SORRY UTB-TSC: STILL NO GAS OR OIL MONEY FOR YOU

By Juan Montoya
Just as the state calls for further reduction in spending to address a record deficit in its budget, some good news for the University of Texas have emerged from beneath the desert grounds.
The Permanent University’s board has announced that it has completed a record-breaking oil and gas lease sale in West Texas that will bring $206 million to the fund.
The PUF is a state endowment contributing to the support of 18 institutions and 6 agencies associated with the University of Texas System and The Texas A&M University System. The local entity, UTB-TSC is part of that system. The PUF was established by the Texas Constitution in 1876 with land grants.
The PUF lease land holdings are composed of 2.1 million acres, primarily in West Texas. The PUF's strategy is to invest in a broadly diversified portfolio of fixed income and Article VII of the Texas Constitution assigns responsibility for managing the PUF Lands.
In the partnership negotiated by Sen. Eddie Lucio Jr. and State Rep. Rene Oliveira between Texas Southmost College and the UT System in 1991 TSC agreed that as a condition of becoming a part of the UT System, it would forgo participating in dividing up the PUF pie.
The same still hold true in the proposed agreement now under consideration by the TSC trustees and the UT Regents. Additionally, the new entity created by legislation will require the community college to turn over all its assets – properties, buildings, and bank deposits – to be managed by the UT System.
Additionally, the TSC trustees agree to abide by the regents' choice of president and to allow him (or her) to hire and fire without their approval or input.
According to the PUF website, its portfolio includes private investments, marketable alternative investments, and various other specialized public market investments. The PUF is managed using universal endowment principals and dictates that distributions to the Available University Fund (AUF) are based on the total return of the PUF investments. The University of Texas System Board of Regents has established a distribution policy that provides stable, inflation adjusted annual distributions to the AUF to support the two university systems while preserving the real value of the PUF investments.
Jerry Patterson, chairman of the Permanent University Fund’s Board for Lease of University Lands, said bidding for the Midland-area lease was strong. The land went for more than $1,000 per acre.
“This is a great day for the University of Texas and Texas A&M University systems, Patterson is quoted in a news account of the announcement. “$206 million is a lot of money.”
According to press reports, the lease sale topped the previous record, set in April, of roughly $54.4 million. The bonus sale brought in more revenue to the Permanent University Fund than all of the fund’s oil royalties from last year combined.
But, of course, UTB-TSC won't get any of it.
Under the terms of the proposed partnership agreement, a murky funding formula is proposed that relies on the Texas Legislature increasing its payments to the new entity. However, with the state curtailing expenditures in the face of massive budget deficits, it is not a guarantee that any new money will materialize.
"So they want all of our property, all of our money, they won't give us any decision-making powers to choose a president or approve her decisions, and they want it by next month?" asked an incredulous faculty member. "Is this any way to run a railroad?"