incidental FeesNew fees and or changes to the fee amounts are set for twoNew fees and or changes to the fee amounts are set for twoyears upon approval by the Board of Regents. years upon approval by the Board of Regents.

Proposals are considered prior to the Fall Semester of the 2nd year of the biennium.

Fee revenue must be spent in accordance with the approved purpose (justification) and per Texas Education Code stipulations.

Mandatory Fees:Mandatory Fees: Required to be paid by all students. New fees and/or fee rate changes must be approved by the Board of

Regents (BoR)

Incidental or Course Fees:Incidental or Course Fees: Fees that are assessed based on a student’s or user’s choices, or as

a good/service is used; e.g. all students taking a particular course, lab or enrolled within a college. College/course fees are included in the Total Academic Cost formula.

New fees and or changes to the fee amounts are set for twoNew fees and or changes to the fee amounts are set for twoyears upon approval by the Board of Regents. years upon approval by the Board of Regents.

Proposals are considered prior to the Fall Semester of the 2nd year of the biennium.

Fee revenue must be spent in accordance with the approved purpose (justification) and per Texas Education Code stipulations.

Mandatory Fees:Mandatory Fees: Required to be paid by all students. New fees and/or fee rate changes must be approved by the Board of

Regents (BoR)

Incidental or Course Fees:Incidental or Course Fees: Fees that are assessed based on a student’s or user’s choices, or as

a good/service is used; e.g. all students taking a particular course, lab or enrolled within a college. College/course fees are included in the Total Academic Cost formula.

Facilities and Administrative (F&A) Indirect Cost Recovery

Facilities and Administrative (F&A) Indirect Cost Recovery

Facilities and Administrative (aka indirect cost recovery) from sponsored grants and contracts provides reimbursement for institutional expenses in support of extramural activities that cannot be directly charged to a specific grant or contract.

Facilities component includes plant operation and maintenance, depreciation, library expenses.

Administrative component includes general administration

and general expenses, sponsored projects administration.

Facilities and Administrative (aka indirect cost recovery) from sponsored grants and contracts provides reimbursement for institutional expenses in support of extramural activities that cannot be directly charged to a specific grant or contract.

Facilities component includes plant operation and maintenance, depreciation, library expenses.

Administrative component includes general administration

and general expenses, sponsored projects administration.

Facilities and Administrative (F&A) Indirect Cost Recovery

Facilities and Administrative (F&A) Indirect Cost Recovery

F&A rate is negotiated with the federal government (DHHS) On-campus rate: 41.5% On-campus rate: 41.5% 44.5% rate just negotiated! for next 4 years44.5% rate just negotiated! for next 4 years Off-campus rate: 26% rateOff-campus rate: 26% rate

Modified Total Direct Costs (MTDC) is the base to which F&A (indirect cost) rates are applied when submitting a grant or contract, per OMB Circular A-21.

F&A rate is negotiated with the federal government (DHHS) On-campus rate: 41.5% On-campus rate: 41.5% 44.5% rate just negotiated! for next 4 years44.5% rate just negotiated! for next 4 years Off-campus rate: 26% rateOff-campus rate: 26% rate

Modified Total Direct Costs (MTDC) is the base to which F&A (indirect cost) rates are applied when submitting a grant or contract, per OMB Circular A-21.

http://www.whitehouse.gov/OMB/circulars/a021/a021.html  

Facilities and Administrative (F&A) Indirect Cost Recovery

Facilities and Administrative (F&A) Indirect Cost Recovery

Modified Total Direct Costs consist of "salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care, tuition Equipment, capital expenditures, charges for patient care, tuition

remission, rental costs, scholarships, and fellowships as well as remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs."$25,000 shall be excluded from modified total direct costs."

Exclusions: some costs are excluded from Total Direct Costs (TDC) to arrive at the MTDC base to which F&A rates are applied. OMB A-21 also provides for exclusions of other items of cost OMB A-21 also provides for exclusions of other items of cost

where necessary to avoid a serious inequity in the distribution of where necessary to avoid a serious inequity in the distribution of costs.costs.

Modified Total Direct Costs consist of "salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants and subcontracts up to the first $25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract). Equipment, capital expenditures, charges for patient care, tuition Equipment, capital expenditures, charges for patient care, tuition

remission, rental costs, scholarships, and fellowships as well as remission, rental costs, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of the portion of each subgrant and subcontract in excess of $25,000 shall be excluded from modified total direct costs."$25,000 shall be excluded from modified total direct costs."

Exclusions: some costs are excluded from Total Direct Costs (TDC) to arrive at the MTDC base to which F&A rates are applied. OMB A-21 also provides for exclusions of other items of cost OMB A-21 also provides for exclusions of other items of cost

where necessary to avoid a serious inequity in the distribution of where necessary to avoid a serious inequity in the distribution of costs.costs.

