By any standard, 1998-99 has been an historic year for the University, one that has taught us anew something that Thomas Jefferson knew well--that great universities live in history, not in the moment. They evolve and they change, even as their societies evolve and change. This year's report is about change that predicts good things for the future.

The year 2020 provides a rough boundary between the University's second century and its third century--hence, the title Virginia 2020 for our long-range planning programs. Looking forward twenty years, we  have begun this year to plan anew, to reconceive the work that defines the University's enduring value. This undertaking has the purpose of ensuring the University's continued vitality and integrity in an era that the nation is only now beginning to imagine.

We bring wonderful tools and raw materials to these builder's tasks. Today's faculty leaders are the best informed and most creative colleagues with whom I have ever worked. They are entrepreneurial in the best sense. In the last three or four years, they have re-engineered laboratories and classrooms to connect them via the Internet and the Web to the entire world of knowledge. By way of new partnerships with industry and government, they are enlarging knowledge itself as the investment capital for our nation's and our globe's next generation.

Progress in building academic quality remains brisk. We have never seen larger numbers of senior faculty leading their fields than now. Lewis and Clark Professor of Biology Janis Antonovics was elected to the Royal Society, Britain's Academy of Science, this year. AT&T Professor of Engineering William A. Wulf  is serving as president of the National Academy of Engineering. Ernest H. Ern Professor of Environmental Sciences George M. Hornberger won the 1999 Excellence in Geophysical Education Award of the American Geophysical Union. Dean Robert E. Scott of the School of Law and Commonwealth Professor of Biology Michael Menaker were elected to the American Academy of Arts and Sciences.

At the same time, unprecedented numbers of younger faculty members are achieving distinctions that predict their lifelong value to the University. Cassandra L. Fraser, an assistant professor of chemistry, received the National Science Foundation's Presidential Early Career Award for Scientists and Engineers. Zongli Lin, assistant professor of elec trical engineering, received an Office of Naval Research Young Investigator Award of $300,000 over some three years. Matthew Coggins, a research fellow in the Cardiac Imaging Center, won the Young Investigator Award of the American Society of Echocardiography for his work in understanding how microscopic bubbles play a role in imaging areas of heart inflammation.

The range of the faculty's undertakings in this period makes ambitious statements about our intentions for the University's third century. Physics professor Bradley B. Cox is advancing potentially revolutionary propositions about time-reversal symmetry violation. Souder Family Professor of English Charles P. Wright's fresh approach to American poetry in Black Zodiac and other recent works has brought global recognition of the continuing quality of literary and artistic work within the faculty. University Professor Anita Jones's leadership on Internet II and in national science policy summarizes in a remarkably compact way the modern viability of Thomas Jefferson's notion that science is useful. And the work of Edward L. Ayers, the Hugh P. Kelly Professor of History, in the Virginia Center for Digital History, on the effects of the Civil War on two cities at opposite ends of the Shenandoah Valley demonstrates the value of science in humanistic studies.

To maintain excellence in the future, we must continue to develop and apply the new technologies that have changed our world in this decade. To the extent that we discipline ourselves to build and invest resources in the University's new technology centers, which are libraries, e-classrooms, e-laboratories, and indeed e-offices and e-dormitories and even e-connections to faculty homes, alumni offices, and other distant sites, we sustain the faculty work that makes the University indispensable--to students, to alumni, to Virginia and the nation. In our time and beyond, universities that fall short of leadership in these areas will lose ground.

New Initiatives

Faculty members led this year in opening the University's resources for public benefit. Dean Sondra Stallard of Continuing Education and others have established a new undergraduate degree program for part-time adult students this fall, with the pilot offering here in Charlottesville. This is the first time we have offered such a program for part-time adult learners. The McIntire School of Commerce has enrolled the first class in its accelerated master's degree program in information systems. As these programs mature, they will be offered off-Grounds as well as on-Grounds. The McIntire School's new program will be delivered by means of broadband technologies that have the capacity to make it accessible anywhere and at any time.

