Deep budget cuts ahead
Mark R. Warner sent a sobering message about Virginias financial
woes lastweek, announcing that revenues over the next two fiscal
years will be $1.5 billion less than expected.
a 40-minute address to the General Assemblys 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.
stressed that the cuts and other spending actions announced Monday
are not just cosmetic.
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.
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.
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
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.
these steps and others that are to come, we are placing everyone
on notice that discretionary spending of all kinds must be halted,
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.
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.)
the memo, layoffs were listed as a last-resort reduction
measure in the workforce planning tools specified.
the next few days, the states 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.
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.
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
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.
we receive more detailed instructions from the state, we will
know more precisely how these cuts will affect the University,
a briefing after Warners 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 states 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.
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,
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.
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