UNIVERSITY OF VIRGINIA
BUDGET SUMMARY
2003-2004
Cover photograph courtesy of Michael K. Higgins
University of Virginia
2003-04 Budget Summary
Table of Contents
Operating Budget Summary - All Divisions
1
Academic Division Budget Development
5
Academic Division Revenues
Revenue Budget Summary (chart)
Revenue Budget Detail (chart)
9
11
17
Academic Division Expenditures
Expenditures by Functional Classification
Expenditure Budget Detail by Functional Classification (chart)
Expenditures by Programmatic Category
Expenditure Budget Summary (chart)
Expenditure Budget Detail (chart)
Auxiliary Enterprises Projected Reserve Expenditures (chart)
21
21
23
25
27
32
34
University of Virginia's College at Wise
Budget Summary (chart)
37
39
Medical Center
Budget Summary (chart)
43
45
Proposed Budget Resolutions
49
Appendix - Academic Division Major Budget Unit Detail
2
UNIVERSITY OF VIRGINIA
2003-2004 OPERATING BUDGET SUMMARY
Operating Revenue – All Divisions
The projected revenues for the period July 1, 2003 through June 30, 2004 for all divisions
of the University of Virginia total $1.62 billion. This amount represents an increase of $98.4
million or 6.5 percent as compared with the revised revenue projection for 2002-03 of $1.52
billion. Of the total revenue budget $895.5 million relates to the Academic Division, $703.2
million to the Medical Center, and $19.8 million to University of Virginia’s College at Wise
(Wise).
Revenues
(in millions)
Academic Division
Medical Center
Wise
Total
2003-04
$895.5
$703.2
$19.8
$1,618.5
Original
2002-03
$835.9
$619.0
$19.7
$1,474.6
Revised
2002-03
$857.7
$642.6
$19.8
$1,520.1
Change
from
Revised
$37.8
$60.6
$0.0
$98.4
Percentage
Change
4.4%
9.4%
0.0%
6.5%
The largest revenue source remains patient revenues (42.1 percent), followed by grants
and contracts (15.1 percent) and tuition and fees (15.0 percent). Revenues from the state general
fund appropriation continue to decrease. Just two years ago total revenues from the state general
fund appropriation were budgeted at $181.8 million or 13.8 percent of the total budget at that
time. In 2003-04, total revenues from the state general fund appropriation are budgeted at $130.8
million or 8.1 percent of the total budget.
2002-03 Revenues by Source
State
Appropriation
9.6%
Patient Rev.
40.8%
Tuition & Fees
14.2%
Grants &
Contracts
15.3%
Auxiliaries
8.7%
Other
11.4%
2003-04 Revenues by Source
State
Appropri ation
8.1%
Pati ent Re v.
42.1%
Tui ti on & Fee s
15.0%
Grants &
Contracts
15.1%
Auxi li arie s
8.6%
O the r
11.1%
Operating Expenditures – All Divisions
The operating expenditure budgets for the period July 1, 2003 through June 30, 2004 for
all divisions of the University of Virginia total $1.58 billion. This amount represents an increase
of $102.2 million or 6.9 percent compared with the revised budgets for 2002-03. Of the total
budget, $895.1 million relates to the Academic Division, $665.4 million to the Medical Center,
and $19.8 million to Wise.
Operating Expenditures
(in millions)
2003-04
$895.1
$665.4
$19.8
$1,580.3
Academic Division
Medical Center
College at Wise
Total
Original
2002-03
$835.8
$587.6
$19.7
$1,443.1
Revised
2002-03
$857.2
$601.1
$19.8
$1,478.1
Change
from
Revised
$37.9
$64.3
$0.0
$102.2
Percentage
Change
4.4%
10.7%
0.0%
6.9%
Nearly 57 percent of the operating budget is attributable to the Academic Division
(including the Schools of Medicine and Nursing), while about 42 percent is attributable to the
Medical Center. The remaining 1 percent is contributed by Wise.
2002-03 Operating Expenditures $1.48 billion
2003-04 Operating Expenditures $1.58 billion
Academic
Division
58.0%
Academic
Division
56.6%
Medical
Center
40.7%
Wise
1.3%
Medical
Center
42.1%
Wise
1.3%
Employment Levels – All Divisions
The University has planned for 13,068 full-time equivalent (FTE) positions for 2003-04,
an increase of 2.7 percent or 348 FTEs from the 2002-03 revised budget levels. The Academic
Division is expecting 7,491 FTEs, an increase of 63 FTEs, the Medical Center is projecting 5,340
FTEs, an increase of 276 over current staffing levels, and the College at Wise employment will
increase by 4 FTE to 237.
History of Employment Levels
15,000
12,500
10,000
7,500
5,000
1998
1999
UVA
2000
2001
Med Ctr
2002
2003
2004
Wise
2
Key Issues
For the Academic Division and the College at Wise, the most critical issue continues to be
the diminishing state support. As the state’s revenue shortfall for the 2002-04 biennium stands at
$6 billion or 27 percent of the predicted state revenue, support for higher education continues to
suffer. As the chart below outlines, the general fund reductions have had a significant negative
impact on the tuition students are charged, the operating budgets departments are allocated, the
equipment purchases departments can initiate, and the deferred maintenance backlog
accumulating on buildings and infrastructure.
Academic Division
College at Wise
2002-03 2003-04
2002-03 2003-04
(in thousands)
General Fund Budget Reductions:
Base GF Appropriation Before Reductions
$167,795 $168,030
$10,926
$11,168
First Round:
Institution Specific
Research and Public Service Centers
Total
Percentage of Base Appropriation
$25,383
$449
$25,832
15.4%
$33,328
$454
$33,782
20.1%
$440
$30
$470
4.3%
$581
$30
$611
5.5%
Second Round:
Institution Specific
Research and Public Service Centers
Total
Percentage of Base Appropriation
$14,015
$0
$14,015
8.4%
$17,827
$593
$18,420
11.0%
$676
$0
$676
6.2%
$967
$0
$967
8.7%
Total of First and Second Round Reductions
Percentage of Base Appropriation
$39,847
23.7%
$52,202
31.1%
$1,146
10.5%
$1,578
14.1%
How Budget Reductions Were Achieved:
Tuition Applied to Appropriation Reduction
Percentage of Total Reduction
$18,000
45.2%
$28,000
53.6%
$590
51.5%
$726
46.0%
Departmental Budget Reductions
Percentage of Total Reduction
$21,847
54.8%
$24,202
46.4%
$556
48.5%
$852
54.0%
Reductions to Other General Fund Allocations:
Eminent Scholar Match
$735
VGUAP Match (eliminated completely)
$26
Equipment Trust Fund Allocation
$2,183
Maintenance Reserve
$5,146
$735
$26
$2,183
$5,116
$1
$1
$38
$203
$1
$1
$38
$202
3
Faculty and staff compensation and retention are another concern. The General Assembly
has allocated a 2.25 percent base salary adjustment, effective November 25, 2003, that is
applicable to the Academic Division and Wise. This is not a net increase in the annual
compensation faculty and staff will receive in the upcoming fiscal year, since there was a 2.5
percent one-time bonus paid in August of 2002.
While defining and funding appropriate levels of graduate financial aid through remission,
fellowships, and stipends has been a concern of the University’s for several years, the significant
undergraduate tuition increases cause the University to also focus on undergraduate financial aid
in 2003-04.
For the Medical Center, providing quality patient care while continuing to manage an
appropriate operating margin is the top priority. The Corporate Integrity Agreement and the new
Health Insurance Portability and Accountability Act legislation are external pressures that will
result in additional expenses for the Medical Center. The cost associated with providing quality
patient care will continue to have upward pressure due to labor shortages and increases in
pharmaceutical and medical device expenses. The 2003-04 fiscal plan features the
implementation, jointly with the School of Medicine, of early phases of the Decade Plan, the
opening of two modular operating rooms and approximately nine new beds, enhanced personnel
compensation packages, and facility expansion.
4
Academic Division Budget Development
The first step in the budget development process was the projection of revenues available
for expenditure in 2003-04. Actions by the Board of Visitors – approval of housing, dining,
mandatory fee, and tuition rates – and the General Assembly – approval of amendments to the
2002-04 Appropriation Act – were integral to this effort.
The second step of budget development was the determination of expenditure targets for
each vice president. The targets were based on preliminary budget assumptions approved by the
President and reported to the Board of Visitors in October 2002, as well as the impact of the
general fund reductions assessed by the General Assembly. The 2003-04 targets reflect the 200203 departmental budget reductions allocated for the first and second round general fund
appropriation reductions. The University was able to fund the incremental 2003-04 budget
reductions from new tuition revenues, so no further across-the-board budget reductions were
assessed to the 2003-04 targets. There were additional specific reductions applied to the research
and public service centers in 2003-04 by the General Assembly. The target development process
is designed to give maximum flexibility to vice presidents in the allocation of resources among
their activities, although that is obviously limited during a period of budget reductions.
The General Assembly has made provision for a 2.25 percent salary increase for faculty
and classified staff, effective November 25, 2003. As the split between general fund (tax
revenues) and non-general fund (tuition revenues) changes, the University will be expected to
fund more and more of its expenses from tuition. In the original 2001-02 budget (before that
year’s $4.8 million budget reduction), 50 percent of the state revenues were provided from
general funds and 50 percent were provided from tuition. In the proposed 2003-04 budget in the
following pages, only 34 percent of state revenues are provided from general funds, while 66
percent are provided from tuition. These percentages will impact the amount of salary and benefit
cost increases funded from the state, as well as any allocations related to the higher education
funding model approved by the General Assembly, but not yet implemented.
The state has calculated its share of salary increases on the 2002-04 Appropriation Act
which shows that approximately 36 percent of University’s total educational and general
appropriation comes from general fund revenues. The remaining 64 percent will be funded from
incremental tuition revenues. [This funding split differs from the 34 percent /66 percent funding
split mentioned in the previous paragraph because the 2002-04 Appropriation Act does not
include the additional non-general funds that will be generated from the new 2003-04 tuition rates
approved in April 2003.] An estimate of the state funds needed for the salary increase in 2003-04
is reflected in the University’s reserves, but has not been allocated to departments in the budget
presented. Departments who hold positions funded from revenues other than general funds or
tuition, including private support, grants and contracts, and auxiliary revenues, have planned for
the 2.25 percent salary increase within their departmental budgets.
The University will incur significantly increased benefit costs, as the employer share of
employee health insurance premiums has increased by an average of 28.5 percent and the
Commonwealth has increased the contribution to the Virginia Retirement System as calculated by
the state’s actuaries. While the University will receive a portion of these increased costs from
5
state general funds, the majority of the cost will be covered by tuition revenues. As with the
salary increases, an estimate of the increased benefit costs for state positions is reflected in the
University’s reserves, rather than being allocated to the departments. Departments who hold
positions funded from revenues other than general funds or tuition have included the incremental
benefit costs in their departmental budgets. As is consistent with the past few years, no
incremental funding for increases in "other than personal services" budget categories has been
included in the budgets or targets except as specifically identified in subsequent sections of this
summary.
In the final step of budget development, vice presidents were given an opportunity to
present prioritized lists of resource needs that cannot be addressed within the target budgets
provided. All available funds, including those specifically earmarked by the General Assembly,
are then allocated in an addenda process. Incremental tuition and fee revenue, indirect cost
recoveries from grants and contracts, state general funds allocated for the UVa Health Plan, and
private funds provided in excess of $10 million for the addenda process. The University was able
to meet all mandatory commitments, re-establish a $1 million reserve for emergency needs, and
meet some other critical needs. More information concerning the 2003-04 addenda allocation is
included in the expenditure budget analysis later in this document.
