UVa may tap fund to pay for priorities

The University of Virginia intends to tap deeper into its $5 billion endowment to finance its ambitious — and expensive — plans for the future.
“We may be on the cusp of greatness,” said John O. “Dubby” Wynne, chairman of the UVa Board of Visitors’ finance committee. “We’re going to have to be innovative and willing to take some risks.”
UVa’s Commission on the Future of the University has been developing a long list of proposals that aim to keep UVa in competition with top-tier private institutions such as Harvard, Yale and Princeton.
“There is an arms race in higher education,” Wynne said. “Those that have are using their resources to separate themselves from the pack.”
To finance the commission’s initiatives, UVa officials are exploring possible ways to raise the cap on how much cash the university can pull each year from its endowment. Under self-imposed fiscal responsibility rules, UVa may spend no more than 4.5 percent of its endowment in 2008.
The Board of Visitors will determine in June how much more UVa ought to be able to spend of its         endowment each year.
“We want to create a revenue stream that will allow us to implement, as early as the next fiscal year, the highest priorities of the Commission on the Future of the University,” said Leonard W. Sandridge, UVa’s executive vice president and chief operating officer.
The total price tag of UVa’s future plans has yet to be revealed. The commission’s plans include three priorities — enhancing the student experience; increasing international education, research and service; and boosting science and technology research.
Colleges and universities across the nation are feeling pressure to spend more of their endowments on day-to-day operations. Led by U.S. Sen. Charles Grassley, R-Iowa, several lawmakers are demanding answers why higher education institutions with enormous endowments are not allocating more money from those endowments for things such as financial aid and tuition.
At the Board of Visitors’ meeting Friday at the Rotunda, UVa officials made a point to say that their plans to spend more of the endowment are not related to Grassley’s probe. UVa’s goal, they said, is simply to ensure that the university has the money available to pay for its long-term plans.
Chris Brightman, chief executive officer of the UVa Investment Management Co., which seeks to grow UVa’s endowment by investing in stocks, bonds and real estate, gave an update Friday morning on the endowment’s recent performance.
During fiscal year 2007, UVa’s endowment jumped by from $3.457 billion to $4.343 billion. Yet halfway through fiscal 2008, the endowment’s growth had slowed considerably, bringing its total to $5.065 billion, Brightman said.
“I don’t think this is going to end up a particularly good year for investments,” he said, adding that the endowment’s performance historically has been excellent.
The board’s finance committee also endorsed several measures that will be up for final approval today. The panel voted to bring mandatory student fees up to $2,132 per year for in-state students, a 16.8 percent increase, and up to $2,350 for out-of-state students, a 14.1 percent increase. The board also voted to increase tuition and fees for graduate students.
The board typically sets tuition rates for undergraduate students at its April meeting, but the board is waiting on the state government to finalize its budget. The board’s executive committee will set tuition for the fall in the coming weeks.