Students walk on the campus of the University of Virginia in Charlottesville. (Norm Shafer/For The Washington Post)

Few public universities boast the financial strength to establish a special multi-billion-dollar fund for strategic initiatives, separate from their endowment. Yet that is exactly what the University of Virginia has just done, a financial move that could spur debate about spending priorities at the elite flagship. One prominent critic — a former board member — has accused the school of creating a “slush fund.”

U-Va. announced this week that it has set aside $2.2 billion for “strategic investments,” a fund expected to generate up to $100 million a year for proposed projects to be vetted by faculty and advisory committees and subject to approval from the governing Board of Visitors. That could mean spending on technology, lab equipment, faculty recruiting or student scholarships, among other ideas.

“To remain one of the top universities in the country, providing outstanding quality to our students, and to have outstanding faculty, we have to be making these kind of investments,” Patrick D. Hogan, U-Va.’s executive vice president and chief operating officer, said Wednesday. “We want to be the number one public university in the country. It isn’t about rankings. It’s about having the best in academic experiences for our students.”

U-Va. is in an enviable financial situation at a time when many public universities are under budgetary strain. Its endowment, reported at $6.1 billion as of June 2015, is the 18th biggest in the country and one of the largest in public higher education. The strategic investment fund is separate from the endowment but will be managed in much the same way, with an annual payout of between 4 percent and 5 percent. Hogan said the fund was assembled from reserves built up over years that have ensured the university’s stability in running its academic and medical programs. He said $2.2 billion represents about what it would take to cover U-Va.’s academic and medical center expenses for nine months. That is a healthy but necessary cushion for such a major enterprise, he said.

But former board member Helen E. Dragas describes the money as a “slush fund.” Dragas, who as rector led the board from 2011 to 2013, said the university could use the money to help make U-Va. significantly more affordable.  “There are more than enough billions on hand to give some back to Virginia’s families and still improve the University’s rankings,” Dragas said.

The board voted to create the fund in February. Dragas said she supported that action at the time.

But Dragas contended that university leadership kept the size of the fund under wraps while U-Va. was deciding key issues such as tuition. This fall entering students from Virginia will pay $13,060 in tuition — not counting fees, room and board. That is up from $11,892 the previous year. Dragas said she was shocked to learn at a June board meeting that the fund would total $2.3 billion, a figure slightly higher than the $2.2 billion total the university now cites.

“Seriously, if the board had known it had an extra $2.3 billion of discretionary money lying around on top of its huge endowment, would it have voted to raise tuition another 10 percent on Virginia families this year?” Dragas said. Her second four-year term on the board expired on June 30.

Hogan denied that the university leadership hid anything. He said the magnitude of the reserves used to create the fund has been documented for years in audited financial statements. “It’s been a very transparent process,” he said. “This has all been out in the open with the board.”

U-Va. is likely to face questions from Richmond about the fund.

Sen. J. Chapman “Chap” Petersen (D-Fairfax), a member of the Senate’s education committee, said he found the size of the fund “mind-boggling.” Petersen, who holds a law degree from U-Va., said he wants an independent forensic audit to document how U-Va. amassed such a large rainy-day fund.

“I’ve never heard of anything like this,” he said. “This is a massive, massive asset.”

Petersen said he was curious how the money would be spent: “Are they going to buy a race car? Invest in a pro sports team? Buy junk bonds? Their mission is to educate students.” In theory, he said, the size of the fund could enable the university to refund tuition to each of its 16,500 undergraduates and hire each student a personal tutor.

Virginia’s General Assembly appropriates about $150 million a year to U-Va., nearly 10 percent of the school’s academic budget, and also provides substantial funding for construction projects. Hogan said he did not want to respond to Petersen’s specific remarks because he has not had a chance to speak with him.

“We’ve always had great support from the General Assembly,” Hogan said, noting that U-Va. is “ready and prepared to provide any information we can to that important constituency.”