Virginia Law

Article 4. Restructured Financial and Administrative Authority; Covered Institutions; Management Agreements.

A. The governing board and administration of each public institution of higher education that meets the state goals set forth in subsection A of § 23.1-1002 and meets the requirements of this article to demonstrate the ability to manage successfully the administrative and financial operations of the institution without jeopardizing the financial integrity and stability of the institution may negotiate with the Governor to develop a management agreement with the Commonwealth to exercise restructured financial and administrative authority.

B. No public institution of higher education shall enter into a management agreement unless:

1. a. Its most current and unenhanced bond rating received from Moody's Investors Service, Inc., Standard & Poor's, Inc., or Fitch Investor's Services, Inc., is at least AA- (i.e., AA minus) or its equivalent, provided that such bond rating has been received within the last three years of the date that the initial management agreement is entered into; or

b. The institution has participated in decentralization pilot programs in the areas of finance and capital outlay, demonstrated management competency in those two areas as evidenced by a written certification from the Cabinet Secretary designated by the Governor, received restructured operational authority under a memorandum of understanding pursuant to Article 3 (§ 23.1-1003 et seq.) in at least one functional area, and demonstrated management competency in that area for a period of at least two years;

2. At least an absolute two-thirds of the institution's governing board has voted in the affirmative for a resolution in support of a request for restructured operational authority under a management agreement;

3. The institution submits to the Governor a written request for his approval of the management agreement that contains evidence that (i) the institution possesses the necessary administrative infrastructure, experience, and expertise to perform successfully its public educational mission as a covered institution; (ii) the institution is financially able to operate as a covered institution without jeopardizing the financial integrity and stability of the institution; (iii) the institution consistently meets the financial and administrative management standards pursuant to § 23.1-1001; and (iv) the institution's governing board has adopted performance and accountability standards, in addition to any institutional performance benchmarks included in the general appropriation act and developed pursuant to § 23.1-206, against which its implementation of the restructured operational authority under the management agreement can be measured;

4. The institution provides a copy of the written request to the Chairmen of the House Committee on Appropriations, the House Committee on Education, the Senate Committee on Finance and Appropriations, and the Senate Committee on Education and Health;

5. The institution agrees to reimburse the Commonwealth for any additional costs that the Commonwealth incurs to provide health or other group insurance benefits to employees and undertake any risk management program that are attributable to the institution's exercise of restructured operational authority. The Secretary of Finance and the Secretary of Administration, in consultation with the Virginia Retirement System and the affected institutions, shall establish procedures for determining any amounts to be paid by each institution and a mechanism for transferring the appropriate amounts directly and solely to the affected programs;

6. The institution considers potential future impacts of tuition increases on the Commonwealth Savers Plan and discusses such potential impacts with parties participating in the development of the management agreement. The chief executive officer of the Commonwealth Savers Plan shall provide to the institution and such parties the Plan's assumptions underlying the contract pricing of the program; and

7. The Governor transmits a draft of any management agreement that affects insurance or benefit programs administered by the Virginia Retirement System to the Board of Trustees of the Virginia Retirement System, which shall review the relevant provisions of the management agreement to ensure compliance with the applicable provisions of Title 51.1, administrative policies and procedures, and federal regulations governing retirement plans and advise the Governor and appropriate Cabinet Secretaries of any conflicts.

2005, cc. 933, 945, §§ 23-38.88, 23-38.91, 23-38.97; 2006, c. 775; 2009, cc. 827, 845; 2011, cc. 828, 869; 2013, c. 482; 2014, c. 628; 2016, c. 588; 2017, c. 314; 2024, c. 217.

A. If the Governor finds that the public institution of higher education meets the criteria set forth in § 23.1-1004, he shall authorize the appropriate Cabinet Secretary to enter into a management agreement with the governing board of such institution.

B. Each such management agreement shall be submitted no later than the succeeding November 15 to the House Committee on Appropriations, the House Committee on Education, the Senate Committee on Finance and Appropriations, and the Senate Committee on Education and Health. The Governor shall include a recommendation for approval of the management agreement with the public institution of higher education in "The Budget Bill" submitted pursuant to subsection A of § 2.2-1509 or in his gubernatorial amendments submitted pursuant to subsection E of § 2.2-1509 due by the December 20 that immediately follows the date of submission of the management agreement to such Committees.

C. The General Assembly shall consider whether to approve or disapprove the management agreement as recommended. If the management agreement is approved as part of the general appropriation act, it shall become effective on the effective date of such general appropriation act.

2005, cc. 933, 945, § 23-38.97; 2016, c. 588.

A. Each covered institution that complies with the requirements of this article shall have the powers set forth in this article that are expressly included in the management agreement.

B. Each management agreement shall include:

1. A copy of the governing board's resolution in support of a request for restructured operational authority;

2. The institution's express agreement to reimburse the Commonwealth for any additional costs that the Commonwealth incurs to provide health or other group insurance benefits to employees and undertake any risk management program that are attributable to the institution's exercise of restructured operational authority;

3. The institution's undergraduate Virginia student enrollment, financial aid requirements and capabilities, and tuition policy for undergraduate Virginia students; and

4. A statement of the Governor's power to void the management agreement pursuant to subsection E of § 23.1-1007.

C. There is a presumption that restructured operational authority is not included in the management agreement, and such authority shall only be granted to a covered institution if it is expressly included in the management agreement. The only implied authority that is granted to a covered institution is that which is necessary to carry out the express grant of restructured operational authority. Each covered institution shall be governed and administered in the manner provided in (i) this article but subject to the expressed terms of the management agreement, (ii) the general appropriation act, and (iii) the institution's enabling statutes.

D. Except as specifically made inapplicable under this article or the express terms of a management agreement, the provisions of Title 2.2 relating generally to the operation, management, supervision, regulation, and control of public institutions of higher education are applicable to covered institutions as provided by the express terms of the management agreement.

E. In the event of a conflict between any provision of Title 2.2 and any provision of the management agreement, the provisions of the management agreement control. In the event of a conflict between any provision of this article and an institution's enabling statutes, the enabling statutes control.

F. The provisions of the State and Local Government Conflict of Interests Act (§ 2.2-3100 et seq.) that are applicable to officers and employees of a state governmental agency shall continue to apply to the members of the governing board and the covered employees of a covered institution.

