A MEETING OF THE EXECUTIVE COMMITTEE OF THE
BOARD OF VISITORS OF VIRGINIA COMMONWEALTH UNIVERSITY
April 20, 1990
A meeting of the Executive Committee of the Board of Visitors of
Virginia Commonwealth University was held on Friday, April 20, 1990, at
10 a.m. in the University Meeting Center.
Present were Drs. Moore (Rector) and Johnson; and Messrs. Farin-
holt, Ferguson, Gregory, Lipman, Meador and Siegel. Absent were Dr.
Holland; Messrs. Morris and Whitworth; and Mrs. Epps. Also present
were Drs. Ackell, Andrako, Cribbs, Dewey, Ruch and Wilson; Messrs.
Bruegman, Fischer, Gehring, Kudless, Poe, Puleo, Rapp and Ross; and
Mrs. Price.
Dr. Moore called the meeting to order and stated that due to the
lack of a quorum the Executive Committee would meet rather than the
full Board.
Dr. Ackell reported that last evening, during the School of Busi-
ness' Executive in Residence program, Mr. Dick Meador was named the
Business School's Alumnus of the Year.
Dr. Ackell stated that last year, when Governor Baliles first
announced a 1 percent and then a 2 percent General Fund reversion in
this year's budget due to anticipated state revenue shortfalls, VCU
realized that the growth this institution had experienced over the past
several biennia would not continue into 1990-92. VCU undertook immedi-
ate preparations for a budget cutback in December. Expectations were
realized when the General Assembly approved in March a State General
Fund budget reduction of over 5% as part of an overall state government
effort to generate savings so that high priority budget increases could
be funded within the estimated state revenues available.
The University's share of this budget cut is $6 million in 1990-91
and $7 million in 1991-92. While these amounts represent a cut of 5-6%
of VCU's State General Fund Appropriation for Educational and General
Programs, they have a deeper impact when one considers that there are
continuing commitments which also must be funded, along with other high
priority funding needs,-including a contingency fund. All together,
the University faced a budget shortfall in its Educational and General
Programs of $10 million.
VCU is dealing with this budget shortfall in two ways. First,
tuition and fees are being increased within the guidelines prescribed
by the General Assembly and the Governor. Fifty-percent (50%) of the
State's budget reduction is being offset by increased tuition charges.
The University's tuition and required instructional fees will increase
5.6% for full-time in-state undergraduates. This percentage is well
within the 6.5% limit imposed by Governor Wilder and the General Assem-
bly.
Second, the budget is being cut in accordance with Governor Wil-
der's intent "to streamline programs, cut unnecessary expenses, and, in
appropriate cases, curtail programs or services in order to meet the
State's budget constraints." VCU has met the Governor's stated purpose
to "demonstrate to parents and to the public at large that VCU is run-
ning as tight a ship as possible and that our fiscal house is in
order." In addition, Virginia's state tax support per FTE student is
below the Southern Regional Education Board's average for public uni-
versities in the Southeast. This is one reason why Virginia's in-state
tuition rates are the highest in the Southeast. Conversely, Florida
and North Carolina are consistently above the average for state tax
support per student. This is a major reason why the tuition rates are
low in these two states.
The University's budget cuts amount to $6.6 million in 1990-91 and
$7.9 million in 1991-92.- This represents 3.8% of VCU's current base
budget for Educational and General programs in 1990-91 and 4.4% of
VCU's current base budget in 1991-92. By the second year of the
biennium, 175 positions will be eliminated from the budget. This rep-
resents over 5% of the current work force in Educational and General
Programs.
The budget reduction process has not been easy; however, it has
afforded everyone an opportunity to participate and be heard. Early on
in the process, a Budget Development Plan was developed. Following
meetings with deans, department heads, and appropriate governance
groups, a set of criteria was agreed upon to guide the preparation of
the 1990-92 biennial budget plan. Among the more important criteria
adopted were the following:
• Enrollment projections must be realized.
Budget reductions will be permanent.
• Budget reductions will occur selectively in people and pro-
grams.
^ There will not be an across-the-board percentage cut in all
programs.
