2010-2011annual budget summary

8/8/2019 2010-2011annual Budget Summary

1/136

2010-2011

BUDGET SUMMARYALL DIVISIONS

Revised June 7, 2010


2/136

UNIVERSITYOFVIRGINIA

2010-2011BUDGET SUMMARYTABLEOFCONTENTS

All Divisions........1

Academic Division..............5

University of Virginias College at Wise..31

Medical Center..39Annual Renovation and Infrastructure Plan..45

Supplemental Information.............47

Resolution......53

Academic Division Major Budget Unit Detail.......55


3/136

UNIVERSITY OF VIRGINIA ALL DIVISIONS2010-2011OPERATING BUDGET SUMMARY

The operating expenditure budget for the period July 1, 2010 through June 30, 2011 forthe University of Virginia will total $2.4 billion, an increase of $96.2 million or 4.2 percentcompared with the 2009-10 projection. Of the total budget, $1.3 billion or 55.7 percent relates tothe Academic Division (including the Schools of Medicine and Nursing), $1.0 billion or 42.9percent to the Medical Center, and $34.4 million or 1.4 percent to the University of VirginiasCollege at Wise (Wise).

SOURCES FOR THE OPERATING EXPENDITURE BUDGETAs shown below, patient revenues (42.9 percent) fund the greatest proportion of the operatingexpenditure budget, followed by tuition and fees (17.6 percent), grants and contracts (13.6percent), auxiliary revenues (8.1 percent), state general funds (6.3 percent), endowmentdistributions (5.5 percent), and gifts (3.8 percent). The remaining 2.2 percent is generated from

federal stimulus funds, investment income, accumulated investment balances, short-termfinancing, and other miscellaneous revenues.

2010-11 2009-10

2010-11 2009-10 Increase % Inc. 2009-10 2008-09

Budget Projection (Decrease) (Dec.) Budget Actual

Academic Division $ 1,326.7 $ 1,292.6 $ 34.1 2.6% $ 1,267.8 $1,207.2

Medical Center 1,020.6 959.6 61.0 6.4% 989.9 952.2

Wise 34.4 33.3 1.1 3.3% 34.7 34.3

Total $ 2,381.7 $ 2,285.5 $ 96.2 4.2% $ 2,292.4 $ 2,193.7

Operating Expenditure Budget

(in millions)

Tuition & Fees

Sponsored Programs

Auxiliary Revenues

State GF

Endowment

Annual Giving

Other

Patient Revenues

17.6%

13.6%

8.1%

6 3%

42.9%

Tuition & Fees

Sponsored Programs

Auxiliary Revenues

State GF

Endowment

Annual Giving

Other

Patient Revenues

16.9%

13.2%

8.5%

6.8%

42.0%


4/136

The Academic Division is expecting 8,771 FTEs, an increase of 85 FTEs; the Medical Center isprojecting 6,322 FTEs, an increase of 108 over current staffing levels; and Wise plans to increase

its employment by 8 FTEs to 292 FTEs.

KEY ISSUESAfter the financial upheaval of the prior year, 2009-10 had some bright points in a period

where the state budget continued to decline. Endowment returns rebounded, with a 17.0 percentreturn for the 10 months through April 30, 2010; however, state revenues remain belowprojections. Temporary federal stimulus funding ($5.6 million for 2009-10 and $21.9 million for2010-11) helped sustain the Universitys operating budget when the University incurred a fourthround of state budget reductions in three years, totaling $36.8 million. As a result, the Board of

Visitors (the Board) began to consider how the University should be funded in the future in orderto establish a more stable and reliable financial platform.

The Commission on the Future of the University continues to be the primary blueprint forthe Universitys strategic efforts. Funding for Commission initiatives was protected duringbudget reductions, and planned investments were maintained for 2009-10 and 2010-11 aspreviously approved by the Board.

For the Medical Center, the 2010-11 fiscal plan has been developed while considering thechallenge of providing patient care, teaching, and research services in a changing health careindustry. The major strategic initiatives that impact next years fiscal plan include collaborationwith faculty on managing the cost of supplies and improved documentation of clinical care andits coding; the impact of Culpeper Regional Hospital on patient volume; the operational impactof completing the Transitional Care Hospital at Northridge, the Emily Couric Clinical Cancer

8,298 8,505 8,725 8,686 8,771

6,136 6,347 6,376 6,214 6,322

264 291302 284 292

-

5,000

10,000

15,000

20,000

2007 2008 2009 2010 2011

Academic Med Center Wise


5/136

and pharmaceutical goods; enhanced scrutiny by federal regulators; the impact on funding forMedicaid and Indigent Care given the Commonwealth of Virginias current financial situation;

and economic pressures and uncertainty regarding cash flows from investments and non-operating income.

COMPARISON OF THE OPERATING BUDGET TO AUDITED FINANCIAL RESULTSThe Universitys 2010-11 operating budget serves as its financial plan and is developed

on a basis that is different than the method of preparing audited financial statements, which aredeveloped in accordance with generally accepted accounting principles (GAAP). The operatingbudget and the audited financial statements have distinct objectives and are developed using

differing rules and conventions. In some cases, similar descriptions are used in both reports eventhough the precise definitions and the specific amounts are not identical. However, both sets offigures are accurate for their particular purposes, and both are drawn from the Universitysfinancial applications.

The annual operating budget reflects budget allocation decisions necessary to accomplishUniversity goals and ensure physical and financial resources are appropriately preserved for thefuture. It is the responsibility of the Universitys administration to propose annual plans which

keep expenditures and revenues in balance.

The Statement of Revenues, Expenses, and Changes in Net Assets from the auditedfinancial statements most closely relates to the operating budget, but there are different rules andconventions employed. Several of these differences include:

GAAP financial statements classify general fund appropriations as non-operating income,while the operating budget classifies them as operating income.

GAAP financial statements are prepared on an accrual basis, while the operating budgetis prepared on a cash basis, consistent with the states operating budget.

GAAP accounting rules require tuition revenues to be shown net of scholarshipallowances. The operating budget shows tuition and fees as gross income and the fullamount of all student aid as an expense in order to highlight the revenue impact of tuition

planning and the corresponding student financial aid requirements.

GAAP financial statements recognize depreciation expense for buildings and equipment.In the Academic Divisions operating budget, depreciation is not funded, and capitalpurchases less than $1 million are expensed rather than spread over the useful life of thepurchase. This is, in part, due to the state funding a portion of maintenance as a capital


6/136

GAAP statements accrue pledged gifts in the year the pledge is made. The operatingbudget includes only cash received for gifts again, funds available for expenditure.

Federal Family Education Loan Program is included in the GAAP statements as federalgrants and contracts but excluded from the annual operating budget.

Fringe benefit expenditures are included in the operating budget using pooled benefitrates, as they impact the operating units; the GAAP-basis statements include actual costs.

Self-funded insurance and healthcare reserves are excluded from the operating budget butare included in the GAAP-based financial statements.

At each Board Finance Committee meeting, an overview of actual results as compared tothe budgeted financial plan for the most recently-ended quarter is provided. In this quarterlyoverview, actual results are not presented in accordance with GAAP; instead, they are presentedconsistent with the budget plan to provide a useful basis for comparison to the approved budget.

PERFORMANCE MEASUREMENTUnder the 2005 Restructured Higher Education Financial and Administrative Operations

Act and the 2006 and 2009 Management Agreements, the Universitys performance on a set ofpre-defined measures is subject to review annually by the State Council of Higher Education forVirginia (SCHEV). This annual certification determines the Universitys eligibility for certainfinancial incentives, such as interest on tuition and fee revenue as outlined in the Act. SCHEV has

developed Institutional Performance Standards to assess each individual institutionsperformance on the statewide goals specified in the Act. The Universitys performance onseveral financial standards is also considered. Furthermore, as part of the ManagementAgreement, the University is required to meet additional state expectations in the areas ofresearch, economic development, and Virginia Community College System (VCCS) transfersand must measure its performance in the administrative areas granted increased authority.Specific measures are associated with the areas of capital outlay, leases, and real estate; financialadministration; human resources; information technology; and procurement. The Academic

Division was certified at the May 18, 2010 SCHEV Council meeting, ensuring the receipt offinancial incentives related to interest earnings on tuition balances and procurement card rebates.

In June 2005, the Rector appointed the Special Committee on Planning to complete afinancial and strategic 10-year plan for the University. The overall objectives of the planningprocess were to improve the Universitys national ranking; focus academic priorities on areas of


7/136

ACADEMIC DIVISION BUDGET

BUDGET DEVELOPMENTThe first step in developing an annual expenditure budget is to estimate unavoidable cost

increases in opening new facilities, utilities, compensation adjustments, and Board priorities.Next, the Budget Office calculates expenditure targets for state and local general budgets foreach vice president, based on preliminary budget assumptions reported to the Board in Februaryof each year. The target development process is designed to give maximum flexibility to vicepresidents in the allocation of resources among their activities. Expenditure budgets for othersources (self-supporting units, gifts, endowments, grants, contracts, facilities and administrative

(F&A) recoveries, and auxiliaries) do not have initial targets; instead, these budgets are set bythe responsible unit based upon expected activity. The third step in the budget developmentprocess is the projection of funds available for expenditure. Actions by the Board (approval oftuition, fees, housing rents, and dining rates) and the General Assembly (passage of a budget) aresteps in that process.

