Board adopts $1.44B budget

Staff report

Amid concerns about state funding cuts and stagnant faculty salaries, the University’s Board of Visitors approved a $1.44 billion operating budget for 2002-03 at its May 30-June 1 meetings.

The academic division will get $835.8 million, or 57.8 percent of the total. The Medical Center is set to receive $587.6 million, or 40.8 percent, and the College at Wise, $19.7 million, or 1.4 percent.

Overall, the proposed budget represents a 1.9 percent hike from the current fiscal year, which ends June 30.

Leonard W. Sandridge Jr., executive vice president and chief operating officer, explained during the Finance Committee meeting May 30 that the University is coping with a $25.4 million reduction in state funds and the second year without base salary increases from the state.

Increasing tuition and fees, which the board approved in April, will make up for roughly half of the reduction, Sandridge said. Tuition and fees account for $207.5 million, or about 14.1 percent, of the projected total revenues of $1.47 billion.

Warren M. Thompson, one of four new board members, asked what impact the salary situation is having on faculty turnover.

“There’s no real evidence of a serious exodus,” Sandridge said. “But there’s no question we’re having to work hard to counter offers” from other institutions.

“We’ve tried to set aside the resources to deal with serious cases,” he said.

Finance committee chair William H. Goodwin Jr. and board member Terence P. Ross raised questions about some of the Health System’s figures. Admissions are projected to increase by 894 patients, from 26,643 this year to 27,537 in 2003, counter to declines over the past several years.

Ross also wondered if enough had been planned for pharmaceutical costs, which Chief Financial Officer Larry L. Fitzgerald said are budgeted to rise 6.1 percent.

“I think you are extraordinarily conservative on the expenditures side and extraordinarily liberal on the revenue side,” Ross said of the center’s budget.

Fitzgerald and R. Edward Howell, vice president and chief executive officer of the center, explained that admissions are being brought in line with the trend in peer institutions. In addition, U.Va. in the past had to turn away patients, a situation that now won’t be necessary because of added staff and more capacity through shorter hospital stays.

Sandridge said the budget includes $12 million in reserves to deal with costs and revenues that don’t match expectations. Goodwin concluded by expressing confidence in Howell’s ability to make the budget work.

— Lee Graves

Med Center employees to get bonuses, not leave

Medical Center employees will share in the state-approved 2.5 percent bonus plan, but will not receive the option of taking extra time off.

Howell, in presenting the bonus plan to the Board of Visitors’ Health Affairs Committee, said offering paid leave was not an option, because the hospital is a round-the-clock operation. Under state law, the Medical Center has the autonomy to oversee its own compensation plans.

Probationary employees and employees rated “needs improvement” in their most recent evaluation are ineligible for the bonus, Howell said. The bonus will be paid to the remaining 4,272 Medical Center employees Aug. 23. The cost to the Medical Center will be $4.5 million, including taxes, according to a fiscal impact statement supplied to the board.

Board changes Med Center retirement plan

The board also approved changes in the Medical Center retirement plan that are projected to save the Medical Center about $1,305 per employee. Beginning with employees hired in October, the Medical Center will reduce its contribution to each employee’s retirement plan from 8 percent to 4 percent of salary, and lengthen the vesting schedule — the amount of time each employee must participate in the plan to be eligible to receive the Medical Center’s contributions upon his or her departure — from one to two years. On the other hand, the Medical Center will match 50 percent of each employee’s own contribution to a maximum of an amount equivalent to 4 percent of the employee’s pay, up from a $480 maximum previously.

The changes do not affect current employees.

New dean outlines vision

New Medical School dean Dr. Arthur “Tim” Garson Jr. presented his vision of the future, mapping for the board a 10-year projection of trends. Garson predicted an increase in the number of hospital patients as baby boomers age, but also a shortage of doctors and nurses. Heart disease and cancer will remain threats, but other diseases will be eradicated.

“This will allow people to live long enough to get another disease,” Garson said.
Costs to the community could increase, as could the number of uninsured patients, and there may be a greater gap between what is medically possible and what is affordable.

The Medical School’s task is to determine what must be taught and how to teach it, he said. The competition among schools will be in producing better doctors and innovations, stressing specialization and collaboration, both within and outside the medical field, he said.

U.Va.’s role is to supply models for excellence for the rest of the country in providing superior patient care, creating a distributed network and providing greater use of electronic data, Garson said.

Garson, who has already spent a planning weekend with Howell, said the school should provide growth and recognition opportunities for master teachers, offer a master’s program in public health and generate major clinical programs.

Specifically, he suggested the University needs an orthopedic chair and hematology/oncology chief. He stressed that there would need to be strong fund raising to support his vision.

Discharges down, expenses up

In his report, Fitzgerald noted that discharges are below last year and the current budget and expenses are over budget and soaring over last year’s costs. Labor costs are higher than budgeted, though the Medical Center has greatly reduced its use of contract nurses.

William E. “Nick” Carter, vice president of operations at the Medical Center, said an eight-bed short-stay unit would be available starting in June as a way of reducing costs. He also said each job vacancy was being evaluated before it is being filled.

— Matt Kelly

Student drinking drying up?

When it comes to how much U.Va. students think their peers drink, the gap between reality and perception is shrinking. And students are actually drinking less than three years ago, according to the U.Va. Department of Student Health’s yearly surveys.

What seems to be making a difference at the University? Chalk it up to a form of reality check called “social norms marketing,” which Patricia Lampkin, interim vice president for student affairs, described to the board’s Student Affairs and Athletics Committee May 31.

“This downward trend is definitely encouraging,” she said. Social norms marketing “is based on the premise that young people usually want to keep up with what their peers are doing, yet their perceptions are often out of line with actual behavior.”

Student Affairs staff has promoted the survey results in a public relations campaign that includes lively advertisements in the Cavalier Daily. They show that students aren’t drinking as much as they think they are. In 1999, students thought their peers were downing about nine drinks a week, when in actuality they’d drink about six. By 2002, both those numbers had decreased from the perception that student peers were consuming about 4.5 drinks to the reality that it’s about 3.5.

– Anne Bromley

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