A New Formula
for Higher Education
the Cost of Education
• Sandridge seeks to reassure wary employees
Up: Press conference and Sept. 13 briefing
The Commonwealth Chartered Universities and Colleges initiative was created
to preserve and enhance the quality of higher education in Virginia and to strengthen
programs for Virginia undergraduates.
While Commonwealth Charter agreements will not
limited to the University of Virginia, William & Mary and Virginia Tech,
these three universities have taken the lead in advancing the proposal through
the General Assembly.
This special report provides an overview of the
Commonwealth Charter initiative,
with particular attention paid to
what the legislation will mean to
and its employees.
Lays Out Details of Commonwealth Charter Proposal
By Dan Heuchert
If the proposed legislation is approved, current U.Va. faculty
and staff will continue to receive the same — or perhaps increased — pay and benefits,
but may be able to opt into additional retirement plan options.
Board of Visitors will regain the exclusive right to set tuition
and issue bonds, and
the University will no longer have to seek state approval for building
projects. University revenues will remain in Charlottesville,
rather than being deposited
into state coffers and re-appropriated back to the University.
In exchange, the three universities pledge to forego some,
but not all, of their state appropriations. The funds thus
freed up could be reinvested in
non-chartered institutions, University
President John T. Casteen III suggested
at a media briefing held Sept. 9 in the Rotunda.
we’re proposing is not revolutionary,” Casteen said. Even at
U.Va.’s founding, Thomas Jefferson anticipated that the state would not
be able to provide the resources needed to support the institution, so he sought
other funding sources, Casteen said. “He was the University’s first
proposal goes before the state’s General Assembly in January.
If approved, the three universities will then formulate their
own charter agreements with
the state before receiving final sign-off from the governor.
If all goes smoothly, the earliest a charter could take effect
would be July 1, 2005.
and Leonard W. Sandridge, executive
vice president and chief operating
officer, stressed that U.Va. would remain a public school, committed
to a public mission.
The chartering initiative is “anything but an attempt to become a private
institution,” Casteen said.
would maintain its current 67 percent ratio of in-state enrollment.
tuition would likely gradually increase toward a market rate,
all three universities are committed to maintaining access for
Casteen said. Earlier this year, the University unveiled its“
Access UVa” financial-aid plan, which caps or eliminates
student loans for qualifying
According to the legislative proposal and a template for a
possible charter agreement, U.Va. employees would technically
being “state employees” to “public
employees,” though there is little difference. They would retain many of
the rights and obligations of state employees, and they would still be able to
participate in the state grievance system and the Virginia Retirement System.
Health care and other insurance benefits would not change, although new employees
hired after the charter’s effective date may be required to pick up a greater
portion of their premiums.
Employees of the Medical
Center, which received similar codified
autonomy from the state eight years ago, would not be affected
by the charter
In fact, classified employees stand to gain from charter
status, Casteen said. Though U.Va. has been able to offer
increases, it has lacked the authority to offer similar
increases for classified staff.
Under the charter plan, U.Va. would have the freedom to
set its own compensation levels for classified employees
“It’s in our best interests to do the best we can for our employees,” Sandridge
said after the media briefing. “We have every incentive to make sure they
are compensated appropriately to the extent of our ability, in a market-appropriate
U.Va.’s ability to control its own tuition is “vitally important” to
the charter proposal, Sandridge said. Though current state law delegates that
authority to the boards of visitors at public schools of higher education in
Virginia, in practice, the Commonwealth’s governors and legislators have
often overridden that authority and mandated freezes, and occasionally rollbacks,
The charter proposals would combine state appropriations
and tuition to meet the state-calculated “cost of education.” The amount of tuition increase
necessary to meet that figure, then, would depend upon the state contribution,
as well as market factors, Sandridge said. He anticipated that tuition would
increase by an average of less than 10 percent annually over the next five years.
By its own standards, the state’s $365 million appropriation to U.Va. is
$39.3 million short of its obligations. Similarly, Virginia Tech faces a $34.3
million shortfall, and William & Mary, a $15.2 million deficit.
By agreeing to a reduced state appropriation, the
universities estimate that $13.8 million annually
would be available
for investing in the
other public colleges, universities and community colleges.
The three universities would also agree to enroll
a combined 2,450 new and transfer students from
to a fact sheet.
Another key component of the proposal is the
ability to issue bonds and forego state approval
Currently, the state issues bonds, and the legislature
must approve all capital projects. By localizing
control of the
and planning process, the
University could speed projects to completion
in as much as 25 percent less time, Sandridge
This could allow universities to build
additional research facilities more
quickly and provide
a major economic
benefit to the Commonwealth,
to a “brain-based economy,” Casteen said.
