UNIVERSITY OF VIRGINIA
BOARD OF VISITORS
MEETING OF THE
FINANCE COMMITTEE
NOVEMBER 8, 2012
FINANCE COMMITTEE
Thursday, November 8, 2012
2:00 – 3:30 p.m.
Harrison Institute, Small Auditorium
Committee Members:
Victoria D. Harker, Chair
Frank B. Atkinson
A. Macdonald Caputo
The Hon. Alan A. Diamonstein
Vincent J. Mastracco, Jr.
Edward D. Miller, M.D.
John L. Nau III
Timothy B. Robertson
Helen E. Dragas, Ex-officio
Daniel M. Meyers, Consulting Member
AGENDA
PAGE
I.
II.
REGULAR REPORTS (Mr. Hogan)
A.
Audited Financial Report for the Year Ending June
30, 2012 and First Quarter Sources and Uses (Mr.
Hogan to introduce Mr. David Boling and Ms. Colette
Sheehy; Mr. Boling and Ms. Sheehy to report)
B.
2013-2014 Academic Division Budget Planning and
Preliminary Assumptions (Ms. Sheehy to report)
C.
Internal Financial Model Report (Mr. Hogan to
introduce Mr. John Simon; Ms. Sheehy and Mr. Simon
to report)
ACTION ITEMS (Mr. Hogan)
A.
Property Acquisition: 1015 Spring Creek Parkway,
Louisa, Virginia, from the University of Virginia
Physicians Group
B.
Authorization of and Intent to Issue Tax-Exempt
Debt
C.
Amendments to the Optional Retirement Plan (Mr.
Hogan to introduce Ms. Susan Carkeek; Ms. Carkeek
to report)
III. VICE
A.
B.
C.
PRESIDENT’S REPORTS (Mr. Hogan)
Vice President’s Remarks
Report on University Workforce
Endowment Report – Market Value and Performance as
of September 30, 2012 (Written Report)
1
8
13
14
16
19
21
22
28
PAGE
D.
Miscellaneous Financial Reports
1.
Academic Division Accounts and Loans Receivable
2.
Capital Campaign
3.
Report on Endowment by School/Foundation
4.
Quasi-Endowment Actions
42
44
45
46
BIOGRAPHICAL STATEMENTS OF PRESENTERS
PAT HOGAN
Patrick D. Hogan was appointed Executive Vice President and Chief
Operating Officer of the University in October 2012. He is
responsible for setting financial policy and for overseeing the
financial affairs of the University including its schools and the
Medical Center. In addition, these key operational and
administrative areas report to him: finance, human resources,
management and budget, the architect for the University, corporate
compliance, emergency preparedness, and police. Hogan serves on
the Medical Center Operating Board and on the boards of the
University of Virginia Investment Management Company and the UVa
Foundation.
Hogan previously served for 37 years with Ernst & Young, most
recently as Deputy Global Managing Partner, based in London. In
this capacity, Hogan was a member of the Ernst & Young senior
global leadership team and oversaw the global Quality and Risk
Management function for the professional services lines of
Assurance, Advisory, Tax, and Transaction Advisory. During his
career with Ernst & Young, Hogan also served as Deputy Global Vice
Chair for the Asia/Pacific Assurance and Advisory Business
Services operations, as Area Managing Partner for the Mid-Atlantic
Area Assurance and Advisory Business Services practice, and as
Health Sciences Industry Leader for the Mid-Atlantic Area.
He received a B.S. in Business Administration with an accounting
concentration from Old Dominion University, where he graduated
summa cum laude and was a member of Beta Alpha Psi.
Hogan joined the McIntire School Advisory Board in 2000 and served
as Vice Chair.
He has been a regular guest lecturer at McIntire
on topics including enterprise risk management. His other areas
of expertise include health sciences, accounting, auditing, and
leadership. Hogan is a member of the American Institute of CPAs
and the Virginia Society of CPAs. He is married to Sharon Hogan,
and they have one daughter.
DAVID BOLING
Dave Boling is the Deputy Comptroller of the University of
Virginia. As Deputy Comptroller, his areas of responsibility
include Financial Reporting, Cost Analysis, Fixed Assets
Accounting, Debt Accounting, and Strategic Planning & Analysis.
Dave joined the University in 1980 as an Accounting Intern, and
has worked his entire 32-year career in the central Financial
Administration area.
Dave received a BS in Accounting from Old Dominion University in
1980, and an MS in Accounting from the University of Virginia in
1990. Dave is married with four grown children, who each attended
Virginia public universities, including William & Mary, Virginia
Commonwealth University, the University of Virginia, and James
Madison University.
COLETTE SHEEHY
Colette Sheehy has been the University's Vice President for
Management and Budget since 1993. She serves as the institution's
senior budget officer and oversees facilities management, space
and real estate, the operating and capital budgets, procurement
and supplier diversity services, state governmental relations, and
process simplification.
Colette began her career at UVa as a Budget Analyst in 1982. In
1986, she became the Assistant to the Director of the Budget, and
in 1988 was named the Director of the Budget. Between 1991 and
1993 she served as the Associate Vice President and Director of
the Budget before assuming her current position.
A native of Freehold, New Jersey, Colette earned a Bachelor of
Arts degree in economics from Bucknell University and a Master's
degree in Business Administration with a concentration in finance
from Rutgers University Graduate School of Management.
Colette served as one of the chief architects and negotiators of
the Higher Education Restructuring and Administrative Operations
Act passed by the General Assembly of Virginia in 2005 - a law
that created a new relationship between the Commonwealth and its
public institutions of higher education. She has been a member of
the Virginia Retirement System Board of Trustees since 2009.
JOHN SIMON
John D. Simon is the Executive Vice President and Provost of the
University of Virginia and the Robert C. Taylor Professor of
Chemistry. He is charged with directing the academic
administration of the 11 schools, the Library, the Art Museum,
public service activities, numerous University centers, foreign
study programs, and the advancement of teaching and research. He
also co-chairs the Internal Financial Model Steering Committee.
Provost Simon served as the Vice-Provost for Academic Affairs at
Duke University from 2005 to 2011. As Vice-Provost, Simon was
responsible for overseeing Duke's strategic planning and for
nurturing campus-wide academic initiatives to connect the
humanities, social sciences, and sciences. He chaired Duke's
chemistry department from 1999-2004. Simon received his B.A. from
Williams College in 1979 and his Ph.D. from the Department of
Chemistry at the Harvard University in 1983. After a postdoctoral
fellowship at UCLA, Simon joined the Department of Chemistry and
Biochemistry at UCSD in 1985, and then moved to Duke University as
the George B. Geller Professor in 1998.
Provost Simon has earned numerous fellowships and awards for his
scientific work including the Presidential Young Investigator
Award, Alfred P. Sloan Fellowship, Camille and Henry Dreyfus
Teacher Scholar Award, and the Fresenius Award. He is a fellow of
the American Association for the Advancement of Science and the
American Physical Society.
SUSAN CARKEEK
Susan A. Carkeek was named Chief Human Resource Officer at the
University of Virginia in November 2006. Her title was changed to
Vice President and Chief Human Resources Officer in August 2007.
She is responsible for all human resource functions for the
academic division of the University, as well as having oversight
of the University of Virginia's College at Wise and for the health
plan and other benefits for the University's Medical Center. Her
areas of responsibility include benefits, compensation, learning
and development, employee relations and career services, payroll,
records, recruitment and staffing, information management, and
leadership development, as well as non-academic aspects of the
faculty personnel system.
Carkeek has over thirty years of experience in higher education
human resource management. Prior to relocating to Virginia, she
served as the Vice President of Human Resources at the University
of New Mexico. There she was responsible for leading and directing
the University's human resource programs, including recruitment,
employment, benefits, compensation, classification, employee and
labor relations, performance management, training/organizational
development, career services, human resource data management, and
the Dispute Resolution Center. In 2004, her department was awarded
the most innovative human resources department in the state of New
Mexico.
Prior to the University of New Mexico, she worked with the
University of Nevada, Reno, and before that, the University of
Montana. Carkeek holds a bachelor's degree in business
administration from the University of Massachusetts, Amherst and a
master of business administration from the University of Montana.
She also is certified as a Senior Professional in Human Resources
(SPHR) by the Society for Human Resource Management. She has been
a member of the College and University Professional Association
for Human Resources (CUPA-HR) since 1976 and has held various
high-level posts in the organization, including Vice President of
Professional Development and positions of leadership on both the
Executive Committee and the Board of Directors. Carkeek coauthored the CUPA publication entitled ―A Practical Guide to the
Employment Function.‖
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
I.A.
ACTION REQUIRED:
None
Audited Financial Report for the Year
Ending June 30, 2012 and First Quarter
Sources and Uses
BACKGROUND: At the September meeting, the Vice President for
Management and Budget, Colette Sheehy, and the Deputy Comptroller,
Dave Boling, provided preliminary unaudited financial results for
the Academic division, for the year ended June 30, 2012. Since
then, the data for all three divisions (Academic, Medical Center,
and Wise) have been combined into a set of consolidated financial
statements. The audit has been completed by the Auditor of Public
Accounts, who issued an unqualified audit opinion on October 31,
2012. In addition to results for 2012, the Deputy Comptroller
will present 10-year trends for some key financial data.
DISCUSSION: The final June 30, 2012 audited financial statements
are presented on pages 2 and 3. These statements are prepared
using the Governmental Accounting Standards Board (GASB) model for
public universities. Except for the incorporation of Medical
Center and Wise data, there were no significant changes from the
unaudited results presented at the September meeting. Some key
10-year financial trends will be discussed at the Finance
Committee meeting.
1
University of Virginia
STATEMENT OF NET ASSETS (in thousands)
as of June 30, 2012 (with comparative information as of June 30, 2011)
6/30/2012
ASSETS
Current assets
Cash and cash equivalents
Restricted cash and cash equivalents
Short-term investments
Appropriations available
Accounts receivable, net
Prepaid expenses
Inventories
Notes receivable, net
Total current assets
$
Noncurrent assets
Restricted cash and cash equivalents
Endowment investments
Other long-term investments
Deposit with bond trustee
Notes receivable, net
Pledges receivable, net
Capital assets - depreciable, net
Capital assets - non-depreciable
Goodwill
Total noncurrent assets
Deferred outflow of resources
Total assets and deferred outflow of resources
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
Deferred revenue
Deposits held in custody for others
Commercial Paper
Long-term debt - current portion
Long-term liabilities - current
Total current liabilities
Noncurrent liabilities
Long-term debt
Derivative instrument liability
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted:
Nonexpendable
Expendable
Unrestricted
Total net assets
2
404,997
3
128,673
6,933
301,373
18,783
24,053
5,207
890,022
6/30/2011
$
324,384
1
127,423
8,196
224,682
13,401
21,105
4,508
723,700
25,577
3,428,234
955,538
17,787
34,435
2,653
2,541,372
398,559
11,446
7,415,601
37,814
3,386,469
902,846
112,916
33,725
7,179
2,310,046
463,614
11,938
7,266,547
35,053
11,123
$ 8,340,676
$ 8,001,370
243,838
87,287
35,909
127,463
12,804
103,476
610,778
188,306
94,934
36,079
76,850
12,718
92,659
501,546
1,081,828
35,053
97,688
1,214,569
1,106,387
11,123
115,231
1,232,741
$ 1,825,347
$ 1,734,287
$ 1,708,603
$ 1,662,987
560,007
2,418,734
1,827,985
6,515,329
533,291
2,354,163
1,716,642
6,267,083
University of Virginia
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS (in thousands)
for the Year Ended June 30, 2012(with comparative information for the year ended June 30, 2011)
6/30/2012
REVENUES
Operating revenues
Student tuition and fees (net of scholarship allowances
of $87,358 and $79,591)
Patient services (net of charity care of $2,066,282 and $1,798,563)
Federal grants and contracts
State and local grants and contracts
Nongovernmental grants and contracts
Sales and services of educational departments
Auxiliary enterprises revenue (net of scholarship
allowances of $13,393 and $12,946)
Other operating revenues
Total operating revenues
$
410,739
1,146,773
260,434
4,287
48,838
20,339
6/30/011
$
381,136
1,042,100
281,299
3,694
47,191
21,289
118,963
43,793
2,054,166
113,199
29,774
1,919,682
1,283,186
808,229
69,504
181,220
35,597
2,377,736
(323,570)
1,239,307
732,502
67,657
164,533
29,603
2,233,602
(313,920)
NONOPERATING REVENUES (EXPENSES)
State appropriations
State stabilization (ARRA)
Gifts
Investment income
Pell grants
Interest on capital asset–related debt
Build America Bonds rebate
Losses on capital assets
Other nonoperating revenues (expenses)
Net nonoperating revenues
Income before other revenues, expenses, gains, or losses
145,412
508
132,196
205,747
12,017
(31,046)
8,750
(1,260)
(6,750)
465,574
142,004
161,342
23,638
147,844
833,465
12,738
(45,628)
8,501
(1,322)
(6,857)
1,133,721
819,801
Capital appropriations
Capital grants and gifts
Additions to permanent endowments
Transfers to the Commonwealth
Total other revenues
Increase in net assets
32,591
48,731
24,920
106,242
248,246
EXPENSES
Operating expenses
Compensation and benefits
Supplies and other services
Student aid
Depreciation
Other
Total operating expenses
Operating income (loss)
NET ASSETS
Net assets—beginning of year
Net assets—end of year
$
3
6,267,083
6,515,329
43,749
20,739
27,778
(2,745)
89,521
909,322
$
5,357,761
6,267,083
UNIVERSITY OF VIRGINIA
SOURCES AND USES OF FUNDS
Fiscal Year 2013
As of First Quarter Ending September 30, 2012
PURPOSE OF REPORT
This report reviews actual results compared to budgeted
outcomes for the sources and uses of funds of the University of
Virginia, Academic Division.
Schedule 1 compares the actual results at September 30, 2012
to the budget for the first quarter of fiscal year 2013. The
schedule also includes the annual budget for reference.
The cash-based operating plan differs from the Generally
Accepted Accounting Principles (GAAP) financial statements in the
following ways:

External debt service, UVa Health Plan activity, and endowment
investment performance are excluded, while repayments of debt
to the internal bank and the expendable endowment distribution
are included.

Depreciation is not recognized and most equipment purchases are
reported as a use of funds, not capitalized.

Only gifts received and available for the operating plan are
included. Pledges, non-cash gifts, gifts transferred to the
endowment or capital program, and gifts held at foundations are
excluded.

The operating plan nets financial aid funded from tuition from
gross tuition, but does not exclude financial aid funded from
other sources (gifts, endowments, and grants).

The operating plan reflects mandatory fees collected for
auxiliaries and internal revenues collected from internal
departments as auxiliary revenue.
REVIEW OF 9/30/12 ACTUAL RESULTS VERSUS QUARTERLY BUDGET
(SCHEDULE 1):
Through September 30, 2012, actual net sources exceeded uses
by $172.2 million or 5.0% higher than the FY 2013 quarterly
4
budget. Traditionally one-half of tuition revenues (representing
one semester of billings) are recognized in the first quarter and
state appropriations are fully recognized in the first quarter,
while expenses are incurred more evenly throughout the year.
Sources of Funds
Actual available sources of funds for the Academic Division
as of September 30, 2012 were $548.4 million, or 1.0% greater than
the $543.0 million budgeted for the quarter. The only significant
negative variance from budget is related to the state
appropriation which is 3.3% less than anticipated due to timing of
recording the $4.8 million special appropriation for the Rolls
Royce partnership which will be reported in the second quarter for
this fiscal year.
Uses of Funds
Total uses of available funds for the Academic Division
totaled $376.2 million which is 0.7% below the original FY
2013 quarterly budget.

Direct instruction is $4.9 million or 6.8% higher than the
quarterly estimate, primarily related to a $2.7 million
investment from the School of Medicine Fund for the Future to
the HOPE (Hematology Oncology Patient Enterprises) partnership.

Research & public service expenditures are $6.7 million or 7.7%
higher than anticipated for the quarter. The first quarter
variance relates to a one-time transfer of funds received from
the Va. Tobacco Indemnification & Community Revitalization
Commission for the construction of the Commonwealth Center for
Advanced Manufacturing in Prince George, VA. We still expect
the fiscal year results to reflect reduced federal activity for
the fiscal year as funding from the American Recovery and
Reinvestment Act phases out.

Student services spending is 10.0% or $0.9 million higher than
the quarterly estimate as some expenses have been incurred
earlier in the year than anticipated. This category is
expected to be within budget by year end.
Future Events

Anticipated second quarter results will reflect the award of 3%
across-the-board one-time bonuses for all eligible full-time
and part-time salaried employees in the Academic Division (and
5
at the College at Wise) effective November 24. Bonuses for
employees paid from state educational and general funds will be
funded one third from a state appropriation, one third from
tuition, and one third from the reallocation of funds within
schools and departments. Bonuses for employees paid from all
other sources of funds (e.g. auxiliary enterprises, gifts,
grants) will be covered from their respective fund sources.

The country will be carefully watching Congress after the
election to see what kind of movement will be made to avert the
―fiscal cliff‖, officially known as sequestration that is
scheduled to go into effect in January 2013. The University is
monitoring activity at the federal level related to this
potential event and has prepared to address the budget cuts
sequestration could produce if it is ultimately enacted. Three
areas thought to be primarily impacted are the Medical Center,
student financial aid, and research grants and contracts. The
Medical Center projects revenue reductions of approximately $4
million this year and $8 million in FY 2014 related to
reductions in Medicare payments (Medicaid is exempt). The
Medical Center expects to manage any reductions through cost
mitigation and increases in volume.
The impact of sequestration on federal financial aid is
expected to be minimal affecting only two programs –
Supplemental Education Opportunity Grant (SEOG) and Work-Study.
We estimate a shortfall of about $140,000. Pell grants are
exempt.
Federal research funding could experience reductions of between
8-10% which at its worst could mean $25 million less in
revenue. Should these cuts occur we would need to reduce or
eliminate certain programs and potentially provide bridge
financing during some transitional period.
In anticipation of sequestration we have maintained a strong
level of liquidity and accelerated our draws and billing on
federal grants to daily.
6
7
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
I.B.
ACTION REQUIRED:
None
2013-2014 Academic Division Budget
Planning and Preliminary Assumptions
BACKGROUND: Each year at this time, the University begins
formulating the Academic Division budget for the subsequent fiscal
year, including the establishment of budget assumptions which will
guide units in developing their 2013-2014 budgets. The Vice
President for Management and Budget will review several key
components to the 2013-2014 operating budget development,
including assumptions about the availability of various revenue
streams to the extent they are known at this time, as well as
high-priority areas for investment.
DISCUSSION: The objectives of the 2013-2014 budget process are to
(1) understand multi-year financial planning efforts occurring in
the schools and major service units; (2) continue the transition
to an activity-based resource allocation model; and (3) provide
assurance that school resources are aligned to advance the
President’s priorities of faculty retention and recruitment,
curriculum enhancement, and research. Flexibility should also be
maintained to address high priority items emerging from the
strategic planning process. The following budget planning
assumptions provide underlying information needed by schools and
units to develop the 2013-2014 budget in a way that meets those
objectives. The below assumptions will be used in the development
of the 2013-2014 operating budget, to be presented to the Board of
Visitors for action at its May 2013 meeting.
8
Revenue Assumptions:

For 2013-2014, the University anticipates undergraduate tuition
rate increases within a range of 2.5-3.5%. Actual tuition and
fee charges for 2013-2014 will reflect rates that will be
approved by the Board of Visitors at its April 2013 meeting.
o It is anticipated that the McIntire differential tuition will
be fully implemented at $5,000 per undergraduate.
o Tuition rates for graduate and professional schools will
reflect increases in the cost of instruction, financial aid,
reallocation of funds where appropriate, as well as
consideration of market sensitivity.
o Proposed fees should be kept as low as possible, with the reallocation of existing resources considered before increasing
student charges. In evaluating new or increased fees, the
administration will consider, among other factors:
 the impact to existing students;
 the impact to AccessUVa; and
 how proceeds will be deployed (whether intended use is
aligned with institutional priorities).

