With Virginia facing a $1.5 billion budget shortfall, the commonwealth’s public colleges and universities are looking for ways to offset a potentially significant loss of state funding with the goal of not having to raise tuition and fees for students next fall.

Gov. Terry McAuliffe’s chief of staff Paul Reagan recently sent a letter asking school officials to prepare for a 7.5 percent decrease in appropriations from the state’s general fund in the fiscal year that begins July 1. Reagan urged college presidents and chancellors to “make a concerted effort to identify real, ongoing efficiencies and related savings,” rather than forcing families to shoulder more of the financial burden.

“Tuition and fee increases beyond what was already being proposed in an institutions’s six-year plan should not be considered as a mechanism to offset these reductions,” Reagan wrote in the letter, which was first reported by the Roanoke Times.

State policy decisions have contributed to a monumental shift in the way Virginia’s public colleges are funded in just the past two decades. Tuition made up less than a third of total education revenue at state schools in 1989, and by 2014, those dollars accounted for 62 percent of the money schools needed to educate students, according to the State Higher Education Executive Officers Association.

The implosion of the financial markets in 2008 led to a steady decline in state funding for colleges as tax revenue dried up. Even as the economy rebounded, higher education funding for Virginia’s public colleges and universities remained 22 percent below 2008 levels, according to the Center on Budget and Policy Priorities. The think tank estimates that the $1,718 cut in per-student funding and tuition increases — averaging $3,808 for in-state students at four-year institutions — is making college less affordable for Virginia residents.

In the past week, several university leaders have reached out to their school communities to address how the newest decline in state funds might impact operations.

Virginia Tech President Tim Sands assured students, faculty and staff that the university’s “enrollment and philanthropic growth” will help the school weather cuts, as will a plan to reallocate resources among academic departments as needed.

Sands, in a letter addressed to the school community, said the reduction in state support could total $18.1 million, which includes $5.1 million the state asked Virginia Tech to give up in the current budget year. The school has already absorbed the current cuts and does not anticipate any changes to its operational budget for fiscal year 2017, he said

“Virginia Tech’s commitment to improving our academic and research programs, providing access to students and being the very best steward of state resources possible will not change as a result of the state’s budget requirements,” Sands wrote. “Fulfilling that promise is more challenging when key sources of revenue are reduced, but we are grateful for the support we do receive.”

At Virginia Commonwealth University, president Michael Rao told the school community to brace for reductions in state support totaling more than $21 million through fiscal year 2018. That figure includes previously announced savings strategies, which include having public colleges and universities cover a portion of the Virginia Retirement System premium increases for two years and forgo rebates on credit cards.

“This is disappointing news,” Rao said. “We will once again confront the significant cuts in the context of protecting our academic mission, with particular emphasis on student financial assistance and minimizing the impact on tuition and fees.”

Rao said the university has worked hard to align its resources to support “academic quality and student success” despite the ups and downs of state appropriations that “make long-term strategic planning extremely difficult.”

McAuliffe has tried to reverse years of dwindling state support by proposing nearly $300 million in higher education spending. The 2016 General Assembly carved out $313 million in state funds for public colleges and universities in the biennial budget, an increase of about 6 percent over the prior budget. Seven of the prior nine budget years since the recession have included cuts to higher education funding, according to the State Council of Higher Education for Virginia (SCHEV).

Dan Hix, SCHEV’s finance policy director, said the council “appreciates the investments in higher education by the governor and General Assembly and will work with all parties to protect that investment as we go through this period of belt-tightening.”

Tepid income and sales tax revenue are at the heart of Virginia’s fiscal problems, according to the governor. During the summer, McAuliffe warned that a loss of high-paying jobs due to federal budget cuts and lower-wage workers replacing retiring baby boomers were depressing tax revenue growth. His administration anticipates the current two-year budget will be short $1.2 billion, on top of the nearly $280 million loss carried over from the budget that ended June 30.

Although McAuliffe spared state colleges and universities from the cuts other executive branch agencies endured in fiscal year 2017, Reagan told school officials that their “portion of the budget is just too significant to leave out of the discussion and plans for addressing the projected revenue shortfall for fiscal year 2018.”

He encouraged schools to begin planning for likely cuts, but said they are under no obligation to submit a formal savings plan like other agencies. Reagan assured the universities that student financial aid would not be factored into the reduction in appropriations.

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