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SCHEV backs universities' autonomy on endowment funds

SCHEV backs universities' autonomy on endowment funds

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RICHMOND — A university’s endowment or other private resources should not be used by the General Assembly to determine how much public money is appropriated to the school, the State Council of Higher Education for Virginia said Tuesday.

SCHEV, the state’s coordinating agency for higher education, adopted resolutions affirming its support for the financial autonomy of public universities and pointing out that, under state code, lawmakers can’t reduce appropriations because of endowment funds and gifts.

The council also approved a resolution to allow universities the flexibility to use tuition revenue to supplement faculty salaries. The state has authorized a 3 percent raise for fiscal 2018, but SCHEV said additional merit-based increases are necessary to keep salaries competitive with peer institutions.

SCHEV’s actions followed the revelation over the summer that the University of Virginia had amassed more than $2 billion for a Strategic Investment Fund, the earnings on which will be used to finance grant proposals. In August, top UVa administrators were called before a joint assembly committee meeting to explain how the money was amassed.

Nationally, congressional investigators are also studying whether universities are using enough of their wealth to defray costs for students.

Gilmer Minor , the council’s chairman, said SCHEV’s resolutions are intended to show support for the schools’ private fundraising efforts. One resolution praises financial management strategies that have allowed universities to “maintain their viability through economic downturns.”

SCHEV Director Peter Blake said that while the controversy over UVa’s fund “sharpened the focus” of the resolutions, the council was speaking to the budget constraints under which institutions operate.

“Council wanted to express support for efforts institutions take to help themselves,” he said in an email after the meeting. “The recent discussions of the SIF elevated the discussions around value, perception and budget, but the resolution is relevant to all institutions, as they all face these issues.”

The council also approved budget recommendations, to be sent to the governor and assembly for the next fiscal year, requesting an additional $34.1 million to cover operating expenses. Another $31.2 million would come from the schools, which could be covered by a tuition increase of just over 1 percent, Dan Hix, SCHEV’s finance policy director, told the council.

In addition, the council is calling on the state to shell out $11.7 million for student financial aid — $8.9 million for undergraduate aid and $2.8 million for the transfer grant program.

The transfer grant funds, divided between $900,000 from this year and $1.9 million for next, are for a need-based award program for students who complete an associate degree at a two-year college before transferring. Hix said that in addition to the grant, students can save about 30 percent on the cost of a bachelor’s degree by taking that route.

SCHEV also is recommending a maximum award of $3,350 for the Tuition Assistance Grant, which offsets tuition at Virginia’s nonprofit, private colleges for in-state undergraduates. However, the exact award, which this year is projected to be $3,200 for undergraduates and $1,600 for graduate students, is contingent on participation rates.

For faculty salaries, SCHEV is recommending $43.2 million, evenly divided between the state and schools, with the raises to take effect July 1, 2017. Faculty — and all state employees — were to receive a 3 percent raise this year, but that funding was redirected because of the state budget shortfall.

Because salary increases at peer institutions are making Virginia colleges less competitive in recruiting faculty, Hix said, the schools should “have a little bit more flexibility to look at their tuition” to supplement salaries but still remain affordable.

The resolution says “tuition-related increases should be minimal and not compromise affordable access” for in-state undergraduates.

Hix noted that although last session’s budget brought a reinvestment in higher education and the lowest increase in tuition rates in 15 years, state schools have seen eight cuts in state appropriations in the past 10 years.

The assembly provided an additional $314 million in general fund support for public institutions in the 2016-18 biennium and $1.3 billion additional capital funding.

But Hix said college campuses will see 33 new facilities open during the biennium, leading SCHEV to recommend $13.9 million to cover operation and maintenance costs, with $8.1 million of that amount coming from the state’s general fund.

One of the new facilities is the library at the University of Virginia’s College at Wise. Its share of the operating cost is estimated at $432,578 for fiscal 2018. But because of the impact covering that cost would have on tuition rates, SCHEV is recommending full funding come from the state general fund, Hix said.

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