Meeting of the
Finance Committee
May 20, 2013
1
Finance Committee Agenda
Consent Agenda:
• Working Capital Investment Policy
• Defined Contribution Retirement Plan Amendments
• Capital Items
- Project Review, Alderman Road Residence Halls, #6
- Project Approval, Facilities Management Shop Support/Office Building
• Purchase of 560 Ray C. Hunt Drive from UVa Foundation
Action Items:
• 2013-14 Operating Budget
- Academic Division
- UVa’s College at Wise
- Medical Center & Transitional Care Hospital
- Pratt Fund
- Annual Renovation and Infrastructure Plan
2
Amendment to Delegation of Authority in
Working Capital Investment Policy
•
Currently, the policy authorizes the VP &
CFO to manage the investment of working
capital.
•
Propose amending the policy to change
authorization to the EVP & COO to manage
working capital investments.
3
Defined Contribution Retirement Plan
Amendments
• Amend the Optional Retirement Plan of the
University of Virginia allowing employees to receive
benefits any time on or after the day of separation
from service (to align with Virginia Retirement
System).
• Amend the Optional Retirement Plan of the UVa
Medical Center granting employees service credits
for the vesting period requirement from the
Albemarle Arthritis Associates (AAA), LLP, effective
May 26, 2013.
4
Project Review
• Alderman Road Residence Halls
Building # 6
5
Project Approval
• Facilities Management Shop Support/Office
Building
– 14,000 GSF
– Provide shop support and office space
– $6 million ($5 million debt and $1 million
cash)
6
Purchase of 560 Ray C. Hunt Drive
from the University of Virginia Foundation
– 110,000 SF
– Purchase price not to exceed $15,850,000
– EVP-COO authorized to approve and execute
purchase agreements and related documents on
behalf of the University
7
8
University of Virginia
Financing Academic Excellence
Progress Report
May 20, 2013
9
Progress to Date
• Established framework for four-year plan
• Commitment to faculty salaries
• Substantive discussion of Organizational Excellence
• Approved 2013-14 tuition and fees
• Prepared 2013-14 budget
• Implemented administrative changes to AccessUVa to
hold 2013-14 institutional investment at the 2012-13
level. Performed analysis necessary to identify
possible program enhancements and cost reductions.
10
Next Steps
• Overlay Strategic Plan investment priorities and determine
potential funding needs and sources (Strategic Investment Fund)
• Develop a tuition model to address long-term needs, particularly
those of the College of Arts and Sciences
• Determine necessary changes to advancement organization to
meet philanthropic goals
• Finalize program changes for AccessUVa by September 30, 2013
• Track AAU salary rankings against the Board-approved four-year
goal
Incorporate into FY14 FAE
11
12
BOV Actions Reflected in the Budget
• Reviewed budget assumptions at November meeting:
– Endowment distribution
– Projected AccessUVa costs
– Estimate of sponsored research activity
• Reports on budget actions by the Governor and General
Assembly
• Multi-year faculty salary plan and enrollment projections
approved at February meeting
• Tuition, fees, housing, and dining rates approved at April
meeting
13
ALL DIVISIONS
2013-2014 BUDGET
14
2013-14 Operating Budget
•
•
•
•
•
•
Academic Division
University of Virginia’s College at Wise
Medical Center
Transitional Care Hospital
Pratt Fund
Annual Renovation and Infrastructure Plan
15
ALL DIVISIONS
2013-14 Budget Priorities
Academic Division and the College at Wise
• Competitive faculty and staff compensation
• Objectives of the Higher Education Opportunity Act of 2011
–
–
–
–
Enrollment growth
Access and affordability
Science, Technology, Engineering, Math and Health education
Early Alert Retention Program (Wise)
• Capture and redirect savings for critical academic program
requests through Strategic Investment Fund or other vehicle
(UVa Academic Division)
Medical Center
• Strategic Investment Pool to support the Medical Center’s
strategic plan
16
2013-2014 OPERATING EXPENDITURE BUDGET
(In Millions)
Change
from
2012-13
Academic Div. $1,412.5
-2.5%
Medical Center $1,215.8
+8.7%
UVa-Wise
$
38.6
+4.6%
Total
$2,666.9
+ 2.4%
Wise 1.4%
Medical Center
45.6%
Academic
Division
53.0%
17
ALL DIVISIONS
History of Employment Levels
(Budgeted FTE)
18
ALL DIVISIONS
Where the Money Comes From
2012-13 ($2.60 Billion)
2013-14 ($2.67 Billion)
1.3%
5.0%
Tuition & Fees
8.6%
State Appropriations
17.5%
3.9%
5.1%
8.4%
17.1%
Patient Revenues
5.9%
5.9%
10.7%
Endowment Distribution
45.1%
5.8%
5.9%
Sponsored Programs
Expendable Gifts
11.4%
42.4%
Other
Sales & Services and Other
19
ALL DIVISIONS
Where the Money Goes
2013-14 ($2.67 Billion)
2012-13 ($2.60 Billion)
Instruction
Research & Public Serv.