Planning Priorities
Schools and departments have been encouraged to use resources from all available sources
to meet the priorities that have been identified in the University’s strategic planning efforts. While
the general fund budget reduction has many units determining how to maintain current programs,
rather than program expansion, increased resources from other revenue sources have allowed
additional investments in University and school initiatives according to strategic plan priorities.
Within the financial and staffing limitations established by the budget, vice presidents, deans, and
directors of major units of the University have the flexibility to re-allocate available resources to
their highest priority program requirements.
The Board-initiated Budget Defense Fund (BDF) has been critical in assisting in the
investment of resources to priority areas and in the retention of key faculty during this period of
diminishing general fund support. In fact, the University has been able to continue with the
implementation of several of the initiatives outlined in the Virginia 2020 planning process. From
the BDF, seed funding of $100,000 has been allocated to each of four new institutes developed in
response to the Virginia 2020 Science and Technology Commission. The institutes are the
Institute for Nanoscale and Quantum Engineering directed by Robert Hull, Professor, Department
of Materials Science and Engineering; the Morphogenesis and Regenerative Medicine Institute
(related to the bio-differentiation initiative of the 2020 Science and Technology Commission)
headed by Barry Gumbiner, Chair, Department of Cell Biology and Ray Keller, Chair, Department
of Biology; the Information Initiative led by Anita Jones, University Professor, Department of
Computer Science and Engineering; and the Institute on Aging directed by Mark Williams, MD,
Geriatric Medicine.
6
Additionally, $1.5 million (from the BDF and graduate tuition revenues) will be allocated
in 2003-04 for Alderman Library to continue implementation of its Library of Tomorrow initiative
and $500,000 will be applied from the BDF to finance the purchase of specialized instrumentation
for the Institute for Nanoscale and Quantum Engineering.
The Health System’s Decade Plan
The Decade Plan – the first joint planning effort of the School of Medicine, the Medical
Center, and Health Services Foundation – charts the ways in which the University will create
innovative "Models for all of U.S." in areas such as patient service, translational research from cell
to bedside, professionalism in teaching and service to the community. These models will result in
widespread benefit and visibility, taking the University to top status as a health care institution by
2012, as defined objectively by national rankings and through peer recognition of excellence.
The Faculty Development Council has identified areas of concentration, based on current
strengths, including cancer, aging, cardiovascular disease, children's health, diabetes and obesity,
digestive health, immunology, infectious diseases, global health, neurosciences, organogenesis,
and women's health. Investment in programs will be based not only in these areas, but also in
areas that demonstrate potential for future innovation, and areas that at present cannot be
identified as the Health System moves into the next decade.
As the name implies, the Decade Plan is a multi-year funding plan that spans ten years.
For 2003-04, the School of Medicine anticipates investing $6.8 million in new initiatives and
current programs to support the Decade Plan. The School proposes to leverage a supplemental
Pratt distribution of $4 million and on-going fundraising efforts to provide the financial resources
necessary to carry out the objectives of the Decade Plan in 2003-04.
Financial Self-Sufficiency for the Darden School and the Law School
General fund budget reductions have accelerated the speed at which tuition revenues
generated by the Darden School and the Law School exceed the operating budgets allocated from
University resources. Accordingly in April 2003, the University updated financial self-sufficiency
understandings with the Darden School and the Law School recognizing that both schools will
meet self-sufficiency in 2003-04. The agreements will put in place the concept endorsed in
November 1995 by the Board of Visitors. The financial relationship between the University and
the Darden and Law Schools is based on a tuition-driven model of Financial Self-Sufficiency
designed to provide these professional schools with the financial capability to sustain long-term
academic excellence. This means the Darden School and the Law School will collect 100 percent
of tuition revenues, pay 100 percent of their direct costs – including all salary and benefit
increases and all utilities, operations, and maintenance on their buildings – and contribute 10
percent of their revenues to central resources to offset the indirect costs of their operations. The
schools will forfeit any claim on general fund operating revenues, except a subsidy of $2,500 per
in-state student. This subsidy recognizes a commitment by each school and the University to instate students by providing a $5,000 differential between in-state and out-of-state tuition.
7
Integrated Systems Project
The Integrated Systems Project began in 1999, charged with implementing an integrated
financial, human resources, and student information system for the University. In July 2001, the
Oracle Finance applications were deployed, and in October 2002, the Oracle Human Resources
and Payroll applications were deployed. The implementations were completed on budget and,
with the exception of a 90 day delay for Human Resources and Payroll, on time. The permanent
organization, re-named the Integrated System Deployment and Support, responsible for providing
the on-going support and maintenance for the new applications now reports to the Vice President
for Finance.
It was initially planned that the third phase of the project – student information – would
follow directly after the completion of the finance and human resource phases. However, the
student systems on the market are not as fully developed as expected, so the University will
carefully evaluate all options before selecting and implementing a student information system for
this purpose. The Vice President and Provost has formed a work group to make a
recommendation on a new student information system to be implemented in the near future.
At this time last year, it was expected that the University would initiate and complete the
upgrade to Version 11i of the Oracle software in 2002-03. The upgrade was delayed, and it is
anticipated that a vendor will soon be selected to assist with the upgrade during the next fiscal
year.
Higher Education Equipment Trust
The 1986 General Assembly authorized the establishment of a statewide Higher Education
Equipment Trust designed to meet the high priority equipment needs of institutions of higher
education. Through June 30, 2003, the University has received $83.9 million. The next
allocation is scheduled for July 2003, at which time the University expects to receive $5.5 million.
While this is a decrease from the $7.6 million received in July 2001, the allocation was not
impacted during the second round of general fund budget reductions in October 2002. This
funding comes to the University as reimbursement of purchases, so neither the allocation nor the
related purchases are included in the University's 2003-04 budget.
8
Academic Division Revenues
Academic Division revenues are projected to total $895.5 million in 2003-04, an increase
of 4.4 percent over the revised budget of $857.7 million for the current fiscal year. The Revenue
Budget Summary appears on page 11, and the Revenue Budget Detail appears on page 17.
Academic Division revenues are made up of the following sources:
2002-03 Revenues
2003-04 Revenues
Tuition & Fees
26.6%
Tuition & Fees
24.7%
Grants &
Contracts
27.1%
Aux. Ent.
14.9%
State
Appropriation
15.8%
Other
17.5%
State
Appropriation
13.5%
Grants &
Contracts
27.1%
Aux. Ent.
15.0%
Other
17.6%
State General Fund Appropriation
State general funds are tax revenues which are appropriated by the General Assembly for
the use of the institution. The state general fund appropriation is made up of an appropriation for
educational and general programs, a special appropriation for specific programs, and an
appropriation for student financial aid.
The revised 2002-03 general fund appropriations for educational and general programs of
$130.3 million is a $5.7 million decrease over the original 2002-03 budget of $136.0 million. This
reduction is due to the second round of general fund budget reductions occurring in October 2002
of $14.0 million, partially offset by an increase of $5.8 million due to the August 2002 bonus paid
to faculty and classified employees. This bonus was funded 100 percent from general fund
revenues. The remaining offset is related to the University reverting non-general fund revenues
back to the Commonwealth related to savings from a group life insurance premium holiday and
the reduction in the contribution to the Virginia Retirement System. In the original 2002-03
budget, the savings reverted back to the state was treated as a reduction of the general fund
appropriation. The more appropriate treatment is to show this reversion to the state as an
expenditure from the non-general fund revenues, which is how this non-general fund reversion is
reflected in the revised 2002-03 and the 2003-04 budgets.
The 2003-04 budget for general fund appropriations for educational and general programs
has been developed using the approved 2002-04 Appropriations Act. There will be a $14.7
million decrease from the revised 2002-03 budget to $115.6 million. This decrease includes $12.4
million in incremental budget reductions, the $5.8 million related to one-time bonuses in 2002-03,
with offsetting increases of $1.7 million for increased state retirement contributions, $1.3 million
for the funding of the UVa Health Plan, and an estimated $1.0 million for planned faculty and
classified salary increases.
9
The carryforward of $850,000 in unspent Commonwealth Technology Research Fund
(CTRF) balances from June 30, 2002 has increased the amount of funds available in 2002-03
compared to the original budget. The 2003 General Assembly eliminated the CTRF program in
the future, as well as any uncommitted balances in 2003-04. The state will meet its previous
commitments for 2003-04, as reflected in the $1.3 million budget for 2003-04.
There is an additional decrease to Eminent Scholar matching funds in both 2002-03 and
2003-04 to $2.9 million. This is an overall decrease in this matching program from a high of $3.7
million in 2000-01. It is projected that endowments eligible for Eminent Scholar matching will
generate $13.9 million in 2003-04. The state will match about 21¢ on the dollar in 2003-04. The
University adds over half a million dollars or another 4¢ per dollar of eligible income in matching
funds from private resources.
The budget reductions can be expected to further diminish the University’s standing
relative to public peer institutions in the amount of general fund appropriations per in-state
student. The following chart shows the University’s standing using the 2002-03 original state
appropriation for each school:
School
University of North Carolina - Chapel Hill
University of California – Berkeley (01-02)
University of Michigan - Ann Arbor
University of Virginia
2002-03 GF
per In-state Student
$22,484
$22,309
$19,213
$9,748
It is anticipated that the 2003-04 general fund appropriations per in-state student for the
University will decrease to around $8,800.
The original 2002-03 general fund appropriation for financial aid included about $25,000
in matching funds for the Virginia Graduate and Undergraduate Assistance Program. This match
was completely eliminated in the October 2002 budget reductions. The 2003-04 general fund
appropriation for financial aid does not reflect the University’s share of the additional $4.5 million
allocated by the 2003 General Assembly for system-wide financial aid. These funds are currently
held in a central state reserve, to be allocated by the Department of Planning and Budget and the
State Council of Higher Education in the near future.
Non-general Fund Revenue
Non-general fund revenues are resources which are earned or generated by the University
such as tuition, indirect cost recoveries, grants and contracts, auxiliaries, or from private
resources. With the exception of gifts and endowment income, non-general funds are also
appropriated by the General Assembly. The different sources of non-general fund revenue are
described in further detail in subsequent sections of this document.
