Board approves new agreement with state

Staff reports

The Board of Visitors considered issues related to the University's future at its Oct. 5 and 6 meeting, approving a six-year pilot performance agreement with the state and hearing that athletics can't continue as is without increased support.

The board also discussed student demand for information technology, which still outpaces U.Va.'s ability to offer enough computer courses.

U.Va. joins pilot program

The Board of Visitors approved an Institutional Performance Agreement between the University and the state that addresses major funding over the next six years, as well as quality and accountability issues.

The Governor's Blue Ribbon Commission on Higher Education recommended in its final report that the state move away from using strategic plans toward using the institutional performance agreements. U.Va. is one of five Virginia institutions that has agreed to participate in a pilot IPA program.

"The institutional performance agreement could give U.Va. a long-term plan for capital outlay projects, [as well as] increased managerial autonomy over our routine business processes," Colette Sheehy, vice president for management and budget, said after the Oct. 5 finance committee meeting.

One of the primary financial aims of the IPA is to increase the proportion of the University's budget provided by state appropriations from the current level of 26.9 percent to 30.3 percent in 2005-06, and to decrease the proportion provided by tuition and fees from 25.6 percent to 20.5 percent in that period.

Another goal is to increase "education and general" expenditures by about $240 million between fiscal year 2001 and fiscal year 2006, a 48 percent increase over the approved budget for the current fiscal year. Of that $240 million increase, 63 percent would be funded by the state.

The IPA anticipates maintaining faculty salaries at the 60th percentile of the benchmark salary group approved by the State Council of Higher Education for Virginia. U.Va. salaries had reached the 48th percentile last year.

The plan also foresees a significant increase in funds for new faculty hires, because the level of state appropriations should rise once the state restores base budget adequacy -- that is, funding guidelines based on the number of students that were in place before the early 1990s.

"We don't know what will happen after the submission Oct. 6 or the extent to which the state will agree with the terms proposed in the agreement," Sheehy said. "This is a new process for both sides, and I imagine that the specifics will emerge as we work through the process."

Athletics financial forecast 'dismal'

Maintaining the status quo in athletics may produce an annual Athletic Department budget deficit of $10 million and a cumulative shortfall of $44 million by 2010, Carolyn M. Callahan, chair of Virginia 2020's fifth commission, told the Student Affairs and Athletics Committee.

Callahan, a Curry School professor and the University's faculty representative to the National Collegiate Athletic Association, offered an interim report on her commission's findings. A final report, to include recommendations for new sources of revenue, is due to the board in January.

"What we have found is not good," Callahan said. "The [financial] outlook for the next 10 years or so I would say is dismal."

In 1997, only 43 percent of NCAA Division I-A schools turned a profit, while 53 percent reported a deficit. Today, even high-profile programs at the universities of Michigan and North Carolina are facing financial crises, Callahan noted.

Last year, U.Va.'s budget broke even, said Director of Athletics Terry Holland. A year earlier, there was a $250,000 deficit, which was covered with reserve funds. Few reserves are available to cover future deficits, Callahan said, and shoe and clothing contracts are being reduced across the country. Revenues from television and radio broadcasts "are probably at their limit," she said, while costs are expected to continue to increase "if we wish to remain competitive at the same level" -- among the top 10-20 athletic programs in the country.

Callahan's commission is looking for ways to maintain that level of excellence within the framework of a balanced budget.

"Our position is that everything is on the table," Holland said, including the possibility of discontinuing one or more of the University's 24 varsity sports.

"We hope not to have to do that," Callahan said, who added that one goal will be to establish an endowment for athletics.

In his remarks to the committee, Vice President for Student Affairs William H. Harmon said that approximately 95 percent of incoming first-year students participated in a summer orientation session this year, said. Nationally, a 75 to 80 percent participation rate is considered good, he noted.

More parents than expected have accompanied their children to the sessions, he added, contributing to a summertime economic boost for the Charlottesville area.

Also, an explosion in the number of student organizations has led to a space crunch in Newcomb Hall, and Student Council is pushing for a new student activities center, Harmon said.

As of Oct. 6, there were 404 registered student groups, he said. Ninety-one sought office space in Newcomb, but only 38 could be accommodated, he said.

Harmon has met with Student Council to review its proposal for a new facility. "I was impressed with their presentation," he said.

Info-tech demand booming

The University is scrambling to meet skyrocketing demand for information technology classes, both from computer science majors and students who just want an adequate amount of literacy, officials told the Educational Policy Committee.

Enrollment in Computer Science 110 -- an introductory computer literacy course for non-Engineering students -- jumped from 187 students during the 1997-98 school year to 360 in 1999-2000, said Vice President for Research and Public Service Gene D. Block. This fall, there was a 99-student waiting list for the course.

