BOV discusses College finances
September 18, 2009
Aggressive tuition hikes may be just one of the ways that the College of William and Mary combats the latest round of Virginia Gov. Tim Kaine’s budget cuts.
Potential tuition increases were among the many solutions suggested by faculty and staff Wednesday and Thursday at the Board of Visitors’s September quad-annual meeting. However, most of the BOV remained quiet on the issue of rising costs, seeking to wait until future meetings to discuss it.
The main concern of the BOV and the campus community was the effect of Kaine’s latest budget cuts on the welfare of the College as a whole.
The issue is drawing attention throughout the College — one of the first meetings Wednesday was packed beyond capacity, forcing additional chairs to be taken from neighboring rooms to accommodate the number of people in attendance.
College President Taylor Reveley attempted to lighten the atmosphere by discussing several of the College’s key accomplishments since the BOV met last April.
Reveley mentioned the hiring of 25 new professors, the record number of freshman applicants to the College, and the seamless transition in most of the College’s senior leadership.
“Great people are in place,” he said. “People are crucial. Without great people, even a huge endowment will be useless.”
Reveley also stated that the leadership was intent on designing a new financial model, one that does not rely heavily on the state to cover the institution’s operational costs.
“We are deadly serious, in a very sophisticated fashion, in trying to come up with a new financial model that does not heed upon the unrealistic expectation that the state will provide for our operating budget in the way that it used to provide for our operating budget,” Reveley said.
The BOV received positive news on the status of the College’s endowment from Wells Fargo, the investment bank charged with investing the endowment.
Wells Fargo reported that the College’s portfolio had gained back around 17 percent, or $46 million, of the money it lost during the recessionary period of 2008.
The good news did not extend to Vice President for Finance Sam Jones’s report on the College’s finances.
Jones explained that the state, in addition to the $10.5 million budget shortfall they had foreseen, had just added another $6.2 million to the shortfall with Kaine’s current budget cuts.
In response to this additional cut, Jones explained that a majority of the $7.6 million federal stimulus money would now be allocated to the current fiscal year.
Jones also discussed the one-day furlough proposed by the governor’s office — a plan that will save the state an estimated $15 million without affecting the retirement benefits of state workers.
“The idea is that you don’t work, and you don’t get paid,” Jones said. “We don’t appear to have the flexibility to say we’re not going to do the furlough and cut somewhere else, nor do we have the flexibility to add additional furlough days.”
A furlough would not take effect until approved by the Virginia General Assembly.
For the fiscal year 2010, with the addition of Kaine’s budget cuts, the College would have to tackle a $3.35 million shortage, Jones said.
Because of the increase in cuts by the state, Jones said that a large portion of the federal stimulus funds given to the College from President Barack Obama’s policies would have to be moved to the current fiscal year to alleviate some of the pain.
“We can eat nuts and berries for a couple of years,” Reveley said, but he stressed that this was not a long-term solution, and that a new financial plan independent from the state had to be forged.
“We’re a public university with declining public support,” new BOV Rector Henry C. Wolf ’64 J.D. ’66 said in response to one member’s comment that the College was not state-funded anymore, but state-supported.
During a meeting of the Committee of Academic Affairs, Provost Michael R. Halleran highlighted the importance of keeping the College’s decision making independent of monetary hindrances.
“There are a lot of things that we do control,” Halleran said. “The most important things that happen on this campus — who we hire, what we teach, whom we teach, how we teach it — all of these are things that we decide, regardless of what our budget is.”
But Kate Slevin, chancellor professor of sociology and Chair of the Faculty Assembly’s Liason Committee to the BOV, disagreed, responding that faculty at the College simply had come to the point of losing faith in the institution’s ability to raise revenue.
“We are very worried to the point of being discouraged,” Slevin said. “We’ve had cut after cut … our biggest concern is the integrity of the academic program.”
Slevin explained to the committee that with low salaries, no raises, larger classes and more students, faculty had come to the belief that it was almost impossible to keep up with the international standards that the College expects of them.
“Please find revenue,” she said. “We really are asking that the BOV be bold, really bold, bolder than you’ve been in the past, and we think you must be extremely aggressive in finding other forms of revenue.”
Gene Tracy, FA president, also stated that the faculty members of the Faculty University Priorities Committee (FUPC) had unanimously voted earlier that week to have the BOV consider aggressively raising tuition in coming years.
But the faculty was not the only entity to believe tuition should be increased.
Reveley and Halleran were in unison during the Committee on Strategic Initiative meeting, stating that the most logical way to solve the budget problem was by raising tuition within reasonable limits while simultaneously increasing need-based aid, a dramatically new plan for public institutions.
The Committee of Strategic Initiatives’s meeting witnessed a heated debate among BOV members when guidelines for a new financial model simply tweaked the existing model. BOV member and Committee of
Financial Affairs Chair Charles A. Banks III was concerned that the College should be coming up with an original model for how it was going to handle financial affairs.
“I’d hate to miss the opportunity, while the economy is keeping us in heat, to get more efficient,” Banks said.
Reveley responded by stating that there really was not a strategic plan out there for a public university like the College to adopt.
“Rich privates have spent money like drunk sailors and left no financial model for themselves or others,” Reveley said.
Others, like Wolf, agreed with Reveley, stating that in a world where change is inevitable, the strategic plan should be something that can ensure the future of the College.
“We need to look at the strategic plan like a work in progress,” Wolf said. “Let’s look at the strategic plan like an evolving plan.”
The BOV opened their first meeting of the year with the introduction of two new members, Dennis H. Liberson ’78 and Michael Tang ’76, to the Board. Pending approval from Kaine, the two will replace outgoing members Barbara B. Ukrop ’61 and Michael Powell ’85. Due to a previous commitment, Tang was not present at the meetings.