Permanent University Fund

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The Permanent University Fund (PUF) is one of the methods the State of Texas funds its universities.

In 1876, the Texas Constitution formed the PUF, into which proceeds from leases and royalties on state land would be deposited. The discovery of huge oil reserves in the early 1900's dramatically increased the size of the PUF.

The PUF principal in fall 2005 was approximately $15 billion, second only to Harvard University's endowment. The PUF primarily serves The University of Texas System, which receives two thirds of its proceeds. The remaining third goes to the The Texas A&M University System. As of 2006, the University of Texas System received the fourth largest endowment in the nation, and the Texas A&M System received the tenth largest.

Other Texas public universities outside these two systems, notably University of Houston and Texas Tech University, are prohibited by law from sharing the income from this endowment. At one time, the PUF was the chief source of income for Texas A&M University and The University of Texas at Austin, but today its revenues account for less than ten percent of the universities' annual budgets. This has challenged both schools to increase sponsored research and private donations.