University of Virginia President Teresa A. Sullivan, right, applauds as journalist and author Katie Couric returns to her seat after speaking at the University of Virginia commencement exercises May 20 in Charlottesville. (Sabrina Schaeffer/AP)

The University of Virginia’s first female president, Teresa Sullivan, will step down this summer after just two years on the job because of an apparently abrupt rift between her and the school’s governing board over the direction of one of the nation’s premier public universities.

The announcement Sunday shocked the university community and signaled potential hard times ahead for the flagship university, an institution founded by Thomas Jefferson and unaccustomed to instability. The previous president, John T. Casteen, stayed for 20 years. When she exits on Aug. 15, Sullivan will have served two years and two weeks, the shortest presidential tenure in the school’s history.

Sullivan attributed her departure to “a philosophical difference of opinion” between herself and U-Va.’s governing board of visitors. It was unclear when the rift began, but its existence surprised the Charlottesville community.

The disagreement may be rooted in money. Helen Dragas, who chairs the board, portrayed an institution facing “an existential threat” from the combined effects of an economic downturn, state disinvestment and looming faculty departures. She faulted Sullivan’s administration for a culture of “incremental, marginal change” and said the institution needs a leader more adaptable to “the realities of the external environment.”

The U-Va. board “feels strongly and overwhelmingly that we need bold and proactive leadership on tackling the difficult issues that we face,” Dragas said, including “hard decisions” on spending. The board presumably concluded Sullivan was not that leader.

Sullivan is widely popular among university faculty and students. Some pressed Sunday for more details than the governing board was willing to provide.

“If there’s a reason to do it, it should be a very serious and substantive reason,” said George Cohen, a law professor who chairs the Faculty Senate. “We have a whole new administrative team. You would have thought that they’d want to give the team, now that it’s together, more of a chance to work together.”

Cohen said Sullivan’s departure came as a “complete surprise.” So did Ann Marie McKenzie, a recent U-Va. graduate and former chairman of the prestigious student-run Honor Committee, which upholds the school’s strict honor code.

“I thought she was an effective leader and had a vision for the university,” McKenzie said. “But apparently the Board of Visitors didn’t like that vision.”

Sullivan could not be reached for comment Sunday, but she released a statement vaguely describing differences with the board.

“Although the board and I have a philosophical difference of opinion, I will always treasure having had the opportunity to work with so many gifted faculty and staff, talented students and loyal alumni,” she said.

Sullivan arrived at U-Va. in the summer of 2010 with one of the most illustrious résumés in public higher education. She spent four years as provost at the University of Michigan, an elite state flagship in the same academic tier as Virginia. She had worked previously as executive vice chancellor of the University of Texas system.

At U-Va., she received an annual compensation of $680,000.

Sullivan was only the eighth president of U-Va., and she had a tough act to follow. Casteen led U-Va. through an era of dwindling state support. He directed two of the largest fundraising campaigns at any public university and increased the endowment tenfold.

Students found Sullivan accessible and down to earth. Her staff called her “Terry.”

Johnny Vroom, 21, U-Va.’s student body president, said he learned of her impending departure as all students did — via a mass e-mail Sunday morning.

He criticized the board for making decisions “behind closed doors” and not fully explaining what happened. “We all had a very positive outlook on President Sullivan,” Vroom said. “That’s why it was such a shock.”

Sullivan is a sociologist by training, with a doctorate from the University of Chicago and an undergraduate degree from Michigan State University. She has written several books.

She has kept up with her scholarly research, which won her respect with U-Va. faculty. In January, Sullivan taught a two-week sociology class in her conference room, blocking out time in her schedule for office hours and providing students her direct e-mail address.

But Sullivan was viewed as an outsider by many in tradition-
obsessed Charlottesville, and she had no previous experience at the university. Casteen, in contrast, has three U-Va. degrees.

