April 23, 2014
MEMORANDUM
TO:
The Finance Committee:
Victoria D. Harker, Chair
John A. Griffin, Vice Chair
Frank B. Atkinson
Marvin W. Gilliam Jr.
Stephen P. Long, M.D.
Edward D. Miller, M.D.
Timothy B. Robertson
Linwood H. Rose
George Keith Martin, Ex Officio
Daniel M. Meyers, Consulting Member
Martin N. Davidson, Faculty Consulting Member
and
The Remaining Members of the Board and Senior Advisor:
Hunter E. Craig
Allison Cryor DiNardo
Helen E. Dragas
Kevin J. Fay
Frank E. Genovese
William H. Goodwin Jr.
Bobbie G. Kilberg
John L. Nau III
Blake E. Blaze
Leonard W. Sandridge Jr.
FROM:
Susan G. Harris
SUBJECT:
Minutes of the Finance Committee Meeting on April 23,
2014
The Finance Committee of the Board of Visitors of the University
of Virginia met, in Open Session, at 9:32 a.m. on Wednesday, April 23,
2014, in Conference Room 103/104 of the Southwest Virginia Higher
Education Center in Abingdon, Virginia; John A. Griffin, Vice Chair,
presided.
Present were Frank B. Atkinson, Marvin W. Gilliam Jr., Stephen P.
Long, M.D., Timothy B. Robertson, Linwood H. Rose, George Keith
Martin, and Leonard W. Sandridge Jr.
Finance Committee
April 23, 2014
2.
Also present was Daniel Maxwell Meyers, the Consulting Member
from the Council of Foundations.
Present as well were Hunter E. Craig, Allison Cryor DiNardo,
Helen E. Dragas, Kevin J. Fay, and Frank E. Genovese. Participating
by telephone were: Bobbie G. Kilberg, Edward D. Miller, M.D., and
Blake E. Blaze.
Teresa A. Sullivan, Susan G. Harris, Susan A. Carkeek, Simeon E.
Ewing, Donna Price Henry, Patrick D. Hogan, Bryan H. Hoyt, John S.
Huguenin, Richard C. Kast, Patricia M. Lampkin, S. Pace Lochte, David
W. Martel, McGregor McCance, Christine F. Pajewski, Marcia K.
Quesenberry, Nancy A. Rivers, Colette Sheehy, John D. Simon, and Debra
D. Rinker.
Mr. Griffin called the meeting to order. He reminded those on
the telephone of their obligation to remain on the line for the
duration of the call. He thanked Victoria Harker and Patrick Hogan
for all their work before the meeting in reaching out to individual
members. He said he found the whole process to be intensely
educational in terms of the important issues that face the University.
He also found it very heartening to see the passion of members in
their efforts to take care of the University.
Mr. Griffin introduced Ms. Rachel D. Fowlkes, the Agency Head and
Executive Director of the Southwest Virginia Higher Education Center
(SWVHEC). Ms. Fowlkes gave a brief history of the SWVHEC.
Mr. Griffin turned the floor over to Mr. Hogan for his
presentation.
_ _ _ _ _ _ _ _ _ _
Mr. Hogan said in February the Board set all 2014-2015 tuition
and fees rates for the Academic Division, with the exception of
undergraduate tuition rates for regular session, the School of
Continuing and Professional Studies (SCPS), 2015 summer session, and
study abroad. At this meeting, members were asked to consider these
tuition rates, as well as 2014-2015 tuition and fees for the College
at Wise.
Mr. Hogan reported that the House and Senate failed to agree on a
budget and adjourned on March 8, 2014. The Governor called a Special
Session for March 24, 2014 to drive toward resolution. He said
subsequent budget action will not meaningfully impact the proposed
undergraduate tuition proposal, given the areas under discussion.
Mr. Hogan explained that the proposed tuition rate reflects an
increase in undergraduate base tuition that will help meet the costs
of addressing competitive faculty and staff salaries, as well as
increases in health care and state-required retirement costs. He said
this recommendation first and foremost enhances the quality of the
student educational experience at UVa. The strategic investments that
Finance Committee
April 23, 2014
3.
are proposed would advance initiatives that benefit current and future
generations of students. A proposal was made of an additional 2.0%
increase in tuition and educational and general (E&G) fees to fund the
implementation of strategic plan priorities in fiscal year 14-15.
Revenue from this additional 2% tuition increase (generating $3.8
million) would be directed primarily to fund the costs of the
following:



•
Strategic hiring of faculty to address expected generational
turnover (Pillar 4)
Enhancing undergraduate experience through high-quality
academic advising, career advising and coaching, research with
faculty members, service learning, entrepreneurial
experiences, and internships (Pillar 1 and 3)
Enhancing institution-wide infrastructure and services to
encourage and support research, scholarship, creative arts,
and innovation by faculty and students (Pillar 2)
Funding other strategic plan priorities through a combination
of philanthropy, corporate partnerships, reallocations, and
any additional cost reductions.
