September 17, 2011 — Sharply rapping the gavel Thursday at 3:15 p.m., Helen Dragas called the preliminary session of the University of Virginia's Board of Visitors  to order. "I'm going to start on time," she declared, smiling.

With that, Dragas officially began her tenure as U.Va.'s first woman rector. Though she led the board's annual retreat in July, the sessions in the Rotunda on Thursday and Friday were considered the board's first meeting of 2011-2012.

She presided over a variety of discussions, including internal financial models, financial aid, the University's six-year plan, the Rotunda roof and the chimneys in student rooms in the Academical Village.

Rotunda Roof Will Be Repaired, Not Replaced

Investigation by structural and forensic engineers has led to a major sigh of relief: The leaky Rotunda roof is "structurally sound" and merely needs repair, not replacement, according to David Neuman, architect for the University.

The leaks have led to structural damage to the Rotunda's walls, and there was major concern that the roof would need to be replaced – and discussion about which of the iconic building's many historic eras a new roof would replicate.

Neuman briefed the board's Buildings and Grounds Committee on the investigation, which saw scaffolding erected around the Rotunda this summer and then excavation of a strip from the roof's base to the oculus at the top.

Repairs should begin by March, Neuman said, and the roof's appearance will remain largely as is, though it may be repainted a slightly duller shade of white to match its appearance in 1976, when the Rotunda was last restored.

Also needing repair are the fireplaces in the student rooms along the Lawn and the Ranges. A consultant discovered cracks in the chimney linings last month, leading University administrators to ban the use of the fireplaces until repairs can be made. A chimney fire could spread easily through the ceilings, as the 1800s-era buildings lack firewalls and sprinkler systems.

Colette Sheehy, vice president for management and budget, briefed the Buildings and Grounds Committee on the situation.

A committee of Lawn and Range residents on Wednesday submitted the results of a survey it conducted of this year's and last year's residents. The students favored repairing the chimneys and installing modern fire suppression systems, and suggested additional training on safe use of the fireplaces.

Residents of the Lawn and Range are selected through a competitive application process. Lawn rooms are reserved for fourth-year undergraduates, while selected graduate students typically live on the Range for a year or two. An online frequently-asked-questions section about life on the Range notes, "Having a fireplace is one of the best parts of being a Range resident."

Board member Randall J. Kirk suggested making the fireplace ban permanent, arguing "it borders on the ridiculous to allow fires in a historic wooden building."

But five board members, including student representative Jonathan Overdevest, spoke in defense of tradition, one noting that there has not been a major room fire in nearly two centuries. However, board member W. Heywood Fralin urged that the ban remain until sprinklers are installed.

The University has already solicited requests for proposals for the chimney repair, which were due Friday and could be evaluated by the end of the month, Sheehy said.

Board Briefed on Plans for New Financial Model

Top University administrators – including President Teresa A. Sullivan; Michael Strine, executive vice president and chief operating officer; and Milton Adams, interim executive vice president and provost – briefed the Finance Committee on a new internal financial model that will seek to better align resources with University priorities, enhance the transparency of the budget process and foster faculty entrepreneurship.

Units will receive funds based on their activities, including student enrollment and research, and have greater freedom to determine how the funds are spent. Units such as Facilities Management and University Police will become "service centers" that are accountable to their customers, such as the schools and their deans..

Compared to the more centralized system currently in use, Strine said, "How we make decisions and who makes them will change."

Board members generally expressed support for the "activity-based budgeting" concept, which Strine said should be implemented in time for the 2013-14 budget cycle. He added that there are two groups – one the oversight committee, the other a working committee – that have been charged with the creation of what the final financial model will look like.

Board Affirms Six-Year Plan

The University has begun responding to the requirements of the state's 2011 Higher Education Opportunity Act, admitting the largest entering class in the school's history this fall.

The legislation requires the state's colleges and universities to annually submit six-year plans responding to the act's objectives, and the board on Friday affirmed U.Va.'s report.

U.Va.'s plan includes an expansion of undergraduate enrollment by 1,673 students by the 2018-19 academic year; further development of accelerated degree programs, including a the "3+1" program, which allows students with advanced credit to achieve bachelor's and master's degrees in four years; and the expansion of summer and January terms, as well as programs that allow non-traditional students to obtain or finish degrees.

