At the time of this writing in October 2016, we are one year away from the beginning of the University’s bicentennial commemoration. The bicentennial gives us the opportunity to celebrate UVA’s achievements over the past 200 years while conceiving and articulating our aspirations for the University’s third century and beyond.
To fulfill the ambitious aspirations that we will set forth, we must sustain and further strengthen the University’s capacity to invest in excellence. One way we are doing that is through UVA’s new Strategic Investment Fund.
UVA has a record of prudent financial stewardship that has included the use of operating and capital reserves to provide stability for the Academic Division and the Health System; strong operating, liquidity, and debt metrics that have garnered triple-A debt ratings; as well as philanthropic gifts to meet our commitments to academic excellence. These balances are not new and have always been disclosed on our audited financial statements. What is new? We are better leveraging our strong financial position and the additional investment authority from the Commonwealth of Virginia. This approach complements Affordable Excellence, which allows us to moderate tuition increases while meeting the full need of our students. These two initiatives ensure that UVA will continue to offer excellent academic programs that are also affordable for students and their families.
We have pooled these resources and invested them with the University of Virginia Investment Management Company (which also manages our endowment) to create a revenue stream that will help us improve UVA’s affordability and academic quality, conduct research that benefits all segments of society and offer exceptional medical care through our Health System. The auditor of public accounts, in a review of the Strategic Investment Fund, confirmed that the fund does not include tuition or state general funds, is in compliance with state regulations, and was appropriately authorized by the Board of Visitors. The balances making up the $2.2 billion fund will remain in place, while the investment return on the pooled resources will be used to award grants.
Grant proposals are accepted from all members of the University community, including students, and are sponsored by a dean or vice president. Sponsored proposals are first considered by a faculty evaluation committee, then by an advisory committee that includes University leaders, and finally by the full Board of Visitors.
In September, the Board of Visitors approved the first round of grants, authorizing approximately $26 million to be disbursed over the next three years for projects that support doctoral students, advance research, enhance our academic enterprise and build much-needed technology and research infrastructure. This first round of grants will support law students who want to go into public service, provide continuing education for public-safety professionals and support students who participate in cutting-edge research, among other key priorities. Projects that provide new academic programs and infrastructure will help restrain future tuition increases; students will not pay for them, but they will enjoy the benefit. While approving these awards, Board members confirmed that they wish to consider proposals related to affordability and access at their next meeting in December.
It’s important to consider the creation of the Strategic Investment Fund within the context of today’s challenges in American higher education. In recent decades, numerous forces have converged to create an uncertain environment for colleges and universities, especially public institutions. State disinvestment and flat or declining federal budgets for research have coincided with rising demands for cost control and access and affordability. In recent years, the Commonwealth of Virginia has reinvested in its public colleges and universities, but UVA and other public schools continue to feel the effects of two decades of reductions.
To continue to thrive in this challenging environment, top universities must rethink and redefine their approach to financial strength and stability. Thanks to two successful capital campaigns over the past two decades, UVA was able to remain strong through volatile times that included the worst financial crisis since the Great Depression. With continued support from alumni, parents and friends, and with the resources made available through the Strategic Investment Fund, UVA will continue to solidify its position of strength.
To say that UVA is seeking its own means of financial stability is not to say that we want to become private. UVA’s role as a public university is about more than dollars. We are public by mission and by governance, and as a public university we serve the Commonwealth by offering an affordable education to citizens from all backgrounds, by advancing economic growth, and by offering high-quality, safe clinical care to patients from Virginia and beyond. Our financial strategies may evolve with the times; our mission will not.
UVA will continue to face challenges. The Strategic Investment Fund gives us the strength and agility to rise to those challenges, and this should give all of us hope and optimism as we prepare to embark on the University’s next century.
Teresa A. Sullivan