Mr. Hogan focused on efficiencies that were already underway.
gave a breakdown of the $11.5 million in savings:


He
$5.5 million in health care and other fringe-related savings
from program changes and reallocations
$6.0 million in reduced costs through strategic sourcing and
process simplification, negotiated savings on procurement
contracts, strategic workforce planning, reduced cost of
leased space, and deferral or elimination of lower priority
expenses.
He said this targeted savings of $11.5 million represents 3.6% of
the fiscal year 2014 undergraduate addressable operating expenditure
budget (i.e., excludes faculty salaries and research). He said the
University of Virginia is the most efficient among the top 25 best
institutions in the country as determined by US News and World Report;
year after year, the University is consistently recognized as a best
value among public and private institutions. Efficiency is and should
be a continuous improvement process. There will always be
opportunities to cut operating costs – there were opportunities 20
years ago, there were 10 years ago, and there are now – and there will
be new costs that should be managed and reduced 10 years from now just
because of how organizations develop and technology and priorities
change. However, savings from improved efficiency are not going to be
enough to pay for faculty salary increases or the unfunded retirement
costs assessed to the University for the Virginia Retirement System
(VRS), or the investment needed to preserve the quality of the
undergraduate experience expected by students, and parents of
students.
Finance Committee
April 23, 2014
4.
The tuition proposal includes 2014-2015 tuition of $10,484 for a
Virginian undergraduate and of $38,988 for a non-Virginian
undergraduate. He said there are several ways to look at this
proposal:

Tuition and E&G fee increases for undergraduates are proposed
to increase 4.5% ($472) for Virginians and 6.0% ($2,268) for
non-Virginians. (This represents an average increase of
5.4%.) Combined with the fees previously approved by the
Board of Visitors in February (E&G fees, auxiliary fees, and
the student activity fee), 2014-2015 tuition and fees for a
Virginian undergraduate are $12,998, an increase of 4.3% or
$540.

2014-2015 tuition and fees for a non-Virginian are $42,184, an
increase of 5.9% or $2,340. The total price of education
(tuition, required fees, housing, dining, books, travel, and
other) for a Virginian first-year undergraduate student will
increase $949 to $27,417, an increase of 3.6% over 2013-2014.
For a non-Virginian first-year undergraduate student, the
price of education will increase $2,730 to $57,836, an
increase of 5.0% over 2013-2014.
Mr. Hogan covered the tuition increases proposed for The
University of Virginia’s College at Wise. The tuition and E&G fee
increase will be 4%. The Technology Fee will increase from $125.00
per year to $130.00 per year; a 4% increase as compared to 2013-2014.
To ease the burden of the cost ($10-$25 per transcript) to students
and alumni for official transcripts, the College will implement an E&G
Academic Credentialing Fee in the amount of $20.00 per year for fulltime students. Students and alumni will be able to request as many
transcripts as they need with no additional charge.
For 2014-2015, The University of Virginia's College at Wise
recommends a $359 (4.2%) increase in tuition and mandatory E&G fees
for Virginia residents totaling $8,868. The College further
recommends a $937 (4.0%) increase in tuition and mandatory E&G fees
for non-Virginia residents totaling $24,502. The proposed 4% increase
in the student auxiliary fee will continue to support increasing
operational and maintenance costs of existing and new facilities and
funding debt service. The basic Board rate will increase 4% which
allows for continued flexibility in meal options available within the
meal plans. This service addresses the primary concern expressed by
students as it relates to the variety and availability of the meal
plans offered.
Mr. Hogan reviewed next steps, which include working to finalize
the budget that will be presented to the Board for their consideration
at the June meeting. Over the summer, the State required six-year
plan will be updated. By September, an updated long-term financial
plan will be presented to the Board with sources and uses.
_ _ _ _ _ _ _ _ _ _
Finance Committee
April 23, 2014
5.
Mr. Griffin opened the floor for discussion on the Wise
resolution. Ms. Cryor DiNardo asked about the discount on tuition for
those surrounding states. Mr. Ewing commented that those individuals
living within a 50-mile radius would receive a discount on tuition.
Mr. Gilliam commented that there was only a 6% out-of-state population
at Wise, so the numbers would be pretty small.
