Finance Committee September 20, 2013 1 FINANCE COMMITTEE ACTION - PowerPoint PPT Presentation

Meeting of the Finance Committee September 20, 2013 1

FINANCE COMMITTEE ACTION ITEMS 1. Operating Budget Requests for the 2014-2016 Biennial Budget for the Academic Division, Medical Center and College at Wise 2. 2014-2020 State-Required Six-Year Plan 3. Capital Project Financing Plan: Rugby Road Office Building 4. Intent to Issue Tax-Exempt Debt 2

Operating Budget Requests for the 2014-2016 Biennial Budget for the Academic Division, Medical Center and College at Wise Colette Sheehy Vice President for Management & Budget 3

General Fund Academic Division Budget Submission (in millions) 14-15 15-16 Total Operating Amendments: Enrollment Growth – Va UG $ 0.43 $ 2.08 $ 2.51 STEM Faculty Start-Up Packages 7.00 14.00 21.00 Cancer Research 4.00 4.00 8.00 Economic Development Accelerator 4.00 4.00 8.00 O&M Costs for New Facilities 0.87 0.90 1.77 Health Insurance Premium Increases 0.23 0.23 0.46 4 $ 16.53 $ 25.21 $ 41.74

General Fund Academic Division Budget Submission Language Changes: • Add language to administer salary increases for University and Classified Staff based on merit • Eliminate specific line item language related to the Center for Politics and Virginia Center for Diabetes Professional Education • Add language to continue operation of Newport News Center 5

General Fund Medical Center Submission (in millions) 14-15 15-16 Total Operating Amendment: Restore Medicaid Reimbursement $ 10.38 $10.86 $21.24 to 100% Language Change: • Add language to clarify existing law related to compensation of Medical Center employees 6

General Fund College at Wise Budget Submission (in millions) 14-15 15-16 Total Operating Amendments: STEM Early College Academy $ 0.26 $ 0.87 $ 1.13 High-Need Degrees 0.69 0.69 1.38 Appalachian Prosperity Project 0.30 0.30 0.60 $ 1.25 $ 1.86 $ 3.11 7

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2014-2020 State-Required Six-Year Plan Colette Sheehy Vice President for Management & Budget 9

State Six-Year Plan Key Actions in 2013 June Reviewed six-year plan assumptions with chair of Finance Committee July 1 Submitted preliminary six-year plan to State July 3 Shared plan with Board of Visitors members August 28 Reviewed plan with State officials September 2 Shared plan and set of high-level summary slides with Board of Visitors members September 6 Receive comments from State officials September 20 Board of Visitors’ action October 4 Submit final plan to State 10

State Six-Year Plan State Feedback • President Sullivan and others met with Director of SCHEV, Secretaries of Education and Finance, Director of the Department of Planning and Budget and Staff Directors of the House Appropriation and Senate Finance Committees to discuss the University’s plan • Two comments specific to the University’s plan: • Please update the section of your plan that addresses AccessUVA with your most recent action on the program. • While we understand that you may be unable to provide specifics at this time, please provide the broad categories and estimates for reallocations and savings. 11

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Capital Project Financing Plan: Rugby Road Office Building Colette Sheehy Vice President for Management & Budget 13

Capital Project Financing Plan: Rugby Road Office Building • Built in 1924, the former Rugby Faculty Apartments is deemed a contributing structure according to the University Historic Framework Plan. • The building is listed in the National Register of Historic Places as a contributing resource within the Rugby Road- University Corner Historic District. • Project approved in April 2013 as part of multi-year capital plan will renovate 25,000 gross square feet as generic office space. 14

Capital Project Financing Plan: Rugby Road Office Building • Renovation is part of a larger space management strategy to address several important objectives: • Relocates units from commercially leased space • Enables highest and best use for key office space in Fontaine Research Park (revenue-producing clinical space) • Converts a non-productive asset to usable space and prevents further deterioration • Provides opportunity to avoid cost of swing space during other project renovations (e.g. Rotunda) 15

Capital Project Financing Plan: Rugby Road Office Building ($ in millions) Low High Project cost $8.1 $10.0 Maintenance funds $1.0 $ 2.0 Debt $7.1 $ 8.0 Annual debt service $ .5 $ .6 Annual O&M $ .3 $ .3 Total $ .8 $ .9 16

Capital Project Financing Plan: Rugby Road Office Building Estimated Renovation Cost ($ in millions) Low High Renovation cost $6.0 $7.5 Abatement & Demolition $ .3 $ .4 Elevator $ .3 $ .4 Architectural & Structural $2.4 $3.2 Mechanical, Electrical & Plumbing $3.0 $3.5 Renovation Cost $/GSF: $240 $300 17 NOTE: Cost excludes design, project management and contingency costs.

