Texas ban on public university DEI offices carries financial penalty

Texas lawmakers held a marathon hearing last week to grill public university leaders on their compliance with a 2023 state law banning diversity, equity, and inclusion (DEI) offices at their schools or face financial consequences. 

Ahead of the hearing, Republican State Sen. Brandon Creighton, who chairs the chamber’s Subcommittee on Higher Education, warned higher education leaders institutions.

At the UT’s flagship Austin campus, the Faculty Council and Staff Council Leadership issued a statement saying the administration had used SB 17 as an excuse to fire more than 50 people, “most from marginalized groups.”

“Not a single dismissed staff member was working in a DEI space, but rather focusing on learning a new job assignment,” the statement said.

UT Austin President Jay Hartzell said in a statement that the Division of Campus and Community Engagement would be disbanded as part of its SB 17 compliance efforts.

DEI had a much smaller footprint at the Texas A&M University System with only nine DEI offices and 27 full-time employees, according to Chancellor John Sharp. 

Both chancellors said auditing was underway to demonstrate initial compliance, with processes in place to ensure it is ongoing.

“The penalties are severe so we have ongoing compliance that our auditor and his entire office are going to be working on every day,” Sharp said. 

On another front in the culture war, the Biden administration’s revision of Title IX regulations for schools receiving federal money, which clarifies the law prohibits discrimination based on sexual orientation or gender identity, led Texas Gov. Greg Abbott to direct public universities and community colleges not to comply and Attorney General Ken Paxton to ask a federal court for a preliminary injunction to stop its implementation.

Media reports that Texas A&M University was gearing up to comply with the changes sparked a warning from Abbott.

“If they act contrary to state policy, they are jeopardizing state funding, including money from the PUF (Permanent University Fund),” the Republican governor posted on the X social platform.

In a statement, Texas A&M said no changes have been made at this point and that the university system is reviewing the federal regulations and Paxton’s legal challenge to determine the course of action going forward. 

The 1876 Texas constitution, which called for the establishment of the University of Texas and made Texas A&M a branch, allocated 1 million acres in the Permian Basin to support the schools, earmarking all sales and proceeds from the land for the PUF public endowment. An additional 1 million acres were added in 1883. Oil wasn’t discovered on the land until 1923.

An annual distribution of investment returns as well as surface income from land leases for grazing, easements, and other uses go into the Available University Fund, which is used to pay debt service on bonds and notes issued by the two systems for capital projects.

A constitutional amendment passed by voters in November created a nearly  $4 billion Texas University Fund to support research at Texas State University, Texas Tech University, University of Houston, and University of North Texas.

Meanwhile, Texas public universities are heading to the municipal bond market.

A $413.23 million, triple-A-rated University of Texas System Permanent University Fund bond issue was priced last week. That followed a $412.57 million PUF deal in February, and an $801.7 million, triple-A-rated revenue financing system bond issue in April. 

Texas State University System is scheduled to sell nearly $608 million of revenue financing system revenue and refunding bonds, rated Aa2 by Moody’s and AA by Fitch, this week.