The Financial Report, 1993-94

Report of the Executive Vice President & Chief Financial Officer

We have witnessed remarkable changes this decade in higher education. The public demands that its universities, especially public institutions, adhere to the highest academic and administrative standards. We are held accountable - and rightfully so - for operating as efficiently and effectively as possible.

At the University of Virginia, we are finding new ways to serve more students while preserving the qualities that distinguish our academic programs. We must, first and foremost, teach well. We must quickly apply the discoveries of our laboratories to society's needs. Our Health Sciences Center must change the way it delivers health care. We are being asked, quite simply, to do more - and do it superbly - without the prospect of significant increases in resources.

We embrace this challenge wholeheartedly. We are responding by becoming more entrepreneurial and innovative, by building on our strengths, and by striving to meet the needs of our customers. We are selectively consolidating and eliminating services. We intend not merely to maintain, but to extend the excellence of our academic enterprise. Our ultimate goal is to reduce the average cost of a bachelor's degree.

Our strategies are detailed in "Targeting Excellence," a comprehensive plan for improving the efficiency and responsiveness of our academic and administrative services. Among the commitments made in the report are:

In making these changes, we begin with a number of critical assumptions. The University's commitment to top-quality programs will remain steadfast. Increases in tuition and fees will roughly equal the rate of inflation. We will continue to raise private and sponsored program funds to finance excellence in activities for which state appropriations cover only baselevel costs and to initiate programs for which state funding is unavailable.

Earlier this year, we proposed a plan for decentralization of state administrative processes designed to facilitate our ability to carry out these initiatives. In it, the University requested full authority to process all accounting and disbursements in Charlottesville. We asked for relief from various policies and procedures related to personnel. We want to operate a locally managed personnel system that is designed for the academic and health care environment, designed to reduce redundant administrative operations. Finally, we requested full decentralization in purchasing goods and services subject to the requirements of the Virginia Public Procurement Act. We estimate that we could save $500,000 and simplify our procedures significantly during the first year if we are granted authority to implement our proposal.

Even without these changes, we have made significant progress in streamlining our operations. In the last few years, we reduced the number of senior management positions and flattened management hierarchies, realizing savings of $800,000 annually. We eliminated duplication and reduced costs through consolidations, including combining the Health Sciences Center security department with the University police department and merging the Learning Needs and Evaluation Center with the University's student counseling center. Under a new value-improvement program, the Health Sciences Center has reduced staffing by almost six hundred persons through attrition in the past twelve months. The installation of a Grounds-wide computer network in all University buildings and student residences is nearing completion. We added more than 1,200 parking spaces in the past two years to respond to the needs of visitors and patients as well as students and staff.

In addition, we have looked critically at our academic programs with the goal, not simply of eliminating unnecessary programs, but of strengthening those in which we excel. Our decisions this year to absorb the Department of Rhetoric and Communication into other departments and to merge the McIntire Library and Clemons Library collections are examples of this process. Using the same criteria, we have begun restructuring the undergraduate computer science curriculum in the School of Engineering and Applied Science. The program, which now stresses early laboratory experience, is considered to be on the leading edge of such offerings for undergraduates in this country.

We are working cooperatively with other institutions to make our resources extend further. Beginning in September 1994, several Piedmont Virginia Community College evening classes now meet in University facilities and their physical education classes are being offered at Slaughter Recreation Center. We are now exploring ways to provide administrative services to Longwood College.

These changes not only make it possible for us to deliver the highest quality of service at a reasonable cost, they also strengthen the University's financial position. U.S. News & World Report ranks us the most efficient among the nation's top twenty-five academic institutions. Moody's recently upgraded the University's bond rating to AA1, making the University of Virginia one of only three public institutions in the nation with that premier rating. Alumni and friends continue to be important forces in sustaining our financial health. I am pleased to report that contributions from alumni and friends and good investment performance have produced an endowment that is worth more than $641 million.

We are grateful for the private and public support that has made the University a special place. We take our responsibility to alumni, friends, and the Commonwealth of Virginia very seriously. The University - and its future - belong to the citizens of Virginia and the nation. Only by working together can we create an institution ideally suited for leadership in the twenty-first century, an institution that can call itself "Mr. Jefferson's University."

Sincerely,

Leonard W. Sandridge
December 1, 1994

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