Includes audio clips

Aug. 3, 2009 — When it came time for him to pick a college, W. Heywood Fralin wanted to go somewhere other than where his brothers went.

So he didn't choose Virginia Tech. "It came down to the University of Virginia," he said.

He walked down the Lawn in 1962 as a psychology graduate of the College of Arts & Sciences, but he never truly left the Grounds. He is a past member of the Board of Managers of the University of Virginia Alumni Association, past president of the Virginia Student Aid Foundation (now the Virginia Athletics Foundation) and, in 2004, was appointed by Gov. Mark Warner to the Board of Visitors.

In June he completed a two-year term as rector of the University, and in July was named to the committee that will search for a successor to President John T. Casteen III. Fralin will finish his term on the board in 2012.

As chairman of the Virginia Business Higher Education Council, Fralin recently helped launch "Grow by Degrees," an initiative aimed at increasing state support for higher education and awarding 70,000 more degrees by 2020 as a way to secure Virginia's economic future.

Fralin is chief executive officer of Medical Facilities of America Inc., which operates nursing homes in Virginia and North Carolina, and Retirement Unlimited Inc., which operates retirement centers in Virginia. He lives in Roanoke.

On a recent morning, Fralin sat down with U.Va. Today's Marian Anderfuren to reflect on his term as rector, the impending retirements of Casteen and Executive Vice President and Chief Operating Officer Leonard W. Sandridge, and his aspirations for Grow by Degrees.

U.Va. Today: You graduated from U.Va. 47 years ago. What inspires people to stay engaged? What inspired you?

Fralin: Shortly after I graduated, I became involved in the University's Student Aid Foundation, which is now the Virginia Athletics Foundation, and that not only created an interest in athletics, it also exposed me to other components of the University. Involvement is the key – early involvement is the key to making sure people remain connected.

U.Va. Today: You talked to an incoming class this morning at orientation. When you think about the student experience you had and the student experience they're going to have, what comes to mind?

Fralin: We are a much more global university today. We focus on global students, global faculty; we are interested in our students having a global experience while they attend the University, and in our teaching we are interested in developing a global perspective because these students will have to interact with people from other nations throughout their lives.

U.Va. Today: Any thoughts on the presidential search?

Listen to W. Heywood Fralin talk about the presidential search:

Fralin: [John O.] Dubby Wynne, who's the chairman of the search committee, has put together a very capable committee, and it will search the world over to come up with the very best president that can be secured for the University. This position is one that will be attractive to many, many qualified university presidents.

U.Va. Today: When you think about a new president having such a tough act to follow, have you formed some ideas about characteristics of the next president?

Fralin: Clearly the next president will have to be a terrific fundraiser. It's evident that the University is not going to be able to rely on significant state support in the future, so to properly fund the University will require private dollars.

The University will certainly have to focus on diversity. In addition, I think we have to focus much more on science, technology, engineering and mathematics, particularly as they affect research. The University has done a great job as a liberal arts institution. It has not focused as much as I'd like to see it focus on the research component. It's very important that the next president understand that that is a significant factor at the University. And then all of the schools at the University, whether graduate or undergraduate, need to be ranked at the top of their peer groups, so we're going to have to focus on finding the president who will understand that we want to be the best of the best.

U.Va. Today: You're the CEO of a business, and you've seen businesses come and go over your career. Leadership transitions are really difficult. What are some things the University has to be on the lookout for in terms of how smoothly this transition takes place?

Fralin: We're facing not only the transition of the president, but also the executive vice president in charge of administration, and so we have the two top officers of the University who are transitioning over the next 18 months. That is a significant challenge. John Casteen has been president of the University – it'll be 20 years when he retires. He has institutional knowledge that has been extremely important, and his fundraising capabilities are second to none. The same can be said for Leonard. I don't think there's a university in the country that's run better than the University of Virginia. You hear it time and time again, from members of the General Assembly, people in the governor's office and people throughout the country.

