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
Venture
2
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
.
6
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
.
9
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
.
13
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
Board of Visitors
15
.
16
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
Engage. Simplify. Enable the Mission.
Sarah Collie
Assistant Vice President for
Organizational Excellence
Engage. Simplify. Enable the Mission.
Organizational Excellence
18
Organizational Excellence
Gathering enterprise-wide data from the Benchmarking
Study
Engage. Simplify. Enable the Mission.
Early Progress
Realizing higher quality and synergies, as well as costsavings and cost-avoidance
19
Benefitting from strong academic-administrative
collaboration
Aligning initial activities with strategy to enhance
University capacity
High
EFFECTIVENESS
World-class
EFFECTIVENESS
Low
World-class
EFFICIENCY
• New service models
• Enhanced collaboration
• Process and functional
improvements – (e.g.
technology, space)
EFFICIENCY
High
Engage. Simplify. Enable the Mission.
Aspiring to World-Class and
Globally Distinguished Performance
20
Finance
 Cash Disbursements
− Accounts Payable
− Travel and Expenses
 Revenue Cycle
− Credit
− Customer Billing
− Dispute Management
− Collections
− Cash Application
 Accounting and External Reporting
− Fixed Assets
−
−
−
−
Intercompany accounting
General ledger accounting
Cost Accounting
External Reporting
 Tax Management
 Treasury Management
− Cash Management
− Capital & Risk Management
 Compliance Management
 Planning & Performance Mgmt
 Business Analysis
 Function Management
Human Resources
Information Technology










 IT Business Planning
- Alignment, Prioritization
 Enterprise Architecture Planning
 Emerging Technologies
 Infrastructure Development
 Application Development and
Implementation
 Quality Assurance
 Infrastructure Management
 End User Support
 Application Maintenance
 Risk Management
 Function Management
Total Rewards Administration
Payroll Services
Data Mgmt, Reporting & Compliance
Staffing Services
Labor Relations
Workforce Development Services
Organizational Effectiveness
Total Rewards Planning
Strategic Workforce Planning
Function Management
Procurement








Supply Data Management
Requisition and PO Processing
Supplier Scheduling
Receipt Processing
Compliance Management
Customer Management
Sourcing Execution
Supplier Management and
Development
 Function Strategy and Performance
Management
 Sourcing & Supply Base Strategy
 Function Management
Research Administration


