October 4, 2008 — As the University of Virginia's Board of Visitors gathered in the Rotunda this week, concern over the flagging economy was never far from the discussion.
In his opening remarks, University President John T. Casteen III reported that, at the governor's request, the University had submitted plans to address potential cuts of 5, 10 and 15 percent in state funding from its current operating budget.
Virginia Gov. Timothy Kaine asked for the plans to counter a drop in forecasted state revenues.
The cuts could amount to between $7.6 million and $22.8 million, Casteen said. Officials are now awaiting a response from the state.
With that in mind, the board's Finance Committee considered only a handful of requests for inclusion in the two-year operating and capital budgets that Kaine will propose in December.
"It is not likely in this economic environment that many of them will be approved," said Leonard W. Sandridge, U.Va.'s executive vice president and chief operating officer.
In the operating budget, the University will ask for $13.1 million in new funding for five items: PRODUCED in Virginia, a popular distance-education program for community college graduates ($1.7 million); support for graduate students ($2 million); funds to cover increased utility costs ($3.1 million); additional funds for operation and maintenance of several new buildings ($5.2 million); and a $1.1 million contribution toward the University's health care plan.
Additionally, the University is requesting $7.5 million in capital funds for a retrofitting of the Ivy Stacks, a University Library storage facility, to double its capacity. Two other capital items — renovations of New Cabell and Ruffner halls — are being resubmitted, despite having received preliminary support from the state.
Faculty and staff salary increases — in the current and coming years — also appeared to be in question. Sandridge expressed hope that the state would honor the 2 percent salary increases called for in the current budget, scheduled to take effect Nov. 25.
However, he recommended that the board defer action on faculty and staff compensation for the coming budget until the financial picture becomes clearer. The board agreed.
Sandridge also reported that the state recently put a hold on $10 million from its higher education equipment trust fund that had been designated to purchase scientific and research equipment for U.Va. The University is working to release those funds, he said.
In his report to the External Affairs Committee, Robert D. Sweeney, senior vice president for development and public affairs, said the economy has not yet had a major impact on fundraising.
"Our numbers appear to be solid in a scary time financially," he said.
The $3 billion capital campaign remains just slightly ahead of schedule, with 59 percent of the goal achieved in 58.3 percent of the elapsed time. The philanthropic cash flow for the fiscal year that ended June 30 was $286.65 million, the second-best year on record.
The University is negotiating with one foundation and five individuals who have the potential to make eight- or nine-figure gifts, Sweeney reported.
"We don't think the top prospects are gone, by any means," he said. "I would bet you anything that when the end of 2011 comes" – the scheduled end of the current campaign — "we will be over $3 billion."
University Struggling to Attract Female Faculty
The gender split among those earning doctorates is about even, but only 38 percent of U.Va.'s offers of tenure-track faculty positions are going to women, and only 42 percent of early-career, tenure-track faculty members are female.
Dr. Sharon Hostler, interim vice provost for faculty advancement and McLemore Birdsong Professor of Pediatrics, outlined those figures Friday in a report to the Educational Policy Committee.
The overall number and percentage of women faculty at U.Va. are increasing, she said, but U.Va. still ranked 52nd among its 61 American Association of Universities peers in 2007.
A survey of faculty recruits of both genders who declined positions at U.Va. found that the most important factor — "by far," Hostler said — was the lack of job opportunities for spouses, followed by salary and geographic issues.
The lack of accredited child care is also a problem, Hostler said, noting that a new faculty member who recently became pregnant discovered that the University-affiliated child-care centers had an 18-month waiting list for infants.
The problem of finding work for both halves of dual-career couples is particularly pointed among women. About 40 percent of women have spouses or partners who are also academics, compared to 34 percent of men. Only 5 percent of academic women have stay-at-home spouses or partners, compared to 20 percent of men.
The University is increasing its efforts to find suitable work for dual-career couples, building relationships with both local employers and the 17 institutions of higher education within an 80-mile radius of Charlottesville, Hostler said.
Additionally, two new child-care centers are late in the planning stages, and the University is redoubling mentoring and networking efforts to boost retention.