10
University of Virginia - Academic Division
Revenue Budget Summary
2003-04
Revenues from Educational and General Activities
State General Fund Appropriation
Tuition and Fees
Grants, Contracts and Indirect Cost Recoveries
Endowment Income
Gifts
Sales, Services, Investment Income and Other
Original
2002-03
Revised
2002-03
$ 115,565,302
209,868,915
228,670,040
52,811,127
51,410,141
22,485,802
680,811,327
$ 136,015,517
179,705,357
217,123,124
56,119,146
27,707,599
19,292,935
$ 635,963,678
$ 130,268,353
186,104,700
216,804,420
49,979,440
50,606,088
21,041,506
$ 654,804,507
$ 5,526,064
28,771,500
15,489,200
15,247,388
14,500,000
598,462
$ 80,132,614
$ 5,550,128
24,503,252
14,475,400
12,261,910
13,950,347
451,940
$ 71,192,977
$ 5,526,064
25,496,020
14,728,800
14,525,569
13,949,987
495,201
$ 74,721,641
Total Revenues from Auxiliary Enterprises
$ 26,832,167
30,139,800
22,729,000
12,033,200
10,743,764
6,457,197
5,199,400
4,395,700
4,334,967
3,225,700
8,475,707
$ 134,566,602
$ 24,879,288
28,225,300
22,564,000
11,217,000
10,606,711
6,318,428
4,685,500
4,616,600
4,140,573
3,087,600
8,385,070
$ 128,726,070
$ 23,719,607
29,625,300
21,802,500
11,242,000
10,606,711
6,250,100
4,685,500
4,616,600
4,135,609
3,087,600
8,405,853
$ 128,177,380
Total Revenue Budget - Academic Division
$ 895,510,543
$ 835,882,725
$ 857,703,528
Total Revenues from Educational and General Activities
Revenues from Student Financial Assistance
State General Fund Appropriation
Transfer from Tuition and Fees
Grants, Contracts and Indirect Cost Recoveries
Endowment Income
Gifts
Investment Income and Other
Total Revenues from Student Financial Assistance
Revenues from Auxiliary Enterprises
Athletics
University Bookstore and Cavalier Computers
Housing and Conference Services
Parking and Transportation
Voice Communications
Student Health
Intramural/Recreation Sports
Printing Services
Newcomb Hall and University Programming Council
Dining Services
Other Auxiliary Activities
Percent
Change
Dollar Change
from
from Revised
Revised
2002-03 to
2002-03 to
2003-04
2003-04
$ (14,703,051)
23,764,215
11,865,620
2,831,687
804,053
1,444,296
$ 26,006,820
(11.3%)
12.8%
5.5%
5.7%
1.6%
6.9%
4.0%
3,275,480
760,400
721,819
550,013
103,261
5,410,973
0.0%
12.8%
5.2%
5.0%
3.9%
20.9%
7.2%
$
3,112,560
514,500
926,500
791,200
137,053
207,097
513,900
(220,900)
199,358
138,100
69,854
6,389,222
13.1%
1.7%
4.2%
7.0%
1.3%
3.3%
11.0%
(4.8%)
4.8%
4.5%
0.8%
5.0%
$
37,807,015
4.4%
$
$
$
11
Tuition and Fees
The revised 2002-03 tuition and fees budget is $6.4 million more than originally approved
last June. The $385 mid-year increase in tuition generated about $6.5 million, of which $700,000
was transferred to financial aid in order to meet the increased financial aid need of students
because of the mid-year increase. Additionally there were higher summer session registrations
and student activity fees, generating an additional $587,000 more than expected.
The 2002-04 Appropriation Act, as approved by the General Assembly and the Governor
allowed tuition for in-state undergraduates to be annualized based upon the mid-year tuition
increase, plus a 5 percent increase on the base, plus an additional amount to fund the required
non-general fund portion of salary and healthcare benefit increased costs. Tuition and fee rates
for out-of-state undergraduate, graduate, and professional school students are set at the discretion
of the Board of Visitors. The 2003-04 budget reflects the expected revenue to be generated by
the tuition increases shown in the following chart, consistent with the state’s policy and as
approved by the Board:
Undergraduate
Graduate
In-State
2003-04
$ Increase
Tuition
from Prior
and Fees
Year
$5,925
$984
$7,817
$2,794
% Increase
from Prior
Year
19.9%
55.6%
Out-of-State
2003-04
$ Increase % Increase
Tuition
from Prior from Prior
and Fees
Year
Year
$21,945
$1,794
8.9%
$19,925
$828
4.3%
Darden
$28,126
$2,004
7.7%
$33,126
$2,004
6.4%
Law, 1st yr
Law, Returning 2nd yr
Law, Returning 3rd yr
$23,725
$22,525
$21,325
$2,786
$2,786
$2,786
13.3%
14.1%
15.0%
$29,128
$29,128
$29,128
$2,234
$2,234
$2,234
8.3%
8.3%
8.3%
Medicine, 1st yr
Medicine, Returning 2nd yr
Medicine, Returning 3rd yr
Medicine, Returning 4th yr
$22,341
$20,491
$18,991
$17,991
$3,816
$3,466
$2,966
$1,966
20.6%
20.4%
18.5%
12.3%
$34,391
$34,391
$34,391
$34,391
$3,584
$3,584
$3,584
$3,584
11.6%
11.6%
11.6%
11.6%
Tuition and fee revenues available for educational and general programs are projected to
increase $23.8 million or 12.8 percent over the revised 2002-03 budget to $209.9 million. The
2003-04 tuition and fees budget was developed using the enrollment projections approved by the
Board of Visitors in April 2003, as well as recent enrollment trends. The budget assumes that the
current in-state versus out-of-state ratios will remain unchanged. For 2003-04, that is 68 percent
in-state in the undergraduate schools, 46 percent in-state in the graduate schools, and 45 percent
in Law, Darden and Medicine.
The University’s approved enrollment growth plan shows that Fall 2003 on-grounds
enrollment will total 19,275 students. Of the expected 12,775 undergraduate students, 68 percent
will be Virginians. The off-grounds enrollment projection for the fall is 3,850 students, of which
12
73 percent will be Virginians. It is projected that the first year class will include 3,040 students,
an increase of 41 over Fall 2002 enrollment, while 530 students will transfer to the University.
Approximately $17.6 million of the $23.8 million total tuition increase is allocable to
increases in undergraduate, graduate, Medical school, Summer Session and the School of
Continuing and Professional Studies (SCPS) tuition rates. Incremental tuition revenue will be
used to address undergraduate and graduate financial aid ($3.2 million), incremental state budget
reductions ($11.7 million), and to fund salary and healthcare cost increases ($4.1 million).
Approximately $7.1 million of the incremental tuition revenue is allocable to selfsupporting degree programs, including Law, Darden, McIntire Ernst & Young and Executive
Programs, and Engineering Executive Programs. While the majority is related to tuition
increases, Darden will also be adding a new section of sixty students in Fall 2003.
Approximately $2.5 million of the incremental tuition revenue is related to the non-degree
programs of SCPS, the addition of the new Debt Service Fee for out-of-state students required by
the Commonwealth, the new International Student Fee, and the increase in the E&G Facilities
Fee.
Over $28.8 million or 13.1 percent of tuition revenue from degree programs is allocated to
undergraduate and graduate financial aid. The University is committed to working with schools
to improve the flexibility and attractiveness of the University’s graduate support packages in order
to become more competitive in attracting top graduate students. The University funded financial
aid to students through the following programs:
•
$9.4 million is allocated to undergraduate aid, an increase of $1.7 million over original
2002-03. This contribution allows the University to offer 100 percent of demonstrated
need to first, second and third year students. In 2004-05, the University plans to offer 100
percent of demonstrated need to all four classes.
•
$6.6 million is allocated to the out-of-state graduate student tuition adjustment program.
To qualify for the program, an out-of-state graduate student must be employed in a
significant academic capacity and earn a contract rate of at least $5,000 during the fiscal
year. The maximum award is limited to the differential between in-state and out-of-state
tuition rates as approved by the Board of Visitors. This is a decrease from the $7.7
million allocated in 2002-04, reflecting the University’s actions to reduce the per student
differential by nearly $1,000 by increasing in-state graduate tuition significantly (22.3
percent over 2002-03 annualized base) while minimizing the increase to out-of-state
graduate tuition (2.3 percent over 2002-03 annualized base).
•
$6.7 million is allocated to enhance the support of graduate teaching assistants, as the
University continues to provide in-state tuition, required fees, and a healthcare voucher to
eligible graduate teaching and research assistants. The increase of $1.6 million over
original 2002-03 reflects the significant increase in graduate in-state tuition, as well as an
11.5 percent increase in the full healthcare premium of single coverage for qualifying
13
graduate students. In 2001-02, the University added funding to subsidize the health
insurance premiums of graduate teaching assistants and graduate research assistants who
earn $5,000 or more annually. While the long-term commitment is to fund at least 70
percent of the cost, in 2003-04 the University is increasing funding to continue to
subsidize 100 percent of the premium, scheduled to increase to $1,193 annually.
•
$6.0 million is allocated to in-state and out-of-state graduate financial aid. The increase of
$1.8 million reflects the institution’s commitment to improving graduate financial support.
The majority of the incremental tuition revenue resulting from the significant increase in
graduate in-state tuition was re-allocated to the deans in the form of incremental
fellowship funding.
Grants, Contracts, and Indirect Cost Recoveries
Based upon the expenditure trends and the value of new sponsored program awards
during the period July 2002 through March 2003, revenues and expenditures from Grants,
Contracts and Indirect Cost Recoveries are expected to increase by 5.5 percent over the 2002-03
revised budget. Through March 31, 2003, new sponsored program awards are up only 2 percent
over the same period in 2001-02. However, new awards grew by 14 percent in 2001-02 and 14
percent in 2000-01, so it is expected that growth in expenditures will exceed the 2 percent in new
award growth seen in the first nine months of 2002-03. Accordingly, it is estimated that grant and
contract expenditures will increase by approximately 5 percent in 2003-04.
It is estimated that the expenditure base of indirect cost recoveries will increase by the
same 5 percent in 2003-04; however, an additional 2 percent growth is included related to the
negotiation of an increased indirect cost recovery rate on federal grants and contracts. In April
2003, the University negotiated a new indirect cost recovery rate of 52 percent, an increase of 8
percent over the old rate of 48 percent. The impact on indirect cost recoveries will be gradual as
the old rate applies to current contracts; the new rate will be applicable to new federal grants and
contracts beginning July 1, 2003.
Total grants, contracts, and indirect cost recoveries are budgeted at $244.2 million in
2003-04. Indirect cost recoveries will comprise $55.4 million of that total, with 30 percent of that
amount or $16.6 million allocated to educational and general programs and $2.3 million allocated
to student financial aid. Direct revenues from grants and contracts will be budgeted at $188.9
million, with $13.2 million of that total to support student financial aid.
Endowment Income
Approximately $78.5 million will be distributed from the pooled endowment fund in 200304 to Academic Division units. However, restricted endowment income is recognized as revenue
as it is expended not as it is distributed. Based upon historical levels of expenditure and the
changes in the per share distribution amounts, it is projected that an estimated $68.1 million will
be recognized as revenue and expended in 2003-04. The entire amount distributed will not be
expended due to donor restrictions on the endowments, unfilled professorships resulting from
14
limitations on hiring related to state budget reductions, or accumulations of reserves for future
commitments.
Of the $68.1 million projected for expenditure in 2003-04, $52.8 million will expended for
educational and general purposes, while the remaining $15.3 million will be expended for student
financial aid. In addition to the endowed scholarships and fellowships, the 2003-04 student
financial assistance budget includes $703,000 for the President's Fellowships and $1.2 million for
continued funding of a merit scholarship program established in 1985-86.
Gift Income
There is a significant change from the original 2002-03 budget for gift revenue of
approximately $22.9 million to the revised budget of $64.6 million. This is primarily related to
growth in gift expenditures related to the state budget reductions and higher than expected gift
receipts in 2002-03.
Like restricted endowment revenue, restricted gift revenue is recognized as it is expended
rather than as it is received. Gift revenues expended are expected to grow slightly to $65.9
million from the 2002-03 revised budget of $64.6 million, as estimated by the departments
receiving the gifts. Of the $65.9 million projected for expenditure in 2003-04, $51.4 million will
be expended for educational and general purposes, while the remaining $14.5 million will be
expended for student financial aid.
Other Revenues
Revenues from other sources including current funds investments and sales and services of
educational departments will increase $1.5 million or 7.2 percent in 2003-04. $598,000 of the
$23.1 million generated from other sources will be allocated to financial aid.
Auxiliary Enterprises
An auxiliary enterprise is an entity that exists to furnish goods or services to students,
faculty or staff and charges a fee that is directly related, although not necessarily equal, to the cost
of the service. Auxiliary enterprises are expected to be self-supporting, with revenues fully
supporting the operating and capital expenditures of the enterprise. Additionally, the
Commonwealth requires that auxiliaries be charged an overhead rate to support the general and
administrative services provided by the E&G operations. In 2003-04, the auxiliaries are charged
6.97 percent of their operating expenditures – a total of $4.3 million will be recovered by E&G
operations. In return for payment of general and administrative support, auxiliary enterprises are
credited with interest earned on their cash balances.
