June's events brought a number of challenges facing the University to the forefront, including concerns about online education, health care and the pace of change. Questions were also raised about the University's finances, including issues of declining state funding, flat faculty salaries and the sustainability of existing budget models.
In remarks to University deans and vice presidents on June 10, Board of Visitors Rector Helen Dragas said, "We see no bright lights on the financial horizon as we face limits on tuition increases, an environment of declining federal support, state support that will be flat at best, and pressures on health care payers."
In a later email outlining challenges faced by the University, Dragas pointed out, "Since 2000, state funding per student has declined from $15,300 to $8,300 per student in constant dollars."
To better understand the background of these concerns, the following is a crash course on the basics of UVA's finances.
There are two basic ways to view the University's finances
- All University divisions, including the Medical Center's hospitals and clinics and the University's College at Wise. For 2012-13, the University's budget as a whole is $2.6 billion.
- The academic division, which encompasses all schools and operations but excludes the Medical Center and UVA's College at Wise. The figures used on this page relate to the academic division. The academic division's 2012-13 budget is $1.36 billion.
Where does the money come from?
32.4% Tuition and fees
22.6% Sponsored programs (federal research grants, etc.)
12.4% Sales and services
Revenues generated by activities including housing, dining, UVA Bookstores, athletics, etc.
11.2% Endowment distribution
10.2% State appropriations
8.2% Expendable gifts
How is the money spent?
61.8% Academic enterprise
Includes direct instruction, research and public service, academic technology, libraries and student services
15.8% Auxiliaries (e.g., housing, dining, student health, athletics)
9.4% Operation and maintenance of the physical plant
7.3% Student financial aid
5.8% General administration
Why does tuition continue to go up?
- The Commonwealth of Virginia, along with other states, continues to shift the responsibility for paying for higher education from the general tax-paying public (by reducing state funding) to University students and their families.
- The cost to educate a student continues to rise. Although University employees have not seen a comprehensive salary increase since 2007, the cost of health and retirement benefits continues to grow. Meanwhile, as faculty retire and as the student enrollment expands, an increasingly competitive marketplace drives up the cost of hiring new faculty. The budget office projects that "half of the faculty who will be at the University of Virginia in 2020 are not on Grounds today."
How does the financial aid program work?
What about the $5.347 billion endowment—shouldn't that solve most financial challenges?
Only a small percentage of the endowment's assets can be spent annually (ranging between 4 percent and 6 percent of assets).
The estimated endowment distribution for fiscal year 2012-13 is about $138.9 million. Of that amount, about 68 percent, or $94.5 million, is currently restricted to donor-designated purposes, such as support for a specific school, a particular research program, a professorship or a scholarship. About 32 percent, or $44.5 million, is unrestricted endowment income, which is currently committed to Board of Visitors' priorities such as AccessUVa, enhancing faculty salaries, improving the residential experience of students and graduate fellowships.
Sea Change: Academic Division Budget by Source
|Tuition and fees||18.5%||32.4%|
|Academic division budget||$393.1 million||$1.36 billion|