February 7, 2024

Dear Faculty and Staff,

I hope that you’ve had a bright start to your new year. We are just a few weeks into the spring semester, and I hope things are proceeding well for you. I have a few items to update you about.

Budget Planning and Compensation for FY25

We have begun the process of preparing our budget proposal for FY 2024-2025 to present to the Board of Regents. When it comes to finances, it has been a tumultuous year for universities nationwide. Many flagship universities are experiencing budget deficits as large as $250 million. Among them are West Virginia University, University of Arizona, Penn State University, University of Chicago, University of Nebraska, University of Connecticut and City University of New York. While there are many reasons for their financial troubles, enrollment declines and uncontrolled expenditures seem to be the most common factors. As we all know, the “great resignation,” in part caused by the global pandemic, forced all sectors, including higher education, to increase wages in order to retain and recruit talent. In subsequent years, most sectors had to find efficiency, adjust workforce and become more innovative in order to thrive. Universities — public or private — find themselves at the same crossroads today and must make similar adjustments.

While our finances at the University of Houston are sound, we should take it as a wake-up call and re-evaluate our assumptions and act now. Here are some facts for your consideration:

1. In comparison to fall 2019 (pre-pandemic) our enrollment for fall 2023 is flat. On a positive note, our retention rate has increased, indicating that we are succeeding in our goal of improving student success. 
2. During this same time, our two revenue streams — state allocation and tuition increase — have been restricted. We have not raised tuition for a few years and received only partial adjustment for inflation from the Texas Legislature. To be precise, 6.6% of the base was increased for this biennium (or 3.3% per year).
3. During this same time, we made a deliberate choice to retain our talent and invested 14.3% of our total salary pool in salary increases through market equity, meritorious performance and counteroffers.

Clearly, our investments have been outpacing our revenue and we have been doing so by generating funds from central efficiencies. However, now we need to take a deeper look. After consulting with vice presidents and deans, here are our budget directions for the upcoming fiscal year, which will take effect on September 1:

1. Phase II of market equity will be fully funded and impacted staff will be brought up to the new minimum salary levels, resulting from the compensation study. In order to fund these actions, a 2% base budget reduction, generating $8 million, will be imposed on all units.
2. All academic departments that grew at least 2% in their enrollment this year (fall and spring) will be held harmless, as long as their base enrollment is commensurate to their faculty strength. The Office of the Provost will follow up with further guidelines.
3. There will be no merit-based salary increases this year.
4. There will be no freeze on hiring or discretionary expenditures. All units can continue to recruit for positions as usual, but I ask that units evaluate their recruitment needs very carefully and fill the positions that directly align with their unit’s mission and productivity.

In future years, if we want to commit to our goal of investing in talent, I suggest that we consider the following:

1. We stay focused on students — recruitment, retention and timely graduation. Enrollment growth does not simply mean more students; it can easily mean retaining the students we have.
2. We emphasize accountability and make sure that every member of our team is fully productive.   
3. We implement strategies — new and old — to increase efficiency in processes. While it is easy to pinpoint what others are doing inefficiently, there are always practices and processes within our own units on which we can improve.
4. We embrace technology as and when appropriate.
5. And perhaps most importantly, we advocate to the public and the Legislature about the need for investment in higher education.

You may ask how the endowment resulting from Texas University Fund (TUF) impacts our financial choices. Here is the historical context.

In 2018, the Division of Research, in consultation with faculty, started the process of developing a research plan with the aim of doubling our research footprint. This process led to establishing several interdisciplinary themes, priorities and a five-year funding plan. More specifically, it included hiring additional research faculty, building core facilities with shared equipment, funding start-ups and increasing technical staff to support researchers. We took this plan to the Legislature and requested an endowment that could yield a guaranteed pool of funds to accomplish our goal. In May, the Legislature passed a bill creating the Texas University Fund (TUF) and in November, Texas voters approved the constitutional amendment to fund the endowment.

TUF is being used, as expected by the Legislature, to execute the five-year research strategic plan that was the basis for our request: Searches for a number of Presidential Frontier Faculty and Aspire faculty are underway and work on core facilities is progressing under the Division of Research supervision.

In the long term, it is expected that TUF funding will lessen the need to support research priorities with enrollment-driven funding and thus allow more financial support for academic units.

Update on SB17 and SB18

SB 17, regarding diversity, equity and inclusion (DEI), became effective as of January 1, 2024, although the prohibition on funding any DEI programs using state resources went into effect on September 1, 2023. The next step, as outlined in the law, is that SB 17 requires the Legislature to conduct a hearing to review the implementation of the new law, with either a member of our Board of Regents or their designee required to testify on behalf of the system. Further, the state auditor is required to conduct a review of the implementation of SB 17 at each university over the next several years in order to determine if each university has complied with the law. If it is determined that a university has violated the law, the university could be subject to the loss of its state funding. You can find a summary of this bill prepared by our general counsel here, and full text is available here.

SB 18, regarding faculty tenure, became effective on September 1, 2023. The UH System Board of Regents has already approved changes to each of our system’s university tenure policies to comply with this legislation. As a result of changes in the law, tenured faculty will likely experience changes to faculty review procedures compared to the process in past years. And while it is not required by SB 18, we do expect that the Legislature will request that each university system testify as to the implementation of this legislation prior to the next legislative session. A summary of the bill from our general counsel is available here, and the final legislation can be found here.

New Leadership

Executive Searches

First Graduation Ceremony!

While every single graduation ceremony is special, the first graduation for the students from the Fertitta Family College of Medicine will go down in history books as a very special event. The ceremony is scheduled for May 11.

Athletics

In December, we brought in Coach Willie Fritz as the head coach for the Houston Cougars Football team. He has been received with hope and optimism, and in this short time period, has built a strong roster.

The Houston Cougar Men’s Basketball team is ensuring that the nation’s eyes remain on Houston. The Cougars are 20-3 this season and currently rank #1 in NET rankings and #5 in Associate Press rankings. It is worth noting that for the last 78 weeks, the team has been ranked in the top 25 nationally, the longest active streak in NCAA Division 1.

Construction on the Football Operations Center has started, and the end zone of the new facility is expected to be finished in time for the new season this coming fall.

The RAD

The food hall replacing the old satellite building is scheduled to open before spring break and has been named the Retail Auxiliary and Dining Center (RAD Center). It will feature the Nook coffeehouse and a market store when it opens this spring. The remainder of the venues will open in fall 2024 and will house many new food vendors in a setting that promotes interaction and collaboration.

Yes, you can see us from the sky!

If you are flying out of Houston and fly over the University, please look down and catch a glimpse of UH painted in big, bold, red letters on the Alumni Center roof. I have already received great feedback filled with pride from our alumni.

Thank you, once again, for your dedicated service to the University. If you have any questions regarding any of the items, please do not hesitate to write to your vice president or directly to me. Wishing you a wonderful semester!

Sincerely,