G. A covered institution, its officers, directors, employees, and agents, and the members of its governing board are entitled to the same sovereign immunity to which they would be entitled if the institution were not governed by this article.

H. The Virginia Tort Claims Act (§ 8.01-195.1 et seq.) and its limitations on recoveries remain applicable to covered institutions.

I. A management agreement with a public institution of higher education shall not grant restructured operational authority to the Virginia Cooperative Extension Service and Agricultural Experiment Station Division, the University of Virginia's College at Wise, the Virginia Institute of Marine Science, or an affiliated entity of the institution unless the intent to grant such authority and the degree to which such authority is granted is expressly included in the management agreement.

J. For purposes of §§ 23.1-101, 23.1-102, 23.1-103, 23.1-104, and 23.1-107, Chapter 2 (§ 23.1-200 et seq.), §§ 23.1-306, 23.1-402, 23.1-403, and 23.1-404, Chapter 5 (§ 23.1-500 et seq.), Chapter 6 (§ 23.1-600 et seq.), Chapter 7 (§ 23.1-700 et seq.), §§ 23.1-800, 23.1-801, 23.1-901, and 23.1-1001, Chapter 11 (§ 23.1-1100 et seq.), Chapter 12 (§ 23.1-1200 et seq.), subsections G, H, and I of § 23.1-1300, § 23.1-1302, and subdivision B of § 23.1-1303, each covered institution shall remain a public institution of higher education following its conversion to a covered institution governed by this article and shall retain the authority granted and any obligations required by such provisions.

K. State government-owned or operated and state-owned teaching hospitals that are a part of a covered institution as of the effective date of the covered institution's initial management agreement shall continue to be characterized as state government-owned or operated and state-owned teaching hospitals for purposes of payments under the state plan for medical assistance services adopted pursuant to § 32.1-325, provided that the covered institution commits to serve indigent and medically indigent patients. If such covered institution commits to serve indigent and medically indigent patients, the Commonwealth, through the Department of Medical Assistance Services, shall, subject to the appropriation in the current general appropriation act, continue to reimburse the full cost of the provision of care, treatment, health-related services, and educational services to indigent and medically indigent patients and continue to treat hospitals that were part of a covered institution and that were Type One Hospitals prior to the effective date of the covered institution's initial management agreement as Type One Hospitals for purposes of such reimbursement.

L. Consistent with the terms of the management agreement, the governing board of each covered institution shall assume full responsibility for management of the institution, subject to the requirements and conditions set forth in this article and the management agreement, and shall be fully accountable for meeting the requirements of §§ 23.1-206, 23.1-306, and 23.1-310 and such other provisions as may be set forth in the management agreement.

2005, cc. 933, 945, §§ 23-38.88, 23-38.91, 23-38.92, 23-38.93, 23-38.96, 23-38.97; 2006, c. 775; 2009, cc. 827, 845; 2011, cc. 828, 869; 2013, c. 482; 2014, cc. 484, 628, 815; 2016, c. 588.

A. Each initial management agreement shall remain in effect for a period of three years. Subsequent management agreements shall remain in effect for a period of five years.

B. If an existing management agreement is not renewed or a new management agreement is not executed prior to the expiration date, the existing agreement shall remain in effect on a provisional basis for a period not to exceed one year. If, after the expiration of the provisional one-year period, the management agreement has not been renewed or a new agreement has not been executed, the public institution of higher education shall not exercise such restructured operational authority until it enters into a new management agreement with the Commonwealth.

C. The Joint Legislative Audit and Review Commission, in cooperation with the Auditor of Public Accounts, shall review, for at least the first 24 months from the effective date of the management agreement, the level of compliance with the expressed terms of the management agreement, the degree to which the covered institution has demonstrated its ability to manage successfully the administrative and financial operations of the institution without jeopardizing the financial integrity and stability of the institution, the degree to which the covered institution is meeting the state goals set forth in subsection A of § 23.1-1002, and any impact that the management agreement has had on students and employees of the covered institution. The Joint Legislative Audit and Review Commission shall make a written report of its review no later than June 30 of the third year of the management agreement. The Joint Legislative Audit and Review Commission may conduct a similar review of any management agreement entered into subsequent to the initial agreement.

D. The Auditor of Public Accounts or his legally authorized representatives shall audit annually accounts of all covered institutions and shall distribute copies of each annual audit to the Governor and to the Chairmen of the House Committee on Appropriations and the Senate Committee on Finance and Appropriations. Pursuant to § 30-133, the Auditor of Public Accounts and his legally authorized representatives shall examine annually the accounts and books of each such institution, but no covered institution shall be deemed a state or governmental agency, advisory agency, public body, or agency or instrumentality for purposes of Chapter 14 (§ 30-130 et seq.) of Title 30 except for those provisions in such chapter that relate to requirements for financial recordkeeping and bookkeeping. Each covered institution is subject to such other reviews and audits as are required by law.

E. If the Governor makes a written determination that the covered institution is not in substantial compliance with the terms of the management agreement or with the requirements of this chapter, he shall provide a copy of that written determination to the chairman or rector of the governing board of the covered institution and to the General Assembly, and the covered institution shall develop and implement a plan of corrective action. The covered institution shall provide a copy of such corrective action plan to the Governor and General Assembly. If the Governor determines that the covered institution is not yet in substantial compliance with the management agreement or the requirements of this chapter after a reasonable period of time following the implementation of the corrective action plan, the Governor may void the management agreement and the institution's status as a covered institution shall terminate and it shall not exercise such restructured operational authority until the institution enters into a subsequent management agreement with the Cabinet Secretary designated by the Governor or the voided management agreement is reinstated by the General Assembly.

F. An institution's status as a covered institution may be revoked by an act of the General Assembly if the institution fails to meet the requirements of this article or the management agreement.

2005, cc. 933, 945, §§ 23-38.88, 23-38.94. 23-38.98; 2006, c. 775; 2009, cc. 827, 845; 2011, cc. 828, 869; 2013, c. 482; 2014, c. 628; 2016, c. 588.