Expedient methods used to cut the budget in the past, such as
reductions in general operating support and support services,
are inappropriate means of achieving the budget reductions
necessary.
- New initiatives defined in the University's Institutional
Priorities for 1990-92 will be funded insofar as possible.
- A contingency would be retained in the event of further eco-
nomic downturn, revenue shortfalls, and inability to achieve
the budget cuts based on the prescribed timetable.
While the center of attention has been on the University this time
around, the Hospital is not without its challenges. Although the Hos-
pital experienced a 1% cut in its state General Fund Appropriation, or
approximately $537,000 per year, the state still refuses to support the
costs associated with Indigent Care co-payments. These costs are pro-
jected to be $4 million annually. Coupled with the rapid and unpre-
dictable changes in third party reimbursement practices and the highly
competitive health care environment, the Hospital budget is stretched
to the limit. A positive bottom-line is projected for next year, but
it represents less than 1% of the Hospital's total operating revenue.
For a Hospital of this size, and the necessity to maintain a capital
reserve for the repair and replacement of facilities and equipment, a
bottom-line of less than 1% is marginal at best.
Dr. Ruch stated that the budget process was a very open and partic-
ipatory one. Following the policy direction set by President Ackell,
each vice presidential area was given a target and asked to develop a
plan. These plans were then nerved through the "system" including
involvement by faculty, department chairmen, deans and governance
groups including University Council.
Mr. Bruegman stated that the Budget Plan includes six separate
budgets involving various revenue sources and fund groups. As back-
ground, the six budgets are funded as follows:
Educational and General (E&G)
State tax dollars and student tuition and fees
Sponsored Programs
Grants and contracts
Auxiliary Enterprises
Self-supporting areas such as athletics, housing, bookstores
University Funds
Gifts, endowment income, etc.
Student Financial Aid
Loans, grants primarily from the State and Federal Govern-
ment
Hospital
Patient revenues, third-party payers, indigent care funding
Mr. Bruegman stated that during the budget process there were some
misconceptions about that need to be clarified
1. Fund accounting does not permit one fund group to support
another. As such, the cuts to E & G programs mandated by the
General Assembly must occur in E & G funds.
2. Funds raised as part of the $52 million campaign consist
primarily of restricted gifts and are earmarked for specific
purposes.
3. Tuition and fees can be increased to offset only 50 percent of
the budget cut. The University is required to charge
out-of-state students three times the amount of tuition as
in-state students.
4. A modest contingency is being retained for unexpected revenue
shortfalls and unrealized budget cuts.
5. The budget includes the abolishment of 175 positions. Many of
these positions are vacant. It is difficult to determine at
this time exactly how many people will be adversely affected,
if any, because of the very complicated State layoff policy
which allows for "bumping" based on seniority.
Mr. Cribbs stated that VCU's headcount and F'TE enrollments are at
their highest levels ever, 21,391 headcount and an estimated 17,404
FTE. Modest increases are expected in next year's enrollment. The
University's total revenues are expected to be $1.3 billion with the
general fund accounting for 28 percent of this total and tuition and
fees for 10.5 percent.
It was noted that the Budget Plan for Educational and General Funds
presents a balanced budget on a current basis for each year of the
biennium and on a permanent basis by June 30, 1992. In addition, by
June 30, 1992, a permanent University Contingency equal to approximate-
ly 1.5 percent of revenues will be established. Contingencies equal to
.5 percent of revenues will be established in other fund sources.
General Fund reductions imposed in the 1990-92 Appropriation Act
are achieved on a permanent basis by June 30, 1992. Consistent with
the Appropriation Act, tuition charges have been increased to equal 50%
of the general fund cut. Therefore, tuition is used to replace 50
percent of the lost state support, thereby reducing required expendi-
ture reductions. The increase in tuition charges results in increasing
the proportion of educational costs that tuition supports.
Critical funding needs totalling $1.6 million in 1990-91 and $2.0
million will be met through reallocation of savings accomplished
through base budget reductions. Funding reductions totalling $6.6
million in 1990-91 and $7.9 million in 1991-92 will be imposed.
