Sept. 17-30, 2004
Back Issues
A New Formula for Higher Education
Alumnus Trice assists diversity commission
Medical Center budget healthy, operating board told
Civil engineering professor drives for safer highways
U.Va. in London
Symphony celebrates 30th anniversary
Bob Woodward to lecture about Iraq war motives
Engineer envisions vehicles of the future


A New Formula for Higher Education

Comparing the Cost of Education
Frequently Asked Questions
Sandridge seeks to reassure wary employees
Listen 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 financial aid
programs for Virginia undergraduates.

While Commonwealth Charter agreements will not be
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 U.Va. and its employees.

University 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.

The 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 the state’s non-chartered institutions, University President John T. Casteen III suggested at a media briefing held Sept. 9 in the Rotunda.

“What 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 fund-raiser.”

The 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.

Casteen 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.

U.Va. would maintain its current 67 percent ratio of in-state enrollment. Though tuition would likely gradually increase toward a market rate, all three universities are committed to maintaining access for low- and middle-income students, Casteen said. Earlier this year, the University unveiled its“ Access UVa” financial-aid plan, which caps or eliminates student loans for qualifying students.

According to the legislative proposal and a template for a possible charter agreement, U.Va. employees would technically go from 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 plan.

In fact, classified employees stand to gain from charter status, Casteen said. Though U.Va. has been able to offer faculty members privately funded salary 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 as well.

“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 fashion.”

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, of tuition.

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 state’s other public colleges, universities and community colleges.

The three universities would also agree to enroll a combined 2,450 new and transfer students from Virginia, according to a fact sheet.

Another key component of the proposal is the ability to issue bonds and forego state approval of capital projects, Casteen said.

Currently, the state issues bonds, and the legislature must approve all capital projects. By localizing control of the financing and planning process, the University could speed projects to completion in as much as 25 percent less time, Sandridge estimated.

This could allow universities to build additional research facilities more quickly and provide a major economic benefit to the Commonwealth, by speeding the transition to a “brain-based economy,” Casteen said.

Casteen stressed that the three universities making the proposal have remained successful relative to their national peers despite a lack of support from the state.

“The 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 stream.”

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.

FAQs: What is a Chartered University? Will faculty and classified staff remain state employees? ... Below are answers to employees’ frequently asked questions

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, and authorities.

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.

Q: 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, public employees have many of the same rights and obligations as employees of state agencies. Further, 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 care programs, 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. Employees who 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 University?

A: U.Va., through the Board of Visitors, will have the authority to approve compensation plans for all employees for the first time. As a Chartered University, U.Va. would be able to establish a stable funding mechanism for performance-based compensation for all its employees (similar 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, employees could get a raise when other 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 through November 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 would have the authority to approve additional increases for classified staff.

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 employees. However, 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.

Q: 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 employee and as a retiree under 65 years of age.
Retirees 65 years of age and older will continue to have the option of participating in the state’s Medicare Supplement Plan. The Retiree Health Care Credit will continue as well.

Q: How will my group life insurance, accidental death and dismemberment insurance, long term care and disability insurance differ when I become a chartered employee?

A: All Academic Division and College at Wise employees who are on payroll prior to the Charter effective date of July 1, 2005, will maintain comparable benefits. Medical Center employee benefits are not affected by the change to Charter status.

Q: 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, 2005, will have the option to change to the new programs offered by U.Va. during a scheduled enrollment period.

Q: Will I continue to have the same holidays, annual, and sick leave?

A: The U.Va. leave system will be the same on July 1, 2005, as it is today. However, the Charter legislation gives institutions the authority to create more flexible and easy-to-understand leave systems that would address specific University and employee needs instead of the more than 40 leave categories that exist today. A more streamlined system would benefit everyone. Just as the Board of Visitors now approves faculty and Medical Center leave policies, the Board would have the authority to establish leave policies for classified staff.

Q: Will the Medical Center Human Resources System change on July 1, 2005?

A: No. The Medical Center Human Resources System will remain the same. The Medical Center was granted codified autonomy status in 1996, which resulted in more delegated authority for personnel and other areas.This will not change.

