The University of Virginia won widespread praise, including from Gov. Robert F. McDonnell, for keeping its tuition increase for in-state undergraduates at 3.7 percent for the current academic year, the smallest increase in a decade.

But what’s next?

Discussion among members of the Board of Visitors at their Friday meeting in the Harrison Institute/Small Special Collections Library auditorium signaled that the lengthy discussion is just beginning – a discussion that won't be final until 2013-14 tuition is set in April.

Though public sensitivities to tuition increases and accompanying political pressures are important, several at the meeting said tuition, state funding trends and operational needs create a complex stew that isn't easy to analyze. U.Va.'s in-state undergraduate tuition and fees increased from $5,169 in 2002-03 to $12,224 in 2012-13.

Board member Frank B. Atkinson, for example, stressed that Virginia colleges largely have been raising tuition not to fund new programs or operational needs, but to help make up for consistent declines in state money.

While state money for higher education increased slightly in Virginia for the current budget cycle, it has been on a steady downward trajectory for years. At U.Va., state funding as a percentage of the operating budget for the Academic Division was 15.8 percent in 2002-03, and was down to 10.2 percent in the current fiscal year. It makes up just 6 percent when including the Academic Division, the Medical Center and U.Va.’s College at Wise.

Looking back yet another decade, in 1992-93, state funds accounted for 24.1 percent of the Academic Division operating budget. Those dynamics mean U.Va. “must keep an eye on the evolving situation at the state level,” Atkinson said.

Like other state universities, U.Va. must regularly revise for state officials a six-year plan that includes updates and projections on multiple issues, including projected tuition increases. Finance Committee Chair Victoria D. Harker said the six-year update due in October will include an estimated tuition increase of 2.5 percent to 3.5 percent.

Board member Dr. Edward D. Miller said inflation has been averaging 1.8 percent to 2 percent annually in recent years, yet colleges and universities have routinely raised tuition during this period by twice that rate or more.

"How long can we justify that?" he asked after a presentation on the University’s fiscal condition that was part of the Finance Committee meeting. Miller questioned whether U.Va. has considered limiting its tuition increases to the rate of inflation.

In response, President Teresa A. Sullivan said looking only at tuition increases misses important context. For example, she said, of the 3.7 percent increase for this academic year, U.Va. is able to use only the revenue associated with 1.2 percent of the increase. The remainder is consumed by operational and other new costs that the state has passed down, which the University must cover.

Board member Linwood H. Rose, president emeritus of James Madison University, said his research shows that U.Va.’s tuition trends deserve to be viewed from an angle other than percentage increase. Adding together state general fund appropriations and money from tuition per year, he said, U.Va. currently has fewer dollars per student than it did in 2000-01.

Rose said the University must stay vigilant in efforts to keep college affordable, but he added that, when it comes to tuition, U.Va. is “really in pretty good shape here.”

Also at Friday’s meeting:

• Senior Vice President for Development and Public Affairs Robert D. Sweeney told the External Affairs Committee that the University’s $3 billion campaign now stands at $2.76 billion, and he predicted the goal will be reached by next spring. Sweeney said Reunions giving, alumni giving and online fundraising all are showing strong gains. Online giving surged from $1.4 million in the 2008 fiscal year to $6.8 million in 2012.
• A new board committee, the Special Committee on Governance and Engagement. discussed preliminary ideas to reduce the board’s number of standing committees from 10, appoint fewer members to each committee and have committees meet concurrently. The governance committee also advanced the idea of increasing the membership of the Executive Committee by one and adjusting how many members would constitute a quorum. No votes were taken, and the changes will be considered at a future board meeting.
• The board voted to name the under-construction indoor practice facility adjacent to University Hall the George Welsh Indoor Practice Facility, in honor of the former U.Va. football coach who led the program to national prominence during his tenure from 1983 to 2000. It approved naming the Fralin Museum of Art front entrance plaza as The Joseph and Robert Cornell Memorial Foundation Entrance Plaza, in appreciation for the generous support of the Joseph and Robert Cornell Memorial Foundation. The board also voted to name a garden on the grounds of the Miller Center the Gibson Orchard Garden, in honor of the contributions of former Miller Center Foundation Director David E. Gibson and his wife, Linda.

Medical Center’s Operating Margin Surpasses Target

The U.Va. Medical Center’s financial performance in fiscal year 2012 exceeded expectations, Health System leaders said at Thursday’s meeting of the Medical Center Operating Board, held in conjunction with the Board of Visitors meeting.

The Medical Center’s $77.9 million in net income exceeded the $57.7 million projected for fiscal year 2012, while the 6.4 percent operating margin exceeded the projected 5 percent margin.

Admissions were up 2.5 percent during fiscal 2012, said Larry Fitzgerald, associate vice president for business development and finance. The number of surgeries performed as well as the number of patients cared for in the emergency room, on the inpatient units and as outpatients at the Health System’s clinics all exceeded prior years and budgeted projections.

The Health System has seen consistent growth over the past decade in the number of patients treated; for instance, the number of surgeries performed at U.Va. has increased by one-third over the past 10 years, Fitzgerald said.

“By and large, we have seen growth across the organization,” he said.

In other business, the board:

• Learned that the Medical Center has met the Stage 1 requirements for “meaningful use” of its electronic medical record system from the Centers for Medicare and Medicaid Services. Obtaining the meaningful use designation will earn the Medical Center $4 million in federal incentive payments. U.Va. is the first hospital in Virginia to obtain meaningful use designation for Medicaid.
• Learned about the success of UVA Care Connection, a concierge program offered to U.Va. employees and their families along with select companies in the Charlottesville area. About 16,000 appointments have been made through the program since its launch in January 2010.
• Saw an example of the efforts to enhance patient care, as demonstrated by improvements in limiting the number of hospital-acquired pressure ulcers. The Medical Center has reduced its rate of pressure ulcers below the median reported by UHC, a national organization of academic medical centers.

The Medical Center also learned this week that it received the 2012 Sustainability Award from UHC. The organization cited the Medical Center’s commitment to sustainability, its development of ways to measure progress toward its sustainability goals and its communication efforts.