2. Operating Budget Funding Sources State Appropriations - General Revenue Formula Funding, Special Items, Benefit Cost Sharing THECB Transfers TX Grant, Work-study Statutory Tuition & Lab Fees General Revenue-Dedicated (considered a revenue source for formula funding) Designated Tuition, Fees & Misc. Revenue F&A - Indirect Cost Recovery Facilities & Administrative Overhead Auxiliary Enterprise Funds Athletics, Bookstore, Recreation Center, University Center, Food Service, Housing, Parking Restricted Funds Gifts, Financial Aid & Grants/Contracts Plant Funds Buildings and Capital Improvements State Funds Also referred to as E&G: Educational & General budgets Designated Funds aka Local funds

3. 3 Operating Budget Fiscal Year 2016 Revenue Sources $550.0 Million

4. State Funds - Statutory Tuition   Rates established by Texas Education Code 54.051 Rate has remained at $50/SCH since Fall 2005 for resident undergraduate students   Graduate students pay 2 times undergraduate rate, referred to as Graduate Incremental Tuition Rate has remained at $100/SCH since Fall 2005   Non-resident students pay rates equal to the average non-resident tuition at the 5 most populous U.S. states Rates are determined by The Higher Education Coordinating Board (THECB) and listed under Texas Ed Code §54.051(d). The current non-resident student rate is $440/SCH for Undergraduate and $880/SCH for Graduate.   Statutory Tuition is a revenue source for the Instructional & Operation (I/O) Formula, an amount estimated in the General Appropriations Act   Institution bears the impact of any over or under collection of budgeted revenue – worse for campuses with declined enrollment

5. Designated Funds - Designated Tuition Back in 2003, the legislature ‘deregulated’ designated tuition rates to counteract declining state revenue.   Rates are set by the UT System Board of Regents   Rate has remained constant for past 3 years for resident students.   Provides a source of revenue in 2 nd year of the biennium to fund merit for retaining top faculty and staff; providing scholarships (i.e. Presidential scholarships) and Strategic Initiatives (i.e. GRIP), etc. FY 2014FY2015FY2016 U/G – Resident$149.51 U/G – Non Resident$152.65$164.50 Graduate – Resident$159.50 Graduate – Non Resident$159.50$177.20 Note: Reflects updated presentation based on non-resident rate increase

6. 6 Auxiliary Fees=$27.3 million Operating Budget Fiscal Year 2016 Total Mandatory Fees= $71.8 Million

7. Instruction & Academic Support Expenditures for salaries, wages, and all other costs related to those engaged in the teaching function including the operating costs of instructional departments. This would include the salaries of faculty, teaching assistants, lecturers and teaching equipment. Library materials and related salaries are also included. Student Services Expenditures for offices of admissions and of the registrar and activities with the primary purpose of contributing to students’ emotional and physical well-being and intellectual, cultural, and social development outside the context of the formal instruction program. Institutional Support Expenditures for central activities concerned with administration and long-range planning for the entire institution. Expenditures related to: Executive direction, planning, programming, and legal operations Activities to maintain relations with the community, alumni, or other constituents; development and fund raising Fiscal operations (accounting office, financial services, budget office) Activities related to general administrative operations and services (human resources office, purchasing office, etc) NACUBO Expenditure Classifications (1 of 2)

8. O&M of Plant Expenditures of current operating funds for the operation and maintenance of the physical plant. This includes all expenditures for operations established to provide services and maintenance related to grounds and facilities. Also included are utilities, fire protection, property insurance, and similar items. Campus Police Environmental Health & Safety Facilities Debt Service Interest and principal payments from borrowed funds for Capital Projects approved by the Board of Regents such as construction of a building or renovation of existing facilities. Capital Outlay Acquisition of a long-lived assets. NACUBO Expenditure Classifications (2 of 2)

9. 9 Operating Budget Fiscal Year 2016 Expenditures $550.0 Million

10. 10 Uses of Discretionary Funds   Faculty hiring and retention of top faculty; promotion & tenure; Instructional Technology   Student Success Initiatives such as Graduation Improvement Plan, Graduate Student Scholarly Activities   Instructional Support for additional sections and courses (not covered by fees collected)   Campus Police staffing and security related initiatives, such as Early Alert System   Expansion of Annual Giving Call Center, Library, New Classroom Space   Research core facilities and cloud computing   Research related to promote access, advancement and excellence in Undergraduate research and scholarly activities   Scholarships, Fellowships & Financial Aid including Presidential Scholarships, Graduate Scholarship Program, Transfer Scholarships, etc.   Operations & Maintenance of Buildings including utilities   Payment of debt related to new and existing buildings   Technology, software and related Infrastructure to support operations and secure data   Personnel and Departmental operating expenses   Faculty hiring and retention of top faculty; promotion & tenure; Instructional Technology   Student Success Initiatives such as Graduation Improvement Plan, Graduate Student Scholarly Activities   Instructional Support for additional sections and courses (not covered by fees collected)   Campus Police staffing and security related initiatives, such as Early Alert System   Expansion of Annual Giving Call Center, Library, New Classroom Space   Research core facilities and cloud computing   Research related to promote access, advancement and excellence in Undergraduate research and scholarly activities   Scholarships, Fellowships & Financial Aid including Presidential Scholarships, Graduate Scholarship Program, Transfer Scholarships, etc.   Operations & Maintenance of Buildings including utilities   Payment of debt related to new and existing buildings   Technology, software and related Infrastructure to support operations and secure data   Personnel and Departmental operating expenses