10
On motion made and seconded, the Committee convened into executive
session to discuss certain personnel matters involving the performance
of identifiable employees or faculty of VCU and to discuss matters
relating to gifts, bequests and fund-raising activities including the
approval of Naming Proposals as authorized by Section 2.1-344 a(1) of
the Virginia Freedom of Information Act.
Following executive session, on motion made and seconded, the fol-
lowing Resolution was approved by roll call vote:
Virginia Cc monwealth University hereby certifies that, to the best
of each member's knowledge, (i) only public business matters lawfully
exempted from open meeting requirements by Virginia law were discussed
in the executive meeting to which this certification resolution
applies, and (ii) only such public business matters as were identified
in the motion convening the executive session meeting were heard, dis-
cussed or considered by the Executive Committee of the Board of Visi-
tors of Virginia Commonwealth University.
ROLL CALL Ayes Nays
Dr. French H. Moore, Jr. (Rector) X
Mrs. Rozanne G. Epps Absent
Mr. James B. Farinholt, Jr. X
Mr. Jack H. Ferguson X
Mr. Roger L. Gregory X
Dr. Harry I. Johnson, Jr. X
Mr. Eric M. Lipman X
Mr. Richard L. Meador X
Mr. Philip B. Morris Absent
Vote:
Ayes: 7
Nays: 0
ABSENT DURING MEETING: 2
ABSENT DURING VOTING: 2
On motion made and seconded, the Committee approved the Naming
Proposals and the appointment of Dr. Grace Harris as Vice Provost for
Continuing Studies and Public Service.
The meeting was adjourned at 12:50 p.m.
Philip- B. Morris, Secretary
Approved:
French H. Moore, Jr., Rec r
10
On motion made and seconded, the Committee convened into executive
session to discuss certain personnel matters involving the performance
of identifiable employees or faculty of VCU and to discuss matters
relating to gifts, bequests and fund-raising activities including the
approval of Naming Proposals as authorized by Section 2.1-344 a(1) of
the Virginia Freedom of Information Act.
Following executive session, on motion made and seconded, the fol-
lowing Resolution was approved by roll call vote:
Virginia Commonwealth University hereby certifies that, to the best
of each member's knowledge, (i) only public business matters lawfully
exempted from open meeting requirements by Virginia law were discussed
in the executive meeting to which this certification resolution
applies, and (ii) only such public business matters as were identified
in the motion convening the executive session meeting were heard, dis-
cussed or considered by the Executive Committee of the Board of Visi-
tors of Virginia Commonwealth University.
ROLL CALL Ayes Nays
Dr. French H. Moore, Jr. (Rector) X
Mrs. Rozanne G. Epps Absent
Mr. James B. Farinholt, Jr. X
Mr. Jack H. Ferguson X
Mr. Roger L. Gregory X
Dr. Harry I. Johnson, Jr. X
Mr. Eric M. Lipman X
Mr. Richard L. Meador X
Mr. Philip B. Morris Absent
Vote:
Ayes: 7
Nays: 0
ABSENT DURING MEETING: 2
ABSENT DURING VOTING: 2
The budget assumes a cash balance of $10.1 million at June 30,
1991.
Mr. Cribbs presented the proposed Tuition and Fees Charges for
1990-91. A number of objectives and strategies were used in setting
tuition, the most important of which was to replace half of the General
Fund reductions imposed by the state with tuition revenues. The Uni-
versity Fee was set at a rate sufficient to fund approved operating
levels for activities supported by the Fee and to increase the sinking
undergraduate student will receive an increase of 6.1 percent overall
fund for construction of Student Commons II. A full-time Virginia
(tuition, fees, room and board). An out-of-state undergraduate student
will receive an 11 percent increase which is consistent with the
state's policy of charging out-of-state students three times the cost
$575 or 12.7 percent. Tuition for a Virginia graduate student will
of in-state students. The University Fee will increase from $510 to
increase 5.4 percent and 11 percent for a non-Virginian. Pharmacy
rates will be the same as graduate rates. Medical students' tuition
will increase 8.9 percent for in-state students and 17.4 percent for
out-of-state students. The dental students' tuition increase is 7.9
percent for in-state and 11.1 percent for out-cif-state.