For the first time in four years, the University does not anticipate a reduction in stateappropriations for 2010-11 (although an additional $14.8 million is expected in 2011-12). Tosummarize the impact of reductions since 2007-08:

In October 2007, the state reduced the Universitys general fund appropriation by $9.2million (6.25 percent), which was passed along to schools and departments as a 1.8percent reduction in state general budgets in fall 2007 and an additional 1.2 percentreduction to 2008-09 state general budgets during last years budget development cycle.

In October 2008, the state further reduced the Universitys general fund appropriation by$10.6 million (7.0 percent), which was passed along to schools and departments as a 3.0percent reduction in state general budgets in fall 2008.

In April 2009, the General Assembly approved the Governors recommendation for anadditional $12.4 million (8.0 percent) reduction in the Universitys 2009-10 general fundappropriation. This resulted in a 3.2 percent reduction to 2009-10 departmental stategeneral budgets during this budget development cycle.

In April 2010, the General Assembly approved the Governors recommendation for anadditional $4.6 million (3.6 percent) mid-year reduction to the Universitys general fundappropriation. This resulted in a 2.5 percent reduction to academic state general budgetsand a 3.0 percent reduction to administrative state general budgets.


8/136

2010, consistent with the 2010 Appropriation Act. As is consistent with the past, there is not anacross-the-board increase for "other than personal services" budget categories in the state or local

general budgets or targets. Departmental budgets from other sources (self-supporting units, gifts,endowments, grants, contracts, indirect cost recoveries, and auxiliaries) reflect the necessaryincreases in compensation and other than personal services.

In the final step of budget development, vice presidents are given an opportunity topresent prioritized lists of resource needs that cannot be addressed within the target budgetsprovided. Available tuition revenues, state general funds, and centrally-managed private fundsare allocated towards the highest priority initiatives. In the 2010-11 budget, the University will

be able to meet mandatory commitments, Board priorities, and address the most critical needs.More information concerning the 2010-11 addenda allocations is included in the expenditurebudget analysis later in this document.

PLANNING PRIORITIES AND THE COMMISSION ON THE FUTURE OF THE UNIVERSITYDuring the spring of 2007, University faculty, students, and staff formed the Commission

on the Future of the University. The Commission identified a set of core institutional values and

three priorities [Student and Faculty Experience; International Programs; Science, Technology,and Research] and designed to distinguish the University in the next decade and beyond. InJanuary 2009, the Board released funds in support of the Commissions plans. The 2010-11budget includes $7.8 million for the first six initiatives as listed in the Commissions guidingdocument, Strategies for the Future of the University.

Throughout the planning and implementation phases of the Commissions work, leadershave appeared before the Board to report their plans and results. At the November 2009meeting, Commission leaders evaluated the extent to which they accomplished their one-yeargoals.

To advance the first four initiatives related to the first priority of maintaining andenhancing the Student and Faculty Experience, the Commission established a center foradvanced study of teaching and learning in higher education; a center for computationally-intense research and study; an institute for faculty advancement; and a comprehensive academic

public service program that integrates students service and research experiences throughouttheir time at the University. The leaders of these initiatives (Robert Pianta, Dean of the CurrySchool of Education; James Hilton, Vice President and Chief Information Officer; SharonHostler, Vice Provost for Faculty Development; and Milton Adams, Vice Provost for AcademicPrograms) reported meeting 15 of the 18 goals related to teaching and learning.


9/136

The third Commission priorityScience, Research, and Technologycomplements theconstruction of science and engineering research facilities which is underway on Grounds. Vice

President for Research Tom Skalak reported meeting all five of his first-year goals, thanks inlarge part to the assistance of a pan-University planning group comprised of faculty, students,deans, staff, outside partners from corporations and alumni groups, development officers, andtechnical staff. At the November 2009 Board meeting, Mr. Skalak outlined efforts towardcreating a culture of collaboration, awarding grants for research across schools, and improvinginfrastructure for multi-investigator proposals.

Following the review of progress made toward first year goals, Commission leaders

presented metrics for years two and three. When the Commission reports to the Board inNovember 2010, the success of initiatives that began in year one will be evaluated against selectperformance measures. Reports are at http://www.virginia.edu/planningdocuments/commission/.

KEY ACTIVITIES IMPACTING THE ACADEMIC DIVISIONS BUDGETAccessUVa

In the current economic environment, AccessUVa remains a critical priority for the

University. The program offers 100 percent of demonstrated need to all undergraduates,eliminates loans and work study for undergraduates whose families are at or below 200 percentof the poverty level ($44,100 for a family of four in 2010), and limits need-based loans to theaverage cost of one year of attendance for an in-state student ($21,000 for students who enteredin Fall 2007; $22,000 for students who entered in Fall 2008; $23,000 for students who entered inFall 2009; $24,500 for students who will enter in Fall 2010).

The projected 2010-11 full cost of all phases of AccessUVa will be $80.1 million, anincrease of $10.0 million from 2009-10. Central University sources will provide $32.8 million in2010-11. The central University investment is generally funded from tuition and localunrestricted funds; in 2010-11, federal stimulus funding allocated from the state will be used tomeet this need. AccessUVa is considered to be attractive for philanthropy; an increasedemphasis on raising dollars for this program will make available unrestricted resources for otheracademic priorities.

The remaining portion of the total AccessUVa cost, $47.4 million in 2010-11, is fundedfrom restricted gifts and endowments, athletic grants, general funds, outside grants, federalgrants and loans, and work study.

Competitive Compensation


10/136

During the last two years, it has been very difficult to maintain a competitive position

relative to faculty salaries. The lack of any salary increases in 2008-09 and 2009-10 has erasedall of the gain previously achieved, bringing the University to the 29th position with an averagesalary that is $7,000 below that of the institution holding the 19 th position. In 2009-10, theaverage increase in salaries among the 60 AAU institutions was 0.93 percent, while among thetop 19 institutions it was 1.5 percent.

The 2010-11 budget does not allow the University to address permanent base increases insalary for either faculty or staff. We will need to develop a plan to resume salary increases in the

near future. In the meantime, the state has authorized a three percent bonus payment to allemployees should state revenues exceed the official forecast by at least $82.2 million. Thisbudget reserves adequate funds to pay the bonus if approved by the state. This reserve willprovide flexibility for the Board and President to make appropriate one-time compensationadjustment should the state fail to meet its benchmark.

The 2010-11 budget reflects the fringe benefit rates proposed to the Department of Healthand Human Services: 28.8 percent for full-time faculty and executive level University Staff;

38.9 percent for all other full-time staff; 26.5 percent for part-time faculty and staff with benefits;and 6.7 percent for part-time faculty and staff without benefits and wage employees. This rateproposal, however, was developed before the General Assembly made a number of adjustmentsto benefit funding for 2010-11. The University anticipates submitting a revised proposalreflecting these changes, which include:

requiring all new employees with retirement benefits to make the 5 percent employeecontribution towards their retirement (paid by the University for existing employees);

reducing the Optional Retirement Plan contribution for new employees electing thisplan from 10.4 percent of salary to 8.5 percent of salary (plus an optional supplementof 0.4 percent, which the University has elected to provide);

deferring the 4th quarter Virginia Retirement System (VRS) payment until the 1stquarter of the subsequent year; and

reducing payments to the VRS for the employer contribution to retirement, group lifeinsurance, the Virginia Sickness and Disability Program, and retiree health benefitsfrom 9.25 percent of salary to 2.56 percent of salary.

For at least the next two years, the Commonwealth will require the University to return


11/136

of the asset value annually into maintenance. For educational and general (E&G) buildings, theannual maintenance budget is to be increased by $1.5 million each year between 2005-06 and

2014-15. For 2010-11, the sixth installment of $1.5 million is included. Unfortunately, thisinvestment by the University will be more than offset by the $2.5 million reduction in the statemaintenance reserve appropriation for 2010-11.

In addition, the University will continue to budget two percent of the value of any newfacilities that come on line. The budget for 2010-11 includes $1 million to support operating andmaintenance costs of new facilities expected to open during the year.

In order to bring the maintenance backlog to a level where identified maintenancedeficiencies are five percent of the asset value, at least $73 million in one-time investments inE&G maintenance must be made over the 10-year period. In order to fund this $73 million, theUniversity will seek assistance from the state through its capital outlay programs, student fees,private funding, and debt financing. Several current renovation projects will provide progresstowards reducing deferred maintenance: New Cabell Hall, Ruffner Hall, Jordan Hall HVACreplacement, Garrett Hall, McLeod Hall, Alderman Road Residence Hall replacements, andNewcomb Hall. The auxiliary units, the Medical Center, and Wise are continuing to address

their respective backlogs. The budget write-up for each entity will address how these objectiveswill be achieved.

