many years of debilitating state budget cuts to higher education
— including a combined $272.4 million reduction from three
leading Virginia universities over the past two years — the
presidents of those institutions have developed a proposal to establish
a new relationship with the state.
an innovative move designed to reduce pressure on the state budget
and to ensure the quality of higher education in the Commonwealth,
William & Mary, Virginia Tech and the University of Virginia
announced last week that they will ask the 2004 General Assembly
to enact the “Commonwealth Chartered Universities and Colleges
Act of 2004.” The legislation would create a process for chartering
state-assisted, public universities and colleges as political subdivisions
of the Commonwealth.
the new model, the state would limit its financial appropriations
to these universities to less than what would traditionally be expected.
In exchange, the universities would no longer be subject to certain
state personnel, procurement and capital-project regulations. These
two measures would promote substantial savings for both the state
and the institutions involved.
all recognize that the ongoing state budget crisis presents a serious
challenge to each university’s ability to maintain overall
institutional excellence,” said U.Va. President
John T. Casteen III. “For the past decade, we chose to view
the cuts pragmatically, using them to help determine what is essential
to our mission, to use what we have wisely and to find alternate
means to fund our core purposes.
have become adept at running lean, and have been rewarded in rankings
for being able to deliver great educations with limited resources.
But those accolades have not come without great sacrifice.”
together with William & Mary President Timothy J. Sullivan and
Virginia Tech President Charles Steger, recognizes the challenges
facing higher education in Virginia. Over the current two-year budget
cycle, 2002 through 2004, the Commonwealth cut $617 million in taxpayer
support from higher-education appropriations, including the combined
$272.4 million from U.Va. (a 29.7 percent reduction), Virginia Tech
(25 percent) and William & Mary (24 percent).
these universities have had to rely on private support to bolster
existing programs and to create new initiatives.
state has struggled for years to provide financial resources to
its colleges and universities: in 1985, funding for higher education
represented approximately 17 percent of the state’s general
fund budget; in 2004, only 10 percent. Given other competing demands
for state appropriations, the three presidents believe it will be
difficult for the state to find the resources to adequately fund
higher education. They are not alone in their assessment.
1998, the Joint Subcommittee on Higher Education Funding Policies
created minimum funding standards based on national norms to ensure
the competitiveness of Virginia’s colleges and universities.
Last September, SCHEV noted the state would need to give an additional
$399 million to meet those funding
goals and guidelines developed by the General Assembly, U.Va., Virginia
Tech and William & Mary have calculated what they need each
year to operate their educational programs and have discovered they
face a combined annual deficit of $145 million — exclusive
of unmet student financial aid — simply to meet operating
funding gap not only threatens to erode the quality of critical
programs that have taken decades to build, but further diminishes
the institutions’ ability to pay competitive salaries to faculty
and staff and adequately fund student financial aid.
Impact of partnership on staff and faculty The impact of this new
partnership on staff members of the three universities will be limited.
The proposal requires that each institution’s board of visitors
adopt regulations, policies and procedures that are consistent with
the Virginia Personnel Act. In addition, all current non-faculty
employees will be given the option to remain in the Virginia Retirement
System and their current health insurance plan.
fewer state regulations to contend with, the partnering universities
will be able to offer compensation and benefits to their employees
beyond those provided by the state. This will come as good news
to their staff and faculty members, who have not received a salary
increase in the past three years. While a 2.25 percent raise was
implemented for classified staff in November, the governor’s
budget does not call for another raise until November 2005.
summer, in a discussion on salaries, members of U.Va.’s Board
of Visitors expressed their concern over the board’s lack
of authority to implement raises for all employees. The board declared
its interest in seeing that all U.Va. employees — faculty
and classified staff — are fairly and competitively compensated.
In the fall, the board designated $250,000 for the rewards and recognition
program that was created, but never funded, by the state for classified
the mid- and late-1980s, the high level of state funding for colleges
and universities established the foundation for Virginia’s
exceptional system of higher education. This quality has been recognized
nationwide and confirmed by U.S. News & World Report, which
has ranked the University of Virginia the nation’s No. 1 public
university for four of the past seven years. A key to these continued
high rankings is the quality of U.Va.’s faculty.
attract and retain talented faculty, U.Va., like any college or
university, must provide adequate compensation and facilities. In
the late 1980s, the General Assembly established a policy of funding
faculty salaries at a level equal to the 60th percentile of salaries
paid at each college or university’s peer institutions nationwide.