In early fall, we opened the Robertson Media Center, located on the third floor of Clemons Library. Conceived by and named for Timothy B. Robertson (Col '77) and his wife Lisa Nelson Robertson, this center is home to the new academic program in modern media studies, headed by Robertson Professor Johanna Drucker. Drucker is well along in developing both courses and facilities for students and faculty who seek to apply media resources, such as digital technologies, to their own academic and creative work.

New external support for faculty work tells an essential part of the story about the future. This year the School of Medicine secured an $8 million grant from the National Institutes of Health (NIH) to unravel the molecular mechanism behind high blood pressure and to lay the groundwork for a cure. The U.S. Department of Education awarded the Curry School of Education $3.6 million to promote the use of technology in teaching. A multidisciplinary faculty team received a $3 million grant from the National

 Institutes of Health to study sensory cell regeneration after injury. The Center for Cellular Imaging is using a $1 million gift from the W. M. Keck Foun dation to develop a high-speed, high-resolution microscope to observe molecular events in living cells as they occur. Engineering and medicine together have received some $10.5 million from the Whitaker Foundation to support biomedical engineering, and specifically to initiate research in vascular engineering. External support of this kind validates the worth of faculty work.

Partnerships with industry are another form of validation. This has been a solid year of growth in the University Patent Foundation, which oversees commercial development of products built on faculty expertise, and in both of our research parks. This year, the Patent Foundation transferred some $1.6 million to the University in the form of royalties, patents, and license fees, and the sum is growing.

The North Fork Research Park, adjacent to the airport, will ultimately accommodate 3 million square feet of offices, laboratories, and other facilities. This year, we completed the roads and essential infrastructure for this park, and welcomed new tenants who occupy more than 150,000 square feet of new space and employ no fewer than four hundred persons. Current occupants include MicroAire Surgical Instruments, Motion Control Industries, and PRA International, Inc. The Fontaine Park, on Route 29S just above I-64, opened both a new Healthsouth Rehabilitation Hospital, staffed by our medical faculty, and a related medical office building this year. Both parks demonstrate every day the value of long-term relationships between faculty in engineering, medicine, math, the sciences, and business and our private sector clients.

The Intellectual Community

The students continue to build my optimism about the future--our own, and the nation's. Their overall graduation rate now exceeds 90 percent, one of the highest rates anywhere, and the graduation rate for African-American undergraduates is once again the highest in the nation in any private or public university. About one-fourth of the undergraduates are minority students, and women comprise 56 percent.

Student successes have been especially numerous this year. Jeffrey David Manns, of Wynnewood, Pa., became our forty-third Rhodes Scholar. Daniel Cunnane, of Towson, Md. and John Schafer, of Roswell, Ga. won Mellon Fellowships in Humanistic Studies. Baltimore native Peggy Boutilier, a field hockey and lacrosse All-American, was named the NCAA Woman of the Year. The men's lacrosse team won the NCAA championship, and both the men's and women's swimming teams won the ACC titles. In the process, Shamek Pietucha, of Edmonton, Alberta, won the University's first individual national championship in swimming.

I have thought a good bit this year about how the University fosters its students ' willpower to take on and dominate tough challenges, and about how this quality manifests itself in accomplishments after graduation. This fall's Virginia 2020 Internet Summit highlighted alumni involvement in e-business--a topic that came to mind after Fortune magazine posed the question "So what's in the water down in Charlottesville?"in an article about the extraordinary number of alumni who lead e-business or Internet companies. Alumni who lead Yahoo!, iXL, iVillage, and CNET, among others, banded together to organize this on-Grounds gathering. In the process, they created a conversation that excited audiences around the world via Internet.

