The University enters the 1996-97 year with a budget of almost $1 billion. We have been successful in building a financial base that is supported by a broad range of reliable revenues. Funding from Virginia taxpayers remains an important source of funds for the University. During 1996-97, state tax support represents over 13 percent of the total budget, including the Medical Center, and almost 22 percent of the academic division budget, the highest proportion in recent years. In the years ahead, we do not expect state support to represent the proportion of our budget that it did in the 1980s, in part because of the growth in other revenue sources.
At the same time, revenue generated by faculty through research grants and contacts for 1996-97, mostly from the federal government, will account for over 25 percent -- roughly one-quarter -- of the academic division budget, surpassing the proportion supported by state funds. We have actively pursued new collaborative ventures with business -- through our business parks, technology transfer, and research contracts -- that will produce additional support for academic programs.
The Campaign for the University of Virginia is a key element in creating the groundwork for future successes well into the new century. The many buildings rising on Grounds and the eminent faculty that have joined us in recent years are a tribute to the generosity and foresight of our alumni and friends.
We have taken care in managing our endowment, a key element in our long-term strategy to stabilize our financial resources. Our endowment reached a record $823 million at the end of fiscal year 1995-96, a rise of more than $100 million over the previous year. Although a portion of this increase is from gifts and transfers, approximately 85 percent of the increase can be credited to sound investment strategies. We have the fifth largest endowment of any public university in the country. We are grateful for the work of the Finance Committee of the Board of Visitors and of our treasurer's office in guiding our investments so prudently.
REDUCING COSTS AND STREAMLINING OPERATIONS
We have made substantial progress in redefining and sharpening our administrative functions and processes, reducing duplication of effort while creating an environment in which innovative approaches can be tested and deployed. In these efforts, we have benefited from the willingness of the Governor and the Virginia General Assembly to grant greater latitude in conducting administrative processes. This year, the state granted to the Board of Visitors on behalf of the Medical Center the authority to manage human resources, certain capital outlay projects, procurement, and leases and exempted the Medical Center from having to disclose in public meetings some kinds of competitively sensitive business information. The added flexibility is already aiding in the management of the Medical Center as it competes with other institutions in an environment shaped by managed care. Similar authority was granted to the entire University for administration of building projects and leases.
We also have enacted a number of our own improvements. This year, we saw the first fruits of the University's electronic forms project, which is designed to eliminate manual data entry, to place data entry closer to a transaction's original source, and to improve overall efficiency of administrative and academic units. Electronic forms technology will play a critical role in future University systems.
The savings in administrative costs we have achieved from these programs and others like them have allowed us to bolster our academic programs. For instance, our ability to hire former astronaut and alumna Kathryn Thornton was the direct result of cost reductions achieved in the administrative arena. Our employees have taken the lead in changing the way the University conducts its business.
There is, of course, much to be accomplished if we are to meet the challenges
of the new century and safeguard the University for our posterity. Our Grounds
master plan is being updated with a view to the University over the next fifty
years. Immediate financial challenges exist in the areas of faculty salaries,
student scholarships and fellowships, the delivery of health care, and
technology. We are confident that we are equal to the task. We will continue to
strengthen our programs, encourage greater institutional flexibility, operate
effectively, and embrace new opportunities to achieve leadership and excellence.
Go on to Financial Report Highlights
Return to President's Report Table of Contents