Changes at UVA
David Boling
Deputy Comptroller, UVA
May 17th, 2012
1
Changes at UVA
New Leadership
A New Financial Model
Financial Reporting to the Board
2
New Leadership
• New President – August 2010
• New Executive VP and COO – July 2011
• New Provost – July 2011
• VP and CFO – search underway
3
New Leadership
Teresa Sullivan
• Became UVA’s first female president in
August, 2010
• Formerly the Provost at the University of
Michigan
4
New Leadership
Michael Strine
• Became UVA’s Executive VP and COO in
July, 2011 (Took over for Leonard Sandridge)
• Formerly the Vice President for Finance, Chief
Financial Officer and Treasurer at Johns
Hopkins University
5
New Leadership
John Simon
• Became UVA’s Executive VP and Provost in
July, 2011
• Formerly the Vice-Provost for Academic
Affairs at Duke University
6
New Leadership
VP and Chief Financial Officer vacancy
• Yoke San Reynolds retiring at the end of May
• Has been at UVA for 11 years
7
New Internal Financial Model
President has mandated adoption of a new
funding model that will emphasize:
1. Transparent decision making
2. Incentive based allocations
3. Prudent stewardship of the University’s
resources
(Some know this approach as “Responsibility Center
Management” (RCM) or “Activity Based Costing”)
8
New Internal Financial Model
Current model is highly centralized…
– Tuition revenue
– State appropriations revenue
– F&A recoveries
– Unrestricted gifts and unrestricted
endowment spending distribution
– O&M expense (facilities maintenance)
– Central admin and other support costs
9
New Internal Financial Model
Goals of the New Model:
1. Decentralize authority and
accountability for resource planning
2. Empower and increase self-reliance of
the schools, and other major units
10
New Internal Financial Model
How will this happen?
By associating institutional revenues and expenditures
with the activities that generate them. In effect, ALL
sources of revenue will be identified and attributed to the
units that generate them, and ALL support costs will be
either be charged out or allocated out to the academic
units
11
New Internal Financial Model
In the new (decentralized) model, what
happens to….?
– Tuition revenue
– State appropriations revenue
– F&A recoveries
– Unrestricted gifts and endowment spending
distribution
– O&M expense (facilities maintenance)
– Central admin and other support costs
12
FY11 Operating Revenues and Expenditures, Actual (DRAFT
UNOFFICIAL AND UNAUDITED DRAFT (for illustration purposes only!)
ACADEMIC UNITS
A&S
Revenues:
State Appropriations
Tuition and Fees (Note 1 and 3)
Less RP1 Revenue already in T&F and St Approp (note 2)
SG/SR Funding Allocation (E&G, Research, and Fin Aid) (note 3)
Sponsored Programs (Note 4)
Endowment Spending Distribution Received (Note 5)
Endowment Admin Fee Received (Note 5)
Spendable Gifts
Sales and Services (Note 6)
Interest Earnings, net (Note 7)
Other
Total Revenues
0
788,239
(698,348)
112,873,167
39,239,265
13,981,767
813,269
12,254,714
1,635,503
112,339
3,200
181,003,116
Expenditures (Unit Based): (Note 8)
Instruction
Research
Public Service
Academic Support
Libraries
Student Services
Financial Aid to Students
Institutional Support
Operation & Maintenance of Plant
Auxiliaries
Other
Total Expenditures
100,522,377
41,755,111
3,883,694
11,414,428
232,140
458,835
22,500,745
3,132,299
181,569
10,000
0
184,091,198
Architecture
Batten
Curry
Darden
0
0
0
0
78,640
11,650
87,829 35,463,773
(43,140)
(10,740)
(71,341)
0
7,609,106
427,999 14,861,776
686,220
264,005
20,798 13,868,706
272,070
742,624 4,949,338
570,596 4,979,291
35,288
235,554
27,004
236,981
524,872
3,505
364,039 10,172,811
358,116
11,050 2,485,311 2,021,179
(182)
521
32,872
Engineering
Law
Libraries
McIntire
Medicine
Nursing
0
0
0
0
0
219,365 40,642,517
1,011 12,056,797
238,407
37,937
(163,441)
0
(66,268)
(78,375)
(214,400)
(25,200)
31,302,038 6,289,081 21,194,466 7,436,664 54,957,351 6,967,187
