The 2010 General Assembly adjourned March 14, one day later than scheduled, after grappling with the greatest decline in state revenues since World War II that necessitated serious budget reductions in all areas of state government. In the end, the General Assembly was able to protect higher education from reductions beyond those presented in former Gov. Tim Kaine's introduced budget, and also to provide some good news for state employees with respect to furloughs, benefits, and compensation.

The new budget for fiscal years 2010-12 calls for no furloughs for state employees. The one day furlough recommended by Gov. Kaine for the current fiscal year is still in place; however, institutions of higher education will be permitted to find alternative means to achieve the same funding reduction without furloughing employees. In addition, existing employees will not be required to contribute to the Virginia Retirement System or optional retirement programs, but new employees will have to contribute 5 percent of their retirement benefit beginning July 1, 2010.

Also, if state revenues increase by $82 million above the current projection, a 3 percent bonus for state employees in December 2010 will be provided; if the revenue increase is less, the amount of the bonus will be prorated accordingly. Finally, the deferred compensation cash match program is restored for 2009-10, and will be continued in 2010-11 at one-half the current rate ($10 per pay period versus $20), and fully restored for 2011-12.

For university operations, the budget remains as recommended by Gov. Kaine, with a base reduction of $5.2 million in 2011 and $21.8 million in 2012. In 2011, however, the budget contains $20.9 million of stimulus (American Recovery and Reinvestment Act) funds for the University Division. No language concerning restrictions on tuition increases was written into Appropriations Act.

The capital fee paid by out-of-state students was increased from $10 per credit hour to $15 per credit hour. This means that non-resident students carrying an average course load will pay about $150-175 additionally per year for an approximate total of $560 per year over and above traditional tuition and fees. Any additional fees greatly reduce university tuition flexibility with respect to out-of-state students. Capital fees are sent to the state and not retained in the university. The General Assembly dropped the proposal to levy a capital fee on in-state students.

This action appears to be a replacement for the “raid” on Auxiliary Enterprise balances, which was eliminated. However, the state will still collect the interest on auxiliary balances in 2011, an amount of $767,792.

The Cooperative Extension/Agricultural Experiment Station was subject to a degree of controversy when the House Appropriations Committee introduced language that would require the closing of a number of local offices and elimination of certain programs. The university, working with College of Agriculture and Life Sciences Dean Alan Grant and Interim Extension Director Rick Rudd, persuaded the Conference Committee to change the language to leave these decisions to the university based on the results of the strategic planning process currently underway by Extension. This work was greatly assisted by an outpouring of grassroots support for Extension from across the commonwealth. Along with the improved language, the budget imposes an additional $1 million reduction in 2012 above the $4.5 million in the introduced budget. For 2011, the base budget reduction for the CE/AES Division is $1.1 million, which is offset by $4.8 million in stimulus funding.

Maintenance Reserve and the Equipment Trust Fund are important components of the university’s operations. Maintenance Reserve will be continued for 2011 at $5.6 million, a loss of $3.1 million over the prior year. A new formula will be established for 2012. The Equipment Trust Fund, which is funded through debt, will only be continued after an assessment of the state’s debt capacity. If the capacity is found to be adequate, the university will receive $8.3 million each year, as well as $2.3 million each year for research equipment. This represents a significant increase in equipment funding, if and when it becomes available.

In legislative activity, many bills of concern fortunately fell by the wayside in the legislative process. Most notable were a number of bills introduced to restrict the percentage of out-of-state students enrolled. None was adopted, though this issue is sure to be taken up by the blue ribbon commission on higher education that Gov. Bob McDonnell will appoint soon. Also, a bill to allow faculty members to carry concealed weapons on campus was narrowly defeated in a subcommittee of the House Committee on Militia and Police.

Virginia Tech supported the amendment to the state Freedom of Information Act (FOIA) introduced at the request of the University of Virginia. This exception allows information shared with the state mandated threat assessment teams at Virginia colleges and universities to remain confidential and be protected from requests made under FOIA. The bill passed after compromise language was introduced allowing access to assessment team information in the event a crime was committed by someone under assessment (for a crime that causes death, serious bodily injury, or felony sexual assault).

For additional information concerning the actions of the General Assembly, contact Laura Fornash, director of state government relations at Virginia Tech.

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