REVISED
6/2/11
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS
MEETING OF THE
FINANCE COMMITTEE
JUNE 9, 2011
FINANCE COMMITTEE
Thursday, June 9, 2011
2:00 – 3:30 p.m.
Board Room, The Rotunda
Committee Members:
Helen E. Dragas, Chair
A. Macdonald Caputo
Hunter E. Craig
The Hon. Alan A. Diamonstein
Marvin W. Gilliam Jr.
Mark J. Kington
Randal J. Kirk
Vincent J. Mastracco Jr.
John O. Wynne, Ex-officio
Daniel M. Meyers, Consulting Member
AGENDA
PAGE
I.
II.
CONSENT AGENDA
A.
Coulter Foundation Quasi-Endowment Investment
B.
Project Budget Review, East Chiller Plant
C.
Signatory Authority
1. Contract with Virginia Blood Services
2. Contract for Consulting Services to Manage
Implementation of Recommended Patient
Progression Improvement Actions
ACTION ITEMS
A.
Partial Divestment of the Robert M. Berne Chair in
Cardiovascular Research
B.
Authorization of and Intent to Issue Tax-Exempt Debt
(Mr. Sandridge to introduce Ms. Yoke San L. Reynolds;
Ms. Reynolds to report)
C.
Additions to the Major Capital Projects Program (Mr.
Sandridge to introduce Ms. Colette Sheehy; Ms. Sheehy
to report)
1.
College at Wise Football/Band Building
2.
Facilities Management Shop Building
D.
2011-2012 Operating Budget (Mr. Sandridge to
introduce Mr. R. Edward Howell; Ms. Sheehy and Mr.
Howell to report)
1.
Academic Division
2.
The University of Virginia’s College at Wise
3.
Medical Center
4.
Pratt Fund
5.
Annual Renovation and Infrastructure Projects
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3
4
5
7
8
11
13
PAGE
E.
Medical Center Joint Ventures/Acquisitions
1.
Hematology Oncology Patient Enterprises, P.C.
2.
Program of All-Inclusive Care for the Elderly
(PACE)
3.
Nephrology Acquisition
III. REPORTS BY THE EXECUTIVE VICE PRESIDENT AND CHIEF
OPERATING OFFICER (Mr. Sandridge)
A.
Vice President’s Remarks
B.
Access UVa (Mr. Sandridge to introduce Mr. Gregory
W. Roberts; Ms. Reynolds and Mr. Roberts to report)
C.
Endowment Report – Market Value and Performance as
of March 31, 2011 (Written Report)
D.
Retirement Administrative Committee (Written Report)
E.
Miscellaneous Financial Reports
1.
Academic Division Accounts and Loans
Receivable
2.
Capital Campaign
3.
Internal Loans to University Departments
and Activities
4.
Write-off of Bad Debts for Non-Patient
Services
5.
Report on Endowment by School/Foundation
6.
Quasi-Endowment Actions
7.
2011 Summer Conference Rates
IV.
APPENDIX
A.
2011-2012 Pratt Fund Allocations
B.
Minutes of the May 24, 2011 Meeting of the Retirement
Administrative Committee
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27
29
40
43
45
46
47
48
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52
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS CONSENT AGENDA
I.A. COULTER FOUNDATION QUASI-ENDOWMENT INVESTMENT: Approves
establishment of a $10 million quasi-endowment, required by the
Coulter Foundation as a condition for the University of Virginia
to receive a matching $10 million endowment from the Foundation.
Wallace H. Coulter has been a champion of practical,
translational research directed toward improving the scope and
quality of clinical diagnostic medicine. Consistent with Mr.
Coulter’s lifelong work of improving healthcare, the Coulter
Foundation established the Translational Research Partnership
Program in Biomedical Engineering in 2005. The University has
been a partner in this program, and by mutual agreement, the
University and the Coulter Foundation wish to expand the
University’s participation in the program.
The Coulter Foundation made a $10 million endowment gift to
the University in March 2011 on the condition that the
University match the Coulter gift with a $10 million endowment.
The $20 million total endowment will provide funding for the
Coulter Program. The agreement further specifies the spending
distribution for the Coulter Program from the combined
endowments.
The University funded its match by transferring
unrestricted endowment funds into a segregated quasi-endowment
to satisfy the terms of the Coulter gift. Private funds may be
raised to replace and release the funds advanced from the
unrestricted endowment.
An exit strategy exists for the recovery of the University
match if the program is terminated.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
APPROVAL OF ESTABLISHMENT OF AND INVESTMENT IN THE WALLACE H.