The auxiliary enterprises include Athletics and Intramural Sports, University Bookstore
and Cavalier Computers, Housing and Conference Services, Parking and Transportation, Voice
Communications, Student Health, Printing Services, Newcomb Hall and University Programming,
Dining Services, Mail Services, Leased Facilities, University Press, and other activities operated
to serve students, faculty, and staff. Emphasis is placed on providing safe, effective, and efficient
15
enterprises that are compatible with and facilitate the accomplishment of the University's primary
mission.
Revenue projections were developed using the enrollment projections approved by the
Board of Visitors in April 2003, the housing rates approved by the Board of Visitors in February
2003, and the dining, and mandatory non-E&G fees approved by the Board of Visitors in April
2003. Increases in student fees support operating cost increases in University Transit, Escort
Services, Recreational Facilities, Athletics, and Student Health. Revenues from all auxiliary
enterprises are estimated to total $134.6 million in 2003-04, an increase of 5.0 percent over the
2002-03 revised budget.
Revenue changes which are not based on Board approved fees and rates are explained
below:
The Athletics revenue budget is increasing by $3.1 million or 13.1 percent. This increase
reflects higher ticket and post-season revenues of $1.3 million or 16.9 percent; the athletic student
fee increase generating an additional $1 million; larger corporate sponsorships projected to
generate another $550,000 or a 34 percent increase; and greater Atlantic Coast Conference
distributions of $211,000. The budgeted revenues have been reconciled to the Five-Year Plan as
previously presented to the Board of Visitors.
Parking and transportation revenues are increasing by 7.0 percent to $12.0 million in
2003-04. In addition to the approved student fee increase, this reflects a $562,000 or 2.4 percent
increase in revenues from the Health Sciences Center in support of the South Garage Addition
debt service and a $120,000 or 10 percent increase from hourly parking rates.
Under the dining services contract with ARAMARK Corporation, net revenues received
by the University in 2003-04 are expected to total $3.2 million. Of this amount, approximately
$11,000 represents vending and concession commissions, $240,000 represents interest income,
and the remaining $3.0 million is from total board and retail sales. Rates for contract meal plans
were approved by the Board of Visitors in April and were increased at an average of 3.44 percent.
Decreases in revenues for Printing Services and the University Press are based upon
expected lower demand for their services.
16
University of Virginia - Academic Division
Revenue Budget Detail
Revised
2002-03
2003-04
State General Fund Appropriations
Legislative Appropriations
Anticipated State Adjustments
Total State General Fund Appropriations
Special State General Fund Appropriations
Eminent Scholars Matching Funds
Fishery Resource Grants
Commonwealth Technology Research Fund Awards
VIVA Library Materials
Total Special State General Fund Appropriations
State Nongeneral Fund Appropriations for Educational and General
Regular Degree Program Tuition
Architecture
Graduate Architecture
College of Arts & Sciences
Graduate Arts & Sciences
Commerce
Graduate Commerce
Education
Graduate Education
Engineering
Graduate Engineering
Nursing
Graduate Nursing
Medicine
School of Continuing and Professional Studies (SCPS)
Summer Session
Subtotal Regular Degree Program Tuition
Transfer to Financial Aid – Undergrad University Grants
Transfer to Financial Aid – Graduate Adjustment
Transfer to Financial Aid – GTA/GAA Remission
Transfer to Financial Aid – GTA/GAA Healthcare
Transfer to Financial Aid – Graduate University Grants
Subtotal Tuition Transferred to Financial Aid
Percentage of Regular Degree Program Tuition Transferred to Financial Aid
Net Regular Degree Program Tuition
$ 111,279,538
(157,188)
111,122,350
$ 122,151,085
2,990,447
125,141,532
2,933,485
210,000
1,299,467
4,442,952
2,933,485
270,000
1,878,595
44,741
5,126,821
3,897,864
1,874,861
86,215,460
14,586,777
6,706,345
1,185,027
5,673,724
18,764,868
5,779,563
2,285,455
642,030
12,289,566
2,618,673
4,968,000
167,488,213
3,482,632
1,689,552
76,545,825
13,475,389
5,967,609
223,278
1,034,721
4,908,174
16,598,208
5,247,687
1,930,827
517,472
10,868,972
2,804,451
4,630,000
149,924,797
(9,435,499)
(6,604,512)
(4,996,459)
(994,940)
(3,463,517)
(25,494,927)
15.2%
(7,935,499)
(7,675,003)
(3,932,748)
(900,077)
(1,863,081)
(22,306,408)
14.9%
141,993,286
127,618,389
17
University of Virginia - Academic Division
Revenue Budget Detail (continued)
Revised
2002-03
2003-04
Self-Supporting Degree Program Tuition
Law JD, Graduate and Appellate Judges’ Programs
Darden MBA and PhD Programs
McIntire Executive and E&G Degree Programs
Engineering Executive Degree Program
SCPS Bachelor of Interdisciplinary Studies Degree Program
Subtotal Self-Supporting Degree Program Tuition
$ 27,262,934
19,278,600
4,884,763
1,044,000
460,926
52,931,223
$ 24,429,262
15,693,052
4,529,163
772,000
357,607
45,781,084
(2,550,813)
4.8%
(2,537,832)
5.5%
Net Self-Supporting Degree Program Tuition
50,380,410
43,243,252
Other Tuition and Fees
SCPS Non-Degree Tuition and Fees
McIntire Executive and E&Y Fees
Mandatory E&G Fees
Application Fees
Other Program Fees
Total Other Tuition and Fees
9,140,792
1,572,423
2,529,854
1,828,000
1,414,910
16,485,979
7,452,958
1,502,220
1,986,000
1,776,700
1,241,225
13,959,103
208,859,675
184,820,744
2,026,721
16,600,000
(725,760)
585,000
2,112,253
15,500,000
(651,780)
585,000
Total State Nongeneral Fund Appropriations for Educational and General
227,345,636
202,366,217
Total State Funds for Educational and General
342,910,938
332,634,570
Total Grants, Contracts & Indirect Cost Recoveries for Educational and General
212,210,800
201,371,200
1,009,240
52,811,127
51,410,141
20,459,081
1,283,956
49,979,440
50,606,088
18,929,253
Total University Funds for Educational and General
125,689,589
120,798,737
Total Revenues for Educational and General
680,811,327
654,804,507
Transfer to Financial Aid – University Grants
Percentage of Self-Supporting Degree Program Tuition to Financial Aid
Total Tuition and Program Fees
Revenue from Fines, Rents, Sales and Services
Recovery of Indirect Costs (30%)
Transfer to Financial Aid - GRA Healthcare
Work Study Revenue
University Funds for Educational and General
Student Activity Fees
Endowment Income
Private Gifts and Grants
Sales, Services, Investment and Other Income
18
University of Virginia - Academic Division
Revenue Budget Detail (continued)
Revised
2002-03
2003-04
Revenues from Student Financial Assistance
State General Fund Appropriations
Transfer from Non-General Fund Revenues
Grants, Contracts and Indirect Cost Recoveries
Endowment Income
Private Gifts and Grants
Investment and Other Income
$ 5,526,064
28,771,480
15,489,200
15,247,388
14,500,000
598,462
$ 5,526,064
25,496,020
14,728,800
14,525,569
13,949,987
495,201
Total Revenues from Student Financial Assistance
80,132,614
74,721,641
Revenues from Auxiliary Enterprises
Athletics
TV, Radio, Licensing and Sponsorship
Conference Revenue
Gate Receipts
Student Fees and Other
Other
Total Athletics
2,344,367
7,836,000
9,089,400
6,611,300
951,100
26,832,167
1,779,839
7,625,000
7,984,992
5,761,300
568,476
23,719,607
University Bookstore and Cavalier Computers
30,139,800
29,625,300
Housing
Student Housing Rents
Housing Conference Services
Faculty and Staff Housing
Total Housing Services
20,255,000
1,743,000
731,000
22,729,000
19,323,000
1,768,500
711,000
21,802,500
Parking and Transportation Services
Student Fees
Parking Fees, Bus Passes, Charter Fees and Other Income
Total Parking and Transportation Services
2,153,000
9,880,200
12,033,200
1,978,000
9,264,000
11,242,000
Voice Communications
Student Health
Intramural/Recreation Sports
Printing Services
Newcomb Hall and University Programming Council
Dining Services
Leased Facilities
University Mail Services
University Press
Other Auxiliary Activities
10,743,764
6,457,197
5,199,400
4,395,700
4,334,967
3,225,700
2,873,988
1,985,000
1,717,397
1,899,322
10,606,711
6,250,100
4,685,500
4,616,600
4,135,609
3,087,600
2,820,388
1,955,010
1,618,210
2,012,245
134,566,602
128,177,380
$895,510,543
$857,703,528
Total Revenues from Auxiliary Enterprises
Total Revenue Budget – Academic Division
19
Academic Division Expenditures by Functional Classification
Academic Division expenditures are projected to total $895.1 million in 2003-04, an
increase of 4.4 percent over the revised budget of $857.2 million for the current fiscal year.
Academic Division expenditures are budgeted in the following functional categories, with detail
on page 23:
2002-03 Operating Expenditures
$857.2 million
Non-
2003-04 Operating Expenditures
$895.1 million
NonPersonal
Services
35.3%
Personal
Services
36.3%
Wages 2.2%
GTA/GRA
2.1%
Classified
Sal. &
Benefits
22.0%
Wages 2.7%
Faculty Sal.
& Benefits
37.3%
GTA/GRA
2.1%
Faculty Sal.
& Benefits
38.0%
Classified
Sal. &
Benefits
21.9%
As mentioned earlier, the General Assembly has allocated a 2.25 percent base salary
adjustment, effective November 25, 2003. This is not a net increase in the annual compensation
faculty and staff will receive in the upcoming fiscal year, since there was a 2.5 percent one-time
bonus in August of 2002. While the Commonwealth’s stated goal continues to be maintenance of
the instructional faculty salary average at the 60th percentile of each institution’s peer group, the
Academic Division average faculty salary average dropped to the 27th percentile in 2002-03. That
ranking could fall further in 2003-04 if peer institutions manage to fund compensation increases
larger than 2.25 percent despite their own budget woes. In fact, in the past 12 years, the state has
met the 60th percentile benchmark for Academic Division faculty salaries only once.
The University will incur significantly increased benefit costs, as the employer share of
employee health insurance premiums has increased by an average of 28.5 percent and the
Commonwealth has increased the contribution to the Virginia Retirement System as calculated by
the state’s actuaries. While the University will receive a portion of these increased costs from
state general funds, the majority of the cost will be covered by tuition revenues.
The Academic Division’s 2003-04 budget includes a reserve for the expected general fund
and nongeneral fund components of the salary ($2.8 million) and benefit ($3.95 million) increases
for state funded positions. Salary and benefit increases for non-state funded positions have been
budgeted by the individual departments.
21
Staffing
As shown in the following chart, the Academic Division has budgeted a slight increase of
63 FTE positions to a level of 7,491 in 2003-04.
State
Grants and
Contracts
Private
Resources
Auxiliaries
Total
2002-03 Original
2002-03 Revised
Change
% Change
4,367.57
4,305.99
(61.58)
(1.4%)
1,528.93
1,551.52
22.59
1.5%
761.74
803.60
41.86
5.5%
765.45
767.20
1.75
0.2%
7,423.69
7,428.31
4.62
> 0.1%
2003-04
Change
% Change
4,256.26
(49.73)
(1.2%)
1,678.92
127.40
8.2%
795.46
(8.14)
(1.0%)
760.45
(6.75)
(0.9%)
7,491.09
62.78
0.8%
One cost reduction strategy employed throughout the University during the two rounds of
budget reductions was to eliminate vacant state positions. As shown above, the net decrease in
state positions since the 2002-03 original budget is 111 positions. Excluding a 60 FTE increase in
state positions at the Darden School, the decrease in state positions in all other departments of the
Academic Division is 171 FTE or 3.9 percent. Darden has moved 43 FTEs from private
resources due to a significant decline in enrollment in its executive education programs and added
17 new faculty to accommodate the 120 new students enrolled in the Fall of 2002 and the Fall
2003. Darden is funding this increased state salary requirement, including 2003-04 salary and
benefit increases, through its own tuition revenues under self-sufficiency.
