The University of Virginia will tap more of its $3.2 billion endowment to strengthen university programs and help hold the line on tuition increases, reports the Daily Progress. The Board of Visitors voted Friday to increase the payout rate to 5 percent of the fund’s market value on June 30, a move that should generate $16 million more for university academics and UVa Health System patients.
The board also approved a new formula for determining how much of its endowment is spent each year: After fiscal 2009, the university will increase its endowment spending by the rate of inflation, as long as the resulting payout is within four percent to six percent of the fund’s market value.
The $2.24 billion operating budget for 2008-2009 provides $1.22 billion for academics, $980 million for the medical center, and $34 million for the College at Wise — a 5.4 spending percent increase. The budget allows for 159 new full-time workers, up from 12,170, a new student data system, more student financial aid, and more.
Bacon’s bottom line: Good. This move is long overdue. I’ve long criticized UVa, my alma mater, and other public Virginia universities for piling up bigger and bigger endowments for the seemingly sole purpose of claiming, “Mine’s bigger than your’s” — even as they aggressively jacked up tuitions year after year. The increased payout and future indexing for inflation helps ensure that the endowment is used for the purposes of improving the quality of education and keeping tuitions affordable.
The BoV’s actions are not necessarily the end of the story. Alumni and other stakeholders must continue to scrutinize where the money goes. But Friday’s actions signal that the Board clearly understands that the endowment does not exist for its own sake — it needs to be used.