Casteen stressed that the three universities
making the proposal have remained successful
to their national
despite a lack
of support from
elements to move into the top 15 of national
universities are largely already in place,” he said. “The
chief missing element is the reliability of the funding
|Comparing the Cost of Education
State Funding Policy Targets and Fiscal
Year 2004-2005 Educational and General
Funds Operating Budgets
|* Excludes additional allocation for
student financial assistance. Cost of
education reflects fiscal year 2003-2004
estimates prior to any updates for fiscal
year 2004-2005 changes in salaries, enrollment
and other factors.
What is a Chartered University? Will faculty and classified
staff remain state employees?
... Below are answers
to employees’ frequently
Q: What is a Chartered University/College?
A: A Chartered University is a political subdivision of the
Commonwealth accountable to the citizens. Currently, universities
are state agencies, like the Department
of Transportation or the Department of Taxation. Chartered University legislation
proposes a new relation-ship with the Commonwealth built on increased operating
autonomy for the Chartered University/College. As a public body, a Chartered
University/College would be similar to an authority or municipality in that
all of its authorities are created and delegated in the Charter granted to
it by the Commonwealth of Virginia. Similar public bodies are cities, towns,
Q: Would faculty and classified staff remain state employees?
A: Any person who works for the Commonwealth is a “public employee.” Therefore,
any employee of a Chartered University or College would be a “public employee,” like
employees of the Virginia Lottery and the Virginia Retirement System. Chartered
University employees would not be considered “state employees” because
they would not work for a state agency.
So what’s the difference between
a “state employee” and “public employee”?
A: There is little difference. State employees and public employees
are both employed by the Commonwealth. Under the Code of Virginia,
have many of the same rights and obligations as employees of state
it is the intent of the chartered universities to ensure rights and
benefits through the legislative process.
Q: As a public employee what would the difference be for me in terms
of job security and benefits?
A: There wouldn’t be a difference. Chartered University legislation
would protect the current retirement system, life insurance and health
and grievance procedures.
Q: Will the state continue to pay my salary?
A: It’s important to understand that the state does not pay all of an employee’s
salary today. Currently, the state pays only a portion — about 34% — of
the salary of employees who are funded through state-funded positions
in the Academic Division. Tuition and other revenue make up the rest.
provide services to the University through student programs, athletics,
sponsored contracts and grants, and auxiliary operations receive no state
funding for their
salaries. There will be no change to the current process.
Q: So if the General Assembly didn’t
authorize a pay increase in any given year (as has happened several times
in the past), could University employees get
raises if we were a Chartered
A: U.Va., through the Board of Visitors, will have the
authority to approve compensation plans for all employees
for the first
would be able to establish a stable funding mechanism
for performance-based compensation for all its employees
to the faculty
merit system) that would be far
more resilient to fluctuations in state funding decisions
made year to year. If the Board authorized pay increases,
state agencies would not. Currently, however, the Board
cannot take that action for classified staff.
In October 2003, for example, the Board approved a
three-year commitment for adjusting faculty salaries
2006. This resulted
in an additional
1.75% merit-based faculty increase in 2003 and an
authorized 2% additional faculty increase in 2004. The Board wanted
to do the
same for classified
staff, but was
not allowed. As a Chartered University, the Board
have the authority to approve additional increases
Q: Would we still adhere to the State Grievance Policy?
A: Yes. A Chartered University would be bound by
the provisions, guidelines and regulations of
the State’s Grievance
Policy for classified staff.
Q: Will I still be able to participate in the
Virginia Retirement System (VRS)?
A: Yes. Chartered University legislation will
guarantee employees’ rights
to continue to participate in VRS at the same rate as state
agencies contribute on behalf of their employees. Additionally,
with the approval
of the Board of
Visitors, U.Va. could offer an optional defined contribution
retirement program for classified staff as we do now for
faculty and Medical Center
existing VRS faculty will not have an option of changing
from the VRS to a new defined contribution plan that may
be established by U.Va. in
the future since
they already have had the option of choosing from two retirement
plans, and this decision by statute is irrevocable.
Would Chartered University status impact my health care insurance—both
as a current employee and as a retiree?
