& Mary, Va. Tech
Schools seek new partnership with state
After many years of debilitating
state budget cuts to higher education — including a combined
$272.4 million reduction from three leading Virginia universities
over the past two years — the presidents of those institutions
have developed a proposal to establish a new relationship with
In an innovative move designed to reduce pressure on the state
budget and to ensure the quality of higher education in the Commonwealth,
William & Mary, Virginia Tech and the University of Virginia
announced last week that they will ask the 2004 General Assembly
to enact the “Commonwealth Chartered Universities and Colleges
Act of 2004.” The legislation
would create a process for chartering state-assisted, public universities
and colleges as political subdivisions of the Commonwealth.
Under the new model, the state would limit its financial appropriations
to these universities to less than what would traditionally be
expected. In exchange, the universities would no longer be subject
to certain state personnel, procurement and capital-project regulations.
These two measures would promote substantial savings for both
the state and the institutions involved.
“We all recognize that the ongoing state budget crisis presents
a serious challenge to each university’s ability to maintain
overall institutional excellence,” said U.Va. President
John T. Casteen III.
the past decade, we chose to view the cuts pragmatically, using
them to help determine what is essential to our mission, to use
what we have wisely and to find alternate means to fund our core
“We have become adept at running lean, and have been rewarded
in rankings for being able to deliver great educations with limited
resources. But those accolades have not come without great sacrifice.”
Casteen, together with William & Mary President Timothy J.
Sullivan and Virginia Tech President Charles Steger, recognizes
the challenges facing higher education in Virginia. Over the current
two-year budget cycle, 2002 through 2004, the Commonwealth cut
$617 million in taxpayer support from higher-education appropriations,
including the combined $272.4 million from U.Va. (a 29.7 percent
reduction), Virginia Tech (25 percent) and William & Mary
(24 percent). Increasingly, these universities have had to rely
on private support to bolster existing programs and to create
The state has struggled for years to provide financial resources
to its colleges and universities: in 1985, funding for higher
education represented approximately 17 percent of the state’s
general fund budget; in 2004, only 10 percent. Given other competing
demands for state appropriations, the three presidents believe
it will be difficult for the state to find the resources to adequately
fund higher education. They are not alone in their assessment.
In 1998, the Joint Subcommittee on Higher Education Funding Policies
created minimum funding standards based on national norms to ensure
the competitiveness of Virginia’s colleges and universities.
Last September, SCHEV noted the state would need to give an additional
$399 million to meet those funding guidelines.
Using goals and guidelines developed by the General Assembly,
U.Va., Virginia Tech and William & Mary have calculated what
they need each year to operate their educational programs and
have discovered they face a combined annual deficit of $145 million
— exclusive of unmet student financial aid — simply
to meet operating costs.
This funding gap not only threatens to erode the quality of critical
programs that have taken decades to build, but further diminishes
the institutions’ ability to pay competitive salaries to
faculty and staff and adequately fund student financial aid.
Impact of partnership on staff and faculty
The impact of this new partnership on staff members of the three
universities will be limited. The proposal requires that each
institution’s board of visitors adopt regulations, policies
and procedures that are consistent with the Virginia Personnel
Act. In addition, all current non-faculty employees will be given
the option to remain in the Virginia Retirement System and their
current health insurance plan.
With fewer state regulations to contend with, the partnering universities
will be able to offer compensation and benefits to their employees
beyond those provided by the state. This will come as good news
to their staff and faculty members, who have not received a salary
increase in the past three years. While a 2.25 percent raise was
implemented for classified staff in November, the governor’s
budget does not call for another raise until November 2005.
Last summer, in a discussion on salaries, members of U.Va.’s
Board of Visitors expressed their concern over the board’s
lack of authority to implement raises for all employees. The board
declared its interest in seeing that all U.Va. employees —
faculty and classified staff — are fairly and competitively
compensated. In the fall, the board designated $250,000 for the
rewards and recognition program that was created, but never funded,
by the state for classified employees.
During the mid- and late-1980s, the high level of state funding
for colleges and universities established the foundation for Virginia’s
exceptional system of higher education. This quality has been
recognized nationwide and confirmed by U.S. News & World Report,
which has ranked the University of Virginia the nation’s
No. 1 public university for four of the past seven years. A key
to these continued high rankings is the quality of U.Va.’s
To attract and retain talented faculty, U.Va., like any college
or university, must provide adequate compensation and facilities.
