Aug. 30-Sept. 12, 2002
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Deep budget cuts ahead
Bond referendum a critical issue for higher education
Done Deal -- University finalizes plans for African consortium
Conserve -- U.Va. cracks down on water use

Apprenticeship program turns 20

How does aging affect cognition?
Children care for elderly parents
Years weaken signal of body’s master clock
Celiac sprue -- a diseas that goes against the grain
In Memoriam
Hot Links -- U.Va. home page
Remembering Sept. 11th
Warm welcome

Deep budget cuts ahead

By Lee Graves

Gov. Mark R. Warner sent a sobering message about Virginia’s financial woes lastweek, announcing that revenues over the next two fiscal years will be $1.5 billion less than expected.

In a 40-minute address to the General Assembly’s money committees on Aug. 19, Warner asked heads of state agencies to develop three different plans to reduce their state-funded budgets for the current and coming fiscal year by an additional 7 percent, 11 percent and 15 percent. Those plans must be submitted by Sept. 20.

Warner stressed that the cuts and other spending actions announced Monday are not just “cosmetic.”

“They will be real, with clear impacts and consequences on citizens, local governments, agencies and employees,” he said. “Make no mistake. Some institutions and agencies will close. Some funding streams may disappear. And there will be more layoffs.”

The bleak news does not affect the bonus/leave program promised state employees this month. A 2.5 percent bonus was budgeted for workers with some having the option of choosing two weeks’ paid leave or a combination of leave and bonus. Those who opted to receive the bonus should notice the money in their Aug. 30 paycheck.

U.Va.’s budget for the current fiscal year, which began July 1, already reflects a $23.4 million general fund reduction; that reduction was projected to increase by an additional $33.3 million in 2003-04. The cuts Warner announced Monday would come on top of those previously ordered reductions.

Warner also said he will establish a process for identifying targeted cuts in specific programs and “funding streams,” and he listed more than half a dozen measures to halt discretionary spending until a plan for balancing the budget is developed.

“Through these steps and others that are to come, we are placing everyone on notice that discretionary spending of all kinds must be halted,” Warner said.
The revised revenue estimate comes after news that the state finished the fiscal year on June 30 with $237 million less than projected. That was after announcing a $3.8 billion revenue shortfall for the current biennium.

U.Va. officials already have frozen state-funded hiring and discretionary spending. In an Aug. 1 memo sent out by Colette Sheehy, vice president for management and budget, and Yoke San Reynolds, vice president for finance, unit managers were asked to begin developing plans for 7 percent reductions in their education and general (E&G) budgets, which are funded with tax appropriations and tuition. (State appropriations are known as “general funds.”)

In the memo, layoffs were listed as “a last-resort reduction measure” in the workforce planning tools specified.

“In the next few days, the state’s Department of Planning and Budget will assign us specific budget reduction targets. These are expected to average 7 percent, 11 percent and 15 percent,” said Leonard W. Sandridge, U.Va.’s executive vice president and chief operating officer.

In fact, the University decided to plan on the high side when asking managers to develop their budget cuts. In the Aug. 1 memo, Sheehy and Reynolds wrote, “At our current proportion of general funds to total [E&G] budget, a 7 percent reduction on the total budget is equivalent to slightly more than a 16 percent cut in the tax appropriation.”

Other actions taken by Warner include implementing monthly spending limits for agencies (quarterly for colleges and universities), not signing construction contracts that obligate general fund revenues and withholding half of general fund maintenance reserve allocations.

Warner’s announcement spurred the U.Va. library system to cut back hours, purchases and patrons’ use of computer printers (see separate story). Other University divisions are making contingency plans while waiting for a clearer picture from the state.

“When we receive more detailed instructions from the state, we will know more precisely how these cuts will affect the University,” Sandridge said.

In a briefing after Warner’s remarks, John M. Bennett, state secretary of finance, was asked whether the bond referendum on Nov. 5, which includes $846 million for construction and renovation projects at the state’s public colleges and universities, might provide a small stimulus to the economy.
“There will be a stimulus effect, but it will depend on how quickly construction projects get under way,” Bennett said.

State agencies had already been asked to reduce their budgets by 7 and 8 percent this fiscal year and next, respectively, to meet the $50 billion two-year budget. Under the Aug. 19 directives, the total cuts could amount to about 23 percent for some agencies, Warner said.

To partially offset U.Va.’s loss, the Board of Visitors this spring raised tuition by 9 percent for in-state students and 8.5 percent for out-of-state students, in line with many other colleges and universities across the state. The General Assembly would have to enact enabling legislation in January before another round of tuition increases could be implemented, Bennett said.

In explaining why he is requesting three spending reduction plans from each agency, Warner said, “The reductions we implement will not levy the same percentage cut for each agency. … We will evaluate each plan, and assess its impact on core services, before making a decision about the amount each agency budget will be reduced.”


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