April 2025

The Board of Visitors (BOV) met in late March and took several actions that have a direct impact on University Operations.

Tuition, fees, room and board.  The BOV set tuition, fees, room and board for the next academic year.  This is an important step for students and families as they plan for the upcoming school year, but it is also important for the campus community.  For instance, most of the functions within University Operations – including finance, facilities, human resources, IT, public safety, governance, audit and compliance – are funded as part of our educational and general (E&G) programs.  Tuition revenue accounts for 68% of the funding for those programs (with state funding accounting for 27% and a myriad of other revenue sources making up the difference). 

For auxiliary programs, student fee revenue coupled with room and board charges account for almost half of the programmatic revenue that allows us to provide transit and parking services,  provide student health services, compete in intercollegiate athletics, and offer on-campus student housing and dining - programs that have each won national awards for their innovation, quality, and positive impact on student development.

In total, tuition, fees, room and board account for over $980 million in annual revenue to the institution.  They are the revenue sources most directly in control of the Board of Visitors and the expenditures for which our students and families hold us most accountable.

Student housing.  After years of discussion, the BOV voted to rescind its prior approval to construct 1,750 new on-campus beds as the first phase of a new Student Life Village (SLV).  SLV was envisioned to be a long-term, multi-phased housing project that could be developed over a period of roughly two decades to meet the university’s on-campus housing needs.  Instead, the BOV directed the administration to develop an alternative plan that focuses on the most immediate on-campus needs, including the renovation of our existing housing facilities, and to put those plans in the context of the university’s undergraduate enrollment strategy.  The Facilities, Finance, Student Affairs, and Enrollment Management teams are already at work to bring forward a plan at the BOV’s August meeting.

The BOV also took action related to a series of Presidential Executive Orders and federal guidance.  Although there are clearly significant differences in viewpoint around the content of those Executive Orders and guidance, the practical application is clear.  All higher education institutions that receive federal funding are subject to lose that funding if they are determined to be out of compliance.  As discussed below, the potential financial implications for Virginia Tech are significant.  Many of our students rely on federal financial aid or federally subsidized student loans in order to enroll at Virginia Tech and persist in obtaining their degrees.  In addition, without federal funding, our research enterprise would be severely impacted.

Although that context is important for understanding the BOV’s action, I know it has created significant concern for many, raising questions about our individual responsibilities to each other and to this community.  In his recent town hall, President Sands reiterated the importance of Virginia Tech’s Principles of Community.  If you have not read our principles recently, I urge you to do so.  They are a cornerstone to who we are as a university and serve as a daily reminder of how we can move forward together.  

At the state level, the 2025 regular session of the General Assembly adjourned at the end of February after considering over 3,100 bills and resolutions.  Among those were amendments to the Commonwealth’s biennial budget, which includes funding for the current fiscal year as well as FY26.  The proposed state budget contains some good news for Virginia Tech. 

Operating Budget.  The proposed budget includes funding for merit-based salary adjustment program for eligible employees in FY26 and an across-the-board bonus for eligible employees at the end of the current fiscal year.  It also provides additional state funding for key strategic initiatives, including funds to increase enrollment at the Virginia Tech Carilion School of Medicine in Roanoke, additional programmatic support for the Virginia Tech Corps of Cadets, and equipment support for our Cooperative Extension and Agricultural Experiment Station Division.  Unfortunately – and uncharacteristically – the additional operating support is “one-time” in nature, meaning it will be provided only in the current year, and not on-going base support that can be relied upon in future years.  Assuming the Governor approves the budget, Virginia Tech’s Office of Budget and Financial Planning is working to align those new one-time dollars with appropriate one-time uses to retain a structurally balanced budget for the university.  

Capital Budget.   The state’s capital budget includes authorization for major construction, renovation and maintenance reserve projects and identifies funding for those projects that will receive funding from the state.  As currently proposed, the state budget would provide incremental funding for maintenance reserve and the construction of Mitchell Hall.  It also provides funding and authorization for a new medical school building in Roanoke.

The Governor has until early May to approve or reject the amended budget.  Any changes will be reflected in the annual Authorized Budget Document located on the Office of Budget and Financial Planning website following the June BOV meeting.

