Following a decade of state-mandated tuition freezes and budget cuts, administration officials say they have done all they can to maintain the University's elite national ranking without an increase in funding.
"We have wrung just about everything there is to wring out of what we have," College Dean Edward L. Ayers said. "More resources are essential."
In order to achieve sustained financial and academic stability, the University, along with cash-strapped peers Virginia Tech and William & Mary, now is looking to renegotiate its relationship with the commonwealth as a charter institution.
Though students and staff should see few sudden changes if the plan becomes law, it will have a significant impact on the University's future direction, according to Leonard Sandridge, University executive vice president and chief operating officer.
"This is a long-term lifestyle change for these three institutions and for the Commonwealth of Virginia," Sandridge said.
The University's current cash-crunch is nothing new. In past periods of economic growth, the General Assembly enacted tuition caps on the state's public institutions, but during the recent recession it has allowed tuition increases to cover a lack of state funding, said John L. Knapp, recently-retired director of economic research at the University's Weldon Cooper Center for Public Service.
"It sort of plays back and forth," Knapp said. "The perceived flexibility of higher education meant extra pressure was put on higher education in difficult economic times."
Feeling the crunch
Smaller academic departments, which have been hit particularly hard by recent hiring freezes, will require significant budget increases in the years to come if they are to offer the types of courses befitting a second-ranked public institution, Statistics Department Chair Jeff Holt said.
Despite adding an undergraduate major to its degree offerings this year, the statistics department remains short-handed, with just seven full-time faculty members. Holt attributed the shortage to the University's last hiring freeze, when the statistics department lost two full-time faculty members who have yet to be replaced.
"In the last couple of years ... they have not been filled because of lack of funds," he said. "It was partly just bad timing."
The University's resource shortage has been felt across the board. When University faculty members compiled a Science and Technology Commission Report in 2000, it found that, "for a leading, comprehensive university, the difference in rankings between the sciences and engineering and the humanities is both surprising and disappointing."
Still, University administrators remain optimistic that the freedom granted by charter status could propel the University into the upper-echelon of higher education institutions nationwide, both public and private.
"I am eager for us to be recognized as one of the universities in the United States, period," Ayers said. "That is within our reach if the charter plan and the capital campaign succeed."
Breaking free
Under the terms of the proposed legislation, classification as a charter institution will allow a school's governing body to set its own tuition and establish local operating guidelines. In exchange for this increased autonomy, the schools behind this proposal have offered to return 10 percent of the money they are appropriated from state funds.
As a chartered institution, the University would remain public and therefore accountable to the General Assembly, but in many areas it would be free to act without state approval or financing.
University President John T. Casteen III said the Virginia universities would be more effective at running themselves than they would under strict Virginia oversight.
"The state does not at this point have a developed strategy," Casteen said. "Virginia Tech, William & Mary and we believe that we do have one that will begin to advance us in that direction."
Still, concerns remain. Staff Union President Jan Cornell said many employees are uncomfortable with the plan, especially with what she asserts is a lack of detail. The University is holding several sessions designed to brief employees and address their concerns.
In the meantime, administration officials say the University is well-equipped to handle the transition. According to Casteen, the University's long history of significant alumni donations, status as one of only two public universities nationwide to wield a "AAA" bond rating and experience with programs such as the Darden and Law Schools suggest the University will succeed as a charter institution where other public universities might struggle.
"Part of what we have and Tech has and William & Mary has is a history going back to 1990 of building financially strong independent programs one by one," Casteen said.
Dollars and sense
In addition to being a major selling point for the legislation, the commitment by hopeful charter institutions to return a limited portion of their funding to the state is intended to increase the resources available to other public institutions. Many of these schools, such as Virginia Commonwealth University and George Mason University, could stand to benefit from attaining charter status in the future as well, said Colette Sheehy, University vice president for management and budget.
As it stands, the proposed legislation would allow any institution meeting certain requirements to obtain charter status, though only the University, Virginia Tech and William & Mary have publicly announced their intention to do so.
Of course, with the increased responsibility given to charter institutions to meet their own funding requirements, students at the institutions may be faced with footing a portion of the bill.
Assuming that the state manages to meet its funding targets for higher education in the future, something which it has not been able to do in the past, tuition at the University is expected to increase by up to 10 percent a year for the next five years, Sheehy said.
The University projects that it will have to cover an annual $39 million shortfall over this period.
To mitigate the effect of tuition increases, Casteen said the University is counting on its "Access U.Va." financial aid plan and an ambitious capital fundraising campaign.
"The charter arrangement is not a free ride," Casteen said. "On the other hand, the tuition charges that are relevant to the market and are mitigated by the best financial aid plan in the country at this point are the way to go."
After the initial phase-in period, tuition increases are expected to settle at about 4 percent a year to cover maintenance costs and inflation, Sheehy said.
Now, following more than a year and a half of planning for the change, administrators from the three potential charter institutions are working to spread awareness among students and staff, clarify details and lobby legislators to support the change before the January start of the 2005 General Assembly session.
University officials said they are confident the legislation will have the support of both the governor's office and the General Assembly.
"So far every state official who has finished examining the proposals has endorsed them," Casteen said. "I find that very encouraging."
--Associate Editor Shannon Sturcken contributed to this report
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