UVa Invests $75 Million in Fund to Recruit Profs


The University of Virginia is tapping its Strategic Investment Fund to create the Bicentennial Professors Fund, a $75 million plan to support about 70 endowed professorships, reports the Daily Progress.

The College of Arts & Sciences at UVa currently has 52 endowed professorships. Endowed chairs are used primarily to supplement professors’ salaries, recruit graduate students, and underwrite laboratory space. Such dedicated funding is a critical tool for recruiting star faculty and building institutional prestige at a time when UVa is competing for academic talent and elevate its standing as one of the top universities in the country.

“Endowed professorships have been a challenge to secure in numbers sufficient to reward our existing faculty and to help recruit the best new faculty,” Ian Baucom, dean of the Graduate School of Arts & Sciences, told the Daily Progress in an email.

“In my own career and in my role as dean, I’ve experienced first-hand how endowed professorships were the difference in our ability to retain or attract talented faculty members,” Baucom said. “The Bicentennial Professors Fund will help us build on our historic strengths and fuel our emerging, field-transforming research by ensuring we are highly competitive in the marketplace.”

Under the plan, the university will match half of every dollar in gifts of $1 million or more. For gifts of $3 million or more, the newspaper says, the Bicentennial Professors Fund will provide a “super match” of $2 for every $3 pledged. Thus, a $3 million gift would be matched with $2 million.

The Strategic Investment Fund was cobbled together from various reserves and special funds and handed over to the University of Virginia Investment Management Company (UVIMCO), where it can generate a higher investment return. Since February 2016, the fund has invested more than $307 million in strategic priorities such as $20 million for autism research, a research seed fund, addiction aid, infrastructure for behavioral research efforts, and an interdisciplinary research center to study cosmic origins.

Bacon’s bottom line: If the goal of the UVa administration and Board of Visitors is to attract star faculty and elevate the prestige of the university — and it is — then this is a necessary investment. The recruitment and retention of big-name faculty members is only getting more intense as other institutions throw more and more money into the academic arms race.

Let’s assume the university generates 6% to 7% annually on the $75 million in the Bicentennial Professors Fund and retains, say 3% to allow the fund to continue to grow and keep pace with inflation while withdrawing 3% to 4% to spend. That would create resources of $2 million to $3 million a year, or about $30,000 to $40,000 per endowed professorship. That should be a big help in recruiting and retaining the big names.

However, if UVa’s goal is to make the institution more affordable and accessible — a goal that is given lip service — then this is an opportunity lost. The money could have been used to build an endowment for financial aid. Or it could have been invested in re-engineering business processes to lower the university’s cost structure. For purposes of illustration, one could envision investing $75 million in HVAC systems, lighting systems, and rooftop solar and saving, to pick a reasonable number, $7.5 million a year in annual operating costs, which in turn could be used to moderate tuition increases.

Ironically, it is possible that recruiting more star faculty will have the effect of driving up costs. While UVa’s academic titans are funded in part by general tuition, they tend to teach few courses than the typical instructor and contribute little to the educational experience of the undergraduates paying the tuition.

Instead of competing with Ivy League institutions, why can’t UVa settle for becoming the best public university and providing the best undergraduate experience in the country? Those seem worthy goals, and reaching them would be an impressive achievement.

UVa responds: UVa spokesman Anthony de Bruyn responded to this post as follows:

In December of last year, the Board of Visitors established a permanent endowment of up to $300 million to support student scholarships through a combination of philanthropic support and the Strategic Investment Fund. Earnings from the Bicentennial Scholars Fund provide need- and merit-based scholarships for University undergraduate students, and also will relieve pressure on long-term tuition increases by funding need-based aid from this fund rather that from tuition revenue.

The University is also doing its part to identify cost savings across Grounds.  The University’s Organizational Excellence program has identified $60.2 million in savings since the launch of the program in 2014.  You can learn more about the program and associated initiatives here.

Bacon’s response to UVa’s response: Yes, UVa has upped its commitment to financial aid, which does make the cost of attendance more affordable than it would be otherwise for the recipients. But that doesn’t do much for the middle-class and affluent families who still pay the full freight. De Bruyn said that funding from the Strategic Investment Fund helps alleviate the pressure to raise tuition in future years. Well, we’ll see about that. I’ll believe it when I see the Board of Visitors enact a tuition increase that’s less than the inflation rate.