Sponsored program positions, projected to increase 9.8 percent over the 2002-03 original
budget to 1,679, are supported by growth in sponsored program expenditures. If sponsored
program awards do not support the projected number of FTEs, the positions will not be created.
Positions funded from private resources are expected to increase by 4.4 percent over the 2002-03
original budget to 795, reflecting some departments ability to move some of their salary
commitments to private sources during the reduction in available state resources. The 2003-04
budget reflects a net decrease of 5 FTE positions in auxiliary enterprises over the 2002-03 original
budget.
Of the 7,491 positions budgeted for 2003-04, 2,335 positions are involved directly in the
primary programs of instruction, research, and public service. Another 1,679 positions are funded
from grants, contracts, and related indirect cost recoveries.
22
University of Virginia – Academic Division
Expenditure Budget Detail - by Functional Classification
FTE
Expenditures for Educational & General Activities
Faculty Salaries and Fringe Benefits
Classified Salaries and Fringe Benefits
Wages and Fringe Benefits
GTA/GRA Wages
Subtotal Personal Services
Percent of Total Educational & General Budget
Other Than Personal Services
Recoveries
Transfers
Total Expenditures for Educational & General Activities
3,150.30
3,262.57
317.77
6,730.64
6,730.64
Total Expenditures for Student Financial Assistance
Expenditures for Auxiliary Enterprises
Faculty Salaries and Fringe Benefits
Classified Salaries and Fringe Benefits
Wages and Fringe Benefits
GTA/GRA Wages
Subtotal Personal Services
Percent of Total Auxiliary Enterprises Budget
Other Than Personal Services
Recoveries
Transfers
Total Expenditures for Auxiliary Enterprises
Total Expenditure Budget - Academic Division
2003-04
Amount
$327,960,912
175,698,857
17,527,393
18,647,552
539,834,714
79.3%
390,913,582
(250,355,285)
415,316
680,811,327
Revised 2002-2003
FTE
Amount
3,113.91
3,237.33
309.87
6,661.11
6,661.11
$307,927,721
167,901,656
13,977,428
18,252,234
508,059,039
77.6%
408,457,460
(262,085,233)
373,241
654,804,507
80,132,614
146.79
613.41
0.25
760.45
760.45
7,491.09
11,824,878
20,671,700
6,443,272
22,000
38,961,850
29.1%
79,021,587
(9,087,727)
25,213,887
134,109,597
74,721,641
147.04
620.16
11,868,156
21,004,689
5,161,632
10,000
38,044,477
29.8%
0.00
767.20
767.20
76,326,499
(9,302,334)
22,580,317
127,648,958
$ 895,053,538 7,428.31
$ 857,175,106
23
Academic Division Expenditures by Programmatic Category
The Expenditure Budget Summary appears on page 27, and the Expenditure Budget
Detail can be found on page 32. Academic Division expenditures are budgeted in the following
programmatic categories.
2002-03 Operating Expenditures
$857.7 million
Research &
Grants &
Contracts
19.5%
Auxiliaries
14.9%
Public
Service
6.0%
2003-04 Operating Expenditures
$895.1 million
Research &
Grants &
Contracts
19.6%
Auxiliaries
15.0%
Public
Service
5.9%
Instruction
25.9%
Financial
Aid 8.7%
Other
13.6%
Academic
Support
11.4%
Instruction
26.1%
Financial
Aid 9.0%
Other
13.2%
Academic
Support
11.2%
Educational and General
Educational and general (E&G) is a term used to describe operations that are related
directly to the University's educational objectives. E&G expenditures include primary and support
programs of instruction, research, public service, academic support, student services, institutional
support, and maintenance and operation of physical plant. Student financial assistance, auxiliary
enterprises, and hospital programs are excluded.
Instruction
The program of instruction includes the teaching faculty, support staff, instructional
equipment, and operating costs directly related to instruction, as well as departmental research.
The revised 2002-03 budget decreased by $3.3 million from the original 2002-03 budget.
Second round budget reductions of $10.4 million were allocable to the schools, with $4.75 million
offset from the mid-year tuition increase and $195,000 offset by the Budget Defense Fund
allocations to Architecture and Nursing, for a net impact of $5.5 million to the revised 2002-03
budget. This permanent impact was offset by the one-time funding of $1.7 million for the August
2002 bonuses and carryforward balances.
The increase in the 2003-04 instructional budget is $13.2 million or 6.0 percent over the
revised 2002-03 budget. Approximately $4.4 million is tuition to be generated and retained by
self-supporting degree programs in Darden, Law, McIntire, Engineering, and SCPS. There is
$2.7 million related to salary and benefit cost increases in the area of instruction to be allocated
25
from the reserve in 2003-04. Other instructional increases are related to the University’s addenda
process: $225,000 to hire three new Arts and Science’s faculty in the American Studies Program;
$186,000 for funding the new Graduate Studies function to be served by the Office of the Vice
President for Research and Graduate Studies; $160,000 for faculty hiring in Architecture
$157,000 in excess tuition to be re-allocated to the School of Medicine; and $150,000 to be
allocated to expand Summer Session offerings. Approximately $3.2 million of the increase is the
result of additional private resources allocated to instruction; $2.2 million of which is the expected
commitments on the Budget Defense Fund in 2003-04.
Additional instructional initiatives included within the 2003-04 budget includes the
offering of a Masters of Public Health degree, the continued expansion of the Darden School with
the addition of 60 new students, the Curry School’s Children at Risk Initiative, expanded
opportunities for non-business majors to take business courses, and the renewal of the College’s
Department of Economics.
Research
The 2003-2004 educational and general research program includes the Center for Public
Service, Center for Advanced Studies, Center for Politics, Fishery Resource grants, the State
Climatologist, the Institute of Nuclear and Particle Physics, and the Diabetes Research and
Training Center. In addition to these specific activities, the program includes support for research
faculty but does not include sponsored research or departmental research.
The revised 2002-03 budget increased by $8.9 million from the original 2002-03 budget.
Nearly all of this increase is due to increases in sponsored programs and private expenditures
towards research support. A portion of the private increase is related to the one-time
carryforward of nearly $900,000 in the chair research accounts, plus an overall increase in
expenditures from gift funds. There was an increase in the revised state budget of $42,000 related
to the one-time funding of the August 2002 bonus and the carryforward of Commonwealth
Technology Research Fund awards from June 30, 2002, offset by second round budget
reductions.
The $2.8 million increase in the 2003-04 budget includes a $3.5 million increase in funding
from indirect cost recovery and private sources, offset by a decrease in state support of $725,000.
The 2002-04 Appropriation Act includes an additional $460,000 in specific reductions to research
centers (in addition to the $384,000 specific reduction in 2002-03). Approximately $125,000 is
included in the reserve for allocation to salary and benefit increases in 2003-04.
Three awards from the Commonwealth Technology Research Fund are included in this
category, for a total of $1.9 million in the revised 2002-03 budget and $1.3 million in 2003-04:
• S. Ray Taylor, Associate Professor in the Materials Science Department in the School
of Engineering, was awarded a three-year grant to research the development of an
26
University of Virginia - Academic Division
Expenditure Budget Summary
2003-2004
Expenditures for Educational & General Activities
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Physical Plant
Grants and Contracts
Total Expenditures for Educational & General Activities
Original
2002-2003
Revised
2002-03
Percent
Change
from
Dollar Change Revised
from Revised 2002-2003
2002-2003 to to 20032004
2003-2004
$ 234,500,759
39,044,450
13,462,280
99,851,006
19,188,978
48,424,421
50,639,433
$ 224,643,538
27,341,626
11,285,592
92,724,591
15,968,923
45,999,867
50,692,541
$ 221,310,346 $
36,261,505
15,714,185
97,611,683
18,013,136
50,706,816
47,879,836
13,190,413
2,782,945
(2,251,905)
2,239,323
1,175,842
(2,282,395)
2,759,597
6.0%
7.7%
(14.3%)
2.3%
6.5%
(4.5%)
5.8%
175,700,000
$ 680,811,327
167,307,000
$ 635,963,678
167,307,000
$ 654,804,507 $
8,393,000
26,006,820
5.0%
4.0%
$
80,132,614
$ 71,192,977
$ 74,721,641 $
5,410,973
7.2%
Expenditures for Auxiliary Enterprises
Athletics
University Bookstore and Cavalier Computers
Housing and Conference Services
Parking and Transportation Services
Voice Communications
Student Health
Intramural/Recreation Sports
Printing Services
Newcomb Hall and University Programming Council
Dining Services
Other Auxiliary Enterprises
Total Expenditures for Auxiliary Enterprises
$
26,832,167
30,009,100
22,631,400
12,033,200
10,743,764
6,457,197
5,175,400
4,395,700
4,411,400
3,178,135
8,242,134
$ 134,109,597
$ 24,825,573
28,123,000
22,422,440
11,182,000
10,606,711
6,318,428
4,685,500
4,616,600
4,349,099
3,073,900
8,461,726
$ 128,664,977
$ 23,043,917 $
29,539,900
21,621,200
11,182,000
10,606,711
6,308,305
4,685,500
4,616,600
4,518,635
3,073,900
8,452,290
$ 127,648,958 $
3,788,250
469,200
1,010,200
851,200
137,053
148,892
489,900
(220,900)
(107,235)
104,235
(210,156)
6,460,639
16.4%
1.6%
4.7%
7.6%
1.3%
2.4%
10.5%
(4.8%)
(2.4%)
3.4%
(2.5%)
5.1%
Total Expenditure Budget - Academic Division
$ 895,053,538
$ 835,821,632
$857,175,106 $
37,878,432
4.4%
Total Expenditures for Student Financial Assistance
27
environmentally compliant, multi-functional coating for aerospace application using
molecular and nano-engineering methods.
• James R. Brookeman, Professor of Radiology and Bio-Engineering in the School of
Medicine and John P. Mugler, Professor of Radiology in the School of Engineering were
awarded a three-year grant to research in-vivo hyperpolarized gas magnetic resonance
imaging.
• William A. Petri, Jr., Professor of Internal Medicine in the School of Medicine was
awarded a three-year grant to study mucosal therapy for infectious and autoimmune
diseases.
Public Service
The major activities in the public service category include the Virginia Foundation for the
Humanities, the Institute of Government, the Women’s Center, the Virginia Film Festival, and noncredit course offerings.
The revised 2002-03 budget increased by $4.4 million from the original 2002-03 budget.
The $1.3 million increase in state support reflects an appropriate reclassification of the Virginia
Foundation for the Humanities from the academic support program. The remaining $2.4 million
increase is related to an overall increase in expenditures from gift funds.
The 2003-04 public service budget reflects a $2.3 million decrease or 14 percent decrease
over the revised budget for 2002-03. The 2002-04 Appropriation Act includes an additional
$138,000 in specific reductions to public service centers (in addition to the $65,000 specific
reduction in 2002-03). A reduction in private support of $1.7 million accounts for the remainder of the
decrease.
Academic Support
The academic support program encompasses the libraries, the portion of Information
Technology and Communications that supports academic computing, and the activities of the deans
of the schools.