However, this goal has been met only once at U.Va. in the past 12
state appropriations for faculty salaries at U.Va. only allow for
funding at the 27th percentile of its peer institutions. It is estimated
that the Commonwealth would need to spend an additional $111.5 million
per year for faculty salaries within the state to reach the 60th
percentile in 2004-05.
state simply has not been able to adequately fund our three universities
in order to sustain where they are today,” Casteen said.
ties to remain strong
partnership will by no means sever all ties to the state, as Steger,
Sullivan and Casteen adamantly point out. Each university would
remain a public institution with boards appointed by the Governor,
confirmed by the General Assembly and accountable to the state’s
citizens — just as they are now. Furthermore, the presidents
have proposed guidelines setting forth required regulations, policies
and procedures that would hold each school accountable for, among
other things, performance measures, audit reports and a strong commitment
to financial aid.
“No one is talking about becoming private,” Casteen
said. “We will always have a strong commitment to educating
the citizens of Virginia. It is our founding mission and one we
will never abandon.”
what each institution seeks is the flexibility to protect themselves
from irrevocable, long-term damage to the quality that lies at the
heart of their academic programs and reputations — especially
at a time when enrollment numbers are increasing (61,000 additional
students in the Commonwealth by 2010) and operating costs must rise
to keep pace with enrollment.
on tuition and financial aid
substantial financial increases from the Commonwealth, tuition can
be expected to rise, although by what amount, no one can yet say.
For one thing, no one knows what the upcoming state appropriation
will be. For another, “we never discuss tuition without also
discussing access and financial aid,” said Leonard W. Sandridge,
executive vice president and chief operating officer. “The
two always go hand-in-hand, and the University is committed to providing
access to students regardless of financial need.”
the past two years, University students and faculty groups have
supported tuition increases. However, over the past decade, the
state has implemented tuition rollbacks and consecutive years of
tuition freezes. As a result, 2003-04 tuition at U.Va. is actually
less than inflation-adjusted 1995-96 tuition. A look at state appropriations
per in-state student at each of the three partnering universities
also paints a clear picture of the state’s inability to adequately
fund higher education, especially when compared with several peer
universities around the country. (See chart below.)
advantage of the partnership’s legislative proposal is that
any new revenues can be invested in programs and professors directly
related to students’ academic work. In addition, each institution
will devote a substantial portion of these new revenues to student
financial assistance, thus enhancing each institution’s ability
to offer financial aid to all Virginia students who qualify.
ensure that no Virginia student admitted to U.Va. is excluded because
of financial reasons, beginning in the fall of 2004, U.Va. will
meet 100 percent of the need for all undergraduate students who
qualify for financial aid through grants. This program was started
with the entering class of 2002 and phased in over four years.
addition, U.Va. is studying the feasibility of an innovative program
aimed to limit the amount of debt incurred by middle-class students.
Such institutional aid programs are key to the public mission of
the University of Virginia, Casteen said.
Building on decentralization initiatives
the early 1990s, U.Va., Virginia Tech and William & Mary became
part of a long-term pilot decentralization project that gave them
more decision-making powers in purchasing, hiring and capital spending.
The purpose of the project was to increase business efficiencies
in their daily operations, to save money and to eliminate red tape.
This project was considered a success, and during last winter’s
General Assembly, the legislature passed 11 of 12 decentralization
proposals advanced by the three universities.
1995, the University worked closely with members of the General
Assembly on a proposal to grant codified autonomy status to the
U.Va. Medical Center. The legislation, granted in 1996, resulted
in more authority to U.Va. for capital outlay projects, leases,
risk management, purchasing and personnel matters. It allowed the
Medical Center to be more competitive and to respond to changing
market conditions more quickly than state regulations usually permit.
see this new partnership legislation as a natural next step to earlier
decentralization legislation,” Sandridge said. “If granted
increased flexibility, we will use our strength for the good of
the university and the entire state, remembering that there would
be appropriate state oversight and accountability built into the
Fund Appropriations to Higher Education
Drivers as a Percent of Total General Fund Appropriations*
percentages are rounded to the nearest whole number
follows is a funding breakdown per in-state student for 2002-03
at the state’s three leading universities compared with
four peer public universities from across the nation.
appropriation per in-state student
funding per in-state student
Institutional data and Grapevine (Center for the Study of Education
Policy, Illinois State University)
Note: U.Va. state appropriation per in-state student for 2003-04
has decreased to $8,802.