Finding people to replace that kind of leadership is extremely difficult. The most important thing is to make the right decision, not to make a quick decision.

U.Va. Today: What do you see as the most significant things that the board accomplished during your term as rector? The Commission on the Future of the University, with that focus on research, comes to mind.

Fralin: I don't want to unduly take credit. The committee responsible for planning the future of the University has been in existence long before I served as rector, and the Commission on the Future really grew out of that planning committee. I have been very focused on implementation of the very fine suggestions that the committee on planning and the commission came up with. One of those suggestions has to do with research, and we absolutely have to focus more on science, technology, engineering and mathematics. A lot of people believe that someday there are only going to be 50 universities that will be significantly funded by federal agencies; if that's the case, it's very important that U.Va. be one of the 50.

We've added several research buildings within the last couple of years. We opened the Carter-Harrison research building. In addition to that we started construction on the technology research building and the College research building over by Scott Stadium. Those additional research facilities will make a significant impact on our research here at the University.

We have created building maintenance reserves for all our new buildings and begun to institute reserves for all of the existing buildings. The state has not funded maintenance of our buildings as we would like, and we've taken the initiative to make sure we have the funds to do that.

We've developed better communications with General Assembly members and with the governor's administration. As issues arise, it's important to keep those lines of communication open.

I'm happy that we have come to terms with a rather unified design plan for the core areas of the University, which I would call from the area around Scott Stadium to the vicinity of Beta Bridge. That is a sensitive area, and in the past a lot of our supporters and alumni believed some of the buildings have not been in keeping with the architecture that Thomas Jefferson would have supported. We've been very sensitive to that and developed a plan for how buildings will be designed.

We've brought U.Va.-Wise much closer to Charlottesville. It's a significant part of the University, and one of which we can be very proud.

We have strengthened a number of programs at the University. The new Batten School [of Leadership and Public Policy] is a huge addition, and it's an area of leadership that's really not addressed at any other institution in the nation. And the improvements at the Miller Center are certainly worth noting. It's a significant effort that's been rewarded with greater exposure. Jerry Baliles has done a terrific job there.

Also in terms of research, I'm proud we have looked for additional funding sources. We asked the Medical Center, which currently applies all funds that are remaining at the end of the year to medical research, to look for ways to provide savings so we can add funds to research. And there are other things that we think will be very productive down the road, not the least of which would be encouraging donors to consider research as a major byproduct of their contributions.

There are some things we're constantly working on from year to year, like the endowment. We've improved diversity at the University, but we still have a way to go. AccessUVA is something we're very proud of, and we continue to fund AccessUVA to a greater extent every year – even though we're in very difficult financial times – because we think it's important.

For a number of years we have been focused on developing a unified agreement with all of the University foundations and having them become more involved in the decision-making process. We finished this agreement, and it is working extremely well. We have three Council of Foundations members who attend board committee meetings and they have significant input.

Looking toward Leonard's retirement and having experienced [Alexander "Sandy" Gilliam's] retirement, we felt it was important for us to look toward expanding the roles of various individuals. When Sandy retired and we chose Susan Harris to become secretary of the board, we expanded the role of the secretary since she brought a number of her duties from Leonard's office. When he retires, it's going to be difficult for any one individual to replace him.

And finally, the elimination of early decision in admission. Not only has that been widely accepted, but it is viewed by many other institutions as the right thing to do. No question that it's one of [the late] Jack Blackburn's legacies as dean of admission.

U.Va. Today: You've said a couple of times that you don't expect the state to provide significant support. I guess it's $150 million they give us. It's not chump change, but it's a very small percentage of the overall budget.

Fralin: It's not chump change, but we're probably under 6 percent of the annual budget of the University, or we will be after the next cuts. The only good news is that when we reach the point that it's zero, we won't be able to incur additional cuts. But it's important that we continue to be funded. It would take another $3 billion in endowment funds to provide $150 million annually.

U.Va. Today: At zero, is U.Va. still a state institution?