The revised 2002-03 budget increased by $4.9 million from the original 2002-03 budget.
There was a $1.8 million decrease in state support related to the reclassification of the Virginia
Foundation for the Humanities to public service and the second round of state budget cuts, offset
by the one-time funding of $860,000 for the August 2002 bonuses and the June 30, 2002
carryforward of unspent balances into 2002-03. The offsetting increase is related to private
support, due to an overall increase in expenditures from gift funds.
The budget for 2003-04 is projected to increase by $2.2 million or 2.3 percent to $99.9
million. State support will increase by $712,000 over the revised budget. There is $1.4 million
28
related to salary and benefit cost increases in the area of academic support to be allocated from the
reserve in 2003-04. Other academic support increases are related to the University’s addenda
allocations: $500,000 for the Library of Tomorrow initiative, $150,000 to the International Studies
Office for the processing and maintenance of international student records, and $123,000 to the
School of Architecture for technology support. Approximately $1.5 million of the increase is from
additional indirect cost recovery and private resources allocated to academic support.
Student Services
The student services program includes those activities whose primary purpose is to
contribute to the students' emotional and physical well-being and to their intellectual, cultural, and
social development outside of the classroom.
The revised 2002-03 budget increased by $2 million from the original 2002-03 budget.
Approximately $900,000 is related to the one-time funding of $170,000 for August 2002 bonuses
and carryforward funds from June 30, 2002. Private resources accounted for the remaining $1
million increase in the revised budget.
The student services budget for 2003-04 is projected to increase by $1.2 million to $19.2
million, almost entirely in the state area. There is $250,000 related to salary and benefit cost
increases in the area of student services to be allocated from the reserve in 2003-04. Other
increases are related to the University’s addenda process, in particular to fund an increased
emphasis on diversity initiatives: $322,000 for undergraduate and graduate admissions process,
including an increased emphasis on minority recruiting; $108,000 for the Office of Career Services
to replace a loss in external revenue resource; $71,000 for the support of residence staff; $19,000
to the Office of African-American Affairs for increased office support, and $7,000 for the funding
of a new multi-cultural class.
Institutional Support
Included in the institutional support program are the financial, administrative, logistical, and
development activities of the University. The revised 2002-03 budget increased by $4.7 million
from the original 2002-03 budget. There was an increase in state support of $1.5 million, primarily
related to carryforward and the one-time increase of $500,000 for the funding of the August 2002
bonus. $3.2 million of the increase was related to support from indirect cost recoveries and private
support, primarily due to the carryforward of local balances in the Integrated Systems Project,
Development and other institutional support areas.
The institutional support budget is projected to decrease by $2.3 million or 4.5 percent in
2003-04. While there is $800,000 held in the reserve for increases in salary and benefit costs, this
increase is offset by the reduced need for funding of the Integrated Systems Project. As mentioned
earlier, the financial and human resource phases of the Integrated Systems Project have been
completed, while a vendor has not yet been selected for the student information system. Only
$200,000 and 2 FTEs to begin the planning for the student system acquisition and implementation
29
have been allocated in the 2003-04 budget. The 2002-03 budget approved by the Board last June
included an allocation for the upgrade to Version 11i of the Oracle software which has been
delayed to 2003-04. Consequently $3.6 million of the original 2002-03 Integrated Systems Project
budget has been deferred until 2003-04.
In 2001-02, the Board approved an internal loan of up to $20 million to be paid back by
2009-10 to finance the project. In 2002-03, the funds drawn down from the internal loan were
repaid in full from the earnings on the unrestricted endowment.
There is an addenda allocation of $1.2 million from the local general fund to support the
increase needed in University Development and University Relations related to the new Capital
Campaign planned to raise approximately $3 billion.
Operation and Maintenance of Plant
The operation and maintenance program category includes all expenditures for operating
and maintaining facilities, leasing space, and police and security, net of amounts charged to
auxiliary enterprises and the Medical Center.
The revised 2002-03 budget decreased by $2.8 million from the original 2002-03 budget.
The decreases are the result of the carryforward of a deficit of $1.3 million from June 30, 2002 (at
the request of central administration) and the allocation of the second round of budget reduction of
$685,000, offset by one-time bonus funding of $1 million.
The O&M budget is projected to increase $2.8 million or 5.8 percent in 2003-04 compared
to the 2002-03 revised budget. There is $1.6 million related to salary and benefit cost increases to
be allocated from the reserve in 2003-04. Other increases are related to the allocations from the
University’s addenda process: $609,000 for the operations and maintenance of new facilities,
$416,000 for increased utility costs, and $381,000 for increased rent costs.
Sponsored Programs
The proposed expenditure plan for 2003-04 anticipates a 5 percent increase in expenditures
from sponsored programs and indirect cost recoveries. As stated in the revenue comments,
historical trends and new sponsored program awards for the period July 2002-March 2003 were
used to estimate 2003-04 expenditures. Award data are good predictors of expenditures in
subsequent periods for federally sponsored programs. Sponsored program expenditures are related
primarily to research projects, but also may be restricted to institutional and service programs.
Student Financial Aid
Student financial aid includes student scholarships, fellowships and other forms of student
assistance exclusive of student loans, student employment, and service scholarships where service
is required of the students receiving the scholarships. The student financial assistance budget also
30
does not include aid provided directly to students or their families by third parties. The student
financial aid budget promotes student accessibility through scholarships and fellowships.
Financial aid awards to undergraduate students are based on standard calculations of the
student's financial need. In 2002-03, 24 percent of the student body demonstrated need. For the
same year, the University has met an estimated 93 percent of the demonstrated need of
undergraduate students when Direct Student Loans are included. In 2003-04, the University will
offer 100 percent of demonstrated need to undergraduate 1st, 2nd and 3rd year students.
As mentioned in the revenue sections earlier, student financial assistance programs are
supported from state general funds, tuition, endowment income, gifts, and federal sources. Growth
is expected from all sources, particularly given the significant increases in tuition approved for
2003-04. The 2003-04 budget for student financial assistance is $80.1 million, an increase of
approximately 7.2 percent over the 2002-03 revised budget of $74.7 million.
Auxiliary Enterprise Expenditures
Auxiliary enterprise expenditures are projected to increase by 5.1 percent in 2003-04 from
$127.6 million to approximately $134.1 million. In the development of the auxiliary enterprise
budgets for 2003-04, the University has continued to place emphasis on the maintenance of prudent
reserves for the rational and systematic renewal and replacement of equipment and facilities. The
budget includes proposed expenditures for 2003-04 from each auxiliary enterprise reserve
beginning on page 34.
The 2003-04 Athletics budget is $26.8 million, exclusive of student athlete scholarships.
This is an increase of $3.8 million or 16.4 percent over the 2002-03 revised budget. The increased
revenues are being directed toward the program improvements included in the Five Year Plan
including women’s Olympic sports, football, men’s and women’s basketball, capital projects and
academic advising. The Athletics operating budget has been reconciled to the Five Year Plan – the
primary difference is that expenditures related to Debt Service Fees collected by Athletics for
facilities were not included in the Five Year Plan.
Housing expenditures are increasing by 4.7 percent to $22.6 million in 2003-04, related to
increased operating costs, including salary and benefit costs and increasing contractual costs for
voice-data services and preventive maintenance.
Parking and transportation expenditures are increasing by 7.6 percent to $12.0 million in
2003-04, related to increased operating costs, including salary and benefit costs as well as the
purchase of six buses over the next three years at a cost in excess of $1.4 million.
Intramural/recreation sport expenditures are increasing by 10.5 percent to $5.2 million in
2003-04, related to increasing operational and debt service costs for the Aquatics and Fitness
Center Addition and salary and benefit costs.
31
University of Virginia - Academic Division
Expenditure Budget Detail
Revised
2002-2003
2003-2004
Expenditures for Educational & General Activities
State Funds for Educational & General Activities
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Physical Plant
Total State Funds for Educational & General Activities
$
$
182,928,849
7,419,749
2,293,158
61,339,007
15,751,579
26,474,990
46,703,606
342,910,938
Grants, Contracts and Indirect Cost Recoveries for Educational & General Activities
Instruction
$
1,225,547
Research
14,378,666
Public Service
2,967
Academic Support
16,442,400
Student Services
271,600
Institutional Support
3,724,020
Operation and Maintenance of Physical Plant
465,600
Direct Cost of Grants and Contracts
175,700,000
Total Grants, Contracts & Indirect Cost Recoveries for Educational &
General Activities
$ 212,210,800
University Funds for Educational & General Activities
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Physical Plant
Total University Funds for Educational & General Activities
$
Total Expenditures for Educational & General Activities
$
$
$
172,904,438
8,144,690
2,821,721
60,627,175
14,383,799
28,196,519
45,556,228
332,634,570
1,026,031
13,482,867
12,758
15,299,688
253,400
3,500,032
489,424
167,307,000
$ 201,371,200
$
$
50,346,363
17,246,035
11,166,155
22,069,599
3,165,799
18,225,411
3,470,227
125,689,589
47,379,877
14,633,948
12,879,706
21,684,820
3,375,937
19,010,265
1,834,184
$120,798,737
$
680,811,327
$
654,804,507
34,297,564
15,489,200
30,345,850
$
31,022,084
14,728,800
28,970,757
Expenditures for Student Financial Assistance
State Scholarships and Fellowships
Sponsored Program Scholarships and Fellowships
University Scholarships and Fellowships
Total Expenditures for Student Financial Assistance
$
$80,132,614
$74,721,641
32
University of Virginia - Academic Division
Expenditure Budget Detail (continued)
2003-2004
Revised
2002-2003
Expenditures for Auxiliary Enterprises
Athletics
University Bookstore and Cavalier Computers
Housing and Conference Services
Parking and Transportation Services
Voice Communications
Student Health
Intramural/Recreation Sports
Printing Services
Newcomb Hall and University Programming Council
Dining Services
Leased Facilities
Mail Services
University Press
Other Auxiliary Activities
Total Expenditures for Auxiliary Enterprises
Total Expenditure Budget - Academic Division
$
26,832,167
30,009,100
22,631,400
12,033,200
10,743,764
6,457,197
5,175,400
4,395,700
4,411,400
3,178,135
2,873,988
1,949,500
1,717,397
1,701,249
$
23,043,917
29,539,900
21,621,200
11,182,000
10,606,711
6,308,305
4,685,500
4,616,600
4,518,635
3,073,900
2,820,388
1,909,210
1,871,137
1,851,555
$134,109,597
$127,648,958
$895,053,538
$857,175,106
33
University of Virginia - Academic Division
Auxiliary Enterprises
2003-04 Projected Reserve Expenditures
Athletics
Preventive Maintenance and Improvements
Women's Crew Shells/Equipment
University Hall Repairs and Replacements
$
Total Athletics
$
1,000,000
25,000
200,000
1,225,000
Intramurals
AFC Equipment and Systems Purchases
AFC Re-carpet
Recreation Facility Repairs and Improvements
Equipment - The Park
Total Intramurals
$
106,400
80,000
135,000
15,000
$
336,400
Telephone System
Wireless Services
Dorm Network
Telemanagement System
Outside Plant Cable
Infrastructure 800 MGhz System
Network Infrastructure
Growth Costs
Switchroom Generators and Air Conditioning
Phone Mail
Total Telephone System
$
1,150,000
515,896
150,000
300,000
1,500,000
2,144,860
200,000
100,000
100,000
$
6,160,756
$
5,912,800
524,000
$
6,436,800
$
463,000
35,000
$
498,000
$
50,000
50,000
100,000
100,000
80,000
$
380,000
Dining Services
Observatory Hill Dining Hall Renovation
Facility Repairs and Improvements
Total Dining Services
Printing Services
Equipment and Systems Purchases
Miscellaneous Facility Repairs and Improvements
Total Printing Services
Bookstores & Cavalier Computers
Bookstore Capital Equipment
Bookstore Computer System Replacement/Upgrade
Central Grounds Bookstore
Miscellaneous Facility Repairs and Improvements
Contingency
Total Bookstore & Cavalier Computers
34
University of Virginia - Academic Division
Auxiliary Enterprises
2003-04 Projected Reserve Expenditures (continued)
Newcomb Hall
O-Hill Basement Fit-out
Miscellaneous Facility Repairs
$
250,000
110,000
$
360,000
Bus Purchases
Lot Repair
Emmet/Ivy Garage
Facility Renovation and Maintenance
Lighting Upgrade
Capital Equipment Purchases
Storm Water Management
South Lawn Parking
Replacement Signage
$
717,000
100,000
500,000
86,000
25,000
15,000
240,000
393,000
20,000
Total Parking and Transportation
$
2,096,000
$
2,000
$
72,000
53,000
5,000
40,000
50,000
6,000
38,000
5,000
6,000
$
275,000
$
2,954,700
132,400
1,000,000
60,000
$
4,147,100
Total Newcomb Hall
Parking & Transportation
Child Development Center
Equipment Replacement
Faculty/Staff Housing
115/117 Piedmont Properties Renovations
2504 Townhouses - Siding
2505 Townhouses - Replace Washers & Dryers
Piedmont Houses - Outside Emergency Phones
Piedmont Houses - Upgrade Playground Equipment
Piedmont Houses - Refinish Hardwood Floors
Piedmont Houses - Replace Outside Water Lines
Orchard House - Install Carpet/Vinyl
Carriage House - Exterior Painting
Total Faculty/Staff Housing
Student Housing
Bice Refurbishment
Alderman Road Repairs
McCormick Road Fire Alarm System
Alderman Shower Refurbishments
Total Student Housing
35
University of Virginia - Academic Division
Auxiliary Enterprises
2003-04 Projected Reserve Expenditures (continued)
JAG School
Replace Drain Stack Pipe
Replace A/C Return Fan
Carpet Replacement - BOQ Rooms
Replace Toilets in BOQ Rooms
Total JAG School
$ 206,720
19,500
14,100
16,810
$
257,130
$
100,000
25,000
25,000
$
150,000
$
$
79,200
5,000
$
84,200
Satellite Uplink
Thornton Hall Remodeling and Renovation
Equipment Replacement and Repair
Satellite Maintenance and Repair
Total Satellite Uplink
Student Health
Equipment and Systems Purchases
Facility Maintenance
Total Student Health
36
The University of Virginia’s College at Wise
2003-2004 Budget Summary
The 2003-04 operating budget for the University of Virginia’s College at Wise (Wise) will
total $19.8 million, an increase of $15,000 or 0.1 percent as compared to the 2002-03 revised
budget.