The plan also seeks to diversify and strengthen the University's research enterprise as a stimulus to economic growth, with particular emphasis on "new strategic research opportunities in key areas," including sustainable technologies, biomedical engineering and cancer research.

The six-year plan proposes 6.5 percent tuition increases in the next two academic years, while maintaining affordable access through financial aid.

Other objectives include competitive salaries for faculty and staff, more efficient use of facilities and pursuit of "continuous improvement focused on curtailing costs and improving service."

AccessUVa Review Process Outlined

With the cost of AccessUVa, the University's comprehensive financial aid program, rising faster than anticipated, the board in the spring called for a comprehensive review of the program.

On Friday, the board received an outline of how that review will proceed.

The University will hire a consultant this fall, and the board has appointed a special seven-member committee, chaired by Vice Rector Mark Kington, to oversee the review.

The committee is expected to make draft recommendations in February, which the board will begin taking up in April. Any changes would be effective with the class entering in the fall of 2014, and would not affect currently enrolled students, said Yoke San Reynolds, vice president and chief financial officer.

The challenge, she said, will be balancing two competing priorities: the desire to attract and retain a diverse and high-quality student body, and the need to optimize the use of scarce unrestricted resources.
 
Created in February 2004, AccessUVa marked a significant commitment to need-blind admissions and meeting 100 percent of demonstrated need for all undergraduate students, providing all-grant packages to low-income students, capping the loan indebtedness of middle-income students and ensuring all students receive aid complete financial literacy training so they could more responsibly manage their finances.

In the five years prior to 2004, fewer than a quarter of the students demonstrated financial need, and the board allocated $16 million in institutional funds toward the approximately $30 million cost, with much of the balance coming from tuition.

In the 2010-11 academic year, 4,702 students (32.8 percent) demonstrated financial need, and the average aid package was $17,932. The program's total cost ran to more than $92 million in the current academic year, with institutional funds now covering about $38.3 million – more than double the original expenditures.

Indoor Practice Facility Added to Capital Projects List

When inclement weather makes outdoor practice unsafe, U.Va. coaches find themselves having to shorten, reschedule or even cancel practices.  (On one occasion this year, the football team scrambled into the John Paul Jones Arena and worked out on the concrete floor.)

On Friday, the board added an indoor practice facility to the University's capital projects list. The facility, projected to cost between $11 million and $13 million and cover about 78,000 square feet, would be located on an existing practice field near University Hall. The permanent building replaces an earlier plan for a bubble-like "air-supported structure."

Construction will be funded by gifts, and the building operation and maintenance will be paid from Department of Athletics operating revenues.

No timetable for construction was announced.

Improved Financial Results for Health System

At Thursday's meeting of the Medical Center Operating Board, Larry Fitzgerald, Medical Center chief financial officer, reported that the hospital ended its fiscal year with an operating income of $89.1 million and an operating margin of 8.3 percent for all its business units, well above the budget of 4.9 percent.

While the results did include a one-time payment resulting from an IRS settlement with teaching hospitals, Fitzgerald attributed the improvement to reductions in supply costs, increased admissions and shorter hospital stays. The average stay at the hospital dropped from 6.19 days in the prior year to 5.93 days in the newly reported figures. Because of the improvement, "we had the capacity to take 20 additional patients every day last year" on average, Fitzgerald said.

Uncertainty over the Affordable Care Act and expected decreases in reimbursement for indigent care and Medicare and Medicaid patients will affect future finances, he cautioned.

A retina camera developed at U.Va. will help prevent diabetes-related blindness, Dr. Peter A. Netland, professor of ophthalmology and chair of the Department of Ophthalmology, told the board. The so-called CavCam, which won the 2010 U.Va. Cup for entrepreneurship, received support this year from the Buchanan Awards, named for Ward C. Buchanan, a 1914 U.Va. Law School graduate whose $52.6 million bequest created an unrestricted endowment for unique, "clinically differentiating" programs at the Medical Center.

Diabetic retinopathy is caused by damage to the retina's tiny blood vessels due to chronic hyperglycemia. With regular screening by retina cameras, the incidence of blindness can be reduced by as much as 80 percent, but less than half the diabetic population receives annual screening, Netland said.