As for the Organizational Excellence program, it is much to be commended. Kudos on the $60 million in savings. However, I would like to see an analysis of those programs. I would ask if any of them required substantial up-front capital investments. Could the university save even more by making large capital investments in efficiency? I don’t know the answer. But those are the kinds of questions we need to be asking.

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8 responses to “UVa Invests $75 Million in Fund to Recruit Profs

  1. Re: “Instead of competing with Ivy League institutions, why can’t UVa settle for becoming the best public university and providing the best undergraduate experience in the country?” — why is this a choice? Aren’t their goals the same? If endowing more professorships is good, isn’t it good both for public universities and for the Ivy League?

    I guess I’m trying to ask, what different missions between these types of higher education do you have in mind?

  2. Exactly Acbar. It’s not as if Berkeley, UNC, Michigan, and UCLA aren’t trying to attract the same faculty members…

  3. UVA is in competition with their peers in many areas including the cost of tuition.

    The affordable tuition issue is widespread across Higher Ed both in Va and Nationally and long-standing.. decades…

    but that issue combined with the fact the state does providing funding – apparently allows critics to deep dive into all nooks and crannies of UVA to determine if they are making good choices and decisions.. with the idea that if they did them right- their tuition costs would be less.

    I don’t defend the escalating costs but again – it’s not a problem unique to UVA such that it follows that critics are then justified in going over their operations to see where the problem that is causing higher tuitions is…

    I still think we have the wrong model for funding. We need to go to a voucher system where the student gets the money and decides what’s the best value for the money they do have – which should never be 100% and always require them to put some of their own money or sweat equity to qualify for the voucher.

    Once you do that – you let the Universities compete for customers and you let the Universities decide where to cut costs and where to invest…

    the basic idea that every Tom, Dick and Harry layperson that comes along is justified in deciding how Universities should operate because they do get public monies is a silly concept but a popular one… these days…

    sorta like those that say since they pay gas taxes.. they have the right to tell VDOT or METRO or pick your favorite govt agency… what they’re doing wrong!!!

  4. I think most of that SIF money came from surpluses in the health division, so using it outside of reducing the cost of healthcare provided through the “non-profit” side or improving quality of care causes me consternation. . .

  5. How much good would it do for UVA to lower costs for healthcare if most folks are having their bills paid for by reimbursement from employer-provided insurance and MediCare?

    Seems like if they can actually make a profit from reimbursement.. they’ve done a “good” thing.. and then how would they actually use that largess otherwise .. I just can’t imagine them reducing their costs to less than the amount of reimbursement! It would make zero difference to the patients except those actually paying out of their own pocket. Right?

    Would you rather UVA Medical be separate and standalone and pay high dollar salaries to upper management?

    No hospital that I know of prices their stuff lower than the reimbursement. Most, in fact, claim that reimbursement is not enough.. and they end up having to either take a financial hit or charge others who do have insurance.. more.

    I understand the frustration .. I just don’t think most really understand how things really work – enough to actually effect meaningful changes.

    And that’s why I also think lay people trying to “audit’ UVA are on a fools errand…

    It’s sorta like trying to figure out how Dominion or Walmart does business such that folks can make “suggestions” on how Walmart can lower their prices.

    You kind of have to be part of that enterprise to really know the terrain and to be able to make actual intelligent observations.

    Walmart would laugh in your face if you as a customer wanted to “help” them be more efficient.

    UVA would have a similar attitude, truth be told…

    They do have a BOV to do that.. and that BOV is largely depending on staff for giving them the info needed to make informed decisions.

    I watch our own BOS-appointed Citizen Budget Review Committee attempt to look into the Schools finances… and it’s a problematical thing with the Citizens Committee more often than not , complaining that they cannot get the info they need to properly “review”.

    I don’t know what the answer is.. I know the frustration and motivation… but the current approach is just a fail… from the get go.

  6. You know that since they’ll be looking for research and not teaching docs, that says a lot about yanking their public money and letting them go it on their own. We could float out Hampton Roads, VCU, and western part of the state places that have a harder time than UVA/TECH and the NoVA places (GMU comes to mind).

