The Restructured Higher Education Financial and Administrative Operations Act Update
February 10, 2005
On Tuesday (Feb. 8), both the Virginia State Senate and House of Delegates passed landmark bills that would grant Virginia's public colleges and universities greater control over their financial and administrative affairs. The two chambers must now resolve minor differences between the two bills before sending legislation to Gov. Mark R. Warner, who has generally endorsed the concept.
The legislation would require all public institutions who seek greater administrative autonomy to develop six-year financial, academic, and enrollment plans to clearly define how they would help meet state needs. Depending on institutional needs and interest, a college or university could seek one of three levels of financial and administrative flexibility.
According to Minnis Ridenour, Senior Fellow for Resource Development and Virginia Tech's principal liaison for this initiative, the concepts outlined in the "Restructured Higher Education Financial and Administrative Operations Act" were the result of an agreement by The Council of Presidents (presidents for all the public four year institutions, the Chancellor of the Virginia Community College System and President of the Community Colleges) to broaden the concept of the Charter Initiative to include all colleges and Universities.
"The legislation will not only benefit individual universities, it will also help the commonwealth, ensuring it will have one of the strongest and more flexible higher education systems in the state," said Ridenour. "This is a significant development towards helping Virginia Tech achieve its goal of becoming one of the nation's best universities."
Under the legislation, all state colleges and universities would remain state agencies, and would not become political subdivisions of the state. In exchange for greater autonomy, the legislation of both bills defines 11 conditions that must be met for an institution to be eligible for increased financial and administrative autonomy. Key among these conditions is that each institution would be required to develop six-year financial, academic, and enrollment plans to both demonstrate their commitment to the Commonwealth's needs as well as to ensure adequate state financial support.
Eleven basic requirements
The bills define 11 specific requirements a public college or university must meet before it can be eligible for any level of increased financial and operational authority.
Any college or university that seeks a higher level of administrative autonomy would be required to:
==> Provide access to all citizens of the commonwealth, including underrepresented populations, and ensure the cost to attend remains affordable;
==> Offer a broad range of undergraduate programs. These programs must be of the highest quality and they must meet students' needs as demands and disciplines change;
==> Define steps to ensure high retention and graduation rates;
==> Develop comprehensive articulation agreements with the Virginia Community College System;
==> Contribute to state-wide economic development efforts;
==> Provide assistance in helping improve elementary and secondary school systems;
==> Conduct business operations that maximize efficiency while meeting the Commonwealth's Management Standards;
==> Develop a six-year financial plan that projects all revenues, including tuition and fees.
Each provision must be specifically defined through a formal resolution by the school's board of visitors. The State Council of Higher Education for Virginia (SCHEV), in cooperation with House and Senate committees, representatives from the colleges and universities, and other state officials designated by the governor, will develop a set of measurable indicators by October 2005 to assess whether an institution has met these goals.
"These requirements would guarantee the commonwealth that a college or university was fulfilling its responsibilities as a public institution to its citizens," said Ridenour. "It is important because we must assure the people of Virginia that our fundamental commitment of education, research and outreach will not be diminished in any way."
Levels of Financial and Administrative Operations
According to Ridenour, institutions who meet these basic standards would be eligible to adopt more flexible and autonomous business practices to the degree that they are compatible with the institution's financial resources, current business operations, and overall needs.
Under this legislation, colleges and universities that demonstrate compliance with all 11 provisions will be eligible for additional financial and operational authorities at one of three distinct levels.
Institutions at the first level would have the authority to manage various business practices with greater autonomy. Institutions, for example, could retain revenue interest and carry over funds, be exempt from state regulatory procedures in areas of construction and procurement, and manage campus resources with more flexibility. The ability to exercise these authorities without state regulation will result in more cost savings and financial stability for each institution.
Institutions that are successful at the first level may enter into a memorandum of understanding with the state to seek additional operational authority (the second level) in any one or combination of the following financial or administrative areas: institutional management, capital projects, procurement, or human resources.
The College of William and Mary, The University of Virginia, Virginia Tech and any other institutions that seek third level status would be permitted to enter into a management agreement with the commonwealth to assume responsibility for all four financial and administrative areas, subject to the requirements and conditions of the bill and the agreements with the state.
"The basic framework of this legislation allows each institution to assume a level of responsibility and autonomy that it is capable of achieving," said Ridenour. "This would help all public colleges and university to operate more efficiently at a pace that right for each school. Over time, all our state schools can benefit from greater operational flexibility, and can do so at a time that is right for each of them."
Updates on this legislation will be forthcoming as warranted.