The Virginia General Assembly's decision about whether to use the Revenue Stabilization Fund to mitigate the effects of the Commonwealth's budget deficit could affect proposed budget cuts at Virginia higher education institutions, including the University.
The Commonwealth's Revenue Stabilization Fund, a $1.2 billion reserve, often referred to by lawmakers as the "rainy-day fund," might be used to help cover part of a projected $640-million shortfall in the Commonwealth's two-year budget, Deputy Secretary of Finance Manju Ganeriwala explained.
Gov. Tim Kaine asked the University and several other state colleges and universities last month to submit proposals to cut their spending by 5 to 7.5 percent as a result of the budget shortfall. Kaine's spokesperson Kevin Hall, however, said the requested spending cuts may rise if the General Assembly does not authorize the use of the Revenue Stabilization Fund, as the suggested cut of 5 to 7.5 percent took into account the fund's usage.
"The cuts could be even deeper," Hall said.
Anda Webb, University vice provost for administration & chief of staff, said the University has only submitted spending cut proposals for the original 5 to 7.5 percent. She acknowledged, however, that the numbers certainly could change, adding that nothing has been finalized.
"We don't know what the final amount of reduction will be," Webb said. "My understanding was that the University was given a target reduction number for planning purposes."
Ganeriwala said it is ultimately the governor's and Assembly's role -- especially in regards to the possible use of the "rainy-day fund" -- to determine how deep the cuts will be.
Secretary of Finance Jody Wagner made a presentation to the House Appropriations Committee Monday regarding steps that might be taken to cover the Commonwealth's deficit including, but not limited to, the use of the Revenue Stabilization Fund. Ganeriwala added that Wagner's presentation to the House Appropriations Committee was meant to inform the committee of the magnitude of the situation.
"If [the Revenue Stabilization Fund] is not exercised, the cuts would have to be greater, in the 10 to 12 percent range," Ganeriwala said.
Not all members of the General Assembly support tapping the fund, however.
Del. Vincent F. Callahan Jr., R-Fairfax, explained the fund must be reserved for more serious and disastrous times.
"I'd just like to reiterate that the 'rainy-day fund' is there for a catastrophe," Callahan said. "And I think it makes a terrible precedent to start using the 'rainy-day fund' when there isn't a catastrophe."
Callahan said the budget shortfall can be made up through other means, such as not filling employment vacancies.
"The sky is not falling," Callahan said.
Callahan also added that the Governor's Office may be misrepresenting the need to use the fund.
"They have a lot more room for maneuvering than they will admit," Callahan said.
Hall, however, said the matter should not be taken lightly and explained the Revenue Stabilization Fund was created for situations like the present one.
"Voters approved the Revenue Stabilization Fund to be used in situations just like the one we are in," Hall said.
Hall also noted that if the fund is not used, an increase in budget reductions could cause concern among many Virginians.
"You know the angst that has been created by the 5 to 7 percent," Hall said. "Double that."
Still, Callahan maintained that the University may not be as affected as some might like to believe.
"U.Va. is well positioned to absorb any cuts that they might make," Callahan said. "I don't think the average student or average professor will feel any cuts in the budget."
The actual extent to which the University will have to cut spending, however, will remain unknown for several weeks. According to Ganeriwala and Hall, Kaine will announce his budget-reduction plan in early October.
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