Spring 2009

To the University community, alumni, parents, and friends of the University

Despite what sometimes seems to be unrelenting bad news about the nation's economy, the University, and indeed universities everywhere, have extraordinary opportunities now to offer solutions to some of our most pressing problems -- and to help ensure the future of the nation.

We are already committed here to addressing many of the priorities President Obama has emphasized in recent remarks on the economy -- health care, energy, science and technology, and of course education.

Great universities spark innovation, create new knowledge, and educate future citizen leaders. They discover and share the knowledge that leads to recovery and prosperity. As it has in prior times of crisis, our nation will inevitably look to us and to others working in similar universities for solutions to issues that touch all who live on our planet.

One step President Obama and Congress have taken to stabilize the economy is passage of the American Recovery and Reinvestment Act of 2009 (ARRA), which will distribute $787 billion into the economy over the next two years. Many of you know that we worked with universities elsewhere to make the case for this stimulus package. The President and the Congress did as we asked, and the opportunities now are nothing short of historic.

Colleges and universities can now compete for many of those dollars, and advance the public good with them. These funds are intended to be bridge funds -- temporary support for a recovering economy. As we compete for and use them, we intend to enhance current work and jump-start new work -- here, in the surrounding community, and nationwide. Longer-term recovery depends in part on the success that these first stimuli achieve on the path to recovery.

Shortly after the first of the year, I asked Leonard Sandridge to lead a pan-University Ad Hoc Stimulus Coordinating Group to implement a University strategy for applying for grants, and to solicit and vet University proposals. The group, which has met weekly since mid-February, deals with projects that reflect institutional and academic research priorities but also promise larger economic impacts. By necessity, this group has sought large-scale, multi-disciplinary, multi-jurisdictional, and multi-school funding opportunities. It has focused primarily on energy, sustainability, cybersecurity, and health IT. These efforts have the capacity to bring significant additional stimulus funds to U.Va., and in the process to create jobs and protect families against becoming lost in the downturn.

The process for seeking ARRA funds is complex. Except for competitive research proposals funded in the customary ways, it requires approval from the Governor prior to submission to Federal agencies.

Of the state's $4.8 billion in ARRA funds, some $126.7 million has been designated for higher education. Of that sum, we will receive initially $10.7 million in 2009-10 to help offset the Governor's earlier recommended $23.1 million general fund cut. This translates to a net reduction of $12.4 million in 2009-10. This more moderate reduction in the University's budget lets us offset in part the tuition increases previously scheduled for in-state students and their families for the next two years.

As originally announced, additional ARRA funds were to be available to fund proposals from across the state for capital construction, service-related projects, transportation, financial aid, equipment, and other operational items. Earlier this month, however, the Governor put this balance into a reserve to be tapped if, as many economists now predict, the economy worsens in 2009-10. Most with whom I am talking believe that the Governor's decision to hold this money in reserve reflects a wise and informed view of this economic downturn. But you can imagine the extent to which this decision has forced reconsiderations of priorities in agencies and institutions across the state. Prior to this reserve strategy, we had submitted some 20 proposals -- primarily for capital projects -- totaling $1 billion.

In a sense, this was a temporary setback because we remain optimistic about other opportunities for Federal funding.

Much, probably most, ARRA funding is designated for research and development. It will come in the form of grants from NIH, NSF, NOAA, EPA, FEMA, HUD, and the U.S. Department of Education. Tom Skalak, the vice president for research who is also helping to lead our effort, has created a Web site to provide information about funding opportunities as they become available.

We continue to encourage faculty members to prepare proposals for submission and to pursue funding opportunities aggressively. The funds are out there. As of Friday, in fact, we had submitted more than $10 million in competitive grant proposals to Federal agencies.

One specific proposal among those moving forward includes the University, Virginia Tech, and John Tyler Community College. Together, we are seeking funds to create an Advanced Manufacturing Innovation Zone (AMIZ) to support precision-manufacturing technology and workforce development in Virginia.

This zone is intended to support and complement the Rolls-Royce jet engine manufacturing plant scheduled to be built in Prince George County. Part of Rolls-Royce's decision to come to Virginia was the opportunity to create innovative partnerships with higher education and to collaborate on a variety of fronts in both engineering and business. There will be significant educational and research opportunities for the University and others, as well some 10,000 new jobs created in the state.

The Governor is enthusiastic about this proposal. He has approved our approaching Federal agencies directly for funds to support this project. I was in Washington much of last week working on this issue.

Also last week, we received some good news when the University became the first institution of higher education to offer Build America Bonds, which are partially subsidized by the U.S. Treasury through the ARRA. We issued $250 million in BAB bonds for 19 construction projects, saving the University $60 million in interest payments over the bonds' 30-year term.

Projects that receive stimulus funds must meet strenuous accountability and reporting standards. We will track and report all stimulus funds received by the University. We are preparing now to handle the temporary increase in the number of proposals and awards, to ensure that procurement standards are met properly, and to provide appropriate financial and employment reports.

We all know that these times are tough. Each day's newspapers remind me of my grandfather's, father's, and mother's stories about the Great Depression. I know that many of you have the same reaction to much of the news, and I am deeply grateful for your notes of advice, support, and (when we miss something or make mistakes) criticism. Recovery is hard and important work done by many who read this letter and by our colleagues.

As we succeed in securing our fair share of these funds, we have opportunities not only to advance research at the University, but also to do our share of the work necessary to reshape our nation's and the world's economy. Rarely has the challenge been so great. Rarely have our University and America's universities been so ready to meet it: hard work, massive goals, our common futures built on our success in this work.

John Casteen

Note: To track progress toward these goals, follow the University's budget-impact/stimulus Web site. For a Q&A on the impact of the federal stimulus package, go to: http://www.virginia.edu/budgetimpact/federalqanda.html