Senate panel approves liquidating tobacco-settlement reserve for med schools

Senate budget writers voted Thursday afternoon to liquidate an endowment containing more than $400 million of Texas’ tobacco-settlement money and give the money to 10 academic health science centers, including the University of Texas Southwestern Medical Center at Dallas.

The centers would take a 15 percent cut in their state funding in the proposed two-year budget, said Senate Finance Committee Chairman Steve Ogden, R-Bryan. He said the reduction would be $358 million. It was unclear how much of that cut UT Southwestern would bear, though if the endowment is dissolved, its share would be nearly $60 million, according to committee documents.

After a lively debate, the committee voted 10-5 to dissolve the Permanent Health Fund for higher education, which has $429 million. It would be distributed to the nine state health science centers, and the private Baylor College of Medicine in Houston, using the current formula for distributing the fund’s earnings — about $45 million every two years. The formula considers the amount of uncompensated indigent care that the centers’ teaching hospitals provide. The centers can spend the money or use it to create a new endowment, said Sen. Judith Zaffirini, D-Laredo.

As we reported in a post last week, the liquidation is one of numerous ideas being considered by the Senate, as part of its search for $5 billion in savings and “non-tax revenue” that can help ease deep cuts to education and social services.

Zaffirini and four other senators, all Republicans , opposed the move. The others were Sens. Bob Deuell of Greenville, Kevin Eltife of Tyler, Jane Nelson of Flower Mound and Kel Seliger of Amarillo.)

“This is a permanent trust fund,” stressed Eltife (at left in 2007 AP photo above). “So what do we go after next? It’s a mistake.”

Seliger said that though the 2012-2013 budget “will be painfully austere,” lawmakers shouldn’t use gimmicks. He said that will only make future budgets harder to write because “then we’re right back in the ditch — without the resources.”

Ogden, though, said the proposed budget reduction for the health science centers would “cut deep” and impair their ability to carry out their missions.

“To tell them, ‘We’re going to cut your budget by 15 percent and oh, by the way, we’re not going to let you touch your money,’ is … a mistake,” he said.


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