The Board of Visitors of the University of Virginia has jacked up in-state tuition and fees at Mr. Jefferson’s University by 8.3 percent, or $655 per year. (See the Times-Dispatch article.)
The usual justification for the relentless increases in tuitions year after year is the declining share of funding provided by the state. If you want to remain a world-class university, you gotta make up the difference somehow!
Well, let’s take a look at the cheap-skate funding provided by those misers in the General Assembly. UVa did take some big whacks earlier in the decade. State support, which had peaked at $166.3 million in fiscal 2002, fell to $117.2 million by 2004. Since then, however, state support has rebounded substantially:
FY 2004 – $117.2 million
FY 2005 – $126.0 million
FY 2006 – $137.2 million
FY 2007 – $156.1 million
FY 2008 – $158.6 million
So, state support next year will have returned nearly to the glory days of the early decade. Not quite, but close. As the state has restored its funding, has UVa moderated its tuition increases in any way? Let’s see:
FY 2004 – 10.7 percent, or $636 per student
FY 2005 – 7.9 percent, or $580 per student
FY 2006 – 8.6 percent, or $665 per student
FY 2007 – 8.3 percent, or $655 per student
Answer: No, tuition increases continue unabated. And that’s despite the fact that the University’s endowment, according to Wikipedia, stood at $3.5 billion in 2006, making it the largest endowment of any public university in the United States. What’s more, the University is currently engaged in a $3 billion fund-raising campaign, which is going very successfully, if the recent $100 million donation by Frank Batten, the Norfolk media tycoon, is any indication.
In the late 1990s and early 2000s, the endowment was a star financial performer. According to a UVa Online article:
…decisions made by the board in 1974 to invest 75 percent of the fund in equities has paid off handsomely. In looking at the cumulative endowment performance, $1 million invested in 1974 is worth $38.1 million this year. Income from the endowment distribution per share went from $10 per share in 1974 to about $115 per share in 2003, far more than the $45 per share if the University had stuck with the investment in bonds.
While consistently racking up double-digit returns on its investments — UVa’s endowment even gained 2 percent in the year of the dot.com crash — how much has been allocated to operations? According to a FY 2002 document, endowment income provided only 3.5 percent of the university’s annual revenues. Knowing that UVa’s budget was $708 million and the endowment was $2 billion that year, we can extrapolate that the endowment kicked in roughly $25 million — about 1.25 percent of the endowment and a tiny fraction of the income it generated.
This data is several years old, so it is conceivable that yields on endowment investments have fallen and/or that UVa now diverts a higher percentage of its endowment to supporting university operations. It’s also possible that in my quick Googling I have compared apples and oranges. So these figures, which need to be confirmed by university authorities, should be regarded only as a rough cut.
But if the numbers are close to accurate, it appears that the top priority of the Board of Trustees is building a giganzo endowment: reinvesting the vast bulk of its earnings rather than earmarking it for actual expenditures. That’s great for boosting UVa’s position in the U.S. News & World-Report ratings of top universities, but it’s pretty hard on students and parents paying those massive tuition increases.
I am open to changing my appraisal in light of additional information, but I get the very strong impression that the priority of the University’s administration and board of trustees is empire building: creating a bigger, more beautiful, most prestigious institution — catching up with the Ivy League. The priority is not providing an affordable education. State budget cuts make a convenient whipping boy, but the reality is that the University would rather pay for operating expenses by sticking it to students than tapping its massively expanding endowment.
Is this what Thomas Jefferson had in mind for his university? I’m not so sure.
(Photo credit of the proposed South Lawn Project: Campaign for the University of Virginia.)
Update: The Associated Press reports: “Annual tuition increases of 10 percent and a greater reliance on private gifts are in Virginia Tech’s future, President Charles Steger told the faculty senate.”