March 1-7, 2002
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Budget: Where U.Va. stands
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Disaster drill prepares local personnel for real emergencies
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U.Va. planning future of Morven Farm, seeks guidance from community

Dave Matthews buys five Kluge farms
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Career Services builds new bridges to jobs for students
Students seek alternative job choices in tough times
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Budget: Where U.Va. stands
Process a long and winding road

By Dan Heuchert

The news about the state budget seems ever-changing. One governor proposes a budget; the next one changes it. Then legislators rewrite the budget altogether. Numbers shift constantly. One day, you may be getting a raise. The next day, you’re not. Then it’s not a raise, but a bonus, or perhaps some time off. It can be frustratingly confusing.

Colette SheehyMessage from Colette Sheehy
Vice President for Management and Budget

Everyone in the state will feel the results of the difficult budget decisions that lawmakers are grappling with in Richmond. The University is no exception.

These deliberations are often complex and, because of the nature of the legislative process, details are changing by the minute.
Difficult times that result from decreasing state revenues are not new to the University. We have weathered them before and emerged stronger — and wiser.

The Office of State Governmental Relations monitors closely the issues that will affect the University and is working hard to keep the interests of the University and its employees before state legislators. And our managers know more in 2002 about how to deal with declining state resources than they knew in 1990.

It is important to remember that in 1990, 33 percent of U.Va.’s Academic Division operating budget came from state tax appropriations. Currently, this figure is 21 percent. In 1990, 13.5 percent of total University revenues came from gifts and endowments. Now the figure is 15.4 percent. So the base that the state cut is relatively less than it was in 1990.

We used tuition throughout the early 1990s to offset some of the impact of the cuts in state money, and we are pleased that the legislature has returned the authority to set tuition to each Board of Visitors. Our board will be able to consider the best pricing policy for our institution and student body. Tuition will again serve as a cushion against the full impact of the budget cuts.

University administrators share everyone’s concern about the situation we face. We realize that we have to manage to the reality, including the reality that staff and faculty have suffered. I want to reiterate here that the goal of the University administration is to protect present employees above all else.

President Casteen recently summed up the situation that reflects what many of us in the administration believe. “I don’t expect the next couple of years to be easy,” he said. “At the same time, I expect that the University will continue to outperform the state. It seems to me that this is the lesson of the last decade — and the best hope for the next.”

“Laws are like sausages,” the late German Chancellor Otto von Bismark once said. “It is better not to see them being made.” With apologies to the squeamish, then, what follows is a primer on Virginia’s budget process, with an eye to salary matters as an example of how things change in the process.

Virginia operates on a two-year budget cycle. In even-numbered years, the General Assembly meets for a 60-day “long session” to consider a 24-month spending plan, to take effect July 1, the beginning of the state’s fiscal year. In odd years, the legislature generally meets for 45 days, and makes midstream adjustments to fit the more current financial picture. Lawmakers also may modify the expiring budget, if need be, with so-called “caboose bills” that take effect as soon as the governor signs them.

So budgeting, either writing a new one or amending an old one, is a nearly constant process. Each fall, the University submits its budget priorities — developed through an extensive internal process — to the state Office of Management and Budget. These include requests for both operating needs and capital (building) projects, the latter of which are enumerated in a six-year plan that is updated every other year.

The state budget office, working in concert with the governor, reviews the state’s revenue projections and puts together a budget proposal, which the governor usually unveils in December. At the close of 2001, outgoing Gov. Jim Gilmore did the honors.

Gilmore’s proposal, which included a 2 percent raise for state workers, was immediately panned as unrealistic for many reasons by legislative leaders and then-Gov.-elect Mark Warner, all of whom had their eyes trained on a mounting revenue shortfall, thanks in part to Virginia’s recession-swamped economy.

Still, Gilmore’s budget was introduced as the plan of record when the 2002 “long session” opened Jan. 9. It was referred to the legislature’s powerful “money committees,” the state Senate’s Committee on Finance and the House of Delegates’ Appropriations Committee. There, the sausage-making began in earnest.

Warner took office and submitted his own package of budget amendment proposals, which included a salary freeze for state workers, including faculty members.

Committee members submitted amendments of their own. Even as the committees worked on the budget, fresh revenue projections forecasted a growing deficit: $1.3 billion for the remainder of the current fiscal year, and $2.5 billion for the two-year cycle beginning July 1.

The capital budget process has gone fairly smoothly. Early in the session, both committees agreed to a $1.6 billion bond package to finance construction at the state’s colleges, universities and parks. Almost $1 billion of that would have to be approved by voters in a referendum, presently slated for November. U.Va.’s share would be $98.2 million, $68.3 million of which would go before the voters.

The money committees finally completed their work on the operating budget Feb. 17 and sent their versions to their respective full houses. The Senate considered its version for only two hours Feb. 21 before voting 34-6 to approve; the House debated into the night, voting on dozens of amendments before finally approving its version by an 81-15 vote.

The House bill provides for a 2.5 percent across-the-board salary increase in December 2003, as long as the revenue picture gets no worse. The Senate went a different route, scheduling one-time bonuses of 2.5 percent and 2.0 percent in the coming two fiscal years; alternately, classified employees could choose to receive two week’s of additional paid annual leave instead. In the Senate plan, institutions could be given discretion as to how they would dole out the bonuses to faculty members.

The houses were expected to formally reject each other’s budgets Wednesday, sending their competing versions to an eight-member conference committee, expected to be comprised of senators John Chichester (R-Fredericksburg), Charles Colgan (D-Manassas), Walter A. Stosch (R-Glen Allen) and William Wampler (R-Bristol), and delegates James H. Dillard II (R-Fairfax), A. Victor Thomas (D-Roanoke), Lacey E. Putney (I-Bedford) and Vincent F. Callahan Jr. (R-McLean). Their task is to come up with a compromise measure to be approved by each house in time for the assembly’s scheduled March 9 adjournment.

Warner will have 30 days to review the budget passed by the legislature. In Virginia, governors are empowered with a so-called “line-item veto,” which allows them to red-line certain elements of the budget without vetoing the whole bill.
The Assembly reconvenes April 17 to consider Warner’s vetoes. It takes a two-thirds vote of each chamber to overturn a gubernatorial veto.

The new budget will then take effect July 1 — just a few months before the University submits its proposed amendments for consideration by the governor and the 2003 General Assembly.


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of the University of Virginia

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