In addition to those powers granted in each covered institution's enabling statutes and the general appropriation act, each covered institution, subject to the express provisions of the management agreement, may exercise all the powers necessary or convenient to carry out the purposes and provisions of this article and:

1. Make and execute contracts, guarantees, or any other instruments and agreements necessary or convenient to the exercise of its powers, authority, and functions, including contracts with persons to (i) operate and manage any or all of the covered institution's facilities or operations and (ii) incur liabilities and secure the obligations of any entity or individual, provided, however, that no covered institution may pledge the faith and credit of the Commonwealth or enter into an indemnification agreement or binding arbitration agreement contrary to state law;

2. Conduct or engage in any lawful business, activity, effort, or project consistent with the covered institution's purposes or necessary or convenient to the exercise of its powers; and

3. Procure insurance, participate in insurance plans, provide self-insurance, continue participation in the Commonwealth's insurance or self-insurance plans, continue participation in the Commonwealth's risk management programs, and continue participation in the Virginia Retirement System or other Commonwealth sponsored retirement plans subject to the conditions in §§ 23.1-1020 through 23.1-1026, and any combination of the foregoing, as provided in this article. The purchase of insurance, participation in an insurance plan, or creation of a self-insurance plan by the covered institution shall not be deemed a waiver or relinquishment of any sovereign immunity to which the covered institution or its officers, directors, employees, or agents are otherwise entitled. Covered institutions may participate in any Commonwealth or Virginia Retirement System insurance, self-insurance, or risk management program on the same terms and conditions applicable to other state agencies and other public institutions of higher education.

2005, cc. 933, 945, § 23-38.99; 2016, c. 588.

A. Each covered institution may acquire, plan, design, construct, own, rent as landlord or tenant, operate, control, remove, renovate, enlarge, equip, and maintain, directly or through stock or nonstock corporations or other entities, any project. Such project may be owned or operated by the institution, other persons, or jointly by such institution and other persons and may be operated within or outside the Commonwealth as long as (i) the operations of such project are necessary or desirable to assist the institution in carrying out its public purposes within the Commonwealth and (ii) any private benefit resulting to any such other private persons from any such project is merely incidental to the public benefit of such project.

B. Each covered institution may continue, adopt, and enforce policies for the operation of any facility, including any veterinary facility, hospital, or other health care and related facility owned or operated by the institution. Any such policies pertaining to the operation of any veterinary facility, hospital, or other health care or related facility may include the conditions of practicing any health profession or veterinary medicine in the facility, the admission and treatment of patients, the procedures for determining the qualification of patients for indigent care or other programs, and the protection of patients and employees, provided that such policies do not discriminate on the basis of race, religion, color, sex, sexual orientation, gender identity, national origin, or any other factor prohibited by law.

2005, cc. 933, 945, § 23-38.100; 2016, c. 588; 2020, c. 1137.

Each covered institution may:

1. Create or assist in the creation of; own in whole or in part or otherwise control; participate in or with any entities, public or private; and purchase, receive, subscribe for, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise acquire or dispose of any (i) shares or obligations of, or other interests in, any entity organized for any purpose within or outside the Commonwealth and (ii) obligations of any person or corporation. No part of the assets or net earnings of such institution shall inure to the benefit of, or be distributable to, any private individual except that reasonable compensation may be paid for services rendered to or for such institution in furtherance of its public purposes and benefits may be conferred that are in conformity with its public purposes.

2. Participate in joint ventures with individuals, corporations, governmental bodies or agencies, partnerships, associations, insurers, or other entities to facilitate any activities or programs consistent with its public purposes and the intent of this article.

3. Create or continue the existence of one or more nonprofit entities for the purpose of soliciting, accepting, managing, and administering grants and gifts and bequests, including endowment gifts and bequests and gifts and bequests in trust.

4. In carrying out any activities authorized by this article, provide appropriate assistance, including (i) making loans from its funds, other than general fund appropriations or proceeds of bonds issued under Article X, Section 9 (a), 9 (b), or 9 (c) of the Constitution of Virginia or under Article X, Section 9 (d) of the Constitution of Virginia if such issuance is supported by general funds and (ii) providing the time of its employees to corporations, partnerships, associations, joint ventures, or other entities whether such entities are owned or controlled in whole or in part or directly or indirectly by such institution.

2005, cc. 933, 945, § 23-38.101; 2016, c. 588.

A. A covered institution may establish or continue to operate a campus police department in accordance with the provisions of Article 3 (§ 23.1-809 et seq.) of Chapter 8. Campus police shall possess the powers provided in Article 3 of Chapter 8, except that a covered institution's employment of campus police is governed by the provisions of this article rather than by Chapter 28 (§ 2.2-2800 et seq.) and Chapter 29 (§ 2.2-2900 et seq.) of Title 2.2.

B. Campus police officers of a covered institution are eligible to participate in the same state-sponsored retirement plans on the same terms and conditions as campus police officers of other public institutions of higher education.

2005, cc. 933, 945, § 23-38.102; 2016, c. 588.

A. Each covered institution may (i) independently manage its operations and finances, including holding and investing its tuition, fees, research funds, and auxiliary enterprise funds and all other public funds; (ii) create any policy deemed necessary to conduct its financial operations; (iii) adopt the budget for the institution; and (iv) control the expenditures of all moneys generated or received by the institution, including tuition, fees, and other nongeneral fund revenue sources.

B. Subject to the express terms of the management agreement, the governing board of each covered institution has the sole authority to establish tuition, mandatory fees, room and board, and other necessary charges consistent with sum sufficient appropriation authority for all nongeneral funds as provided by the Governor and the General Assembly in the general appropriation act. In the event that the institution retains any nongeneral funds, it shall invest such funds consistent with an investment policy established by the governing board and retain all income earned on such investments. In the event that the Commonwealth holds any nongeneral funds on behalf of the institution, the institution shall receive a share of the income earned by the Commonwealth on the investment of such funds as provided in subsection C of § 23.1-1002.

C. The governing board of each covered institution shall include in its six-year plan pursuant to § 23.1-306 its commitment to providing need-based grant aid for middle-income and lower-income Virginia students in a manner that encourages student enrollment and progression without respect to potential increases in tuition and fees.

D. Each covered institution's management agreement shall include the quantification of cost savings realized as a result of the restructured operational authority pursuant to this article.

