UT Watch Response to The Texas Compact Plan (now defunct)

Not keeping with their promises, the Texas Compact has been successfully forgotten. The one piece of legislation that probably made some legislators vote for tuition deregulation is now long gone. UT officials and the Board of Regents sold the Legislature on deregulation, by any means necessary. In December, they offered to "take care of at least half of all Texas families." If the Texas Legislature would turn over its authority to set tuition to the Regents, UT promised to provide a free education to any student with a family income below $41,000. From the perspective of low- and moderate-income families this sounds like a bonanza.

"I think it's a pretty unique, somewhat revolutionary proposal," Chancellor Mark Yudof (Houston Chronicle, 12/14/02).

Is UT finally fulfilling its mandate "to place within the reach of our people, whether rich or poor ... a thorough education ... to male or female on equal terms, without charge for admission"?

Not by a long shot.

"We have so many holes in the plan," Yudof said. "Don't hold me to the numbers." (Austin-American Statesman, 12/14/03).

No Money for Students, yet Money for Buildings

To begin with, UT didn't (and still doesn't) have a clear idea how it would execute its ambitious plan. They have no clue how to raise the $3.6 million it would cost in the first year nor the million in the next. One can guess, however, that it will come from raised tuition and fees. On February 14th, 2003, Yudof said he expects tuition to climb 27% for the five years following deregulation. At the Feb. 14th Board of Regents meeting where they discussed the necessity of securing more funding through deregulation, they tossed around several capital building projects.

If the UT System is so broke, why are we putting up new buildings; more importantly, who's going to pay for them? One item discussed at the Feb. 14th Board of Regents meeting was the design approvals for new construction. These include: $39,875,945 for a Chemistry and Physics building at UT-Arlington, $3,000,000 for a Day Care Center and $17,500,000 for Southwestern Medical Park Apartments at UT-Southwestern Medical Center of Dallas, $48,000,000 for Research Facilities Expansion and $25,000,000 for University Plaza Development at UT-Medical Branch of Galveston, and finally $120,000,000 for a Research Expansion Project (Institute of Molecular Medicine) at UT-Health Science Center of Houston. These costs do not include operating and maintenance costs.

Although these projects might be worthy ventures in and of themselves, they do, however, total over a quarter of a billion dollars in project cost estimates and are not seemly for a university system faced with serious budget constraints.

One reason the regents relish the idea of increasing tuition is that they use tuition revenue bonds to pay up to half of the cost of new building projects. They need to raise more tuition every year to pay off these bonds which of course accrue interest to those who acquire them. An endless cycle of increasing debt and tuition to pay it off occurs.

Texas Compact Deconstructed

When Yudof first went public with his plan in December, he did so half-cocked AND cocky (all that talk of revolution!). In January, he carefully retailored his promise so that instead of offering a free college education to "at least half of all Texas families," it only applies to high school students who would already qualify for another assistance program called the TEXAS Grant Program in addition to federal aid and local scholarships. In fact, very few students who don't qualify for the Grant Program would qualify for Compact, which has more stringent criteria.

From the Austin-American Statesman (1/15/2003): "Passed by the Legislature in 1999, the Texas Grant Program has more money available than what students are seeking, prompting additional questions about how Yudof plans to better attract applicants. Last year, the state allocated $120 million, but only $103 million in grants was awarded statewide. The unspent money was reallocated for grants this year." Now, UT has estimated that about 22,000 students within the UT System would qualify. UT estimates that it would cost $10-25 million to take care of these students. However, as the Statesman reported, $17 million has been left undistributed in the TEXAS Grant Program. Ostensibly, UT can't tap this money because the Texas Grant Program requires that UT pay everything beyond $2,950 per student per year. Yudof's energy would be better spent convincing the state to restructure the Texas Grant Program so that the leftover money would be distributed to those who need it.

The Board of Regents themselves argue(pdf) that the average UT-Austin student with family income under the median receives around $9,000 in financial aid, a little more than necessary to cover tuition and fees costs. This is from one of their meeting in December 2002. However, people from low-income backgrounds still won't have their housing and other costs taken care of, expenses which actually make up the majority of college costs. UT is doing little more than "filling in" for the number of students below the median that don't quite get enough aid to cover tuition and fees. But what about those whose families make just over $41,000? According to their own statistics, the average UT-Austin freshman who reports a family income between $40,000 and $60,000 receives just below $6,000 in scholarships and grants. Since the average tuition and fees load is $5,340, this "proves" that this mythical average freshman is taken care of. However, attending UT-Austin for a year also includes other expenses such as housing and food which total nearly $16,000. This discrepancy amounts to over $10,000. They have conveniently left that part out when discussing their proposal.

Also, all their arguments that dereg will allow them to set different tuition for different schools as a change from the status quo is a non-argument. Schools in Texas already have different rates of tuition, the Legislature just sets a cap and the school can charge up to that. They try and make it sound as if all schools in Texas cost the same despite their differences in prestige and quality of education. However, since each school sets fee rates there are major differences in the cost of education between schools. For example, UT-Pan Am costs around $2,500/year for tuition and fees, while UT-Austin costs around $5,400/year.

Playing the Public

Yudof is playing a tricky game: trying to wow the public and the Lege with a high-flying plan, while knowing full well that he is simply repackaging existing funding. Little-by-little, UT officials have been feeding the Austin media with details of its "plan" as the Legislature settles down to business. All the while, Yudof and company have been stressing that their "revolutionary proposal" is "absolutely contingent" on the Lege approving tuition deregulation. What's so cynical about this quid pro quo deal is that tuition deregulation and Compact have nothing to do with each other. If Yudof really cared about all those poor kids, he could do so without deregulating tuition. He is playing on the state's problems with funding higher education and providing accessibility to all Texans.

UT - especially the Board of Regents - have shown little regard for providing an affordable education in the past, and it's doubtful they've suddenly had a change of heart. Far more likely, this is an attempt to make tuition deregulation seem like a fair trade rather than a power grab. By pinning a plan to make education affordable to the back of an unpopular attempt to consolidate tuition authority, UT is engaging in a shameless form of political maneuvering. UT has been lobbying for tuition deregulation for years with little success; motions to undermine legislative, democratic authority are rarely embraced. This legislative session might be a no-holds-barred attempt at finally getting the legislature to roll over. With the Republicans in power and preoccupied with a billion state debt, UT probably sees this as their best chance to get tuition deregulated.

Yudof seems to be doing most of the leg-work for tuition deregulation and the Compact, rather than the Regents themselves. Of course this is befitting of a group of people who have always made their decisions privately and capriciously. Still, Yudof is expending an extraordinary amount of energy on this one issue. Could it be that the Regents - who largely bankroll Yudof's $787,319 compensation package (highest-paid public educator in the nation) are puppeteering this project? Regent Hunt and Regent Clements each gave $100,000 to Yudof's compensation fund. That kind of money talks.