In the late 1980s, the General Assembly established a policy of
funding faculty salaries at a level equal to the 60th percentile
of salaries paid at each college or university’s peer institutions
nationwide. However, this goal has been met only once at U.Va.
in the past 12 years.
Current state appropriations for faculty salaries at U.Va. only
allow for funding at the 27th percentile of its peer institutions.
It is estimated that the Commonwealth would need to spend an additional
$111.5 million per year for faculty salaries within the state
to reach the 60th percentile in 2004-05.
“The state simply has not been able to adequately fund our
three universities in order to sustain where they are today,”
State ties to remain strong The partnership will by no means sever
all ties to the state, as Steger, Sullivan and Casteen adamantly
point out. Each university would remain a public institution with
boards appointed by the Governor, confirmed by the General Assembly
and accountable to the state’s citizens — just as
they are now.
the presidents have proposed guidelines setting forth required
regulations, policies and procedures that would hold each school
accountable for, among other things, performance measures, audit
reports and a strong commitment to financial aid.
“No one is talking about becoming private,” Casteen
said. “We will always have a strong commitment to educating
the citizens of Virginia. It is our founding mission and one we
will never abandon.”
Rather, what each institution seeks is the flexibility to protect
themselves from irrevocable, long-term damage to the quality that
lies at the heart of their academic programs and reputations —
especially at a time when enrollment numbers are increasing (61,000
additional students in the Commonwealth by 2010) and operating
costs must rise to keep pace with enrollment.
Impact on tuition and financial aid
Without substantial financial increases from the Commonwealth,
tuition can be expected to rise, although by what amount, no one
can yet say. For one thing, no one knows what the upcoming state
appropriation will be. For another, “we never discuss tuition
without also discussing access and financial aid,” said
Leonard W. Sandridge, executive vice president and chief operating
officer. “The two always go hand-in-hand, and the University
is committed to providing access to students regardless of financial
In the past two years, University students and faculty groups
have supported tuition increases. However, over the past decade,
the state has implemented tuition rollbacks and consecutive years
of tuition freezes. As a result, 2003-04 tuition at U.Va. is actually
less than inflation-adjusted 1995-96 tuition. A look at state
appropriations per in-state student at each of the three partnering
universities also paints a clear picture of the state’s
inability to adequately fund higher education, especially when
compared with several peer universities around the country. (See
One advantage of the partnership’s legislative proposal
is that any new revenues can be invested in programs and professors
directly related to students’ academic work. In addition,
each institution will devote a substantial portion of these new
revenues to student financial assistance, thus enhancing each
institution’s ability to offer financial aid to all Virginia
students who qualify.
To ensure that no Virginia student admitted to U.Va. is excluded
because of financial reasons, beginning in the fall of 2004, U.Va.
will meet 100 percent of the need for all undergraduate students
who qualify for financial aid through grants. This program was
started with the entering class of 2002 and phased in over four
In addition, U.Va. is studying the feasibility of an innovative
program aimed to limit the amount of debt incurred by middle-class
students. Such institutional aid programs are key to the public
mission of the University of Virginia, Casteen said.
Building on decentralization initiatives
In the early 1990s, U.Va., Virginia Tech and William & Mary
became part of a long-term pilot decentralization project that
gave them more decision-making powers in purchasing, hiring and
capital spending. The purpose of the project was to increase business
efficiencies in their daily operations, to save money and to eliminate
red tape. This project was considered a success, and during last
winter’s General Assembly, the legislature passed 11 of
12 decentralization proposals advanced by the three universities.
In 1995, the University worked closely with members of the General
Assembly on a proposal to grant codified autonomy status to the
U.Va. Medical Center. The legislation, granted in 1996, resulted
in more authority to U.Va. for capital outlay projects, leases,
risk management, purchasing and personnel matters. It allowed
the Medical Center to be more competitive and to respond to changing
market conditions more quickly than state regulations usually
“We see this new partnership legislation as a natural next
step to earlier decentralization legislation,” Sandridge
said. “If granted increased flexibility, we will use our
strength for the good of the university and the entire state,
remembering that there would be appropriate state oversight and
accountability built into the proposal.”
Virginia’s Three Leading Universities Compare
With Four Public Peers
Funding per in-state student, 2002-03:
appropriation per in-state student
funding per in-state student
data not available; figures represent 2001-02 data. Note:
U.Va. state appropriation per in-state student for 2003-04
has decreased to $8,802.
Institutional data and Grapevine (Center for the Study of
Education Policy, Illinois State University)
the Money Goes
General Fund Appropriations to Higher Education