There are Academic Division employees who work for the Health System, which comprises the School of Medicine, the School of Nursing, and the Claude Moore Health Sciences Library. They will become Chartered University employees.

Employees who work for the Health Services Foundation and affiliated university foundations are not University employees, and they will not become Charter employees.

Q: Will U.Va.’s Faculty and Classified human resources systems, policies or practices change on July 1, 2005?

A: Human resources policies and practices will remain the same. We intend, however, to examine areas where our human resource policies could be improved. Chartered status will ensure that U.Va. will remain competitive in the recruitment and retention of an increasingly diverse workforce with unique demands and needs.

Q:If Chartered University legislation is passed by the next General Assembly session, how will it affect me as an employee on July 1, 2005?

A: All faculty and staff will continue to have the same job and compensation as they did prior to the passage of Chartered University legislation. Their insurance coverage, retirement plan, and annual and sick leave programs will all remain the same. U.Va. will continue to administer hiring, classification, tenure and promotion policies and practices for faculty and staff. The current compensation and classification, benefits, leave and employee relations programs and policies will remain in place.

Q: How would the human resource system in effect today differ from the human resource system under the Chartered University agreement?

A: The chartered universities would adopt a set of human resource policies and programs that are generally consistent with the principal features of the current human resource system, but with reasonable exceptions and variations to allow sufficient flexibility. A chartered university could adopt best practices in a variety of human resources policies and programs more in line with other universities. These changes would allow the institution to address specific components of the human resource system that are unique to a university setting (i.e., academic calendar) but that may not be applicable to other state agencies such as the Department of Taxation. Any changes would be carefully studied, and faculty and staff would have opportunities to review and discuss these.

Q: So why is Chartered Univ- ersity legislation good for employees of U.Va., Virginia Tech and William & Mary?

A:Because as a Chartered University, each school would have the authority to propose and implement new compensation and benefits programs, or improve existing 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 affect them.

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.

Q: Are Virginia Tech, U.Va., and the College of William & Mary the only schools eligible for Charter status?

A:These three schools are proposing the legislation, but the status will be available to any school able to meet the established criteria. These schools have the revenue capacity, asset base and more than a decade of experience in local fiscal and personnel management (decentralization) to qualify them to operate under a new partnership with the state. In fact, a number of practices initiated by these 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

Q: 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 Commonwealth. It is the intention of the Charter institutions that the Commonwealth would redirect these savings to other higher education institutions in Virginia 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 and staff salaries, student financial aid, capital projects, maintenance reserve, the equipment trust fund, critical initiatives through the budget amendment process, etc.

Q: Is Chartered University or College status another word for privatization?

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.

It simply is a new operating framework giving increased autonomy to any school that applies and qualifies for chartered status. Chartered schools would maintain full accountability to the Commonwealth, adhere to 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 General Assembly intervened with state-mandated tuition rollbacks and consecutive years of tuition freezes. As a result, students 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 session indicated that 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 year.

Tuition increases will depend on the amount of tax support we receive from the state to fund the cost of education. The gap between state appropriations and the cost of education will be closed over a five-year phase-in period.

Q: How will students and their families be assured education remains affordable at the Chartered Universities/Colleges?

A: At U.Va., we never talk about tuition increases without also talking about financial aid and access to higher education. U.Va. is deeply committed to 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 UVa. 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 families.
For more information about Access U.Va. visit

Sandridge seeks to reassure wary employees

By Dan Heuchert

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.

Sandridge responds to other questions:

• The 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 these issues.”

• 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 said.

• 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.

Faculty, staff 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.

“If 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, he added.

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 in them, he said.

Furthermore, the charter legislation would give the University authority to offer salary increases to its classified staff in years in which the state cannot afford to do so, he said.

When 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 the Medical Center to remedy a nursing shortage that had once forced the closure of some beds, he said.

Audience members questioned Sandridge closely about whether his assurances were written into the legislation. He sought to reassure them that it was in U.Va.’s best interests to treat its employees fairly.

“I could 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 said 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.




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