In response to a board member's question, Sandridge noted that proposals to boost rail service between Charlottesville and Washington, D.C. "have gotten a little bit of traction lately," and are a potential boon to recruitment efforts.
More Building on the Way
The Buildings and Grounds Committee, meeting Thursday, moved several construction projects forward, but sent two major projects back to the drawing board.
The committee gave the go-ahead to the next two phases of the Alderman Road dormitory replacement project, which will see five of the 1970s-era residence houses razed to make way for four larger dorms – containing 400 additional beds – and a new student commons building.
This fall's opening of Kellogg House creates the capacity to begin the cycle of demolition and construction. The next two phases, starting with the demolition of Dobie House next summer, are expected to cost between $126.9 million and $145.9 million.
The committee also approved a new connection between New Cabell Hall and the under-construction South Lawn Project. The project will create an entry into New Cabell's second floor, sheltered by a third-floor terrace. A new set of steps and a wheelchair ramp from the pedestrian bridge will serve the new entry.
Next spring, Pavilion X will have a new, old look, under another project approved by the committee. The pavilion will be restored to Thomas Jefferson's original design, which included a nine-foot-tall parapet that concealed the peaked roof. The columns will be restored to their original off-white stucco.
The committee also backed an expansion to the Moser Radiation Therapy Center at the Northridge medical complex and a larger video board at Scott Stadium.
Not every project sailed through the committee. Two of the highest-profile proposals – an $88.9 million research building for Arts & Sciences and a $76.3 million Information Technology Engineering building – were tabled when board members balked at the drawings.
Both buildings would face Whitehead Road near Scott Stadium. University Rector W. Heyward Fralin noted that the buildings would be very visible, particularly on football game days, when 60,000 fans are drawn to the area.
"They don't look up to the standards that I would like to see," Fralin said.
Board member Don Pippin agreed. "I don't like it at all," he said, specifically taking issue with both buildings' flat roofs and a metal enclosure atop the research building that would hide its utility systems. "To me, it's not the University of Virginia."
Fralin and Pippin both suggested that the new buildings departed too greatly from the University's traditional red-brick-and-columns design principles. Board member Helen E. Dragas added that she was concerned that the two tall buildings, built atop parking lots, would appear too dense.
University Architect David Neuman defended the plans as compatible with the board-approved University design guidelines, and he said the sites were in accordance with the board's goal of maximizing infill and minimizing sprawl. He noted that the stakeholders for both buildings, including the major donor for the information technology building, had approved the designs.
Nevertheless, the committee voted to table the proposed design and ask Neuman's office for revisions.
'Solid' Year Misses Budget Mark
The U.Va. Health System just missed its budgetary targets for the fiscal year that ended July 30. One part of the reason: too many patients.
Larry Fitzgerald, the Health System's chief financial officer, told the Medical Center Operating Board that the hospital is often filled to capacity and forced to turn away patients, especially on Tuesdays and Wednesdays.
Last year, the hospital denied 564 patient transfer requests from other hospitals. Had they been accepted, the Health System likely would have exceeded its budgetary goals, he said.
The operating budget set a goal of a 4.3 percent margin of revenues over expenses for the fiscal year that ended June 30. Revenues were off slightly and expenses were slightly higher, leaving a margin of 4 percent.
"I would characterize this year as a solid year," Fitzgerald said. "Any year in which you don't make the budget can't be a good year, but it was a solid year."
The capacity issues are being addressed. A 72-bed hospital expansion is scheduled for completion in 2011, and the Emily Couric Clinical Cancer Center is under construction and expected to come online in 2010. Also, a new children's hospital is in the planning stages.
Fitzgerald outlined several areas in which the Medical Center missed its targets. The costs of drugs and supplies were almost $10 million higher than U.Va.'s peer benchmarks. Also, employee compensation — up 22 percent over the past five years — was higher than anticipated, with the number of employees and average salaries both above budget.
Part of the revenue loss is attributable to the Medical Center's mission as a public teaching hospital, Fitzgerald noted.
He noted one case in which a Danville man was denied care at a local for-profit hospital and ended up at U.Va. After running up a $1.6 million bill, he was discharged to a local nursing home, where U.Va. remains financially responsible for his care.