E. Each covered institution may enter into any contract that it determines to be necessary or appropriate to place any bond or investment of the institution, in whole or in part, on the interest rate, cash flow, or other basis desired by the institution, including contracts commonly known as interest rate swap agreements, futures, and contracts providing for payments based on levels of, or changes in, interest rates. Each covered institution may enter into such contracts in connection with, incidental to, or for the purpose of entering into or maintaining any (i) agreement that secures bonds, notes, or other obligations or (ii) investment or contract providing for investment, otherwise authorized by law, including § 23.1-1013. Such contracts may contain such payment, security, default, remedy, and other terms and conditions as determined by the institution after giving due consideration to the creditworthiness of the counterpart or other obligated party, including any rating by any nationally recognized rating agency, and any other criteria that may be appropriate. Any money set aside and pledged to secure payments of bonds, notes, or other obligations or any contract entered into pursuant to this section may be pledged to and used to service any such contract.

F. The governing board of each covered institution shall adopt a system of independent financial management that includes bookkeeping and accounting procedures that have been prescribed for governmental organizations by the Government Accounting Standards Board.

2005, cc. 933, 945, §§ 23-38.104, 23-38.106; 2016, c. 588.

Each covered institution may invest its operating funds in any obligations or securities that are considered legal investments for public funds in accordance with Chapter 45 (§ 2.2-4500 et seq.) of Title 2.2. Such institution's governing board shall adopt written investment guidelines that provide that such investments shall be made solely in the interest of the covered institution and shall be undertaken with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

2005, cc. 933, 945, § 23-38.105; 2016, c. 588.

A. Each covered institution may:

1. Borrow money and issue bonds, notes, or other obligations as provided in this article and purchase such bonds, notes, or other obligations;

2. Seek financing from, incur, or assume indebtedness to, and enter into contractual commitments with, the Virginia Public Building Authority and the Virginia College Building Authority, which authorities may borrow money and make and issue negotiable notes, bonds, notes, or other obligations to provide such financing relating to facilities or any project; and

3. Seek financing from, incur or assume indebtedness to, and enter into contractual commitments with, the Commonwealth as otherwise provided by law relating to the institution's facilities or any project.

B. Notwithstanding the provisions of this chapter, no covered institution is exempt from any requirement or covenant contained in any outstanding bonds, notes, or other obligations.

2005, cc. 933, 945, § 23-38.107; 2016, c. 588; 2017, c. 314.

A. Notwithstanding the provisions of § 23.1-1119, a covered institution may (i) issue bonds, notes, or other obligations for any purpose that is consistent with its institutional mission, including to (a) finance or refinance any project, (b) appropriately manage operational cash flows, (c) provide for short-term financing, (d) refund bonds, notes, or other obligations issued by or on behalf of such institution, or otherwise, including bonds, notes, or other obligations or obligations not then subject to redemption, and (ii) guarantee, assume, or otherwise agree to pay, in whole or in part, indebtedness issued by such institution or any affiliated entity for managing operational cash flows or resulting in the acquisition or construction of facilities for the benefit of such institution or the refinancing thereof.

B. Nothing in this article shall preclude a covered institution from participation in any financing program or bond issue established and implemented by the Commonwealth or any agency of the Commonwealth, including (i) any financing program or bond issue under Article X, Section 9 (b) or 9 (c) of the Constitution of Virginia and (ii) any financing program or bond issue under Article X, Section 9 (d) of the Constitution of Virginia undertaken by the Treasury Board, the Virginia College Building Authority, or the Virginia Public Building Authority if such institution is otherwise eligible and approved to participate and is otherwise able to fulfill any requirements that may be imposed upon it by virtue of its participation.

C. Notwithstanding Article 8 (§ 2.2-2415 et seq.) of Chapter 24 of Title 2.2, Chapter 11 (§ 23.1-1100 et seq.), and § 23.1-2205, each covered institution may issue bonds, notes, or other obligations consistent with debt capacity and management policies and guidelines established by its governing board without (i) obtaining the consent of any legislative body, elected official, commission, board, bureau, political subdivision, or agency of the Commonwealth; (ii) any proceedings or conditions other than those specifically required by this article; (iii) the approval required by the provisions of Article 8 (§ 2.2-2415 et seq.) of Chapter 24 of Title 2.2; or (iv) any regulation or procedure, including a review or approval procedure, adopted pursuant to Chapter 11 (§ 23.1-1100 et seq.).

D. Each covered institution may issue such types of bonds, notes, or other obligations as it determines are appropriate and consistent with debt capacity and management policies and guidelines established by its governing board, including bonds, notes, or other obligations payable as to principal and interest from any one or more of the following sources: (i) its revenues generally; (ii) income and revenues derived from the operation, sale, or lease of a particular project, whether or not it is financed or refinanced from the proceeds of such bonds, notes, or other obligations; (iii) funds realized from the enforcement of security interests or other liens or obligations securing such bonds, notes, or other obligations; (iv) proceeds from the sale of bonds, notes, or other obligations; (v) payments under letters of credit, policies of municipal bond insurance, guarantees, or other credit enhancements; (vi) any reserve or sinking funds created to secure such payment; (vii) accounts receivable of such institution; or (viii) other available funds of such institution.

E. Any bonds, notes, or other obligations may be supported by any grant, contribution, or appropriation from a participating political subdivision, the covered institution, the Commonwealth, any political subdivision, agency, or instrumentality of the Commonwealth, any federal agency, or any unit, private corporation, partnership, association, or individual.

F. Bonds, notes, or other obligations of a covered institution are for an essential public and governmental purpose.

G. It is lawful for any bank or trust company within or outside the Commonwealth to serve as depository of the proceeds of bonds, notes, or other obligations or other revenues of a covered institution, furnish indemnifying bonds, notes, or other obligations, or pledge such securities as may be required by such institution, provided that any such deposits are collateralized in accordance with the Security for Public Deposits Act (§ 2.2-4400 et seq.) in the case of a bank or savings institution or Article 3 (§ 6.2-1047 et seq.) of Chapter 10 of Title 6.2 in the case of a trust company.

2005, cc. 933, 945, § 23-38.108; 2016, c. 588.