Fralin: We'll always be a state institution. We very much believe in the public model. We are here to serve the commonwealth of Virginia, and while we have a significant number of out-of-state students – about 30 percent – they really increase the exposure of Virginians to other geographic areas and cultures in the U.S. and in the world.

U.Va. Today: The in-state/out-of-state issue is probably going to surface again in the General Assembly.

Listen to W. Heywood Fralin speak on the in-state/out-of-state issue:



Fralin: We very much believe that the ratios we have today are the correct ratios, about 70/30, and we've had those ratios for a long, long time. It has worked well for the University. An awful lot of out-of-state students remain in Virginia once they graduate, and I would also note a lot of them contribute back to the University once they graduate. It would be a real mistake for the General Assembly to determine that we need to increase the ratio of in-state students

U.Va. Today: How do the board and administration make that case? And to whom?

Fralin: We make the case to the governor, to the General Assembly and to the public. We have some very valid entrance criteria that any qualified Virginian who wants to attend the University can attend. We now have the two-plus-two program with our community colleges, which guarantees that a student who goes to the community college and takes the required courses and achieves the required academic results will be admitted, and that's a guaranteed admission. With AccessUVA that's true even if they don't have the financial means.

It's in the best interest of commonwealth that the ratio remains where it is today. With the funding resources that the state provides currently, [out-of-state tuition] is a significant source of revenue for the University of Virginia. The out-of-state students pay about 1 1/2 times the actual cost; and so therefore they are benefitting the in-state students significantly because they're subsidizing the in-state tuition rate. And the thing we discussed previously… the global perspective. It's extremely important for the Virginia students to develop the diversity that is developed by having exposure to students from other geographic areas of the United States and other cultures throughout the world.

U.Va. Today: Let's talk a little about the Grow by Degrees initiative. Where did that bubble up from?

Listen to W. Heywood Fralin discuss the Grow by Degrees initiative:

Fralin: You probably have to go back to the beginning of the Virginia Business Higher Education Council, which started I believe in 1994. It was created at the invitation of the Council of Presidents, which had suffered cutbacks [at their institutions] due to a downturn in economy at that time. They found their messages to members of the General Assembly and to the administration were not being heard, or at least not being answered, and they needed some help. They asked the business community to become involved and encouraged them to lobby the General Assembly to help with funding for higher education. I think it made an impact early on; there were a lot of business members involved, probably approaching 100, significant excitement at meetings that were held, real enthusiasm for supporting higher education.

But as the years passed, the same message began to have less of an impact. And yet many business people believe that the real key to success for the Virginia economy is higher education; it's probably the most important component of economic development. It made little sense to a lot of us to see year after year the cuts that were made to higher education, when it really was the key to our future.

And so we thought that there are a lot of things that needed to be done to correct that. First of all, the public needed to be informed about the importance of higher education – not that they're uninformed, but it's not something that is on the public plate like K-through-12 education. In addition to that, there was a real concern about the fact that only 38 percent of college-age kids are actually attending college. The United States for years led the world in the percentage of high school graduates who were attending college; today we're 12th, which is a dangerous statistic in a knowledge-based economy. We need to increase that 38 percent to at least 50 percent, and if we do it we're confident that the economy in Virginia will be a model for the country and for the world.

While it will take a few years to see the results, we are confident of what the results would be, and we think it's something the commonwealth needs to start working on very quickly.

We started meeting with the Council of Presidents to talk about whether they believed this was an effort we ought to pursue as an organization. The college presidents were excited about the effort; they believed it was something that is long overdue. So we've embarked on a private fundraising campaign – there are no public dollars involved in this – to do three things. One, to inform the public of where we stand today in terms of our support for higher education and how important it will be if we improve that support; secondly, to encourage the current candidates for governor to make higher education a significant part of their campaigns and to encourage the successful candidate to make funding and improvement of higher education an important focus of their administration; and then the third component would be to have the same discussion with the members of the General Assembly, to encourage them to support better funding.

