We Weren’t Hiding Anything, Says UVa’s COO

What would T.J. say?
What would T.J. say?

by James A. Bacon

University of Virginia officials vigorously dispute allegations by members of the General Assembly that the university was less than transparent with its $2.3 billion Strategic Investment Fund, a pot of gold that critics have characterized as a slush fund. Patrick D. Hogan, chief operating officer of the university, supplied records yesterday from a Board of Visitors subcommittee meeting showing that members had discussed using investment earnings to invest in projects approved as part of the long-term plan in 2014.

Said Hogan: “We have absolutely nothing to hide.”

Reports the Daily Progress:

The investment fund originated with more than $1 billion in investment returns that had accumulated between 2009 and 2014. Officials had talked about using this money to pay for some of the projects outlined in UVa’s strategic plan, passed in 2013. The Cornerstone Plan, as it’s called, lays out a broad series of goals, including improvements to UVa’s technological infrastructure and a wave of faculty hires.

The plan — initially priced at $564 million over five years — was not completely funded when it was passed, and there was concern that costs could be passed on in the form of tuition. The idea was to take some of the investment returns that had accumulated over the years and use them to pay for these improvements.

The investment returns were combined with other reserves to create the fund, which could pay out up to $100 million annually, Hogan said.

“We recognized then that the Cornerstone Plan needed long-term support,” he said.

Hogan said the creation of a permanent fund will allow UVa to improve the student experience without passing the cost on to students. This fund will pay for the improvement projects UVa hopes to undertake — hiring new faculty and providing them with research startup money, for example — without straining operating funds.

Bacon’s bottom line: Changes to the fund apparently followed normal bureaucratic procedure, moving quietly through a Board of Trustees subcommittee before surfacing before the full board. I’m prepared to believe that UVa administrators thought they were being transparent. But there was a breakdown somewhere if some board members were caught by surprise and it’s taken this long for UVa to explain in a way that people can understand how the fund came to be. What Hogan did not address in the Daily Progress article was why the board felt compelled to discuss the issue in closed session. Such an action does prompt people to wonder, “What were they hiding?”

At the end of the day, the controversy is over how to use an investment windfall amounting to $100 million a year — whether to invest in initiatives to make UVa a more prestigious institution or to lower costs for Virginia students. Clearly, the administration and a majority of the board favor advancing the university’s institutional interests over its historic mission of providing an affordable, quality education for all Virginians. All the rest is window dressing.

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4 responses to “We Weren’t Hiding Anything, Says UVa’s COO”

  1. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    The point raised in the last paragraph of Jim Bacon’s article strikes at the nub of the issue. But the words in that last paragraph glide harmlessly over the many flashpoints and game changing junctures that must, or should have been, passed through with due process in order to reach a legitimate result. Hence we are now just beginning to scratch the surface of what has happened at UVA on this matter. What is at stake. And what are the consequences should this gambit succeed. In short we are looking down through a dark glass at the tip of an iceberg. And those involved know it.

  2. LarrytheG Avatar

    I still don’t think UVA is unique compared to other institutions in Va on this issue nor on the tuition affordability issue yet they are the focus of all of this.

    and again – I ask – why should taxpayers subsidize “affordable” tuition in the first place when there are LOTS of ways to get a top notch education these days for a LOT LESS money.

    we’ve got this by-gone era thinking about a Public Ivy League college for all Virginians.

    If we want to have government force UVA to sell tuition for an “affordable” price – let’s say so and let’s admit that we are advocating that the govt involve itself in that market – and yes – it very much is a market – just because we help fund it – doesn’t change that. UVA is selling a product and the’re not out of line with other institutions and the proof is they have no shortage of people willing to pay to secure that diploma.

    funny how we want the govt out of some things and directly involved in others, eh?

  3. JOHN BR Avatar

    The UVA board wishes to “invest in initiatives to make UVA a more prestigious institution.”??
    UVA is certainly prestigious by any measure. I am not saying they should rest on their laurels and stand still, but…
    What is happening is that many college administrators (using huge amounts of other people’s money) are having a lot of fun trying to one-up each other. Hey, let’s use that $2.3 billion so we UVA leaders can go to fancy conferences (also paid for by others) and brag to leaders of other schools of the great new things we got to spend money on. Giving a quality education at a fair cost does not get you much in the way of “bragging rights.”
    This type of thinking leads people to use the word “slush fund”.

  4. LarrytheG Avatar

    yeah but calling a legal expenditure of funds a “slush fund” because you disagree with those priorities is irresponsible.

    I would think that alumni endowments are theirs to decide what to do.

    I would think that operating funds – not restricted – are also fair game.

    If we want to restrict the funds or even earmark them for specific purposes then let’s do that – make it law … and require a 3rd party audit if you want to ensure compliance. Then fire people and send them to jail if they violate the law.

    Otherwise – this is just so much kabuki theatre and opportunity for narcissistic politicos to prance about for effect.

    The Feds are good at this. In fact – they even get attacked for putting “strings” on funds…!!!

    Virginia and it’s GA has apparently chosen to allow higher ed, make that taxpayer – money – to be used as “slush funds” when they could easily stop it if they really wanted to.

    I still don’t agree with taxpayers subsidizing college for upscale, high dollar institutions to include room and board and student fees.

    the only thing taxpayers should be subsidizing is tuition and books and then only for the average of a benchmark set of institutions not the top end ones.

    we can’t seem to get ourselves straight on this govt subsidy stuff.

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