WM Reacts to McDonnell's Higher Ed Budget Proposals

By Amber Lester Kennedy Saturday, December 24, 2011

State support of higher eduction has been decreasing for years, but Gov. Bob McDonnell hopes to reverse that trend with his proposal to invest $100 million annually in colleges and universities, with much of the money going to support his Higher Education Opportunity Act.

The College of William and Mary Director of Finance Sam Jones analyzed how the money will be allocated, if approved by the General Assembly, in a memo to President Taylor Reveley on Dec. 21.

The Higher Education Opportunity Act established objectives for higher education, including a requirement for each institution to develop a six-year plan documenting how it would meet those objectives. The act placed specific importance on supporting the STEM (science, technology, engineering and mathematics) disciplines, making education more affordable and accessible, and increasing the number of Virginians with degrees.

In his memo, Jones highlighted McDonnell’s recommendations and their specific impacts on the college.

Some money that was expected may not come to the college. The governor proposes to eliminate a $10 million higher education base budget reversion that was included in the current fiscal year’s budget. The reversion, which is a temporary freeze rather than a full budget cut, had not yet been allocated among the state’s colleges and universities. The college would have received about $400,000 that would have been carried forward into the 2013-14 biennium.

There will also be no state funding provided for base salary increases in McDonnell’s budget. He did, however, propose a 3 percent bonus in the next fiscal year if institutions are able to produce enough savings in the current year. To achieve that, William and Mary would have to find $2 million in unspent discretionary funds over the next six months to provide a 3 percent bonus. What happens to the savings isn’t clear, Jones noted.

“A basic question is then what happens to the $1 million in savings generated above the amount required to support the proposed bonus,” he said. “It is not clear if the college would retain the full $2 million or just the portion necessary to support the bonus.”

The college would also have to raise its non-general fund match to support the bonus, which would equate to roughly $2 million, or a 2 percent increase in tuition if the board went that route.

William and Mary’s six-year plan included a 5 percent base salary increase for faculty and a 4 percent base salary increase for staff in both FY 2013 and 2014.

The college will also be affected by McDonnell’s push to increase employer contributions to the Virginia Retirement System. The college will be expected to raise its share, $800,000, of this increase.

The college would stand to benefit from a $1.5 million increase in operating support, including $529,371 for base operating support, $625,911 in degree incentive funding, $250,000 to expand student research and $52,560 in student financial aid. The degree incentive funding would be used to support the Higher Education Opportunity Act’s objectives, as laid out in the six-year plan.

McDonnell’s budget requires the reallocation of approximately $1.4 million next year, increasing to $2.4 million the following year, to support the act’s objectives. That’s an increase from the reallocations assumed in the six-year plan, which anticipated reallocations of $617,000 in FY 2013, increasing to $1.8 million in 2014. The Secretary of Education must approve uses for the funds, and the plan would have to be updated.

To finance capital projects, the governor recommends the college receive $2.9 million in FY 2013 and $6.3 million in FY 2014 for maintenance reserve funding. The money would pay for small-scale work to maintain academic buildings. The second-year allocation would also pay for accessibility and stormwater infrastructure improvements. Some pre-planning funding is also included for a renovation of Tyler Hall and the fourth phase of the college’s ongoing utilities project.

Finally, the proposed budget would restore some of the cuts to the Virginia Institute of Marine Science (VIMS). The governor recommends VIMS receive $525,000 to support the hiring of four faculty members; $250,000 for preplanning of a marine research facility; and $193,000 per year in maintenance reserve funding. He also recommends a special $8 million capital equipment allocation to purchase a new vessel for monitoring and research to replace the Bay Eagle.

Jones noted the budget recommendations are just the first step of the development cycle. Next, the House of Delegates and Senate will consider his recommendations, create their own budgets and work together to form a joint budget. A final budget will likely be approved by the end of February 2012, he said.