A. The governing board of each covered institution shall adopt policies for the review, approval, and implementation of all capital projects undertaken by the institution.

B. All capital projects of a covered institution, whether funded by an appropriation of the General Assembly or otherwise, shall be approved by the institution's governing board.

C. Except as otherwise provided in subdivision D 2, capital projects undertaken at a covered institution may be exempt from any capital outlay oversight performed or required by the Department of General Services, the Division of Engineering and Buildings, the Department of Planning and Budget, and any other state agency that supports the functions performed by such departments.

D. Capital projects undertaken at a covered institution are subject to the institution's capital project policies adopted pursuant to subsection A and:

1. Any capital project undertaken at a covered institution that costs $300,000 or more is subject to the environmental, historic preservation, and conservation requirements of state law that are generally applicable to capital projects in the Commonwealth;

2. If the capital project is funded in whole or in part with a general fund appropriation for that purpose or proceeds from bonds issued under Article X, Section 9 (a), 9 (b), or 9 (c) of the Constitution of Virginia, or under Article X, Section 9 (d) of the Constitution of Virginia, if such issuance is supported by general funds, the project shall remain subject to the pre-appropriation approvals that are in effect within the executive and legislative branches of state government but may be exempt under the management agreement from any state post-appropriation review, approval, administrative, or other policy or procedure functions performed or required by the Department of General Services, the Division of Engineering and Buildings, the Department of Planning and Budget, and any other state agency that supports the functions performed by such departments; and

3. If a covered institution constructs improvements on land or renovates property that was originally acquired or constructed in whole or in part with a general fund appropriation for that purpose or proceeds from bonds issued under Article X, Section 9 (a), 9 (b), or 9 (c) of the Constitution of Virginia, or under Article X, Section 9 (d) of the Constitution of Virginia, if such issuance is supported by general funds, and such improvements or renovations are undertaken entirely with funds not appropriated by the General Assembly, such improvements or renovations shall be consistent with such institution's master plan approved by its governing board and, if the cost of such improvements or renovations is reasonably expected to exceed $2 million, the institution's decision to undertake such improvements or renovations shall be communicated to the Governor and to the Chairmen of the Senate Committee on Finance and Appropriations and the House Committee on Appropriations no later than 60 days prior to the (i) commencement of construction or renovation or (ii) issuance of bonds, notes, or other obligations to finance such construction or renovation.

E. Each covered institution may designate a full-time employee to be its own building official and may determine the suitability for occupancy of and issue certifications for building occupancy for all capital projects undertaken at such institution. Such building official shall:

1. Ensure that the Virginia Uniform Statewide Building Code (§ 36-97 et seq.) requirements are met for that capital project and that such project has been inspected by the State Fire Marshal or his designee prior to issuing any such certification;

2. Report directly and exclusively to the governing board of the institution and be subject to review by the appropriate personnel in the Department of General Services;

3. Be certified by the Department of Housing and Community Development to perform this function; and

4. Have adequate resources and staff who are certified by the Department of Housing and Community Development in accordance with § 36-137 for such purpose and who shall review plans, specifications, and documents for compliance with codes and standards and perform required inspections of the work in progress and the completed project.

F. No individual licensed professional architect or engineer hired or contracted to perform the functions set forth in subsection E shall also perform other code-related design, construction, facilities-related project management, or facilities management functions for the institution on the same project.

2005, cc. 933, 945, § 23-38.109; 2016, c. 588.

A. Subject to the express provisions of the management agreement, each covered institution may be exempt from the provisions of the Virginia Public Procurement Act (§ 2.2-4300 et seq.), except for §§ 2.2-4340, 2.2-4340.1, 2.2-4340.2, 2.2-4342, and 2.2-4376.2, which shall not be construed to require compliance with the prequalification application procedures of subsection B of § 2.2-4317, provided, however, that (i) any deviations from the Virginia Public Procurement Act in the management agreement shall be uniform across all covered institutions and (ii) the governing board of the covered institution shall adopt, and the covered institution shall comply with, policies for the procurement of goods and services, including professional services, that shall (a) be based upon competitive principles; (b) in each instance seek competition to the maximum practical degree; (c) implement a system of competitive negotiation for professional services pursuant to §§ 2.2-4303.1 and 2.2-4302.2; (d) prohibit discrimination in the solicitation and award of contracts on the basis of the bidder's or offeror's race, religion, color, sex, sexual orientation, gender identity, national origin, age, or disability or on any other basis prohibited by state or federal law; (e) incorporate the prompt payment principles of §§ 2.2-4350 and 2.2-4354; (f) consider the impact on correctional enterprises under § 53.1-47; and (g) provide that whenever solicitations are made seeking competitive procurement of goods or services, it shall be a priority of the institution to provide for fair and reasonable consideration of small, women-owned, and minority-owned businesses and to promote and encourage a diversity of suppliers.

B. Such policies may (i) provide for consideration of the dollar amount of the intended procurement, the term of the anticipated contract, and the likely extent of competition; (ii) implement a prequalification procedure for contractors or products; and (iii) include provisions for cooperative arrangements with other covered institutions, other public or private educational institutions, or other public or private organizations or entities, including public-private partnerships, public bodies, charitable organizations, health care provider alliances or purchasing organizations or entities, state agencies or institutions of the Commonwealth or the other states, the District of Columbia, the territories, or the United States, and any combination of such organizations and entities.

C. Nothing in this section shall preclude a covered institution from requesting and utilizing the assistance of the Virginia Information Technologies Agency for information technology procurements and covered institutions are encouraged to utilize such assistance.

D. Each covered institution shall post on the Department of General Services' central electronic procurement website all Invitations to Bid, Requests for Proposal, sole source award notices, and emergency award notices to ensure visibility and access to the Commonwealth's procurement opportunities on one website.

E. As part of any procurement provisions of the management agreement, the governing board of a covered institution shall identify the public, educational, and operational interests served by any procurement rule that deviates from procurement rules in the Virginia Public Procurement Act (§ 2.2-4300 et seq.).

2005, cc. 933, 945, § 23-38.110; 2011, c. 332; 2013, c. 583; 2015, cc. 760, 776; 2016, c. 588; 2020, cc. 496, 497, 1137; 2022, cc. 96, 97.