COULTER QUASI-ENDOWMENT
WHEREAS, the University of Virginia and the Coulter
Foundation wish to expand the University’s participation in the
Coulter Foundation sponsored Translational Research Partnership
Program in Biomedical Engineering; and
1
WHEREAS, the University of Virginia received a $10 million
gift from the Coulter Foundation to establish the Wallace H.
Coulter Endowment; and
WHEREAS, as a condition of receiving that gift, the
University of Virginia provided $10 million to match the Coulter
Foundation endowment gift, and agreed to establish a separate
Wallace H. Coulter Quasi Endowment; and
WHEREAS, in advance of any fund-raising, the University of
Virginia transferred unrestricted funds to establish the
matching quasi-endowment; and
WHEREAS, the University intends to raise private gifts to
fund all or part of the University’s match; and
WHEREAS, when private gifts are received which are
restricted for the required match, the funds advanced will be
returned to the unrestricted endowment;
RESOLVED, the Board of Visitors authorizes the investment
of $10 million to establish and fund the Wallace H. Coulter
Quasi-Endowment account to match the Coulter Foundation
endowment gift.
2
I.B. PROJECT BUDGET REVIEW, EAST CHILLER PLANT: Approves an
increase of $4.8 million to the East Chiller Plant project.
In accordance with the policy adopted by the Board of
Visitors in October 2004, all capital project budget increases
in excess of ten percent require the approval of the Finance and
Buildings and Grounds Committees. The construction of the East
Chiller Plant was approved in June 2010 at a project budget
range of $25.8 million to $29.0 million.
Since establishing the original budget for the East Chiller
Plant the University has changed the site and developed a plan
to realign Lee Street. The road realignment provides a new site
for the chiller plant that is better suited to a utility plant
while preserving the previous site for a higher and better use.
The new site requires utility relocations that did not
exist at the previous site. In addition, the following site
conditions have been identified, 1) a rock ledge, 2) the need
for a larger retaining wall, 3) unusual attention to dust
control because of the proximity to the helipad, and 4) 2,532
square feet of added basement space for transformers to improve
exterior maintenance access to chillers and provide space for
landscaping along Lee Street in front of the building. These
items require an additional $4.8 million to be funded by the
University’s utility infrastructure fund ($2.4 million) and
hospital operating funds ($2.4 million). Despite the additional
costs we believe this is a better site for the project.
ACTION REQUIRED: Approval by the Buildings and Grounds
Committee, the Finance Committee and by the Board of Visitors
APPROVAL OF PROJECT BUDGET REVIEW, EAST CHILLER PLANT
RESOLVED, that a $4.8 million increase to the East Chiller
Plant project to $33.8 million, is approved.
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I.C.1. SIGNATORY AUTHORITY FOR CONTRACT WITH VIRGINIA BLOOD
SERVICES: Approves signatory authority for Medical Center
procurement of blood services and products.
The Board of Visitors is required to approve the execution
of any contract where the amount per year is in excess of $5
million.
In accordance with Medical Center procurement policy, the
Medical Center is finalizing an extension contract with its
incumbent vendor for blood services and products, effective July
1, 2011. In 2006 the Medical Center issued a request for
proposal, and the current vendor was the sole respondent. At
this time the incumbent is deemed the only source practicably
available for the required services and products. They are in
good standing with the Food and Drug Administration, in
compliance with all other regulatory requirements, and have
never experienced a product shortage in the last five years. In
addition, the Medical Center has negotiated savings,
efficiencies, and improved service requirements for the contract
extension.
The term of the contract is expected to be five years,
comprising an initial term of two years and three one-year
renewal options at the election of the Medical Center. The
total estimated value of the agreement will be in excess of $40
million, with the value in any single year exceeding $5 million,
thus exceeding the signatory authority of the Executive Vice
President and Chief Operating Officer of the University.
ACTION REQUIRED: Approval by the Medical Center Operating
Board, the Finance Committee, and by the Board of Visitors
APPROVAL OF SIGNATORY AUTHORITY FOR MEDICAL CENTER PROCUREMENT
OF BLOOD SERVICES AND PRODUCTS
RESOLVED, the Board of Visitors authorizes the Executive
Vice President and Chief Operating Officer of the University to
execute a multi-year contract for the procurement of blood
services and products, based on the recommendation of the Vice
President and Chief Executive Officer of the Medical Center in
accordance with Medical Center procurement policy.