The operating budget is based on the Appropriations Act approved during the 2003 General
Assembly session. Institution-specific general fund reductions to Wise will total $1.6 million in
2003-04, an increase of $432,000 over 2002-03. Tuition and educational and general fee increases
authorized by the General Assembly and approved by the Board of Visitors will generate additional
revenue of $515,000, an increase of 14.2 percent over the revised 2002-03 tuition revenue
projection. The Higher Education Equipment Trust Fund reimbursement, which is not reflected in
the operating budget, will remain the same for 2003-04.
The 2003 General Assembly Session approved a 2.25 percent salary increase for all fulltime classified and faculty employees for the 2003-04 year. Wise has included a reserve for the
incremental cost in the 2003-04 proposed budget.
For 2003-04, full-time equivalent (FTE) positions are budgeted at 237. Educational and
general (E&G) programs hold 89 percent of these positions, of which 45 percent are involved
directly in the primary program of instruction. Full-time positions in Auxiliary Enterprises total 22.
A summary of all positions is presented below:
Education and General
Sponsored Programs
Auxiliary Enterprises
Total
211
4
22
237
The projected full-time equivalent enrollment for 2003-04 is 1,306, an increase of 30 FTE or
2.4 percent. This projection is based on the 2000-01 to 2005-06 Enrollment Projection Summary
approved by the State Council of Higher Education in the spring of 2002. Freshmen enrollment for
2003-04 is projected to increase by 5 percent and transfer enrollment is projected to increase 7
percent. It is anticipated that out-of-state enrollment in 2003-04 will remain constant with the
current year. The Kentucky Tuition Assistance Grant will continue to support enrollment growth,
as well as enhance recruitment efforts in targeted, out-of-state markets.
Educational and General Revenues
The 2003-04 operating budget for educational and general programs will total $14.0
million. In comparison with the revised 2002-03 budget, this is a decrease of $229,000 or 1.6
percent. The general fund revenue appropriation for 2003-04 will decrease by $745,000 to $9.8
million, 7.1 percent over the revised 2002-03 budget.
37
Non-general E&G revenue for 2003-04 is projected to total $4.4 million, an increase of
$540,000 or 14 percent. This amount includes restricted E&G revenue projections for Application
for Admission fees and Late Registration fees in 2003-04. Non-resident students are required to
pay the full cost of instruction. To be in compliance with this state mandated policy, the nonresident tuition rate will increase by 13.2 percent in 2003-04. Legislative appropriation also
authorizes the College at Wise to charge students a technology service fee. The approved fee rate
will increase from $49 to $50.50 in 2003-04.
Federal sponsored programs continue to be funded at $800,000.
Educational and General Expenditures
Instruction Expenditures
This program includes teaching faculty, support staff, instructional equipment and operating
costs associated directly with instruction. The 2003-04 instructional budget will increase by
$35,000, primarily related to expected salary increases in November 2003.
Public Service Expenditures
The public service budget will decrease by $163,000 or 43.1 percent in 2003-04. The
Southwest Virginia Public Service Education Consortium appropriation received a 44.7 percent
reduction as compared to the 2002-03 original appropriation as part of the state-wide budget
reduction plan proposed by the Governor and approved by the General Assembly. The College
serves as the fiscal agent and site of the Consortium offices. The objective of the Consortium is to
promote and coordinate with institutions of higher education to develop joint educational initiatives
within the public school systems throughout the region.
The remaining public service budget includes the Cultural Arts program, which provides
support to the Pro-Art Association of Wise County and the City of Norton. The Pro-Art
Association promotes and sponsors various cultural events during the year within the area.
Admission to these programs is free to the College students.
Academic Support Expenditures
The academic support program includes library services, technological and computer
services and academic services to both students and instructional faculty. Faculty development and
recruitment are also included within this program. The 2003-04 budget for academic support will
decrease by $24,000.
Student Services Expenditures
Social and cultural development, counseling and career guidance and general student affairs
are included within the student services program. Recruiting, financial aid and registration services
and general college publications are included as well. The student services program provides
various support outlets to students with varying needs, promoting and nurturing their overall wellbeing. The 2003-04 budget will decrease by $23,000.
38
University of Virginia's College at Wise
Budget Summary
2003-2004
Revenues from General Funds
State General Fund Appropriation
SW Va Public Education Consortium
Total Revenues from General Funds
Revenues from Nongeneral Funds
Tuition and Fees - Regular Session
Tuition and Fees - Summer Session
Tuition and Fees - Off Campus
Tuition and Fees - Tuition Remission
Grants and Contracts
Local Sales, Services and Other
Auxiliary Enterprises - Student Housing
Auxiliary Enterprises - Parking and Transportation
Auxiliary Enterprises - Cafeteria
Auxiliary Enterprises - Bookstore
Auxiliary Enterprises - Athletics
Auxiliary Enterprises - Other
Total Revenues from Nongeneral Funds
Total Revenue Budget
Expenditures for Educational & General Activities
Instruction
Public Service
Academic Support
Student Services
Institutional Support
Operations and Maintenance of Physical Plant
Grants and Contracts
Total Expenditures for Educational & General Activities
Total Expenditures for Student Financial Assistance
Total Expenditures for Auxiliary Enterprises
Total Expenditure Budget
Original
2002-2003
Revised
2002-2003
Percent
Change
from
Dollar Change
from Revised Revised
2002-03 to 2002-03
to 03-04
2003-04
$ 9,563,043
200,000
9,763,043
$ 10,586,637
362,000
10,948,637
$ 10,102,258
405,450
10,507,708
($539,215)
(205,450)
(744,665)
(5.3%)
(50.7%)
(7.1%)
3,826,981
310,487
293,750
(275,000)
800,000
1,520,000
82,000
1,000,000
815,000
862,872
791,410
10,027,500
3,059,050
245,250
268,750
(250,000)
800,000
108,789
1,380,533
82,000
941,848
815,000
862,941
457,497
8,771,658
3,369,050
245,250
276,578
(250,000)
800,000
1,320,533
82,000
941,848
815,000
870,372
797,656
9,268,287
457,931
65,237
17,172
(25,000)
199,467
58,152
(7,500)
(6,246)
759,213
13.6%
26.6%
6.2%
10.0%
0.0%
N/A
15.1%
0.0%
6.2%
0.0%
(0.9%)
(0.8%)
8.2%
$19,790,543
$19,720,295
$19,775,995
$14,548
0.1%
$ 5,831,877
215,000
2,427,214
1,308,723
2,031,662
1,403,257
800,000
$14,017,733
$ 5,865,784
381,500
2,440,303
1,411,087
2,228,837
1,351,437
800,000
$14,478,945
$ 5,797,020
377,950
2,451,666
1,332,035
2,124,883
1,363,504
800,000
$14,247,058
$ 34,857
(162,950)
(24,452)
(23,312)
(93,221)
39,753
($229,325)
0.6%
(43.1%)
(1.0%)
(1.8%)
(4.4%)
2.9%
0.0%
(1.6%)
$701,528
$701,528
$701,528
-
0.0%
$5,071,282
$4,539,819
$4,827,409
$243,873
5.1%
$19,790,543
$19,720,295
$19,775,995
$14,548
0.1%
39
Institutional Support Expenditures
Included within the institutional support program are the executive management, fiscal
operations, logistical services, public relations and development, and staff development areas. The
institutional support budget for 2003-04 will decrease by $93,000.
Operations and Maintenance of Plant
This program includes maintenance and housekeeping operations, utility expenditures,
facilities management and landscaping. The budget will increase by $40,000 or 2.9 percent for
2003-04 in order to support expected higher utility costs and November 2003 salary increases.
Auxiliary Enterprises
The auxiliary enterprises at The University of Virginia’s College at Wise include student
housing operations, campus store and cafeteria operations, parking and transportation, student
health services, athletics and the student union. Auxiliary enterprises are self-supporting, funded
solely by revenue collected for services provided to students, faculty, staff and the general public.
The auxiliary budget for 2003-04 will total $5.1 million, an increase of $244,000 or 5.1 percent
over the revised 2002-03 budget.
Student Fees
The student services fee provides operating revenue for many of the College’s student life
functions, enhancing the campus environment. Activities receiving revenue from student fees
include the student government association, student publications, intramural and outdoor recreation
activities, student health services, Cantrell Hall debt and the new student center, athletics and
student life positions. The 2003-04 full-time fee rate will total $1,850 per academic year, an
increase of $110 or 6.3 percent. This proposed fee increase will supplement athletic program
private gift revenues and provide funding for the 2.25 percent full-time faculty and classified salary
increases proposed for 2003-04.
Student Housing
The 2002-03 occupancy level in student housing remains at 101.4 percent. Occupancy for
the fall of 2003 is again projected to exceed 100 percent. Revenues will increase due to an average
3 percent increase in room rates. In order to meet additional housing demand, four faculty houses
have been permanently converted to student housing units and the incremental revenues further
explain the total 15.1 percent increase in student housing.
