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CASTEEN: UVA WEATHERING ECONOMIC WOES-THE DAILY PROGRESS, FEBRUARY 7, 2008

Posted: Thursday February 7, 2008

Casteen: UVa Weathering Economic Woes

By Brian McNeill / bmcneill@dailyprogress.com | 978-7266
February 7, 2008

Soaring growth of the University of Virginia’s endowment over the past three years may help UVa weather the state’s economic downturn, UVa President John T. Casteen III said Wednesday.
“Our endowment is in several ways a damper against the ups and downs” of the state and national economy, Casteen told a crowd of reporters after delivering his annual State of the University Address.

UVa’s $5.1 billion endowment grew by 25.2 percent in fiscal 2007, following 14.6 percent growth in 2006 and 14.3 percent the previous year.

“That’s about as good as it gets,” Casteen said.

The nonprofit University of Virginia Investment Management Co. is responsible for growing UVa’s endowment, which was ranked in 2006 as the 20th largest out of all universities and the fifth biggest at a public institution.

UVa spends no more than 4.5 percent of the endowment annually. The fund helps supplement faculty salaries, academic programs, college construction and other expenditures.

While UVa’s investments proved fruitful last year, the national economy began to slow. By the final quarter of 2007, the economy was growing by less than 1 percent.

In Virginia, trouble in the housing market has led to declining revenue for state and local governments. As a result, the state is projecting a revenue shortfall that has been estimated at anywhere from $641 million to $1 billion.

UVa was told to permanently slash $9.2 million from its budget to help the state government close the shortfall. Many state agencies this week restricted hiring, spending and travel, but UVa was not affected. Meanwhile, Gov. Timothy M. Kaine proposed delaying pay raises for state government employees, meaning that UVa workers would not get a salary boost until mid-2009.

If the state’s revenue situation grows worse, UVa may opt to offer its employees a pay raise from its own coffers. Colette Sheehy, vice president for management and budget, added that no specific plans are in the works and UVa would prefer that the state cover the costs. “We want to make sure the state addresses salaries first,” she said. “If they don’t, then we’ll see. We might find that the revenue situation is so bad that we can’t do anything either.”

Despite the uncertain revenue picture in Virginia, UVa is unlikely to raise its endowment spending cap to compensate, said Leonard W. Sandridge, UVa’s executive vice president and chief operating officer. “We are concerned about the economy, but we can manage,” he said.

A 2007 year-end report by UVa’s investment management firm anticipated less-stellar returns in 2008. “Transition periods are often painful,” the report said, “and our equity portfolio will not be immune to this interim volatility.”

Apart from UVa’s fiscal news, Casteen reported on numerous aspects of university life over the past year.

AccessUVa, a $53.8 million financial aid program, paid the full tuition of 180 first-year students from low-income families. Many more students from middle-class families also received some form of assistance, Casteen reported.

A program that guarantees successful community college students a spot at UVa after two years saw a significant increase in participants, he said. In the current academic year, 300 students transferred from community colleges, up from 234 students the previous year.

UVa also saw a large jump in complaints about bias incidents, Casteen reported. However, while the number of complaints grew from 64 in 2006 to 180 in 2007, the number of incidents actually dropped. The vast majority of bias complaints were related to the Cavalier Daily’s publication of a comic strip that was deemed offensive by many black students. Additionally, 17 other incidents were related to race and 10 were related to sexual orientation, Casteen said.

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CASTEEN: UVA WEATHERING ECONOMIC WOES-THE DAILY PROGRESS, FEBRUARY 7, 2008

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