By all rights, this should have been one lousy year for the University of Texas' Texas-sized endowment.

The worldwide oil glut slashed royalty income from the university's huge land holdings by 44 percent over the 1981 peak--and oil royalties are what greased UT's ascent to the No. 2 position among university endowments, just behind Harvard.

But as the 14-school university system closed out its fiscal year Aug. 31, the endowment showed its greatest single-year growth, at least on paper. The market value stood at $2.025 billion, up about $410 million from the same day a year earlier.

The university's white knight was a bull--the bull market that has produced similiar percentage gains in the portfolios of the roughly 650 colleges and universities around the country that have endowments totaling an estimated $25 billion to $30 billion.

The spectacular paper gains will have a negligible effect on this year's operating budgets, however. The common practice at most universities is to draw income from an endowment at a fixed percentage of its value over several years, leveling off sudden market fluctuations. "Nobody likes to budget for volatile income changes," said Trinity University President Ronald Calgaard.

But if the paper gains hold, and if dividend income grows in a corresponding fashion, then university endowments eventually will be in a stronger position to offset their universities' operating cost pressures than they were during the dismal market performance years of the past decade.

"Endowments took a terrible licking to inflation during the 1970s," said John Phillips, president of the National Association of Independent Colleges and Universities. "There is more wealth out there now, and it makes colleges feel good at the moment, but there is also a lot of jitteriness" about how long the recovery will last.

The National Association of College and University Business Officers hasn't completed its 1983 endowment survey, but a spokesman predicts it will show that the value of about 200 endowments it tracks has risen by roughly a third over last year, with some of the increase coming from normal private donations or external income sources (such as UT's oil rights) and the bulk coming from the bull market.

The gain barely makes a dent in the 10-year losses the funds suffered collectively through 1982. During that period, the total return on the funds--capital gains plus yield--lost 38 percent of their real dollar value to inflation, according to figures supplied by NACUBO.

This year's sharp turnaround "looks great on everybody's bottom line, but nobody has any more real money to play around with yet," said Theodore J. Marchese, vice president of the American Association of Higher Education.

Most universities extract income from their endowments according to a fixed rate--generally 5 percent--of a floating three-year average of the endowment value.

Take Yale University, for example. It realized paper gains of better than $300 million in its endowment this past year. But because of the built-in lag, the fund's contribution to the university's 1983-84 budget of $395 million will be $40.3 million, an increase of just $2.1 million over the year before. Indeed, as a percentage of total operating income, endowment income will go down, not up, at Yale this year.

At UT, endowment income was $105 million in 1982-3, up from $87.6 million the year before. But the gains come mostly from the bond yield on new oil royalty income, not from from the bull market.

UT's endowment is more heavily invested in bonds than stocks, by a ratio of 2 to 1, so its paper value increases have not been as dramatic as they might have been. Most college portfolios are tilted slightly toward stocks, but in the past decade, particularly during the high-interest-rate years of the late 1970s and early 1980s, endowment portfolio managers moved into bonds.

Investment policies at universities historically have emphasized income stocks over growth stocks, leading critics to charge they have not gotten the most for their money, even during this bull market. "Our studies tend to show that they have moved in the wrong direction at the wrong time," said Abbott Wainwright, NACUBO business affairs director.

Some colleges, notably the University of Rochester and Princeton, have moved into high growth stocks in recent years. UT hasn't. State law restricts the kinds of investments it can make, and the continuing income to the endowment from oil royalties, which this year will generate roughly $150 million, "gives us the luxury to go for high yield rather than growth stocks," said UT trust officer Robert Carter.

By state law, all proceeds from the 2.1 million acres of oil lands owned by the university must go directly into the endowment, two-thirds into the endowment of the 14-school UT system, and one-third to the endowment of Texas A&M.

UT uses roughly a third of its annual endowment income on capital expenditures and the remainder on academic enhancements at its main, 48,000-student Austin campus, which is in the middle of a drive that has seen its endowed faculty positions triple to more than 500.

While there is some fear within academic circles that the endowment paper profits never will be reflected fully in strapped operating budgets--"all bull markets become bear markets sooner or later," said Trinity's Calgaard--there are other windfalls from a recovering economy.

The increase in private wealth has raised private donations to universities. The total amount contributed to higher education from private sources in 1981-82 was $4.86 billion, a 14 percent jump over the year before, according to the Council for Financial Aid to Higher Education. The 1982-83 figures have not been compiled, but a slightly larger percentage jump is expected.

"You have a lot of wealthy potential donors, both individuals and foundations, who have made a lot of gains in the past year," said Phillips. "We're all out there competing for our share."