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Intent to Issue Tax-Exempt Debt Pat Hogan Executive Vice President and Chief Operating Officer 19

Intent to Issue Tax-Exempt Debt • Under federal tax regulations, prior to the University’s issuance of tax-exempt debt to finance a capital project, the Board must approve an intent-to-issue resolution, so that the University may reimburse itself with debt for certain qualified expenditures related to the project. • This resolution also authorizes the University to finance a capital project on a short- term basis through the University’s commercial paper program, where appropriate. • This resolution does not authorize the University to issue long- term debt. Prior to the issuance of long-term debt, the Board will be asked to consider a separate issuance resolution. 20

Intent to Issue Tax-Exempt Debt (In Millions) Academic Division North Grounds Mechanical Plant $ .33 Alderman Rd. Residence Area, Bldg. 6 $ 6.20 Facilities Mgmt. Shop/Office $ 5.00 Rugby Administration Building $ 8.00 Medical Center Ambulatory Practice Space $ 6.91 Education Resource Center $25.40 21

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FINANCE COMMITTEE REPORTS 1. June 30, 2013 Academic Division Financial Report Endowment Report – Market Value and 2. Performance as of June 30, 2013 3. Annual Report on UVa Employee Health Plan 4. Darden Student Loan Program 5. Executive Vice President and Chief Operating Officer’s Remarks 23

June 30, 2013 Academic Division Financial Report Melody Bianchetto Associate Vice President for Finance 24

June 30, 2013 Academic Division Financial Report • Unaudited, modified GAAP-basis Financial Statements, as compared to prior year  Statement of Net Assets  Statement of Revenues, Expenses, and Changes in Net Assets • Cash-basis Operating Sources and Uses, actual results as compared to the budget plan. 25

Academic Division Financial Report Modified GAAP-basis Financial Statements (unaudited) Fiscal Year 2012 - 2013 Year ending 6/30/13 Year ending 6/30/12 Balance Sheet Highlights: (in millions) $ 5,615.8 $ 5,145.2 Net Assets Income Statement Highlights: $ 423.5 $ 406.4 Net tuition 304.2 317.4 Grants & Contracts 140.2 131.6 State appropriations 147.1 131.8 Gifts 131.4 138.0 Other 1,146.4 1,125.2 Operating Revenues 1,249.9 1,230.8 Operating Expenses (103.5) (105.6) Net Operating Margin 574.2 272.8 Net Non-operating Contribution $ 470.6 $ 167.2 Change in Net Assets 26

Academic Division Financial Report Cash-basis Operating Sources and Uses, Budget vs. Actual Fiscal Year 2012 - 2013 2012-13 2012-13 Actual Budget Statement of Sources and Uses Highlights: (in millions) Net Tuition and Fees $ 442.1 $ 446.7 State Appropriations 140.2 140.1 Grants & Contracts 314.4 302.8 Endowment Distribution 154.6 155.0 Gifts 132.1 136.4 Other 182.3 274.9 Sources of Funds 1,365.7 1,455.9 Uses of Funds: 1,345.2 1,449.2 Net Sources in Excess of Uses $ 20.5 $ 6.7 27

Academic Division Financial Report Future Challenges • Focus on sustainable financial model • Financing the Strategic Plan • Competitive compensation for faculty and staff • Diversify the research base • Continue to find operational efficiencies • Develop new philanthropic relationships 28

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Endowment Report – Market Value and Performance as of June 30, 2013 Larry Kochard Chief Executive Officer/Chief Investment Officer UVIMCO 30

Outline INVESTMENT MANAGEMENT COMPANY • Growth of the Long Term Pool • Governance and Staffing • Investment Philosophy • Performance Review • Asset Allocation • Short Term Pool 31

Growth of the Long Term Pool INVESTMENT MANAGEMENT COMPANY 6,000 2005-2008 Foundation assets & UVA operating funds consolidated to the Long Term Pool 5,000 Shareholder Composition: June 30, 2013 17% 4,000 University Operating Reserves $ in Millions 3,000 2004 UVIMCO spun off from the University 61% 22% 2,000 University of 1997 University- Virginia Related Established separate Board of Directors Endowment Foundations 1,000 Long Term Pool: $5.96 Billion 0 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 1974 Endowment* Post-1974 Gifts and Transfers* Long Term Pool Performance (Net of Distributions) Actual Long Term Pool Value * Adjusted for inflation using the Higher Education Price Index 32