VCU board looks at austere budget

economic-forecast-headerThe Virginia Commonwealth University Board of Visitors confronts an austere budget climate that could mean changes in how tuition is priced when it considers the 2013-2014 VCU spending plan for approval in May.

The board was presented a challenging financial picture at a retreat Sunday that included an in-depth review of the university’s budget framework, issues and potential ideas and solutions that have been researched for the last year.

VCU President Michael Rao said VCU faces funding circumstances that are unique in the Commonwealth. VCU is one of four Tier III institutions in Virginia, along with the University of Virginia, Virginia Tech and the College of William & Mary. But unlike its peers, VCU serves the largest in-state student population at the lowest tuition rate among both the Tier III and several other state universities.

Even with an increase in state funding approved by the governor and General Assembly for the upcoming academic year, state support remains almost $52 million below 2008 levels.

“That leaves fewer dollars per student to invest in a learning experience that must be world class,” Rao said. “As a public university, we work diligently to keep in-state tuition for undergraduate students low. We also must work as diligently to generate revenues necessary to help ensure student success.”

Rao said budget priorities are faculty recruitment and retention, student scholarships, financial aid and support services and academic facilities.

The board was presented potential operational changes meant to augment ongoing cost-cutting and reallocation of funds to core academic needs, such as shared service centers, creating a financially self-sustaining parking operation, unifying all utility and maintenance activities across the university and outsourcing all housekeeping operations.

Administration officials told the board that without a minimum 4 percent tuition increase and some new, market-based tuition strategies, there will be little that VCU can do to move forward with faculty and student priorities beyond meeting unavoidable costs, such as utility cost escalation and state salary and healthcare premium cost increases.

“New, market-based tuition pricing may generate revenues to move into fiscal year 2014-2015, but it must be paired with expense reallocation and new ways of thinking about current operational programs that cut costs,” said David W. Hanson, chief operating officer and senior vice president.

Hanson presented several market-based tuition pricing strategies for board consideration that included a per-credit pricing structure based on an annual 4 percent tuition and fee increase over four years and 15 credits per semester — which would generate additional revenue for VCU but allow students to get to graduation faster, thus reducing the overall cost for their degree.

Another option among several considered was per-credit pricing with the first 12 credits at regular cost and additional credits discounted to create an incentive for students to take 15 credit hours and proceed to graduation faster.

The board is considering many options, but took no action at the retreat.

Hanson said the administration also considered tuition differentials that charge a higher tuition for juniors and seniors, but student feedback strongly suggested that could have a negative effect on graduation rates.

Hanson said the administration will develop a final tuition and fees recommendation and an overall budget based on feedback from board members and will present it for consideration at the May 10 Board of Visitors meeting.

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