The Joint Legislative Audit and Review Commission, the investigative arm of the Virginia General Assembly, on Monday issued a report, “Review of Non-Academic Services and Costs at Virginia’s Public Higher Education Institutions.” The review of auxiliary enterprises is the latest in a series of reports issued by the commission as it studies the cost efficiency of the commonwealth’s institutions of higher education and seeks to identify opportunities to reduce the cost of public higher education in Virginia.

Auxiliary enterprises covered in the report include intercollegiate athletics, student housing, student dining and recreation facilities and operations. These enterprises receive no state funds, but receive some funding through student fees.

The commission’s report of all public higher education institutions in Virginia had four key findings:

• Intercollegiate athletics do not generate enough revenue to cover expenses and depend heavily on mandatory student athletic fees to subsidize athletic programs.
• Student access to campus recreation facilities costs less than private sector alternatives.
• Student housing and dining costs, on average, are about the same or less than other higher education institutions nationally.
• Most higher education institutional debt is for auxiliary enterprises and student fees pay the majority of the debt service.

The story of auxiliary enterprises and their costs at U.Va. largely runs counter to the trends highlighted in the JLARC draft report. Compared with the other public institutions in the report, U.Va. fares reasonably well.

Auxiliary services are an important part of the fabric of life at universities and colleges. They also are accompanied by costs, which are partly covered by student fees, among other sources. So it is understandable that JLARC would wish to review the level and trajectory of those costs.

Auxiliary enterprises – including its dining services, high-quality residence halls, athletics programs and recreation facilities – significantly enhance the overall experience of students on Grounds. These services contribute to increased student engagement, leadership development and graduation and retention rates. U.Va. had an average freshman retention rate of 97 percent in 2012, and an actual graduation rate of 93 percent. Both statistics are national leaders among public universities.

The JLARC review found that, on average, approximately 12 percent of tuition and fees statewide is used for athletic programs. At U.Va., the percentage of tuition and fees used for athletic programs is 5 percent. Students at U.Va. pay a relatively low student athletics fee compared with students at other institutions; the student athletics fee at U.Va. is $657, while the state average is $1,185.

In return, University students receive a direct benefit by having access to home athletics events.

Athletic programs play an important role in the overall college experience, build general community goodwill and foster relationships with key stakeholders that benefit the institution as a whole.

The report correctly notes that U.Va. has higher-than-average prices for its dining plans. Multiple factors contribute to this, including maintaining and supporting a dining program that offers a wide variety of choices and options; elevating the quality of the dining program with an emphasis on better-quality food products; and implementing a robust sustainability program that includes purchasing local, organic and fair-trade food products and reusable or compostable disposable ware.

The cost of  U.Va.’s dining plans is commensurate with the quality of the product, while meeting the growing expectations of students.

Finally, the report states that auxiliary enterprises are funded primarily through the issuance of bonds, with students paying the majority of the debt service. Debt provides a low-cost option for financing projects, aligns the cost of facilitates with the actual future users of the facilities, provides a dedicated revenue source to repay debt and assists in meeting the requirement that auxiliary operations remain self-supporting functions of the institution.

The state requires that auxiliary enterprises are completely self-supporting and must generate sufficient revenues to offset operating and capital expenses. Auxiliaries pay overhead charges to institutions to fully cover the cost of support services and are subject to state actions with regard to salary increases and benefits. Auxiliaries build and maintain reserves for major maintenance and repairs, as well as renovation of existing physical plant and construction of new facilities.

A draft of the JLARC report may be viewed online.