A:No. Employees will continue to participate
in the U.Va. Health Plan as a current
Retirees 65 years of age and older will
continue to have the option of participating
Supplement Plan. The Retiree Health Care Credit will continue
Q: How will my group life insurance,
accidental death and dismemberment
term care and disability
I become a chartered
A: All Academic Division and College
at Wise employees who are on payroll
date of July
Medical Center employee benefits
are not affected by the change to Charter
If new benefits programs are introduced that are better for my family’s
needs, would I be able to transfer into them?
A: Yes. Employees who were on payroll
prior to the Charter effective
date of July 1,
to change to the new
U.Va. during a scheduled enrollment
Q: Will I continue to have the
same holidays, annual, and
A: The U.Va. leave system will
be the same on July 1, 2005,
as it is
and easy-to-understand leave
systems that would address
the more than 40
leave categories that
A more streamlined system
would benefit everyone. Just as the
Board of Visitors
faculty and Medical
Board would have
the authority to establish
leave policies for classified
Q: Will the Medical Center
Human Resources System
change on July
A: No. The Medical Center
Human Resources System
the same. The
Medical Center was
in more delegated
authority for personnel
and other areas.This
There are Academic Division
employees who work
for the Health System,
Medicine, the School
and the Claude
Moore Health Sciences
Library. They will
become Chartered University
Employees who work
for the Health Services
foundations are not
will not become Charter
Will U.Va.’s Faculty and Classified human resources
systems, policies or practices change on July 1, 2005?
A: Human resources
practices will remain
however, to examine
Chartered status will ensure
that U.Va. will
of an increasingly
passed by the
how will it
affect me as
July 1, 2005?
A: All faculty
job and compensation
leave programs will
policies and practices
Q: How would
in effect today
under the Chartered
adopt a set of
opportunities to review
So why is Chartered
and William & Mary?
policies and practices that would enhance
the overall quality of the work environment for all employees, including
instructional, research, and administrative/professional faculty
and classified staff. Rather than being directed by broad state mandates
that may or may not be beneficial to institutions of higher education,
future changes would be made by the university and its employees, who can
give greater consideration to local issues and local needs. Faculty and
staff would have more opportunities to have input in those issues that
Q: Why is Chartered University legislation necessary?
A: Virginia’s colleges and universities have endured significant under-funding
for more than a decade. The proposed Chartered status will provide the colleges
and universities that qualify with increased flexibility to develop and use revenues
to ensure educational quality, as well as provide the opportunity for each institution
to further advance its mission and grow.
Are Virginia Tech, U.Va., and the College of William & Mary the
only schools eligible for Charter status?
three schools are proposing the legislation, but the status will be available
any school able to meet the established criteria. These schools have
the revenue capacity, asset base and more than a decade of experience
personnel management (decentralization) to qualify them to operate under
a new partnership with the state. In fact, a number of practices initiated
institutions under decentralization have now been adopted statewide and
proven successful. For more information about decentralization at U.Va.
look at “Supporting
Documents” on the Charter Web site at www.virginia.edu/chartereduniversities/.
Why is this an advantage for the Commonwealth of Virginia?
A: Chartered school status will enable the institutions to generate
their own revenues while reducing their financial dependence on the
is the intention of the Charter institutions that the Commonwealth
would redirect these savings to other higher education institutions
to fund higher
education priorities such as enrollment growth and financial aid.
It is to the
Commonwealth’s advantage if its colleges and universities are
able to become stronger and meet the increasing demands of its
students. As more nimble and responsive institutions, we would be
better able to address the Commonwealth’s goals to broaden accessibility, accommodate
community college transfers, and increase academic research.
Q: Will a Chartered school still have access to state monies?
A: The universities will continue to receive general fund appropriations
but at a reduced level of growth than we would traditionally
expect. Chartered schools will continue to receive monies for faculty
aid, capital projects, maintenance reserve, the equipment trust
fund, critical initiatives through the budget amendment process,
Q: Is Chartered University or College status another word for
A: No! Chartered schools would be political subdivisions of the
Commonwealth. Chartered University employees would continue
to be public employees,
employed by a public university.
simply is a new operating framework giving increased autonomy to any
school that applies and qualifies for chartered status.
maintain full accountability to the Commonwealth, adhere
performance and accountability measures – including new program approvals,
and continue the commitment to meet certain management standards as determined
by the Commonwealth.
Q: Why is it necessary for the Boards of Visitors to have
the authority to set tuition?
