The Rotunda at the University of Virginia, Friday June 10, 2016. (Photo by Norm Shafer/For The Washington Post).

RICHMOND, Va. — The leader of the University of Virginia’s governing board told lawmakers Friday that he does not foresee major tuition increases in the near future and indicated that the school is open to discussions about making room for more students from within the state.

The remarks from William Goodwin Jr., U-Va.’s rector, came at a legislative hearing called to scrutinize a controversial $2.2 billion investment fund that the university created this year from operating reserves amassed during the past decade. Some parents and lawmakers have wondered how the university could hold so much in reserve while raising tuition 30 percent for in-state freshmen over the past three years.

One of Goodwin’s predecessors, former rector Helen E. Dragas, told lawmakers that the flagship could have avoided repeated tuition increases if board members had been more aware of the magnitude of the operating reserves, and she called on the university to roll back recent tuition hikes, institute a tuition freeze, and give more access to Virginia’s students.

[Read the full statement from Dragas, below]

Goodwin and other university officials strongly defended the fund, but they also opened the door to conversations about access and affordability at the prestigious public flagship.

“The attitude will be more, ‘How do we keep tuition down [and] be a little bit broader with some of our aid programs,’” Goodwin said. The rector suggested that the university could consider changes to the ratio of in-state to out-of-state students, and said that it was possible “that we’ll look more favorably on in-state students.”

In-state tuition for freshmen is about $13,000 a year, not counting fees, room and board, up from about $10,000 in 2013. About two-thirds of the school’s undergraduates come from Virginia. The rest, from out of state, pay tuition of about $41,700.

Key lawmakers here seemed supportive of university officials, who sought to rebut the accusation from Dragas that the $2.2 billion stockpile amounted to a “slush fund.” There was virtually no criticism of the university from the dais. A representative from the state’s Auditor of Public Accounts, Eric M. Sandridge, told lawmakers that a review of the fund and its sources had turned up nothing improper.
“I did not see anything to indicate there was a ‘slush fund’ of any kind,” Sandridge said.

At the joint hearing of the Senate Finance Education Subcommittee and the House Appropriations Higher Education Subcommittee, a co-chair, Sen. Thomas K. Norment Jr. (R-James City) opened with a warning that the meeting would not be “an inquisition.”

It was, though, a debate about more than money. Some lawmakers praised the university for its lofty ambitions and investment savvy, and some pushed for it to admit more students from the state and charge them less. Dragas said in a written statement, delivered through an aide, that the university should recommit to its public mission to Virginia residents rather than pursuing national status and rankings.

“This is a question of whether Virginians can gain a spot and afford to attend an institution they have paid for over the course of almost 200 years,” Dragas said. “It’s quite simply about whether the University, with this money and its other vast resources, is doing as much as it can for as many in-state students as possible.”

U-Va. President Teresa Sullivan told lawmakers that reserves are essential for a $3.2 billion enterprise with a major health system. In the event of an emergency, a cyber-attack or a sudden federal budget cut, “we need to have financial reserves in place and be prepared to use them,” she said. She insisted that the university’s leaders have the school’s public mission on their minds at all times. “We must be public and excellent, affordable and excellent, accessible to Virginians and excellent.”

 University of Virginia President Teresa Sullivan (2014 file photo from AP Photo/The Daily (Progress, Ryan M. Kelly) University of Virginia President Teresa Sullivan (2014 file photo from AP Photo/The Daily (Progress, Ryan M. Kelly)

Dragas, who left the board this summer, revealed the fund to the public in an opinion piece she wrote for The Washington Post in July.

University leaders defended the fund as key to their ambitious goals and said it will help them achieve “affordable excellence.” The fund, expected to generate about $100 million in returns annually, is separate from the university’s $6 billion endowment and could be used for board-approved initiatives such as luring star faculty members and improving labs.

Some Virginia lawmakers had demanded to know the source of the money, why they had been unaware of such a huge sum, and why the university had been raising tuition in recent years. The state is facing a potential $1.5 billion shortfall in its current two-year budget.

It’s clearly better to learn of a $2.2 billion surplus than a deficit, Sen. J. Chapman “Chap” Petersen (D-Fairfax), who was not at the hearing, said earlier this week. But “the very basic point is why is a non-profit, a public university or any non-profit, sitting on this amount of cash — which is triple the state’s cash reserves? Why do they need it?”

House Majority Leader M. Kirkland Cox (R-Colonial Heights) said after the hearing Friday that it is important to see access and affordability as part of the consideration of the fund: “It’s huge for us to look at in-state slots.”

Del. S. Chris Jones (R-Suffolk) chair of the House appropriations committee, said at the hearing that he doubted some of Dragas’s assertions about how the money could be used. “My personal opinion, it’s irresponsible to make the assertion … that you could wave a magic wand and reduce tuition by X,” he said.

Patrick Hogan, U-Va.’s chief operating officer and executive vice president, told lawmakers that a big tuition rollback conceivably could benefit some students today but would undercut future generations. “That would be a very shortsighted action,” he said.

Norment, the Senate majority leader, said after the meeting that he is generally wary of efforts by the legislature to micromanage public universities in an era when state supports a smaller share of operations than it once did.

“You can’t continue to underfund them and say, ‘Don’t raise tuition and don’t take out-of-state students,’” Norment said. He said he favors giving U-Va. and other public schools “more latitude” on enrollment and financial management issues. He added that Dragas had instigated a “helpful” discussion about the university’s finances.

This story has been updated.

 

Here are Dragas’ remarks in full:

Remarks by Helen Dragas

Here are Sullivan’s prepared remarks:

University of Virginia President Teresa A. Sullivan's prepared remark