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100 years after oil first discovered on PUF land, Texas Tech and others get a fund of their own

Sarah Self-Walbrick/Texas Tech Public Media

As a special session of the Texas Legislature gaveled in this week, Lubbock lawmakers already had victories to tout back home.

In a session deeply mired by controversy, Texas’ conservative majority delivered new restrictions for gender transition-related health care of minors, a ban on DEI offices for public colleges, and granted the Secretary of State new authority over elections in Harris County. Additionally, another score might be settled soon with voter approval — but not one between Democrats and Republicans.

Since 1876, the state has provided funds for Texas A&M University and the University of Texas Systems through an endowment known as the Permanent University Fund, or PUF. The overall value of the PUF endowment as of last year was around $30.8 billion, according to audited reports, which flows from income generated by mineral and surface leases on 2.1 million acres of land across 24 counties primarily in West Texas. The schools were the only public institutions of higher education in the state when the PUF was created.

Land grants were added to the fund over the years when cattle grazing leases were the most profitable source generated from the acreages. It was not until 1923, a century ago this week, that oil was struck for the first time on UT-owned lands in Reagan County’s “Big Lake Oilfield,” located in Southwest Texas, and the value of the land skyrocketed.

Since then, opening the PUF to other Texas universities has been repeatedly floated to no avail.

The idea of reallocating PUF’s income gained traction with lawmakers throughout the 1970s and persisted without major success for the outlier institutions. Attempts to accommodate schools outside of the PUF would culminate in a 1984 amendment to the state Constitution that created the Higher Education Fund, or HEF.

While the HEF serves the same essential purpose as the PUF — to pay for capital improvements at Texas universities — there is still a significant disparity in the dollar amount that the two funds disburse to schools. Just under $400 million was appropriated by the HEF for 30 colleges to split through the 2025 fiscal year, according to the Texas Higher Education Coordinating Board.

The HEF was originally prohibited from exceeding a principal value of more than $2 billion before a constitutional amendment repealed the cap in 2009. Earlier that same year, the nonprofit company established to oversee the PUF and the two systems’ various fiduciary assets came under scrutiny from lawmakers for awarding its employees bonuses amid the fallout of the 2008 global financial crisis.

During the third special session of the 87th Texas Legislature in 2021, the same year UT and rival University of Oklahoma announced their intentions to leave the Big XII conference, Lubbock lawmakers Rep. Dustin Burrows and Sen. Charles Perry both introduced measures to reallocate PUF money to “emerging research schools.” Neither bill, nor the Lubbock legislators’ joint resolutions to establish the Texas University Fund, or TUF, would progress in either chamber that year.

Still, Burrows and Perry vowed to engage with fellow legislators in talks about the fund’s fairness ahead of this year’s session. As the regular session adjourned on May 29, it appeared to have worked.

House Bill 1595, filed by Rep. Greg Bonnen, R-Friendswood, establishes TUF by designating it as an endowment for emerging research universities. Senate Bill 30, carried by Sen. Joan Huffman, R-Houston, would meanwhile allocate approximately $3 billion to the fund.

Texas Tech and the University of Houston are set to receive the most from the legislature at $44.4 million and $48.4 million, respectively, according to state budget figures. In comparison, the University of North Texas and Texas State University would receive roughly $21.3 million and $22.4 million, respectively.

Although both measures passed with bipartisan support, their provisions are contingent upon approval of a constitutional amendment by voters in November. This procedure is a result of the state’s novel method of supporting its schools, said Brandon Rottinghaus, a political science professor at the University of Houston.

“Most states do not fund public education this way,” Rottinghaus said. “States have set aside money for specific programs and for scholarships, but having a piece of land set aside is pretty rare. So, Texas is definitely at the vanguard of that.”

Moreover, Rottinghaus said it is ironic that the land in West Texas dedicated to the PUF was believed to be “fairly valueless” when added to the PUF all those years ago because “it turned out to be exceptionally valuable.” As an increasing population is helping universities like UH and Tech thrive, it also undercuts their ability to flourish because the funding mechanism “doesn't fairly adequately distribute that money across the universities.”

While the process of altering the state constitution every time a change gets made to the public school apparatus can be a bit cumbersome, it does have the benefit of granting citizens some say over what the dynamics of the constitution look like. When changes are approved, Rottinghaus said it's hard to undo them.

Feuds over the equity of the PUF have become more prominent as the state economy has boomed over the years, prompting institutions that have historically been left out of the fund to lobby hard for a solution. Rottinghaus said Texas is a victim of its own success in this regard.

“There's been a consistent political struggle over this money at the legislative level,” he said. “People who are loyal to their institutions want to see their institutions get a piece of the pie. They finally got it.”

Rottinghaus said that while it is unclear if this move is a sign that UT and A&M’s political ties with the legislature are faltering, it is still a significant development for a fight that appeared to be going nowhere for the longest time. Jason Smith, UH vice chancellor and vice president for governmental relations, said longstanding frustrations over the legislature’s deference for UT and A&M was a precursor for other institutions teaming up to seek a new permanent endowment.

"The benefit here is that we partnered with the folks at Texas Tech University in trying to get this over the line for both of us, which has been a tremendous partnership,” Smith said. “We've worked very well together and I think everyone would agree if it wasn't for both of us teaming up on this, we wouldn't have gotten it done.”

In addition to the $3 billion investment from the legislature, Smith also noted that lawmakers are committing a portion of the revenue from the Economic Stabilization Fund, also known as the state’s rainy day fund, to the corpus of the fund. At least $100 million annually will be added to the TUF to ensure its growth — which, like PUF, is in part garnered from oil and gas revenues sourced in West Texas.

While any university appreciates money from the legislature, James Riddlesperger, a political science professor at Texas Christian University, said the funding disparity still persists.

“I guess whether [TUF] is a big help to Tech, North Texas, Texas State, and the University of Houston is in the eye of the beholder,” Riddlesperger said in a written statement. “Obviously, the Permanent University Fund dwarfs this effort, but it is a recognition that other [Carnegie Tier One] institutions in the state need support.”

Requests for comment on this story from Tech, UNT, TSU, and Texas Women’s University were either not returned or declined by the institutions.