by Andrew Shurtleff
President John T. Casteen III
Focus on budget crisis
Casteen: Standing fast in hard times
years fall letter has been a challenge to write. The mood
on Grounds is a complex story because we have the combination
of what may be the strongest entering class ever, a serious regional
drought, a record year for alumni and donor support, and the worst
state budget crisis in Virginias history.
states face revenue shortfalls this year. Several have reduced
allotments, including allotments to their public colleges. In
this sense, Virginias problems resemble problems elsewhere.
the same time, Virginias problems predate the collapse of
the technology bubble or the economic crisis that followed Sept.
Virginia assumed financial responsibility for much of local government
in 1998 when it began phasing out an unpopular local property
tax on automobiles. For the first few years, the massive surplus
that Governor Allen left behind as he finished his term disguised
the real cost of this buy-out. Then, as the surplus dissipated
and anticipated state revenues failed to materialize, this new
cost (now said to approach $1 billion per year) became a massive,
unfunded state obligation. Politicians argue about the rate of
overspending in 1998-2001, but estimates that seem valid to me
suggest that real state revenues grew by no more than about 10
percent while state expenditures grew by about 37 percent. It
was inevitable that the state would sooner or later hit the wall.
money per in-state student:
U.N.C.-Chapel Hill: $24,178
Virginia delayed alerting the public about its revenue shortfalls
for so long that by late 2001 the state had slipped into an unrecognized
deficit: revenues were simply not meeting expenditures. The new
Governor, Mark Warner, and the General Assembly addressed the
problems that they knew early in the third fiscal quarter, when
we and most other agencies absorbed budget cuts. Our first reduction
was $4.8 million on a former General Fund (i.e., tax) appropriation
of $166.3 million.
and perhaps most serious of all, as the national recession cut
state revenues the states revenue prediction model failed
to predict state income accurately. Accordingly, quarter-after-quarter
the state has had to reduce spending. The shortfall for the biennium
that began on July 1 has grown to some $6 billion or ca. 15 percent
of the states predicted revenue, and the Governor and General
Assembly have had to make additional, deep cuts in allotments.
the University, this will mean losing (by the end of the biennium)
cumulative funds now estimated at $98.2 million since 2001-02
($51.6 million for 2003-04 alone). Tax support will fall to $116.4
million from an original appropriation of $166.3 million. (The
2002-03 reduced state appropriation of $125.9 million represents
9 percent of the 2002-03 total University revenues.) So far as
I know, no state has ever furnished such a small proportion of
its flagship universitys budget as will remain after these
cuts (perhaps as little as 7 percent) and still claimed that university
as a public institution. I wish I could tell you that this is
the end of the problem. In truth, I cannot. As I write, state
revenues continue to deteriorate.
Dickens phrase, these are the worst of times and the best
of times. The worst in that state support has now declined so
sharply that no one is predicting when recovery may come. In a
single year, the state took away no less than one-quarter of its
former appropriation per in-state student. Over three years, the
state predicts that it will take no less than 31 percent of the
original 2001-02 appropriation. As of 2001-02, the most recent
year for which we have statistics, the University of North Carolina
at Chapel Hill had $24,178 in state money for each in-state student.
The University of Michigan had $17,082 per in-state student. The
University of California at Berkeley had $22,309. These are our
nearest peer institutions, our competitors. Our state appropriation
per in-state student for 2001-02 was $12,695. It is now $9,711,
and it will drop to $8,860 next year.
these are also better times than one might guess.
year, the state
restored to the Board of Visitors its statutory
authority to set tuition. The Board added about 9 percent at the
start of this year, bringing the charge back to roughly its level
in 1993, and the sum of tax and tuition support per in-state student
to 74.5 percent of the total cost of education. As all of Virginias
boards are, ours is deliberating an unusual mid-year surcharge
to replace about half of what the Governor has had to take from
us in the last several days. The Boards plan includes financial
aid increases for all students with unmet need.
factors make the times better also. Despite understandable alarm
about jobs and salaries and support moneys, faculty and staff
members have addressed these crises with remarkable wisdom and
faculty forums have addressed the issues with
dignity and purpose. Faculty and staff views coincide closely
with the Boards vision and my own of the mandate to sustain
quality despite the losses.
more surprising, students generally have favored the mid-year
surcharge as the only available way to sustain quality in this
strange new environment. The Cavalier Daily endorsed the concept.
Student leaders have spoken for it in their conversations with
the Board. Parents, many of whom have sent advice and expressions
of concern in e-mails and letters, have almost universally urged
us to do what we must to maintain academic quality.
the Universitys people are standing fast in a hard time.