While state colleges in Texas rely heavily on tuition dollars for their funding, they also get significant portions of their operating budgets from the state. A recent announcement, then, which advises budget reductions of 3% across the board, is going to be a significant hurdle for these schools to deal with, especially as costs for universities continue to climb. But just how bad will the problem be? There, of course, always impacts form losing funding, but in this article, we’re going to look at how these cuts may impact students currently at these schools, and students who are thinking of applying. We’ll do a broad overview, and then give some specific notes on the flagship schools: UT Austin and Texas A&M.
What’s Happening to College Budgets in Texas?
The Texas State Legislature is requesting multiple state agencies, including all public universities, cut all budget requests for the next two-year period by 3%. K-12 funding, including the state’s new voucher program for private schools, is not going to be impacted by this cut, at least not at this moment. This is merely a preliminary bit of groundwork, a starting place for the state’s budget negotiations.
The state is constrained in what spending they can cut, but is looking for savings to cover a projected budget deficit. These are not finalized cuts yet, merely proposals, but it is clear there is legislative enthusiasm for enacting these cuts. The proposed budget, including cuts, would go into effect in August of 2027, and cover the period through August of 2029.
These proposed cuts are coming in combination with rising costs to universities, and while tuition rates are staying flat. Low tuition rates are beneficial to students, but they do harm the university’s ability to raise funds, as a significant portion of a school’s operating budget each year comes from these tuition dollars.
It is up to universities themselves to decide what and where they should cut to meet spending reduction targets, prioritizing what they wish to protect, and what they think they can do without. These priorities are likely to differ by school, as the administration of each tries to weather the loss as best they can. While reductions of this type are not uncommon, they are also not ideal for the schools.
What Will Schools Cut, and How Will Cuts Impact Students?
It is impossible to know for certain what universities will cut until they submit budget proposals, but we do have some sense of what their priorities are, and how potential cuts will impact the experience of students at these schools. The first question most students and parents ask is why schools don’t make up the shortfall through their endowment.
This is a reasonable question, and has two answers. The first is if a school spends more of the endowment than it earns in investment income, then soon there is no endowment. Second, gifts to universities are often earmarked, money that can only be spent in certain ways, and so cannot be used to simply make up any projected shortfall that arises.
Based on past experiences, teaching staff is likely to be among the first groups impacted, with positions left unfilled, or professors encouraged to retire. This is often a good way to make up a brief shortfall, if the university expects further funding to be forthcoming in the future.
Other schools are going further, looking to make long-term cuts. The University of North Texas is looking to close or consolidate up to 70 academic programs, this is a quick if drastic way to shrink a budget, mostly by cutting the administrative costs of these programs, and by letting go of significant numbers of faculty.
These cuts will have a much larger impact on smaller regional colleges and community colleges; UT Arlington will have more problems as a result of this than UT Austin. We saw this before, during the 2008 crash, when the state drastically cut budgets across the board for higher ed. This doesn’t mean UT Austin will be totally unharmed (more on that later), but we anticipate them having significantly fewer issues stemming from these cuts than some of their peers.
The Impact on Students
We anticipate an impact on students in several areas. The biggest, and most likely to take effect regardless of which school in Texas you’re attending, is increased class sizes. When the number of instructors goes down, and the number of students remains constant, there is an inevitable increase in the number of students in each class.
While this is most felt in already large core courses, this doesn’t make the impacts any less severe. Larger courses means less individual mentorship, and makes it much harder for students to get to know the professor, with an easier chance to slip through the cracks.
To ameliorate this, if it is a subject you are interested in or struggling in, we advise organizing your questions and showing up to office hours. This can feel daunting, but professors hold office hours at all because they want students to attend them. Professors don’t enjoy failing students, but they aren’t going to take the initiative to reach out, especially in larger classes. As the number of students per professor increases, the more the onus is on students to take the initiative when reaching out.
The other potentially troubling cut is in entire departments or programs. We don’t know for sure what these are yet, so the impact for students will range from none at all through catastrophic. We are fairly certain majors like business and biology will be safe, but niche though important programs may end up on the chopping block. We advise students watch this news carefully, to see if their chosen field simply ceases to be offered by a university they’re interested in.
Impacts on Texas A&M and UT Austin
In many ways, Texas A&M and UT Austin should be insulated from the worst impacts of this funding cut. While their endowments are smaller than Ivy League schools, both universities have significant savings and investments, and get a large portion of their funding from federal grant money, rather than state dollars. Here, however, is where the problems arise.
Federal funding for universities, and for university research, has been impacted significantly, both with major cuts to funding, and an ongoing reorganization to how grants are awarded and distributed. Thus, major research universities like UT Austin and Texas A&M are facing major unexpected budget shortfalls, right as state funding is contracting as well.
The most impactful cut is to research overhead. A new regulation by the federal government has drastically reduced the amount of research grant funding that goes to overhead costs. These costs do not fund the research directly, but instead pay for things like the building the research takes place in, the electricity to power the building, and other sundry costs which allow the research to happen, but which are not directly associated with it.
This transfers these costs to the universities if they want to continue pursuing research, which they do as a core part of their mission. Either of these may be weatherable individually, but combined, and amongst a backdrop of inflation and market uncertainty, even grand schools like these will be looking to cut costs.
We aren’t sure how this will shape up, but we foresee an increasing use of adjuncts over tenure track faculty, a reduction of teaching positions, and even the possible closure of certain departments or programs. In addition, the schools are likely to pursue fewer research projects, depending on how much federal funding is actually available.
The cuts to research are likely to be among the most impactful to students, as grant funding is ultimately what pays for undergraduate research positions. Without this supply of funding, professors and labs won’t have the budget to take on and train nearly as many undergraduates as in previous years. A&M and UT Austin won’t be hurt by this as much as most universities in Texas, but they will still feel the impacts of it.
Final Thoughts
Universities have massive budgets, supported by federal and state dollars, and by the tuition from students. Public universities have long been a low-cost option for students to attend college, but if state funding for these schools continues to dry up, that may have to change in the future. Currently, Texas is the only state making such sweeping cuts, but as so many of our students live in and apply to schools in Texas, we thought it worth looking into this issue, and explaining how it may impact you.
This is still a developing story, and this budget reduction may not come to pass. If it does go through however, and colleges do have to make cuts, whether drastic or more sedate, we’ll be sure to keep you informed.
If you’re looking for advice navigating this ever shifting college landscape, or finding schools with the resources and programs to match your needs and interests, then Ivy Scholars can help. Our mentors have a deep understanding of colleges and what they offer students, and are adept at guiding them to the schools which best match their needs. Schedule a free consultation today to learn more, we’re always happy to hear from you.
