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Sam Jones memorandum to the president regarding state budget

February 9, 2009

TO: W. Taylor Reveley, III
        P. Geoffrey Feiss

FROM:    Samuel E. Jones

SUBJECT:    House and Senate Budget Actions

Yesterday the House Appropriations and Senate Finance committees acted on amendments to the Commonwealth’s 2008-10 operating and capital budgets. While approving a series of budget recommendations, both committees noted that further budget adjustments may be necessary once they receive revised revenue estimates from Governor Kaine and the final details of the federal stimulus package are available.

Key elements of the committees’ respective budget recommendations relating to the College include the following:

•    Faculty and Staff Salaries—No funds are included to support faculty and staff salary increases in this biennium.

•    Restoration of Budget Reductions/Support for Unavoidable Cost Increases—The House recommends $672,527 to partially offset the impact of state budget reductions or to meet unavoidable costs. The Senate recommends restoration of two thirds of the Eminent Scholars reduction. The College’s share of this restoration is estimated to be $847,955.

•    Student Financial Aid—The House redirects $26 million in incremental student aid recommended by Governor Kaine in order to partially offset the impact of reduced state support on the College. This action has no impact on the College’s student aid allocation since we received no incremental funds from the Governor. The Senate adds an additional $4 million in student aid to the funds recommended by the Governor. The College’s share totals $164,003.

•    Tuition Policy—There do not appear to be any restrictions placed on tuition action that may be taken by the Board of Visitors. There is an expectation that restoration of some of the state funding reduction will somewhat mitigate the amount of any tuition increase.

•    Percentage of In-State/Out-of-State Undergraduates—The House includes language that 1) limits the percentage of out-of-state undergraduates in the overall undergraduate population to the previous year’s percentage, 2) requires that at least 70% of any increase in the number of freshmen from the previous fall be in-state, and 3) reserves at least 80% of the new transfer student slots for in-state students. The Senate has no such language.

•    Capital Projects—The House recommends $1,042,000 in general funds and $3,208,230 in nongeneral funds to support planning for the Integrated Science Center III project. Language is included allowing the College to be reimbursed for any nongeneral funds it may commit to the planning process. The Senate provides no general funds for this project.

•    Capital Fee for Out-of-State Students—The Senate recommends that the $2 per credit hour capital fee charged to out-of-state students increase to $6 per credit hour.  This fee is intended to recognize the benefit that out-of-state students receive from new or renovated academic facilities supported through state-issued debt. Revenue generated from this fee is used to offset a portion of the debt service incurred by the Commonwealth for these projects.

Additional detail regarding the House and Senate budget recommendations will be available by the end of the day Tuesday.

From this point, the respective budget recommendations must now be approved by the House of Delegates and Senate, respectively. After approval the budget will go to conference committee for reconciliation. Conference deliberations will be made more difficult if the Governor’s revised revenue estimates show that additional budget cuts are necessary to maintain a balanced budget. It is not yet clear how funds available through the federal stimulus package might be used to mitigate the impact of state budget reductions.

I will keep you informed as we learn more. Please contact me if you have any questions regarding this initial summary.