On motion made and seconded, the 1990-92 Consolidated Budget Plan,
the 1990-91 Tuition and Fees Charges and the 1990-91 Hospital Operating
Budget were approved.
Mr. Farinholt commended the administration for its outstanding
leadership of a very difficult budgetary matter.
reduced reimbursements for capital costs, and direct and indi-
rect medical education.
The Hospitals continue to work aggressively with the Commonwealth and the City of Richmond in attempting to transfer
patients from Indigent Care to the Medicaid Program. Success
in making this transition through on-site Medicaid workers
will have a direct impact upon indigent care costs and their
relationship to Commonwealth funding.
Appropriations from the Commonwealth are estimated to be at 20
percent of cash receipts.
The budget represents state support based upon the biennial
amount enacted by the 1990 Session of the General Assembly.
It should be noted that State support was reduced by the Gen-
eral Assembly by 1 percent or approximately $.5 million each
year of the biennium. In addition, the state guidelines for
defining Indigent Care continue to exclude costs associated
with Indigent Care co-payments. This effectively reduces
hospital revenues by $4 million annually.
The state appropriation assumes a $5.5 million reduction due
to increased Medicaid eligibility and to mandated dispropor-
tionate share increases by Medicaid.
The budget recommends a 9 percent increase in rates. Medicare
per case payments are projected to increase by 4.1 percent,
Medicaid per day payments by 4.5 percent, Blue Cross per day
payments by the contractual 7 percent and commercial reim-
bursement by 9 percent. Since the majority of payors do not
pay charges, the 9 percent rate change translates into an
effective net patient service revenue increase of only 5.9
percent.
The Budget Plan continues a strong emphasis on cost contain-
ment, and assumes revenues and expenditures will be balanced
and the Hospitals will break even for the budget year.
Personal services and fringe benefit costs are projected to
increase 10.4 percent in 1990-91.
In total, operating expenditures are projected to increase 6.3
percent in 1990-91.
Debt service payments and required capital expenditures and
commitments will require a draw on hospital reserves of $4.1
million in 1990-91.
The Budget Plan for Auxiliary Enterprise Programs projects revenues
at approximately $27,806,000 in 1990-91 and $30,027,000 in 1991-92 with
anticipated operating expenditures of approximately $26,626,000 in
1990-91 and $28,108,000 in 1991-92. Auxiliary Enterprises fund
balances are sufficient to meet state guidelines for operating and
maintenance reserves.
With regard to University Funds, unspent balances may be carried
forwarded at year-end. As a result, expenditures do not necessarily
equal revenues in any single fiscal year. In 1990-91, expenditures are
projected to exceed revenues by $2,784,000 and by $1,896,000 in
1991-92, resulting in the use of accumulated fund balances. Although
permissible by University policy, this use of fund balances will be
closely monitored to ensure that ongoing commitments do not exceed
revenue streams, and, if necessary, reductions in spending will be
imposed.
The Student Financial Assistance Budget is expected to reach
$43,691,000 in 1990-91 and $45,612,000 in 1991-92. It was noted that
loans are the single largest category of student financial aid,
accounting for $28,080,000 in 1990-91 and $29,100,000 in 1991-92.
Mr. Fischer presented the Hospital Operating Budget for 1990-91.
Mr. Fischer stated:
• Inpatient admissions, patient days, and emergency visits are
projected to remain relatively level for the 1990-91 budget
year. Outpatient visits are estimated to increase only
slightly by 1 percent.
• Medicare reimbursement has in recent years failed to meet
basic inflation and has continued to reduce payment in several
areas. Proposed regulations for 1990-91 will result in
On motion made and seconded, the Committee approved the Naming
Proposals and the appointment of Dr. Grace Harris as Vice Provost for
Continuing` Studies and Public Service.
The meeting was adjourned at 12:50 p.m.
Philip- B. Morris, Secretary
Approved:
French H. Moore, Jr., Recto
