U.Va. endowment performance second in nation
Board begins discussions on 2004-05 tuition

By Lee Graves

U.Va. treasurer Alice Handy presented a report on the University endowment Friday that was both swan song and tour de force.

Handy, who is leaving her post of 29 years at the University to pursue personal business interests, has guided the endowment to elite status, and for that she received a long and loud ovation from the Board of Visitors’ Finance Committee.
The endowment stands at more than $1.8 billion. The one-year return of 9.2 percent for pooled funds stands second only to Harvard among the nation’s 30 largest universities.

William H. Goodwin Jr., chairman of the Finance Committee, thanked Handy for her years of service and said both her performance and that of the endowment have been “outstanding by any measurement.”

Handy said that decisions made by the board in 1974 to invest 75 percent of the fund in equities has paid off handsomely. In looking at the cumulative endowment performance, $1 million invested in 1974 is worth $38.1 million this year. Income from the endowment distribution per share went from $10 per share in 1974 to about $115 per share in 2003, far more than the $45 per share if the University had stuck with the investment in bonds.

“Because we were able to invest more aggressively, with the board’s support, you now have $115 [per share] to spend,” Handy said.

In another money matter, the board began preliminary discussions about the tuition picture for the 2004-05 academic year. There are many variables, including the level of funding from the state, but Colette Sheehy, vice president for management and budget, laid out the basic pricing policy in considering tuition.
First, the University wants a tuition structure that will help it reach its goals for salaries and for base budget adequacy over the next four years. Second, the policy should take into account both in-state and out-of-state market factors while recognizing the public nature of the University. Finally, beginning next year U.Va. will offer 100 percent of demonstrated need for financial aid to all undergraduates.

The board will not act on tuition until April, and the topic is expected to be on the agenda again at its February meeting. To frame the discussion, Sheey presented a range of possibilities. The best-case scenario, which depends on adequate state funding, would be for undergraduate tuition to increase a total of $510 per student, which amounts to 11 percent for in-state students and 2.5 percent for out-of-state. The worst case, Sheehy indicated, would be an increase of $1,035 per student, a 22.5 percent hike for in-state undergrads and 5 percent for out-of-state undergrads.

Board member John O. Wynne stressed that it is important that the board try to avoid setting double-digit tuition increases for in-state students.

L.F. Payne, also on the board, agreed. “This year is particularly important to moderate in-state increases,” he said.

Both the Law School and the Darden Graduate School of Business Administration expect to set out-of-state tuition to meet the market rate of peers and build in a $5,000 discount for in-state students.

In-state surcharges for medical students are expected to continue, with first- and second-year in-state students paying a $2,500 surcharge, and third-years paying $1,000. A set difference between in-state and out-of-state tuition will be considered.