As part of the deferred maintenance initiative and the Universitys increased authorityunder Restructuring, this Budget Summary includes an annual plan for how the AcademicDivision and Medical Center will address major renovations and infrastructure projects costingbetween $1 million and $5 million. This plan is summarized beginning on page 45. The Boardsapproval of the Annual Renovation and Infrastructure Project (ARIP) plan will help to ensurethat the University continues to address and place a high priority on its critical maintenanceneeds.

American Recovery and Reinvestment Act

Since the passage of the American Recovery and Reinvestment Act of 2009 (ARRA), theUniversity has received 162 research awards totaling nearly $67 million from federal agencies.

Additionally, the University will receive a share of the State Fiscal Stabilization Funds (SFSF)through the Commonwealth of Virginia: $5.6 million in 2009-10 and $21.9 million in 2010-11.In 2009-10, the SFSF were used to balance the overall budget given the general fund budgetreductions. In 2010-11, the University plans to use the SFSF to fund AccessUVa for one year.This will enable the University to meets its increasing financial aid commitments, as well as re-direct funds normally allocated to financial aid for several one-time critical needs through the


12/136

facility in Virginia, the University became part of an innovative partnership that includesVirginia Tech and the VCCS to collaborate with the company on a variety of fronts in both

engineering and business. The state will allocate $40 million to the University, Virginia Tech,and the VCCS over five years as incentive for the companys location and research activities;approximately $23.5 million will accrue to the University. The Universitys first installment wasreceived in 2009-10: $3.7 million was transferred to an endowment to create new professorshipsin the School of Engineering and Applied Sciences; $1 million was used to upgrade mechanicalengineering laboratories; $200,000 was allocated to begin a manufacturing minor in the Schoolof Engineering; and $250,000 was allocated to match research awarded to the University fromRolls-Royce. In 2010-11, the University will receive the second installment of $4.95 million:

$3.5 million to create endowments for new professorships in the Engineering School and theMcIntire School of Commerce, provide graduate student support, and create undergraduateinternships; $1 million to upgrade mechanical engineering laboratories; $200,000 to support thenew manufacturing minor; and $250,000 to match research awards from Roll-Royce.

The School of Medicines Implementation of the Decade Plan

The Decade Plan, a joint planning effort of the School of Medicine, the School of

Nursing, the Health Sciences Library, the Medical Center, and the Health Services Foundation,provided the framework for Move as One, a consolidated initiative that focuses on HealthSystem-wide collaboration for development and innovation in areas such as patient service,translational research, professionalism in teaching, and service to the community. In 2009-10, theSchool of Medicine noted progress in several important areas:

The School successfully completed a Southern Association of Colleges and Schoolsprogram review of its Undergraduate Medical Education program. The reviewersnoted with favor the process for ongoing review, assessment, and improvement of theprogram.

The Clinical Performance Evaluation Center has been formed, and assessment andevaluation tools have been developed. The Teachers in Academic Medicine programis helping faculty develop skills for team curriculum building and teaching,integration of technology, and inclusion of participatory learning. The Claude Moore

Medical Education Building is on schedule for occupancy in June 2010. Planning isunderway for inter-professional education and competency-based assessment.

Initial planning sessions have been held to develop strategic goals for education,research, patient care, infrastructure, and service under the Move as One banner.Sessions with department chairs and center directors will refine strategies for


13/136

The School and the Medical Center successfully implemented the EmployeeConnection program to provide primary care and specialty services to University

employees. The program has met its goals for timely access to physicians andattracting new patients.

The Dean has implemented the use of a data matrix as one tool in his annualevaluation of department chairs and center directors. The matrix will be helpful inidentifying areas of excellence and weakness and in demonstrating long-term trends.

In 2010-11, the Health System will continue to focus on improving patient access and

satisfaction, implementing its new curriculum, strengthening research support, and fosteringinnovative clinical programs.

HIGHER EDUCATION EQUIPMENT TRUSTThe 1986 General Assembly established a statewide Higher Education Equipment Trust

to meet the high-priority equipment needs of higher education. In 2010-11, the Universityexpects to receive $10.4 million, provided that the states economic situation improves enough to

allow for the issuance of debt. The University plans to utilize the 2010-11 funds in a strategicmanner to assist in new faculty start-up packages, purchase critical research equipment, andupgrade the hardware supporting the planned Oracle upgrade. This funding comes to theUniversity as reimbursement of purchases, so neither the allocation nor the related purchases areincluded in the University's 2010-11 budget.


14/136

ACADEMIC DIVISION OVERVIEW OF OPERATING SOURCESThe schedule of Academic Division Operating Sources below summarizes total available

resources based on projected cash inflows from general funds, tuition and fees, sponsoredresearch, gifts, endowment distributions, auxiliary revenues, and other sources. Resources whichwill not be available for the operating budget are subtracted: transfers to capital projects, gifts-in-kind, transfers to endowments, and philanthropic gifts collected directly by foundations.These adjustments result in available resources for the operating budget of $1.33 billion for2010-11. A description of each fund source begins on page 14; additional budget detail onfunding sources can be found in the supplemental information on page 47.

Academic Division Operating Sources(in thousands)

2010-11

Proposed

Financial Plan

2009-10

Projected

Results Change % Change

2009-10

Approved

Financial Plan

Sources of Operating FundsState general fund appropriation 153,269$ 171,715$ (18,446)$ -10.7% 172,462$

Less: transfer to capital reserves/projects (16,838) (31,292) 14,454 -46.2% (31,451)

State general fund appropriation 136,431 140,423 (3,992) -2.8% 141,011

Tuition and fees 409,892 382,108 27,784 7.3% 381,451

Sp onsored research direct cost s and F&A cost recoveries 337,138 329,400 7,738 2.3% 310,500

Less: transfer to capital reserves/projects (13,150) (13,033) (117) 0.9% (11,300)

Sponsored research for operating plan 323,988 316,367 7,621 2.4% 299,200

Endowment distribution 134,400 133,600 800 0.6% 136,643

Less: transfer to capital reserves/projects (2,624) (1,373) (1,251) 91.1% (1,373)

Less: transfer to auxiliaries (310) (310) - 0.0% (310)

Endowment distribution for operating plan 131,466 131,917 (451) -0.3% 134,960

Projected philanthropic cash flow 286,907 265,040 21,867 8.3% 265,000

Less: gifts directly to foundations (197,456) (182,408) (15,048) 8.2% (195,736)

Plus: transfer from foundations 63,400 72,000 (8,600) -11.9% 105,133

Less: gifts-in-kind and transfers to endowments (28,270) (26,115) (2,155) 8.3% (31,056)

Less: transfer to capital reserves/projects (25,354) (35,161) 9,807 -27.9% (50,201)

Less: transfer to auxiliaries (9,585) (4,438) (5,147) 116.0% (4,438)

Net gifts available for operating plan 89,642 88,918 724 0.8% 88,702

Sales, investment income & other 23,460 26,251 (2,791) -10.6% 28,261

American Recovery and Reinvestment Act of 2009 - operat ing 21,893 5,559 16,334 293.8% 10,723

American Recovery and Reinvestment Act of 2009 - Rolls Royce - - - - 450


15/136

ACADEMIC DIVISION OVERVIEW OF OPERATING USESAs shown below, the Academic Divisions projected spending plan comes to $1.33

billion for 2010-11. After the planned use of accumulated investment earnings and operatingcash balances, the operating plan shows a surplus of $11.7 million for 2010-11. In reality, thesefunds are restricted gifts and endowment income and are not available for normal operationalneeds. A description of operating budget activities begins on page 18; additional budget detailon funding uses can be found in the supplemental information on page 51.

Academic Division Operating Uses(in thousands)

2010-11Proposed

Financial Plan

2009-10Projected

Results Change % Change

2009-10Approved

Financial Plan

Uses of Operating FundsDirect instruction 325,328$ 318,591$ 6,737$ 2.1% 312,604$

Research and public service 314,465 310,369 4,096 1.3% 304,256

Library, information technology, and academic administration 124,223 128,309 (4,086) -3.2% 118,148

Student services 35,846 34,468 1,378 4.0% 32,404

General administration 75,286 83,216 (7,930) -9.5% 74,918

Operation and maintenance of physical plant 93,477 80,754 12,723 15.8% 82,031

Scholarships, fellowship s and other graduate sup port 146,640 138,113 8,527 6.2% 136,316

Athletics 51,395 45,970 5,425 11.8% 46,023

Bookstore 29,875 30,256 (381) -1.3% 30,277

Housing and conference services 37,227 36,301 926 2.6% 36,580

Other auxiliary operations 76,907 77,890 (983) -1.3% 77,571

Total operating expenses 1,310,669 1,284,237 26,432 2.1% 1,251,128

Operating Reserves and Temporary AllocationsStudent system project expenses - 8,404 (8,404) -100.0% 6,842

Bi-weekly payroll adjustment - - - - 5,180

Reserve for Rolls Royce initiative 1,450 - 1,450 - 450

Reserve for potential bonus 8,093 - 8,093 - -

Reserve for Access UVa/tuition shortfall 1,000 - 1,000 - 1,000

Reserve for base operating needs and contingencies 1,340 - 1,340 - 1,300

Reserve for additional contingencies 4,101 - 4,101 - 1,891

Total operating reserves and temporary items 15,984 8,404 7,580 90.2% 16,663

Total Uses of Operating Funds 1,326,653 1,292,641 34,012 2.6% 1,267,791

Net Sources and Uses for Operations 5,983 (12,440) 18,423 -148.1% 7,204

Allocation of investment appreciation 4,215 17,593 (13,378) -76.0% 9,495

Allocat ion of short -t erm financing for st udent sy st em p roject - 5,626 (5,626) -100.0% 3,964


16/136

The charts below demonstrate which operating revenues will provide the resources tofund the operating expenditure budget.