43,024,970 1,673,999 1,817,964
0 182,753,598 2,535,564
3,844,911 1,938,546 2,243,310 3,423,731 31,174,200 1,760,149
178,902
93,235
105,885
165,275
1,584,614
83,686
4,260,342 3,805,021
444,638 2,113,613 23,641,820
780,947
1,086,231
535,148
557,439
20,868
4,452,357
132,263
50,149
(27,868)
2,615
151,990
325,709
3,891
0
4,079 21,144,249
(320)
83,803,467 54,949,679 26,301,060 25,294,642 320,057,905 12,276,103
SCPS
Total
Acad Units
0
0
14,407,864 104,034,029
(11,598,597) (12,969,850)
14,181,871 278,786,926
694,830 286,165,766
56,761
69,665,224
157
3,559,850
18,351
58,384,673
208,903
13,504,368
7,975
660,011
21,151,208
17,978,115 822,942,206
9,569,329
5,649,154
32,194,439 53,865,197
6,633,930
547,279
214,258
1,435,730
2,804,863
86,320
2,076
968,118
0
473,647
165,733
0
11,683,491 26,089,746
12,566,744 2,612,905
3,465,050 1,561,389
2,724,842 7,066,729
0
923,920
533,844 4,044,161
3,051,643 6,895,431
1,217
0
0 1,817,870
26,643,732
1,195,061
27,236,152
711,797
14,624
4,679,943
3,705,469
2,740,344
10,000,391
0
3,792,761
4,500,757
34,026,831 51,012,151
83,358,110
52,881,482
(172,172)
(172,172)
(4,824,485)
1,010,000
(3,910,964)
(7,725,449)
260,781
260,781
1,871,276
744,259
(28,207,311)
(28,207,311)
(62,474)
(62,474)
(1,537,977)
(1,537,977)
(9,102,063)
1,335,000
(45,516,026)
(53,283,089)
273,185
(5,657,252)
(1,172,241)
1,950,973
(5,967,588)
235,656
42,972
(28,583,916)
220,120
1,244,133
30,712
31,008
10,357,170
GL Transfers: (Note 9)
Self-Sufficiency Tax
In-State Subsidy
(To)/From Reserves, Debt, or Capital Projects (Note 10)
Total GL Transfers
(1,848,494)
(1,848,494)
(217,018) (9,416,400)
(217,018) (9,416,400)
(3,150,561)
325,000
26 (2,275,301)
26 (5,100,862)
Net Increase/(Decrease) for FY11
(4,936,576)
(1,004,859) (8,268,003)
(1,832,365) (2,247,817)
43,364,062
1,536,832
5,259,536
0
490,320
4,868,567
0
17,909,365 64,130,408 5,663,440
89,080 189,877,515 1,798,909
0
6,018,029
254,455
3,286,478 20,730,693 2,326,848
0
4,480,089
149,175
1,187,835
437,903
772,034
9,677,645 1,496,176
0
6,012
243
90,174
0
1,702,808
0
1,881,796
7,148
0
27,734,082 24,087,928 297,818,182 11,977,974
622,426
110,571
(13,800)
26,924,712
5,548,844 294,866,347
0 294,032,149
1,166,852
18,227,831
7,225,643
67,105,187
0
36,266,330
1,129,550
11,865,735
71,600
60,744,098
186,907
3,357,391
818,118
9,629,369
250,989
260,989
(1,337)
1,887,607
16,397,166 798,243,033
(1,127,017)
13
FY11 and FY10 Operating Revenues and Expenditures, ACTUALS (DRAFT)
UNOFFICIAL AND UNAUDITED DRAFT (for illustration purposes only!)
A&S
FY11
FY10
Change in $ Change in %
Revenues:
State Appropriations
Tuition and Fees (Note 1)
Less RP1 Revenue already in T&F and St Approp (note 2)
SG Funding Allocation (E&G, Research, and Fin Aid) (note 3)
Sponsored Programs (Note 4)
Endowment Spending Distribution Received (Note 5)
Endowment Admin Fee Received (Note 5)
Spendable Gifts
Sales and Services (Note 6)
Interest Earnings, net (Note 7)
Other
Total Revenues
0
788,239
(698,348)
112,873,167
39,239,265
13,981,767
813,269
12,254,714
1,635,503
112,339
3,200
181,003,116
0
1,915,630
(658,242)
110,271,154
36,913,076
13,374,550
739,578
11,736,600
1,628,047
60,689
(232,678)
175,748,404
(1,127,391)
(40,106)
2,602,013
2,326,189
607,217
73,691
518,114
7,456
51,650
235,878
5,254,713
-58.9%
6.1%
2.4%
6.3%
4.5%
10.0%
4.4%
0.5%
85.1%
-101.4%
3.0%
Expenses (Unit Based): (Note 8)
Instruction
Research
Public Service
Academic Support
Libraries
Student Services
Financial Aid to Students
Institutional Support
Operation & Maintenance of Plant
Auxiliaries
Other
Total Expenditures
100,522,377
41,755,111
3,883,694
11,414,428
232,140
458,835
22,500,745
3,132,299
181,569
10,000
0
184,091,198
101,228,300
43,424,559
3,919,743
12,779,143
232,813
1,174,740
22,402,324
3,799,842
638,052
9,954
0
189,609,470
(705,923)
(1,669,448)
(36,049)
(1,364,715)
(673)
(715,905)
98,421
(667,543)
(456,483)
46
0
(5,518,272)
-0.7%
-3.8%
-0.9%
-10.7%
-0.3%
-60.9%
0.4%
-17.6%
-71.5%
0.5%
#DIV/0!
