The University of Virginia is now established firmly as one of the premier universities in the nation and the world. It is widely recognized as an exceptional place to both learn and teach, a fact that lends stability to our academic enterprise and provides a basis for further excellence. The faculty here is one of the most distinguished group ever assembled anywhere, and each successive class of students is brighter and more talented than the one that preceded it.

The achievement of so many of the University's academic goals has been the result, at least in part, of the University's unusual financial stability. Its budget -- topping $1 billion in 1997-98 -- is supported by a broad range of reliable revenues. The University is one of just three public universities in the nation to receive a Aa1 bond rating from Moody's Investors Service.

The decline in state appropriations and concurrent rise in tuition and fees that marked the beginning of the decade have moderated -- and indeed state appropriations are expected to increase in the coming year. Funding for sponsored programs has risen, a noteworthy achievement when spending for research by government and industry is in decline. Sponsored programs funding now equals our revenue from tuition. Finally, gifts and endowment continued to be an important source of funding, increasing 20 percent over last year.

The growth in our endowment has been remarkable. In the 1986-87 fiscal year, it totaled $422 million. Ten years later, it has reached a record $1 billion, giving the University the fifth largest endowment of any public university in the country. Thanks to the generosity of our donors and the guidance provided by the Finance Committee of the Board of Visitors and the treasurer's office, the University's endowment has become a lasting edifice, as permanent as any building on Grounds.

Building on Human Resources

These achievements would not be possible without the support of faculty, administrators, and staff. The academical village rests on a sound foundation created anew each day through the hard work of these dedicated individuals, whose vision and commitment lend vitality and stability to the entire enterprise. They are, for instance, active supporters of the capital campaign -- faculty and staff contributions have exceeded expectations in all divisions of the University -- as well as the source of many initiatives that have enabled the University to streamline operations and cut costs.

Cross-functional teams of University faculty and staff have used the delegated authority granted by the Governor and General Assembly to target specific opportunities for doing business in new, more efficient ways. Teams are now at work in such areas as travel reimbursement policies and procedures, the classified staff hiring process, and research administration. The results have been gratifying. For instance, a process simplification group helped the University adopt a vendor credit card system to facilitate small purchases and reduce the cost of recording transactions in the University's accounting system. The savings from fiscal year 1996-97 alone were in excess of $665,000.

University of Virginia Endowment   This year, the University's endowment reached a record $1 billion. Endowment spending, carefully monitored by the Board of Visitors and the treasurer's office, has played a major role in University efforts to raise faculty salary levels to those near our peer institutions.

The University's most impressive asset as it enters the new century is its extraordinary stability, the product of our exceptional academic performance, our reliable revenue stream, our large and growing endowment, and an active, innovative faculty and staff fully committed to the mission of the University. This stability has made it possible for University planners to envision the future with confidence and to take steps to ensure that the University continues to provide the highest standards of education to the citizens of the Commonwealth and the nation. Our goal is to secure the University's future, not for the next year or the next decade, but for the next century.

 Sincerely,