2010-11 2009-10

In 2010-11, tuition and fees (30.8 percent) provides the greatest proportion of theoperating budget, followed by sponsored programs (24.4 percent), auxiliary revenues (14.0percent), state general funds (10.3 percent), endowment distributions (9.7 percent), and gifts (6.9percent). The remaining 3.9 percent is generated from federal stimulus funds, investmentincome, accumulated investment balances, short-term financing, and other miscellaneousrevenues.

FUNDING SOURCESState General Fund Appropriation

State general funds are tax revenues appropriated by the General Assembly for the use ofthe institution. The state general fund appropriation is comprised of an appropriation for E&Gprograms, a special appropriation for specific programs, and an appropriation for studentfinancial aid. The following chart shows the Universitys standing among peer publicinstitutions using the 2009-10 state appropriation for each school:

School2009-10 GF perIn-state Student

University of North Carolina Chapel Hill $26,034

University of Maryland $17,620

University of Michigan Ann Arbor $15 595

31%

24%

14%

10%

10%

7%4%

Tuition & Fees

Sponsored Programs

Auxiliary Revenues

State GF

Endowment

Annual Giving

Other

29.5%

23.3%14.4%

10.9%

9.7%

7.1%

5.1%


17/136

It is expected that the states Eminent Scholar match will decrease by 50 percent to less

than $800,000, while endowment distributions on Eminent Scholar endowments are projected at$17 million in 2010-11.

Non-general Funds

Non-general funds are resources generated by the University such as tuition, paymentsfrom federal agencies and other entities for research, student and user fees, gifts, and endowmentdistributions.

Tuition and Fees

The budget reflects tuition increases previously approved by the Board:

TUITION AND E&GFEES In-State% Increase

Out-of-State% Increase

Undergraduate 11.5% 6.2%

Graduate 11.0% 5.7%Darden 2.3% 2.0%Law 4.5% 3.9%Medicine 8.1% 8.5%

Tuition and fee revenues are expected to increase $27.8 million or 7.3 percent over theprojected 2009-10 budget to $409.9 million. The 2010-11 tuition and fee budget was developed

using approved enrollment projections, as well as recent enrollment trends. The budget assumesthat the current in-state versus out-of-state ratios will remain unchanged.

The approved enrollment growth plan reflects a total of 21,148 on-Grounds headcountstudents for fall 2010. Of the 14,160 undergraduate students, 69 percent will be Virginians.The off-Grounds enrollment projection for fall 2010 is 3,690 students. It is projected that thefirst year class will include 3,240 students, while 540 additional students will transfer to theUniversity.

Approximately $22.4 million of the total tuition increase is generated from increases inundergraduate, graduate, Medical School, Summer Session, and the School of Continuing andProfessional Studies tuition rates. About $2.8 million of the incremental tuition revenue isallocable to self-supporting degree programs, including Law, Darden, McIntire graduateprograms, and an Engineering executive-style graduate program. Over $2.6 million of the


18/136

2009-10 revised budget, which incorporates federal funding resulting from the ARRA, is sixpercent higher than originally budgeted last spring, when the full impact of stimulus funding on

research was unknown. The budget also includes a similar increase in the reimbursement ofindirect costs by the grants and contracts. In the spring of 2009, the University successfullynegotiated an increased F&A rate of 54.0 percent, up from 51.5 percent. However, this new rateis applicable only to new grants awarded after July 1, 2009; therefore, it will take some time forthe increment to accrue to the University.

Total grants, contracts, and F&A recoveries are budgeted at $324.0 million in 2010-11.F&A recoveries, after the transfer of $13.1 million to capital reserves, will comprise $59.9

million of that total, with direct costs funded from grants budgeted at $264.1 million.

Endowment Income and Gifts

The University is projecting available revenues of $131.8 million in 2010-11 from theendowment distribution and endowment administration fee. Based upon estimates fromdepartmental budget officers and historical levels of expenditure, it is projected that $129.0million will be expended in 2010-11 for E&G programs and student financial aid. The majority

of the $2.8 million funds that will be distributed but not expended is restricted and is notavailable for general institutional commitments. These amounts will not be expended due todonor restrictions, unfilled professorships, or accumulations for future commitments.

In June 2008, the Board established an endowment administration fee of 0.5 percent ofthe June 30th market value to support the costs associated with fundraising and administering theendowment. One-half of this fee is returned to central University resources, while the remainderis distributed to the endowment owners (i.e., the school or unit). The administrative fee is

expected to provide $13.0 million to the 2010-11 budget.

University Development projects cash flow from philanthropy will reach $287.0 millionin 2010-11. Of this amount, it is expected that $197.5 million will be generated directly by theUniversitys affiliated foundations. The foundations, in turn, are expected to transfer $63.4million to the University for both operating and capital expenditures. Of the availablecollections, $15.7 million will be invested in the pooled endowment fund, $25.4 million will betransferred to capital projects, and $12.6 million will be in the form of non-cash gifts-in-kind.As a result, nearly $89.6 million in new gifts collected in 2010-11 will be available foroperations. Private support for athletics operations, $9.6 million in 2010-11, is included in theathletics operating revenues.


19/136

normally allocated to financial aid for several critical needs identified through the addendaprocess.

Because the ARRA funding will be eliminated by 2011-12, the University was careful toallocate supplement to critical, one-time needs including: a reserve for a faculty and staff bonus,a hiring commitment to Dean Meredith Woo, an upgrade of the Oracle E-Business Suitesoftware, a digital document management system, enhancements to the Universitys performancemanagement system, and equipment to modernize shelving in the Librarys Ivy Stacks storagefacility. After meeting each of these needs, the University was able to reserve $4.1 million foremergency needs and to help address future budget reductions.

While the original 2009-10 budget included stimulus funding for the states commitmentto the University for the Rolls-Royce partnership and for capital planning, it was ultimatelydecided that this was not an appropriate source for these expenditures. The state funded theRolls-Royce commitment from state general funds and deferred on the planning funds forRuffner Hall.

Other Sources of FundsOther sources of funds, including current fund investments and sales and services of

educational departments, will contribute $23.3 million towards the expenditure budget. Finally,in order to meet expenditure commitments from the local general fund, approximately $4.2million from accumulated investment earnings and $1.5 million from operating cash balanceswill be applied to the 2010-11 budget. The accumulated investment earnings were the result of aBoard action five years ago to invest a portion of current funds in the pooled endowment fund.

The discussion of auxiliary operations begins on page 21.

OPERATING BUDGET BY EXPENDITURE CATEGORY

Approximately 60 percent of theAcademic Divisions total operating budgetwill be expended on personal services.When financial aid and auxiliary operationsare excluded, approximately 74 percent ofeducational expenditures are for thecompensation, including fringe benefits, offaculty, staff, wage employees, and graduate

Faculty

Comp.31.8%

Staff

Comp.22.0%

Other

40.1%


20/136

OPERATING BUDGET BY ACTIVITYThe following pie charts show the percentage of the total operating budget dedicated to

each major activity:

2010-11 2009-10

E&G Budget

E&G is a term used to describe operations that are related directly to the University'seducational objectives, including the programs of instruction, research, public service, academicsupport, student services, institutional support, and maintenance and operation of physical plant.

Direct Instruction

Instruction includes the teaching faculty, support staff, instructional equipment, andoperating costs directly related to instruction, as well as departmental research. The increase,including salary and contingency reserves, in the 2010-11 instructional budget is $16.7 million or5.3 percent over the 2009-10 forecast. A portion of the increase, $4.1 million, is related to asupplemental reserve held in the event of further state budget reductions, and $3.4 million isrelated to a potential three percent bonus for faculty and staff.

Proposed allocations in the instruction program include the second of four allocations of

$200,000 and two new faculty positions for the School of Architecture; $918,500 and six facultypositions in the School of Engineering; $841,000 to support a revised curriculum and enrollmentgrowth in the School of Medicine; $90,000 for the Batten School; and $244,000 to supportadditional graduate teaching assistants in the School of Nursing.

Additionally, there is a reserve of $200,000 in 2010-11 to develop a minor in

Instruction

Research & Public

Serv.

Academic Support

Student Services

Institutional Support

Physical Plant

Financial Aid

25.2%

23.7%

9.4%2.8%

5.7%

7.2%

11.2%

14.7%

Instruction

Research & Public Serv.