  7. Larry, UVA hospital has non-profit, tax-exempt status. Overall, this is about a $30B or so tax advantage to these hospitals across the U.S. This is a huge benefit, but also comes (or should come) with obligations. The guidance used to be clear that, to qualify for tax-exempt status, a hospital had to provide, “to the extent of its financial ability, free or reduced-cost care to patients unable to pay for it.” It is less clear now, although it has gotten more attention recently from the IRS and the ACA.

    Anyway, I am pretty sure the big hide in the SIF stuff was that the surpluses largely came from the health division. UVA obviously didn’t want to say that they are using tax-advantaged status as a hospital to set up well-paid professorships.

  8. I am confused by Jim’s post. And I even more confused by UVA spokesman Anthony de Bruyn later clarifications.

    To the best it is intelligible, I read UVA’s orginal Dec. 8 announcement on this subject to say in pertinent part and I quote:

    “The University of Virginia Board of Visitors on Friday approved a $75 million, multi-year proposal that will position the University to attract and retain top faculty as UVA prepares to enter its third century of providing one of the best educational experiences in the nation.

    The Bicentennial Professors Fund, one of seven new projects approved for support from the board’s Strategic Investment Fund, will enable the creation of an estimated 70 endowed professorships.”

    AND THAT:

    “Together with our new creative faculty recruitment strategies, and the expansion of responsive faculty development programming, the Bicentennial Professors Fund will invigorate faculty hiring at the University. This financial support is the kind of transformative infusion we need to succeed in the competitive higher-ed marketplace.”

    AND THAT EARLIER AND AS A DIFFERENT MATTER:

    “In December 2016, the Board of Visitors approved the creation of a permanent endowment to support student scholarships that could reach $300 million through a combination of philanthropic support and Strategic Investment Fund disbursements. Earnings from the Bicentennial Scholars Fund provide need- and merit-based scholarships for University undergraduate students, while also relieving pressure on long-term tuition increases by funding need-based aid from this fund instead of from tuition revenue.

    Friday’s approval of the Bicentennial Professors Fund mirrors the scholarship investments with the creation of a second signature fundraising campaign that leverages University resources to generate new support for one of the priorities of the University’s Cornerstone Plan.”

    AND THAT AS A MATTER OF ALLEGED HISTORY:

    “The Strategic Investment Fund was established to provide transformational investments in the quality of a UVA education, of its research and of its health care services, without relying on tuition or tax dollars. In all, the Board of Visitors approved seven projects Friday and provided them with a total of $93.3 million from the fund. Since its establishment in February 2016, the fund has invested more than $307 million on 29 projects.”

    AND THAT ON FRIDAY DEC. 8, 2017

    “Other investments approved (this) Friday (include):

    1/ Supporting Transformative Autism Research, $6.2 million over three years: Aims to position UVA as a global leader in autism research, while improving the lives of individuals and families affected by autism across the commonwealth.

    2/ 3 Cavaliers Research Seed Fund, $3.3 million over two years: This implements a model in which multidisciplinary teams partner to explore creative research ideas that might not be ready for more traditional external funding.

    3/ Reducing the Burden of Addictions in Virginia, $3.5 million over four years: Will create new technologies and interventions aimed at reducing the burden of addiction – including “eHealth” (internet-based) and “mHealth” (mobile phone-based) treatment modalities.

    4/ Behavioral Research Infrastructure, $2.2 million over three years: Will provide infrastructure and core facilities in an effort to delve deeper into the burgeoning field of behavioral economics.

    5/ Virginia Initiative on Cosmic Origins, $1 million over three years: Will help establish an interdisciplinary research center that will explore the origins of life in the universe and better position the University for NASA and National Science Foundation funding.

    6/ Smart Infrastructure, $2 million over three years: Will better link facilities and laboratories for research, operations, translation and impact.

    ANOTHER WORDS, Based on UVA’s Announcement:

    I read UVA’s December 8 announcement to say that on Dec. 8, UVA approved SEVEN new programs. These seven included the six listed immediately above, PLUS the new $75 million Dollar Bicentennial Professors Fund that will “enable” an estimated 70 endowed professorships.

    SO THAT AS OF DEC. 8:

    The Board of Visitors had approved seven projects Friday and provided them with a total of $93.3 million from the Strategic Investment Fund IN ADDITION TO another $307 million the Board had earlier transferred from the fund to invest in another 29 projects since the Fund’s establishment in February 2016. I come to this last conclusion based on UVA’s Dec. 8 statement that “Since its establishment in February 2016, the fund has invested more than $307 million on 29 projects.”