As I have in all of the Virginia 2020 dialogues, I found in the Internet Summit unexpected and exciting similarities between academic discourse, the kind that has always flourished here, and corporate discourse, the kind that occurs naturally when leaders meet to chart the future. All kinds of persons sat around tables in seminar rooms, traded ideas in large forums, and gathered in talkative groups in corridors and around coffee tables throughout the University. Listening, I was struck by the reality that useful science really does connect us as a people, just as our founder thought it would.

The University's College at Wise  The initiatives that the College at Wise is pursuing to attain national stature among its peer institutions mirror those of the University of Virginia.  Like the University, the College is bolstering its arts, sciences, international, and public outreach programs. Its efforts, so far, have been effective. This year, U.S. News & World Report announced that the College at Wise ranked second among Southern public liberal arts colleges. The University and the College also have close academic ties. As part of the University Fellows Program, U.Va. faculty regularly travel to Wise to lecture and work with faculty and students. U.Va. education professor Harold Burbach developed a program that allows College staff to pursue a master's degree in education while on the job, and faculty in the history department collaborate on a variety of projects. President Casteen emphasized the close relationship between the two schools this year by joining Chancellor Jay Lemons and speaking at both graduation and convocation ceremonies.

Marshaling Resources

The Campaign for the University of Virginia continues to surpass all expectations, and the momentum continues. (As I write in mid-November, we have realized that we will reach the overall goal of $1 billion before the end of the calendar year, one full year ahead of schedule.) At the end of fiscal year 1998-99, we had raised $947 million. In January 1999, we exceeded the original campaign goal of $750 million in cash gifts and pledges. The success of this effort remains a nationally recognized model, and I am deeply grateful to the 126,000 alumni, friends, and organizations whose gifts have propelled the campaign forward.

Private support has touched all areas of the University. Generous donors have made commitments for 150 endowed professorships, nearly 627 endowed scholarships and fellowships, and 285 other academic endowments. They have provided construction or renovation of hundreds of thousands of square feet of facilities, including the new Darden School, the David A. Harrison III Law Grounds, and a new library for rare books and manuscripts. Facilities for football, baseball, soccer, tennis, and other sports have been expanded and improved, and Pavilion VII, the oldest building on the Lawn, is being restored, as are the Lawn and Range rooms.

The campaign has long-term implications for the University. Our combined endowment now exceeds $1.6 billion--the second largest held by a single public university (and only three university systems have larger). Favorable markets and prudent fund management over the next five or so years, when pledges are paid off, may well add another $1 billion.

Fund-raising momentum continues to build. Although the campaign is in its sixth year of active solicitation, 1998-99 has been the best year yet, and this comes in a period when one might have expected a plateau or  even a decline in giving. This year's total of $198 million exceeds by some $28 million our record performance in 1995-96, when we publicly kicked off the campaign.

Over and over again, supporters demonstrated extraordinary commitment to what we are trying to achieve. This year, we received a $13.3 million unrestricted pledge from Board of Visitors member William H. Goodwin Jr., president of CAA Industries of Richmond, and his wife, Alice T. Goodwin for the Darden School and an unrestricted $10 million gift from United Technology Corporation chairman George David (Darden '67) for the Darden School. Jeffrey C. Walker (Com '77) contributed $3 million to fund the Walker Professorship in Growth Enterprises. This gift is the largest the University has ever received for a single endowed chair. The Kenan Charitable Trust supported restoration of Pavilion VII through a $1 million challenge grant and also issued a $500,000 challenge to endow educational programs related to the Jeffersonian structures and the historic gardens. Fund-raising for both matches has been uncommonly successful. David A. Harrison III has provided yet another extraordinary gift: $10 million to create an institute for the study of American history, literature, and culture and to fund construction of one of the two buildings that will constitute the new special collections library. These and many other acts of foresight and generosity bode well for our University in the next century.

