Higher Ed could be big winner in '05

After several years of severe cuts to higher education, the General Assembly did quite well by Virginia’s colleges and universities in the 2004 session, and it’s quite probable that ’05 could prove pretty good for them, too.

Next year may hold the promise of approving a new way of governance for certain institutions as well as yet another round of increased funding for them all. And there’s no reason that achieving such shouldn’t be a bipartisan goal of both the legislative and executive branches.

No one disputes that our state’s public system of 15 four-year and 24 two-year colleges and universities is renowned in the nation, if not the world. And few would disagree that the system should be boosted each year by both increased funds and other measures of support to propel it to even higher levels of prominence.

From the late 1990s through about 2002, more than $450 million of new money was invested in our higher education system. But when the recession hit a few years ago, the state budget proposed in 2003 cut away about $300 million, representing about 40 percent of the reductions made to all state agencies.

But then things began to turn around. When the 2004 tax-reform package was passed by the legislature, which included $1.3 billion in net new revenue, appropriators were able to direct more than $260 million in new funds to higher education, with about $175 million of that going to base operations and growing student enrollments. New money also went for faculty salary increases and various research aims.

However, one promising legislative initiative considered by legislators was ultimately set aside for more study – the “charter university” proposal favored by three of the state’s most prominent institutions.

The University of Virginia, Virginia Tech, and the College of William and Mary would like to be granted charters by the state, allowing them to handle certain administrative and budget functions on their own, almost wholly apart from the state’s central systems but still accountable in most every auditable way. The concept calls for a contractual relationship to be established between the individual institutions and the state, which would detail how each school would manage its personnel and procurement systems, control its cash flow, manage its debt, and carry out its capital improvement plans. In exchange for this new operational and financial management flexibility, UVa, Virginia Tech, and William and Mary each would give up a certain amount of state appropriation it otherwise would be entitled to under current funding guidelines. The dollars they’d give up could then be redistributed in a win-win sort of way to other, non-chartered colleges and universities.

These three institutions obviously have done a cost-benefit analysis and believe the savings that would be generated from increased local control – or, put another way, less state bureaucratic control – total more than the yearly state funding amounts they’d forfeit. The savings realized by each school would be plowed back into their individual operational and instructional costs.

The charter initiative – officially known as the Commonwealth Chartered Universities and Colleges Act – was prompted by the seemingly perpetual funding challenges every institution faces. It’s been characterized as a plan that ultimately could benefit both the state and the institutions. It’d reduce the cash commitments from the state to the chartered institutions while empowering them to better operate within their very market-driven world.

Virginia’s entire public higher education system has been under-funded over the past couple of years – as measured by the General Assembly’s own guidelines – by some $400 million. While considerable progress was made this year to reduce that deficit, more has to be done to completely erase it.

The yearly shortfalls incurred by UVa, Virginia Tech, and William and Mary have generally totaled about $145 million. That level of chronic under-funding has obviously impacted these institutions’ ability to meet their core academic and operational functions – everything from instruction to faculty and staff salaries to routine building maintenance. The institutions, like every other, have had to make up some of the lost funds by increasing tuition, something no one likes to see.

The legislation to enable individual charters to be established between the state and UVa, Tech, and W&M is being studied by a core group of delegates and senators this summer and fall. It is hoped that its details can be worked out in time for the legislation to be presented to – and passed by – the ’05 General Assembly.

Some positive signs have been seen in recent weeks. Both Gov. Mark Warner, a Democrat, and House Speaker Bill Howell, a Republican, have signaled that the charter initiative has a certain amount of merit. Warner would like to engineer a major push on higher education in his remaining year or so in office, and chartering the three schools could – and should – be a major part of that push. Likewise, Howell has said he’d like the upcoming legislative session to focus on innovative ways to meet government’s funding and service-delivery challenges. A higher ed decentralization initiative like the charter proposal – one that would cut red tape, take a new approach to funding, and maintain accountability – would fit neatly into Howell’s plans.

If successful, it’d make sense to grant charters to other colleges and universities once they’ve demonstrated an in-house support structure adequate to take sole control of heavy-duty procurement, personnel, and budget functions as well as full responsibility for intense capital outlay programs. George Mason University (now the state’s largest institution), Virginia Commonwealth University, and James Madison University may prove likely candidates a few years from now for a second round of charters.

Warner and legislators should approve the charter initiative next year. But that’s not all. There’s still ground to be made up from years of under-funding. In the late 1990s, the legislature established funding guidelines and levels for each institution that have yet to be met. That needs to change.

As good as 2004 was for our public colleges and universities, let’s hope that ’05 is just as good, if not a bit better. There’s no reason it can’t be.