Though the University now stretches well beyond Jefferson's Lawn and Ranges, the connections among our schools remain one of our most valuable assets. The growing sophistication of human knowledge and the complex questions that arise from complex learning now impel scholars to view difficult problems from multiple disciplinary perspectives. The boundaries that divide academic departments have become easier to cross, and the proximity of our schools and programs to each other and to the historic heart of the University fosters the intellectual ferment that gives rise to new discoveries and new ways of thinking.

In recent planning efforts, in which we have envisioned futures built on established and emerging strengths, the importance of cross-disciplinary collaboration has become clearer than ever. We are a small institution when compared with other public research universities. While our size contributes to the exceptional power and intimacy of the learning experience here, it prevents some departments, especially in the sciences and engineering, from acquiring the breadth of faculty expertise necessary to achieve the distinction of which they are capable. By encouraging departments to join forces across disciplinary lines, we can assemble a critical mass of scholars in key areas and build research and teaching programs that are among the best in the world.

We are beginning to see the fruits of our commitment to working collaboratively. A new institute devoted to the study of morphogenesis and regenerative medicine, one of our Virginia 2020 initiatives, draws on the collective capabilities of researchers in biology, cell biology, microbiology, pediatrics, chemistry, biomedical engineering, and other departments. In the area of nanotechnology, another Virginia 2020 priority, we have professionally recognized faculty strengths in departments ranging from materials science to chemistry to biomedical engineering. Similarly, faculty members in chemistry and medicine are working together to make groundbreaking advances in drug discovery and development. And as we proceed with planning for the new Arts Grounds, one of our overarching goals is to promote creative collaborations among our arts programs.

Our students, too, are discovering the power of collaboration. The team that constructed the solar house for the Department of Energy's Solar Decathlon on the National Mall included graduate and undergraduate students in architecture, engineering, and other fields. Named first among fourteen entries for the quality of its design and livability, and winning second place overall, the house combined technical, aesthetic, and environmentally sustainable innovations that grew out of multidisciplinary thinking.

The University's collaborative ventures are international in scope and impact. In southern Africa, a region where our faculty have long conducted research on the environment, we have formalized a relationship with four institutions that encompasses not only scientific inquiry but also distance-learning programs and opportunities for our students to study in the region. Capitalizing on eminent programs in literature, history, politics, law, and other fields, as well as our extraordinary library collections, both on paper and online, we have established the International Center for American Studies. Through the center, scholars in this country and abroad will draw on the University's incomparable resources to gain a new understanding of the American experience.

Nowhere is the University's collaborative spirit more evident than in the study of ethics. In philosophy, religious studies, medicine, nursing, law, business, architecture and planning, environmental sciences, and engineering, we have distinguished ethicists who can help us wrestle with the vexing dilemmas that arise in our time. The new Institute for Practical Ethics is bringing these strengths together and has begun to offer courses in which undergraduates explore ethical issues of global significance.

One very practical reason to pursue multi-disciplinary initiatives is that they make efficient use of resources, an absolute necessity in these uncertain and stringent times. The University is among many public research institutions that are dealing with dramatic cutbacks in state support. In 2002, the Virginia General Assembly faced a structural budget crisis totaling some $3.8 billion over three fiscal years. Every function of state government had to take cuts in appropriations, and we lost more state dollars than any other institution in the Commonwealth.

After removing $4.8 million in state funds from our revenues in 2001-2002, we budgeted for state cuts of $25 million in 2002-2003 and $33 million in 2003-2004. As the state's financial condition further deteriorated over the summer, we imposed a hiring freeze and curtailed discretionary spending until we could determine the full extent of the shortfall. With the further cuts announced by Governor Warner in October, the reductions total $42 million in 2002-2003 and $52 million in 2003-2004.

Though state appropriations will account for less than 9 percent of our total funding next year, they remain the principal source of support for most of our academic programs. This kind of financial contraction can be damaging to student and faculty morale, but it can also strengthen us. The challenge of maintaining institutional excellence in the face of severe budget reductions pushes us to determine what is essential to our mission, to use what we have wisely, and to find alternative means to fund our core purposes.

Despite current difficulties, we can look to the future with optimism, in large measure because our alumni and friends continue to demonstrate their commitment to sustaining the academic enterprise. This past year, the University and its affiliated foundations received more than $255 million in gifts, an amount unprecedented in our history. This figure includes two of the largest single contributions ever made to the University, as well as nearly $34 million in annual giving from more than 50,000 donors.

As the following report makes evident, we are working hard to deserve such generous support. To stay on this path, we will continue to seek partnerships-within our own community, with colleagues in other universities, with friends in the public and private sectors, and with alumni, our lifeblood. And we will emulate our founder, who as a scholar was "bold in the pursuit of knowledge, never fearing to follow truth and reason to whatever results they led, and bearding every authority which stood in their way."

Sincerely, 

John T. Casteen III 
President