In February 2011, the Board of Visitors approved a 10-year
enrollment plan, which will be updated in February 2013 to
reflect actual growth to date and extend the projection for two
more years. The regular session mandatory fee is expected to
be assessed to 20,000 fee-paying students; the special session
mandatory fee is expected to be assessed to 5,800 fee-paying
students.
The 2013-2014 budget will reflect the continued implementation
of revenue tenets of the new activity-based budget, after
approval by executive management.

Reimbursements for direct and indirect costs related to
externally-sponsored research (primarily federally funded) are
currently projected at a 2.1% decrease due to flat federal
budgets and the ramp-down of grants from the 2009 American
Recovery and Reinvestment Act. The final 2013-2014 budget will
be based on historical spending patterns, sponsored program
awards, expected indirect cost recoveries, and discussion with
the research-intensive schools and the Vice President for
Research. The budget will reflect a 58% Facilities and
Administrative cost recovery rate on new grants.
9

Preliminary projections indicate a 2.0% increase in activity
related to sales and services (primarily from self-supporting
entities that exist to provide services to students, faculty,
and staff, such as Housing, Bookstores, Athletics).

Effective July 1, 2008, the Board of Visitors adopted an
endowment spending policy that calls for ―a percentage increase
in the annual distribution from the endowment, unless such
increase causes the distribution to fall outside a range
defined as four percent on the low end and six percent on the
high end of the market value of the Pooled Endowment Fund.‖ If
the distribution falls outside of this range, the Finance
Committee may recommend either raising or lowering the rate of
increase.
o The percentage increase in spending distribution is based on
a five-year rolling average of the Higher Education Price
Index (HEPI) which is equivalent to 2.4%. This factor will
be applied to the 2012-2013 spending distribution to derive
the spending distribution for 2013-2014.
o Applying the spending policy in place will result in an
endowment distribution for fiscal year 2013-2014 of
approximately $164 million, or 4.95% of the June 30, 2012
market value of the Pooled Endowment Fund. Since this falls
within the approved band of four percent to six percent
established by the Board of Visitors’ policy, no further
action is required by the Board. The endowment distribution
for fiscal year 2012-13 will be an estimated $160 million, or
4.83% of the June 30, 2012 market value of the Pooled
Endowment Fund.

Taking a conservative view, we assume no growth in the state
general fund appropriations, but will evaluate the Governor’s
budget proposal and Senate and House modifications as they are
released.

Funds from annual giving will be projected based upon estimates
from University Development and schools.
10
Expenditure Assumptions:

Full funding will be provided for the projected cost of
AccessUVa. After implementation of administrative changes,
including a work study component for low income students, a
minimum student contribution, and a March 1 application
deadline, the cost of AccessUVa in 2013-2014 is expected to
remain the same as in 2012-2013.

Compensation:
o Fiscal year 2013-2014 will be the first year of a multi-year
strategy to raise teaching and research faculty salaries to
attain a rank of #20 in the AAU by 2016-2017. In this first
phase, the total salary base for teaching and research
faculty is targeted to increase by 4.75% (includes 2%
authorized by the State). Deans will set parameters for
individual salary increases based on performance and provided
that the faculty member has a peer evaluation on file. These
increases will occur during the fiscal year through annual
reviews, promotion and tenure decisions, or off-cycle
increases.
o The current state approved budget for 2013-2014 authorizes a
2% average salary increase for eligible administrative and
professional faculty and university staff. Deans and vice
presidents will award individual increases based on
performance. Final approval of the increase is contingent on
the outcome of the 2013 General Assembly session.
o The current state approved budget for 2013-2014 authorizes a
2% salary increase for classified staff provided the employee
has a performance rating of at least ―Meets Expectations‖.
Increases will be awarded based on guidelines from the state.
Final approval of the increase is contingent on the outcome
of the 2013 General Assembly session.
o The minimum hiring rate for salaried staff will increase in
July 2013 by 2% from $11.30 to $11.53 per hour.
o Estimated 2013-2014 fringe benefit rates are outlined
below. The proposed rates reflect an increase in employerpaid premiums for the UVa Health Plan of 3.25% effective
January 1, 2013. The rates are estimates and may be impacted
by actions of the federal government or the 2013 General
Assembly.
11
2012-2013
FB Rates
Full-time (FT) faculty and university
staff—executive
FT classified staff, university staff,
managerial & professional and operational
& administrative
Part-time (PT) faculty and staff with
benefits
PT faculty and staff without benefits and
wage
26.3%
Preliminary
2013-2014 FB
Rates
25.2%
35.6%
35.9%
26.3%
25.2%
5.5%
6.0%

Auxiliaries should plan for quarterly general and
administrative assessments based on a rate of 6.2% of their
adjusted 2011-2012 expenditure base to cover their share of
central services.

The 2013-2014 budget will reflect the continued implementation
of expenditure tenets of the new activity-based budget, after
such tenets are approved by executive management.
Reserves and Other:

Units will comply with the Board of Visitors Capital and
Operating Reserves Policy established in April 2006: (a)
operating reserves equivalent to three months of operating
expenses and (b) annual capital expenditures or contributions
to capital reserves of at least 1.5% of replacement value of
buildings and equipment.
12
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
I.C.
ACTION REQUIRED:
None
Internal Financial Model Report
Vice President for Management and Budget Colette Sheehy and
Executive Vice President and Provost John Simon, current co-chairs
of the New Internal Financial Model Steering Committee, will
provide a report on the work to develop and implement a new
internal financial model to better align resources to support
strategic priorities and create incentives to control costs,
improve productivity, and enable entrepreneurial activities.
They will 1) review the core principles which will drive the new
model design and 2) describe the differences between the current
model of allocation-based budgeting and the activity-based
budgeting of the new financial model. Ms. Sheehy and Mr. Simon
will also review the steps in the phased implementation beginning
with the 2013-2014 budget cycle. The Board of Visitors will
continue to receive regular updates on the status of this work at
each meeting as the project proceeds from design through
implementation.
13
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
II.A.
Purchase of Land and Improvements,
Located at 1015 Spring Creek Parkway,
Louisa, Virginia, from the University
of Virginia Physicians Group (Zion
Crossroads)
BACKGROUND: In 2007 the University of Virginia Physicians Group
(―UPG‖) (then known as University of Virginia Health Services
Foundation) contemplated acquiring land at Zion Crossroads to
establish a Regional Primary Care clinic employing three or four
physicians. Upon further consideration and working with the Health
System, the initiative grew to an approximately 50,000 square foot
multi-specialty clinic, with certain ancillary technical services.
In 2010, UPG purchased 4.79 acres in the Spring Creek Business
Park for $1.6 million. Spring Creek Business Park is located just
north of the intersection of U.S. Route 15 and Interstate 64 in
Louisa, County. UPG has completed construction of the building
shell and core components.
DISCUSSION: The facility is under construction and consists of a
two-story masonry building, containing 48,072 gross square feet,
on 4.79 acres, located on Spring Creek Parkway in Louisa County.
The shell and core building components were completed in May of
this year, and it is expected the building will be ready for
occupancy during the first half of 2013. A medical facility in
this location will create outreach opportunities and enhance
clinic accessibility to those living and working east of
Charlottesville. It is in the best interests of the Medical Center
to own this facility rather than to enter into a long-term lease
with UPG.
The facility will consist of two primary service lines: (i)
outpatient clinics and (ii) imaging services. The Medical
Center’s Clinical Outreach Initiative contemplates the clinics
will be Provider Based requiring the Medical Center to be
responsible for facility operation and maintenance expenses. The
Clinics being considered at Spring Creek include Primary Care,
Dermatology, Allergy, Cardiology, Endocrinology, Gastroenterology,
Nephrology, Pulmonary, Neurology, Urology, and Sports Medicine.
14
Advanced imaging services will be provided in the facility through
University of Virginia Imaging, LLC.
The University’s cost to purchase the real property (land and
all improvements thereon) from UPG will be no more than
$18,000,000. The Medical Center will enter into a long term lease
with the University of Virginia Imaging, LLC for the imaging space
in the building.
ACTION REQUIRED: Approval by the Medical Center Operating Board,
the Finance Committee, and by the Board of Visitors
APPROVAL TO PURCHASE 1015 SPRING CREEK PARKWAY, LOUISA, VIRGINIA
WHEREAS, the Medical Center Operating Board and the Finance
Committee find it to be in the best interest of the University of
Virginia to purchase from the University of Virginia Physicians
Group land and improvements thereon located at 1015 Spring Creek
Parkway, Louisa, Virginia (the ―Property‖) at a purchase price not
to exceed $18,000,000;
RESOLVED, the Board of Visitors approves the acquisition of
the Property; and
RESOLVED FURTHER, the President of the University, or her
designee, is authorized, on behalf of the University, to approve
and execute purchase agreements and related documents, to incur
reasonable and customary expenses, and to take such other actions
as deemed necessary and appropriate to consummate such property
acquisition; and
RESOLVED FURTHER, all prior acts performed by the President
of the University, or her designee, and other officers and agents
of the University, in connection with such property acquisition,
are in all respects approved, ratified, and confirmed.
15
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
II.B.
Authorization of and Intent to Issue
Tax-Exempt Debt
BACKGROUND: Under federal tax regulations, prior to the
University’s issuance of tax-exempt debt to finance a capital
project, the Board of Visitors must approve an intent-to-issue
resolution, so that the University may reimburse itself for
certain qualified expenditures related to the project and incurred
prior to the issuance of debt.
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. Short-term debt may
be provided for a capital project only after the project’s
business plan, including documentation of the project’s fiscal
soundness, has been approved by the Capital Outlay Executive
Review Committee.
This resolution does not authorize the University to issue
long-term debt. Prior to the issuance of long-term debt, the
Board of Visitors will be asked to consider a separate issuance
resolution.
DISCUSSION: The Medical Center plans to purchase land and
improvements, located at 1015 Spring Creek Parkway, Louisa,
Virginia, from the University of Virginia Physicians Group. The
total project cost is not expected to exceed $18.0 million, $17.3
of which will be funded by long-term University debt.
The facility is under construction and consists of a twostory masonry building, containing 48,072 gross square feet, on
4.79 acres, located on Spring Creek Parkway in Louisa County. The
shell and core building components were completed in May of this
year, and it is expected the building will be ready for occupancy
during the first half of 2013. A medical facility in this
location will create outreach opportunities and enhance clinic
accessibility to those living and working east of Charlottesville.
Clinics being considered at Spring Creek include Primary Care,
Dermatology, Allergy, Cardiology, Endocrinology, Gastroenterology,
16
Nephrology, Pulmonary, Neurology, Urology, and Sports Medicine.
Advanced imaging services will be available as well.
With any request for project debt funding, Treasury
Management performs a credit assessment to determine that the
funding identified by each of the sponsors is adequate to cover
the associated debt service payments. While this resolution gives
the University the authority to issue tax-exempt debt for the
projects listed below the ultimate granting of a loan for a
project is dependent upon Treasury’s credit assessment.
This action would authorize a loan or loans and declare the
University’s intent to issue tax-exempt debt for the project
listed above in the following amounts:
Requested
Intent to
Issue
Authorization
Project
MEDICAL CENTER:
Spring Creek Acquisition
$17.3 million
Total of
Requested and
Previous
Intent to
Issue
Authorizations
$17.3 million
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
AUTHORIZATION OF AND INTENT TO ISSUE TAX-EXEMPT DEBT
WHEREAS, the University intends to undertake certain capital
projects identified below (the ―Project‖), and to finance the
Project through the issuance of tax-exempt debt, in the maximum
principal amount stated below for the Project:
MEDICAL CENTER
Spring Creek Acquisition - $17.3 million; and
WHEREAS, the University further intends to expend funds on
the Project and to reimburse such expenditures from the proceeds
of the tax-exempt debt; and
17
WHEREAS, to comply with the Internal Revenue Code of 1986, as
amended, and Section l.l50-2 of the Income Tax Regulations (the
―Regulations‖), it is necessary, in order to reimburse such
expenditures incurred prior to the issuance of the tax-exempt debt
with the proceeds of such debt, that the University declare its
official intent to make such a reimbursement of expenditures; and
WHEREAS, prior to the issuance of long-term debt, the Board
of Visitors will be asked to consider a separate issuance
resolution;
RESOLVED, short-term debt may be issued for the Project, but
only if the following conditions are met:
1. A comprehensive and detailed financial plan for the
Project is submitted to and approved by the Capital Outlay
Executive Review Committee; and
2. A school or unit shall remain responsible for repaying
any debt obligation incurred regardless of the status of such
school’s or unit’s Project; and
RESOLVED FURTHER, the Board of Visitors of the University of
Virginia declares its intent to expend funds on the Project and to
reimburse such expenditures from the proceeds of tax-exempt debt,
in accordance with the following:
1. This resolution is a declaration of official intent for
purposes of Section 1.150-2 of the Regulations; and
2. The University reasonably expects to issue tax-exempt
debt for the Project in the maximum principal amount stated in the
recitals above.
18
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
II.C.
Amendments to the Optional Retirement
Plan
BACKGROUND: The University provides academic faculty and
executive, managerial and professional staff a choice of two
retirement plans – a defined benefit plan (VRS) sponsored by the
Commonwealth and a defined contribution plan (ORP) sponsored by
the University. The University also sponsors a separate defined
contribution plan (MCRP) for employees of the University of
Virginia Medical Center.
DISCUSSION: To offer employees these retirement benefits, the
University maintains nine qualified retirement plans. Separate
plans are required, for example, to differentiate distinct plan
provisions, vesting, or agency (Academic Division vs. Medical
Center).
Amendments are recommended to two of the nine plans: the
Defined Contribution Retirement Plan for Executive Employees of
the University of Virginia and the Qualified Governmental Excess
Benefit Arrangement for Employees of the University of Virginia.
The first amendment recommended for The Defined Contribution
Retirement Plan for Executive Employees of the University of
Virginia removes the minimum dollar amount on the annual employer
contribution for any individual participant’s account. Currently,
there is a minimum annual contribution requirement of $10,000.
There are no immediate requests pending for a lower annual
contribution. This amendment offers additional flexibility in
future benefit offerings.
The second amendment, to The Qualified Governmental Excess
Benefit Plan, enhances the flexibility for participants in
electing the form of distribution of accrued benefits upon
retirement. Currently the plan requires a participant to elect
the form of distribution of his or her Excess Benefit Account at
the time of enrollment in the plan. Because personal and
financial circumstances often change significantly between time of
enrollment and time of distribution, this amendment will allow the
19
participant to elect the form of distribution at the time of
separation from employment.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
AMENDMENTS TO THE DEFINED CONTRIBUTION PLANS
RESOLVED, The Defined Contribution Retirement Plan for
Executive Employees of the University of Virginia is amended to
eliminate the required minimum annual employer contribution to a
participant’s account; and
RESOLVED FURTHER, the Qualified Governmental Excess Benefit
Arrangement for Employees of the University of Virginia is amended
to allow a participant to elect the form of distribution of his or
her Excess Benefit Account at the time of separation from service.
20
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
III.A.
ACTION REQUIRED:
None
Vice President’s Remarks
BACKGROUND: The Executive Vice President and Chief Operating
Officer, Patrick D. Hogan, will report on several key issues which
do not require action but about which members of the Board of
Visitors should be aware.
21
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
III.B.
ACTION REQUIRED:
None
Report on University Workforce
UNIVERSITY OF VIRGINIA EMPLOYEE CATEGORIES
Employees at the University of Virginia are found in three
budget entities - the Academic Division, the Medical Center, and
the College at Wise. Total headcount of all employees is
approximately 22,000. A count and description of employee
categories follows, along with an additional explanation of the
relationship between the University and Commonwealth regarding
other human resource practices. A chart summarizing salary and
benefits is also provided.
Employee Category
Teaching & Research
Faculty
Temporary/Wage Faculty
Administrative &
Professional Faculty*
Professional Research Staff
Staff
Temporary/Wage Staff
Graduate Assistants
Student Employees
College at Wise
Medical Center
TOTAL
Head
Count
Additional Description
2,514 Includes 1,575 tenure track and 934 non tenure
track; also includes 1,033 faculty in the School of
Medicine
506 Part-time faculty typically teaching one course.
640
494
5,172 Includes 2,330 Classified Staff* (45%) and 2,842
University Staff (55%)
748
1,599 Includes 871 Teaching Assistants and 728 Research
Assistants
2,584
365 Includes 92 T&R faculty, 40 A&P Faculty, 167 staff,
and 66 temp/wage employees
7,262 Includes 5,854 salaried employees, 646 temporary
employees, and 762 “house staff” (i.e. medical
residents)
21,884
22
Notes:
*New employees are not hired as Administrative & Professional
Faculty and Classified Staff. Most employees that would have
fallen into those categories are now being hired as University
Staff.
These counts do not include employees of the University
Physician’s Group (primarily billing staff for the physician
practice plan) nor do they include the majority of employees with
the many other University Foundations.
DESCRIPTION OF UNIVERSITY OF VIRGINIA EMPLOYEE CATEGORIES
Teaching and Research (T&R) Faculty: Faculty members with various
titles, such as assistant, associate, and full professor who
perform the teaching and research functions of the University.
Faculty may be tenured, ―on track‖ for tenure, or on a fixed (or
limited) term appointment. Faculty personnel issues (hiring,
promotion, tenure) are managed by the Office of the EVP-Provost.
HR provides benefit administration and employee relations support.
Faculty participate in the state retirement program. They have
two options—the Virginia Retirement System (VRS), a defined
