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All the President's Profs

December 22, 2010

Calling them Mr. Jefferson’s Justice League is somehow irresistible. Perhaps that’s because the University of Virginia’s Faculty Budget Advisory Committee resembles a gathering of superheroes, where brainiacs of varied disciplines combine their powers to confront a common enemy.

Granted, the villain – deteriorating university resources – is not as sexy as, say, Lex Luthor. And the scholarly powers of endowed chairs are hardly gamma rays. At the same time, there’s a sense Virginia has responded to a difficult economic environment in part by convening an astute assembly of professors on a campus founded 191 years ago by Thomas Jefferson.

The 13-member crew, whose membership is weighted toward those with some business or finance acumen, is charged to serve as an informal advisory group to Teresa A. Sullivan, the university’s recently minted president. But Sullivan says the committee is also designed to bring transparency to the institution’s often-mystifying budgeting process, connecting the university’s administrators with a diverse pool of faculty.

“It seemed to me a shame these two groups of smart people hadn’t sat down with each other before,” she says.

Unlike a standard faculty budget task force, the advisory committee isn’t necessarily engaged with a particular issue, such as where the university should cut or invest. Instead, it is grappling with more fundamental high-level questions, such as whether the university operates with sufficient liquidity – or cash on hand – to pay its bills should there be another huge economic plummet.

Another point of distinction for the budget committee is its make-up. Like most university-wide committees, the group includes professors across a range of disciplines. At the same time, Sullivan clearly sought a number of faculty with business orientations, and committee members were charged to "draw on on their own expertise in financial matters to provide advice."

While Sullivan says she wasn’t looking for a brain trust to tap for input on specific policy questions, she notes that she won’t “rule out the idea that as we make budgetary decisions I will consult this group.”

Moreover, Sullivan may well be inclined to turn to this committee for ideas, rather than using outside groups that offer such services for a fee, sometimes inviting faculty criticism.

"President Sullivan said that she would certainly go to this internal group for advice before resorting to the outside as a general matter," Carol Wood, a university spokeswoman, said in an e-mail. "Sometimes," she added, "there are issues of such technical complexity that you still need the right expert."

Virginia has faced budget cuts, like most institutions, but the fact that the university is less dependent upon the state than many other public colleges has proven something of an advantage. Only about 10 percent of the university's $1.4 billion budget -- excluding the medical center -- comes from taxpayer dollars, so the university's fate is not so intimately tied to the state's own financial struggles. But the portion of the university's budget that is linked to the state has taken a beating. Virginia has already lost about $32 million in appropriations in the last three years, and officials expect that total reduction to reach $50 million by the end of next year.

The committee's charge is to advise the president, but some members see a clear subtext to their defined duties. Members are likely to share what they’ve seen of the university’s inner financial workings with their colleagues, and those discussions could potentially shield Sullivan’s administration from the kind of suspicion and mistrust that can permeate a campus when difficult budget decisions are made.

“By drawing a group of faculty into reasonably intense discussions, that’s one way to make clear there’s no smoke and mirrors here, that people are acting responsibly as stewards of the university’s finances,” says Sarah Turner, a committee member and professor of education and economics.

Yet, the committee isn’t expected to just accept the administration’s party line. To the contrary, Turner says she and others in the committee’s first meeting questioned whether Virginia’s investment strategy is too conservative.

“I think it’s about asking not obnoxious questions but provocative questions,” she says. “Question your assumptions. What are the tradeoffs?”

Striking to Turner, for instance, was a PowerPoint slide that showed Virginia’s liquidity position relative to those of its peers. Virginia has enough liquid assets to sustain operations for about 213 days, more than all but two of eight selected institutions. By contrast, the University of North Carolina at Chapel Hill had about 85 days of cash on hand, according to the slide.

The liquidity of Virginia’s assets likely helped spare the university from some of the problems encountered by institutions like Harvard University, which scrambled to sell off illiquid holdings in hedge funds and private equity after the market bust. But did Virginia also miss out on other investment opportunities by keeping so much cash on hand?

“One of the questions that was fairly put on the table [in the first committee meeting] was, 'What’s the cost of having another 50 days of liquidity?,'" Turner says. "What’s the right amount of liquidity you want to have so if the floor drops out tomorrow you’re not held hostage?”

Leonard Sandridge, the university’s executive vice president and chief executive officer, stresses that the committee’s work is not intended to subvert or replace the normal budgetary governance process. The provost, deans and other faculty still have their important roles to play, he says. It is also of note that the committee includes a member of the Faculty Senate and the chair-elect of the Senate, suggesting the committee's role is to complement -- not replace -- the Senate's function in budgetary discussions.

“Whether you’re talking about a public university or a private university today, they are much more focused as an institution on setting priorities and realizing what they can and cannot do,” Sandridge says. “I would say it only works if you can have the buy-in from the faculty that have to live with the results of those decisions. This is a vehicle for that happening to the maximum extent possible.”

To achieve faculty “buy-in,” as Sandridge suggests, professors need to feel like they’re getting the straight story, says Robert Kemp, a research professor in the McIntire School of Commerce and a committee member.

“It’s time the university evolved in numerous ways, but money is at the heart of it,” says Kemp, who is chair-elect of the Faculty Senate. “This initiative is [Sullivan’s] attempt to say, ‘I’m going to be very transparent about the money, folks.’ ”

“I think she will not say this directly,” he adds, “but I do believe that trust is an objective of this.”

This is not the first time Sullivan has assembled a team like the one at Virginia. After the fall of Lehman Brothers, when economic panic was at its peak, she pulled together a similar group at the University of Michigan at Ann Arbor, where she was provost from 2006 to early 2010. Even since Sullivan’s departure, the committee has stayed in place.

“They play an extremely important informal [role], which is that we stay in touch with the needs and interest of the faculty on campus,” says Martha Pollack, Michigan’s vice provost for academic and budgetary affairs.

And while the committee’s input is informal, Pollack stresses their work isn’t just a feel-good exercise held over from Sullivan’s tenure.

“I’m not in favor of meetings for their own sake,” she says. “It’s really easy in an administrative role to become isolated if you don’t make great efforts to stay in touch on campus.”

 

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