By Dan Heuchert

May 25, 2004 — For U.Va., it was a budget that was worth the wait.

The compromise two-year budget that finally emerged from the Republican-controlled Virginia General Assembly after several weeks of extended debate over raising taxes contains two major boosts for the University: a 3 percent, Thanksgiving-time raise for faculty and staff, and a substantial boost to the University’s base operating budget — which could mean even more money for faculty.

Vice President for Management and Budget Colette Sheehy

The legislature formerly approved the compromise budget plan on May 7. Gov. Mark Warner may still request modifications, which the General Assembly will take up at its reconvened session June 16.

Warner’s original December budget proposal called only for the possibility of a raise for faculty and staff late in 2005 — and then only if state revenues met certain targets. The plan that emerged from the joint conference committee provides for a 3 percent increase effective Nov. 25, 2004, plus an additional 2 percent one year later.

Likewise, Warner’s December budget provided for a $665,000 increase over the next two years in the state’s current $120.6 million contribution to the University’s base operating budget. Legislators boosted that figure to $3.8 million in 2004-05 and $7.5 million the following year.

“That’s a huge increase,” said Colette Sheehy, the University’s vice president for management and budget.

Although the funds are undesignated, they came with language attached suggesting that the money be used to “serve more students, retain existing students more effectively, increase the number of students receiving a degree or certificate, and enhance the quality and rigor of its academic programs,” and directing the state secretary of education to monitor the outcome.

“The focus is clearly on instructional areas,” Sheehy said.

University officials were meeting last week to formulate a proposal for the funds in time for this week’s Board of Visitors budget work session.

Sheehy hinted that at least some of the funds may be allocated to faculty retention efforts. The University had already planned a 1.5 percent faculty salary increase — before the legislature approved its 3 percent statewide raise.

Even with the state’s additional base-budget funding, its total contribution to the University’s revenues is expected to hover right around its current 8 percent, Sheehy said, since other sources of funding — including tuition and research support — are also projected to grow.

The budget also contained taxpayer funding for two capital projects: $6 million for an addition to McLeod Hall, home of the School of Nursing; and a $17.5 million downpayment on the estimated $50 million needed to modify the University’s coal-burning central heating plant.

Not all the news was good. U.Va. sought $15 million to fund a maintenance reserve; the budget that emerged contained less than a third of that amount, which Sheehy identified as “probably the biggest disappointment” of the legislative session. Legislators also deferred for a year approximately $2 million in additional research funding.

There were also new measures to limit the University’s autonomy in setting tuition rates and the proportion of out-of-state students. Legislators will now approve a ceiling on the total amount of revenue that tuition will be expected to provide, without setting specific limits on increases for either in-state or out-of-state students as long as they don’t exceed that ceiling.

Meanwhile, the budget freezes out-of-state enrollment at current levels for schools in which non-Virginians make up 25 percent or more of their undergraduate enrollment; U.Va. draws about 32 percent of its students from outside the Commonwealth’s borders.

The main higher education focus going into the session was U.Va.’s bid — along with Virginia Tech and the College of William & Mary — to forge a new, more autonomous relationship with the state. In exchange for budget concessions, the three universities were seeking more control over their own affairs.

The “chartered universities” initiative, which received cautious praise from many quarters, was one of the budget crisis’ first victims, to be carried over until the 2005 session. The legislature did form a committee to study the proposal, however.
There was one piece of non-budgetary good news: legislators approved a long-sought measure to provide health benefits to employees who work between 20 and 31 hours per week. The bill affects more than 200 employees at the University.

The catch, though, is that those affected will be required to pay the entire premium, which U.Va.’s Human Resources department estimates will cost about $300 monthly for single employees and more than $800 per month for family coverage.
Advocates for the measure pronounced the plan a “good first step.”

“The General Faculty Council has had that as one of its goals since its inception, which was back in 1993,” said past chairwoman Lotta Lofgren. “We think it’s a wonderful step in the right direction, but it is unfortunate that people have to pay the full premium themselves.”

Anda Webb, a member of the Women’s Leadership Council, which also has pushed for part-time benefits, agreed. “Financially, that could be a burden on someone who is working part-time.”

The lawmakers also clarified a measure passed in 2003 that created the Virginia Information Technologies Agency, intended to centralize the coordination of information technology in the state. That legislation, however, unintentionally superceded other “codified autonomy” measures that applied to the University Medical Center. The measure was amended this year to exempt the Medical Center from VITA’s oversight.