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I.C.2. SIGNATORY AUTHORITY FOR MEDICAL CENTER PROCUREMENT OF
PROFESSIONAL CONSULTING SERVICES TO MANAGE IMPLEMENTATION OF
RECOMMENDED PATIENT PROGRESSION IMPROVEMENT ACTIONS: Approves
signatory authority for Medical Center procurement of
professional consulting services to manage the implementation of
patient progression improvement actions.
In February 2011, the University of Virginia Medical Center
engaged Huron Healthcare Consulting through a request for
proposal process to perform an assessment of the operational
effectiveness of the Medical Center’s current systems, tools,
and reports for managing patient throughput and to provide a
report of their findings and recommended actions. Approximately
18 consultants conducted interviews with over 100 key physician
and administrative leaders and observed workflow processes in
inpatient, surgical, and procedural services, and in the
emergency department. The cost of the engagement was $300,000.
On March 15th, the Medical Center received a written report
from Huron Healthcare which identified numerous high improvement
opportunities in our patient throughput processes as well as in
our communications and organizational culture. Their report
included a recommended action plan that identified redesigns of
key patient flow functions and programs that have major change
impact on the roles and competencies of faculty, residents, and
staff as well as on our systems of care. Some of the key
recommended actions include a redesign of the Bed Center and
patient placement protocols to improve appropriate placement of
patients and address capacity concerns more efficiently; the
implementation of standard operating room scheduling processes
across all surgical services to optimize utilization of
Operating Room resources; the implementation of a structured
method of communication to support daily interdisciplinary care
coordination and involvement of patients and families to
expedite discharges; and the establishment of a new centralized
case management program to provide complex patient transition
planning and utilization management to Clinical Staff, patients,
and families. Implementation of these recommended actions to
reduce inefficiencies and enhance patient flow have the
potential to increase the Medical Center’s capacity up to six
percent by achieving reductions in average patient days of 0.4
days, thus resulting in contribution margin improvements between
$15 million and $22 million annually.
The Medical Center would like to commence work promptly to
implement these recommendations. Due to the complexity involved
in redesigning the various processes and roles across many
departments, services, and patient care settings, the Medical
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Center does not have the internal resources to redesign and
manage implementation of these recommended solutions in a timely
fashion and desires to further engage Huron Healthcare
Consulting to provide this support.
Huron Healthcare is a leader in implementation of patient
flow processes redesign and offers best-practice knowledge and
experience in working within complex academic medical centers to
achieve desired outcomes. Huron anticipates that the
recommended actions can be implemented within eleven months.
The cost of the implementation engagement is estimated to be
$7.9 million (plus expenses), fifty percent of which will be at
risk to Huron for performance outcomes. This amount includes a
credit of $300,000 for the fees paid for the initial assessment.
ACTION REQUIRED: Approval by the Medical Center Operating
Board, the Finance Committee, and the Board of Visitors
APPROVAL OF SIGNATORY AUTHORITY FOR MEDICAL CENTER PROCUREMENT
OF PROFESSIONAL CONSULTING SERVICES FOR PATIENT PROGRESSION
IMPLEMENTATION
RESOLVED, the Board of Visitors authorizes the Executive
Vice President and Chief Operating Officer of the University to
execute a contract for professional consulting services for the
Medical Center to manage the implementation of patient
progression improvement actions, based on the recommendation of
the Vice President and Chief Executive Officer of the Medical
Center in accordance with Medical Center procurement policy.
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UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.A. Partial Divestment of the Robert M.
Berne Chair in Cardiovascular Research
BACKGROUND: In November of 1992, the School of Medicine Dean’s
Office used royalty income derived from six patents to establish
three unrestricted quasi-endowments. These quasi-endowments
were used to: (a) establish the Robert M. Berne Chair in
Cardiovascular Research, (b) provide for long-term growth and
operations of the Cardiovascular Research Center, and (c)
support scientific research and programmatic functions of the
Cardiovascular Research Center.
DISCUSSION: The School of Medicine wishes to divest $2.4
million of the Berne quasi-endowment, decreasing its market
value to around $2.5 million. The $2.4 million of divested
funds will be used to: (a) fund recruitment packages to replace
four senior researchers, and (b) fund additional research
endeavors within the Cardiovascular Research Center, to include
post-doc awards, innovative and novel research awards, and
bridge funding for faculty. These purposes are consistent with
and support the original intended uses of the quasi-endowments
established in 1992.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
APPROVAL OF PARTIAL DIVESTMENT OF THE SCHOOL OF MEDICINE’S
ROBERT M. BERNE CHAIR QUASI-ENDOWMENT
WHEREAS, the School of Medicine has $4.9 million in the
Robert M. Berne Quasi-Endowment account; and
WHEREAS, the School of Medicine wishes to provide funding
for recruitment packages for new researchers, as well as for
additional research endeavors within the Cardiovascular Research
Center;
RESOLVED, the Board of Visitors authorizes the divestment
by the School of Medicine of $2.4 million from the Robert M.