benefit retirement plan, or an Optional Retirement Plan (ORP), a
defined contribution plan, which higher education institutions
have the option to offer under the auspices of the VRS. The ORP
is managed by UVa but the employee and employer contribution rates
are set by the Commonwealth. There are different contribution
rates depending upon date of hire. Faculty are paid monthly and
are covered by the workers compensation program managed at the
state level.
The University of Virginia is the only state agency in the
Commonwealth of Virginia that has a separate health plan. All
state employees, including all other institutions of higher
education, are covered under the Commonwealth of Virginia health
plan (COVA). The UVa Health Plan is a self-funded plan that
includes both Academic Division and Medical Center employees and
dependents. The UVa Health Plan covers approximately 28,500
lives, totaling about $125 million per year. In general, the
University plan is considered to provide better benefits at less
cost than the COVA plan.
Administrative and Professional (A&P) Faculty: These positions
provide professional services to faculty, students, and staff in
support of instruction, research, and public service. This
employee category is unique to the Commonwealth of Virginia. It
23
began as a designation for academic administrators such as deans
and center directors. It also includes librarians and continuing
education professionals. As a consequence of the rigidity in the
state classified system and the lack of flexible retirement
benefits, the category grew over the years to also include many
other professional staff positions such as accountants, engineers,
and IT professionals. At its peak, the category included over 880
positions. As these positions become vacant, most are now being
filled in the newly created ―University Staff‖ category, described
below. A&P have the same retirement options, workers
compensation, monthly payroll, and health insurance as T&R
Faculty.
Professional Research Staff (PRS): This hybrid category includes
a variety of position titles ranging from ―research assistants‖
(treated more like staff and are paid bi-weekly) to ―research
scientists‖ (treated more like faculty and are paid monthly).
This category also includes ―research associates‖ that are like
postdoctoral fellows. A study is underway to review and update
employment practices for these employees. The Office of the Vice
President for Research manages this category of employment.
Research Assistants participate in VRS defined benefit plan.
Research Associates and Research Scientists are able to choose at
hire between the VRS and the ORP. There are different
contribution rates depending upon date of hire. Research
Assistants and Research Scientists are covered under the selfinsured UVa Health Plan while are Research Associates (numbering
about 230) are on a fully insured health plan through a contract
with Southern Health. All, except post-doctoral fellows, are
covered under the state workers compensation program.
Classified Staff: As a ―state agency‖, all University employees
are employees of the Commonwealth of Virginia. However, only
Classified Staff are subject to all state policies and are
governed by all the terms and conditions of employment as ―state
employees‖. Classified Staff are subject to the Commonwealth of
Virginia Personnel Act which covers appointment, promotion,
transfer, pay, leave, performance evaluation, layoff, removal,
discipline, grievance, and a range of other policies that
determine terms and conditions of employment. It is a typical
public sector, civil service system based on structured
classification rules and ―pay bands‖. The Board of Visitors has
limited authority over Classified Staff. Salary increases are
controlled by the Legislature and approved as part of the state
budget process. Classified Staff are in the VRS defined benefit
plan, the state workers compensation program, and they have access
to the state’s grievance procedure. There are different
24
retirement contribution rates depending upon date of hire. They
are paid bi-weekly and are covered under the UVa Health Plan
rather than the state’s COVA plan.
University Staff: This employee category was created under the
"Restructured Higher Education Financial and Administrative
Operations Act", passed in July, 2005, which allowed for a new HR
plan to be more responsive to the needs of the institution and
employees. As part of an inclusive process, recommendations from
employee task forces were incorporated into new policies formally
approved by the Board of Visitors in May, 2008, and effective
January, 2009. Policies retained for this category of employee
include the state workers compensation and grievance procedure.
As of July 1, 2006, all new staff hires are designated "University
Staff" instead of Classified Staff and are covered under the new
policies. Classified Staff and A&P Faculty hired before that date
have the option to enroll in the new plan. University Staff
designated as ―non-exempt‖ under federal labor standards (e.g.
eligible for overtime) have access only to the VRS; those
designated as ―exempt‖ (executive, managerial, and professional
staff) are able to choose at hire between the VRS and the ORP.
The retirement contribution rates vary depending upon date of
hire. University Staff are paid bi-weekly and are covered by the
UVa Health Plan.
College at Wise: Policies, benefits, payroll, and terms and
conditions of employment for faculty and staff at the College are
generally the same as those described here for Academic Division
employees. However, most employees at the College at Wise
participate in the state’s COVA health plan.
Medical Center: Legislation passed by the General Assembly in the
1996 session granted the University of Virginia autonomy to adopt
unique personnel policies for Medical Center employees. Often
referred to as ―codified autonomy‖, the Board of Visitors approved
separate human resource policies for the Medical Center in July,
1996. The Medical Center and Academic Division share the same
Federal Employer Identification Number (FEIN) designating UVa as
one employer for federal tax reporting. Benefits administration
is shared with one employee group health plan and Medical Center
employees participate in the Medical Center Retirement Program
(MCRP), with different employee/employer contribution rates.
Medical Center has separate Payroll and Human Resource
departments. Employees of the Medical Center remain subject to
the provisions of the State Grievance Procedure.
25
Note: There are no employee unions at the University. The
Virginia General Assembly passed a law in 1993 prohibiting public
employee bargaining. The legislation prohibits all governmental
agencies of the Commonwealth from recognizing any labor unions.
It specifically states: ―No state, county, municipal or like
governmental officer, agent, or governing body is vested with or
possesses any authority to recognize any labor union or other
employee association as a bargaining agents of any public officer
or employees, or to collectively bargain or enter into any
collective bargaining contract with any such union or association
or its agents with respect to any matter relating to them or their
employment or service.‖
There was an employee association at UVa
entitled the ―Staff Union of the University of Virginia‖ (SUUVA)
that was affiliated with the Communication Workers of America
(CWA). The group disbanded due to their inability to generate
sufficient dues-paying members.
26
27
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
November 8, 2012
COMMITTEE:
Finance
AGENDA ITEM:
III.C.
ACTION REQUIRED:
None
Endowment Report - Market Value and
Performance as of September 30, 2012
(Written Report)
BACKGROUND: The University of Virginia Investment Management
Company (UVIMCO) provides investment management to the Rector and
Visitors of the University of Virginia and its related
Foundations. Assets deposited in UVIMCO are held in the custody
and control of UVIMCO on behalf of the University and Foundations
within a long-term co-mingled investment pool.
UVIMCO’s primary objective in managing the pool is to
maximize long-term real return commensurate with the risk
tolerance of the University. To achieve this objective, UVIMCO
actively manages the pool in an attempt to achieve returns that
consistently exceed the returns on a passively managed benchmark
with similar asset allocation and risk. Recognizing that the
University must attract outstanding students, faculty, and staff
and provide them appropriate resources, UVIMCO attempts to manage
pool assets to provide long-term real returns that compare
favorably with the returns of endowments of other outstanding
schools. UVIMCO does not set spending rates. UVIMCO communicates
the Pool’s risk and return estimates to the University and
Foundations for their consideration in setting spending rates.
DISCUSSION: The following commentary provides information on the
current market environment as well as the asset allocation,
performance (unaudited), risk management, and liquidity position
of UVIMCO’s Long Term Pool as of and for periods ending September
30, 2012. While we report on short-term performance such as the
most recent quarter, we encourage all of our investors to focus
most on longer-term performance. Over the 20-year period ending
September 30, 2012, the Pool’s annualized return was 12.1%,
exceeding the policy benchmark return by 450 bps. We continue to
position the Long Term Pool defensively versus the policy
portfolio benchmark, with less market risk.
28
MARKET ENVIRONMENT
The third quarter of 2012 was dominated by Central Bank
action and positive responses from most markets. The S&P 500 was
up 6.4% for the quarter and 16.4% year to date, the MSCI Europe ex
U.K. was up 9.7% for the quarter and 12.8% for the year to date,
while the MSCI Emerging Markets was up 7.9% for the quarter and
12.3% year to date.
September 2012 was the month for monetary policy as Central
Banks tried to rebuild market confidence. The month began with
the announcement of OMT (―Outright Monetary Transactions‖) by the
European Central Bank (ECB) where they committed to buy up the
debt of heavily indebted Eurozone nations such as Italy and Spain
to help them finance their budget deficits. U.S. policy makers
followed by extending its zero rate policy through mid-2015 and
instituting QE3, and the Bank of Japan followed the United States
by committing to increase the size of its asset purchase program
to JPY 80 trillion, and extend it by six months to December 2013.
In the United States, the Federal Open Market Committee
(FOMC) committed to purchasing $40 billion of additional Agency
mortgage backed securities per month. In addition to this
announcement, the FOMC stated that ―if the outlook for the labor
market does not improve substantially, the Committee will continue
its purchases of Agency mortgage backed securities, undertake
additional asset purchases, and employ its other policy tools as
appropriate until such improvement is achieved in a context of
price stability.‖ This open-ended statement, affectionately
referred to as ―QE-forever‖ or ―QE-infinity,‖ had the desired
effect on riskier bonds as spreads tightened across the board. On
the other hand, treasuries responded by exhibiting great
volatility. The 10-year Treasury rose above 1.9% but then ended
the third quarter at 1.6%, relatively unchanged from where it had
been before the announcement. Although equity markets are up for
the quarter and the year, we are seeing diminishing marginal
returns with each QE initiative.
Amidst the monetary stimulus, investors continue to worry
about three macroeconomic issues: (i) the U.S. election and the
impact on the impending fiscal cliff; (ii) the Eurozone crisis;
and (iii) slowdown in China. The uncertainty of the upcoming U.S.
election and the extension of tax cuts have discouraged many
investors and businesses from spending. Meanwhile, continued
weakening of certain European economies causes uncertainty
surrounding the Euro. On the other side of the world, China’s
economy slowed for the seventh straight quarter, leaving many
29
wondering about the impact a continued slowdown will have on the
global economy.
Despite their recent volatility, U.S. Treasuries continue to
be the perceived safe haven in the midst of all this uncertainty.
As investors search for yield, the S&P 500 dividend yield is wider
than the 10-year Treasury yield, which hasn’t occurred since the
1950s, and 57% of S&P 500 stocks have dividend yields greater than
the 10-year U.S. Treasury yield. The corporate credit market
continues to push investors into longer duration and lower credit
quality. Inflows continued into U.S. high yield markets, as
evidenced by the 12% year to date returns in the Merrill Lynch
U.S. High Yield Master index.
ASSET ALLOCATION
Our policy portfolio continues to be an allocation of 60%
global public equity, 10% global public real estate, and 30%
global investment grade fixed income. This portfolio is designed
to provide long-term growth from equities, an inflation hedge from
real assets, and deflation hedge from fixed income.
The Long Term Pool’s actual allocation as of September 30,
2012 is 62.2% to equity managers, 15.3% to real asset managers and
22.4% to fixed income (including marketable alternatives, credit,
and cash). Looking through to our managers’ underlying
investments, the Long Term Pool has a 51.2% allocation to
equities, 16.6% allocation to real assets and 32.2% allocation to
fixed income (including credit) and cash as of September 30, 2012.
Therefore, the Long Term Pool continues to be positioned
defensively versus the policy portfolio benchmark, with less
market risk. Our portfolio tilts remain unchanged: a relative
overweight to quality equities, a low duration bond portfolio, a
relative underweight to real estate, and a meaningful allocation
to natural resources.
PERFORMANCE
The Long Term Pool returned 3% for the quarter ending
September 30, 2012 versus the policy benchmark gain of 5.1%. On a
calendar year basis, the Long Term Pool is up 12% versus the
benchmark gain of 11.5%. We are pleased with the Long Term Pool’s
returns thus far this year, as it is unusual for the Pool to keep
pace with strong market rallies in the short term. Our equity and
real asset strategies have all recorded double digit gains yearto-date, while our marketable alternatives and credit portfolio
has earned a respectable 5.6%. The 13.5% of the Long Term Pool
30
held in cash and bonds continues to be a drag on performance, but
provides critical liquidity for shareholder distributions, capital
calls and new investments.
EQUITIES
Public Equity: The public equity portfolio gained 7.6% for the
quarter ending September 30, 2012 versus 7% on the MSCI All
Country World index. Global equity gains were broad-based as
markets reacted positively to central bank actions in the U.S. and
Europe. We were pleased that our high-quality portfolio, having
provided significant downside protection for the quarter ending