Academic Support

Student Services

Institutional Support

Physical Plant

Financial Aid

Auxiliaries

24.8%

24.0%

9.9%3.3%

6.4%

6.2%

10.7%

14.7%


21/136

for scholarships in these departments for outstanding students." Mr. Pratts will provides furtherthat these funds could be used "to support research in the School of Medicine and to provide

scholarships for medical students." The will stipulates that the Pratt endowment reverts toWashington and Lee University if the University of Virginia does not comply with the provisionsof the will. The original Pratt endowment has been split into two equal endowments, with 50percent of the original principal assigned to the College of Arts and Sciences and the remaining50 percent assigned to the School of Medicine.

For 2010-11, $2.3 million is recommended for the School of Medicine to provide directresearch support. For the College of Arts and Sciences, $2.4 million will support the

departments of Biology, Chemistry, Mathematics, and Physics in compliance with the terms ofMr. Pratts will.

Funds totaling $4.0 million are held in the Presidents Fund for Excellence and in anormal operating reserve.

Research and Public Service

The 2010-11 research and public service budget will increase by $4.5 million or 1.4

percent as compared to 2009-10. This category includes both University and externally-fundedresearch and public service. University-funded research and public service includes support forresearch faculty, as well as the Center for Public Service, the Center for Advanced Studies, theCenter for Politics, the Institute of Nuclear and Particle Physics, the Virginia Center for DiabetesProfessional Education, the Virginia Foundation for the Humanities, the Institute of Government,the Womens Center, the Virginia Film Festival, Blandy Farm, and non-credit course offerings.

The Commonwealths investment in research of $2.8 million in 2010-11 is included in

this program. Of this amount, $1.9 million has been set aside for the Committee on the Future ofthe Universitys science and technology priorities, and $900,000 has been allocated for cancerresearch in the School of Medicine. Included in 2009-10 is $6.1 million relating to both the2009-10 allocation and unexpended funds carried forward from 2008-09.

Additionally, there is a reserve of $1,450,000 in 2010-11 pending the release of funds bythe Commonwealth to meet the commitment to the Rolls-Royce initiative.

There are two proposed addenda allocations in public service: $135,000 to continue theUniversitys work with the Virginia Economic Development Project in southwest Virginia and$30,000 for a public sculpture initiative.

Academic Support


22/136

Student ServicesThe 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 2010-11 student services budget isprojected to decrease by $5.6 million or 13.1 percent. This decrease reflects the completion ofthe Student System Project in December 2009, partially offset by the establishment of theStudent Information System help desk and maintenance organization in January 2010. Theproposed 2010-11 addenda includes six positions and $550,000 for Student Financial Services tosupport undergraduate and graduate financial aid; $94,000 to add a new associate dean ofstudents; $42,000 for an America Reads coordinator; and $20,000 for a Scholars Visitation

Program.

General Administrative ActivitiesThis category includes executive, financial, administrative, logistical, and fundraising

activities. The general administration budget will decrease by $7.6 million or 9.2 percent in2010-11. Permanent addenda allocations of $75,000 have been proposed to continue investmentin Procurement revenue-generating activities and to support ARMICS [Agency RiskManagement & Internal Control Standards] compliance.

Operation and Maintenance of Plant

The operation and maintenance program category includes all expenditures for operatingand maintaining facilities, leasing space, and police and security, net of amounts charged toauxiliary enterprises and the Medical Center. The operations and maintenance budget, includingitems held in reserve, is projected to increase $14.9 million or 18.5 percent in 2010-11 comparedto the 2009-10 revised forecast. The 2009-10 forecast includes an extra month of recoveriesfrom customers (deferred from 2008-09 at the request of the University for cash management

purposes), resulting in reduced activity of $8 million. Other reasons for the increase over revised2009-10 are a reserve for the potential faculty and staff bonus ($1.6 million); annualized and newallocations for maintenance of new facilities ($4.0 million); increased maintenance funding ($1.5million); a reserve for laboratory upgrades ($1.0 million); security dispatch services ($210,000);and support for environmental health and safety ($421,000).

STUDENT FINANCIAL AIDThe student financial aid budget, over $148 million in 2010-11, includes graduate and

undergraduate student scholarships, fellowships, and other forms of student assistance supportedfrom state general funds, tuition, endowment income, gifts, and federal sources. This budgetexcludes work study, loans, or aid provided directly to students by third parties.

Financial aid awards to undergraduate students primarily are based on current federal


23/136

funding ($21.9 million) to directly support undergraduate financial aid. This will provide one-time relief to unrestricted funds, which, as described earlier, will be used to support one-time

critical needs. As a result, a smaller percentage of tuition revenues for one year only willsupport financial aid. In 2010-11, nearly $37.5 million, 9.7 percent of tuition revenue fromdegree programs, is allocated to undergraduate and graduate financial aid. The University re-allocates tuition revenues to support financial aid through the following programs:

$8.8 million to support AccessUVa. $11.1 million to fund the cost of in-state tuition and fees and a healthcare voucher for

eligible graduate teaching assistants.

$6.5 million to provide the differential between in-state and out-of-state tuition andfees for out-of-state graduate students who are employed in a significant academiccapacity, earning at least $5,000 during the fiscal year.

$11.1 million for graduate fellowships, including Law and Darden students.The 2010-11 budget includes funding from central unrestricted private resources of $2.1

million for an undergraduate merit scholarship program and $1.0 million for the President'sFellowships, the Universitys most prestigious graduate fellowship.

AUXILIARY ENTERPRISESAn auxiliary enterprise is an entity that exists to furnish goods or services to students,

faculty, or staff and charges a fee to recover the cost of the service. Auxiliary enterprises areexpected to be self-supporting, with revenues fully supporting the operating and capitalexpenditures of the enterprise. Emphasis is placed on providing safe, effective, and efficiententerprises that are compatible with, and facilitate the accomplishment of, the University'sprimary mission. The Commonwealth requires that auxiliaries be charged an overhead rate tosupport the general and administrative services provided by E&G operations. In 2010-11, theauxiliaries will be charged approximately 7.4 percent of their operating expenditures. A total of$5.2 million will be recovered by E&G activities. In return, auxiliaries are credited with interest

earned on their cash balances.

Revenue projections are based on Board-approved enrollment projections, housing anddining rates, and mandatory non-E&G fees. For 2010-11 the Board approved a 2.8 percentauxiliary fee increase, resulting in a total assessed auxiliary fee of $1,804.


24/136

reserves, for the major auxiliary enterprise units is included in the following sections.

Athletics

Athletics operations support 12 intercollegiate sports for men and 13 for women,providing competition opportunities for over 700 student athletes, 474 of whom receivescholarship support. In 2010-11, Athletic revenues are projected to increase by 11.7 percent to$51.4 million, while expenditures will increase by 11.8 percent to $51.4 million. The increase inexpenditures largely is related to recent changes within the mens basketball and footballprograms, which resulted in necessary one-time investments in these programs. Increasedphilanthropy represents the offsetting revenue stream, as reflected in the 2010-11 Athletics gifts

budget. To accommodate for challenging revenue streams in 2009-10, Athletics continued toidentify sustainable changes in its business practices, which carry forward to 2010-11. Inaddition to the operating budget explained above, $13 million in gifts was raised through theVirginia Athletic Foundation to fund student athlete grant-in-aid scholarships.

As shown on the schedule below, Athletics plans to transfer $2.5 million of its remainingrevenues to its renovation and repair (R&R) and expansion reserves in 2010-11. While Athleticsalso relies on the stadium endowment earnings and reinvestment of the stadium endowment to

meet the Boards reserve policy, it remains critical for Athletics to continue increasing its annualtransfer to the reserves to consistently re-invest at least 1.5 percent annually in Athleticsfacilities.

ATHLETIC RESERVESR&R Reserve

ExpansionReserve Total

Projected Balance, 7/1/10 $1,466,000 $4,178,000 $5,644,000

Plus: Transfers from Operating 860,000 1,637,000 2,497,000

Less: Planned Expenditures 768,000 1,453,000 2,221,000


With $2.2 million in planned expenditures, Athletics will have a remaining $5.9 millionreserve, primarily earmarked for continuing debt service for the Scott Stadium Expansion and toestablish a reserve for the John Paul Jones (JPJ) Arena.

In addition to debt service requirements totaling $1.1 million, the Athletics budget plansfor the following expenditures from its reserves in 2010-11: $400,000 annual transfer to the JPJArena; $443,000 for artificial field replacement, crew equipment, and tennis court resurfacing;and $325,000 for University Hall improvements.


25/136

impact of expected growth in the Cavalier Computers operations and a declining revenue streamin the Bookstore sales due to competition.

Planned operational challenges in 2010-11 include increased competition amongpurveyors of textbooks, a drop in football game day sales, a decline in mail order sales, and aloss of sales of higher-margin merchandise and departmental business due to continued budgetreductions. While the Bookstores implementation of an online textbook rental service offsetssome of the decline in revenues, other initiatives are planned. These initiatives includeexpanding the rental textbook and e-book titles, incentivizing on-time placement of textbookorders for departments, and adding new electronic items for purchase. Additionally, the

Bookstore plan includes reduced inventory costs, reduced student and wage expenses, andreduced transfers to its expansion reserve. The Bookstore will continue to make its annualtransfer for required debt service of $780,000; however, current projections do not allow for thecontinuation of an annual $200,000 contribution to the Bookstore Endowment for Excellence.The planned philanthropic contribution for 2009-10 has been reduced to $175,000, and the 2010-11 contribution has been put on hold until the economy and the Bookstores business begin toimprove. As of March 2010, the Bookstore Endowment for Excellence had a market value of$4.7 million, generating annual expendable income of $230,000.