Facilities and Administrative (F&A) Revenue Allocations

Facilities and Administrative (F&A) Revenue Allocations

Budgeted recovery is estimated at $6 million.Budgeted recovery is estimated at $6 million. Will grow as research expenditures increase and as Will grow as research expenditures increase and as

effective rate increases.effective rate increases. F&A Revenue is shared internally per MOU:F&A Revenue is shared internally per MOU:

Principal Investigator 10.0% College, Center or Institute 10.0% Debt Service 40.5% Bldg Mtnc/Capital Imprvmts 4.5% Academic Affairs 12.0% Research 15.0% Business Affairs 8.0%

100.0%

Budgeted recovery is estimated at $6 million.Budgeted recovery is estimated at $6 million. Will grow as research expenditures increase and as Will grow as research expenditures increase and as

effective rate increases.effective rate increases. F&A Revenue is shared internally per MOU:F&A Revenue is shared internally per MOU:

Principal Investigator 10.0% College, Center or Institute 10.0% Debt Service 40.5% Bldg Mtnc/Capital Imprvmts 4.5% Academic Affairs 12.0% Research 15.0% Business Affairs 8.0%

100.0%

Auxiliary EnterprisesAuxiliary Enterprises Self-supporting activity providing goods or services to

students, faculty, staff, departments, or incidentally to the general public.

Charges are directly related to, although not necessarily equal to, the cost of the goods or services.

Important aspect of campus life UTSA’s Auxiliaries specified in the Ed Code and include

Bookstore – outsourced management contract (Follett) Food Services - outsourced management contract (Chartwells) Parking Housing University Center Athletics UTSA Card

Self-supporting activity providing goods or services to students, faculty, staff, departments, or incidentally to the general public.

Charges are directly related to, although not necessarily equal to, the cost of the goods or services.

Important aspect of campus life UTSA’s Auxiliaries specified in the Ed Code and include

Bookstore – outsourced management contract (Follett) Food Services - outsourced management contract (Chartwells) Parking Housing University Center Athletics UTSA Card

Capital Improvement FundingCapital Improvement Funding

System authorized methods of debt financing:

1. Tuition Revenue Bonds (TRB) are approved by the Legislature to debt finance new construction. “Free money” to UTSA.

General revenue appropriation covers debt service.

Recent UTSA Buildings financed with TRBEngineering $74,250,000BSE 22,950,000Main 15,000,000Downtown, Phase III 35,000,000

System authorized methods of debt financing:

1. Tuition Revenue Bonds (TRB) are approved by the Legislature to debt finance new construction. “Free money” to UTSA.

General revenue appropriation covers debt service.

Recent UTSA Buildings financed with TRBEngineering $74,250,000BSE 22,950,000Main 15,000,000Downtown, Phase III 35,000,000

Capital Improvement FundingCapital Improvement Funding

2.2. The Permanent University Fund (PUF)The Permanent University Fund (PUF) debt program debt program funds various E&G capital needs.funds various E&G capital needs.

--PUF debt from tax-exempt bonds secured by distributions to the Available University Fund. “Free money” to UTSA.

STARS –Faculty Start-up funds UTSA has received $6.6M over the past 3 years

LERR – Library, Equipment, Repair and Rehabilitation UTSA received $2 million for FY07; $2.237M in FY08

Recent PUF Allocations to UTSARecent PUF Allocations to UTSA$20.25 M for Science Lab Renovations$ 8.25 M for Engineering Building$14.50 M for 1604 & Hausman Property (future site of Athletic facilities)

2.2. The Permanent University Fund (PUF)The Permanent University Fund (PUF) debt program debt program funds various E&G capital needs.funds various E&G capital needs.

--PUF debt from tax-exempt bonds secured by distributions to the Available University Fund. “Free money” to UTSA.

STARS –Faculty Start-up funds UTSA has received $6.6M over the past 3 years

LERR – Library, Equipment, Repair and Rehabilitation UTSA received $2 million for FY07; $2.237M in FY08

Recent PUF Allocations to UTSARecent PUF Allocations to UTSA$20.25 M for Science Lab Renovations$ 8.25 M for Engineering Building$14.50 M for 1604 & Hausman Property (future site of Athletic facilities)

Available Sources of Capital FundingAvailable Sources of Capital Funding

3. The Revenue Financing System (RFS) The UT System program provides low The UT System program provides low interest financing for capital needs:interest financing for capital needs:

--available to campuses that meet bond rating agencies’ standards for The UT System to preserve its AAA rating.

Construction projects or capital equipment funded by Designated Tuition: must meet 2 of 3 financial ratios.

Projects funded by auxiliaries or fee revenue must demonstrate sustainable ability to service the debt.

--100% of debt service paid by UTSA.

3. The Revenue Financing System (RFS) The UT System program provides low The UT System program provides low interest financing for capital needs:interest financing for capital needs:

--available to campuses that meet bond rating agencies’ standards for The UT System to preserve its AAA rating.

Construction projects or capital equipment funded by Designated Tuition: must meet 2 of 3 financial ratios.

Projects funded by auxiliaries or fee revenue must demonstrate sustainable ability to service the debt.

--100% of debt service paid by UTSA.

Annual Financial Report (AFR) Annual Financial Report (AFR)

UTSA has a healthy financial condition with a “Satisfactory” rating from UT System.

UTSA’s significant growth has ‘maxed out’ debt capacity to finance additional construction using designated tuition (and certain other fees) as the source for debt service.

UTSA has a healthy financial condition with a “Satisfactory” rating from UT System.

UTSA’s significant growth has ‘maxed out’ debt capacity to finance additional construction using designated tuition (and certain other fees) as the source for debt service.