The number of computer science majors has more than doubled over the last decade, from 136 in the 1989-90 academic year to 282 last year. But, he noted, the number of faculty has risen only slightly in the same interval, from 19 to 22.

Some faculty lines have been reallocated, Block said, and the University is seeking federal and foundation support. In addition, Vice President and Provost Peter W. Low has provided an additional $100,000 per year from his discretionary budget to support additional sections of popular computer courses.

Some board members appeared dissatisfied. "If I interpret what you've said, we haven't done much," said William H. Goodwin Jr. "We really have no excuse not to offer it to any student who wants this."

Board member Terrence P. Ross noted that 15,000 computer jobs are vacant in Northern Virginia alone.

The University's first proposed Institutional Performance Agreement with the state calls for an additional $330,000 and 3.5 faculty positions to support additional introductory-level classes, said Shirley L. Menaker, associate provost for academic support.

The board also heard reports from two students who participated in the Faculty Senate's Harrison Awards program for undergraduate research. David Britts, a third-year Engineering student, worked with associate professor Pam Norris in her aerogel lab, exploring how fibers might reinforce the lightweight materials enough to make them useful as insulators. Britts' work may lead to additional funding for the lab, Norris said.

Jennifer Johnson, in her fourth year in the five-year teacher education program, worked with Curry School associate professor Margo Figgins to survey minority high school students about their attitudes toward teaching careers. Her findings will be presented to Curry School faculty later this month, and at a national conference later this year.

The Harrison Awards program received 165 applications for grants last year, and 25 winners were selected, said Faculty Senate president-elect Robert Grainger. The Senate is ccurrently seeking proposals for next year's projects.

Medical Center holding steady

The Health System's financial report before the Board of Visitors Oct. 6, showed that the operating income of $4.5 million was consistent with expectations for the first two months of the fiscal year. Associate Vice President for Finance Larry Fitzgerald said it was partly due to three factors: higher than expected patient volume; an increase to hospital charges which average 6 percent; and a higher than expected case mix index, which refers to the severity of patient illnesses. An additional Medicare payment to the Medical Center will bring in $3 million more in net revenue this year.

Fitzgerald and Dr. Robert Cantrell, Vice President and Provost for Health Sciences, mentioned that the Medical Center is still experiencing a staff shortage. Attempts to recruit nurses overseas yielded few results, because other countries are also short on nurses, Cantrell said.

Implementing the Health System's Performance Improvement Project, which began in January, has generated almost $14 million in savings and revenue ideas toward the $28 million target, Chief Operating Officer William E. "Nick" Carter Jr. reported. The steering committee has approved proposals to save $8.3 million since June, with some of them already implemented. Carter pointed out that ideas are not just rubber-stamped. "We backed away from $2 million in cost savings, because we felt it would not be correct to implement those ideas," due to possible negative effects on patient care and quality of work-life concerns, he said.

Some of the initiatives that have produced savings include: renegotiating contracts for pharmaceutical and operating room supplies; maximizing reimbursements from drug companies for indigent care drug programs; and reducing late charges.

The steering committee tabled cost-cutting ideas in two areas where the Health System is above the norm: the Health System spends almost double that of other hospitals on its retirement contribution and spends more for its infection control program.

"We decided it would not be prudent to take something away from employees," Carter said. That applies even to potential employees, with the present difficulties in recruiting. And when it comes to infection control, U.Va.'s rate is better than comparable hospitals, so no one wanted to change that, he said.

Other business

• A working group on the University's Greek system is focusing on ways to strengthen ties between the University and fraternities and sororities, said board member Gordon F. Rainey. Several Greek houses are seeking new renovations, but such programs may come with increased accountability, he said, citing a "need for cultural change." A final report is due in January.
• As of June 30, the University's endowment grew by $479 million to $1.74 billion, U.Va. Treasurer Alice Handy reported.
• Six new endowed professorships were established, bringing the total number to 450. They are: the Joseph Weintraub Bank of America Professorship in Law; the Teresa Heinz Professorship in Sustainable Communities in the School of Architecture; the Edmund H. Henderson Professorship in Education; the Novartis U.S. Foundation Professorship in the Curry School of Education; the Thomas A. Saunders III Family Professorship in Nursing; and the Madeline Higginbotham Sly Professorship in Nursing.
• The value of the University's sponsored research has increased by 48 percent between 1996 and 2000, from nearly $160 million to more than $200 million, Block reported. The largest shares of the broad-based increase came from the National Institutes of Health and from private foundations, he said.
• The board increased the limit for Medical Center procurements and sole-source justifications to $50,000, and revised procedures for emergency procurements.
• Dr. Cantrell announced that Cole Hendrix, associate vice president for community relations, will resign as of Jan. 1.
• The board passed a special resolution commending L. Jay Lemons, who will be leaving his post as chancellor of U.Va.¹s College at Wise at the end of the year to take the helm of Susquehanna University in Pennsylvania.