Distinction in Athletics The Sears Directors' Cup recognizes the best collegiate athletic programs in the country. This year, the University of Virginia placed eighth in the Sears Cup competition, its best standing ever. Athletic director Terry Holland and a stellar group of coaches, academic counselors, support personnel, and athletes--women and men committed to the ideal of the student who is also an athlete--have moved the University from twenty-second place to eighth in just two years. While the University is proud of its teams--the men's lacrosse team that won the national championship this year, and the men's and women's swimming teams that brought home ACC championships-- it is equally proud of the scholastic achievements of these students. Their classroom success matches their success on the field. For instance, the football program has been cited nationally for its graduation rate among scholarship players for fifteen consecutive years. Four Cavaliers were selected to the 1998 All-ACC Academic Football Team. The Sears Cup standing shows our athletic program for what itis--outstanding.

Tracking a Moving Target

Anyone who has observed the University as it has grown and changed during the last quarter century has witnessed a remarkable renaissance. Much of this growth and change is the result of individual work: students, faculty members, staff members, and thousands of devoted volunteers have built institutional excellence by their personal efforts. Beyond this, our corporate progress so far has consisted of two central accomplishments: self-sufficiency rather than retrenchment or collapse in response to unprecedented declines in state tax appropriations for higher education; and rigorously planned progress in such areas as law, physiology, architecture, education, business, and a dozen other fields as we have found new sources of revenue to support new work.

At the same time, the states that support our peer public institutions have made up and advanced far beyond their own reductions in the early years of this decade. Because our resources have not kept pace with those provided by the state of California, we have watched this year as the University of California at Berkeley moved into the top spot in the popular (U.S. News & World Report) ranking of public universities. The University of North Carolina at Chapel Hill, UCLA, and the University of Michigan are close behind us, and all receive substantially more tax support than we do. These universities are spending their new dollars wisely, and they are advancing. As cost-efficient as we are, we will be hard pressed to sustain the progress of the last decade without both a major new infusion of tax support and sustained success in raising private funds.

Excellence As We Approach Our Third Century

In this decade, planning and management have sustained the quality of our endeavor. In the next, they will support dramatic advances in most of the University's core endeavors, and the work is well under way. As part of the Virginia 2020 planning initiative, faculty members, students, alumni, community leaders, and others are studying our strengths, looking honestly at our defi ciencies, and identifying opportunities for improvement and new investments.

This process addresses four areas in which we need to be stronger and can be: science and technology; the fine and performing arts; international activities; and public service and outreach. Other great American universities excel in all of these areas; yet none has reached its potential here. Commissions chaired by prominent faculty members began work on improvements in these areas in fall 1998. This work and the next phase, which is devising financial strategies for excellence in endeavors that do not receive sufficient state tax support, require serious and sustained effort over several years.

The full title of this effort is "Virginia 2020: Agenda for the Third Century of the University of Virginia." Reflecting what we have learned in this decade about reaching large goals without vast resources, this is a data-driven planning. Budgeting purposefully, making choices, setting priorities, surveying the environment dispassionately and with clear intentions: these qualities have made our planning successful in this decade,  and they are the foundations of the work now in progress.

I cannot predict every outcome of this work, but one will almost certainly be a new approach to raising private funds. Virginia 2020 may well teach us how to make better use of private resources. Fund-raising may need to evolve from our current mode, which is school-based, to a new approach that will permit us to address science or the fine arts as University-wide issues rather than as issues for a single department or school. Our challenge in the next era will be to choose among a range of options and to act boldly when the projected benefits of success make the risks and costs worthwhile.

The University's stakeholders are many. They include generations of alumni and faculty, those 126,000 persons who have supported us in this decade of new financial realities and dramatic growth in stature, citizens who look to the University for moral and intellectual leadership and for scholarship second to none, the taxpayers of Virginia who support us and the elected officials who allocate state moneys, and the women and men who come to Charlottesville to pursue education and equip themselves for a lifetime of service. Our task, indeed our privilege, in this time is to define futures worthy of the past that gave us shape and being.

Sincerely,

John T. Casteen III

President