Berne Chair in Cardiovascular Research Quasi-Endowment account.
7
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
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: Every two years the University submits its Major
Capital Projects Program to the Board of Visitors for its
approval. At its April 2011 meeting, the Board approved an
update to the program. In conjunction with this approval, the
University requests that the Board of Visitors approve this
resolution to authorize short-term debt funding and to declare
its intent to issue tax-exempt debt for the following projects
from the program that are proposed to begin by the end of fiscal
year 2014, in the following amounts:
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Requested
Intent to
Issue
Authorization
Project
ACADEMIC DIVISION:
Infrastructure Expansion and
Replacement
Alderman Road-Phase IV, Bldg. 6
MEDICAL CENTER
Ambulatory Practice Space
Renovations
Total of
Requested and
Previous
Intent to
Issue
Authorizations
$14,500,000
$14,500,000
$23,400,000
$23,400,000
$6,910,000
$6,910,000
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 (whether one or more, the
―Projects‖), and to finance the Projects through the issuance of
tax-exempt debt, in the maximum principal amount stated below
for each of the Projects:
ACADEMIC DIVISION
Infrastructure Expansion and Replacement — $14,500,000;
Alderman Road-Phase IV, Bldg. 6 - $23,400,000;
MEDICAL CENTER
Ambulatory Practice Space Renovations - $6,910,000; and
WHEREAS, the University further intends to expend funds on
the Projects and to reimburse such expenditures from the
proceeds of the tax-exempt debt; and
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;
RESOLVED, debt may be issued for each of the Projects on a
short-term basis, but only if the following conditions are met:
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1. A comprehensive and detailed financial plan for each of
the Projects is submitted to and approved by the Capital Outlay
Executive Review Committee;
2. Short-term debt shall not exceed eighty-four (84)
months in maturity; and
3. A school or unit shall remain responsible for repaying
any debt obligation incurred regardless of the status of such
school or unit’s Project; and
RESOLVED FURTHER, the Board of Visitors of the University
of Virginia declares its intent to expend funds on the Projects
and to reimburse such expenditures from the proceeds of taxexempt 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 each of the Projects in the maximum principal amount
stated in the recitals above.
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UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.C. Additions to the Major Capital
Projects Program
BACKGROUND: Normally, the Board of Visitors approves capital
projects every two years with a comprehensive update to the
Major Capital Projects Program. The last update was in April
2011. When the University identifies a new capital project
outside the biennial update, the project requires approval by
the Buildings and Grounds Committee, the Finance Committee, and
by the Board of Visitors.
DISCUSSION: At this time, the University has two new capital
projects to add to the Major Capital Projects Program:
Facilities Management
Landscape Shop
Operating Cash $1.56 - $1.96M
This 10,000 gross square feet of new construction will house a
new shop building for Facilities Management. Facilities
Management needs modern, efficient shop space in order to
provide their many in-house services. This building supports a
larger effort to update shop space, reorganize the yard, and
address changes in work flow. It is anticipated that
approximately 2,000 gross square feet of existing sub-standard
space will be demolished. Incremental operating and maintenance
costs will be funded from University tuition.
College at Wise Football/
Band Building
Gifts
$2.41 - $2.48M
This 8,342 gross square feet of new construction will house
offices for the football coaching staff, two conference rooms,
and two large open storage rooms for football and band
equipment. Incremental operating and maintenance costs will be
funded from athletics auxiliary revenues.
ACTION REQUIRED: Approval by the Buildings and Grounds
Committee, the Finance Committee, and by the Board of Visitors
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APPROVAL OF ADDITIONS TO THE MAJOR CAPITAL PROJECTS PROGRAM
RESOLVED, the Board of Visitors approves the addition of
two new capital projects to the College at Wise and University
Major Capital Projects Programs: a $2.41-$2.48 million new
Football/Band Building at the University of Virginia’s College
at Wise and a $1.56-$1.96 million new Facilities Management
Landscape Shop in Charlottesville.
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UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.D.
