UVA’s $2.3 billion fund dwarfs Virginia’s own cash reserves
- The University of Virginia (UVA) has amassed a $2.3 billion “strategic investment fund,” prompting elected officials to weigh in on how the money should be spent.
- The fund is nearly three times larger than Virginia's $800 million reserve fund, and several state legislators are proposing a tuition freeze until the money is spent.
The University of Virginia (UVA) has amassed a $2.3 billion “strategic investment fund,” prompting elected officials to weigh in on how the money should be spent.
UVA has an operating surplus “that is significantly larger than the Commonwealth’s own cash reserves,” according to Chap Petersen (D-Fairfax City) and Scott Surovell (D-Fairfax), who have proposed forcing the University of Virginia to freeze its tuition “until we can figure out what’s going on,” reports Bearing Drift.
“Both senators agree the money, which the university admitted arises from its operating accounts, should be returned to Virginia students and families through lower tuition,” said a press release from the state senators.
“We need to, [at] a minimum, freeze tuition until we can figure out what’s going on with this $2.3 billion dollars,” said Petersen. “There is no reason to have a surplus of operating funds, at least of that size, unless you are systematically overcharging for services.”
Surovell recommended that the university freeze or decrease tuition “until this reserve is reduced to a more appropriate level.”
“Let’s not hide this as a ‘personnel matter,’” Petersen declared in his appeal to UVA. “This goes to the fundamental purpose of the university.”
Senator Surovell told Campus Reform that he believes UVA was charging more tuition than necessary to meet expenses.
“Tuitions at all Virginia universities has [sic] been increasing in excess of the national average and Virginia's Government [sic] has been underfunding higher education for years,” Surovell asserted.
“When I attended James Madison University, Virginia covered two-thirds of the cost of college education at JMU, UVA, and other state-supported schools. Today, Virginia only covers one-third,” he explained. “While this has created pressure on UVA to find more money, it does not justify over-charging students and then hoarding the profits to use for special projects.”
The senator also blasted executive sessions, or private meetings conducted by universities, arguing they are “overused and there are not enough consequences for improper use of executive session under Virginia's Freedom of Information Act. We need to revisit that.”
This criticism from the state senators comes on the heels of a statement released by William Goodwin, Rector of UVA’s Board of Visitors.
"All of the board’s actions regarding the strategic plan and the long-term financial plan have been discussed and voted on in public session,” Goodwin asserted. “The monies have always been included in the University’s audited financial statements, which include the operations of the UVA Medical Center, representing more than half of the University’s operating revenues.”
Goodwin added that he has requested that the UVA administration concerning work in this area, according to NBC29.
UVA Rector emeritus George Keith Martin also justified the creation of the fund in an op-ed for The Roanoke Times.
“Given that a significant portion of the university’s revenue budget is derived from the endowment earnings, a healthy reserve fund was a prudent way to protect the school in the event of a downturn in the market,” he writes.
“Indeed, at one point during the recent recession, the value of the endowment was down 30 percent. Also, a couple of years ago, the state did not have a budget. Even though we were collecting tuition, we could not spend it without an appropriation,” he recounts. “Fortunately the state adopted a budget before we had to use our reserves, but that was our strategy to continue to operate the university. In large part, the interest on these reserves will fund the proposed strategic investments.”
The endeavor to increase UVA’s transparency might be a bipartisan effort. Another Virginia state senator, Bill DeSteph (R-Virginia Beach), added his voice to the call for more accountability.
“From a strategic reserves standpoint, the state's rainy day fund or reserve fund is $800 million,” said DeSteph. “This is three times the amount of the state reserve and this is a state agency—a public university—and they feel they need something three times the size of the entire state of Virginia.”
Senator DeSteph also forwarded Campus Reform an email that he sent to Rector Goodwin and UVA president Teresa Sullivan in which he expressed annoyance with the university’s activity surrounding the fund and demanded that the institution decrease its tuition costs.
But S. Chris Jones (R-Suffolk), Virginia’s House Appropriations Chairman, disagrees.
“I think they’ve been very transparent,” said Jones, who has criticized academic spending in the past. “You can have a legitimate debate over the use of the funds, but I do not agree it’s a slush fund. Their financial aid plan is one of the best in the nation for a public institution.”
But Helen Dragas, a former Rector for UVA’s Board of Visitors, sided with DeSteph and the Democrat senators in an op-ed for The Washington Post, arguing that the funds could be better used to make education more affordable for poorer students.
“A conservative estimate of [the operating surplus’] annual earnings potential—$100 million—could be used to cut the tuition of all in-state undergraduates by 70 percent,” she complains, scoffing that instead, “one recent proposal suggested a $50 million program for self-care training to include journaling, meditation, and yoga for nursing students.”
Dragas goes on to suggest that the Virginia General Assembly and Governor Terry McAuliffe (D) should work to increase accountability and transparency at public colleges by mandating better training of board members, not permitting people from outside Virginia to serve on the board or certain important committees, and creating “public comment periods” for the Board of Visitors and accountability to taxpayers.
Dragas also reflected on what she viewed as a “disconnect” between elites and the public, saying it is evident at both the international level, in the form of Brexit, as well as the university level.
“Despite significant growth in state and federal funding, the [Board of Visitors] has voted to raise tuition for new students by 30 percent since 2013,” she notes. “Administrators regularly seek—and get—annual raises for faculty well above the rate of inflation.”
Dragas expresses guilt at eating filet mignon, crab cakes, and fancy desserts with fellow UVA board members shortly after reading about a UVA student who had to beg online for money to eat and pay tuition.
UVA’s Office of University Communications shared the school’s perspective of the situation with Campus Reform, asserting that “minimizing tuition increases is at the heart of the Fund,” and noting that UVA is one of only two public universities in the United States that fully covers the demonstrated needs of its students.
UVA also reiterated that the fund does not contain tuition revenue, and that discussions regarding the “evolution” of the fund were public, listing “access and affordability for Virginians” alongside labs, equipment, and information technology as considerations for the fund’s use.
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