Recent passage of a bill by the House of Delegates' education subcommittee may grant the University's Board of Visitors the autonomy to control millions of dollars currently in restricted reserve funds.
The bill, passed in subcommittee Tuesday, would allow the investment of University funds currently set aside for future expenses, according to Del. William H. Fralin Jr., R-Roanoke.
The bill "will allow the University to invest non-general fund monies, monies collected for students' fees, housing fees or health insurance premiums," thus allowing a higher return on funds that otherwise would lay dormant until later use, Fralin said.
Specifically, the funds will come from hospital cash balances, auxiliary student housing and health care contingency reserves, he added.
Yoke San Reynolds, University vice president and chief financial officer, said passage of the bill would allow for the investment of $30 million to $50 million that will not be needed for another five years. Such money could come from reserves currently earmarked for the replacement of Alderman Road dormitories, Reynolds said.
"We know that we will need a certain amount [of money] in five or 10 years, and if we know that we are not going to be calling on the liquidity for five years, we can invest that money," Reynolds said. "If the law passes, what I would do is take [and invest] that portion that we know we won't touch for five years."
The bill exclusively pertains to the University for a number of reasons, according to Fralin.
"U.Va. has a much larger endowment and a proven track record of handling ... [its] ... money," he said. "It's one of three universities that is under the charter system now."
Fralin added that the University's hospital accounts for a "large donation of revenue" that will also make the bill especially effective.
Reynolds said any risks associated with investing these funds are minor.
"Certainly there are risks when investing more aggressively, but there are ways to mitigate risks," she said. "If the market drops for five years, we can recover."
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