June 30 (-2.8% versus -5.4% on global equities) was able to keep
pace with the strong market rally.
Our long-term public equity performance continues to hold up
well on an absolute and relative basis. Over the trailing three-,
five-, and ten-year periods the public equity portfolio returned
18%, 3.2% and 15.8% annually versus 7.8%, -1.5%, and 9.2% on
global equities over the same time periods, respectively.
While
a significant allocation to the emerging markets in the early part
of the decade explains much of the outperformance in that period
(the MSCI Emerging Markets index returned 17.4% per annum over the
past decade), the more recent outperformance is attributable to
exemplary stock selection by our managers and a bias toward higher
quality companies globally. A little over five years ago, we
began a deliberate effort to shift our significant emerging market
exposure out of diversified, benchmark-aware global emerging
market managers into concentrated, absolute return-oriented
managers. The thesis was that the emerging markets were no longer
compellingly cheap, but remained a rich opportunity set for
skilled business analysts. Today, we believe our emerging market
equity portfolio includes a few world-class stock pickers, and the
long-term returns seem to support this conviction. Collectively,
our four emerging market equity managers returned 22.9% and 11.6%
per annum over the past three and five years, respectively, versus
6% and -1% on the MSCI Emerging Markets index.
Across global markets, companies with relatively stable
profits and low leverage have held up well recently while the
prices of more cyclical, domestically oriented companies reflect
skeptical views of prospective growth. However, it is difficult
to find bargains as prices seem to broadly reflect a fairly
accurate assessment of embedded risks. Despite having performed
well in this quarter’s market rally, we believe our public equity
portfolio will more typically underperform during such strong
market rallies.
31
Long/Short Equity: The long/short equity portfolio gained 4% for
the quarter versus 3.7% on the broad universe of long/short equity
mangers as measured by the Dow Jones Credit Suisse Long/Short
Equity index and 7% on the MSCI All Country World index. Market
direction has had minimal influence on long/short portfolio
returns over the past year. Portfolio gross exposure has hovered
at a healthy 150% of equity, while net long exposure has been
relatively low at an average of 40%. This positioning serves to
lessen the impact of the market direction. For example, global
equities recorded losses in four of the last 12 months, while our
long/short equity portfolio had just one down month. In that
month our long/short portfolio returned -1.2% while global
equities lost 8.8%.
UVIMCO’s longer-term long/short returns continue to compare
favorably to both global equities and the broad universe of
long/short equity managers. Over the past three- and five-year
periods, the long/short portfolio outperformed both the Dow Jones
Credit Suisse Long/Short Equity index and the MSCI All Country
World index by comfortable margins. The three-year return on the
long/short portfolio was 9.3% per annum versus 3.2% and 7.8% on
the long/short universe and global equities, respectively. The
five-year return on the long/short portfolio was 4.4% per annum
versus 1% and -1.5% on the long/short universe and global
equities, respectively. Over the past decade, our long/short
portfolio added value versus the universe of long/short managers
with a return of 8.9% versus 6.9%. Although the 8.9% per annum
return on the long/short equity program slightly underperformed
the 9.2% return on global public equities over the past decade, it
was achieved with substantially less volatility (7.2% versus
17.1%).
Private Equity: The private equity portfolio returned 0.2% for
the quarter ending September 30, 2012 versus a return of 7% for
the MSCI All Country World index. Because quarterly reports from
our private equity managers typically lag our performance
reporting schedule, returns for the first quarter of the fiscal
year do not generally reflect updated September 30 valuations.
Mergers and acquisitions activity for Q3 was down from Q2 and
continued the trend that began in Q1 of 2012, as the pace of
exits, which includes sales, mergers and IPOs, has been relatively
slow so far this year. Global M&A activity for the quarter, as
reported by Thomson Reuters, was $538 billion, down 13% from Q2
and down 3.4% from the third quarter in 2011. The number of deals
completed was 8,476 which was a decrease of 15.4% from Q3 2011.
According to Thomson Reuters, there was some good news on the M&A
front, however, in that there was $247 billion in U.S. deals with
32
a total of 1,810 transactions. This was an increase of
approximately 20% over the dollar figures for Q2, as well as Q3 of
2011, despite a lower number of deals.
The number of Initial Public Offerings (IPOs) in the quarter
continued to be modest with only 10 U.S. venture-backed companies
going public. This is one less than the same quarter in 2011.
The first quarter of 2012 was so strong, however, that IPOs are on
pace to be the best since 2007, according to Dow Jones
VentureSource. So far in 2012, there have been 41 venture-backed
companies that have gone public. Of note among the companies that
did go public in the third quarter were Palo Alto Networks, Inc.,
a software security company (post-IPO valuation of $3.2 billion),
and Kayak Software Corp., an online travel service company (postIPO valuation of $925 million), both of which are in the UVIMCO
venture capital portfolio. There are between 35 and 40 companies
in registration now, so the fourth quarter could see a dramatic
increase in public offerings.
Considered separately, the buyout portfolio returned 0.2% for
the quarter, and the venture capital portfolio also had a return
of 0.2%. For the 10-year period, the buyout portfolio returned
15.3% per annum and the venture capital portfolio returned 3.2%
per annum. The annualized return for the combined private equity
portfolio over the last 10 years was 11.7% versus 9.2% for the
MSCI All Country World index.
Cash distributions for the private equity portfolio received
during the quarter were $35.4 million. Capital calls for the
quarter were $32.8 million, resulting in a net cash flow from
private equity of $2.6 million.
REAL ASSETS
Real Estate: The real estate portfolio returned 0.4% for the
quarter versus 3.8% for its benchmark which consists of a blended
index of publicly-traded U.S. and international real estate
securities. UVIMCO’s flat returns were not unexpected given that
most of the portfolio is still marked at June 30, 2012 valuations.
Over longer time horizons, our real estate portfolio continues to
underperform the publicly traded benchmark. The majority of our
real estate portfolio is still relatively new, and we believe
there is latent value in the portfolio as many investments are
still held at cost. In addition, our real estate investments are
affected by continued compression in REIT capitalization rates
following the financial crisis. However, we expect our real
33
estate portfolio to close the underperformance gap over longer
time horizons as the strategy matures.
U.S. commercial real estate market fundamentals continue to
remain positive. The multifamily sector is still seeing positive
traction as a result of limited overbuilding going into the
financial crisis, declining home ownership, and positive
demographics. Retail and office have also seen increasing
occupancies during 2012. While many investors still view these
sectors as out of favor, our managers continue to find
idiosyncratic opportunities in multifamily, retail and office
space as a result of continued distress, attractive pricing,
opportunities for value-add, or a combination of the three. While
U.S. commercial real estate fundamentals are still improving, a
preference for quality seems evidenced by higher occupancy and
rent growth for Class A properties across sectors.
UVIMCO funded capital calls of approximately $29.0 million
for the real estate portfolio during the quarter, bringing the
overall allocation to 8.6% of the Long Term Pool. As of September
30, our real estate unfunded commitments stood at $167 million,
the lowest nominal amount since 2005. During the quarter, the
real estate program generated $13.0 million of distributions from
sales, refinancing, and current income.
Resources: During the first quarter of fiscal year 2013, UVIMCO’s
resources portfolio returned 2.5% versus a 3.8% gain of its formal
benchmark, a blended MSCI Real Estate index. Commodities and
commodity-related equity indices reflected strong performance
during the quarter. The Goldman Sachs Commodity Index appreciated
by 11.5%, while the North American Natural Resources Sector Equity
index posted a 12.1% gain. Global monetary easing provided a
tailwind for a broad-based rally across commodities that reversed
losses recorded earlier in the summer. The WTI Crude Oil price
gained 8.5% on the announcement of QE3 and heightened geopolitical
risk in the Middle East, ending at $92 per barrel on September 30,
2012. The Henry Hub Natural Gas increased by 17.6% during the
quarter due to a hot summer and the decrease in gas rig count.
Base and precious metals appreciated across the board, largely due
to fiscal stimulus in China and the lessening of short-term demand
concerns.
UVIMCO’s resources portfolio underperformed the benchmarks
during the quarter ended September 30, 2012 in large part because
most of our private resource investments are still marked at June
30 values. Our publicly-traded energy co-investment had an
excellent quarter, returning 25.8%. Over a longer time horizon,
34
the 18.9% annualized return of the resources strategy in the past
five years is a salient example of the value created by our
private managers irrespective of the commodity price environment.
During the same five-year period, commodities depreciated by 5.4%
annually, while the returns of commodity-related public equities
were essentially zero.
The resources program was cash flow positive during the
quarter, with distributions of $23.9 million compared to capital
calls of $9.3 million. The majority of the distributions were the
result of the partial sale of our co-investment position at
attractive prices in the open market.
FIXED INCOME AND MARKETABLE ALTERNATIVES
Marketable Alternatives and Credit: For the quarter ending
September 30, 2012, the Marketable Alternatives and Credit
portfolio returned 3.1% versus 1.8% for the Barclays Aggregate
Bond index and 4.5% for the Barclays High Yield index. Corporate
credit spreads continued to narrow during the quarter, taking both
investment grade and high-yield credit yields to record lows. The
quantitative easing programs announced this quarter and the
resulting loose monetary environment allowed companies to
refinance on attractive terms and keep defaults low. Many of our
Marketable Alternatives and Credit managers have been selling
assets into this strong market, resulting in relatively high cash
balances within evergreen funds and a healthy flow of
distributions from private equity structure funds. Cash
distributions received from our credit managers during the quarter
were $17.6 million, while no capital calls were made.
The Marketable Alternatives and Credit portfolio is a
difficult one to discuss in aggregate over the long term. The
components of the portfolio have changed over time, as has its
benchmark. The Barclays High Yield index is an appropriate longterm benchmark for the Absolute Return & Credit portfolio in the
same way that the MSCI All Country World index is appropriate for
long/short equity over the long-term. We expect, however, that
our Marketable Alternatives and Credit will exhibit a
significantly different pattern of returns versus the benchmark
over time, given the eclectic mix of managers encompassed in our
portfolio. Historical returns on the aggregate portfolio, while
respectable on an absolute basis, have not kept pace with the
Barclays High Yield index; we expect the future to be brighter in
terms of relative returns given the starting point of today’s low
yields. The composition of our credit portfolio in particular
35
continues to evolve as we look for fundamental value-oriented
managers who can invest flexibly in different credit markets.
Bonds and Cash: Our bond and cash portfolios continue to be
managed as sources of liquidity. Our government bond portfolio
has been in short-term U.S. Treasury notes and bonds with
maturities under three years. The average duration of this
portfolio as of quarter end was 0.63 years. We have continued to
maintain our position in shorter duration bonds, as we feel that
the small additional return for longer duration bonds does not
compensate us for the risk of higher rates in the near future.
Our cash portfolio is invested in U.S. Treasury bills and notes
with maturities less than one year and U.S. Treasury guaranteed
Repurchase Agreements with U.S.-domiciled counterparties. The
duration of the cash portfolio as of September 30, 2012 was 0.21
years. The negligible returns reported for the short-term cash
investments are consistent with an environment in which current
interest rates are near 0%.
RISK MANAGEMENT
Risk Management: Investors may be willing to bear risk if they
are adequately compensated with future higher returns. At UVIMCO,
we are willing to bear certain risks, but others must be
eliminated if we are unable to absorb the downside losses or if we
do not earn a sufficient risk premium from assuming those risks.
We consider three broad portfolio risks when managing the Long
Term Pool – market risk, manager risk, and liquidity risk – and
evaluate these factors relative to the risk tolerance of the Long
Term Pool shareholders.
Market Risk: The largest risk factor present in the Long Term
Pool is equity market risk. A common definition of market risk is
the standard deviation or volatility of a portfolio’s return.
Volatility provides a useful proxy for market risk if returns are
normally distributed. However, it is clear that both the broad
market as well as individual investment strategies are not
normally distributed, but rather are subject to a much higher
probability of negative ―tail‖ events. Since investment returns
are subject to ―tail risk‖, it is useful to complement the
standard deviation statistic with an estimate of drawdown risk.
We manage market risk in the Long Term Pool by diversifying
across three broad asset classes: equity, fixed income, and real
assets. Our objective is to maintain estimated market risk in the
Long Term Pool that is less than or equal to the estimated market
risk of the policy portfolio. Our current estimate of the
36
volatility of the Long
the policy portfolio.
annual drawdown on the
less than the drawdown
Term Pool returns is 11.3% versus 12.1% for
In addition, the lowest one-percentile
Long Term Pool is estimated to be -26%,
estimate of -30% on the policy portfolio.
Manager Risk: The Long Term Pool invests with more than one