On motion, the Finance committee unanimously approved the
following resolution:
APPROVAL OF TUITION, REQUIRED FEES AND OTHER CHARGES FOR THE UNIVERSITY OF VIRGINIA’S COLLEGE AT WISE FOR
FISCAL YEAR 2014-2015
WHEREAS, consideration and approval of undergraduate tuition at this meeting will serve to inform the operating budget to be presented to the Board
of Visitors at its annual meeting in June;
RESOLVED, the tuition and required fees and other charges applicable to The University of Virginia’s College at Wise are approved as shown below,
effective July 1, 2014:
Full-time Students (12 hrs or more per semester)
Tuition
Required E&G Fees
Auxiliary Fees
Total Tuition and Required Fees
Virginian
2013-14 Amount
of Percent of 2014-15
Approved
Increase
Increase Proposed
Non-Virginian
2013-14 Amount
of Percent of 2014-15
Approved Increase Increase Proposed
$
$
$
$
$
4,676
125
4,801
3,708
8,509
$
$
$
$
$
186
25
211
148
359
4.0%
20.0%
4.4%
4.0%
4.2%
$
$
$
$
$
4,862
150
5,012
3,856
8,868
$
$
$
$
$
19,100
757
19,857
3,708
23,565
$
$
$
$
$
764
25
789
148
937
4.0%
3.3%
4.0%
4.0%
4.0%
$
$
$
$
$
19,864
782
20,646
3,856
24,502
$
$
$
$
208
208
81
25
$
$
$
$
808
808
236
25
$
$
$
$
32
32
9
-
4.0%
4.0%
3.8%
0.0%
$
$
$
$
840
840
245
25
Students taking more than 18 credit hours per semester must pay for the additional hours at the tuition rates listed below.
Other Charges
Part-time Students (less than 12 hours per semester)
Off-Campus Instruction per hour
Non-Credit Courses per unit
Application Fee
Registration Fee for part-time students will be $5 per semester hour.
$
$
$
$
200
200
78
25
$
$
$
$
8
8
3
-
4.0%
4.0%
3.8%
0.0%
RESOLVED FURTHER, the Executive Vice President and Chief Operating Officer is authorized to approve reduced tuition rates for residents of
Kentucky and Tennessee who live in counties that are within a 50-mile radius of The University of Virginia’s College at Wise and who are enrolled at the
College in accordance with Section 23-7.4:2.F. of the Code of Virginia.
_ _ _ _ _ _ _ _ _ _
Mr. Griffin asked Mr. Dan Meyers, Consulting Member to the
Finance Committee, to say a few words. Mr. Meyers said the central
word here is balance. He said the proposal seems to very carefully
balance the three overall drivers that are most important. The first
is the financial metrics. He said if we start eroding metrics and
ratings, the costs of raising funds will increase. The second driver
is cost and affordability. He was pleased to see such a focused
effort on financial aid. He said on average, in-state students have
all academic costs covered by financial aid – other costs remaining
are room and board, which they would have anyway. The third driver is
excellence: both academic and institutional excellence; both of which
are very important to the nearly 30 foundations that support the
University. Without this, it will cause grave concerns over the
bridge campaign. Overall, Mr. Meyers said he had no problems telling
the Council of Foundations that this was a very well-balanced and very
well thought out proposal for tuition.
Finance Committee
April 23, 2014
6.
Discussion ensued about the tuition proposal, focused on in-state
undergraduate tuition. Mr. Gilliam said he could not support 2% of
the tuition increase applied to strategic plan priorities without
seeing all the numbers for funding the strategic plan. Mr. Hogan said
it was tough to estimate, but the most urgent need was raising faculty
salaries and funding replacement faculty for those who are retiring
and these costs have been provided to the Board. He said the increase
was not enough to fully address these costs, and in June this
information will be presented in the budget discussion. Mr. Atkinson
said the faculty salary increases were approved by the Board
separately from the strategic plan, and Mr. Griffin added that about
20% of this increase was to fund the faculty ―catch up‖. Mr.
Robertson said that was a separate action on the part of the Board to
fund the faculty to a certain level in relation to Association of
American Universities (AAU) peers that had nothing to do with the
strategic plan. He encouraged the administration to develop creative
ideas to maintain excellence at the University over the long term.
Other members asked what initiatives are not being funded through
this increase and were we using reserves? Mr. Hogan said the College
planned to use reserves to fund faculty start-up costs, but it would
not be appropriate to use them for ongoing costs. Mr. Simon answered
that on faculty salaries, we will be number 27 this year on the AAU
list, and our goal is to be at around 20. There is a significant gap
left to fund to ensure the excellence of the faculty in the future.
Mr. Simon said he has had to pay a significant amount to retain top
faculty this year. He added that we need to maintain technology and
facilities to support the research effort, and students expect
technology in the classroom to enhance learning; this is not cheap.
The University must be in this space, with ―flipped‖ classrooms and
other initiatives.
Dr. Miller said tuition should not be increased more than the
rate of inflation. Revenue should be generated through a significant
costs saving program. Mr. Griffin explained that the increased costs
from the state, faculty catch-up, and AccessUVA add up to $12.6
million net of savings without even considering the strategic plan.
