Old Dominion University’s outgoing president, Dr. James V. Koch, is an economist by training. But it doesn’t take a Ph.D. for him to see that Virginia is failing a basic test of supply and demand. The state markets itself as the "Digital Dominion," — promoting free-market Internet trade and committing a Cabinet-level post to technology. Yet, the state’s universities can’t turn out enough new workers for Virginia’s increasingly technical jobs.

James V. Koch, ODU's outgoing president Photo by Mark Rhodes

For Koch, it’s so simple it’s frustrating. Neighboring Newport News Shipbuilding needs twice the number of engineers that ODU can produce. Students in the university’s Microsoft certification program, the largest in the state, get job offers from all over, long before they complete course work. The Hampton Roads economy’s dependence on defense contracts has dropped dramatically, creating a new urgency to grow the private sector. And still, he says, "We can’t satisfy the demands of employers for our graduates."

Which explains the furor over the state budget impasse that trimmed important job-growing projects at colleges and universities. Gov. Jim Gilmore pressed legislators for a spending plan that kept his no car tax pledge on track, namely a 70 percent reduction in the tax for next year. He proposed $230 million for higher education construction, financed by swapping Virginia’s share of future payments from the national tobacco settlement for an immediate payment. Senators rejected tapping the tobacco funds. And the Senate wanted to pull back on the scheduled car tax reduction because of a slowing economy. To reconcile state spending with the massive car tax cut, Gilmore trimmed $421 million that included freezing $214 million for higher education construction plus salaries for state employees, including campus faculty and staff. In late June, in the waning hours of the fiscal year, Gilmore was expected to restore about $85 million in funding for capital projects statewide and says he wants to find a solution for the salary freeze.

Despite possible restoration of some funding, many colleges are still wondering how they can proceed in the face of a freeze on millions of dollars in construction projects already under bid. Old Dominion represents a case study of the price higher education and local economies may pay as a result of budget bickering. The freeze held up construction plans for a computational sciences building capable of producing 40 percent more engineers than the 350 the university now graduates. While the governor found money to complete architectural and engineering plans, the building—designed to house a powerful supercomputer and expensive virtual reality equipment—remains on hold, and the existing equipment sits in an athletic field house. "We have a critical mass of researchers," says Dr. David Keyes, chair of the mathematics and statistics department. "If we had the building, we’d have a good chance of getting into the top rankings."

The ripple effect reaches from Norfolk to Norton. Virginia Tech, whose contributions to the Southwest economy include tech spinoffs and a 100-company research park, hoped for more research and teaching space for chemistry, physics and engineering. George Mason University in Northern Virginia, which contains the state’s highest concentration of tech companies, needed funding for academic buildings at three sites. Projects for other colleges and universities included libraries, instructional space and nuts-and-bolts projects vital to operating state-of-the-art buildings.

Meanwhile, the need for qualified college-educated engineers and other workers only continues to increase. A recent study projects that in 10 years student demand for undergraduate enrollment in Virginia will grow by 43,000. While colleges and universities need new space for teaching and research space, they also face recruitment challenges. Professors say it’s hard to attract top-flight faculty or win lucrative research grants when there’s no money in the state budget for salary increases and a reduced commitment to capital improvement. At least two top recruits turned down ODU’s offers this year because of the budget uncertainties, including one who arrived on campus with a newspaper story in hand about the state budget dispute. James Madison University lost top candidates who simply withdrew from consideration. "The faculty market is very tight. The depth of the candidate pool and the demand make it a seller’s market," says Dr. Robert Reid, dean of JMU’s college of business. It’s also a morale-killer. Even with a short-term salary freeze, "It’s tough if (faculty) see salaries at competing institutions in other states increase anywhere from 3 to 8 percent a year," he says.

