No Budget Cuts, But Finances Still Concern For WM

By Amber Lester Saturday, October 02, 2010

For the first fall in three years, the College of William and Mary is not facing budget cuts from the state.

The financial outlook was a bit brighter in Friday’s Board of Visitors’ meeting, but the college’s financial advisors said the state of the economy is still uncertain. Vice President for Finance Sam Jones told the board that the state’s general fund revenues were up for the past two months. “Two months is not a trend, but at least we can start focusing on where we’re going rather than how we’re going to maintain,” he said.

Without budget cuts to discuss, the board focused on how the school’s financial situation can improve. Board of Visitors Rector Henry Wolf visited campus for two days last week and told the board he found the university has some morale issues, specifically because its employees have gone four years without raises. Because the state’s general funds total $403.2 million, the state has promised a 3 percent bonus for state employees in the fourth quarter. Despite that boost, Wolf said the board still has to focus on the issue in the coming fiscal year, in order to bolster morale and retain talented staff.

“The financial challenge facing the college is the most significant to be faced,” he said.

As it stands right now, William and Mary is facing a funding shortfall of $4.9 million for fiscal year 2012. The college will lose the padding of stimulus funding, which provided $6.9 million this year, and general funds will be reduced by $4.6 million. Expenses will be reduced, however, because the college had several one-time expenditures in 2011, such as equipment purchases, the 3 percent bonus and matching funds for grants.

Jones presented several options to close the budget gap in 2012. The college could reduce staffing, programs or reprogram revenues. It also could increase undergraduate enrollment and/or tuition. Finally, the college could raise additional private funds. No one option would be enough, he said.

In light of Jones’ presentation, much of Friday’s discussion focused on President Taylor Reveley’s ongoing efforts to convince the state legislature to give the college more authority on how it raises and spends its funds. As state support dwindles (from 2001 to estimates for 2012, state support has been reduced by 33.5 percent), the college has to find other means to support itself.

In July, Reveley addressed the State Council of Higher Education for Virginia about the need for a new financial foundation for higher education. “The system is living on borrowed financial time,” he said in his remarks. He listed seven facts that should be considered in Virginia’s financial planning for colleges: Virginia ranks low in appropriations per in-state student; Virginia is a low tax state with much of its money earmarked for transportation; the great bulk of college funding is coming from private sources; out-of-state tuition is essential; adequate financial aid must be made available; growing reliance on private funding can lessen the need for state support; and higher education needs to find a way to become leaner.

As a state college, it is required to have a majority of in-state students (right now, 65 percent of students are Virginians); to raise money, the college has repeatedly raised tuition for out-of-state students, who pay $21,576 more than their in-state student peers. Reveley would like the college to back away from what he calls “one size fits all” state funding and take less state support, thus allowing the board more flexibility to pursue other funding sources.

If William and Mary were given that latitude, it would likely have to accept more students, which Reveley said would not be easy. He told the board it cannot continue to raise out-of-state tuition; he wants the state to allow William and Mary to raise the cost of in-state tuition, while improving its need-based financial aid. He admitted the scenario was “politically unattractive,” but could free up money for cash-strapped community colleges.

Since addressing SCHEV and putting his ideas in writing, Reveley said he’s heard some nice responses, but has heard his proposal was generally not well-received by state officials. Wolf added that some of the leaders at the University of Virginia agree with his position, but are not willing to back away from state funding.

WM to Purchase Office Units

In a closed session during the board’s financial meeting, the board agreed to purchase office condominium units in the Williamsburg Professional Center on Mount Vernon Avenue adjacent to the School of Education. Purchasing the offices will allow the college to reduce its rental expenses, according to a resolution adopted by the board.