As shown on the schedule below, the Bookstore will transfer $140,000 to its reserves.This is significantly lower than transfers to reserves in prior years, due to a 2008-09 one-timetransfer of excess operating reserves to support the planned Central Grounds Bookstoreexpansion. Overall, the Bookstore is meeting the policy of an annual 1.5 percent re-investmentin its facilities. Facilities Management assessed the condition of the Bookstores facilities during2006, identifying less than $500,000 of deferred maintenance needs. With $2.9 million inplanned expenditures, the Bookstore is projecting a $4.6 million reserve in June 2011.

BOOKSTORE RESERVESR&R Reserve



Plus: Transfers from Operating 65,000 75,000 140,000

Less: Planned Expenditures 210,000 2,700,000 2,910,000


In addition to planned 2010-11 spending of expansion reserves of $2.7 million for the

Central Grounds Bookstore expansion, $210,000 is earmarked for both Cavalier Computers andother Bookstore facility repairs and improvements and for equipment and computer systemupgrades. The expansion of the Central Grounds Bookstore has a total project budget of $10.6million Of the total project cost $3 6 million is to be debt financed and the remainder will be


26/136

apartments, townhouses, and detached homes for faculty and staff. Conference Services hostsapproximately 150 adult, youth, and student groups during the summer. Housing revenues willincrease by 2.5 percent to $37.3 million, primarily related to the housing rate increases approvedby the Board in April 2010. Planned uses will increase to $37.2 million, related to higheroperating costs, including fringe benefits, volatility in utility prices, increased preventivemaintenance, and planned transfers to reserves totaling $13.3 million.

In addition to commitments totaling $4.2 million for debt service, the schedule belowillustrates Housings plan to transfer $13.3 million to its reserves in 2010-11. The $6.1 milliontransfer to the expansion reserve is funded from the Housing Improvement Fee, which is

specifically assessed to housing residents to fund R&R reserves for anticipated major renovationand the replacement of first-year residence halls. As Housing proceeds with its replacementplan, its facility condition index (FCI) will reflect improvement. After the 2010-11 planned$13.3 million of reserve expenditures, Housing projects a $6.1 million reserve balance in June2011, largely committed for the continuation of the Alderman Road Residence Hall Replacementproject.

HOUSING RESERVES

R&R Reserve

Expansion

Reserve TotalProjected Balance, 7/1/10 $1,181,000 $4,681,000 $5,862,000

Plus: Transfers from Operating 7,219,000 6,051,000 13,270,000

Less: Planned Expenditures 6,984,000 6,000,000 12,984,000


In 2010-11, the Housing reserves support both Student Housing and Faculty and Staff

Housing. Planned reserve expenditures include: $6.0 million toward the Alderman RoadResidence Hall Replacement project; $2.0 million for refurbishing Lambeth Road apartments;$1.1 million for Gooch furnishings and carpet replacement; $870,000 for waterproofing andfoundation repairs to multiple student residential areas; and the balance toward numerous othersafety and security and repair and renovation projects addressing deficiencies identified in thefacilities audit.

Parking and Transportation

Parking and Transportation (P&T) provides on-Grounds parking in 10 garages and 100lots and 60,000 hours of fixed-route bus service to parking areas, points on Grounds, and studentneighborhoods. P&T also provides event parking services, vehicle maintenance, and ground andair charter services. P&T revenues will increase by 3.4 percent to $19.4 million in 2010-11 as aresult of increased permit rates for the Health Sciences Center (HSC) and expected increasedrevenues for the Charter Coach Bus services The 2010-11 budget reflects a flat student bus fee


27/136


28/136

Communication Services will have remaining only a nominal reserve of $610,000.

COMMUNICATION

SERVICES

RESERVE ExpansionReserve

Projected Balance, 7/1/10 $10,400,000

Plus: Transfers from Operating 1,196,000

Less: Planned Expenditures 10,986,000

Projected Balance, 6/30/11 $610,000

In 2010-11, the reserve will fund 50 percent or $7.4 million of the cost of the new Data

Center, with debt financing the remainder of the $14.8 million project. While the reservebalance had been accumulating for the next major communication system replacement project,given the investment in the Data Center Building, additional borrowing most likely will berequired for the communication system replacement project.

Planned reserve cash expenditures in 2010-11 include the remaining cash commitment tothe Data Center Building of $5.4 million; the communications system upgrade down payment of$1.0 million; $1.0 million for the routine upgrades performed every three years; $1.0 million forwireless LAN rebuild; and $2.5 million for numerous other smaller plant and growth needs.

Student Health Center

Student Health Center operations include General Medicine, Gynecology, Counselingand Psychological Services, Health Promotion, Learning Needs and Evaluation, pharmacy, andinsurance and billing referral. Student Health revenues will increase by 1.8 percent to $9.5

million in 2010-11. Student Health operating expenditures are increasing by 0.5 percent to $9.5million, related to higher operating costs, including fringe benefits, medical and pharmacysupplies, utilities, and service providers.

As shown below, Student Health will transfer $132,000 to its R&R reserve, representinga 1.9 percent investment in the Elson Student Health facility. This transfer satisfies the Boardreserve policy of annual capital expenditures or contributions to capital reserves of at least 1.5percent of replacement value of buildings and equipment.

STUDENT HEALTH RESERVE R&R Reserve

Projected Balance, 7/1/10 $1,040,000

Plus: Transfers from Operating 132,000

Less: Planned Expenditures 138,000

j d l 6/30/11 $1 034 000


29/136

Intramural-Recreational Sports

Intramural-Recreational Sports operates four fitness facilities totaling almost 300,000square feet and over 30 acres of sports fields that are open seven days per week. These locationsprovide opportunities for students, faculty, staff, and dependents to enhance healthy physicaldevelopment and well-being through informal, self-directed wellness pursuits in comprehensivegyms, courts, and pool spaces using sports and fitness equipment. Formal program services incompetitive, experiential, instructional, fitness, or sports-based activities are also offered in thefacilities daily. All departmental services, programs, and facilities are structured to enable

healthy and positive personal growth, group interactions, and community relations building onand off Grounds. Intramurals revenues will increase 6.4 percent to $7.2 million in 2010-11.Expenditures are increasing 6.4 percent to $7.2 million as a result of higher operating costs,including wage rates and fringe benefits for salaried employees.

As shown below, Intramurals expects to transfer $2.6 million to its reserves in 2010-11.Of this amount, $1.6 million covers required debt service, leaving $1.0 million for reserve needs.This represents a 1.6 percent investment in facilities, satisfying the Board reserve policy of

annual facilities re-investments of at least 1.5 percent of replacement value of buildings. With$2.2 million in planned expenditures, Intramurals will have a remaining $3.6 million reserve,earmarked for continued facility maintenance, debt service requirements, and reinvestment andexpansion of its existing facilities.

INTRAMURAL RESERVESR&R Reserve


Projected Balance, 7/1/10 $2,536,000 $707,000 $3,243,000

Plus: Transfers from Operating 964,000 1,589,000 2,553,000Less: Planned Expenditures 425,000 1,789,000 2,214,000

Projected Balance, 6/30/11 $3,075,000 $507,000 $3,582,000

Planned expenditures from the reserves in 2010-11 include: $1.6 million for debt service,$235,000 for improvements to the AFC, $200,000 towards a new recreation center planningstudy, and $175,000 for various other equipment needs.

Printing and Copying

Printing and Copying Services (P&C) operates five copy centers and one printing plant,providing a variety of offset printing, duplicating, copying, photography, microfilming, andauxiliary services P&C revenues are budgeted conservatively to decrease by 9 3 percent to $4 5


30/136

As shown below, P&C will transfer $728,000 to its reserves.

P&C RESERVESR&R Reserve


Projected Balance, 7/1/10 $2,783,000 $0 $2,783,000

Plus: Transfers from Operating 728,000 0 728,000

Less: Planned Expenditures 596,000 0 596,000

Projected Balance, 6/30/11 $2,915,000 $0 $2,915,000

This is relatively consistent with transfers to reserves in prior years, complies with theBoard facilities reinvestment policy, and represents an annual 4.4 percent investment in P&Cfacilities. With $596,000 in planned reserve expenditures, P&C will have a remaining $2.9million reserve balance. The above 2010-11 planned expenditures of $596,000 are forequipment and system purchases, such as Pay-for-Print equipment.

Newcomb Hall

Newcomb Hall provides physical space for student organization offices and studentactivities (including Honor, Judiciary, Student Council, and The Cavalier Daily); theKaleidoscope Center for Cultural Fluency; and the Lesbian, Gay, Bisexual, TransgenderResource Center. It also offers reservation services for non-academic use of space on Grounds,dining facilities, a post office, banking facilities, and a movie theatre. The Student ActivitiesCenter provides resources for over 660 student organizations, and the University Programs

Council organizes events for students.

