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Letter to Alumni and Friends of the University

October 2002

This year's fall letter has been a challenge to write. The mood on Grounds is a complex story because we have the combination of what may be the strongest entering class ever, a serious regional drought, a record year for alumni and donor support, and the worst state budget crisis in Virginia's history. This letter has to be shorter than usual because we are trying to contain costs, but let me try to cover the major issues. Please write if you want more information—my email address is jtc@virginia.edu.

Let me begin with notes on faculty and student honors. Janine Jagger, the Becton Dickenson Professor of Health Care Safety in Medicine, has been awarded a John D. and Catherine T. MacArthur Foundation Fellowship this year. Chemistry professor Brooks Pate (College, 1987) won a similar award last year.

Rare, and awarded only to persons who have not sought them, these so-called "genius awards" are intended to be "a reminder of the importance of the creative individual in American society" and to support still greater accomplishments on the part of the tiny number recognized each year. That two of our own have been so recognized perhaps underscores the validity today of what Mr. Jefferson called "useful science" when he first described the University's proper business.

Janine Jagger is an epidemiologist. She earned her Ph.D. here in 1987, and then founded our International Health Care Worker Safety Center, which she still directs. In the early 1980s, Janine was studying how air bags might prevent brain injuries. At the time, HIV infections from accidental sticks with contaminated needles were identified as a major threat to health care workers, and Janine redirected her work. Unlike others who studied this problem, Janine saw that better needles had to be the key to stemming the spread of blood-born infections among health care workers.

Scientific revolutions often have a normative shape. Before Janine Jagger began studying health care implements, experts believed that worker negligence, not poorly designed needles, caused most needle-stick exposures to HIV/AIDS. Yet Janine, expert in one science—injury control, confronted a problem in another—infection control, and made an imaginative leap beyond all previous thinking about the problem.

Janine and her colleagues eventually gained patents on six safety needle devices, devices that resheath the needle within a syringe in order to protect the person administering an injection against a blood-borne infection. These patents were honored with a 1988 Distinguished Inventor Award by Intellectual Property Owners, Inc. The U.S. Patent and Trademark Office gave them a central place in its 1990 Bicentennial Exhibit.

In a different arena, students from Engineering and Architecture, working with faculty from both schools, have researched how to design and build more efficient, environmentally sustainable houses. During the summer, they built a self-sufficient, 800-square-foot house, powered by solar energy. Their house recently won first place as a design and second place overall in the 2002 Solar Decathlon, a competition sponsored by the U.S. Department of Energy. A nine-year-old guest at Carr's Hill told me that she saw it displayed on the Mall in Washington, and that of all the houses displayed it was the only one she wanted to look at, "much less to live in." It will become a rental home for a faculty family. Additional information appears at http://www.faculty.virginia.edu/solarhome/.

The budget crisis. Ironically, most news in Virginia this year has not been about brilliant scholars who reshape our world or students who conceive new ways to live in it, but instead about the most dramatic and serious budget crisis in Virginia's history. Most states face revenue shortfalls this year. Several have reduced allotments, including allotments to their public colleges. In this sense, Virginia's problems resemble problems elsewhere.

At the same time, Virginia's problems predate the collapse of the technology bubble or the economic crisis that followed September 11, 2001. First, Virginia assumed financial responsibility for much of local government in 1998 when it began phasing out an unpopular local property tax on automobiles. For the first few years, the massive surplus that Governor Allen left behind as he finished his term disguised the real cost of this buy-out. Then, as the surplus dissipated and anticipated state revenues failed to materialize, this new cost (now said to approach $1 billion per year) became a massive, unfunded state obligation. Politicians argue about the rate of overspending in 1998-2001, but estimates that seem valid to me suggest that real state revenues grew by no more than about 10% while state expenditures grew by about 37%. It was inevitable that the state would sooner or later hit the wall.

Second, Virginia delayed alerting the public about its revenue shortfalls for so long that by late 2001 the state had slipped into an unrecognized deficit: revenues were simply not meeting expenditures. The new Governor, Mark Warner, and the General Assembly addressed the problems that they knew early in the third fiscal quarter, when we and most other agencies absorbed budget cuts. Our first reduction was $4.8 million on a former General Fund (i.e., tax) appropriation of $166.3 million.

Third, and perhaps most serious of all, as the national recession cut state revenues the state's revenue prediction model failed to predict state income accurately. Accordingly, quarter-after-quarter the state has had to reduce spending. The shortfall for the biennium that began on July 1 has grown to some $6 billion or ca. 15% of the state's predicted revenue, and the Governor and General Assembly have had to make additional, deep cuts in allotments.

For the University, this will mean losing (by the end of the biennium) cumulative funds now estimated at $98.2 million since 2001-02 ($51.6 million for 2003-04 alone). Tax support will fall to $116.4 million from an original appropriation of $166.3 million. (The 2002-03 reduced state appropriation of $125.9 million represents 9% of the 2002-03 total University revenues.) So far as I know, no state has ever furnished such a small proportion of its flagship university's budget as will remain after these cuts (perhaps as little as 7%) and still claimed that university as a public institution. I wish I could tell you that this is the end of the problem. In truth, I cannot. As I write, state revenues continue to deteriorate.

Inverting Dickens' phrase, these are the worst of times and the best of times. The worst in that state support has now declined so sharply that no one is predicting when recovery may come. In a single year, the state took away no less than one-quarter of its former appropriation per in-state student. Over three years, the state predicts that it will take no less than 31% of the original 2001-02 appropriation. As of 2001-02, the most recent year for which we have statistics, UNC had $24,178 in state money for each in-state student at Chapel Hill. The University of Michigan had $17,082 per in-state student. The University of California had $22,309 at Berkeley and $21,888 at Los Angeles. These are our nearest peer institutions, our competitors, if you will. Our state appropriation per in-state student for 2001-02 was $12,695. It is now no more than $9,711, and it will drop to $8,860 next year.