Subject to the terms of the management agreement, each covered institution may be exempt from the provisions governing the Virginia Information Technologies Agency, Chapter 20.1 (§ 2.2-2005 et seq.) of Title 2.2, and the provisions governing the Information Technology Advisory Council, Article 35 (§ 2.2-2699.5 et seq.) of Chapter 26 of Title 2.2, if the governing board of such covered institution adopts and the covered institution complies with (i) policies for the procurement of information technology goods and services, including professional services, that are consistent with the requirements of § 23.1-1017 and include provisions addressing cooperative arrangements for such procurement as described in § 23.1-1017 and (ii) institutional policies and professional best practices regarding strategic planning for information technology, project management, security, budgeting, infrastructure, and ongoing operations.

2005, cc. 933, 945, § 23-38.111; 2010, cc. 136, 145; 2016, c. 588.

A. Nothing in this section shall limit or reduce the authority granted to a covered institution in §§ 23.1-1016 and 23.1-1028 concerning the planning, design, construction, and implementation of capital projects and leases.

B. Each covered institution may continue to hold, possess, operate, and dispose of any real, personal, tangible, or intangible property that such covered institution held, possessed, or operated prior to the effective date of its initial management agreement as follows:

1. For real property, including land, buildings, and any improvements to land or buildings, acquired or constructed in whole or in part with general fund appropriations or proceeds from a general obligation bond issue under Article X, Section 9 (a) or 9 (b) of the Constitution of Virginia, the covered institution shall (i) hold, possess, and operate such property in accordance with the institution's enabling statutes, this article, and any policies adopted by the governing board of the institution pursuant to this article and (ii) dispose of such property in accordance with general law applicable to state-owned property and the institution's enabling statutes.

2. For real property, including land, buildings, and any improvements to land or buildings, acquired or constructed either (i) entirely with nongeneral fund appropriations or proceeds from a nongeneral fund revenue bond issue under Article X, Section 9 (c) or 9 (d) of the Constitution of Virginia or (ii) entirely with funds other than funds appropriated by the General Assembly or proceeds from a general obligation bond issue under Article X, Section 9 (a) or 9 (b) of the Constitution of Virginia, the covered institution shall hold, possess, operate, and dispose of such property in accordance with the institution's enabling statutes, notwithstanding the provisions of this article, the approval requirements of subdivision B 1 of § 23.1-1301, and any policies adopted by the governing board of the institution pursuant to this article.

3. For personal property, the covered institution shall hold, possess, operate, and dispose of such property in accordance with the institution's enabling statutes, this article, and any policies adopted by the governing board of the institution pursuant to this article.

C. After the effective date of the initial management agreement, a covered institution may acquire any real property, construct improvements on real property pursuant to § 23.1-1016, and acquire any personal property, tangible or intangible, and hold, possess, operate, and dispose of such real and personal property as follows:

1. For real property, including land, buildings, and improvements to land and buildings, acquired or constructed with funds appropriated by the General Assembly for that purpose or with proceeds from a general obligation bond issue under Article X, Section 9 (a) or 9 (b) of the Constitution of Virginia, the covered institution shall (i) hold, possess, and operate such property in accordance with the institution's enabling statutes, this article, and any policies adopted by the governing board of the institution pursuant to this article, and (ii) dispose of such property in accordance with general law applicable to state-owned property and with the covered institution's enabling statutes.

2. For real property, including land, buildings, and improvements to land or buildings, acquired with any funds in the covered institution's possession other than funds appropriated by the General Assembly or proceeds from a general obligation bond issue under Article X, Section 9 (a) or 9 (b) of the Constitution of Virginia, the institution shall hold, possess, operate, dispose of, and otherwise deal with such property, or any right, easement, estate, or interest in such property, acquired by purchase, exchange, gift, assignment, transfer, foreclosure, lease, bequest, devise, operation of law, or other means, in accordance with the covered institution's enabling statutes, notwithstanding the provisions of this article, the approval requirements of subdivision B 1 of § 23.1-1301, and any policies adopted by the governing board of the institution pursuant to this article.

3. For personal property, the institution shall hold, possess, operate, and dispose of such property in accordance with the institution's enabling statutes, this article, and any policies adopted by the governing board of the institution pursuant to this article.

D. With the approval of the Governor or as otherwise provided by law, and consistent with subsections B and C, a covered institution may (i) sell, assign, encumber, mortgage, demolish, or otherwise dispose of any project, any other real, personal, tangible, or intangible property, any right, easement, estate, or interest in any such project or property, or any deed of trust or mortgage lien interest owned by it, under its control or custody or in its possession, and may release or relinquish any right, title, claim, lien, interest, easement, or demand however acquired, including any equity or right of redemption in property foreclosed by it, and (ii) do any of the foregoing by public or private transaction.

E. A covered institution may accept loans, grants, contributions, or other assistance from the federal government, the Commonwealth, any political subdivision of the Commonwealth, or any other public or private source to carry out its mission as a public institution of higher education and any of the purposes of this article. A covered institution may enter into any agreement or contract regarding the acceptance, use, or repayment of any such loan, grant, contribution, or assistance and may enter into other agreements with any such entity in furtherance of the purposes of this article.

F. Localities may lend or donate money or other property to a covered institution for any of the institution's purposes. Any local government making a grant or loan may restrict the use of the grant or loan to a specific project, within or outside such locality.

G. Notwithstanding any other provision of this chapter, no covered institution shall take action with regard to any real or personal property if such action would be deemed to be in violation of any requirement or covenant contained in any outstanding bonds, notes, or other obligations.

2005, cc. 933, 945, § 23-38.112; 2016, c. 588.

A. Each covered employee shall continue to be a state employee who is governed by and eligible to participate in the human resources and benefits programs that governed him and in which he was eligible to participate immediately prior to the effective date of the initial management agreement for the covered institution by which he is employed, including the state retirement system, state health insurance program, state workers' compensation coverage program, and state grievance procedure, until the covered institution establishes a human resources program or programs, plan, or procedure applicable to him pursuant to this article in any such human resources or benefits program area. If, however, a covered institution is permitted by law other than in this chapter to establish an alternative health insurance plan or an alternative faculty or University of Virginia Medical Center retirement plan, such alternative health insurance or faculty or University of Virginia Medical Center retirement plan shall apply to and govern the covered employees included in such plan.

