Chapters 933 and 945, 2005 Acts of Assembly (SB 1327 and HB 2866)

The legislation for the restructuring of Virginia’s public institutions of higher education extends them autonomy in areas such as capital building projects, procurement, and personnel. The autonomy comes with state oversight and with articulated state goals for the institutions to meet.

Under the restructuring act, three levels of autonomy are available to all public institutions of higher education, with the level of autonomy depending on each institution's financial strength and ability to manage day-to-day operations. The act requires the institutions to develop six-year academic, financial and enrollment plans that outline tuition and fee estimates as well as enrollment projections, to develop detailed plans for meeting statewide objectives, and to accept a number of accountability measures, including meeting benchmarks related to accessibility and affordability. Financial incentives are available to schools which meet state objectives.

This legislation is the most sweeping change in Virginia’s system of public higher education in decades.  In the effort to provide colleges and universities with more predictability and flexibility, the Governor and legislature worked to ensure that Virginians see tangible benefits, like improved access, affordability, and quality. In return for additional autonomy from the state, the institutions commit to continue participating in enterprise-wide government reforms, especially helping the state leverage its purchasing power and manage information technology in the most cost-efficient way.

The Legislation Ties Autonomy to State Goals

To qualify for additional autonomy and financial incentives, institutions of higher education must commit themselves formally to meeting basic state policy objectives:

• Access to higher education, including meeting enrollment demand
• Affordability, regardless of income
• Provide a broad range of academic programs
• Maintain high academic standards
• Improve student retention and progress toward timely graduation
• Develop uniform articulation agreements with community colleges
• Stimulate economic development, and for those seeking further autonomy, assume additional responsibility for economic development in distressed areas
• Where appropriate, increase externally funded research and improve technology transfer
• Work actively with K-12 to improve student achievement
• Prepare a six-year financial plan
• Meet financial and administrative management standards.

In return for committing themselves to meet these objectives, schools receive some additional operational autonomy in areas like procurement, personnel, and capital outlay (Level I).

Oversight

The State Council on Higher Education in Virginia (SCHEV) is responsible for developing performance indicators to measure whether the institutions are meeting the state’s objectives. Institutions which are certified as meeting the state’s objective receive financial incentives:

• Interest earnings on tuition and fees;
• Mandatory re-appropriation of unexpended balances;
• A rebate on purchases made through the small purchase charge card;
• A rebate on sole source procurements made through that state’s automated procurement system for which they have paid fees.

Institutions seeking additional operational freedom may seek an MOU in areas to be identified by the Governor in the next budget bill (Level II).

Institutions with at least a AA- bond rating may seek additional autonomy through a management agreement (Level III) which must be negotiated with executive officials designated by the Governor, and then be formally approved by the General Assembly. The management agreement defines the authority an institution may exercise and may affect: its financial operations. capital outlay, procurement, information technology, personnel and human resources.