    HOWEVER, one might also conclude that UVA meant to say that this $307 Million on 29 projects included the new $93 Million on the new 7 projects.

    AND THAT INDEED UVA might also have meant to say that the $307 million included a portion of what its December 8, 2017 announcement described as: “In December 2016, the Board of Visitors approved the creation of a permanent endowment to support student scholarships that could reach $300 million through a combination of philanthropic support and Strategic Investment Fund disbursements.”

    AND, OF COURSE, THIS IS EVEN MORE CONFUSED BY the Dec. 8 UVa statement that “Friday’s approval of the Bicentennial Professors Fund mirrors the scholarship investments with the creation of a second signature fundraising campaign that leverages University resources to generate new support for one of the priorities of the University’s Cornerstone Plan.”

    HENCE, it appears to me that much of this funding, its amount, when it is funded, and where it goes and, for what purpose it goes, is totally up in the air.

    And also that at the least a very substantial portion of it is quite speculative. Why might this be? Well, for one thing, it appears likely the great bulk of these monies, including professors’ salaries, will go into speculative research projects. And its quite likely that no knows whether these research projects will fail or succeed or even get off the ground, or even if they are feasible. Nor can they know how much many of these research projects will cost. Or how they will be put together. Or how they will be funded. And that the costs professorships are only one part of the costs, and indeed in many cases might be a minor and variable part of the costs of each project that includes expensive infrastructure, support mechanisms, non-tenured hired help, outside raised funds, seed monies put at risk, and the like.

    In addition, even if declared a “success”, these university research projects typically lose money (drain internal funds) for as long as they are up and running. That is how most university research operations work and perform under the best of circumstances.

    So how many of these endowed chaired professors will devote most of their time to these sorts of projects that have little to do with teaching students, and often much to do with taxpayer money or draining university resources away from its real job, educating students, particularly undergraduates.

    Indeed it is quite likely that much of these money approved on Dec. 8 are in fact going to be invested into feasibility studies to determine what to do with the future funding of UVA monies – what to invest these monies in, who to hire and what to pay them, an what the market allows, and what the risk profiles allow, and how to make this whole speculative operation work.

    Likely that is why so much vague language is involved here.

    For example, note the vague language used in four of the six new initiatives approved for “funding” on Dec. 8 – AND HERE I QUOTE:

    : 2/ 3 Cavaliers Research Seed Fund, $3.3 million over two years: This implements a model in which multidisciplinary teams partner to explore creative research ideas that might not be ready for more traditional external funding.

    3/ Reducing the Burden of Addictions in Virginia, $3.5 million over four years: Will create new technologies and interventions aimed at reducing the burden of addiction – including “eHealth” (internet-based) and “mHealth” (mobile phone-based) treatment modalities.

    4/ Behavioral Research Infrastructure, $2.2 million over three years: Will provide infrastructure and core facilities in an effort to delve deeper into the burgeoning field of behavioral economics.

    5/ Virginia Initiative on Cosmic Origins, $1 million over three years: Will help establish an interdisciplinary research center that will explore the origins of life in the universe and better position the University for NASA and National Science Foundation funding.

    6/ Smart Infrastructure, $2 million over three years: Will better link facilities and laboratories for research, operations, translation and impact.”

    This of course matches other vague descriptions as to who these endowed chair professors are to be: “the board’s Strategic Investment Fund, will enable the creation of an estimated 70 endowed professorships.”

    In short, these monies of UVA, to a very significant degree, likely, are being invested in what can fairly be called speculative business like ventures that are dependent on markets and grants and endowments, and on highly speculative research that has yet to be determined, and to be done by groups of researchers yet to be hired, and by infrastructures that are yet to be chosen much less built, and whose feasibility, much less its chances of getting organized, up and running, or successful, are all quite up in the air. Or are at best very vague.

    Much else about all of this is unknown as well, and needs straight answers.

    For example Izzo’s comments on the questionable origin of the Strategic Investment Fund, this issue is as valid as ever.

    And why are these massive amounts of monies going into speculative ventures, instead of teaching students at UVA? Why not invest all this money in the teaching and education of UVa’s students?

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