Senate Higher Education To Review How Texas Shares Its Two Big Research Endowments

The Texas Senate Committee on Higher Education will hear invited testimony July 29 on the distribution methods for the Permanent University Fund and the newer Texas University Fund, and whether either needs reform as more campuses seek research dollars.

The Texas Senate Committee on Higher Education will gavel in at 9 a.m. Wednesday, July 29, to hear invited testimony on how the state distributes the two constitutional endowments that bankroll its public research universities.

Chaired by Sen. Paul Bettencourt, R-Houston, the seven-member panel carries a 5-2 Republican majority and takes up a single interim charge for the day: reviewing the distribution methodology for the Permanent University Fund and the Texas University Fund and recommending any needed reforms. The hearing is invited-testimony only, and because the committee is meeting in the interim it will take no vote on legislation.

The Permanent University Fund is the older and far larger of the two. Established in the Texas Constitution and seeded with public land in West Texas that later yielded oil and gas royalties, it is managed by the University of Texas/Texas A&M Investment Management Company, or UTIMCO, on behalf of the UT System Board of Regents. Its investment earnings flow into the Available University Fund, which is split two-thirds to the UT System and one-third to the A&M System and spent first on debt service for construction bonds.

UTIMCO policy caps the annual PUF distribution at 7 percent of the fund’s trailing 20-quarter average value. The charge zeroes in on a long-running tension in that structure: how much of the PUF’s benefit reaches system institutions beyond the flagships in Austin and College Station.

The Texas University Fund is the newcomer. Voters created it in November 2023 by approving Proposition 5, which renamed the old National Research University Fund and gave it a roughly $3.9 billion corpus plus an annual infusion tied to interest earnings on the state’s rainy day fund. Four emerging research universities — Texas Tech, the University of Houston, the University of North Texas and Texas State — currently qualify by spending at least $20 million a year on research and awarding an average of 45 doctoral degrees. As the TUF’s corpus grows and additional campuses approach eligibility, the charge asks members to examine whether the distribution formula can keep payouts stable and predictable for every participating school.

Together the two funds underwrite the state’s ambition to build more nationally ranked, high-research universities without drawing on general tax revenue. The PUF fixes most of its benefit on two systems by constitutional design, and its governing rules are set out in Chapter 66 of the Education Code; the TUF was pitched as a way to level the field for the next tier of institutions. How the committee reads the two formulas could shape how the 90th Legislature weighs competing claims on both pools of money.

Because the panel is meeting in the interim, it will take no vote, and its findings will inform recommendations to the 90th Legislature, which convenes in January 2027.