-2.9%
GL Transfers: (Note 9)
Self-Sufficiency Tax
In-State Subsidy
(To)/From Reserves, Debt, or Capital Projects (Note 10)
Total GL Transfers
(1,848,494)
(1,848,494)
(9,148,657)
(9,148,657)
7,300,163
7,300,163
-79.8%
-79.8%
Net Increase/(Decrease)
(4,936,576)
(23,009,723)
18,073,148
-78.5%
14
New Internal Financial Model
Lots of Issues/Questions to Resolve and
Decisions to be Made…
1. “Winners” and “Losers”
2. Subsidies to the “have-nots”
3. Charge out support services, apply a “tax,” or some
combination of both?
4. Can academic units “opt out” of services?
5. Are admin units “right sized” to be most efficient and
lowest cost? (Benchmarking!)
15
Board of Visitors Reporting
New approach by the new leadership…
– Reports on results of operations throughout the
year, to include interim financial statements
– Multi-year trends analysis for revenues and
expenditures
– Comparisons across UVA schools for key
measures and trends
16
UNIVERSITY OF VIRGINIA - Acade mic Divis ion Only
Fis cal Ye ar 2012 (July 1, 2011 – June 30, 2012)
State me nt of Ne t As s e ts (Unaudite d) at Mid-ye ar
As of De ce mbe r 31, 2011 and June 30, 2011
12/31/2011
ASSETS
Curre nt As s e ts
Cas h and s hort te rm inve s tme nts
Re ce ivable s (accounts , note s , othe r)
Re ce ivable from Me dical Ce nte r
Re ce ivable from UPG
Re ce ivable from SWVHEC & age ncie s
Inve ntorie s , pre paids and othe r
Total curre nt as s e ts
Noncurre nt As s e ts
Endowme nt and othe r long-te rm inve s tme nts
Note s re ce ivable s
Me dical Ce nte r poole d bond re ce ivable
De pos its with bond trus te e s
Capital as s e ts , ne t
Total noncurre nt as s e ts
Total As s e ts
LIAB ILITIES
Curre nt Liabilitie s
Accounts payable and accrue d liabilitie s
De fe rre d re ve nue s and de pos its
De fe rre d re ve nue s , s pring tuition
Comme rcial Pape r
De pos its he ld for UVA-Wis e and SWVHEC
Total curre nt liabilitie s
Noncurre nt Liabilitie s
Long-te rm de bt
Othe r long-te rm liabilitie s
Total noncurre nt liabilitie s
Total Liabilitie s
NET ASSETS
Inve s te d in capital as s e ts , ne t of re late d de bt
Re s tricte d:
None xpe ndable
Expe ndable
Unre s tricte d
Total Ne t As s e ts
$
$
$
318,190,312
267,700,935
12,507,016
219,844
2,756,258
299,265
601,673,630
6/30/2011
51.1%
696.7%
410.4%
100.0%
100.0%
0.0%
143.7%
3,694,182,732
18,888,318
331,458,157
109,600,506
1,953,769,983
6,107,899,696
6,354,767,817
(183,367,192)
549,258
(9,854,815)
(46,419,493)
39,090,070
(200,002,172)
154,803,337
-5.0%
2.9%
-3.0%
-42.4%
2.0%
-3.3%
2.4%
13,896,154
186,648,956
76,850,000
6,600,669
283,995,779
20,414,898
(38,534,460)
230,000,000
10,641,000
2,032,112
224,553,550
146.9%
-20.6%
100.0%
13.8%
30.8%
79.1%
1,085,499,455
25,622
1,085,525,077
1,594,074,406
1,093,062,659
25,622
1,093,088,281
1,377,084,060
(7,563,204)
(7,563,204)
216,990,346
-0.7%
0.0%
-0.7%
15.8%
1,183,635,917
1,154,553,281
29,082,636
475,596,883
2,132,441,799
1,123,822,149
4,915,496,748
449,391,529
2,257,581,756
1,116,157,191
4,977,683,757
34,311,052
148,114,496
230,000,000
87,491,000
8,632,781
508,549,329
$
$
210,518,665
33,599,542
2,450,649
299,265
246,868,121
% Change
107,671,647
234,101,393
10,056,367
219,844
2,756,258
