Prop 5 would create a new Texas university endowment fund
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Texas voters will decide on Proposition 5, which would create a $3.9 billion permanent endowment for the University of Houston and three other universities.
- The endowment would largely be funded from the state's budget surplus, and there would be no new taxes.
Why it matters: The establishment of the Texas University Fund would provide reliable funding to the four universities and allow their schools to boost research efforts and "achieve national prominence as major research universities and drive the state economy," per the ballot.
Context: The University of Texas at Austin and Texas A&M University are the only two Texas universities able to tap into the robust state-funded Permanent University Fund, which receives money from 2.1 million acres of state-owned land leased to oil and gas companies.
- The Permanent University Fund has been credited with helping those universities attract top faculty and increase research funding.
- The establishment of the Texas University Fund would give other universities similar opportunities, Jason Smith, vice president of governmental affairs at the University of Houston System, tells Axios.
What they're saying: The University of Houston is "very connected to the energy sector here in Houston, the energy capital of the world. So we do a lot of research in energy, oil and gas, and that helps to drive the economy," Smith says.
- "So as we go through an energy transition, finding new ways to provide energy to the world, we think that the research that we're doing here will help do that and secure Houston as the energy capital of the world for the future."
Details: As of now, if Proposition 5 passes, four public universities will receive money from the endowment: UH, Texas Tech University, Texas State University and the University of North Texas. While the endowment could expand to include other schools, it would have stringent criteria.
- "The hurdle to get into that $3 billion endowment is so high, that it will take us a substantial amount of time to even get there," Texas Southern University Regent James Benham said after the university was excluded from the endowment, per the Houston Chronicle. "And by the time we get there, they will probably move the requirements. Just to be totally honest with what will probably happen."
How it works: The money for the initial endowment would be sourced from the state budget surplus. An additional nearly $900 million would be transferred to this new endowment from the state's National Research University Fund, which would then be dissolved.
- If Proposition 5 is approved by voters, the state will contribute up to $100 million annually from interest accrued on the state's rainy-day fund.
- The four universities would get their first distribution in fall 2024. UH would expect close to $50 million in its first year, per Smith.
What's next: Early voting ends Nov. 3, and Election Day is Nov. 7.