Budget constraints may dominate General Assembly

By Dan Heuchert

There are some central truths that the General Assembly must face as it begins its annual session in Richmond this week.

First, the two-year budget that it approved last year, in the midst of a booming economy, needs some adjustment. It was predicated on an anticipated 5.25 percent growth rate; the actual rate was closer to 3.25 percent, Del. Paul Harris, R-Albemarle, told a U.Va. audience at the annual legislative forum, held Jan. 5.

Second, Gov. Jim Gilmore is determined to uphold his commitment to repealing the car tax, which means increasing the refund rate from 49.5 percent to 70 percent, as had originally been provided for in his phase-out plan. He rejected advice from senior financial advisers to freeze the refund in his package of budget amendments released in December, instead calling for a package of budget cuts and bond issues to balance the books, he said recently.

"There is extremely strong sentiment in the community to phase out the car tax," he said. "This is what the public wants."

For the University and its employees, that means little or no state funding for new initiatives and some changes in financing for previously approved capital projects.

"This is going to be a fascinating session, especially given the budget constraints this year," state Sen. Emily Couric, D-Charlottesville, said at the Jan. 5 forum.

The majority of operating increases included in the governor's proposed budget are for salary increases. Teaching and research faculty are slated for a 3.4 percent increase in December, which the state says will allow the University to remain at the 60th percentile of its peer institutions.

However, the governor's plan underestimates the increases at peer institutions, according to figures prepared for U.Va.'s State Governmental Relations Office. It allows for a 2 percent increase in 2000-01 and 1.9 percent in 2001-02 at those schools, although in the past 10 years, the lowest such increase has been 3 percent. In 1999-2000, the University's faculty salaries actually were rated at the 48th percentile of its peer group.

Classified employees, administrative and professional faculty, adjunct and part-time faculty, and graduate teaching and research assistants are all slated to receive merit-based increases averaging 3.5 percent under the governor's proposal. Under the new compensation plan, classified employees who rate "contributor" on their annual evaluations would receive a yet-to-be-fixed increase of between 2.8 and 3.5 percent, with "extraordinary contributors" receiving an increase of between 3.5 and 8.75 percent.

Gilmore proposes cutting other operating-budget items, including across-the-board spending cuts of 1 percent during the current year and 2 percent in the coming fiscal year in student services (the Dean of Students office and University Career Services, for example) and institutional support functions (administrative and financial offices). His proposal also anticipates spending less on advertising and recruiting, telecommunications, procurement, and employer contributions to the faculty's optional retirement plan; the reductions total $325,000 in the current year and $2 million in the coming year.

The governor included no state funding for any of the University's proposed operating initiatives.

Meanwhile, a legislative panel, the Joint Subcommittee on Higher Education Funding Policies, recently completed a study of higher education funding levels. Its conclusion: U.Va. receives between $17 million and $18.5 million less in state operating support than it should -- and that does not include funds for maintenance and operation of the physical plant.

On the capital side of the budget, the governor proposed no new state funding for University requests. Gilmore proposes funding four major capital projects as part of a $249 million statewide bond issue for higher education construction, backed by revenues from the state's share of a nationwide tobacco settlement. Two items -- the $9 million renovation of Fayerweather Hall and construction of a new studio art building, and funds to address the University's maintenance backlog (increased from $6.7 million to $8 million) -- had been slated to receive state general-fund support, but are now part of the bond package.

Also included in the governor's proposed bond package is $15 million toward the proposed MR-6 medical research building. The balance of the project's expected $50 million total cost will be borne through non-state sources. The fourth proje

There are at least two other bond bills introduced in the legislature, which vary in their support for U.Va. projects, said Nancy Rivers, director of state governmental relations.

At Gilmore's request, five state schools, including U.Va., submitted "institutional performance agreements" to the state in the fall, which tied increased funding to achievement of specified goals. The governor's budget did not address the agreements.