Governor Bob McDonnell wants to inject, at minimum, an extra $50 million into higher education in order to “’one of the most educated states in all the world.’” This might confuse Virginia taxpayers, who, through the first quarter of 2011 have already pumped more than $1.6 billion into the state’s junior colleges, colleges and universities. How will an additional $50 million make a bit of difference?
The answer is it likely won’t. But lurking behind all of these numbers are other, less publicized sums that support the state’s public universities. These are the endowment funds and special-purpose foundations that have raised billions of dollars to support various school projects and goals. One of the biggest fundraisers is the state’s flagship institution, the University of Virginia.
At the close of the fiscal year on June 30th, UVA’s endowment had assets of more than $4.4 billion. Roughly five percent of the endowment is used each year to meet yearly operating costs, which means that during the current fiscal year, the endowment will “pay out” nearly $144 million…almost three times what the Governor proposes to spend statewide.
But the UVA story doesn’t end with its endowment. The school is also in the midst of a $3 billion fundraising campaign to support endowed professorships, student aid, construction and more. So far, the campaign has pulled in more than $2 billion (or slightly more than what the state has already expended on higher ed operations across all institutions in the first quarter of fiscal year 2011).
Then there are the various “university –related foundations,” a gaggle of nonprofits that have millions in assets sitting in the bank. According to IRS forms, entities like the Darden business school’s foundation have around $300 million in net fund balances at the close of 2008. The Miller Center, home to political wizard Larry Sabato, has a foundation, too, with assets of more than $12 million in 2009.
The point of all these foundations and endowments is “…to strengthen and broaden their programs, to promote the real-world use of research findings, and to enter promising business ventures at no expense to the taxpayer.” That is a fine goal. But it brings us back to why, with all of these other resources, why is there a need for Virginia taxpayers to contribute an extra $50 million?
The stated reason is to make education more affordable, and to spur even more kids to become scientists, mathematicians and engineers.
That, too, may be a noble goal. However, the state is broke, having shorted the Virginia Retirement System $620 million in order to balance the budget (an act that only compounds the system’s existing $53 billion unfunded liability) and owing the federal government more than $300 million for unemployment claims. And if that’s not enough, there’s still the possibility that an additional $140 million will have to be cut from the budget next year due to revenue shortfalls.
Unless the Governor has a plan to check under the seat cushions of every couch and chair in the commonwealth for loose change, the money to further gold-plate the state’s higher ed system just doesn’t exist.
