As some of us prepare for holiday spending sprees, others face lost wages, eviction and COVID-19 expenses. Given these extraordinary circumstances, the U.Va. chapter of United Campus Workers Virginia couldn’t help but reflect on the University’s finances and the ways it could be spending money to benefit workers and students during an unprecedented period of economic insecurity.
In response to lost revenue from the COVID-19 pandemic, the University instituted a hiring and salary freeze, furloughed essential workers at the hospital and suspended contributions to critical benefits, such as retirement. In addition, members of the University’s executive leadership team took 10 percent pay cuts in the spring — a welcome gesture, but one which provided little comfort to workers left with no income whatsoever. “[We] are going to have to tighten our belts,” Jim Ryan announced this past March, “just like other organizations and universities across the country.”
Unlike many other universities, however, the University still possesses an immense amount of wealth. While it has lost money due to this crisis — and will likely face ongoing financial challenges — research conducted by UCWVA uncovered that the University has the resources to address these financial concerns without resorting to austerity. In public higher education, austerity has historically meant lost jobs, shuttering of departments, privatization and more contingent labor. Another wave of austerity at U.Va. would negatively affect the lives of workers and students, the quality of education and the greater Charlottesville community. The University claims that it is resorting to austerity because its hands are tied. What our research shows is that what’s really holding the University back is lack of willpower, not lack of financial resources.
There are three key areas from which the University could redistribute wealth — endowment returns, tuition revenue and component unit spending. The University's endowment is a permanent, self-sustaining source of invested funding referred to as the “Long Term Pool.” The endowment as a whole currently sits at a whopping $9.6 billion. Over a ten year period, this endowment made more money than the average for similar investments — our endowment investments returned 11 percent, while its benchmark portfolio of similar assets returned 9.2 percent. That’s about 2 percent more than the benchmark — this may not sound like a lot, but that’s a difference of $192 million dollars! This means U.Va. is not just financially sound, but doing better than a lot of its peer institutions in terms of endowment growth.
We’re always told the endowment is untouchable beyond a certain point, but the University’s endowment has an unrestricted portion which they could choose to spend from during an emergency. In 2010, for instance, the Board of Visitors increased the endowment distribution from 5 percent to 5.5 percent in response to the 2008 recession, resulting in millions of additional dollars for spending. The Board clearly has the ability to make operational financial changes with the endowment based on the underlying circumstances of the time. Given the stresses of our current situation, UCWVA calls on the Board to increase endowment distribution to meet the needs of our current crisis.
Then there’s University revenue. The University’s 2019 revenue of $4 billion was 44 percent higher than it was in 2005, a significant total increase even after adjusting for increase in enrollment. This increase has not been reflected in most workers’ salaries, however. In 2019, the median pay of a University employee was $67,000. By contrast, the median pay of the top twenty highest earners was $515,000 — nearly eight times more! Even with booming revenue, most employees are still not seeing the same benefits as those at the top.
Executive salaries aren’t the only place the University could be redistributing resources from. The University has several affiliated nonprofit organizations called “component units” that are subject to different laws and regulations than the university itself. One of these organizations is the University of Virginia Investment Management Company, which manages the University’s endowment. UVIMCO decides how to invest our multi-billion dollar endowment. In return for these services, its employees are lavishly rewarded. From 2011 to 2018, UVIMCO spent $3.9 million on travel alone, averaging more than half a million dollars per year. These expenses included private jets to New York, trips for out-of-town board meetings and international first class flights.
But how, if at all, has the pandemic changed the University’s revenue? Apparently, not much — the University received a record number of early decision and early action applications for the Class of 2025, indicating no foreseeable dip in future tuition revenue. Furthermore, the endowment market value increased from $9.6 billion to $9.9 billion, a larger increase than last year, despite the pandemic! The University is still doing well and still making more money off their investments, even in the midst of a recession.
These findings lead UCWVA to conclude that The University Has The Money to avoid austerity measures and to implement a wide range of actions that benefit students, workers and the Charlottesville community. We call on the University to draw from the Strategic Investment Fund and the Short Term Pool, increase endowment spending, “chop from the top” and institute permanent pay cuts for high earners and decrease luxurious travel expenses. Use the freed-up money to provide hazard pay for in-person workers, ensure no future furloughs, institute a tuition freeze and provide compensation for lost pay. We also call on the University to make financial information more transparent by releasing cash flow models and line-item expenditures for major money-making areas, such as the health system. Finally, we call on the University to take steps to ensure budgetary decisions are made democratically by U.Va.’s rank and file workers, who are responsible for the University’s continued operation.
For a more detailed write-up of our findings and calls to action, read our report, UVA Has The Money.
United Campus Workers of Virginia at U.Va. is a wall-to-wall union open to all employees of the University of Virginia. It is a chapter of UCWVA, a Commonwealth-wide labor union dedicated to organizing higher ed workers to fight for safer jobs, better pay and democratically run workplaces.