Texas System Set to Overtake Harvard as Nation's Richest

In the late 1800s, theTexas government donated millions of acres of land considered almost entirely worthless to fund the higher education system, believing grazing rights would bring in a little money. But oil was discovered on the west Texas land in 1923, and the following 99 years made the University of Texas system very, very rich, Bloomberg reports. The system overtook Yale in 2018 to become the nation's second-richest university, and with a $42.9 billion endowment, it is now closing in on Harvard, which is currently the richest with a $53.2 billion endowment.

Some 10,000 wells on land managed by the system are currently producing oil or natural gas. The system, which oversees 2.1 million acres of land, makes $6 million a day from oil and gas leases and royalties—and rising oil prices will mean record revenues this year, while other endowments are facing falling returns from investments. Last year, Harvard announced that it would stop investing in fossil fuels. "The University of Texas has a cash windfall when everyone is looking at a potential cash crunch," William Goetzmann at Yale University’s School of Management tells Bloomberg. "Adjusting your portfolio for social concerns is not costless."

Environmental groups accuse the system of bringing in "dirty money" and worsening the climate crisis, though UT officials say the land also hosts extensive wind and solar power generation projects, and the university expects "considerable growth" in these areas. The money generated by the lands goes into the Permanent University Fund, which was established by the Texas Constitution in 1876 and also benefits the Texas A&M University system. Other public university systems in the state say that since they weren't around when the constitution was drawn up, the fund should be amended to include them, the Daily Texan reports. (More University of Texas stories.)