It is also important to note that although the additional funding provided by the state is indeed good news, the fact that funds have been earmarked as one-time support rather than on-going base support reflects unease at the state level on the potential ripple effects of reductions in federal spending that could negatively impact state revenues.   Fortunately, the Governor and General Assembly have worked aggressively over the last several years to build up the state’s “Rainy Day Fund,” which will provide some initial buffer to any future economic downturn.  However, that Fund is intended to help the state weather temporary fiscal challenges and is not a permanent solution to offset a prolonged economic downturn.  The Commonwealth contributes significantly to our annual operating budgets, providing over $440 million this year alone in support for our E&G programs and student financial aid, so we are carefully monitoring discussions in Richmond and paying attention to the economic forecasts.  

Beyond the potential impact on the state economy, changes in federal funding for research – including direct and indirect research funding – and in immigration policy and practice have implications for our faculty, staff, and students. 

President Sands and Dan Sui, senior vice president for research and innovation, issued a message to campus earlier this week providing updates on federal research funding.  It’s important to understand that federal funding for research comes in two forms: 1) payments for direct research, and 2) facilities and administrative cost recoveries (F&A). 

Direct Federally Funded Research. Direct payments are readily understood as covering the cost of the faculty and staff conducting the research and the supplies and materials needed to conduct the research. In FY24, we received close to $250 million in federal funding to support direct research.  As you have likely seen or heard in the news, universities across the country have received “stop work orders” for grants and contracts that have already been awarded by the federal government.  At Virginia Tech, out of a total of 2,315 active federal awards, 25 have been terminated and 12 have received full or partial stop work orders to date.  The total impact is $21.2 million over a multi-year period.  Faculty and staff in our Office for Research and Innovation are working diligently with principal investigators across the university to monitor and respond to new federal notices and the Provost’s Office is working closely with affected faculty and students, predominantly graduate students, who have been impacted by these changes.

Indirect Funding or Facilities and Administrative (F&A) Cost Recoveries.    It’s the second form of payment for federally funded research that is not well understood and is under considerable scrutiny at the federal level.  In order for faculty and staff to conduct research (those items considered to be direct costs), they must have sufficient facilities and appropriately monitored conditions under which they conduct that research.  To create the necessary research environment and to meet the state and federal regulatory requirements, the university builds, maintains and pays for research labs and facilities; provides animal care; treats and disposes of hazardous research materials; maintains and develops appropriate research security protocols, provides pre- and post-grants and contract administration; supports procurement and purchasing; maintains appropriate staff for internal controls; and provides appropriate research computing infrastructure and expertise.   

When I talk about enabling infrastructure, these are clear examples!  In fact, colleagues in Environmental Health and Safety; Audit, Risk and Compliance, the Office of Civil Rights Compliance and Prevention Education, the Controller’s Office, and the Division of IT contribute to these efforts daily.  Because these activities support the overall research enterprise, it is difficult to apportion their costs to individual research projects or activities. Collectively, they are sometimes referred to as “indirect costs” and many – but not all – of them are eligible for reimbursement from the federal government through a highly technical, regulated process to establish an F&A Recovery Rate.   For FY24, Virginia Tech received over $75 million in F&A from the federal government.  Although this covered a significant portion of our related costs, we estimate that the university absorbed $18 million in research-driven support costs that were not covered by the federal government.   If the federal government reduces the share of indirect costs that it reimburses, the university will have three options: reduce its research activity, reduce activity in other areas of the university in order to shift funding towards research, or look at other sources of funding (e.g., tuition, state funding, or philanthropy) to fill in the hole. 

In addition to changes in federal funding, over the last few weeks, the federal government has ramped up efforts to revoke the legal status of international students studying in the U.S.  President Sands informed campus late last week that we have become aware of Virginia Tech students who are being impacted by these efforts.  To date, we are unaware of any changes in legal status for any Virginia Tech employee as a result of the federal government’s most recent actions.  The Cranwell International Center is reviewing records daily to determine if members of our community are being impacted and is updating its website regularly with the latest available information.