354,805,509
3,510,815,540
19,437,576
321,603,342
63,181,013
1,992,860,053
5,907,897,524
6,509,571,154
$
Change in $
26,205,354
(125,139,957)
7,664,958
(62,187,009)
2.5%
5.8%
-5.5%
0.7%
-1.2%
17
UNIVERSITY OF VIRGINIA - Acade mic Division Only
State me nt of Change s in Ne t Asse ts (Unaudite d)
For the Six M onths Ende d De ce mbe r 31, 2011 and 2010
OPERATING REVENUES AND EXPENSES:
Ope rating Re ve nue s
Stude nt tuition and fe e s, ne t
Grants and contracts (fe de ral, state , nongove rnme ntal)
State appropriations (including fe de ral stimulus)
Auxiliary e nte rprise s re ve nue s, ne t
Gifts, curre nt
Sale s and se rvice s of e ducational de partme nts
Pe ll grants
Total ope rating re ve nue s
Ope rating Expe nse s
Instruction
Re se arch
Public se rvice
Acade mic support
Stude nt se rvice s
Institutional support
Ope ration of plant
Stude nt aid, ne t
Auxiliary
De pre ciation
Othe r
Total ope rating e xpe nse s
Ope rating re ve nue s le ss ope rating e xpe nse s
NONOPERATING REVENUES AND EXPENSES
Nonope rating Re ve nue s
Capital appropriations, gifts, and grants
Inve stme nt income (loss)
Additions to pe rmane nt e ndowme nts
Othe r
Total nonope rating re ve nue s
Nonope rating Expe nse s
Inte re st on capital asse t re late d de bt, ne t
Loss on capital asse ts (gain)
Othe r
Total nonope rating e xpe nse s
Nonope rating re ve nue s le ss nonope rating e xpe nse s
Total Re ve nue s
Total Expe nse s
Incre ase in ne t asse ts
NET ASSETS
Ne t asse ts - July 1 (Be ginning)
Ne t asse ts -- De ce mbe r 31 (e nding)
FY12
12/31/2011
FY11
12/31/2010
Change in $
% Change
207,888,812
170,284,898
126,918,232
83,933,947
48,696,679
11,064,672
4,280,789
653,068,029
189,208,106
175,842,465
138,406,177
74,484,220
50,580,851
11,479,180
4,508,796
644,509,795
18,680,706
(5,557,567)
(11,487,945)
9,449,727
(1,884,172)
(414,508)
(228,007)
8,558,234
150,468,949
151,590,570
15,496,069
71,287,380
18,508,415
39,526,868
49,543,885
25,374,732
59,299,500
47,295,364
3,252,321
631,644,053
156,010,870
156,853,068
14,190,637
67,751,669
18,988,400
37,928,431
48,984,781
23,810,715
58,492,969
45,813,061
3,791,106
632,615,707
(5,541,921)
(5,262,498)
1,305,432
3,535,711
(479,985)
1,598,437
559,104
1,564,017
806,531
1,482,303
(538,785)
(971,654)
-3.6%
-3.4%
9.2%
5.2%
-2.5%
4.2%
1.1%
6.6%
1.4%
3.2%
-14.2%
-0.2%
21,423,976
11,894,088
9,529,888
80.1%
17,770,383
(112,976,962)
25,680,580
16,142,609
(53,383,390)
9.9%
-3.2%
-8.3%
12.7%
-3.7%
-3.6%
-5.1%
1.3%
30,491,597
312,208,004
5,683,275
19,489,658
367,872,534
(12,721,214)
(425,184,966)
19,997,305
(3,347,049)
(421,255,924)
15,687,211
1,127,185
3,158,946
19,973,342
(1,176,605)
(741,244)
12,172,102
10,254,253
(83,610,985)
347,899,192
(431,510,177)
-124.0%
599,684,639
661,871,648
(62,187,009)
1,012,382,329
652,589,049
359,793,280
(412,697,690)
9,282,599
(421,980,289)
-40.8%
1.4%
-117.3%
4,251,643,417
4,611,436,697
304,060,051
6.6%
14,510,606
385,941
15,331,048
30,227,595
4,977,683,757
4,915,496,748
-41.7%
-136.2%
351.9%
-17.2%
-114.5%
-7.5%
-65.8%
385.3%
51.3%
18
Tuition & Fees Revenue
$500,000
$450,000
in Thousands
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
2003
2004
Gross Tuition and Fees
2005