A: Under statute, boards of visitors have always had the
authority to set tuition; however, in the mid-1990s the
state-mandated tuition rollbacks and consecutive years
of tuition freezes. As a result,
at U.Va. actually paid less tuition in 2002-2003 than
students were paying
back in 1995-1996. We believe that each school’s board of visitors is in the
best position to set tuition and raise the necessary revenue to run their own
school. The board is the governing body closest to the needs of the institution
and the ability of the students to pay. Over the long run this will stabilize
university revenue and the cost to students, adding a measure of predictability.
Q: Will tuition at U.Va. go up?
A: Tuition generally goes up by some amount each year
to help fund cost increases. The 2004 General Assembly
it will seek
to cover at
least 67 percent of the “cost of education” for in-state students, defined
as fully funding “base adequacy” and full funding of the 60th percentile
of an institution’s benchmarks for faculty salaries. Students and their
families are asked to pay the balance.
To fully fund our current cost of education, it is
estimated that U.Va. would require an additional
$39 million per
Tuition increases will depend on the amount of tax
support we receive from the state to fund the cost
the cost of education will be closed over a five-year
Q: How will students and their families be assured
education remains affordable at the Chartered
A: At U.Va., we never talk about tuition increases
without also talking about financial aid and
access to higher
assuring access for students who might otherwise
be unable to afford the cost of their
education. Tuition increases will be accompanied
by need-based financial aid awarded under Access
Approved in February
2004, Access UVa
is a bold and
ambitious financial aid program that will keep
higher education affordable not only for the
lowest-income students, but
also for middle-income
For more information about Access U.Va. visit
seeks to reassure wary employees
Leonard W. Sandridge, the University’s executive
vice president and chief
operating officer, faced aggressive questioning Sept. 13 as he sought
to explain the Commonwealth
Charter Universities Initiative to approximately
165 faculty and staff members. The occasion was a briefing held in the
auditorium of the new Harrison Institute/Small Special Collections Library.
Five additional briefings are planned. The next is set for Sept. 21
at 10 a.m. at the same site.
responds to other questions:
University’s matching contributions to retirement plans
would be unaffected.
• In response to concerns raised by history professor Jeffrey Rossman,
Sandridge said that had the charter plans been in place during
the most recent state budget crisis, faculty would likely have
received merit increases in the three years their salaries were
frozen by the state. “This is what charter is all about,” he
said. “The University has the will and resources — if
it is allowed to control its pricing policy — to address
It is too early to tell whether the charter proposal will allow
the University to extend benefits to the domestic partners of
employees, because there may be other legal obstacles. “I
think it is possible that [chartering] could give us more authority,” he
• Sandridge said he would check into whether the charter proposal
would allow the University to provide tuition waivers
for the children of faculty and staff
as a benefit.
• The proposal makes it neither more nor less likely that the
faculty and classified staff would be represented on
the Board of Visitors.
and members of the Staff Union of the University of Virginia, an independent
lobbying group affiliated with the AFL-CIO’s Communications
Workers of America, all expressed degrees of wariness over the
proposal and how it might affect their wages, benefits and working conditions — which
is understandable, Sandridge said.
I were a classified employee, I would be asking the same questions as
you are,” he said. However, most workers would be better off under
the proposed charter system than with the current degree of state control,
Sandridge stressed that jobs, compensation, health care coverage,
retirement plans, grievance procedures, annual and sick leave,
group life insurance,
long-term care and disability insurance, severance policy and participation
in the Virginia Retirement System would all remain unchanged for
current employees. New retirement programs may be formulated for future
employees, and current employees would have the option to participate
the charter legislation would give the University authority to offer
increases to its classified staff in years in which the state
cannot afford to do so, he said.
one speaker suggested that Medical
Center employees have been worse off
since the center was granted codified
autonomy in 1996, Sandridge disagreed. While he acknowledged
that not every
employee’s experience was positive, he
asserted that compensation has increased every year — even
in years in which the state did not grant raises to classified
employees in the Academic Division. Turnover has declined,
and the flexibility to offer increased wages has allowed
to remedy a nursing
shortage that had once forced the closure of some beds,
Audience members questioned Sandridge closely about whether
his assurances were written into the legislation. He sought
it was in U.Va.’s best interests to treat its employees
not imagine any reason why an institution that relies so heavily on its
people would be foolish enough to tinker with the salaries of our
employees,” he said. “We are as good as our people.”
Similarly, in response to a question about the fate of
general faculty members under the charter proposal, Sandridge
there is no special
provision addressing general faculty specifically, but
stated that the University would continue the state’s recent trend of treating general
faculty as it does teaching faculty. “I can’t imagine any reason” to
treat general faculty differently, he said.