Parking and Transportation
Revenue from parking and transportation will be generated from permit fees and fines.
Revenue projections will remain at $82,000 in 2003-04.
40
Cafeteria
The 2003-04 revenue projection for the cafeteria will total $1,000,000, an increase of
$58,000 or 6.2 percent. Student meal plan rates will increase by 4 percent for the 2003-04
academic year. Students residing in student housing are required to participate in the meal plan, so,
just as there is an increase in student housing revenues due to increased students living in campus
housing, there will be a corresponding increase in the number of students on a meal plan.
Campus Store
There will be no change in the campus store revenue projection of $815,000 in 2003-04.
Maintaining fair and competitive prices and providing excellent customer service to students justify
the level funding from 2002-03 to 2003-04.
Athletics
Athletic revenues will decrease by 0.9 percent for 2003-04. The revised 2002-03 budget
totaled $870,372, whereas the 2003-04 budget will total $862,872. This reduction is primarily from
ticket sale revenue.
41
University of Virginia Medical Center
2003-2004 Budget Summary
The Medical Center’s 2003-2004 fiscal plan projects an operating margin of $29.6 million
and net income of $37.7 million. The plan has been developed to include aspects of the joint
Decade Plan, developed by the Medical Center, the School of Medicine and the Health Services
Foundation, while considering the challenge of providing patient care, teaching, and research
services in an increasingly changing health care industry. Payment pressures from third party payers
continue to have a negative impact on revenue on a per-case and per-visit basis. The cost
associated with providing quality patient care will continue to have upward pressure due to
increases in medical supply and pharmaceutical expenses and a shortage of healthcare workers. In
addition, in 2003-04, the Medical Center expects to continue to care for patients with high acuity
illnesses. The acuity level of 1.89, as measured by a Case Mix Index, is experienced by only a
handful of hospitals in the United States.
The 2002-03 operating margin is projected to be $31.6 million and the net income is
projected to be $41.5 million before any payments are made to the School of Medicine based on the
Master Financial Memorandum of Understanding. The non-recurring contractual adjustments
included in the 2002-03 projection are composed of $6.8 million in one-time revenue settlements
from Medicaid, Medicare, Trigon, and the Commonwealth of Virginia. As shown on the chart
below, for 2003-04, there are no projected one-time settlements for 2003-04. With prior year
events such as the purchase of QualChoice by Southern Health Services, Inc. and Medicaid’s
managed care program, the Medical Center continues to experience additional requirements and
pressures on denial write-offs and increases in labor requirements to administer contracts.
Non-recurring Revenue (in millions)
Medicare Cost Report Settlements
Reserve for Trigon Endoscopy/Observation
Medicaid State Budget Reduction
Total
Projected
2002-03
$6.8
0.5
(0.5)
6.8
Budgeted
2003-04
0.0
0.0
0.0
0.0
The Corporate Integrity Agreement and the Health Insurance Portability and Accountability
Act are external pressures that continue to result in additional expenses for the Medical Center.
The Medical Center continues to modernize and integrate information technology services through
the Board approved Integrated Health Information Management System (IHIMS) project. In
addition, increases in capital investment for the hospital expansion and all other capital activity will
result in additional depreciation expense of $5.4 million for 2003-04. The budget includes the
opening of two Modular Operating Rooms to increase Medical Center capacity from 19 to 21
operating rooms. The Medical Center’s 2003-04 fiscal plan accounts for these additional expenses
while preserving its goal of providing high quality and cost effective health care, education, and
research services to patients and their families, students, employers, state and federal governments,
referring physicians, referring agencies, and affiliated networks.
43
The Decade Plan, which is a product of a joint planning process between the Medical
Center, the School of Medicine, and the Health Services Foundation, was also considered in the
budget. Some of the items in the budget directly related to the Decade Plan include $200,000 for
an enhanced telephone service, $400,000 for 10 additional access employees, $125,000 for Cancer
outreach, and $275,000 for other unspecified initiatives.
The Medical Center budget development process continues to be highly participatory and
clinically focused. Patient care service management, support function management, and physicians
have significant roles in the budget development cycle. The budget process begins with a budget
retreat and ends with each operating unit providing a monthly and cumulative operating and capital
budget that contains service demand forecasts, required full-time equivalent personnel, fringe
benefits, and a full complement of non-labor expenses.
Budget Development Assumptions
Market Conditions
For 2003-04, total discharges are projected to grow 3.3 percent from 2002-03 projected
levels primarily as a result of new operating capacity, from the two modular operating rooms and up
to nine additional beds brought into service, and expanded physician capacity. Patient days are
expected to increase overall by 2.4 percent and outpatient service demand is expected to grow by
7.7 percent. The growth in outpatient services reflects a continuing trend of health care services
moving from the inpatient to the outpatient setting. The following table includes historical and
projected patient volumes:
Discharges
Adjusted Discharges
Average length of stay
Patient days
Clinic & ER visits
Home Health visits
Actual
2001-02
26,803
44,353
5.58
149,489
585,480
52,815
Forecasted
2002-03
26,926
44,957
5.65
152,107
594,307
48,504
Budgeted
2003-04
27,809
47,705
5.60
155,814
640,110
49,850
Revenues
The Medical Center’s 2003-04 budgeted payer mix remains consistent with that of 2002-03.
One of the Medical Center’s largest challenges is the continued unwillingness of payers, especially
government programs, to increase their payments to be commensurate with the increases in
educational and medical delivery costs. The $62 million growth in revenues is attributable to bed
expansion and expansions for other patient services facilities including the Fontaine Medical Office
Building, the McCue Sports Medicine Center and the Modular operating rooms.
44
University of Virginia - Medical Center
Budget Summary
2003-04
Budget
Revenues
Total Gross Charges
2001-02
Actual
2002-03
Forecast
$1,103,771,252
$817,028,035
$941,856,273
Less Deductions:
Indigent Care Deduction (net of DSH payment)
Contractual Deduction
Total Deductions
46,575,125
377,215,878
423,791,003
25,561,079
203,240,274
228,801,353
32,230,380
289,953,103
322,183,483
Net Patient Revenue
679,980,249
588,226,682
619,672,790
15,052,439
11,838,092
13,058,353
Total Revenue
695,032,688
600,064,774
632,731,143
Expenses
Expenses from Operations
Operating Expenses
Depreciation and Amortization
Interest Expense
Bad Debt
594,300,433
39,948,483
4,605,545
26,569,000
532,388,282
34,468,124
4,613,866
22,513,844
538,431,766
34,557,494
4,509,573
23,627,181
Total Expenses from Operations
665,423,461
593,984,116
601,126,014
Operating Income
Operating Income Percent
29,609,227
4.3%
6,080,658
1.0%
31,605,129
5.0%
Non-operating Gains and Losses
Investment Income
Net Loss from Affiliates
Loss on Fixed Assets
Other
Total Non-operating Gains and Losses
10,400,000
738,000
(1,000,000)
(2,000,000)
8,138,000
11,637,033
(7,530,421)
(214,913)
(4,894,857)
(1,003,158)
10,504,047
954,444
(1,554,825)
0
9,903,667
$37,747,227
$5,077,500
$41,508,796
Miscellaneous Revenue
Revenues and Gains in Excess of Expenses
45
Rate Changes
The Medical Center proposes a rate increase commensurate with inflationary impacts on
expenses.
Expenses
Expenses from operations are projected to increase by $64.3 million. Expenses per
adjusted discharge decrease 4.3 percent from $13,371 to $13,949. It is anticipated that expense
per adjusted discharge included in the budget will be close to the academic Medical Center
median expense. The cause of decrease is to recognize efficiencies in operations in response to
declining revenues from non-recurring sources. The Medical Center 2003-04 budget plans for 4
percent inflation for medical supplies, a 5 percent for pharmaceutical expenses, and 12 percent for
employee health benefit expenses.
Staffing
The Medical Center’s 2003-04 budget includes 5,340 FTEs, an increase of 276 FTEs from
staffing at the 2002-03 projections of 5,064 FTEs. On an adjusted discharge basis, FTEs growth
is virtually unchanged going from 41.1 FTEs per adjusted discharge in 2002-03 to 41.0 FTEs per
adjusted discharge in 2003-04.
Operating Plan
The operating plan is presented on page 45 and includes actual results from 2001-02, the
2002-03 projection, and the 2003-04 budget. The rapidly changing health care environment will
require continuous examination of budget assumptions. Management will monitor budget versus
actual performance on a monthly basis and, where appropriate, recommend amendments to the
Medical Center Operating Board. Also, management will continue to identify and implement
process improvement strategies that will allow for operational streamlining and cost efficiencies.
Revenues are impacted by the Balanced Budget Act of 1997 (BBA), the Balanced Budget
Refinement Act of 1999, and the Benefits Improvement and Protection Act of 2000. The final
reduction to Indirect Medical Education (IME) that was mandated by the BBA took effect
October 1, 2002. The 12 month impact of the IME reduction is $6.0 million.
The major strategic initiatives that impact next year’s fiscal plan include:
•
Enhanced personnel compensation packages and annual salary and equity adjustments ($4.3
million resulting from 2002-03 actions and $4.7 million of new adjustments for 2003-04).
Adjustments to resident pay scales resulted in a $700,000 adjustment.
•
Introduction of two modular operating rooms.
•
Facility expansions such as the Fontaine Medical Office Building II and McCue Sports
Medicine Center.
46
•
Required expenses related to the Decade Plan and IHIMS.
•
Radiology imaging joint venture which will be fully operational for the entire 2003-04.
•
Implementation of early phases of the Decade Plan.
The major risk factors that impact the ability to accomplish the desired results of next year’s fiscal
plan include:
•
The continuation and improvement of existing operating conditions including the
management of the healthcare worker shortages and a Medicare Case Mix Index above
1.89.
•
The Commonwealth of Virginia budget crisis.
•
The ability to adapt to a shifting patient population where admissions are being replaced
with one-day stays.
•
New Center for Medicare and Medicaid Services and other regulatory reimbursement
changes.
•
Advancements in medical technology which could alter expenses and/or revenues very
quickly.
•
Inflation for medical devices and pharmaceuticals could exceed the budget assumptions.
•
Enhanced scrutiny by federal regulators in areas such as medical records, billing, coding
and contractual agreements.
Capital Plan
Funds available to meet capital requirements are derived from operating cash flows and
funded depreciation reserve. The Medical Center faces many challenges regarding capital funding
as continued pressures on the operating margin affect cash flow, while demand for capital has
increased significantly from space requirements, technological advances and aging of existing
equipment. Subject to funds availability, the Medical Center management recommends $58
million be authorized for capital requirements. The $58 million capital plan excludes approved
investments in the Medical Center expansion previously approved by the Board.
47
APPROVAL OF THE 2003-2004 OPERATING BUDGET FOR THE ACADEMIC
DIVISION
RESOLVED that the 2003-2004 Operating Budget for the Academic Division is
approved, as recommended by the President and the Chief Financial Officer.
APPROVAL OF THE 2003-2004 OPERATING BUDGET FOR THE UNIVERSITY OF
VIRGINIA'S COLLEGE AT WISE
RESOLVED that the 2003-2004 Operating Budget for the College at Wise is approved,
as recommended by the President and the Chief Financial Officer.
APPROVAL OF THE 2003-2004 OPERATING AND BUDGET FOR THE UNIVERSITY
OF VIRGINIA MEDICAL CENTER
RESOLVED that the 2003-2004 Operating Budget for the University of Virginia Medical
Center is approved, as recommended by the Medical Center Operating Board, the President, and
Chief Financial Officer.
49