The University of Texas is facing a big financial challenge because the state has reduced its funding. The institution is seeking funds to finance one of its goals to be the best research establishment not only in the United States but also in the whole world. However, it is claimed that the University is rich due to the proceeds generated from oil wells in its two million acres. Revenues collected from the latter are shared among sixteen other institutions in Texas. Because of low tuition fees offered by the University and accounts constituting about a quarter of its budget, money should be given to the institution without any reductions. The University of Texas needs to look for funds from outside sources in order to finance its research department and tuition fees for students.

Typical Sources of Revenue and Funds

There are unpledged auxiliary funds, which are used for activities separate from daily academic duties and responsibilities of the institution and those involving students’ affairs directly. Some of the activities include guidance, counseling, and professional services. Additionally, funds are appropriated to a band and team leaders, as well as for parking, alumni affairs, pharmacy, clinical affairs, student programs, fine art works, and a student newspaper. Another source of revenue includes pledged auxiliary enterprise funds, which are used to run facilities built by means of issuing bonds and compensating debts as a requirement. Besides, these funds are used for the following activities: designated tuition, student hostels, bookstore, various related sales, and such services as a recreational sports fee. The leading board spends funds set aside on particular projects. Such specific activities include a course fee, recreational sports fee, publication fee, international education costs, and the designated tuition. Another source of revenues includes limited funds spent on the current university activities, but limited by outside entities or agencies. They are mainly used for such projects as endowment income, central government and state financial aid, central and state research contracts, personal gifts, donations, and deals. One more reliable source of revenues for the University is designated or unlimited donations. These funds are available to the central board and used as enhancement of the daily functions of the University, particularly for endowment income and private gifts.

In case of construction projects in the University, sources of revenues may be federal grants. These are funds in the form of money obtained from different units of the central government. Another source is auxiliary enterprise funds generated from businesses controlled by the institution, such as parking lots and health clinics within the University of Texas. Legislative appropriations, that is administration funds released by the Texas State, can also be spent on the institution’s activities. The University of Texas receives funds from other sources, which include gifts and donations. These are finances received from individuals and private organizations. The Higher Education Assistance Fund provides money released by the legislature and usually meant for organizations not receiving permanent university funding. However, the University uses local funds collected inside it and set out in the association’s unique financial statement. Additional income involves funds received from issuing bonds based on the permission granted by the organization’s Board of Regents. These finances are usually repaid by proceeds from construction, student, and utility reserve fees. Moreover, Energy Performance Contract financing is available due to power maintenance projects for the period of more than ten years. Savings are received through implementing measures that will help reduce the cost and consumption of energy. Education income bonds are funds of the company uniformly protected and owed (“101 smart revenue generators (and money-saving ideas),”.

Differences in For-Profit and Non-Profit Business Sources of Funds

The key differences in sources of revenues for the University of Texas are the following. Non-profit business sources are more important than the ones of for-profit organizations. In the first case, the cash-loss generator may be the key service, whereas business results are the most important for for-profit businesses and their sources of funds. Cash flow, stock prices, profits, losses, and financial metrics of performance are the key factors influencing the latter. However, as far as non-profit business sources of revenue are concerned, business metrics, budget, and cash flow projections are the primary things. For-profit business sources of funds are based on short-term goals, whereas non-profit organizations focus deeply on long-term objectives regarding finances. The former are based on obtaining funds from operations in financial capital markets, while the latter include funds generated from debts and grants. For-profit businesses have a small board of governance, which is paid for its services, while in non-profit ones it is often large and offers its services voluntarily.

Reduction of Revenues and Sources of Funds

Although it is not put in the public domain, investigations have revealed that states have reduced their funds allotted to universities more than to other government institutions. It has forced universities, including the University of Texas, to reduce costs through shared services and other efficient methods. As the number of students enrolling for obtaining higher education increases and states reduces their funding of institutions, the latter, including the University of Texas, have transferred these costs to students through increased tuition fees. State officers claim that state funding will not improve education standards of public learning institutions, unless they control their spending, for example, costs spent on health care.

With increasing costs of living, the University of Texas and any other learning institution should continue to benefit from state funding. It will enable them to achieve their objectives. The fact that the University of Texas is seeking financiers among the public and private institutions is a clear signal that educational establishments are facing a big financial problem. Therefore, the reduction of funding from the state for the past few years should be stopped as it will lead to poor services delivery by institutions already suffering from the lack of state financial aid.

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