Newcomb Hall and University Programming Council revenues will remain constant at$6.6 million in 2010-11, with no increase in student fees. Budgeted revenues are sufficient tomeet operational and planned reserve contributions and debt service requirements, as approvedby the Board in prior years. Newcomb operating expenditures also are projected to remain levelfor 2010-11 at $6.6 million.

As shown below, Newcomb will transfer $2.9 million to its reserves in 2010-11,consistent with the 2009-10 fee increase approved for Newcombs renewal and replacement toaddress deferred maintenance.

NEWCOMB HALL RESERVESR&R Reserve



31/136

leaving $2 million accumulated for the Newcomb Renewal project debt service expected tobegin in 2011-12 and for true reserve needs. Newcomb is in compliance with the Board reservepolicy for reinvestment in its Facilities at 1.5 percent. The Newcomb Renewal project is gearingup and, as a result, the Newcomb FCI will improve over the course of the next several years.With $2.2 million in planned expenditures for 2010-11, Newcomb will have a remaining $4.3million reserve. This reserve primarily is earmarked for deferred maintenance, which largelywill be addressed with the Newcomb Renewal project. Newcombs 2010-11 plannedexpenditures include debt service of $900,000, Newcomb furnishings and equipment of$700,000, $72,000 for other miscellaneous facility repairs, and the balance accumulating for out-year debt service for the Newcomb Renewal capital project.

Dining

Dining Services offers eight types of meal plans in four locations to approximately 8,300students. Retail dining is available in 16 locations, and additional services include catering,vending, and concessions. Under the dining services contract with ARAMARK Corporation,board and retail sales are expected to generate $4.7 million, an increase of 4.4 percent over the2009-10 projected budget. Revenues, net of commission payments, beverage support, rentals,and catering, are expected to total $4.6 million. Operating expenditures are expected to total

$4.4 million in 2010-11.

In addition to planned debt service of $1.1million, the schedule below illustrates Diningsplan to transfer $7.2 million to its reserves in 2010-11. Dining is complying with the Boardpolicy of at least an annual 1.5 percent investment in its facilities. With $5.1 million in plannedreserve expenditures, Dining will have a remaining $17.6 million reserve. This reserve primarilyis earmarked for the upgrade of Dining facilities, largely in Newcomb Hall. Dinings 2010-11planned expenditures of $5.1 million are earmarked for facility repairs and improvements.

DINING RESERVES Ren. & RepairReserve


Projected Balance, 7/1/10 $8,658,000 $6,824,000 $15,482,000Plus: Transfers from Operating 1,610,000 5,576,000 7,186,000Less: Planned Expenditures 570,000 4,510,000 5,080,000


Other

This category includes the JPJ Arena, leased facilities (the National Radio AstronomyObservatory and Judge Advocate Generals (JAG) School), Mail Services, University Press, theSchool of Continuing and Professional Studies Satellite Uplink the Child Development Center


32/136

million for Dardens renewal of four classrooms and 28 learning team rooms; and $500,000 forother nominal needs in the JPJ Arena, Cemetery and Columbarium, Mail Services, the ChildDevelopment Center, Business Operations, and Cavalier Advantage.

OTHER RESERVES JAGR&R

SCPSR&R

OtherR&R Total

Beginning Balance, 7/1/10 $3,962,000 $0 $2,054,000 $6,016,000

Plus: Transfers from Operating 412,000 25,000 4,335,000 4,772,000

Less: Planned Expenditures 1,125,000 0 2,083,000 3,208,000

Projected Balance, 6/30/11 $3,249,000 $25,000 $4,306,000 $7,580,000

STAFFINGThe Academic Division projects an increase of 84.5 FTE positions to 8,770.6 in 2010-11.

An increase of just 12 positions is expected from state and tuition sources, driven primarily by anincrease in Facilities Management related to operating and maintaining new facilities that haveopened in 2009-10 and are expected to open in 2010-11. These state positions support allfacilities (E&G, auxiliary, and the Medical Center), and funding is recovered from non-E&G

sources to support this activity.

After two years of holding positions vacant and with increased federal research dollarsunder ARRA funding, increases are expected in grants and contracts and private sources.Positions funded from auxiliaries are expected to decrease by nearly four percent. Of the 8,770.6positions budgeted, about half (4,366 positions) are involved directly in the primary programs ofinstruction, research, and public service.

StateGrants andContracts

PrivateResources Auxiliaries Total

2009-10 Revised 4,910.3 1,825.1 1,116.8 833.9 8,686.1

2010-11 4,922.2 1,918.2 1,126.6 803.6 8,770.6

Change 11.9 93.1 9.8 (30.3) 84.5

% Change 0.2% 5.0% 0.9% (3.6%) 1.0%


33/136

THE UNIVERSITY OF VIRGINIAS COLLEGE AT WISE2010-2011BUDGET SUMMARY

The 2010-2011 operating budget for the University of Virginias College at Wise (Wise)is projected to total $34.4 million, an increase of $1.1 million or 3.2 percent compared to therevised 2009-2010 operating budget.

UNIVERSITY OF VIRGINIA'S COLLEGE AT WISE

OPERATING FINANCIAL PLAN (dollars in thousands)

2010-11

ProposedBudget

2009-10

ProjectedResults Change

%Change

2009-10

ApprovedBudget

Sources of Available Funds

State general fund appropriation $14,003 $14,531 ($528) (3.6%) $15,177

Tuition and fees 7,088 6,141 947 15.4% 6,134Allocation from American Recovery and

Reinvestment Act of 2009 1,703 1,098 605 55.1% 1,619

Sponsored research direct costs 1,122 1,196 (74) (6.2%) 1,528

Endowment distributions/Private gifts 1,885 1,874 11 0.6% 1,637

Sales, investment and other to be expended 67 61 6 9.8% 128Auxiliary enterprises, including gifts forAthletics 8,497 8,414 83 1.0% 8,461

Total Sources of Available Funds 34,365 33,315 1,050 3.2% 34,684

Uses of Available Funds

Direct instruction 10,793 9,730 1,063 10.9% 9,193

Research and public service 1,432 1,539 (107) (7.0%) 2,030Library, technology, and academicadministration 3,562 4,124 (562) (13.6%) 4,331

Student services 1,793 1,833 (40) (2.2%) 1,992

General administration 2,810 2,800 10 0.4% 3,159

Operation and maintenance of physical plant 1,928 1,463 465 31.8% 2,427

Scholarships and fellowships 3,563 3,508 55 1.6% 3,091

Auxiliary enterprises 8,484 8,318 166 2.0% 8,461

Total Uses of Available Funds 34,365 33,315 1,050 3.2% 34,684

Surplus $ - $ - $ - 0.0% $ -

For the first time in four years, Wise does not anticipate any additional reductions in the2010-2011 state appropriations (although an additional $1.48 million is probable in 2011-12).


34/136

In April 2009, the General Assembly approved the Governors recommendation for anadditional $1.5 million (10.0 percent) reduction to Wises 2009-10 general fundappropriation. This reduction was reflected in the 2009-10 original budget.

In April 2010, the General Assembly approved the Governors recommendation for anadditional $460,400 (3.2 percent) mid-year reduction to Wises general fundappropriation. This is reflected in the revised 2009-2010 appropriation budget.

Cumulatively, over the past three years, Wise has incurred a $3.68 million or 25.0 percentreduction in its state appropriation.

While maintaining its focus on student success and regional involvement, it is only withthe assistance of the ARRA/SFSF that Wise has met the challenge of these reductions withoutcompromising existing personnel or the operation of any academic program. Wises statefinancial aid for 2010-11 remains constant with the base funding provided for 2009-10. TheCollege at Wise Advisory Board reviewed and approved this budget on March 19, 2010.

Funding Sources of the Operating BudgetThe charts below demonstrate which operating revenues will provide the resources to

fund the operating expenditure budget.

2010-11 2009-10

20.6%

40.7%

3.3%

24.7%

4.8% 0.7%

5.0%

0.2%

Tuition & Fees

State Appropriations

Sponsored Programs

Auxiliary Revenues

Endowment Distribution

Expendable Gifts

ARRA/SFSF

Sales & Other

18.4%

43.6%

3.6%

25.3%

5.1% 0.5%

3.3%

0.2%


35/136

State General Fund Appropriation

The general fund appropriation for 2010-2011 is projected to total $14.0 million, a

decrease of 3.6 percent as compared to the revised 2009-2010 budget. State financial aidincluded in the general fund appropriation will remain at $1.8 million in 2010-11. General fundappropriation for the Southwest Virginia Public Education Consortium (SVPEC) will continue in2010-2011, with a reduction in funding totaling $37,000 or 15.7 percent as compared to 2009-2010. The Graduate Medical Education Consortium (GMEC) also will continue to receivegeneral fund appropriation through the Virginia Department of Health, with a reduction infunding totaling $13,000 or 5.6 percent. Wise passes through the general fund appropriation toeach of these organizations.

Non-general Funds

Non-general fund E&G revenue for 2010-11 is projected to total $11.9 million. Non-general fund E&G revenue sources include tuition and E&G fees; grants, contracts, and indirectcost recoveries; gifts; distributions from endowments; other sales and services income; and theallocation from the ARRA.