14.2%
13.9%
Academic Support
Student Services
45.6%
11.3%
General Administration
12.3%
42.9%
O&M of Physical Plant
5.7%
1.7%
3.0%
4.2%
6.3%
1.6%
4.0%
2.4%
Financial Aid
6.2%
Auxiliaries
1.7%
Internal Debt Service
Transfers
Patient Care
3.5%
6.3%
2.1% 2.3%
4.6%
4.2%
20
ACADEMIC DIVISION
Wise 1.4%
Medical Center
45.6%
Academic
Division
53.0%
2013-2014 BUDGET
21
ACADEMIC DIVISION
Context for the 2013-2014 budget:
• Planning for the University’s third century
• Maintaining access and affordability
• Investing in the next generation of faculty
• Promoting organizational excellence
• Supporting the objectives of the Higher Education
Opportunity Act of 2011 via enrollment growth and
other strategies
• Designing a financial model to sustain the future
22
ACADEMIC DIVISION
2013-2014 Available Funds - $1.42 Billion
Tuition & Fees
13.0%
2.7%
State Appropriations
32.9%
Sponsored Programs
9.5%
Endowment Distribution
11.1%
Expendable Gifts
10.2%
Operating Cash Balances
20.6%
Sales & Services and
Other
23
ACADEMIC DIVISION
2013-2014 Operating Expenditure Budget
$1.41 Billion
By Category
By Activity
3.2%
Instruction
4.5%
Nonpersonal
Services
41.5%
Faculty
Comp.
28.8%
11.1%
Research & Public Serv.
26.0%
Academic Support
Student Services
7.2%
General Administration
O&M of Physical Plant
Staff
Comp.
23.6%
GTA/GRA
1.8% Wages
4.3%
7.8%
Financial Aid
21.3%
5.4%
3.1%
10.4%
Auxiliaries
Internal Debt Service
Transfers
24
GTA/GRA – Graduate Teaching Assistant/Graduate Research Assistant
25
UNIVERSITY OF VIRGINIA’S
COLLEGE AT WISE
Wise 1.4%
Medical Center
45.6%
Academic
Division
53.0%
2013-2014 BUDGET
26
COLLEGE AT WISE
Profile
•
1,707 Fall 2012 FTE Students
•
136 Faculty
•
182 Support Staff
27
COLLEGE AT WISE
2013-2014 Expenditure Budget - $38.6 M
By Source
By Program
Instruction
Tuition & Fees
24.6%
26.9%
State
Appropriations
Sponsored
Programs
1.4%
Research &
Public Serv.
Student Services
Endowment
Distribution
5.1%
General
Administration
Expendable Gifts
2.3%
Academic
Support
28.2%
30.5%
2.8%
10.6%
39.7%
Sales & Services
and Other
9.8%
4.8%
O&M of Physical
Plant
Financial Aid
9.2%
4.1%
Auxiliaries
28
COLLEGE AT WISE
Strategic Priorities
• Continue to implement goals and strategies to
improve student success through increased retention
and graduation rates
• Expansion of the Summer College program
• Support teaching and research faculty merit increase
to recruit and retain high-quality faculty
29
30
UNIVERSITY OF VIRGINIA
MEDICAL CENTER
Wise 1.4%
Medical Center
45.6%
Academic
Division
53.0%
2013-2014 BUDGET
31
MEDICAL CENTER
Strategic Objectives FY 13-19
• Continuously improve quality to achieve recognition as a top
decile provider of clinical care among academic medical
centers
• Continue collaborative efforts between the Medical Center
and School of Medicine faculty to realize cost efficiencies to
help offset reduced reimbursements for patient care
anticipated due to the Affordable Care Act
• Fund the Strategic Investment Pool to grow the three-part
mission of clinical care, education, and research
32
MEDICAL CENTER
Budget Challenges
• Medicaid and indigent care funding
• Emerging highly competitive environment
• Centers of Excellence & Outreach market share and volume
goals
33
MEDICAL CENTER
Operating Budget
Discharges – Medical Center
Discharges – Transitional Care Hospital
Actual
2012
28,484
222
Projected
2013
28,711
311
Budget
2014
29,458
398
Outpatient Visits & ER
Average Length of Stay - Medical Center
ALOS - Transitional Care Hospital
818,871
5.82
27.85
817,505
5.68
26.62
863,550
5.45
28.00
Net Operating Revenue ($ millions)
Operating Expenses
$1,159.6
1,082.0
$1,179.1
1,118.4
$1,274.8
1,215.7
Operating Income
Operating Income Margin %
$
77.6
6.7%
$ 60.7
5.2%
$ 59.1
4.6%
Non-Operating Gains
$
7.9
$
39.1
$ 13.3
Net Income
$
85.5
$
99.8
$ 72.4
8.5%
5.6%
Net Income Margin %
7.4%
34
35
2013-14 BUDGET
OTHER REQUIRED APPROVALS
36
2013-2014 PRATT FUND ALLOCATION
School of Medicine
(In Thousands)
The Pratt Fund may be used for research and
scholarships in the School of Medicine.
Research
Fellowships
Total
$3,100
700
$ 3,800
37
2013-2014 PRATT FUND ALLOCATION
Arts & Sciences
(In Thousands)
The Pratt Fund may be used for faculty salaries,
scholarships, and equipment in Departments of
Biology, Mathematics, Physics, and Chemistry.
New Faculty Start-Up
Fellowships
Faculty Salaries
Equipment
$ 2,540
683
147
70
$ 3,440
38
ANNUAL RENOVATION AND
INFRASTRUCTURE PROJECTS PLAN (ARIP)
• Annually, Board of Visitors considers a master plan of renovation
and infrastructure projects:
– Between $2 million and $5 million
– Funded with 100% cash (no debt)
• Allows a shorter time-frame to expedite these types of projects
• 2013-2014 Academic Division ARIP = $18.1 to $22.5 million
• 2013-2014 Medical Center ARIP = $6.7 to $7.8 million
39
40
Budget Resolutions Requiring Approval
• 2013-2014 Operating Budget and Annual Renovation and
Infrastructure Plan for the Academic Division
• 2013-2014 Operating Budget for the University of Virginia’s College
at Wise
• 2013-2014 Operating and Capital Budgets and Annual Renovation
and Infrastructure Plan for the University of Virginia Medical Center
• Operating and Capital Budgets for the University of Virginia
Transitional Care Hospital
• Pratt Fund Distribution for 2013-2104
41