Meeting of the Finance Committee November 15, 2013 1 FINANCE - PowerPoint PPT Presentation

Meeting of the Finance Committee November 15, 2013 1

FINANCE COMMITTEE CONSENT AGENDA ITEMS 1. Acquisition of Department of Forestry Property Located at 480 George Dean Drive, Charlottesville, Virginia 2. Amendment to the Qualified Governmental Excess Benefit Arrangement Plan 3. Capital Project Approvals – Financial Plans a. Education Resource Center b. Gross Anatomy Renovation 4. Medical Center Participation in a Dialysis Joint 2 Venture

Acquisition of Department of Forestry Property Located at 480 George Dean Drive, Charlottesville, Virginia Pat Hogan Executive Vice President and Chief Operating Officer 3

Acquisition of Department of Forestry Property: 400 George Dean Drive 4

Acquisition of Department of Forestry Property: 400 George Dean Drive • Department of Forestry owns 13.37 acres on George Dean Drive • Price will approximate property valuation: • 2010 appraisal = $1.9 million • Assessed value = $1.6 million • Parcel is contiguous to UVa and foundation-owned property • Authorizes Finance Committee Chair and EVP-COO to determine appropriate terms and conditions, and to execute acquisition 5

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Amendment to the Qualified Governmental Excess Benefit Arrangement Plan Pat Hogan Executive Vice President and Chief Operating Officer 7

Amendment to the Qualified Governmental Excess Benefit Arrangement Plan • Used to defer taxation on retirement contributions in excess of limitations otherwise imposed by IRS on other retirement plans • Amendment proposed to offer additional forms of distribution (other than just lump sum) by providing annuity options 8

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Capital Project Approvals: 1. Education Resource Center 2. Gross Anatomy Lab Renovation Colette Sheehy Vice President for Management & Budget 10

Project Approvals • Education Resource Center • Budget and scope revision • 45,900 GSF • $29.86 million cost funded with cash 11

Project Approvals • Gross Anatomy Lab Renovation • New project • Renovates and updates gross anatomy teaching space and fresh tissue teaching labs in Jordan Hall to comply with accreditation standards • Estimated project cost of $4-5 million to be funded by gifts 12

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Medical Center Participation in a Dialysis Joint Venture Pat Hogan Executive Vice President and Chief Operating Officer 14

Medical Center Participation in a Dialysis Joint Venture • Proposal to operate a new dialysis clinic in Farmville, Virginia through a joint venture with Centra Health • Medical Center’s ownership interest will be 51% • Enhances the UVa Medical Center’s opportunities to achieve multiple goals of the current Strategic Plan • MCOB recommends approval of this joint venture by the 15 Board of Visitors

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FINANCE COMMITTEE REPORTS 1. Organizational Excellence 2. 2014-2015 Academic Division Budget Planning and Preliminary Assumptions 3. Treasury Report 4. University Workforce 5. Executive Vice President’s Remarks 17

Organizational Excellence Engage. Simplify. Enable the Mission. Engage. Simplify. Enable the Mission. Sarah Collie Assistant Vice President for Organizational Excellence 18

Organizational Excellence Early Progress Engage. Simplify. Enable the Mission.  Benefitting from strong academic-administrative collaboration  Aligning initial activities with strategy to enhance University capacity  Gathering enterprise-wide data from the Benchmarking Study  Realizing higher quality and synergies, as well as cost- savings and cost-avoidance 19

Aspiring to World-Class and Globally Distinguished Performance Engage. Simplify. Enable the Mission. High World-class EFFECTIVENESS EFFECTIVENESS World-class EFFICIENCY • New service models • Enhanced collaboration • Process and functional improvements – (e.g. technology, space) 20 Low EFFICIENCY High

