University of Virginia Library

GOVERNOR'S TRANSFER OF SURPLUS FUNDS

The Chancellor laid before the Board the Bursar's summary of operations at the College,
showing a surplus on 30 June 1956 of $451,389.78, which it had been intended (in accordance with
a plan approved by the Governor in 1954) to devote to a reduction of the College's indebtedness.
Instead of this, the sum of $100,000 had been applied to the debt at the end of the biennium
and, by the Governor's order, the remaining $351,389.78 had been transferred to the General Fund
of the Commonwealth, as shown in the following summary:

MARY WASHINGTON COLLEGE
of the
UNIVERSITY OF VIRGINIA
Analysis of Temporary Loans

June 30, 1956

                               

ANN CARTER LEE HALL
(Student Activities Bldg.)	$247,773.00
Less unexpended balance in this fund applied toward debt	-18,424.34	229,348.66
MASON AND RANDOLPH HALLS
(New Dormitories)	382,990.00
Less unexpended balance in this fund applied toward debt	-198,800.73	184,189.27
HUGH MERCER INFIRMARY		91,907.23
DINING HALL WINGS		184,112.05
FINE ARTS CENTER	682,000.00
Less unexpended balance in this fund applied toward debt	-15,041.64	666,958.36	$1,356,515.57
LESS SURPLUS FROM MAINTENANCE AND OPERATIONS JUNE 30, 1955 APPLIED TOWARD POST			-411,909.24
BALANCE DUE ON TEMPORARY LOANS JUNE 30, 1956			944,606.33
LESS SURPLUS WE HAD UNDERSTOOD WOULD BE APPLIED TO THE DEBT JUNE 30, 1956			-451,389.78
BALANCE OF DEBT HAD WE BEEN PERMITTED TO APPLY OUR SURPLUS AT 6/30/56			493,216.55
REVERTED TO GENERAL FUND OF THE STATE BY THE GOVERNOR			351,389.78
PRESENT BALANCE OF TEMPORARY LOANS			844,606.33

After an extensive discussion of the difficult situation precipitated by the Governor's
unexpected order and its various and immediate effects upon many phases of the College's
operations, the Board adopted the following resolution, and requested the Visitors' Committee on
Mary Washington College to wait upon the Governor, as soon as possible after his projected trip
to Europe, for a discussion of the subject.

RESOLVED by unanimous vote of the Board of Visitors of the University of Virginia that we
have heard with grave concern of the executive transfer to the General Fund of the Commonwealth
of Mary Washington College funds aggregating $351,389.78, which have been painfully accumulated
through rigid economies for the reduction of the present substantial indebtedness of the
College, that

Being convinced that the Governor of Virginia would not have ordered the transfer of funds
if he had been aware of all the circumstances, and

Persuaded, as we are, that the transfer order constitutes not only an injustice to the
College, but a serious injury to its progress, morale, and efficiency at a critical period; that
it is a radical and unprecedented departure from Virginia's traditionally sound fiscal policies;
and that its effect is to discourage frugal and thrifty administration and to give encouragement
to wasteful and inefficient practices in this and other educational institutions,

THEREFORE, without a dissenting voice, we have adopted this Resolution, setting forth our
anxiety, and reciting the following facts, as an appeal to the Governor to enter an order voiding
the transfer of funds:

Following World War II, Mary Washington College was faced with large expenditures. New
dormitories, a fine arts building, a student center, student infirmary, and additions to the
dining hall and kitchen left the College with debts aggregating approximately $1,600,000.
Substantial reductions were made until November 1954, at which time a loan of $1,356,515.57 was
obtained from the State Treasury. The State granted the loan with the understanding that it
would be reduced as rapidly as possible, and upon the further condition that public financing
would be arranged whenever the State wished the balance due it repaid. The president of the
University executed a note for $1,356,515.57, delivered it to the Treasurer and set about
liquidating it. Tuition fees had been increased in 1950 to help reduce the obligation.

In the meantime it had become apparent that revenues would not permit the College to meet
the rising costs of operations and to continue to reduce the debt, as planned, since operating
costs had risen so substantially, and since a material increase in faculty salaries was being
asked (and was subsequently approved by the Governor) on condition that no additional money be
requested of the State. The Mary Washington Committee proposed, and the Board adopted the
proposal, that the out-of-state tuition fees be raised from $280.00 to $340.00 a year for the
purpose of meeting the increase in faculty salaries while maintaining the program of debt
reduction.

The Governor of Virginia and the Director of the Budget on 12 November 1954 addressed to
this Board a joint letter giving approval to the College's plan for liquidating its debt, and
expressing their confidence in the College's ability to reduce the debt substantially from
operating surplus by the time when the note should fall due at the end of the biennium in 1956.

Thereafter by the most careful and diligent work on the part of the College Administration,
a very substantial curtailment was made on June 30, 1955, and the debt was lowered to $944,606.33,
at which point it stood on June 30, last, the close of the biennium. During the past year by
rigid economies, including the postponement of maintenance, repairs, equipment, and improvement
items, the College accumulated a surplus of $451,389.78. This sum the Comptroller was asked to
apply to the debt when the fiscal year closed.

The Board of Visitors has this day been advised that at the direction of the Governor,
$100,000 has been applied to the loan and the balance of $351,389.78 has been transferred to the
General Fund of the Commonwealth, leaving a balance due on the College's debt of $844,606.33.

This is, we believe, the first time that an institution of the State has been denied the
right to reduce its debt from surplus arising out of its own operation. It does not seem likely
that Mary Washington will be able to cope with so large a debt under the plan adopted, since the
favorable results of the last biennium cannot be obtained under the changed conditions now
existing.

However, there is another and much more formidable reason why the action which has been
taken appears unwise. It runs counter to the arrangement under which the Board levied the
increased fees on the student body and to the arrangement under which the funds were borrowed,
and pursuant to which the President of the University and the Bursar of Mary Washington College
made such strenuous efforts to liquidate this obligation. We cannot believe that the Governor
was aware of all of the circumstances when his order was entered.

This Board has supported without reservations the efforts of the President and of the
Bursar to this end. We have noted with approval the zeal and industry with which they have
striven to save money in order to clear the College from debt. How can we in future demand
higher tuition fees of the students, and ask the College staff to forego needed equipment and
maintenance, all in the interest of debt clearance, if past experience proves that in the end
the results of these sacrifices will be conveyed by higher authority from the College to other
State purposes?

NOW, THEREFORE, BE IT RESOLVED that we respectfully urge the Governor of Virginia to give
the most searching consideration to the unprecedented situation set forth in this Resolution,
with all of its far-reaching implications for the future, and to take under serious advisement
our individual and collective belief in the wisdom of a rescinding order.

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On motion the meeting was then adjourned.