Finance OKs $1.97B budget

The Board of Visitors’ Finance Committee approved the 2006-2007 University budget on May 16. Overall, University spending will be up 6.7 percent to $1.97 billion. Academic Division spending will increase 6 percent to $1.07 billion; Medical Center spending will rise 7.4 percent to $866 million; and U.Va.-Wise will see an 11.7 percent bump to $30.4 million. The budget must be approved by the full board at its June meeting, and will take effect July 1, the beginning of the University’s fiscal year.

Administrators felt secure about their numbers, despite “the big question
mark in the budget” at the time of the meeting — the General Assembly’s failure so far to pass a state budget for the 2006-2007 fiscal year. [At press time, a budget still hadn’t been passed.] “I’m confident that the budget I’m bringing to you is sustainable regardless of what happens at the General Assembly,” said Leonard W. Sandridge, executive vice president and chief operating officer. The new budget allows for state funding at the low end of the competing state budget proposals, making state funding about 8.5 percent of the total, similar to the proportion in the past two fiscal years, said Colette Sheehy, vice president for management and budget.

“I’m confident that the budget I’m bringing to you is sustainable regardless of what happens at the General Assembly,” said Leonard W. Sandridge, executive vice president and chief operating officer, referring to the General Assembly’s failure thus far to pass a state budget for the 2006-2007 fiscal year. The new University budget allows for state funding at the low end of the competing state budget proposals.

Health System patient revenue is the largest source of University income, accounting for 44.1 percent of the University’s proected total income in 2006-
2007. Tuition and fees will be the second largest revenue source (at 15.5 percent of the budget), edging past the value of grants and contracts (at 14.1 percent). The rest of projected revenue will come from state taxpayers (8.5 percent), endowment income and gifts (7.8 percent) and auxiliary enterprises (7.5 percent), with other sources providing 2.5 percent.

Sandridge said that he expects Gov. Tim Kaine to sign the 2005 Higher Education Restructuring Act in the coming days. [Kaine signed the bill on May 19.] To be implemented on July 1, the plan will provide new institutional flexibility. Sandridge predicted that U.Va. would look back on 2006 as an historic year that started a new era here. [Inside UVA will report on the Restructuring Act in its June 16 issue.]

The new budget fully funds the four priorities set by the board: deferred maintenance; the Access UVA financial aid program; competitive compensation; and research enhancement. For the second year of a 10-year plan, spending on deferred infrastructure maintenance will rise to $3 million, double last year’s level. AccessUVa funding will be $16.2 million, up $3.2 million from last year, and only about $4 million shy of the projected full implementation cost of $20 million.

In 2002, the board set a five-year goal of raising the average faculty compensation into the top 20 among the 61 peer institutions of the American Association of Universities. U.Va.’s steady rise in the rankings, from 30th in 2002-2003 to 23rd in 2004-2005, will continue in the coming year, when the ranking will rise to 22nd with the new budget of $8.9 million for faculty salary supplements, up $1.8 million from last year. The gap between U.Va.’s average faculty salary and the average at the 19th ranked institution, will be cut in half, from $2,900 this year to within $1,400 next year, thanks to a 1 percent increase in faculty salaries on top of the expected 4 percent increase from the state. Also, the board approved $250,000 for classified staff inband
adjustments on the basis of merit or market rates.

An additional $6 million is budgeted for the hiring of the second and third of 10 national academies-level researchers, to be hired by the University during a five-year plan. The first scientist, electrical engineer Joe C. Campbell, was hired in June 2005. The board also increased the base operating budget for the Virginia Quarterly Review by $117,000. VQR shook up the magazine world with a David-versus-Goliath win of two national “Ellie” magazine awards on May 9.

NEW DIVERSITY COMMUNICATIONS PLAN

William Harvey, vice president and chief officer for diversity and equity, unveiled a new diversity communications strategy that includes the University hosting an annual“ Symposium on Race and Society.” The inaugural symposium this fall will explore: “In Katrina’s Wake: Racial Implications of the New Orleans Disaster.”

William Harvey, vice president and chief officer for diversity and equity, unveiled a new diversity communications strategy that includes two new programs. Beginning this Nov. 2-4, the University will host an annual “Symposium on Race and Society.” The inaugural symposium will explore:“In Katrina’s Wake: Racial Implications of the New Orleans Disaster.”

Possible future topics include national health disparities and the achievement gap. U.Va. will also sponsor a first-of-its-kind annual national survey of high school students on “how the world looks” regarding issues of diversity and opportunity.

Recognizing the success of the studentsponsored“ De-Stereotype Day” that drew more than 1,000 participants on April 26, Harvey hopes to make it an annual event, remaining student-sponsored.

CAPITAL CAMPAIGN ON TRACK

The Capital Campaign “is continuing to show very positive momentum,” said campaign chairman Gordon Rainey, explaining that unofficial commitments totaled $930 million at the end of April. The commitments officially “on the books” as of April 30 totaled $879.9 million, or 29.3 percent of the $3 billion campaign goal, which Robert Sweeney, senior vice president for evelopment
and public affairs, characterized as“ the largest campaign ever conceived by a public university … within the top five largest fundraising campaigns, not just in education, but anywhere.”

Reaching the target of $1 billion by the official kickoff on Sept. 30, 2006, will require raising $14.2 million per month, which is less than recent monthly yields, Rainey said.

UVIMCO GETS BIG RETURNS ON ENDOWMENT

For the fiscal year to date, from July 1, 2005, to April 30, 2006, endowment investments have produced an outstanding 17.1 percent annual return rate, Sandridge noted. But such enviable performance is nothing new for the University of Virginia Investment Management Co. (UVIMCO), which has averaged a 16.7 percent annual return over the three years prior to April 30,
2006, bringing the endowment’s value to $3.5 billion.