Scope of Benchmarking Study – Current State Assessment Information Technology Human Resources Finance  Total Rewards Administration  IT Business Planning  Cash Disbursements Engage. Simplify. Enable the Mission.  Payroll Services − Accounts Payable - Alignment, Prioritization   Data Mgmt, Reporting & Compliance Enterprise Architecture Planning − Travel and Expenses   Staffing Services Emerging Technologies  Revenue Cycle   Labor Relations Infrastructure Development − Credit   Workforce Development Services Application Development and − Customer Billing Implementation  Organizational Effectiveness − Dispute Management  Quality Assurance  Total Rewards Planning − Collections  Infrastructure Management  Strategic Workforce Planning − Cash Application  End User Support  Function Management   Accounting and External Reporting Application Maintenance  Risk Management − Fixed Assets Procurement  Function Management − Intercompany accounting  Supply Data Management − General ledger accounting  Requisition and PO Processing − Cost Accounting Research Administration  Supplier Scheduling − External Reporting  Receipt Processing  Pre-Award  Tax Management  Compliance Management  Post-Award  Treasury Management  Customer Management − Cash Management  Sourcing Execution Student Services − Capital & Risk Management  Supplier Management and  Admission services  Compliance Management Development  Financial Aid Services  Function Strategy and Performance  Planning & Performance Mgmt  Academic Catalog and Records Management  Business Analysis Management  Sourcing & Supply Base Strategy 21   Function Management University Data Management,  Function Management Reporting & Compliance

Charting Our Progress - Examples Initiative Value Annual Savings/ Avoidance New Service Models Engage. Simplify. Enable the Mission. • Virginia Higher Ed. Procurement Cooperative • Reduced demand of UVa TBD • Strategic Sourcing – office supplies resources $300,000 • Back Office Service Sharing • More favorable pricing $430,000 • Economies of scale Negotiated Contract Savings • Banking Services • Greater efficiency $800,000 • Other Major Procurements • Improved service $160,000 Collaborations • Research Administration for Batten School by • Expert full-service pre- TBD School of Medicine award, post-award, and closeout Technology • UVa Box – secure cloud storage for • Accessible, shareable TBD • documents/data Reduces on-site servers Space • Relocation of Physician Billing and Call Center • Improve space utilization TBD to UVa Research Park • Strategic allocation 22 Other • Health Plan - dependent audit, UVa Pharmacy $3.0 - $10.0 and change to Spousal Coverage million (TBD)

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2014-2015 Academic Division Budget Planning and Preliminary Assumptions Colette Sheehy Vice President for Management and Budget 24

2014-15 Budget Planning Revenue Assumptions Tuition: • Comprehensive undergraduate tuition and financial aid strategy being developed for discussion with Board • Engineering will continue to phase in tuition differential • Enrollment growth will follow Board-approved plan • In April, the Board will consider undergraduate tuition, and will consider graduate tuition, housing and dining rates in February. Research Funding: projected 1.0% decrease Mandatory Auxiliary Fees: projected 2-2.5% increase 25 25

2014-15 Budget Planning Revenue Assumptions (continued) Housing and Dining rates: projected 3-4.5% increase Endowment: 4.68% of market value per approved spending policy State Appropriations: funding to support enrollment growth and any state authorized salary and benefit increases (e.g. VRS) Philanthropy: based on school and University Advancement estimates 26 26

2014-15 Budget Planning Expenditure Assumptions Efficiencies/Cost Savings: $8-9 million Financial aid: full funding for AccessUVa to meet 100% of need Compensation: • T&R Faculty – 4.75% merit increase pool per Board approved resolution • A&P Faculty/University Staff – merit-based 3% increase • Classified Staff – as state budget dictates • Fringe rates are projected to increase for faculty and staff 27 • 41% increase in VRS employer contribution rate • Health care premium increases average 7.0%

Budget Development Timeline December 2013- Develop tuition, fees, and financial aid January 2014 requirements February 2014 Discuss tuition, fees, and financial aid scenarios with Finance Committee; approve graduate tuition and fees, housing, and dining April 2014 BOV approves undergraduate tuition and fees May 2014 Complete 2014-15 budget development June 2014 BOV approves 2014-15 budget 28

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Treasury Update Jim Matteo University Treasurer 30

Treasury Update 1. Outstanding debt 2. Fixed vs. variable rate debt 3. Peer comparison on cost of capital 4. Aaa rating benchmarks 5. Key debt capacity ratios 6. Cash on hand 31

Outstanding Debt @ 9/30/13 ($millions) 32