UVA Board Passes Status-Quo Budget for 2025-26

Fending off a bid by fiscal hawks to cut spending on administrative overhead, the University of Virginia Board of Visitors Friday approved a $5.8 billion operating budget for 2025-26. The sum covers $3.3 billion for the UVA medical center and $2.5 billion for academic operations in Charlottesville and Wise.

The board action reaffirmed the 3% tuition increase approved in December but provided a one-time “rebate” to hold tuition steady for in-state undergraduate students next academic year. The $6.5 million in lost revenue will be made up from a $5.9 million increase in state support and some “cost efficiencies.”

Chief Operating Officer J.J. Davis defended the spending and tuition increases as necessary given the “enormous amount of pressure” from inflation, state-mandated pay increases and funding uncertainties created by Trump administration cuts to research. The budget includes many economies, efficiencies and cuts, she contended. “There are budget reductions. They are painful.”

While a majority of Board members acquiesced to the budget, a few were not satisfied.

“For me, the budget doesn’t meet the mark this year,” said Doug Wetmore. “I was hoping to see at our budget workshop … more detail about the cost centers of the university.”

Governor Glenn Youngkin had asked for expenses relating to Diversity, Equity & Inclusion, which the Board had voted in March to dismantle, to be “extracted” from the budget, Wetmore said. Describing himself as “very frustrated,” he added, “I haven’t seen much detail around that.”

Davis shot back with rare criticism of a board member, saying she was “wildly disappointed” by Wetmore’s remarks. “I think we’ve gone above and beyond to be incredibly transparent and incredibly fiscally responsive,” she said.

She then chastised Wetmore and other board members for immersing themselves in budgetary details. Some board members had gone so far as to scrutinize spreadsheets, she noted. “There is a fine line between governance and management,” she said sharply.

“With all due respect,” she told Wetmore, “I see you as a valuable member of this board and someone I spent considerable amount of time with, trying to educate, inform, under incredibly intense and dynamic fiscal times. I think what we’ve provided is an exceptionally restrained budget.”

Wetmore was one of three board members to vote against the budget. The other two included Stephen P. Long and Ken Cuccinelli. (Paul Harris voted against the budget at the Finance Committee level before it was forwarded to the full board.)

The vote represented a significant victory for President Jim Ryan and his allies on the Board. All four board members appointed by former Governor Ralph Northam backed the budget, but so did a majority of board members appointed by Governor Glenn Youngkin, despite his consistent calls for tuition restraint. Budget hawks called for more aggressive cuts this past year but they were effectively sidelined during the budget-making process.

Davis’ sharp remarks to Wetmore were unlike anything I have observed during four years of observing Board of Visitors meetings. I am unsure what to make of them. Normally, staff are highly deferential to board members, at least in public. It is possible that the budget process has been exceptionally tumultuous this year given the uncertainty created by the Trump administration’s cancellation of $63 million in research grants as well as Youngkin’s call for eliminating DEI. Davis alluded to the recent death of her father from cancer, which may have been a possible source of stress. But I suspect that the exchange reflects deeper tension between Ryan and his lieutenants and the budget hawks.

In last regularly scheduled meeting as Rector, Robert Hardie echoed Davis’ sentiment that board members should stay in their lane. “We are a governing body created to focus on strategy and policy,” he said. “We should not cross the line into daily management of the university.”

The June board session was the last regularly scheduled meeting for the board’s four Northam appointees before their terms expire. All four have been steadfast allies of Ryan, and they dominated key positions on the Board even as Youngkin serves out his final year in office. As Rector, Hardie has collaborated with Ryan in setting meeting agendas and Board priorities. Vice Chair Carlos Brown chaired the Academic and Student Life Committee, Bob Blue the Finance Committee, and L.F. Payne the Advancement Committee. Hardie and Blue ran cover for Davis as she formulated the budget, parceled out information she wanted other board members to see and resisted the hawks’ efforts to dig deeper into the numbers.

Youngkin will appoint four replacements by the end of the month, giving him complete control over the board and its committees beginning July 1. Whether anything changes in the University’s budget-setting priorities remains to be seen.

Rachel Sheridan, who will succeed Hardie as Rector, made two telling comments Friday that hinted at substantial alignment with the Ryan administration on budget issues.

In one, a discussion revolved around the cost of tuition for out-of-state students, who got no relief under the revised budget. Dan Brody said he was concerned that out-of-state students were being priced out of UVA, that their acceptance rate was declining, and that UVA was losing its competitive edge in recruitment.