Yet these are also better times than one might guess. In 1999, the state reduced and capped in-state tuition at all of the public colleges and then gave us tax dollars equivalent to the tuition reduction. This year, the state took back this replacement money, and more, and left us with a budget in which the sum of the state appropriation per in-state student and in-state tuition amounted to no more than 78.6% of the actual cost of education, but it also restored to the Board of Visitors its statutory authority to set tuition. The Board added about 9% at the start of this year, bringing the charge back to roughly its level in 1993, and the sum of tax and tuition support per in-state student to 74.5% of the total cost of education. As all of Virginia's boards are, ours is deliberating an unusual mid-year surcharge to replace about half of what the Governor has had to take from us in the last several days. The Board's plan includes financial aid increases for all students with unmet need.

Other factors make the times better also. Despite understandable alarm about jobs and salaries and support moneys, faculty and staff members have addressed these crises with remarkable wisdom and confidence. I get a few angry e-mails when the latest reduction gets reported in the news, and the rhetoric sometimes grows hot. Probably it should: We hire the best people in the market; we demand much of them; they have every reason to be alarmed. Yet faculty forums have addressed these issues with dignity and purpose. Faculty and staff views coincide closely with the Board's vision and my own of the mandate to sustain quality despite the losses.

Perhaps more surprising, students generally have favored the mid-year surcharge as the only available way to sustain quality in this strange new environment. The Cavalier Daily endorsed the concept. Student leaders have spoken for it in their conversations with the Board.

Parents, many of whom have sent advice and expressions of concern in e-mails and letters, have almost universally urged us to do what we must to maintain academic quality. Several have applauded the Board's determination to provide adequate financial aid, and I join with them in gratitude for this. So the University's people are standing fast in a hard time.

I have been very much aware of you and your backing in this hard time. Your support for the capital campaign that concluded in December 2000 and your more recent support provide the chief resource that sustains the University now. Many of you are engaged with us in the VA 2020 planning and other initiatives to make the University even more self-sufficient in the future. More than a few have remarked to me that our time is not unlike Mr. Jefferson's time in that we must build a strong, viable base of private support even as we advocate sound business practices for the state. This was not easy for Mr. Jefferson. It is not easy for us. It is, however, essential to the public good.

A personal appeal to persons who vote in Virginia. The General Obligation Bond proposal on the November ballot is critical to us and to all of Virginia's public colleges and universities. With the exception of the GOB referendum approved by the voters in 1992, the state has not provided regular, timely financial support for new buildings, remodeling, or even maintenance for some 12 years. This year's proposal, only the third such proposal in the state's history, was passed by overwhelming margins in both the House of Delegates and the Senate. The Governor, Lieutenant Governor, and Attorney General have stumped the state in behalf of it, and so also have leaders of both Houses and both political parties.

For higher education generally, the GOB proposal offers the chance to begin restoring core facilities following the neglect that began in the 1990-92 recession and then continued in 10 consecutive state budgets. It is also the means to begin providing for the 35,000 or so new Virginia students who are headed into the colleges in the next half-dozen years. The measure is particularly important here because it provides some $68 million for infrastructure projects (heating and cooling facilities, restoration of decaying buildings, restoration of Cocke Hall, etc.) and new construction, including space for medical research, for nanotechnology, and for the College. Donors have been generous beyond anyone's expectations since the hard years began in 1990. Yet certain obligations, including upkeep of core facilities that the state built, really do belong to the state.

In the current interest market, where state bonds carry premiums that often fall below the rate of inflation, these bonds make excellent sense. Even assuming no growth in the state's economy, the estimated pay-back cost amounts to only .08% of the state's General Fund revenue. Anyone who has refinanced a mortgage or consolidated student loans will know that this is an uncommonly good deal.

So I ask you to vote, and to urge your friends to do so. No serious opposition to this GOB has appeared. So far, the state's most prominent newspapers and business leaders have favored passage. At the same time, there is no hotly contested statewide election on the ballot this year, and the experts predict light voter turn-out. In Northern Virginia and Tidewater, local ballots include somewhat more controversial proposals for regional taxation for roads. I am concerned that some voters may be negative on these other issues, and thus negative on everything, and that others may simply find the November ballot, which is said to be complicated, too confusing to sort out. The University and our Commonwealth need the GOB this year. Please vote, and help us pass it.

In closing, let me ask you to join me in expressing appreciation to one whose contributions here have been enormous and whom few know to thank. Mr. Jefferson's title here was rector, not president. He was the chair of our original Board of Visitors. The job is perhaps the most demanding one imaginable because it involves walking each day in the track left by an authentic American genius, straddling the public and the private elements that make this a great university, and presiding over the deliberations of a board whose responsibilities are genuinely massive. Board members have all of the responsibilities of any corporate board along with all of the responsibilities of public service, and at the center of this circle the Rector presides.

John P. Ackerly III (College 1957, Law 1960) was elected rector on March 27, 1998. He will complete his statutory term this spring. Serving with distinction, he has led the Board through complex issues, has immersed himself in the University's culture and mission, and has participated along with his wife Mary in hundreds of events here and elsewhere for students, faculty, staff, alumni, parents, and others who care about the University. A man of gentle spirit, high standards, and great decency, he has helped unify and hold together our University during enormous change. We are all in his debt.

Sincerely,

John T. Casteen III
President