hundred external managers. We seek to maintain a portfolio of
managers that generates sufficient returns to compensate us for
bearing both market risk and the additional risk inherent in
working with individual managers. Manager risk includes tracking
error or active bets away from the benchmark, operational or
business risks, lack of transparency, and leverage.
UVIMCO mitigates manager risk by a thorough due diligence
process. We have recently hired Jason Love to manage our
operational due diligence process and augment the current
procedures used to assess our managers’ operations and controls.
We also reduce manager risk through diversification, bypassing
certain investment structures, and avoiding certain investment
strategies (e.g. highly leveraged hedge funds). Most importantly,
we control manager risk by building close relationships with
managers who have unquestioned ethics and integrity, and who align
their interests with those of our University and foundation
shareholders.
Over time, UVIMCO has been well compensated for assuming
manager risk. Attribution analyses suggest that manager selection
is the largest contributor to the Long Term Pool’s long-term
outperformance versus the policy benchmark and peers.
Liquidity Risk: UVIMCO defined liquidity risk for the Long Term
Pool as an inability to meet any of the following four primary
liquidity requirements: (i) withdrawals by the University and
foundation investors, (ii) the excess of capital calls over
expected capital distributions from private funds, (iii) the need
to rebalance exposures following a market decline, and (iv) the
ability to deploy cash opportunistically as new investment
opportunities arise. We manage this risk by maintaining a
portfolio of Treasury bills and bonds, maintaining sufficient
liquidity with our public equity and hedge fund managers, and
managing the pace of commitments to private investments.
Managing the pace of commitments to private investments is an
inexact science. As the timing and amount of capital calls to and
distributions from private investments is at the discretion of our
external private fund managers, we must continually recalibrate
our models to better predict these cash flows. Actual unfunded
37
private investment commitments were $834 million or 15% of the
Long Term Pool as of September 30, 2012.
Given our four primary liquidity requirements, we believe
that an appropriate target for liquidity is to have 10% of the
Long Term Pool invested in assets that are safe and highly liquid,
and at least 30% of the Pool should be available for conversion to
cash in any twelve-month period. The total of bonds and cash as
of September 30, 2012 was 13.5%; this allocation will fall before
the end of the calendar year as the result of spending
distributions to the University and foundations. Over time, we
continue to expect the sum of the liquid U.S. Treasury bond and
cash portfolios to vary between 8% and 12% of the Long Term Pool.
Although this is a drag on returns (especially in a zero interest
rate environment), we believe it provides insurance against future
turbulent markets and will allow us to fund attractive investments
that it will more than make up for the return drag.
The percentage of the Long Term Pool that can be turned into
cash has remained relatively constant over the past year. As of
September 30, 2012, 43% of the Long Term Pool can be turned to
cash within one quarter and 47% of the Pool can be turned into
cash within one year.
38
INVES TMENT MANAGEMENT COMPANY
Investment Report
September 30, 2012
Investment Activity
Beginning Net Asset Value (NAV)
Month
FYTD 2013 (1)
$5,526,763,015.49
$5,430,017,096.81
$901,085.23
$901,285.28
Beginning Shares
$6,133.45
$1,618,662.31
($1,964,404.46)
$65,995,087.97
($921,127.16)
NAV Per Share at Beginning of Period
+ Contributions
– Redemptions
+ Investment Return
– Fees
Ending Net Asset Value (NAV)
Ending Shares
NAV Per Share at End of Period
$6,024.75
$11,668,013.74
($11,445,955.79)
$163,988,643.97
($2,736,564.58)
$5,591,491,234.15
$900,881.12
$6,206.69
$5,591,491,234.15
$900,881.12
$6,206.69
Long Term Pool
% of NAV
Shareholder Summary
$3,446,821,552.19
$1,223,355,023.26
$921,314,658.70
$5,591,491,234.15
University of Virginia Endowment
Affiliated Organizations
University Operating Funds
Total
61.6%
21.9%
16.5%
100.0%
Performance
Market Value (2)
$ Millions %
Long Term Pool
Policy Benchmark (3)
Equity
Public
Long / Short
Buyout
Venture Capital
Total Equity
MSCI All Country World Equity
Real Assets
Real Estate
Resources
Total Real Assets
MSCI Real Estate (4)
Fixed Income, Cash & MAC
Marketable Alternatives & Credit
Government Bonds
Cash & Currency
Total Fixed Income, Cash & MAC
Barclays Aggregate Bond (5)
Time-Weighted Returns
MO FYTD CYTD
1 YR
3 YR
Annualized
5 YR 10 YR
20 YR
100.0
1.2
3.0
12.0
13.2
13.4
4.6
10.2
12.1
100.0
2.1
5.1
11.5
18.0
8.4
1.4
8.5
7.6
1,201
1,213
877
190
21.5
21.7
15.7
3.4
3.6
1.1
0.2
0.0
7.6
4.0
0.2
0.2
20.8
13.2
10.0
19.9
23.9
16.6
7.4
21.8
18.0
9.3
18.6
24.8
3.2
4.4
4.3
6.7
15.8
8.9
15.3
3.2
11.9
10.8
-18.3
3,480
62.2
60.0
1.6
3.2
4.0
7.0
15.1
13.4
16.6
21.7
15.1
7.8
4.9
(1.5)
11.3
9.2
14.2
7.3
483
375
8.6
6.7
0.3
0.3
0.4
2.5
12.7
11.8
12.7
13.2
858
15.3
0.3
1.3
12.2
12.9
19.0
1.8
12.6
--
10.0
0.7
3.8
20.0
33.1
16.7
(1.1)
10.9
9.0
1.2
0.0
(0.0)
3.1
0.1
(0.0)
5.6
0.1
(0.1)
7.0
0.2
(0.2)
9.2
1.6
0.2
6.7
5.3
4.3
8.5
5.5
--
-6.9
--
5,591
(3.9)
36.1
(16.2)
18.9
(1.9)
26.0
---
500
542
210
9.0
9.7
3.8
1,253
22.4
0.5
1.4
2.8
3.5
5.9
6.2
6.3
7.2
30.0
0.3
1.8
4.4
5.4
5.6
6.0
5.1
6.3
39
Investment Report
September 30, 2012
Short-Term Liquidity(6)
Actual Liquidity (Cumulative Total % of NAV)
Weekly
Public Equity
Monthly
Quarterly
Semi-Annually
Annually
2%
7%
18%
18%
18%
Long / Short Equity
-
0%
11%
13%
15%
Marketable Alternatives & Credit
-
-
0%
0%
0%
0%
0%
0%
0%
0%
10%
10%
10%
10%
10%
4%
4%
4%
4%
4%
Resources
Government Bonds
Cash
Total
Available Liquidity ($ in Millions)
16%
20%
43%
45%
47%
883
1,139
2,422
2,530
2,640
Private Funds Market Values and Commitments (7)
($ in Millions)
Market Value of Private Investments
Amount
Public Equity
Uncalled Commitments
Amount
% of NAV
Private Aggregate
Amount
% of NAV
148
3%
55
1%
203
4%
18
0%
-
-
18
0%
Long / Short Equity
Private Equity
% of NAV
1,066
19%
372
7%
1,438
26%
Real Estate
483
9%
167
3%
650
12%
Resources
354
6%
196
4%
550
10%
Marketable Alternatives & Credit
255
5%
44
1%
299
5%
2,324
42%
834
15%
3,158
56%
Europe
Asia
LAMA(9)
Total
Market and Currency Exposure Estimates (8)
(% of NAV)
Equity
Policy Ranges
Actual
Exposure
North
America
40 - 70
51.2
30.2
8.1
8.2
4.7
Real Assets
5 - 20
16.6
14.0
1.7
0.7
0.3
Credit
0 - 20
4.9
3.7
0.5
0.1
0.6
Government Bonds
5 - 20
9.7
9.7
-
-
-
Total Market Exposure
70 - 100
82.3
57.5
10.3
9.0
5.5
Policy Ranges
Cash & Currency
Currency Exposure
Policy Ranges
--
--
25 - 75
0 - 30
17.7
17.5
---
100.0
--
75.0
50 - 100
40
0 - 40
0 - 40
0 - 20
(1.4)
0.0
1.5
8.9
0 - 30
9.0
0 - 30
7.1
0 - 20
Investment Report
September 30, 2012
Endnotes
(1)
UVIMCO's fiscal year runs from July 1 through June 30.
(2)
All investments are recorded at estimated fair market value in accordance with UVIMCO's valuation policy.
(3)
The Policy Benchmark is the geometrically linked monthly average of the underlying asset classes' benchmarks, weighted by
the Fiscal Year 2013 policy target allocations: 60% Equity, 10% Real Assets, 30% Fixed Income.
(4)
The Real Estate component of our Fiscal Year 2013 policy portfolio is comprised of 50% MSCI U.S. Real Estate Index and
50% MSCI All Country World Real Estate Index. Prior to January 1995, the benchmark is comprised of 100% FTSE National
Association of Real Estate Investment Trusts Equity Index.
(5)
The Fixed Income component of our Fiscal Year 2013 policy portfolio is comprised of 50% Barclays Capital U.S. Aggregate
Bond Index and 50% Barclays Capital Global Aggregate Bond Index (Hedged in U.S. Dollars). Prior to January 1990, the
benchmark is comprised of 100% Barclays Capital U.S. Aggregate Bond Index.
(6)
Represents securities and funds that may be readily sold for cash within the designated time periods.
(7)
Represents the market values of investments where distributions are at the sole discretion of the managers, plus all uncalled
commitments.
(8)
Market and currency exposures are estimated by looking through managers and funds to the underlying security positions.
Policy ranges express the expected variation in asset class, regional, and currency exposures during normal market
circumstances. Totals may not add due to rounding.
(9)
Latin America, Middle East, and Africa.
41
MISCELLANEOUS FINANCIAL REPORTS
Finance Committee
University of Virginia
November 8, 2012
UNIVERSITY OF VIRGINIA
ACADEMIC DIVISION
ACCOUNTS AND LOANS RECEIVABLE
AS OF SEPTEMBER 30, 2012
Summary of Accounts Receivable:
The University's Academic Division's total accounts receivable at September 30, 2012 was
$65,523,000 as compared to $47,108,000 at June 30, 2012. The major sources of receivables at
September 30, 2012 were student accounts of $28,889,000, and sponsored programs of $29,454,000.
The past due receivables over 120 days old were $2,750,000 as of September 30, 2012 or 4.20 percent
of total receivables, which is below the Commonwealth's management standard of 10 percent.
Gross Accounts Receivable
Less: Allowance for
Doubtful Accounts
Net Accounts Receivable
Accounts Receivable
Greater than 120
Days Past Due
Student
Accounts
Sponsored
Programs
Other
Receivables
$28,889,000
$29,454,000
$7,180,000
$65,523,000
$396,000
$860,000
$78,000
$1,334,000
$28,493,000
$28,594,000
$7,102,000
$64,189,000
$874,000
$1,720,000
$156,000
$2,750,000
Total
SOURCE: Financial Administration
DATE:
October 5, 2012
42
UNIVERSITY OF VIRGINIA
ACADEMIC DIVISION
ACCOUNTS AND LOANS RECEIVABLE
AS OF SEPTEMBER 30, 2012
Summary of Loans Receivable:
The default rate for the Perkins Student Loan Program was 2.37 percent for the quarter ending September 30, 2012.
This is based on the cohort default calculation and is well below the 15 percent threshold set by federal regulations. The Health
Professions Loan Program default rate remained the same at zero percent. The Nursing Undergraduate Student Loan Program default
rate increased from 1.97 percent to 2.15 percent. Both medical loan programs are well below the 5 percent federal threshold.
The University Loan Program default rate increased from 1.78 percent to 2.36 percent for the quarter ending September 30, 2012.
Gross
Loan
Receivables
Perkins Student Loans
Current
Default
Rate
Inc/(Dec)
From Last
Quarter
$20,400,000
2.37%
-4.07%
$0
0.00%
0.00%
$1,096,000
2.15%
0.18%
University Loans
$18,250,000
2.36%
0.58%
Total Student Loans Outstanding
$39,746,000
Health Professions Loans
Undergraduate Nursing Loans
SOURCE: Financial Administration
DATE:
October 5, 2012
43
UNIVERSITY OF VIRGIIA
CAPITAL CAMPAIGN SUMMARY
AS OF SEPTEMBER 30, 2012
All Units
Expendable
1,216,886,709
160,134,906
95,787,576
237,782,896
77,396,989
Endowment
547,195,949
52,695,876
30,936,179
0
2,334,581
Total
1,764,082,658
212,830,782
126,723,755
237,782,896
79,731,570
Gift and Pledge Total
1,787,989,076
292,866,794
633,162,585
79,092,091
2,421,151,661
371,958,885
Campaign Total
2,080,855,870
712,254,676
2,793,110,546
-416,039,076
1,371,950,000
994,887,415
1,628,050,000
578,848,339
3,000,000,000
Gifts and Pledge Payments
Outstanding Pledge Balances
Deferred Gifts
Private Grants
Gifts in Kind
Future Support
Additional Amounts To Be Raised
(1)
Total
Rector & Visitors Gift Accounts Only
Expendable
411,779,294
27,773,789
61,242,173
0
32,590,788
Endowment
282,623,562
4,191,378
15,687,573
0
144,298
Total
694,402,856
31,965,167
76,929,746
0
32,735,086
Gift and Pledge Total
533,386,044
156,727,454
302,646,811
19,962,660
836,032,855
176,690,114
Campaign Total
Additional Amounts To Be Raised
Total
690,113,498
TBD
690,113,498
322,609,471
TBD
322,609,471
1,012,722,969
Gifts and Pledge Payments
Outstanding Pledge Balances
Deferred Gifts
Private Grants
Gifts in Kind
Future Support
TBD
1,012,722,969
Rector & Visitors Unrestricted Giving
Gifts and Pledge Payments
Deferred Gifts
Outstanding Pledge Balances
Total
10,437,727
200,000
86,800
10,724,527
0
0
0
0
(1) Excludes future or revocable support
SOURCE: Office of Development and Public Affairs
October 15, 2012
DATE:
44
10,437,727
200,000
86,800
10,724,527
UNIVERSITY OF VIRGINIA
ENDOWMENT/LONG-TERM INVESTMENTS FOR UVA AND RELATED FOUNDATIONS
AS OF SEPTEMBER 30, 2012
(in thousands)
The University of Virginia Medical School and related foundations
Rector and
Visitors Funds
Related
Foundation
Funds Invested
by UVIM CO
Alumni
Association
Funds Invested
by UVIM CO
Related Foundation
Funds Invested by
Direction of
Foundation Board
$
$
$
$
The College of Arts and Sciences and related foundations
815,670
37,560
9,232
-
Total
$
862,462
369,644
56,956
11,408
54
438,062
44,975
220,649
-
98,299
363,923
113,825
220,536
-
12,104
346,465
77,386
-
38,748
677
116,811
Batten School of Leadership and Public Policy
113,141
-
-
-
113,141
School of Engineering and related foundation
92,658
9,032
-
1,728
103,418
University of Virginia's College at Wise and related foundation
45,496
6,115
2,409
2,365
56,385
Graduate School of Arts and Sciences
52,943
-
-
-
52,943
School of Nursing
41,014
-
2,278
-
43,292
Curry School of Education and related foundation
13,574
8,598
-
1,672
23,844
School of Architecture and related foundation
17,561
1,876
408
568
20,413
School of Continuing and Professional Studies
1,894
-
50
-
1,944
University of Virginia Medical Center and related foundations
428,518
56,949
4,823
23,689 **
513,979
Centrally Managed University Scholarships
176,436
-
-
-
176,436
40,992
61,256
424
440
103,112
-
-
70,497
28,660
99,157
91,769
-
-
-
91,769
-
62,940
-
226
63,166
52,686
9,514
-
-
62,200
-
54,467
-
-
54,467
52,697
-
35
-
52,732
University - Unrestricted but designated
317,127
-
-
-
317,127
University - Unrestricted Quasi and True Endowment
166,370
-
-
-
166,370
University - Unrestricted Other
154,269
-
-
-
154,269
All Other
218,380
207,723
16,474
490,104
186,956
$ 4,887,991
The University of Virginia Law School and related foundation
Darden School and related foundation
The McIntire School of Commerce and related foundation
Athletics and related foundation
Alumni Association
Provost
University of Virginia Foundation and related entities
Miller Center and related foundation
Alumni Board of Trustees
University Libraries
$
3,499,025
$
1,014,171
47,527 *
$
187,839
$
*Includes funds on deposit for other areas/schools not individually listed.
**Excludes approximately $55.8 million of board designated pension funds.
SOURCE: Financial Administration
DATE:
October 22, 2012
45
UNIVERSITY OF VIRGINIA
QUASI-ENDOWMENT ACTIONS
JULY 1, 2012 TO SEPTEMBER 30, 2012
The quasi-endowment actions listed below were approved by (1) the Executive Vice President and Chief Operating
Officer, under the following Board of Visitors’ resolutions, (2) the Vice President and Chief Financial Officer, under
the delegation of authority from the Executive Vice President and Chief Operating Officer, OR (3) the Deputy
Comptroller, under the delegation of authority by the President.