2006
2007
2008
Scholarship Discount & Allowance
2009
2010
Net Tuition and Fees
2011
19
Negotiated F&A Rates
FY2002 through FY2015
50.0%
Effective F&A Recovery Rate by School
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
FY02
FY03
SoM
FY04
Engineering
FY05
FY06
A&S
Curry
FY07
Other
FY08
FY09
Nursing
FY10
FY11
All UVa
22
F&A Recoveries by School
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$0
FY02
FY03
FY04
SoM
FY05
Engineering
FY06
A&S
FY07
Curry
FY08
Other
FY09
FY10
FY11
Nursing
23
UVA Endowment Growth
(In $1,000's)
As of June 30, 2011
$3,600
$3,400
Market Value 6/30/84
$ 213
New Gifts to Endowment
484
Net Adds to Quasi Endowments
Inflation on (1984 MV & Gifts)
Subtotal
1,698
Performance, net of distributions:
Market Appreciation
3,261
Distributions
(1,587)
Performance, net
1,674
Market Value 06/30/11
$ 3,372
$3,200
$3,000
$2,800
$2,600
$2,400
$2,200
$2,000
398
603
$1,800
$1,600
Performance, net of distributions
$1,400
$1,200
$1,000
Additions to Quasi Endowment
$800
$600
New Endowment Gifts
$400
$200
New Gifts
Adds to Quasi
Performance (Mkt Apprec less Distrib)
Inflation
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1984
1985
1984 MV
2000
1984 Market Value
$-
24
Net Income (Modified GASB)
FY2003 through FY2011
$1,000,000
$800,000
$600,000
in Thousands
$400,000
$200,000
$0
2003
2004
2005
2006
2007
2008
2009
-$200,000
-$400,000
-$600,000
-$800,000
-$1,000,000
Net Operating income (loss)
Net Nonoperating income (loss)
Total Net Income (loss)
2010
2011
Net Assets by Category
FY2003 through FY2011
$7,000
$6,000
$5,000
in Millions
$4,000
$3,000
$2,000
$1,000
$0
2003
2004
2005
Invested in Capital Assets, net of Debt
2006
2007
Restricted - Nonexpendable
2008
2009
Restricted - Expendable
2010
2011
Unrestricted
Unrestricted Net Assets
2.0
1.8
1.6
Billions
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
29
O&M Cost Per Square Foot
$14.00
$100,000,000
$12.00
$80,000,000
$10.00
$60,000,000
$8.00
$40,000,000
$6.00
$20,000,000
$4.00
$0
$2.00
Total O&M Cost
Total O&M Cost per Square Foot
Total O&M Cost Per Square Foot
$120,000,000
2011
$16.00
2010
$140,000,000
2009
$18.00
2008
$160,000,000
2007
$20.00
2006
$180,000,000
2005
$22.00
2004
$200,000,000
2003
Total O&M Cost
FY2003 through FY2011
Long Term Debt by Component
FY2003 through FY2011
$1,300,000
$1,200,000
$1,100,000
$1,000,000
$900,000
$800,000
in Thousands
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
2003
2004
2005
2006
Current portion of long-term debt
2007
Commercial paper
2008
Long-term debt
2009
2010
2011
What are the colleges spending their
money on?
• Instructional vs. administrative spending (20022003 to 2008-2009) at public institutions
– Average increase in instruction 45.1%
• UVa increase 42.4% or $125.3 million
• Increase as a percent of E&G 39.3% to 41.6%
– Average increase in administration 65.1%
• UVa increase 68.9% or $33.6 million
• Increase as a percent of E&G 6.5% to 8.2%
What is behind the growth in
administrative expenditures?
% of $ chg.
FY09 over FY03
•
•
•
•
•
Fundraising and alumni relations
Research administration
New functions
Compliance
Annual compensation increases
40.0%
11.3%
5.6%
6.3%
36.8%
100.0%
Questions?
34