The CavCam can be produced for a fraction of the cost of current retina cameras, and the program's goal is to establish the first statewide network of low-cost diabetic retinopathy screening facilities, he said.

Also:

• R. Edward Howell, vice president and chief executive officer of the Medical Center, noted that five U.Va. clinical services were listed in U.S. News & World Report's rankings of best hospitals. U.Va. was one of only seven hospitals recognized outside a major metropolitan area.

• Steven T. DeKosky, School of Medicine dean and University vice president, reported that the class of 2015 is the largest in the school's history. It's also a high-achieving and diverse class with students from 25 states. "Bright students want to come to U.Va. not just for its history," he said, "but also for its new medical education building and 'Next Generation' curriculum that encourages interactive and team-based learning."

• A National Cancer Institute review committee visited the U.Va. Cancer Center in June, DeKosky said. The Cancer Center is a center of research excellence, a designation that is reviewed competitively every five years. While the final result isn't in, DeKosky said the committee complimented the U.Va. presentation and will recommend a five-year renewal.

Board Briefs

• The University plans to submit $33.6 million in state budget amendment proposals this year, Sheehy told the Finance Committee. The submissions include $9.6 million to accommodate enrollment growth; $8.4 million in start-up packages for new and replacement faculty in science, technology, engineering and mathematics; $10 million for cancer research; $5 million for an "economic development accelerator," to encourage research-based spinoff companies; and $560,000 to cover operating and maintenance costs for new buildings.

• The board approved the expenditure of no more than $950,000 to purchase the site of a former gas station at the corner of Emmet Street and University Avenue from the U.Va. Foundation. The foundation will clear the site, install sidewalks and curbs and plant grass before the University takes ownership. The University also plans to raze the property next door at 104 Emmet St., most recently the home home of the Institute for Environmental Negotiation, and both properties will eventually become a park, Sheehy told the Finance Committee.

• The McIntire School of Commerce's move to "differential tuition" – increased tuition charged to its students, offsetting the school's higher cost of educating them – "had no impact on quantity, quality or diversity" of the class that entered this fall, McIntire Dean Carl Zeithaml reported to the board's Educational Policy Committee. Of the 316 U.Va. rising third-year students offered admission this spring, 311 accepted. That 98.4 percent yield was higher than the 94.4 percent rate the year before, and none of the five students who declined offers cited the higher tuition as a reason, Zeithaml said. The yield rate for students transferring from other colleges was also higher than the previous year, he said.

• The board established a special committee to focus on the University's research enterprise, to be chaired by Randall J. Kirk. "I think we've developed a very cogent and ambitious agenda," he said.

The board also renewed the Special Committee on Diversity, which will be chaired by new board member Allison C. DiNardo.

• After viewing a two-minute highlight video, the Student Affairs and Athletics Committee gave an ovation to head baseball coach Brian O'Connor, who led the Atlantic Coast Conference champion Cavaliers to their second College World series appearance in June.  The coach thanked the board and administration for their support, and declared, "I'm very, very proud to be your baseball coach at the University of Virginia."

The committee also warmly welcomed Honor Committee chair Ann Marie McKenzie and University Judiciary Committee chair Victoria Marchetti, who reported on their respective organizations' activities. The board approved a Judiciary Committee-endorsed revision of the University's Standards of Conduct for students, bringing it in line with both federal requirements and the University's recently revised sexual assault procedures.

• Robert Sweeney, senior vice president for development and public affairs, told the External Affairs Committee that the University's $3 billion campaign stood at $2.46 billion through July 31. The campaign took in $229 million in cash flow during the 2010-11 fiscal year, a 12.4 percent increase over the previous year.

Sweeney said fundraisers are hard at work trying to meet the $3 billion goal. "There's no question we are overturning every stone in order to do that," he said.

• The total value of the University's endowments stood at $5.35 billion as of June 30, and achieved a stellar 24.3 percent return in the 2010-11 fiscal year, reported Lawrence Kochard, chief executive officer and chief investment officer of the University of Virginia Investment Management Company.

• Longtime secretary of the Board of Visitors Jeannie Bailes, who is retiring, was recognized at a lunch in her honor on Friday. She has served 14 rectors and five University presidents. Debbie Rinker, formerly an assistant in the Office of the Executive Vice President and Chief Operating Officer, will succeed her.