Budget breakdown

Erica Terrini

News Editor

The General Assembly made final suggestions on the state budget for the remainder of the 2010 fiscal year and through 2012 when they adjourned in early March.

VCU President Michael Rao e-mailed VCU and the VCU Health System a summary of how the state budget might impact VCU.

In the summary, three key areas – employee compensation, operating budget and building and maintenance projects – were addressed based on amendments suggested from the House and Senate.

‘The state’s ongoing fiscal challenges forced the Governor and the General Assembly to wrestle with a budget shortfall of about $4.2 billion and to make painful reductions in a host of state programs and high priority commitments,” Rao stated in the e-mail.

According to John Bennett, the Senior Vice President for Finance and Administration, VCU has been dealing with ongoing budget cuts that include a loss of $14.4 million from last year, and a loss of $42.3 million that will occur in 2012. The loss of funding in 2012 comes from withdrawn state support and federal stimulus funding. Bennett said there is also an unidentified $10 million cut in 2012 for all of higher education in the bill, but public colleges and universities will not know details until next year.

According to Bennett, the loss of funds from 2010 to 2012 will drive VCU to cut programs, increase tuition or a combination of the two. He said VCU is currently looking at options on how best to handle the budget cuts.

“This year, there’s not going to be a lot of money to dole out for new programs,” Bennett said. “It’s going to be (about) how we hold the enterprise together or how we change what we do to fit within this looming hole in 2012.”

Bennett said one option is a tuition differential plan, which would allow high-cost programs to set tuition rates accordingly instead of using fees to obtain funding. Bennett said VCU’s School of Engineering has a tuition differential in place now.

Aside from planning for future shortfalls, Bennett has been communicating with VCU and the VCU Health System about changes for this year, 2011 and 2012.

For employees: This is the third consecutive year VCU employees will not receive a raise, Bennett said.

There is one furlough day built into the budget for 2010. However, there is an option to find an alternate way to find an ulterior source for that money. Bennett said VCU is not likely to implement a furlough day.

There is the potential for a 3 percent bonus if the state has a revenue surplus at the end of the year.

The proposal to force current employees to make retirement contributions was not adopted. Bennett said VCU would have to pay more for retirement. Health insurance premiums will go up by about 3 percent, which is less than expected according to Bennett.

For students: There is no change in student financial aid, but Bennett said any additional revenue VCU obtains will go to increasing funs for financial aid.

A state program, The Higher Education Equipment Trust Fund gives VCU money for equipment each year, but funds for the program are based on the state’s debt financing plan and will not be known until August.

Bennett said VCU will have to increase a fee on out-of-state students to pay for capital outlay (building projects and maintenance). The charge will be $5 per credit hour.

For university projects: Bennett said capital outlay comes in two forms: the money to maintain the university and implement future building projects. He said funding for capital outlay is also based on the state’s debt financing plan, and are currently not known.

Bennett said the biggest project for 2010 was a classroom building that was supposed to be built in a lot next to Harris Hall. VCU had hoped to get $44 million to finance the academic building that would have housed English and social work majors, but the project was not approved for funding by the House and Senate. Bennett said it will be at least another two years before the building’s funding is granted.

However, the House and Senate did approve a housing project on West Grace to recieve funding. The housing project is prospected to be completed by 2012 according to Bennett. A parking deck will accompany the housing project and both the building structures will be paid for through the residents’ and parking users’ fees.

Other approved building projects might include a renovation of the Pauley Heart Center, the Stuart C. Siegel Center and One Capitol Square. A baseball facility might be constructed as well.

The state budget now goes to Governor McDonnell for review. Rao stated VCU “will continue to analyze the General Assembly budget bill and prepare for the difficult choices that face the University.”

FOR GRAPHICS:

The Governor and the General Assembly to wrestle with a budget shortfall of about $4.2 billion.

In Fiscal Year 2010, VCU is down $14.4 million from last year. In FY 2011, VCU will receive $6.8 million in federal stimulus funds.

In FY 2012, VCU faces the expiration of $23.2 million in federal stimulus funding, along with a reduction of $19.2 million in state support.

Preparing for this combined $42.3 million.

FLOW CHART:

The final version of the budget will not be produced until late April. Here are the steps the budget must go through before it is finalized:

The General Assembly released its amendments in early March.

Governor Bob McDonnell has until midnight on April 12, 2010 to make amendments to the House and Senate proposals.

The General Assembly will reconvene on April 21, 2010 to approve or disapprove the governor’s proposals.

The Board of Visitors will meet in a workshop on April 29, 2010 to discuss a plan of action based on the final budget.