"What is the government of the state —the executive branch and legislative branch — trying to convey?" wonders Dr. Ernst Volgenau, president and CEO of SRA International Inc. in Fairfax, an information technology company whose clients include government, defense, health care and financial services. Volgenau, who pays recruitment bonuses as part of his high job-search costs, is still short 50 people for mostly technical jobs in SRA’s work force of more than 1,800. Nationwide, even with the economic slowdown, the Information Technology Association of America estimates that 425,000 IT jobs won’t be filled this year for lack of skilled workers. While George Mason has expanded its computer science enrollment in recent years, "A freeze on construction and faculty salaries is not going to help alleviate the shortage," says Volgenau. SRA hired about 30 IT graduates this spring, most of them from Virginia.

As research universities cool their heels, community colleges are also losing time on long-awaited projects. Danville Community College raised 40 percent of the money for a $3.4 million technical training facility but as of June was waiting on the state share. The project is tailor-made for a region battered by shrinking tobacco and textile industries. It would prepare workers for high-tech jobs or help retrain workers at manufacturing plants like Corning Inc. and Goodyear Tire and Rubber Company. DCC’s president, Dr. Carlyle Ramsey, worries about keeping private financial supporters on board and sustaining a lifeline for Southside Virginia. "The clock isn’t just ticking. It’s running fast for us because of the hits that we have taken in tobacco and textiles."

Commerce and Trade Secretary Barry E. DuVal regularly pitches Virginia’s reputation for good colleges and universities to new business prospects. But, he says, "It takes a combination of activities to attract businesses." He points to the Gilmore administration’s business successes, including low unemployment, $6.5 billion in capital investment last year and 250,000 new jobs, many of them in engineering and computer sciences – the highest rate of job creation per capita in the country. Business leaders applaud Gilmore’s commitment to technology: the first Cabinet-level technology chief, strong opposition to Internet taxes and legislation to promote Internet commerce. In May Gilmore awarded $18 million to Virginia’s research universities from a technology fund created to help higher education vie competitively for federal and private research grants. Overall, he has held down tuition costs and increased spending for higher education by 54 percent since he took office, helping to restore funding slashed from college budgets during recession years and after. "The governor wants to fund as many of the capital projects as possible within the constraints he’s obligated to deal with," says spokesman Reed Boatright. "He has to find innovative ways to deal with shortfalls created by lack of a budget amendment."

Educators and business leaders say the capital construction and salary freeze resulting from the legislative logjam contradicts Virginia’s new image as the "Digital Dominion." Fired-up corporate and education communities, aligned through chambers, technology councils, and business groups, will spend the next few months on the warpath, proving to whoever will listen that Virginia lags peer institutions in spending. They question how a wealthy state ranks in the lower third in spending per student in higher education. And why would Virginia freeze some capital projects when North Carolina is carrying out a $3 billion voter approved bond package for its campuses?

Companies worry that "Virginia just isn’t ready to provide education to those who are qualified and to those students who you would like to have as educated and skilled employees," says Donald Finley, the state’s former higher education finance director who now runs the Virginia Business Higher Education Council, an advocacy group. He sees the freeze on capital projects, part of $2 billion in identified capital needs over the next six years, as symptomatic of a much larger funding problem identified by recent legislative studies. "When business leaders see the enrollment projections, they pretty quickly understand the implications. There are no plans to provide the buildings for these students."

One solution may come in the early days of the 2002 General Assembly session, if not before. An appropriations "caboose" bill, usually for technical touchups near the end of the biennium, might include retroactive salary increases and some funding for stalled campus projects. Competition for available cash will be fierce, and it’s unlikely in a softening economy that funding can be restored for every campus need. Lawmakers and the governor will have to make choices again about which priorities proceed and which stay on the drawing boards.

For Koch, whose successor takes over this month as he ends an 11-year stint as Old Dominion’s president, the choices are pretty clear. The computational sciences building that will "crank up the campus" — and Hampton Roads — is easily the most important project the university could undertake. "Sure, we could do a Ph.D. in Colonial History. That might be nice, but it wouldn’t impact the region the same way in terms of jobs."

Return to Virginia Business - July 2001