Sullivan wasn’t afraid to confront controversy. The day after Graham Spanier was ousted as Pennsylania State University’s president because of the handling of allegations of child sex abuse by a former assistant football coach, Sullivan spoke at a U-Va. board meeting. An outspoken advocate of transparency, she said universities need to foster a culture in which it is okay to question authority and to flag wrongdoing.

“I also must be willing to accept feedback, positive or negative, if I am to lead effectively, and I must set a tone that says bad news can rise to the top of this organization without any messenger being shot for bearing it,” Sullivan said.

By all accounts, no one expected Sullivan to depart after two years. The premature exit of a president is a major blow to any prestigious public or private university, putting a damper on everything from fundraising to faculty recruitment to Washington lobbying.

“It’s a setback. It certainly isn’t impossible to overcome,” said Peter McPherson, president of the Association of Public and Land-grant Universities. “This is still the University of Virginia.”

Dragas told university leaders Sunday morning that Sullivan and the board had agreed on the president’s departure Saturday.

“We intend to name an interim president expeditiously, and to install him or her before the students arrive back on Grounds,” Dragas said, according to a transcript of her statement.

Perhaps anticipating raised eyebrows, the board chair told the audience of vice presidents and deans, “We know this news is a great shock to the institution.”

Dragas credited Sullivan with engaging across “all parts of the university community” and with raising the university’s profile in Washington and abroad. But faculty and staff pay has “continued to decline” under Sullivan’s leadership, Dragas said, and eminent faculty are retiring.

The remarks gave few other direct indications of what the board felt was lacking during Sullivan’s tenure. Dragas spoke of the need for the university to press forward with online education, a new and potentially transformative technology that is stigmatized by many top universities. She hinted at disappointment with Sullivan’s fundraising, a key metric for any college leader. And she alluded to new pressures on the university’s 577-bed hospital.

“[T]he board feels the need for a bold leader who can help develop, articulate, and implement a concrete and achievable strategic plan to re-elevate the University to its highest potential,” she said, suggesting that some of that stature has been lost.

Sullivan might have drawn internal criticism for fundraising. At the end of last year, the university fell $400 million short of a $3 billion fundraising target set in 2004. Annual giving is down from $233 million in fiscal year 2009 to $216 million in fiscal 2011.

But the university’s rank and stature have held fairly steady. The school is ranked 25th among national universities on the most recent U.S. News & World Report list, tied for second among public institutions.

This year’s student applicant pool of 28,274 reflected a 50 percent increase in five years. The admitted class had an average SAT score of 1,396 in reading and math, and 96 percent of the new students came from the top 10 percent of their graduating classes. Both numbers were up.

Virginia Gov. Robert F. McDonnell (R), who was apprised of Sullivan’s departure shortly before it was announced to the public, thanked her in a statement for fulfilling her duties “with honor, energy and good stewardship’’ and said she was a good partner with his administration in its efforts to increase college access and affordability.

“Through her leadership, Virginia added nearly 1,000 new student slots and recently enacted the lowest yearly tuition increase in over a decade,” he said. “Having the University of Virginia play such a leading role in higher education reform was immensely helpful in ensuring that this work to expand access and affordability all across our higher education system would be successful and broadly embraced by all state institutions.”

The ever-changing composition of the university’s board, appointed by the governor, might have played a role in Sullivan’s departure. Its 16 members serve four-year terms.

“The facts are, there are eight people who are on the board now who were not on the board when she was announced” as U-Va. president, said Susan “Syd” Dorsey of Mechanicsville, a former trustee. “I don’t know if that’s a factor or not, but it’s a fact.”

Before Sunday, faculty and students said, there was a pervasive sense on campus that things were going well with Sullivan.

“I’m having a ball. I’m having a great time,” Sullivan said in January, sitting in her office with a reporter but no entourage of staffers or spokespeople. “The faculty here are fabulous.”

U-Va. trustees met in closed session Sunday afternoon to accept Sullivan’s resignation.

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