B. All human resources programs, plans, policies, and procedures established by the governing board of a covered institution pursuant to this article shall apply to and govern all participating covered employees, except as provided in § 23.1-1022.

C. All covered institutions are responsible for meeting the human resource reporting requirements established by the Governor and General Assembly.

2005, cc. 933, 945, § 23-38.114; 2016, c. 588.

A. As used in this section, "active military duty" means federally funded military duty as (i) a member of the Armed Forces of the United States on active duty pursuant to Title 10 of the United States Code or (ii) a member of the Virginia National Guard on active duty pursuant to either Title 10 or Title 32 of the United States Code.

B. The governing board of each covered institution may elect to adopt for its nonfaculty participating covered employees either (i) one or more human resources programs that is or are generally consistent with the provisions of Chapters 28 (§ 2.2-2800 et seq.) and 29 (§ 2.2-2900 et seq.) of Title 2.2, pertaining generally to state employees, or (ii) such other human resources program or programs as it determines to be appropriate. The covered institution may administer such human resources program or programs itself or contract with another covered institution or the Department of Human Resources Management to administer some or all of its human resources programs, subject to the execution of any participation or operating agreement as the parties to that agreement may deem necessary and appropriate.

C. Each covered institution may (i) establish a human resources program or programs for participating covered employees who are not subject to a human resources program established pursuant to subsection B, including a program or programs relating to such employees that its enabling statutes authorizes it to employ and (ii) contract for such consultants, attorneys, accountants, financial experts, and independent providers of expert advice and consultation as such institution deems necessary or desirable to assist in the establishment of such program.

D. Any human resources program adopted by the governing board of a covered institution for participating covered employees shall be based on merit principles and objective methods of appointment, promotion, transfer, layoff, removal, severance, and discipline and shall include other appropriate topics based on such principles and methods.

E. The human resources program adopted by the governing board of a covered institution shall, consistent with applicable federal law, address (i) the employment of participating covered employees who leave the service of a covered institution for service in any of the Armed Forces of the United States, (ii) the employment of veterans who have served in any of the Armed Forces of the United States following the termination of their military service, and (iii) leave and other policies affecting the employment of participating covered employees who have been ordered to active military duty in the Armed Forces of the United States or the organized reserve forces of any of the Armed Forces of the United States or the Virginia National Guard.

2005, cc. 933, 945, § 23-38.116; 2016, c. 588.

A. If the governing board of a covered institution establishes a human resources program or programs pursuant to § 23.1-1021, a salaried nonfaculty covered employee who was employed by the covered institution on the day prior to the effective date of the initial management agreement, except employees of the University of Virginia Medical Center, may elect within a prescribed period of the establishment of the human resources program to participate in and be governed by either (i) the state human resources program set forth in Chapters 28 (§ 2.2-2800 et seq.) and 29 (§ 2.2-2900 et seq.) of Title 2.2 or (ii) the human resources program or programs established by the governing board of the covered institution pursuant to § 23.1-1021. If the salaried nonfaculty covered employee does not make an election within such prescribed period, he shall be deemed to have elected to participate in and be governed by the state human resources program. Elections to participate in the human resources program established by the covered institution are irrevocable. At least once every two years, each covered institution that establishes a human resources program pursuant to § 23.1-1021 shall provide salaried nonfaculty employees who elected to participate and be governed by the state human resources program with (a) a comparison of the state program and the institution's program, including an assessment of compensation and benefits, and (b) an opportunity to participate in and be governed by the institution's human resources program.

B. A salaried nonfaculty covered employee who elects to participate in and be governed by the state human resources program set forth in Chapters 28 (§ 2.2-2800 et seq.) and 29 (§ 2.2-2900 et seq.) of Title 2.2 shall continue to be governed by all state human resources and benefit plans, programs, policies, and procedures that apply to and govern state employees.

C. A salaried nonfaculty covered employee who elects to participate in and be governed by the human resources program or programs established by the governing board of the covered institution pursuant to § 23.1-1021 shall be deemed to have elected to be eligible to participate in and be governed by the human resources plans, programs, policies, and procedures adopted by the covered institution for his employment classification pursuant to §§ 23.1-1024, 23.1-1025, and 23.1-1026.

2005, cc. 933, 945, § 23-38.115; 2016, c. 588.

A. No covered institution is exempt from the State Grievance Procedure (§ 2.2-3000 et seq.), which shall continue to apply to all eligible nonfaculty covered employees of a covered institution. The governing board of each covered institution shall adopt policies that encourage the resolution of employment-related problems and complaints of its nonfaculty covered employees. Such policies shall provide that nonfaculty covered employees of the institution may discuss their concerns with their immediate supervisors and management freely and without retaliation. To the extent that such concerns cannot be resolved informally, the State Grievance Procedure (§ 2.2-3000 et seq.) shall apply (i) to the covered institution's nonfaculty participating covered employees to the same extent that it applied to the same classifications of nonfaculty employees prior to the institution's effective date of the initial management agreement and (ii) to the covered institution's salaried nonfaculty covered employees who have elected pursuant to § 23.1-1022 to continue to participate in the state human resources program set forth in Chapters 28 (§ 2.2-2800 et seq.) and 29 (§ 2.2-2900 et seq.) of Title 2.2.

B. The grievance policies that were applicable to faculty covered employees prior to the effective date of the initial management agreement shall continue in effect but may be amended by the covered institution.

C. A covered institution may adopt grievance policies that are applicable to some or all other employees not subject to grievance policies pursuant to subsection A or B. Such grievance policies may be the same as the grievance policies adopted pursuant to subsection A.

2005, cc. 933, 945, § 23-38.117; 2016, c. 588.

A. Each covered institution shall base all appointments, promotions, and tenure decisions upon merit and fitness, to be ascertained, as far as possible, by the competitive rating of qualifications by that institution.

B. No establishment of a position or rate of pay or change in rate of pay shall become effective except on order of the appointing covered institution.