Mr. Hogan said the University is now paying for five years of faculty
salary freezes — this is a balance.
Ms. Dragas said that these decisions should be made with
consideration for the median incomes of Virginians, which she said
were declining. She asked President Sullivan to address this.
President Sullivan said they look at what families can bring to the
table through the financial aid program. Low income is considered up
to 200% of the poverty index and middle income is 400% of the poverty
index. Ms. Dragas said the highest responsibility of the Board is to
the students and to Virginia families to deliver an excellent,
affordable education.
Mr. Craig said the increase in earning power of a graduate of the
University of Virginia is $30,000 a year. The key ingredient of the
Finance Committee
April 23, 2014
7.
secret sauce in the College is the excellence of the faculty. It is
important to sustain the academic excellence by fully meeting the AAU
20th ranking. He asked what increase the University would require to
attain the 20th ranking? Mr. Hogan said it would cost $6 million in
salary plus fringe costs. This would be about three or four
percentage points in tuition.
Mr. Fay said there is no set timeline for reaching the 20th
ranking, and there should be a balance — some faculty are more
excellent than others — and productivity should be reviewed. He said
there should be a longer term financial plan.
Mr. Atkinson asked Mr. Hogan to explain where the University
ranked last year in terms of an increase compared to other Virginia
schools. Mr. Hogan read from a list, and the University was second to
lowest with a 3.8% increase. The average was 4.7%.
The Rector said the Board needed to contribute to funding the
strategic plan. He said he would support the resolution.
Ms. Cryor Dinardo asked that the Advancement and Communications
committee meeting in June be a joint meeting with Finance because
Advancement issues are closely aligned with budget issues.
After much discussion among members of the committee, noncommittee Board members and administrators, Mr. Hogan agreed to look
for some solutions to cost drivers and bring those solutions, with a
longer-term view, to the Finance committee before next year’s tuition
meeting.
On motion, the Finance committee approved the following
resolution and recommended it to the Board of Visitors for approval.
Six committee members voted in favor of the resolution: John A.
Griffin, Frank B. Atkinson, Stephen P. Long, M.D., Timothy B.
Robertson, Linwood H. Rose, and George Keith Martin. Two committee
members opposed the resolution: Marvin W. Gilliam Jr. and Edward D.
Miller, M.D.
Finance Committee
April 23, 2014
8.
APPROVAL OF CERTAIN UNDERGRADUATE TUITION RATES FOR THE ACADEMIC DIVISION FOR FISCAL YEAR 2014-2015
WHEREAS, consideration and approval of undergraduate tuition at this meeting will serve to inform the operating budget to be presented to the Board
of Visitors at its annual meeting in June;
RESOLVED, the tuition applicable to the Academic Division is approved as shown below, effective July 1, 2014:
Virginian
NonVirginian
Percent
2013-14 Amount of
of
2014-15
Approved Increase Increase Proposed
Amount Percent
2013-14
of
of
2014-15
Approved Increase Increase Proposed
REGULAR SESSION
Undergraduate School:
Tuition
$ 10,016 $
468
4.7% $ 10,484
$ 36,720 $ 2,268
6.2% $ 38,988
McIntire School of Commerce Tuition
$ 15,016 $
468
3.1% $ 15,484
$ 41,720 $ 2,268
5.4% $ 43,988
School of Engineering and Applied Science Tuition (First- and second-year $ 12,016 $
students only)
468
3.9% $ 12,484
$ 38,720 $ 2,268
5.9% $ 40,988
Unless otherwise noted, all per credit hour tuition rates for full-time programs are derived by dividing the applicable annual tuition rate by the average course load. Such per
credit hour rates are assessed only to students who are enrolled in an approved part-time program or have been approved for a reduced load.
SPECIAL SESSION AND OTHER (per credit hour unless otherwise noted)
SCPS Undergraduate
$
334
$
334
SCPS Community Scholars - Undergrad and High School
SCPS National Criminal Justice Command College program $ 5,280
Undergraduate level (total program cost)
Study Abroad
$
309
$
$
15
15
$
238
$
2015 Summer Session, 2015 January Term, and Mt. Lake Biological Station
Undergraduate Class Credit Hour
$
334 $
4.5% $
4.5% $
349
349
$
788 $
$ 1,176 $
47
71
6.0% $
835
6.0% $ 1,247
4.5% $ 5,518
$ 12,090 $
555
4.6% $ 12,645
14
4.5% $
323
$
389 $
23
5.9% $
15
4.5% $
349
$ 1,176 $
71
6.0% $ 1,247
_ _ _ _ _ _ _ _ _ _
The Finance committee meeting was adjourned at 11:10 a.m.
SGH:dr
These minutes have been posted to the University of Virginia’s Board of
Visitors website. http://www.virginia.edu/bov/financeminutes.html
412