Tuition and Fees

Net revenue from tuition and E&G fees is projected to total $7.1 million in 2010-11,increasing by 15.4 percent. The increase is related to several factors. First, Wises tuitioncharges for 2010-11 will increase by 9.5 percent. Second, Wise has seen a significant increase inits Center for Teaching Excellence a center which provides professional teaching training andpromotes dual enrollment opportunities. Third, the General Assembly requires an increase in the

out-of-state capital fee assessed to all non-resident students. The 2010-11 fee will total $532 peryear, a 33 percent increase of $132 as compared to 2009-10.

Planned enrollment growth, consistent with Board-approved projections, continues to aidin determining the projected tuition and E&G revenue. Actual FTE enrollment for the fall 2009semester totaled 1,623, a 2.7 percent increase over the fall 2008 semester. Wise will continue tooffer reduced tuition rates for students residing in targeted counties in Kentucky and Tennessee.

ARRA

Wise received $1.1 million in SFSF from the ARRA for 2009-10 and will receive $1.7million for 2010-11. To moderate the general fund reductions to Wise, planned distribution willfocus primarily on retaining faculty and staff. As reported to the Department of Planning and


36/136

in student services. The Healthy Appalachia Wise grant, initiated by the University of VirginiaCancer Center and sponsored by the Virginia Tobacco Indemnification & CommunityRevitalization Commission, will continue in 2010-11. F&A recoveries amount to $30,000 of the

total.

Endowment Income and Gifts

Endowment distributions projected for E&G programs and student financial aid total $1.6million in 2010-11, a decrease of 3.6 percent as compared to that expected in 2009-10. Thisresults from a lower market value of the endowment caused by the financial crises of 2009.Private gifts, including $342,000 of athletic auxiliary revenue, are projected to total $582,000 for2010-11.

Other Sources of Funds

For 2010-11, other sources of funds include $67,000 from local sales and services andother local activities.

Operating Budget by ActivityDirect Instruction

Direct instruction includes teaching and research faculty, support staff, equipment, andoperating costs associated directly with teaching. The 2010-11 instruction budget will total$10.8 million, a 10.9 percent increase as compared to the revised 2009-10 budget. TeachingFellow salaries historically have been budgeted centrally within the Academic Support program.This budget will be moved to Instruction in 2010-11, with the salaries and positions allocated to

the appropriate academic departmental budgets. The adjunct faculty budget will increase by 9.0percent in 2010-20 as a result of the continued elimination of vacant teaching and researchfaculty positions.

Research and Public Service

SVPEC, GMEC, the Pro-Art Association of Wise County and the City of Norton, andWISE-FM Public Radio make up the public service activities on the Wise campus. Sponsoredresearch is both state and federal grant funded and also is included within this program. The

2010-11 operating budget for research and public service will decrease by 7.0 percent ascompared to the 2009-10 budget.

General fund appropriation for 2010-11 for the SVPEC will total $196,000, a reductionof 15.7 percent as compared to 2009-10. Of this appropriation, $71,849 will be allocated to the


37/136

reduced by 5.6 percent as compared to 2009-10. The GMEC mission will continue to be toimprove access to high-quality primary care for the citizens of Virginia by forming educationalpartnerships between rural and underserved communities in Southwest Virginia.

Funding for the Pro-Art Association of Wise County and the City of Norton will total$19,000 in 2010-11.

Supplemental support in the amount of $450 for WISE-FM Public Radio, which airs viaWVTF-FM, will continue in 2010-11.

Academic Support

Academic support includes library services, technological and computer services, andgeneral academic services to both students and instructional faculty. Faculty development andrecruitment also are included within this program. The 2010-11 academic support budget will bereduced by 13.6 percent as compared to the revised 2009-10 projected results. As referencedunder the Instruction section, Teaching Fellow salaries historically have been budgeted centrallywithin the Academic Support program. This budget will be moved to Instruction in 2010-11,

with the salaries and positions allocated to the appropriate academic departmental budgets.

Student Services

Student Services includes social and cultural development activities, counseling, andcareer guidance, as well as general student affairs services. Enrollment management, financialaid services, registration services, publication costs associated with student recruitment, andprograms designed to meet the guidelines of the American Disabilities Act also are part of the

student services activity. The 2010-11 student services budget will total $1.8 million, a 2.2percent reduction as compared to the 2009-10 budget.

General Administration

Institutional support from executive management, fiscal operations, logistical services,development, public relations, and staff training and development will total $2.8 million in2010-11.

Operation and Maintenance of Plant

Physical plant services in housekeeping, maintenance operations, utilities, andlandscaping and grounds maintenance will increase by 31.8 percent as compared to the 2009-10


38/136

Auxiliary EnterprisesThe 2010-11 auxiliary enterprise operating budget will total $8.5 million. Self-

supporting activities include student housing operations, bookstore, cafeteria services, parking

and transportation, student health services, student union operations, and athletics. Fundedsolely by revenue collected for services provided to students, faculty, staff, and the generalpublic, the auxiliary enterprise operating budget comprises 24.7 percent of Wises total operatingbudget.

Student Fees

Student service fees provide operating revenue for the majority of Wises student lifeprograms. Activities receiving funds from student fee revenue include the student governmentassociation, student publications, intramural and outdoor recreation activities, student healthservices, athletics, student life support, and debt service payments for Cantrell Hall and theSlemp Student Center. No state funds are available to support these programs and operations.Wise historically is in the middle of the 15 public state institutions in Virginia in overall fees andhas been one of the lowest in total costs of attendance in the Commonwealth.

The student service fee for full-time students will increase 4.0 percent from $3,052 in2009-10 to $3,174 in 2010-11. Of this increase, 3.? percent will be dedicated to the operatingbudget plus the final debt/operating charge for the new dining hall. Seventy-five thousanddollars of the student service fee revenue will be obligated for the debt service for the StudentInformation System.

Student Housing

Occupancy levels are projected to remain between 90 to 100 percent in 2010-11.Construction was completed on the new residence hall in August 2009, with occupancybeginning with the fall 2009 semester. To maintain and effectively operate Wises residencehalls, revenue must reflect the cost of operation because the Commonwealth does not provideoperational funding for residence halls. The goal to provide residence life opportunities to meetthe needs and expectations of the student body requires a 10.0 percent increase in room rates.This increase includes the projected funding stream for the next residence hall. The financialmodel for the recently-completed residence halls necessitates this rate increase. The operating

budget for residence hall programs will total $2.2 million.

Parking & Transportation

The 2010-11 projected operating budget for parking and transportation services will total


39/136

of-the-art facility in January 2010. To maintain the standard of service this new facility offers,Wise must keep the meal plan revenue in line with inflationary increases and operational needs.The Consumer Price Index for out-of-home food service for 2009 was 2.9 percent. Based on the

negotiations with Chartwells, Wises food service provider, the meal plan rate for on-campusresidents will increase by 5.0 percent, with an increase of 3.0 percent for optional meal plancontracts for commuting students.

Bookstore

The 2010-11 operating budget for the bookstore will total $1.2 million, a modest increaseas compared to 2009-10.

Athletics

The projected 2010-11 operating budget for intercollegiate athletic programs will total$1.3 million, relatively level with 2009-10.

Auxiliary ReservesThe 2010-11 full-time student services fee of $3,174 includes the final installment to theDining Commons reserve fund. The total contribution will be $600 per student, and the transferto the reserve fund will total $744,600 in 2010-11.

StaffingFTE positions for 2010-11 have been allocated as follows:

E&G 239.0Auxiliary Enterprises 43.6Sponsored Programs 9.1Private Sources .4Total 292.1

The net increase of eight full-time positions is due to filling several previously-vacant

E&G positions and adding one staff in sponsored programs.


40/136


41/136

UNIVERSITY OF VIRGINIA MEDICAL CENTER2010-11BUDGET SUMMARY

The Medical Centers 2010-11 fiscal plan has been developed while considering thechallenge of providing patient care, teaching, and research services in an increasingly-changinghealth care industry. The cost associated with providing quality patient care will continue tohave upward pressure due to increases in medical supply, pharmaceutical, and medical deviceexpenses, as well as a shortage of health care workers. In addition, in 2010-11, the MedicalCenter expects to continue its growth in surgery and to care for patients with high-acuityillnesses.

The Medical Center budget development process is clinically focused and highlyparticipatory. Patient care service management, support function management, and physicianshave significant roles in the budget development cycle. The budget process begins with seniormanagement developing basic budget assumptions such as discharges, length of stay, standardsfor the number of employees, and inflation. This information is communicated to MedicalCenter managers and ends with each operating unit providing a cumulative operating and capitalbudget that contains service demand forecasts, required FTE personnel, and non-labor expenses.

BUDGET DEVELOPMENT ASSUMPTIONSMarket Conditions

For 2010-11, discharges are budgeted to grow 2.9 percent from current projections for2009-10. The growth will be facilitated by enhanced patient flow resulting from bed expansion.Outpatient service demand is budgeted to grow 3.2 percent from 2009-10 revised

2010-2011annual budget summary

Documents