C. No current or prospective participating covered employee of any covered institution shall be required, as a condition of employment, to smoke or use tobacco products on the job or abstain from smoking or using tobacco products outside the course of his employment, provided that this subsection shall not apply to those classes of employees to which § 27-40.1 or 51.1-813 is applicable.

2005, cc. 933, 945, § 23-38.118; 2016, c. 588.

A. Insurance plans provided under this article and all proceeds from such plans are subject to the same provisions regarding exemption from levy, garnishment, and other legal process as is provided to Virginia Retirement System plans under § 51.1-510, provided, however, that (i) permitted assignments shall be made through completion of forms provided by the covered institution or its vendor and (ii) for insurance plans established by a covered institution, the covered institution shall exercise the authority granted to the Board of the Virginia Retirement System in § 51.1-510.

B. Each covered institution (i) shall purchase or make available group life and accidental death and dismemberment insurance plans covering in whole or in part those of its participating covered employees eligible to participate in the Virginia Retirement System and (ii) may purchase or make available such additional insurance plans covering its participating covered employees as it deems appropriate. Participating covered employees shall not be required to present evidence of insurability satisfactory to an insurance company for basic group life insurance coverage. Each covered institution shall offer all salaried participating covered employees basic group life insurance at a level of coverage determined by the institution's governing board. A covered institution may require participating covered employees to pay all or a portion of the cost of the insurance coverage offered pursuant to this subsection, which may be collected through a payroll deduction program. If the institution's governing board so elects, and subject to the execution of such participation agreements as the Virginia Retirement System may require, the covered institution's participating covered employees may be covered by the Virginia Retirement System's group insurance programs established pursuant to Chapter 5 (§ 51.1-500 et seq.) of Title 51.1 with the same terms, costs, conditions, and benefits as other state employees.

C. For those of its participating covered employees eligible to participate in the Virginia Retirement System, a covered institution shall (i) purchase disability insurance; (ii) subject to the execution of such participation agreements as may be necessary, appropriate, and in the best interests of the Commonwealth, continue to participate in the disability insurance program established for state agencies; (iii) establish a self-insured disability insurance program; or (iv) perform any combination of clauses (i), (ii), and (iii). A covered institution may require participating covered employees to pay all or a portion of the cost of the insurance coverage offered pursuant to clause (i), (iii), or (iv), which may be collected through a payroll deduction program. However, no such covered institution shall be required to contribute to the program established for state agencies on behalf of participating covered employees who do not participate in that program.

D. If a covered institution's governing board so elects, and subject to the execution of such participation agreements as may be necessary, appropriate, and in the best interests of the Commonwealth, each such institution or its participating covered employees, or both, may participate in any future insurance programs established for state employees with the same terms, conditions, and benefits as other state employees.

2005, cc. 933, 945, § 23-38.119; 2016, c. 588.

A. Each covered institution shall adopt a severance policy for its eligible participating covered employees that is applicable to voluntary and involuntary separations, including reductions in workforce. The provisions of the Workforce Transition Act (§ 2.2-3200 et seq.) shall not apply to participating covered employees.

B. The terms and conditions of a covered institution's severance policy for eligible participating covered employees shall be determined by the institution's governing board. The covered institution and the Board of the Virginia Retirement System shall negotiate a formula according to which cash severance benefits may be converted to years of age or creditable service for participating covered employees who participate in the Virginia Retirement System.

C. Covered employees who (i) were employees of a covered institution and were covered by the provisions of Chapter 29 (§ 2.2-2900 et seq.) of Title 2.2 prior to the effective date of the initial management agreement, (ii) would otherwise be eligible for severance benefits under the Workforce Transition Act (§ 2.2-3200 et seq.), and (iii) are separated by a covered institution because of a reduction in workforce have the same preferential hiring rights with state agencies and other executive branch institutions as other state employees have under § 2.2-3201. A covered institution shall recognize the hiring preference conferred by § 2.2-3201 on state employees who were (a) hired by a state agency or executive branch institution before the covered institution's effective date of the initial management agreement and (b) separated after that date by that state agency or executive branch institution because of a reduction in workforce. If a covered institution has adopted a classification system pursuant to § 23.1-1021 that differs from the classification system administered by the Department of Human Resource Management, the covered institution shall classify the separated employee according to its classification system and shall place the separated employee appropriately. Any such separated employee who is hired by a covered institution is a participating covered employee for purposes of this article. Classification decisions that are made pursuant to this subsection and apply to employees transferring between state agencies, between other executive branch institutions and covered institutions, and between covered institutions as a result of a reduction in workforce and with the preferential hiring rights provided in this subsection and in § 2.2-3201 are presumed appropriate, and a separated employee who grieves the classification decision bears the burden of demonstrating that the classification violates the separated employee's preferential hiring rights.

D. An employee's transition from being an employee of a public institution of higher education to being a covered employee of a covered institution on the effective date of a covered institution's initial management agreement shall not, in and of itself, constitute a severance of that employee or a reduction in workforce that would make either the covered institution's severance policy adopted pursuant to subsection A or the Workforce Transition Act (§ 2.2-3200 et seq.) applicable to that employee.

2005, cc. 933, 945, § 23-38.120; 2016, c. 588; 2017, c. 314.

Each covered institution shall fix, revise, charge, and collect tuition, rates, rentals, fees, and other charges for the services, goods, or facilities furnished by or on behalf of such institution and may adopt policies regarding any such service rendered or the use, occupancy, or operation of any such facility.

2005, cc. 933, 945, § 23-38.103; 2016, c. 588.

The governing board of each covered institution shall adopt such policies relating to the leasing of real property, including capital or operating/income leases, that reasonably ensure that such leases are efficiently procured on appropriate terms and for appropriate purposes. With respect to capital or operating/income leases for real property to be used for academic purposes or for real property owned by the institution or a foundation relating to the institution to be used for non-academic purposes in accordance with the institution's land use plan pursuant to § 2.2-1153, other than applicable policies adopted by a covered institution's governing board and provisions of general law that expressly apply to covered institutions, such institutions are exempt from any state or local statutes, ordinances, rules, regulations, and guidelines relating to (i) operating/income leases of real property by public entities and (ii) except as otherwise provided in §§ 23.1-1016 and 23.1-1019, capital leases.

2005, cc. 933, 945, § 23-38.113; 2016, c. 588.