P-U-F.  Three simple letters that in Texas government-speak equate to billions of dollars. PUF stands for Permanent University Fund.

The PUF was created in 1876. It's described by the University of Texas System as such: "The Permanent University Fund (PUF) is one of our state’s most unique, important, and enduring competitive advantages."

In 1876, the Texas Constitution set aside land in West Texas to support The University of Texas and Texas A&M systems of higher education. Today, that land – encompassing 2.1 million acres – is leased to oil and gas companies whose wells generate revenue that flows into the PUF. Land also is leased for grazing, wind farms and other revenue-generating activities.

As shown below, the PUF directly benefits the University of Texas System (2/3 benefit) and the Texas A&M University System (1/3 benefit), in an unequal manner.

University of Texas System - PUF Infograph (2018)
PUF Infograph (University of Texas System)

With the recent news of the University of Texas leaving the Big 12 Conference for the SEC, and in the process, leaving behind Texas Tech, Baylor and TCU, there's now a movement on social media to change one of the biggest advantages for Texas and Texas A&M.

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As of Tuesday morning at 10:45 a.m., a Change.org petition to amend the PUF has over 2,200 signatures. You can click on the link in the previous sentence and add your voice to the petition.

The creator of the petition sums it up very simply: "It’s long past time the Texas PUF (Permanent University Fund) is dispersed more evenly among ALL Texas state funded universities, not just the University of Texas and Texas A&M systems."

Some of the university systems excluded from the PUF include: the Texas Tech University System; the University of Houston System; the Texas State University System; the University of North Texas System; and the Historically Black College in Texas.

The PUF has created an almost 150-year advantage in terms of long-term funding for Texas and Texas A&M.

Changing the PUF is an uphill battle: between getting bills passed in the Texas Legislature and then having voters pass the needed state constitutional amendments, the conversation has to start somewhere for the change to happen some day.

Permanent University Fund (PUF) Quick Facts:

  • The Texas constitution stipulates that The University of Texas system gets two-thirds of the benefits of the PUF and the Texas A&M system gets one-third.
  • The PUF endowment is managed by The University of Texas Investment Management Company (UTIMCO), under the authority of the UT System Board of Regents, and the land is managed by the University Lands office.
  • The Constitution allows the UT System to issue bonds guaranteed by the AUF in an amount equal to 20% of the book value of the PUF.
  • PUF bonds may be issued for the benefit of all 14 UT System institutions, but may only be used to finance capital expenditures.
  • From 2004 to 2013 alone, PUF appropriations funded nearly $1.5 billion worth of projects – everything from a UT Permian Basin Kinesiology Building to a research park complex at UT Health in Houston.
  • The PUF also benefits the UT and A&M institutions through an annual distribution of revenue from PUF investment returns to the Available University Fund (AUF). The size of the distribution is usually five percent or less of the market value of PUF investments, and the distribution may not exceed seven percent.
  • The Texas Constitution requires that AUF first be used to pay principal and interest on PUF bonds, but the remainder may be used to support and maintain UT Austin and UT System Administration. The Constitution does not allow AUF to be used for operational expenses for the other UT System institutions.

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