And it's not just funding. We need to do a lot of things better. Our community colleges are a terrific resource and a successful resource, and we really haven't done a very good job of making sure they're not only funded, but they are used. We need to encourage the public to use our community colleges, because that's an opportunity to go to college for a reduced price and then transfer to a four-year institution, or develop job skills.

We need to do a better job of using distance learning, which is also cost effective. Not only do we want to focus on additional funding, but also on additional ways of doing a job more effectively and efficiently.

U.Va. Today: Facing another budget cut, possibly up to $19 million – when you look at that financial reality, how realistic is it for Grow by Degrees to say we need to increase funding?

Fralin: That's a matter of priority. The Virginia budget is still $70 billion, and the higher education component of that budget is not anywhere near the largest component of that budget. And so while there are tough choices, the question really becomes what are the priorities of the commonwealth? Higher education, unfortunately in the past, has not been the highest of priorities, and we think it ought to be, because that's what's going to make the Virginia economy really ignite.

You only have to look at the earning powers of college graduates to see what tax revenues it would bring to the commonwealth. Plus when you think in terms of all the businesses that college graduates will be starting, and all the jobs they'll be creating, it just makes a lot of sense. If you want to increase the tax revenues of the commonwealth of Virginia, you do it by supporting higher education.

U.Va. Today: Investment doesn't seem to be something that resonates in the General Assembly.

Fralin: It's not something that will happen tomorrow. But the results will be so overwhelming that the question is not should we do it, but the question really is how do we not do it?

U.Va. Today: What's your role with this coalition? Meeting and greeting the candidates for governor, the General Assembly…

Fralin: We have already met with the gubernatorial candidates, and we're very encouraged because both do have higher education components in their campaign literature, and both have indicated a real interest in better supporting higher education in the commonwealth. We have a lot of things to do. We have to determine just what is the best way to inform the public of the importance of higher education. We have to raise the dollars to make this happen, probably something in the $2- or $3 million range, but we're confident we can do that. We also are confident we'll come up with some ideas that will resonate with the gubernatorial candidates and General Assembly about how to better serve the commonwealth in terms of providing an education for more people with fewer dollars

U.Va. Today: You're going to have a conference in September, tentatively.

Fralin: What we'd like to do is have a really well-known national speaker who could attract a large crowd. Last year the Virginia Business Higher Education Council had Eric Schmidt, the CEO of Google, and we had 1,000 people. You always think in terms of a Bill Gates or some other national leader … that's the kind of thing we're looking for.

U.Va. Today: You're a big athletics fan and supporter. Do you come to football games?

Fralin: I do come to football games. Athletics are a very important component at U.Va. We have to keep athletics in the proper perspective; we have to expect our athletes to be student-athletes. Look at the excitement that the baseball team just created with their participation in the College World Series. That's really good for the University.

U.Va. Today: Are you hopeful with the coming football season?

Fralin: I'm always hopeful. While you'd like to win every game, it's unrealistic, but I hope we have a respectable season.

U.Va. Today: What about Tony Bennett, the new basketball coach?

Fralin: I'm really excited about him. He's just a tremendous individual who's interested in the future of the athlete – he wants to make sure the athlete gets a proper education. He has all of the proper perspectives, and I predict he'll be tremendously successful at the University.

U.Va. Today: You mentioned the College World Series. Were you happy for the baseball team?

Fralin: Oh yeah. The only thing that was bad about it was that you stayed up half the night watching, you got to bed at 2 or 3 in the morning and you were just dead the next day. But it was fun to watch, and the kids handled themselves so well. You're just really proud to have them as representatives of the University.

And our tennis team, our swimming team and our lacrosse team – the list just goes on and on and on with success stories in athletics at the University. We finished eighth in the Director's Cup and that's a real indication of how well we do. And not only do we do it well in terms of the won-lost record, but we do it well in terms of the respect for the athletes and their tremendous representation of the University. They're great ambassadors.

U.Va. Today: One more question: Your favorite place on Grounds.

Fralin: Without question, the Rotunda and the Lawn.