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March 3, 2004

Special Bulletin from University President Charles W. Steger

SUBJECT: General Assembly Analysis

As a follow up to our last legislative advocacy mailing in December describing the Executive Budget, I am writing to share our assessment of the House and Senate budgets that were adopted on Thursday, February 26, 2004. As the recommendations now stand, for the first time in four years higher education will not suffer General Fund reductions. However, as the linked chart indicates, there are significant differences between these proposals for both the University Division and Cooperative Extension.

While the Executive Budget provided a modest increase in General Fund support, it provided sufficient flexibility in its tuition and fees policy to allow the University to increase tuition and fees rates to a level that would address the funding requirements of our base operating budgets and strengthen our academic programs in accordance with our four-year plan. In comparison to the Executive Budget, the proposed House budget provides additional non-general fund authority and flexibility in its tuition and fees policy. However, the House budget limits tuition revenue increases for 2004-06 to a level that would fund up to 95 percent of the higher education base budget adequacy guidelines, slowing the pace of full funding of the University to a six-year period.

The Senate budget provides significant base funding through both General Fund and tuition and fees; this approach moderates the amount of tuition and fees increases required and meets the four-year funding plan. To illustrate the differences, for 2004-05 the Senate provides $12.3 million in General Fund support for Virginia Tech, while the Governor recommended $3.4 million, and the House, $1.4 million. The level of tuition increases for next year will be directly related to the amount of General Fund support provided. The Senate budget also provides for a faculty salary increase in November 2004, while the House and Executive budgets defer salary increases to November 2005. If no pay increase is approved for 2004-05, faculty will have gone without pay increases for three out of the last four years.

In Cooperative Extension, both the Executive Budget and the Senate budget provided increased General Fund support for each year of the biennium. The Senate budget includes salary increases in November 2004 and 39 new agent and specialist positions. No increase in support was included in the House budget except for the November 2005 salary increase for all employees. Please recall that the Cooperative Extension/Agricultural Experiment Station Division has lost over $10.5 million from its annual base over the last two years.

Fortunately, all three budgets included $8 million for equipment purchases. This returns equipment funding to the previous level of support, following two years of steep cuts.

In summary, the good news is that the tide of diminishing support for higher education appears to be turning. However, we must keep in mind that in the past three years we have lost over one-quarter of our state funding, and there are stark differences in the recommendations before the General Assembly.

Please review this analysis and feel free to share it in your discussions with members of the General Assembly. We are hopeful that a budget will emerge from this process that will enable Virginia Tech and the other institutions of higher education to rebuild and move forward after the most serious budgetary crisis in many years.

Addendum: Proposed Higher Education Budgets From The Governor And Each House Of The General Assembly

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