The Commonwealth of Virginia has a well established and generally quite successful college and university structure. A hallmark of this structure has been a high degree of institutional independence.

Efforts of some of the Commonwealth's institutions in the distance learning arena are both mature and innovative, ranking among the best efforts of institutions in the United States.

A number of issues are driving the interest in advancing an electronic campus initiative or establishing a virtual university. These include:

• Coping with an estimated increase of 38,000 traditional-age students during the next decade.
• Serving educationally underserved communities in both degree and non-degree educational initiatives.
• Offering opportunities for degree completion for those who have attended college but failed to graduate.
• Providing for more than occasional bilateral agreements for transfer of credit between institutions.
• Affording non-traditional second and third career professionals and workforce development candidates access to higher education.
• Overcoming the possibility that Virginia's institutions will be left behind in a new, highly competitive online environment.
• Establishing a way to deal with a perceived lack of leadership at the state level in regard to distance and distributed learning.
• Providing streamlined access to the state's institutions via a portal.
• Creating a mechanism to offer degrees not offered currently by Virginia institutions.
• Taking advantage of online learning to meet enrollment growth at less cost.

Exacerbating the ability of the Commonwealth's institutions of higher learning to respond constructively to these issues is their perceived fiscal situation. For over a decade, both the relative and absolute fiscal position of the Commonwealth's institutions has deteriorated as a consequence of budget priorities and economic conditions at the state level. The consequences appear to be:

• A perception by the institutions that serving additional students simply causes their fiscal situation to erode further.
• A focus on retrenchment rather than expansion that is mirrored by an emphasis on increasing revenue rather than further reducing costs.
• A lack of venture capital within institutions to undertake new initiatives that address any issue other than improving the fiscal position of that particular institution.
• A commitment by the Commonwealth, over the next several bienna, to provide some fiscal relief to the institutions through base budget adequacy while the short term economic prospects for the Commonwealth make this problematic.
• A perception on the part of state supported institutions that, absent achieving base budget adequacy, educational initiatives that do not flow funding directly to them will only worsen an already difficult situation.

At the same time there are a number of misconceptions about how an electronic campus or virtual university might address these issues. Among these misconceptions are the views that:

• One can launch an initiative, absent demand side information that would identify what segments of the economy drive and need additional post-secondary learning experiences.
• Online courses and programs are more costly to develop and deliver than their face-to-face counterparts.
• A virtual university can be "free" (require no state investment) by leveraging existing resources.
• Establishing a separate degree-granting institution is a good idea and would solve a variety of problems that cannot otherwise be resolved.
• Collaboration is an end in itself.

To address some or all of the perceived problem arenas while not further worsening the fiscal situation of the Commonwealth's institutions of higher learning, we recommend that the Commonwealth create an Authority for the express purpose of encouraging, both through coordination and financial support, new educational initiatives that address educationally underserved constituencies in technologically innovative and cost efficient ways. The Authority, henceforth referred to as Virginia Educational Ventures, might operate somewhat in the following way:

• Virginia Educational Ventures would contract (through an RFP process) with an institution or consortium of institutions to make appropriate demand studies to identify and determine the characteristics of educationally underserved communities of interest in the Commonwealth.
• Following one or more demand studies and determination of the most promising opportunities, Virginia Educational Ventures would contract (through an RFP process) with one or more state supported educational institutions to develop and execute a strategy to address, on a continuing basis, the educational needs of those constituencies.
• Seed money, or venture capital, would be provided by Virginia Educational Ventures to assist in program development, market research and business planning for the contracting institution.
• Virginia Educational Ventures, where appropriate, would help identify potential partners (from the private sector, from the philanthropic community or from other state and federal agencies) to help share the risks associated with the new educational initiatives.
• Virginia Educational Ventures would serve as an advocate for student access to online programs and concentrate on raising public awareness of such opportunities in the Commonwealth.
• Virginia Educational Ventures would retain responsibility for assessing the effectiveness of the program or project for which they issued an RFP and for which they awarded the contract.

To meet the extraordinarily stringent requirements of not further eroding institutional base budget adequacy, Virginia Educational Ventures would need to be:

• Organized as an independent agency or authority of the state with a legislative charter that exempted Virginia Educational Ventures from conventional state purchasing processes.
• Governed by a board of trustees or visitors who exercise conventional board oversight over the Authority.
• Operated with a small staff who oversee the RFP process and general administrative activities of the Authority.
• Funded by the legislature with sufficient flexibility to permit other sources of revenue and/or cost sharing.