DATE: Wednesday, October 1, 1997            TAG: 9710010469

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 

SOURCE: BY LEDYARD KING, STAFF WRITER 

DATELINE: RICHMOND                          LENGTH:   78 lines

BUSINESS LEADERS SOUND WARNING ABOUT THE FUTURE OF STATE COLLEGES A REPORT SUGGESTS THAT COLLEGES NEED ALMOST $1 BILLION IN ADDITIONAL FUNDING.

In an election year in which both candidates for governor are courting voters with tax cuts, state business leaders are talking about something altogether different - pumping up aid to colleges by almost $1 billion over the next two years.

If the state doesn't ante up, Virginia risks losing its hard-earned status as one of the top places in the country to attend college, they warned.

That blunt message was the gist of a report released Tuesday by the Virginia Business Higher Education Council. The council is chaired by Northern Virginia developer John T. ``Til'' Hazel, who has suggested raising taxes to meet the state's needs for higher education.

But the timing - just a month before voters choose a new governor and seat 100 members of the House - was strategic. If they are to effect change in the upcoming General Assembly session, council members sensed this was an opportune moment to make their case public.

The council is calling for:

A substantial increase in faculty pay at public colleges and universities, at a cost of $110 million over two years.

An increase in student financial aid and the restoration of state subsidies so that government aid covers 70 percent of expenses for in-state students. Currently, income from tuition and student fees makes up as much as 39 percent of all revenues at some public colleges in Virginia.

More money in capital improvements to boost research and worker training at universities.

Council members, who represent some two dozen of Virginia's largest businesses, also want colleges to have more autonomy in picking their governing boards. And they want a greater emphasis on technology.

The bottom-line recommendation is to spend $910 million in the next two years: $450 million for construction, renovation and maintenance of schools; $400 million for operating costs; and $60 million in financial aid for students.

Of course, business leaders hope they get something out of the deal as well: better trained employees lining up outside their doors.

But in the race for governor, neither Republican James S. Gilmore III nor Democrat Donald S. Beyer Jr. has paid much heed to the council's wishes.

Both candidates support the continuation of the tuition freeze and want to expand money for scholarships. But neither candidate will budge from their tax-cut pledges, thereby diverting hundreds of millions of dollars for services, such as higher education, over the next four years.

Besides, Gilmore spokesman Mark Miner said, ``Spending more money is not always the solution.''

To that, council vice chairman W. Heywood Fralin of Roanoke tells this story:

When he was a student at the University of Virginia, he had an economics professor that won a Nobel Peace prize. When his alma mater tried recently to hire an economics professor, the university was rejected by 11 candidates before finding someone willing to work for U.Va.'s relatively low pay.

``I think that tells it all when we're looking at faculty salaries,'' said Fralin, chief executive officer of Medical Facilities of America Inc.

In a ranking of peer institutions, U.Va. ranked well in the bottom half in terms of average salary. That despite a recent Southern Regional Education Board study showing the state's 1995-96 average salary of $52,658 as tops in the Southeast - and slightly above the national average of $51,504.

Timothy J. Sullivan, president of the College of William and Mary, has bemoaned the problem of poor pay. At least 25 W&M faculty members said they left for other schools between 1994 and this year because of pay, he said.

The State Council of Higher Education, the governor-appointed board that crafts the budget for state schools, is scheduled to meet next week to discuss spending needs.

The council's vice chairman, John Padgett of Norfolk, said he wasn't prepared to spend hundreds of millions over the next two years to address ``a brain drain'' he thinks is exaggerated.

``I'm not sure I embrace a philosophy that more money necessarily yields a better education,'' Padgett said.

But at least one influential player is listening to the business leaders: House Speaker Thomas W. Moss Jr., D-Norfolk.

``We have many needs,'' Moss said Tuesday. ``Until we meet our needs for higher education, police protection and transportation, I don't see how we can propose any kind of tax cuts.''

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