MATT GENTRY The Roanoke Times

Radford University art professor Richard Bay meets his class last week in the Covington Center, built in part with revenues from student fees.

MATT GENTRY The Roanoke Times

Radford University officials say the budget proposal would deprive the school of income that it uses to avoid going into debt.

Virginia college and university students may have to pay more than tuition increases to help balance the state's budget.

A little-known provision in former Gov. Tim Kaine's final budget bill currently working its way through the General Assembly proposes something unheard of in higher education: taking a portion of mandatory student fees paid to universities and depositing that money in the state's bank account.

Higher education officials and advocates say it's not only an unfair "backdoor tax" on students and families, but that it could set a dangerous precedent for education funding.

"This is completely different from taking general fund money [away]. This is private student money never intended to go to the state that the state is taking," said Steven Jones, executive director of Virginia21, a Richmond-based youth advocacy group. "It's a matter of the public trust."

Since 2007, taxpayer support for higher education instruction and operations has been slashed repeatedly, and more cuts are expected to help offset a $4 billion projected state revenue shortfall.

Tuition increases and work force reductions are expected at many of the state's public universities.

Cutting taxpayer support for higher education is one thing. But this proposal, if passed, would go further and take about 5 percent of universities' reserve funds.

These funds come from student fees paid directly to the university to support on-campus services such as dorms, dining halls, health and counseling centers, and athletics. The proposal would take that money and put it instead in the state's general fund.

It's estimated the proposal would take $18.8 million in cash from Virginia universities in the first year.

It would also dip into the interest schools make off the reserve accounts, a move estimated to net about $5.4 million for the state in 2010 and about $7.2 million each year thereafter, said Dan Hix of the State Council of Higher Education for Virginia.

Student services, as well as the overall financial health of public universities, could be threatened.

Taking that money away "hurts schools that need it for debt to build buildings. In its worst case, it could have an impact on your credit rating," Hix said. "And it could wind up increasing student fees to cover this hole."

The effects may not be equal across the state, either. Some universities and their students are likely to suffer more than others.

About 60 percent of the total money taken would come from just four institutions: the University of Virginia, James Madison University, George Mason University and Radford University, Hix said.

Virginia Tech's share is estimated at 3 percent of the total, Hix said.

Radford University has traditionally saved student fee money, built up larger reserve accounts and paid in cash for student housing and other projects. Consequently, Chief Financial Officer Richard Alvarez said, the school holds no debt.

But under this budget proposal, Radford could be penalized for its financial stewardship.

Alvarez estimated the proposal could take about $2.3 million in cash from the university's reserve accounts, as well as $1 million in interest in 2010 alone.

"We have that money obligated" for projects such as a $10 million renovation of two dorms, he said.

Alvarez said he understands the unprecedented needs the state is facing. But taking student fees on top of cuts in state support poses significant challenges.

The idea rankles students who have already borne tuition increases and seen a decrease in services.

"The art department is suffering from budget cuts already. We're lacking in faculty. Our education is really suffering for that," Radford art history major Ashley Vito said Wednesday.

"To take our money and put it towards a deficit that the politicians have gotten themselves into is just completely ludicrous," the Alabama native said.

Virginia21 recently asked Gov. Bob McDonnell in a letter to quash the proposal.

Jones, the organization's director, encouraged students and their families to contact their representatives in the General Assembly.

The House and Senate are working on their budget bills this month and are scheduled to vote on a final version by mid-March.