About 8 percent of patients pay nothing for their care, Fitzgerald said. Last year, the Medical Center wrote off $164.8 million for indigent care and another $45.2 million in bad debt — though both figures were below what had been budgeted for.
University Health Plan financially stable / No cost increase in low-premium program
In introducing Susan Carkeek, vice president and chief human resource officer, Sandridge said that, while health care costs across the country were facing substantial increases, the University was trying to slow down the impact on employees.
Carkeek said there would be no cost increases in the University’s low premium program, which she added is a good plan for healthy individuals and families. Monthly costs will remain at $12 for a single, $47 for employee plus child, $54 for employee plus spouse, $116 for family, and $80 for double state.
The high premium program, however, will see increases. Monthly costs will be $42 (up from $38) for single, $147 (up from $134) for employee plus child, $171 (up from $156) for employee plus spouse, $327 (up from $299) for family, and $291 (up from $263) for double state.
The University continues to offer better health care benefits and at less cost than the state plan, Carkeek said.
In her report on the health plan, she said that she and her staff continue to focus on four key goals:
• to provide health insurance benefits that are attractive to current and prospective faculty, staff and retirees
• to ensure financial stability of the plan
• to maintain appropriate reserves
• to keep plan cost increases as low as possible while maintaining financial integrity.
Carkeek added that she wanted to continue to keep up with the current needs of employees by adding enhancements. In the coming year new benefits will include coverage for acupuncture, pain management and dental implants. In the area of wellness benefits, Weight Watchers and smoking cessation programs will now be included.
Open enrollment, Carkeek said, will be Nov. 3 through. 21, with an employee resource fair scheduled for Nov. 13.
Endowment report reflects the state of the economy
Sandridge praised Christopher J. Brightman, the chief executive officer of UVIMCO, and his staff, as well as Yoke San Reynolds, vice president and chief financial officer, and James S. Matteo, director of treasury operations, for their work in managing the University’s resources – especially during recent difficult times.
“To our public and those who depend on us to be good stewards of assets, we are positioned as well as we can be. This is a time when our conservative nature is serving us well,” Sandridge said.
Brightman was quick to get to the core of what Board members clearly wanted to know: How was the endowment doing during the first quarter of the new fiscal year? “Terrible,” Brightman said.
He said the national Cambridge benchmark has been set at negative 10.6 percent. “I expect that we will be in that range, give or take one or two points,” he said.
Putting this quarter in context, he said it ranks with only two previous years. In 1990, during the first Gulf War, the University reported a negative 10.2 percent. And in 1987, during the stock market crash, it reported a negative 12.2 percent. The good news, Brightman said, was that given external fluctuations, the University’s returns have been remarkably consistent over the past 20 years – averaging 14 percent.
He added that he University’s 5.9 percent return on its $5.1 billion endowment for FY 2008, which ended June 30, is likely to land it in the top quartile of higher education performance measures when they become finalized. While Harvard hit a high of 8.6 percent, peer institutions such as Duke, Michigan and Brown reported in the 6.2 percent range.
Odds and Ends
• The highlight of Thursday's Student Affairs and Athletics Committee meeting was an appearance by Lindsay Shoop, the U.Va. graduate who won an Olympic gold medal in August as part of the U.S. rowing team.
"One of my favorite things is getting to come home and share it with other people," Shoop said. With that, she passed the medal around the room.
"Where do you keep it?" one board member asked.
"In my purse," she replied, drawing laughs. "I've only left home without it once or twice, and I felt completely naked."
• The board heard from the University's three newest deans during Friday's Educational Policy Committee meeting. Paul G. Mahoney (School of Law), Dorrie K. Fontaine (School of Nursing) and Billy K. Cannaday Jr. (School of Continuing and Professional Studies) each made brief remarks.
Vice President and Provost Tim Garson said searches for three deans are under way. Three finalists have been identified to become the inaugural dean of the Batten School of Leadership and Public Policy, seven semifinalists are candidates for dean of admission, and the search for a new dean of the School of Architecture is just beginning.