UVa’s Casteen: More cuts likely

University of Virginia President John T. Casteen III warned the UVa community Thursday that deeper budget cuts are almost certainly on the horizon.

Casteen also signaled that tuition hikes are likely and didn’t rule out layoffs, if the state economy continues to worsen, but said the university intends to do everything it can to avoid them.

Gov. Timothy M. Kaine has instructed state colleges and universities to prepare for reductions of 5 percent, 10 percent and 15 percent of state appropriations for the current fiscal year. Kaine is attempting to curtail state spending amid the ongoing recession that has caused tax revenues to fall far short of projections.

Under the worst-case scenario, UVa would have to slash roughly $19 million out of its state allocation.

“To say that sustaining the University and its people during and after this next round of state cuts will be a challenge is probably to understate the obvious,” Casteen wrote in an e-mail sent to the university community Thursday morning.

Word of the forthcoming cuts comes after several previous rounds of state reductions totaling some $32 million over the last three fiscal years.

Casteen said he cannot yet speculate how UVa’s various departments will absorb the latest round of budgets cuts. With an overall 15 percent state budget cut, he wrote, the typical UVa department would need to slash 6 percent of its budget composed of state tax funds and tuition dollars.

“For now, it may be enough to say that all of us will have to change how we carry on business,” he wrote.

UVa aims to cope with the coming budget cuts without resorting to layoffs, Casteen wrote.

“We remain convinced that we can manage these upcoming state cuts without layoffs, but all of us need to understand how difficult this will be,” he wrote.

Rather than eliminating employees, UVa will instead continue to shrink its labor force by avoiding new hires and by not filling many positions left vacant by retirements, routine turnover and transfers.

“Layoffs are bad business logic in universities because our chief investments are in people whose whole-career accomplishments add up to the University’s net value,” he wrote. “They are not compatible with an institutional culture in which the continuity of core businesses and perpetual innovation and reinvention matter because we aim to grow stronger, especially so in bad times. Layoffs cost money — very possibly more than they might be said to save because most staff and faculty members work in teams that have to be rebuilt from scratch if allowed to collapse during a recession.”

Tuition and fee increases will “almost certainly” be implemented in the near future to help offset the budget cuts, Casteen wrote. “My guess is that increases will come for in-state and out-of-state students and for undergraduate and graduate students. We will meet our students’ demonstrated financial need: the Rector and [Board of] Visitors’ commitment to that purpose is as firm as any commitment I have seen here.”

UVa will also attempt to focus its fundraising efforts in key areas, such as its financial aid program AccessUVa, new buildings, faculty salaries, endowed chairs and other expenditures. Yet the university is also seeking contributions to help offset cuts hitting schools’ and departments’ operating budgets.

Ann Hamric, chairwoman of UVa’s Faculty Senate, said the faculty appreciates that the university has worked hard to prevent layoffs in such a difficult budget environment.

“Faculty are aware of the financial challenges facing universities around the country and here in Virginia,” she said. “From what colleagues have said to me, faculty are grateful that the university is managed in such a way that faculty and staff members have secure employment. President Casteen noted that ‘we are all in this together.’ The Faculty Senate will partner with university leaders in dealing with these latest budget cuts even as we strive to sustain faculty excellence at the university.”