In October 1990 and June 1996 the Board of Visitors approved resolutions delegating to the Executive Vice
President and Chief Operating Officer the authority to approve quasi-endowment actions, including
establishments and divestments of less than $2,000,000, with regular reports on such actions.

In February 2006, the Board of Visitors approved a resolution permitting approval of quasi-endowment
transactions, regardless of dollar amount, in cases in which it is determined to be necessary as part of the
assessment of the business plan for capital projects. Additionally, to the extent that the central loan program has
balances, they may be invested in the long term investment pool managed by UVIMCO or in other investment
vehicles as permitted by law.
Additions from Gifts
Amount
AccessUVa Scholarships
Faculty and Staff Undergraduate Scholarship - UVA Match Quasi-Endowment
President's Fund for Excellence Unrestricted Quasi-Endowment
University Quasi-Endowment Fund (1)
Total Additions from Gifts to Quasi-Endowments
$
115,000.00
270.00
18,813.35
2,472.28
$
136,555.63
Additions from Endowment Income (Capitalizations)
Commonwealth Fund Quasi-Endowment
1,646,259.43
Total Additions from Endowment Income to Quasi-Endowments
$
1,646,259.43
$
80,000.00
898,758.75
300,000.00
$
1,278,758.75
Divestments
Otolaryngology/HNS Molecular Research Program Quasi-Endowment
McIntire School of Commerce Operations Fund
Mellon CVRC Quasi-Endowment - Schwartz
Total Divestments from Quasi-Endowments
Notes:
(1) Includes current unrestricted gifts to the University which, under a standing Board of Visitors resolution, are required to be added to
the University's Unrestricted Endowment Fund.
SOURCE: Financial Administration
DATE:
October 5, 2012
46