“My focus is on in-state students in the state of Virginia,” said Sheridan, “and I appreciate the effort [the Ryan administration] went through to hold tuition flat. … This is the University of Virginia. We serve in-state students.”

Another discussion centered on various metrics of administrative efficiency, such as staff-to-student ratios and faculty-to-staff ratios. UVA has been spending more in recent years on administrative staff to assist professors with their grant applications.

“How about research?” Sheridan asked. “To the extent that there’s growth in administrative research, I think we’re probably comfortable with that. We want to do three things — we educate students, we want to do great research, we want to save lives. … To the extent that there’s administrative growth in research, I think we’re probably comfortable with that.”

In her presentation to the Board, Davis made essentially the same case she does every year: UVA is a great value proposition and UVA has tightened its belt.

The University receives high rankings in numerous surveys, financial aid ensures that every student can afford to attend, students graduate with relatively low levels of debt, the drop-out rate is one of the nation’s lowest, and faculty and students receive many honors, she said.

UVA has held its in-state undergraduate tuition increases to below the increase in the Consumer Price Index (CPI) and the Higher Education Price Index (HEPI) over the past seven years, Davis said.

Making budgeting difficult this year, said Davis, UVA had to contend with a 3% state-mandated pay raise for employees that added $58 million to expenses, as well as other unavoidable cost increases (summarized below). UVA devoted another $14.7 million to “organic growth,” most notably continued expansion of its School of Data Science.

UVA coped with the fiscal squeeze by boosting tuition & fees, tapping other revenue sources, freezing hiring for some positions, cutting discretionary funding like travel, and enacting unspecified “central budget cuts.” Davis made much of UVA’s efforts to shave administrative costs — she mentioned the consolidation of purchasing contracts — but as seen below such “efficiencies” yielded a meager $2 million in savings.

UVA’s academic division employs 20,300 people at a cost of $1.7 billion. Other than noting some hiring freezes, Davis said nothing about what the University was doing to control that expense. Neither did she document any cuts to DEI administration in compliance with the Board’s order to end racial preferences and eliminate DEI.

Some Board members shared Davis’ appraisal of UVA as an affordable, well-run university that provides exceptional value to students.

“We all need to remember that, as my father-in-law and former Rector Bill Goodwin liked to say at the end of every meeting, UVA is a great university, we have a unique DNA that sets us apart from our peers, and we are all lucky to be here,” said Hardie.

“We remain one of the most efficient, affordable institutions in the top tier of institutions in this country,” said Vice Chair Carlos Brown. “We have to be fair to the administration in acknowledging that.”

But there were notes of skepticism. Although UVA metrics may look good compared to its peer institutions, said Cuccinelli, the higher-ed sector is notorious for its low productivity. “Higher ed comparisons only get you so far.”

Paul Manning, who voted to approve the budget, expressed optimism that the administration could find more spending cuts. “Budgets aren’t cast in stone. We should look at this budget as a document, but it shouldn’t be a Bible. We have a large organization, and there is more efficiency. I know it. Our goal is to dig deep.”

One source of cuts to examine might be research expenditures. Sponsored research accounts for 22% of the academic division’s revenue in the budget just approved but 25% of expenses. That three percentage-point difference amounts to roughly $60 million. Is research a money-loser? How does the accounting even work? UVA charges as much as 60% for administrative overhead for its research grants — 40% of a grant goes to the researchers and 60% to the institution. How is that justified? UVA expects to spend $536 million in research next year, but board members have no clear idea how the revenues and expenditures are accounted for or who is subsidizing what.

Such “details” did not preoccupy the Board Friday, which did take time to dish out kudos and congratulations. Praise was lavished upon 40-year employee Colette Sheehy, the retiring senior vice president for operations. And retiring board members waxed nostalgic about their terms on the board.

Hardie had much to feel good about as his term came to an end. The triple Hoo (B.A., M.A., PhD) and major donor, he had treated his term as Rector as a full-time (unpaid) job. He came on board just as UVA, and higher-ed generally, faced a backlash nationally, and as Governor Youngkin appointed a slew of board members determined to reform the institution. For two years, he had stood like Cincinnatus at the bridge to hold off budget hawks, culture warriors and other barbarians like the Jefferson Council.

Board members stood and clapped so many times during the bequeathing of accolades that Hardie joked, “We’re all going to need hand lotion after this day is over.”