The operating budget for the University of Virginia will increase slightly in the coming fiscal year, driven primarily by continued growth at U.Va. Medical Center.

As approved Monday by the Board of Visitors Finance Committee, the University’s $2.7 billion budget for the 2013-14 fiscal year – including the Academic Division, the Medical Center and the College at Wise – will increase by 2.4 percent compared with the revised budget of the previous fiscal year.

The Medical Center budget is set to increase by $97.4 million, or 8.7 percent, to $1.22 billion. U.Va.’s Academic Division budget, meanwhile, will decrease by 2.5 percent, to $1.4 billion. The College at Wise budget is scheduled to increase by 4.6 percent, or $1.7 million for the fiscal year that begins July 1.

Total employment for 2013-14 is projected to be the equivalent of 15,879 full-time positions, an increase of 89 positions over the previous year. That includes a decrease of 214 positions in the Academic Division to a total of 8,363 FTEs, primarily linked to a reduction of personnel expenditures tied to sponsored research awards. Medical Center employment is projected at 7,198, increasing 300. Wise plans to increase its employment by three, to 318 full-time equivalents.

University officials said the budget blueprint reflects capacity to address the outcomes of the strategic planning process, investing in the next generation of faculty, increasing compensation for staff and ensuring the University’s affordability for students with need.

The budget responds to the goals of the Virginia Higher Education Opportunity Act of 2011, particularly Virginia Gov. Robert F. McDonnell’s goal of producing 100,000 more degrees by 2025, with emphasis on enrollment in programs in science, technology, engineering, mathematics and health. U.Va. has committed to increasing its number of undergraduate students by 1,673 between 2011 and 2018.

The budget also advances plans to make compensation more competitive, including the first year of a multi-year effort to raise average faculty pay to the top 20 of U.Va.’s Association of American University peers. The Board of Visitors in February passed a resolution in support of reaching the goal by June 2017, stipulating that it should be addressed through the University operating budget.

The 2013-14 budget language projects U.Va. can reach the 20th rank via annual merit-based increases for continuing faculty of 4.75 percent. The new budget takes care of the first of four such years by using the state-authorized average 3 percent salary increase as a base and adding 1.75 percent. The increases will be handled on a merit basis.

The budget also addresses pay for classified and University staff. The General Assembly, which has authority over classified staff compensation, included in its budget a 2 percent salary increase. The legislature also included a compression adjustment of $65 per year of service for classified employees who have worked at U.Va. for between five years and 30 years.

For University staff, U.Va.’s 2013-14 operating budget includes an average 3 percent merit-based salary increase.

The new budget reflects a focused effort to increase efficiencies and sets the stage for a sustained, even more methodical approach to saving operating funds. As part of the budgeting process, schools and units were asked to report cost-saving and efficiency efforts from the previous year. And a newly established Organizational Excellence Program, within the portfolio of Executive Vice President and Chief Operating Officer Patrick Hogan, commits the University to achieving productivity savings of $44 million by 2016-17.

The budget also holds the line on institutional funding of AccessUVa. The University spent about $40 million of institutional funds on its marquee financial aid program in the past fiscal year and, due to administrative adjustments, projects spending no more than that amount in 2013-14 while responding to increased demand for financial assistance from students.

Medical Center Board Welcomes New Health System Leaders

Medical Center Operating Board members heard Monday from two new members of the Health System’s leadership team – Dr. Nancy Dunlap, dean-designate of the School of Medicine, and Dr. Thomas P. Loughran Jr., incoming director of the Cancer Center.

Dunlap, who will assume her duties as dean Aug. 1, came to U.Va. from the National Governors Association Center for Best Practices in Washington, D.C., where she served as physician-in-residence. The pulmonologist also held several leadership roles at the University of Alabama-Birmingham. Loughran will take over leadership of the U.Va. Cancer Center effective Aug. 15. He has served since 2003 as the founding director of the Penn State Hershey Cancer Institute and professor of medicine at the Penn State College of Medicine.

Loughran said his goals include making the Cancer Center a “prime stop for all patients not only in Virginia, but across the nation” and strengthening the ties between the center’s researchers and patient care providers to develop new treatments for patients. “I look forward to connecting the clinicians with the scientists,” he said.

Dunlap expressed her appreciation for the opportunity to work at U.Va. and thanked her predecessor, Dr. Steven T. DeKosky, “for his support for ensuring a smooth transition.”

Board member Vincent Mastracco saluted DeKosky for his tenure as dean, particularly for his work as “one of the major architects” of the Health System’s strategic direction. “Thank you for all of your contributions you made to the university,” Mastracco said.

After a sabbatical, DeKosky will continue as a faculty member at the U.Va. School of Medicine.

In other business Monday, the Medical Center Operating Board:

• Approved a $1.2 billion Medical Center budget for fiscal year 2014 that forecasts a 3.7 percent increase in patient discharges. Through the first nine months of fiscal year 2013, admissions are up about 1 percent, compared with a 1.7 percent decline among U.Va.’s peer institutions, said Larry Fitzgerald, associate vice president for business development and finance. Operating income for fiscal year 2013 is also ahead of budget and the prior year, Fitzgerald said.
• Received an update on U.Va.’s Graduate Medical Education program from Dr. Susan E. Kirk, associate dean for graduate medical education. U.Va. has 780 residents and fellows participating in 105 training programs. As the group that accredits most of U.Va.’s training programs, the Accreditation Council for Graduate Medical Education, prepares to make some changes to its accreditation program, Kirk noted U.Va’s strong standing with the group. Eighty-four percent of the programs accredited by the association have the group’s most favorable accreditation cycle.