1. Governor Gilmore's Remarks

Governor Gilmore stated that this Commission was "assembled in the name of quality" and that higher education is a top priority of his administration. He referred to earlier reports on higher education in Virginia, such as the Chichester Report and indicated that he wanted the Commission to work toward the achievement of three goals: (1) raise the quality of college education (2) make quality and affordability compatible goals in higher education, and (3) empower the boards of visitors to carry out their work more effectively.

Following remarks from Governor Gilmore in which he restated the charge to the Commission, all other agenda items were presentations by the state officials followed by questions to the presenters from the Commission. Information such as the Governor's Executive Order, the press release naming the members of the Commission, and the Governor's speech to his Commission in their full texts are available as background material.


2. Higher Education Fact Sheet

The information presented to the Commission members during this meeting was about financing higher education. Some information from the Administration's perspective was distributed to the Commission as a "Higher Education Fact Sheet" and included the following:

• Expenditures are at an all-time high

College and university spending is up and at an all-time high


• Growing from $928.8 million in `83 to $2.9 billion in '98, a real increase of 88%

Per student spending continues to grow

• Growing from $5,435 in '83 to $14,088 in '98, a real increase of 48%
• Appropriations are up and outpaced inflation

College and university appropriations have dramatically increased



• Growing from $304 million in '74 to $3.2 billion in 2000, a real increase of 203%



Taxpayer support for higher education has grown and has reached an all-time high

• Growing from $168 million in '74 to $1.2 billion in 2000, a real increase of 99%
• Per student appropriations are up and outpaced inflation

There have been real increases in general fund appropriations per student


• Growing from $1,171 in '74 to $5,471 in 2000, a real increase of 34%

General fund support per in-state student has grown 25% over inflation


• Growing from $4719 in '93 to $7,079 in 2000, a real increase of 25%
• Expenditures for most programs are at all-time highs

Expenditures for every higher education program except financial aid peaked in 1998 (real dollars)

• E&G expenditures reached $1.8 billion, a real increase of 57%
• Auxiliary enterprise expenditures reached $505 million, a real increase of 147%
• Sponsored programs expenditures reached $452 million, a real increase of 174%
• Expenditures of financial aid peaked in 1997

Expenditures for financial aid peaked in 1997 and showed a slight decline in 1998

• Financial aid expenditure increased from $6.7 million to $73 million, a real increase of 560%
• In 1997, expenditures for financial aid peaked at $73.4 million, which was $474,901 or 0.65% greater than in 1998
• Expenditures per student showed real increases

Expenditures per student in all programs showed real increases

• E&G expenditures per student increased 36% (real dollars)
• Financial aid expenditures per student increased 133% (real dollars)
• Auxiliary Enterprise Expenditures per student increased 77% (real dollars)
• General fund appropriations exceeded inflation

General fund appropriations for Educational and General and Financial Aid programs have outpaced inflation

• E&G general fund appropriations have reached $1.1 billion, a real increase of 90%
• Financial aid appropriations have reached $67 million, a real increase of 597%
• General fund per student funding showed real growth

General fund appropriations per student for Educational and General and Financial Aid programs showed real increases

• E&G general fund appropriations per student have increased 24% (real dollars)
• Financial aid appropriations per in-state student increased 96% (real dollars)
• Tuition and required fee increases surpassed inflation

Tuition and mandatory E&G fees for in-state students have exceeded inflation by 66%

As a means of keeping higher education affordable to parents and their children, tuition caps were put in place in the 1994-96 biennium

A tuition freeze was put in place in 1996-98 and 1998-2000 biennia; tuition now remains at the 1995-1996 level

• Mandatory non-E&G fees showed significant increases and have far outpaced inflation

Mandatory non-E&G fees exceeded inflation by 214%

The 1998-2000 budget includes language limiting increases in the fee category to the rate of inflation; several exceptions are provided in the language

Source: Commonwealth Accounting and Reporting System
3. Dr. Allen's Presentation - Overview of the Students We Serve


Dr. Allen's presentation included a brief overview of Virginia's system of higher education. He shared the following facts:


• Educational Attainment

Two out of three adults in Virginia have some college experience.
One of three has four or more years of college.



• Enrollments


Headcount enrollment at public colleges and universities has grown 73% since 1974 to 301,467 students in 1997.

Headcount enrollment at private not-for-profit institutions has nearly doubled since 1975 to 49,408 students in 1997.

Headcount enrollment at private for-profit institutions has grown nearly 600% since 1976 to 4,972 students in 1997.


• Out of State Students


Virginia is a net importer of first-time freshmen; 8,395 leave the state while 12,938 students migrate into the Commonwealth.

One-half of out-of-state first-time freshmen come from four states: Maryland (15%), New York (12%), New Jersey (11%), and Pennsylvania (11%).

When our students leave Virginia to go to school, they most often go to schools in North Carolina, Pennsylvania, South Carolina and Tennessee.


4. Dr. William B. Allen's Presentation on the History of Education Finance Policies in Virginia


In this presentation, Dr. Allen reviewed the development of several formal funding policies that served as guides for the General Assembly and the State Council of Higher Education for Virginia and made the following points:

Formal policies on staffing guidelines, library materials, faculty salaries, tuition and fees, and student financial aid dictated much of the state's funding through the 1970s and 1980s.
Since the recession of the early 1990s, however, many of these formal policies have been replaced with more informal policies, recommendations, and actions.

