Business Connection Aids Higher Education FundingBy Ralph Byers, director of government relations
Spectrum Volume 18 Issue 24 - March 21, 1996
Thanks largely to a major effort by the Virginia Business Higher Education Council (BHEC) over the past year, Virginia higher education has received its first significant funding increase in the 1990s. Beginning in the summer, the BHEC solicited support for higher education from candidates for the General Assembly, and eventually secured pledges from a solid majority of both parties.
Working with the Council of Presidents of the state-supported universities, a unified amendment was submitted totaling $435 million for the biennium. This is the amount that would be necessary to bring Virginia's per-student funding for higher education to the average of the southeastern states.
Although $435 million was not achieved, the General Assembly added more than $100 million to the amount recommended by Gov. George Allen, particularly in the areas of faculty salaries and technology. The General Assembly made a commitment to move faculty salaries back to the 60th percentile of their peer groups and froze tuition for Virginia undergraduates. With strong encouragement from the State Council of Higher Education, the General Assembly provided about $160 million of funding for capital-outlay projects state wide.
For the first time since the 1980s, there appears to be a willingness on the part of both the governor and the General Assembly to devote increased resources to higher education. Unfortunately, there is a growing gap between demands on state resources and the state's ability to provide funding, as evidenced by a number of revenue-related issues debated in the General Assembly session.
For example, Allen presented a budget whose revenues included a $90-million one-time transfer from Trigon insurance corporation, along with the introduction of significant new revenue-producing lottery games. While the General Assembly did not adopt the new lottery projections, it elected to spend all $175 million of the Trigon funds, rather than the $90 million requested by Allen. In spite of this transfer, the salary increase adopted for the faculty and staff would not have been possible without moving one payday into the next biennium.
It should be noted that such one-time funding mechanisms are not new in this biennium. As state revenue growth has slowed and pressures on the state budget increased, a variety of non-recurring measures have been employed. Among other things, in recent years the state has moved lottery proceeds from capital outlay to the general fund; increased the projected yield of the VRS portfolio to achieve a one-time windfall; sold the RF&P railroad for another one-time gain; reduced state agency budgets by $1 billion; sold the assets of the Virginia Education Loan Authority; and postponed implementation of tax measures enacted in earlier General Assembly sessions.
In sum, there are few, if any, one-time revenue enhancements left, and additional demands are sure to be placed on the state budget as the federal government moves to reduce its budget deficit. Therefore, in the absence of increased revenues through economic growth or other means, little additional funding is likely to be available, however good the intentions of the governor and General Assembly. Already funds for badly needed capital outlay at Virginia Tech and other institutions are constrained because the state is reaching the limit of indebtedness that financial advisors permit to maintain the commonwealth's AAA bond rating.
Given this reality, there is also a strong concern in Richmond that evidence of efficiency in state government and higher education be quite visible. For example, a bill was adopted expanding the powers of the State Council of Higher Education to include elimination of duplicative academic programs; in the past the council's powers in this regard have extended only to low-productivity programs. Also, budget language was adopted that links future faculty salary increases to implementation of approved plans for "rigorous" post-tenure review.
The Council of Higher Education is also requested to examine staffing plans of institutions of higher education to ensure that resources are directed toward the General Assembly's highest priority, which is the teaching of undergraduate students. At the same time, language in the budget exempts higher education from the executive-branch hiring freeze, unless the governor certifies that there is a fiscal emergency.
These actions reveal a tension in the General Assembly between a tendency toward control of higher education and the desire to reduce bureaucracy and encourage privatization wherever possible. The Council of Higher Education is directed to develop a "strategic plan for increased decentralization and accountability for the commonwealth's public institutions of higher education." Along these lines, one of the major stories for higher education in the General Assembly session was the decentralization of the University of Virginia and Medical College of Virginia hospitals. George Mason University also received authorization for a major privatization of many of its non-academic functions. Virginia Tech, along with other institutions, received authorization for decentralization of non-General Fund capital-outlay functions. Further opportunities for decentralization are likely to present themselves in the future.
These issues, along with a number of bills concerning the control of information technology at the state level, will continue to receive attention over the coming year. If you would like more information on these or other matters relating to the General Assembly session, please contact the Office of Government Relations, 221 Burruss Hall.