Gov. Tim Kaine asked various agencies and higher education institutions to prepare budget reduction plans of 5 percent, 10 percent and 15 percent Sept. 2.. As the semester comes to a close and the University prepares for 2009, officials are preemptively taking steps to balance the budget and get through the current tough economic times.
Colette Sheehy, University vice president for management and budget, said the possible reduction in state funds from the University’s budget next year is, in part, because the recession has affected the commonwealth’s revenue base.
“Revenue collections are not keeping pace with the forecasted amount for the current year,” Sheehy said, adding that because officials in Richmond must balance the state budget, they need state agencies such as the University to reduce expenditures and costs.
In response to such a request, the University developed a 7-percent budget cut proposal that “will take $10.6 million from the University’s General Fund,” Sheehy said. She added that these proposed cuts would be in addition to cuts the University officially put into place last year. “That was a permanent reduction to the Base Budget Plan and amounted to $9.2 million.”
Leonard Sandridge, University executive vice president and chief operating officer, meanwhile, said the University has been proactive in seeking to accommodate the recent reductions in funding.
“Schools and departments have applied thoughtful strategies to reducing budgets dependent on state funds,” Sandridge said. “The deans and unit heads have made budget reduction decisions that preserve the instrumental mission of the University, protect services to students and avoid employee layoffs.”
Sheehy said revisions to the University budget are still ongoing. She noted that administrators are still compiling the details from each school’s reduction plan, which outlines possible funding cuts to a wide array of programs and services at the University.
“These budgets include cuts in salary costs based on decisions not to fill certain vacant positions, reductions to supply costs and decreases in professional development and travel,” Sandridge said. Sheehy, meanwhile, said the cuts will also cause a reduction in or deferment of maintenance for certain buildings on Grounds.
Sandridge said certain projects such as elevator maintenance and HVAC unit repairs are some of the few projects the University has placed on hold because of the state budget cuts. In addition to these adjustments, Sandridge said there will also be a reduction of custodial services as well as a reduction in landscape maintenance. Employee salaries, though, have not been reduced.
Sandridge added that more budget cuts could be expected in the next fiscal year, but noted that the University is unable to predict the impact such reductions could have on tuition in upcoming years.
“Tuition is affected each year [by these cuts] as cost increases occur,” Sandridge added. “For each dollar appropriated by the state for salary increases, the University must raise 61 cents from tuition with the remaining 39 cents coming from state taxes.”
Sandridge added, though, that the University remains committed to its AccessUVa program.
The Board of Visitors will be updated on the budget cuts in its upcoming finance meeting early in February.
“There has not been a meeting of the finance committee of the Board of Visitors since the governor announced the budget reductions, so there were no specific proposals discussed in the October Finance Committee meeting,” Sandridge said, adding, though, that the rector and vice rector have been updated regularly in regards to sources of University funding.
As for the University’s endowment, which recently has suffered in the unpredictable economic climate, Sandridge said he remains confident. In a letter written to the University community, Sandridge stated that despite the financial crisis, the University’s endowment continues to give the University the means to cope with reductions in state support and plan for the future.
“When the economic crisis hit in the late summer, the long-term pool invested by the University of Virginia Investment Management Company (UVIMCO) decreased from $5.1 billion on June 30 to $4.2 billion on Oct. 31, which is a 20 percent decrease,” Sandridge wrote. In his letter, Sandridge also reassured the University community, stating, “while we know the University’s core endowment is extremely important to the University’s future and to supporting such initiatives as new academic programs and the growth of AccessUVa — funds from the endowment make up just 4.8 percent of the University’s $2 billion operating budget. We benefit from a very diverse set of revenue sources that stabilize our institution in times such as this sources that include tuition, state funds, sponsored programs, and gifts.”
While administrators use the University’s financial versatility to move through the crisis, economic concerns and possible funding limitations within academic departments were also discussed during Faculty Senate meetings this semester.
For these faculty members asked to cut down on unnecessary costs, reduced departmental spending could mean anything from not purchasing new computers this year or next to a shortage of basic supplies and classroom materials, such as a chalk, Senate Chair Ed Kitch said.
“And as a teacher, chalk is very important,” Kitch added.
Academic departments and schools have also been asked to not fill any existing vacancies in their ranks of employees, Kitch said, which will have a varied effect for the faculty; Kitch said there are vacancies in some places but not in others, making for a mixed picture when it comes to attempting to determine how much the state budget cuts will affect departments’ staffing.
“The bottom line impact will be [determined] very soon school by school and department by department,” he said.
Additionally, economic cutbacks could have a potential impact on proposed salary increases, Kitch said. The salary increase for members of the University classified staff that was set to go into effect Jan. 1, 2009, already has been deferred to summer 2009, Kitch added. It is unclear whether this will affect University employees’ decision to adopt the new employee classification system introduced earlier this semester, he said.
The publication of scholarly articles and copyright issues has also been a subject of discussion as a result of potential funding cuts, Kitch said. The publication of scholarly articles is a difficult problem that many universities face, Kitch noted, because when professors produce articles, they hold the copyright to that material, but in order to be published in a scholarly journal, they are required to sign over their copyright to the publication. Most of the journals are privately owned and based on a smaller circulation and charge a significant fee for an annual subscription, which is most commonly an online database, Kitch said.
“For people who are working in the field access to the journal will be absolutely essential, so the University libraries have to have copies,” Kitch said. University libraries then end up spending a large percent of their annual budgets purchasing copies or annual subscriptions to these research publications and academic journals, even though the University originally provided the funding for the professor to conduct the research in the first place, Kitch explained.
“Universities are paying for most of the production cost in the first place [for research and scholarship], and then they have to go and buy it back,” he said. As a result, many universities are encouraging faculty members to push back on the terms of their contracts for the publisher’s demands so they will have greater access to their own work.
“This has become a national issue,” Kitch said. The topic gained attention earlier this year after the National Institute of Health demanded that any scientific journal that publishes work produced by NIH must allow authors to retain their copyrights and make the research publication available for public access, Kitch said.
On the whole, “it’s a very complicated and very intricate problem,” Kitch said, adding that the Faculty Senate hopes to reach conclusions on the topic through the work of a task force and discussions that will take place next semester.
The Board of Visitors will next meet Feb. 5 to 7. Dates for the Faculty Senate meetings during the spring semester, according to the Senate’s Web site, are to be determined. Officials agree, though, that the economy and the state budget cuts will continue to be important on many levels across the University.
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