The state’s Joint Legislative and Audit Review Commission issued its final report today assessing the costs of public higher education in Virginia. It includes a broad analysis of costs associated with the delivery of higher education, from tuition and financial aid to operations and facility maintenance, and proposes several recommendations and options for the Virginia General Assembly to consider.

Overall, the report found Virginia’s higher education institutions to be of high quality, citing the institutions’ ability to educate and graduate students better than peer institutions in the country; Virginia ranked second among all states in terms of the average six-year graduation rate. The report specifically lauded the average six-year graduation rates at the University of Virginia, the College of William & Mary and Virginia Tech.

The report also noted the high cost of attending Virginia’s public universities. Institutional spending per student increased 24 percent, adjusting for inflation, for a 10-year period ending in fiscal year 2012. The majority of the increase in spending, the report notes, was on non-academic services known as auxiliary enterprises.

However, the report also found that state operating-budget funding per in-state student declined significantly since the late 1990s, and that institutions have increased tuition to help offset the reduction in state support. According to the report, there was a 46 percent decline in state funding per in-state student between FY 2002 and FY 2012 across all institutions (from $10,783 to $5,835 in inflation-adjusted dollars).

Auxiliary enterprises examined in the report include intercollegiate athletics, student housing, student dining and recreation facilities and operations. These enterprises receive no state funds, but receive some funding through student fees.

The story of auxiliary enterprises and their costs at U.Va. largely runs counter to the trends highlighted in the JLARC report. Compared with the other public institutions in the report, U.Va. fares reasonably well.

Auxiliary enterprises – including dining services, high-quality residence halls, athletics programs and recreation facilities – significantly enhance the overall experience of students on Grounds. These services contribute to increased student engagement, leadership development and graduation and retention rates. U.Va.’s average freshman retention rate of 97 percent and actual graduation rate of 93 percent makes it a national leader among public universities.

A number of the commission’s general observations and its specific findings about U.Va.’s administrative support functions are consistent with findings and opportunities identified through the University’s own organizational review. The report’s findings reaffirm the importance of the efficiency efforts already under way at the University, officials said.

“It is critical that members of JLARC and the General Assembly, as well as the citizens of the commonwealth, be aware of the quality of public higher education in Virginia,” U.Va. President Teresa A. Sullivan said. “This overall commitment to quality makes higher education in Virginia among the best in the country.

“We do, however, recognize that there are opportunities to achieve greater efficiencies without sacrificing academic quality. Improving the efficient and effective use of all resources is a top priority of U.Va., and we remain committed to continue targeting greater efficiencies while maintaining a high standard of academic excellence.”

University officials cited two general concerns with the final report. The broad-based nature of its recommendations does not take into consideration the diverse size, scope, complexity and missions of Virginia’s 15 public, four-year institutions. Any proposed recommendations should be consistent with the respective institutional missions, they said. 

For example, U.Va.’s residential nature requires significant investment in auxiliary enterprises such as residence halls and dining facilities. An institution with a large commuter population would not need such resources on the same scale.

As such, it may prove difficult for institutions to implement various recommendations proposed in the report while remaining competitive in their respective peer groups.

The second concern relates to the likely erosion in the autonomy that public higher education institutions received through the Restructured Higher Education Financial and Administrative Operations Act of 2005, which provided all public institutions of higher education greater managerial and administrative flexibility in exchange for their commitment to meet various statewide goals.

“I believe institutions have demonstrated their ability to achieve greater operational efficiencies as a result of the autonomy granted to them under the Restructuring Act,” Executive Vice President and COO Patrick D. Hogan said. “We hope that the General Assembly and governor maintain their commitment to allowing institutions to continue to operate under the terms outlined within the act.”

The full report, including the 16 recommendations and seven options, can be found online here.