Pre-Award
Post-Award
Student Services




Admission services
Financial Aid Services
Academic Catalog and Records
Management
University Data Management,
Reporting & Compliance
Engage. Simplify. Enable the Mission.
Scope of Benchmarking Study –
Current State Assessment
21
Charting Our Progress - Examples
New Service Models
• Virginia Higher Ed. Procurement Cooperative
• Strategic Sourcing – office supplies
• Back Office Service Sharing
Value
•
Annual Savings/
Avoidance
•
•
Reduced demand of UVa
resources
More favorable pricing
Economies of scale
TBD
$300,000
$430,000
•
•
Greater efficiency
Improved service
$800,000
$160,000
•
Expert full-service preaward, post-award, and
closeout
TBD
Technology
• UVa Box – secure cloud storage for
documents/data
•
•
Accessible, shareable
Reduces on-site servers
TBD
Space
• Relocation of Physician Billing and Call Center
to UVa Research Park
•
•
Improve space utilization
Strategic allocation
TBD
Negotiated Contract Savings
• Banking Services
• Other Major Procurements
Collaborations
• Research Administration for Batten School by
School of Medicine
Other
• Health Plan - dependent audit, UVa Pharmacy
and change to Spousal Coverage
Engage. Simplify. Enable the Mission.
Initiative
22
$3.0 - $10.0
million (TBD)
.
23
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
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
2014-15 Budget Planning Expenditure
Assumptions
Efficiencies/Cost Savings: $8-9 million
Financial aid: full funding for AccessUVa to meet
100% of need
Compensation:
• T&R Faculty – 4.75% merit increase pool per Board approved
resolution
• A&P Faculty/University Staff – merit-based 3% increase
• Classified Staff – as state budget dictates
• Fringe rates are projected to increase for faculty and staff
• 41% increase in VRS employer contribution rate
• Health care premium increases average 7.0%
27
Budget Development Timeline
December 2013January 2014
Develop tuition, fees, and financial aid
requirements
February 2014
Discuss tuition, fees, and financial aid
scenarios with Finance Committee;
approve graduate tuition and fees,
housing, and dining
April 2014
May 2014
BOV approves undergraduate tuition
and fees
Complete 2014-15 budget development
June 2014
BOV approves 2014-15 budget
28
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29
Treasury Update
Jim Matteo
University Treasurer
30
Treasury Update
1. Outstanding debt
2. Fixed vs. variable rate debt
3. Peer comparison on cost of capital
4. Aaa rating benchmarks
5. Key debt capacity ratios
6. Cash on hand
31
Outstanding Debt @ 9/30/13
($millions)
32
Fixed vs. Variable Rate Debt
Public Aaa Peers; FY12 Financial Data
(%)
100
1.4
8.1
8.2
10.6
90
14.7
19.0
80
50.8
70
60
50
100.0
98.6
91.9
91.8
89.4
40
85.3
81.0
30
49.2
20
10
0
INDIANA U
Fixed Rate Debt
UWASHINGTON
UTEXAS
TEXAS A&M
PURDUE
UNC
UVA
UMICHIGAN
33
Variable Rate Debt
Source: Moody’s MFRA
Peer Comparison – Weighted Average
Cost of Capital & Effective Duration
“Efficient Frontier”
34
Source: Barclays Capital
Moody’s Scorecard Rating for
Aaa-rated Public Universities
35
Key Debt Ratios
36
Debt Capacity Projection
37
Source: JPMorgan
Monthly Days Cash on Hand
@ FYE 2012
(x)
400
(Monthly Liquidity x 365) / (Total Expenses – Depreciation and Additional, Unusually Large Non-Cash
Expenses)
341
350
Aaa
300
251
251
250
203
Aa1
200
185
177
157
150
Aa2
100
Aa3
141
A1
50
A2
A3
Baa
SG
0
Ratings
Purdue
(Aaa)
Texas A&M
(Aaa)
Indiana U
(Aaa)
UVA
(Aaa)
UMichigan
(Aaa)
UTexas
(Aaa)
UNC
(Aaa)
UW
(Aaa)
Source: Moody’s Municipal Financial Ratio Analysis (MFRA); certain figures
calculated by Morgan Stanley from audited financials where available
38
Closing Comments
Strengths
• FY13 performance maintained and enhanced key financial
strengths
• Balance sheet growth supported by strong investment
performance and superior fundraising
• Positive operating results fueled by strong performance of the
health care enterprise and growth in net tuition revenue
• Maintenance of liquidity levels that provide a solid cushion for
potentially stressful environments
Challenges
• High exposure to the rapidly changing and challenging
healthcare marketplace
• Uncertain federal research funding outlook
• Relationship with the Commonwealth and the level of state
appropriations
39
.
40
University Workforce
Susan Carkeek
Vice President and
Chief Human Resources Officer
41
UVa Employee Categories
Employee Category
Teaching & Research
Faculty
Temporary/Wage Faculty
Head
Count
2,467
375
Comparison to
October 2012
-1.9%
-25.9%
Additional Description
Includes 1,511 tenure track (-4.1%) and 956 non
tenure track (-2.3%); also includes 1,061 faculty in
the School of Medicine
Part-time faculty typically teaching one course.
548
-14.4%
Staff
4,981
-3.7%
Includes 1,903 Classified Staff (38%) and 3,078
University Staff (62%)
Graduate Assistants
1,561
-2.4%
Includes 928 Teaching Assistants and 633 Research
Assistants
Administrative &
Professional Faculty
Professional Research Staff
Temporary/Wage Staff
449
-9.1%
682
- 8.8%
Student Employees
2,530
-2.1%
Medical Center
7,306
College at Wise
TOTAL
445
21,344
+21.9%
+1.2%
-2.5%
Includes 238 student employees at College at Wise
Includes 94 T&R faculty (+2.2%), 40 A&P Faculty
(no change), 172 staff (+ 3.0%), and 139 temp/wage
employees (+110.6%)
Includes 5,989 salaried employees (+2.6%), 555
temp/wage employees (-10.6%), and 762 “house
staff” i.e. medical residents
42
.
43
Executive Vice President’s Remarks
Pat Hogan
Executive Vice President and
Chief Operating Officer
44
Executive Vice President’s Remarks
• Quarterly Financial Report
• Annual Audit
• Impact of Federal Shutdown
45
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46