The Department of Planning and Budget first established higher education budget guidelines in 1968. The budget office summarized these guidelines under "Appendix M" thus creating their nickname. In 1974, the General Assembly transferred the responsibility for these guidelines to SCHEV. These guidelines were rarely funded at 100% but continued to be used throughout the 1980s. Appendix M examined staffing guidelines in (a) instruction, (b) academic support, and (c) institutional support. Overall, staffing guidelines were driven by enrollments and served to provide adequate resources.


• Faculty Salaries

In the 1986-88 biennium, the Commonwealth established a funding goal to raise average faculty salaries at Virginia's public institutions to the 60th percentile of selected peer institutions. Funding was provided in the 1998-2000 biennium to meet that funding goal. The only time Virginia reached this goal previously was in 1989.



• Tuition and Fee Policy

The first formal tuition policy was established in 1977. Its purpose was to standardize the amount students were paying for their education. Under this policy, students paid 30 percent of the cost and the state paid the remaining 70 percent. The cost of education varied by institution.

The 70/30 policy was to be phased-in by the end of FY82. Some concerns were raised about the policy with respect to equity and out-of-state students. In 1982 the state decided that in-state community college students would pay 20 percent of cost, in-state undergraduates would pay 25 percent, and in-state graduate students would pay 35 percent. Non-residents would pay 100 percent at community colleges, 60 percent as undergraduates, and 85 percent as graduate students. These percentages continued to increase over the 1984-1992 period.

To address rising tuition, tuition and mandatory E&G fees for in-state students were capped at the rate of inflation (3 percent) during 1994-1996. In 1996-98, a "tuition freeze" on tuition and mandatory E&G fees for resident undergraduates was implemented. The freeze has been continued for 1998-2000 with increases on non-mandatory E&G fees also being held at inflation (with certain exceptions).



• Student Financial Aid

With respect to funding policies for student financial aid, the state uses "unmet need" as the primary criteria in distributing need-based student aid. Unmet need is defined as the difference between the cost of education and the resources available to a student. Currently, the state provides General Fund support to meet approximately 35 percent of unmet need.

In 1972, the General Assembly created the Tuition Assistance Grant (TAG) Program which provides assistance to Virginia residents who attend private institutions of higher education in Virginia. Grants are awarded to all students regardless of need or merit. In 1998-2000 students will receive $2,600 annually.



• Other Funding Issues

Since the 1990-92 biennium, funding for enrollment growth has been on an ad hoc basis.

Additional resources have been routinely provided to institutions to bring new E&G facilities on line. Operation and Maintenance funding is provided on a case by case basis as new facilities are opened.

Capital projects are funded when the State's debt ceilings will allow. Projects are funded based on four criteria: (a) condition of existing facilities, (b) current utilization of space, (c) projected enrollment growth, and (d) programmatic need.



5. President Sullivan's Remarks to the Commission
   
   Mr. Sullivan offered an institutional perspective of Virginia's appropriation process. He said, "Virginia has the best system of public higher education in the nation. What we need - and the people of this Commonwealth deserve - is a battle plan to keep it the best. The good news is that we have . . . three of them." The battle plans to which he referred are three reports: the Chichester Report produced by the Commission on the Future of Higher Education in Virginia, Virginia First 2000 authored by the Virginia Higher Education Council, and the Blueprint for Technology which was released by the Center for Innovative Technology.
   
   President Sullivan identified 12 recommendations for the Commission that he sees as a formula for the future:
   
   
   • Quality - to invest in academic excellence
     
   • Diversity - to preserve the diversity of Virginia's higher education system
     
   • Restructuring - to improve efficiency, reduce duplication, and encourage academic partnerships
     
   • Teaching and Curriculum - to encourage outstanding teaching and retain academic responsibility and accountability for the curriculum
     
   • Performance - to assess performance in relation to the mission of each institution
     
   • Access and Growth - to expand access and fund enrollment growth
     
   • Technology - to invest in 21st century technology
     
   • Decentralization - to increase institutional administrative authority and reduce red tape
     
   • Workforce - to enhance workforce training
     
   • Research and Development - to invest in research and support economic development
     
   • Capital Outlay - to adopt a long-range capital outlay program
     
   • Foundations - to protect institutional fundraising capacity
     
     
6. Mr. Sandridge's Remarks to the Commission
   
   Mr. Sandridge offered comments on the appropriation process from a financial officer's perspective. His primary recommendations to the Commission were:
   
   
   • To enhance institutions' ability to implement long-term plans by implementing more consistent and predictable funding policies and practices.
     
     
   • To provide long-term benefits for higher education by implementing funding policies that place equal importance on core operations and legitimate and appropriate new initiatives.
     
     
7. Other Items
   

The remaining two agenda items were not addressed during this meeting, but were carried over to the next meeting that was to be announced (TBA). At the conclusion of the meeting, Commission members requested a report that would reconcile the seemingly contradictory statistics reported by state and higher education institutional sources.


8. Final Note
   

Each of the presentations included visual materials in the form of an outline and/or charts. Copies of these presentations are available in the office of Steve Janosik (sjanosik@vt.edu) 306 E. Eggleston Hall, Virginia Tech, Blacksburg, Virginia 24061.

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Posted: August 27, 1998
By The Educational Policy Institute of Virginia Tech
sjanosik@vt.edu