AUSTIN (KXAN) - University of Texas students are passing at high rates and dropping out at a lower rate than student before them since the university launched its effort to increase four-year graduation rates, university president Bill Powers said on Wednesday.

Powers announced the improvements at his annual State of the University address to students, faculty, staff, alumni and friends of the university.

"We have significant work left to do, but we are moving the needle," Powers said of the improved retention and graduation rates.

The early signs of success include:

The president also addressed the construction of the Dell Medical School, which is on track to open in 2016. University leaders are currently conducting a nationwide search for the schools inaugural dean.

"The medical school will increase health care, and the quality of health care, especially for uninsured and low income residents in Central Texas," Powers said. "Over a long period of time there will be medical breakthroughs in the research that is done, and that will attract specialties where Central Texans will not need to go elsewhere to get a whole array of specialty."

Powers says thanks to voters and donors, UT will become the first major research university to open a medical teaching hospital in more than 35 years.

In the speech, Powers also touted UT's ranking as one of the best universities in the world and talked about a U.S. Supreme Court decision in June , which sent the case back to a lower court.

"We are more diverse, both in our student body and in our faculty, and we're fighting to protect that diversity in the (Abigail) Fisher case."

Powers also spoke about the Texas Legislature's decision to increase higher education funding and is glad the school will receive an addition $25 million over the next two years.

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Powers: Passing rates up, dropouts down