2011-2012 Operating Budget
BACKGROUND: At its June meeting, the Board of Visitors
considers the proposed operating budgets for the Academic
Division, The University of Virginia's College at Wise, and the
Medical Center. Since its October 2010 meeting, the Board of
Visitors has heard reports on the budget requests submitted to
the state and the preliminary budget assumptions for the 20112012 operating budget. At its April meeting, the Board of
Visitors approved tuition, mandatory fees, housing, and dining
rates for 2011-2012 - which comprise significant revenue sources
for the operating budget - and heard reports on the actions of
the 2011 General Assembly.
DISCUSSION: The proposed 2011-2012 expenditure budget for all
divisions of the University totals $2.49 billion, representing
an increase of 3.1 percent compared with the revised budget of
the previous fiscal year. Of this amount, $1.345 billion
relates to the Academic Division, $1.108 billion to the Medical
Center, and $34.3 million to The University of Virginia's
College at Wise.
Academic Division
The proposed Academic Division operating expenditure budget
will decrease by 2.1 percent to $1.34 billion. The decrease in
the operating budget is related to a reduction in state general
funds, the elimination of federal stimulus state fiscal
stabilization funds, the tapering-off of federal stimulus funds
for research, and a conservative projection of gift and
endowment resources for the operating budget. Increases in
funding sources are driven by tuition and fees and auxiliary
revenues.
In 2011-2012, tuition and fees (32.6 percent) provides the
greatest proportion of the operating budget, followed by grants
and contracts (23.9 percent), auxiliary revenues (13.6 percent),
endowment distributions (10.3 percent), state general funds (9.5
percent), and gifts (7.3 percent). The remaining 2.8 percent is
generated from operating cash reserves, investment income,
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accumulated investment balances, and other miscellaneous
revenues.
On the expenditure side, units have been assessed target
budget reductions and planned for fewer available research and
private funds. Despite the overall decrease in the operating
budget, the University has been able to address enrollment
growth; increased undergraduate financial aid costs; investments
in the School of Architecture, School of Engineering and Applied
Science, School of Medicine, Batten School of Leadership and
Public Policy, McIntire School of Commerce, and School of
Nursing; operating costs for new facilities and deferred
maintenance; and a $3 million reserve that will enable vice
presidents and deans to address strategic faculty and University
staff recruitment and retention issues. These funds are to be
used for merit-based salary adjustments to retain our highest
performers. This reserve includes funds set aside to provide
special salary adjustments for the lowest-paid University staff.
Personnel costs comprise approximately 74.0 percent of
educational and general expenditures and 59.4 percent of total
operating expenditures in the Academic Division.
The University of Virginia’s College at Wise
The proposed expenditure budget for The University of
Virginia's College at Wise will increase by $152,000, or 0.3
percent, in 2011-2012. State general funds will decrease three
percent; at the same time, tuition revenues are increasing by
5.5 percent. Grants and contracts will decrease by 27.8
percent, and auxiliary revenues will increase by 15.7 percent.
Guided by a legacy of teaching and scholarly excellence, the
College continues to honor its commitment of service to its
students, providing learning experiences that offer
opportunities to develop the insight, competence, sensitivity,
and integrity necessary for living enriched lives and for
enriching the lives of others.
Medical Center
The Medical Center operating expenditure budget is proposed
to increase by $103.4 million, or 10.3 percent, to $1.11 billion
during 2011-2012. A number of cost drivers, explained in the
next paragraph, which also bring new revenue contribute to this
significant increase. In fact, without these new activities,
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expenses for 2011-2012 would be up by 4.5 percent over the
current year. Total margin is expected to be $57.7 million or
five percent. The budget presentation will include a proposal
to increase hospital room rates and ancillary service charges
between seven and 9.9 percent and to enhance personnel
compensation packages. The pay-for-performance pool has been
established at $4.0 million, which includes the impact on
benefit costs. Other salary adjustments, such as market
adjustments and a redesign of the compensation program scheduled
for September 2011, total $6.3 million, including the impact on
benefit costs.
For the Medical Center, the 2011-2012 fiscal plan has been
developed while considering the challenge of providing patient
care, teaching, and research services in an increasingly
changing health care industry. The Medical Center will see a
significant expansion of services and increased expense related
to the integration of the Hematology-Oncology Patient Enterprise
(HOPE) ($18.7 million), implementation of the Epic electronic
medical record ($10.3 million), opening of the Emily Couric
Clinical Cancer Center ($9.7 million), operation of the
Transitional Care Hospital ($9.2 million), expansion of surgical
capacity in the main operating rooms and Outpatient Surgery
Center ($5.8 million), and addition of lab capacity and services
in the Heart and Vascular Center ($3.9 million). These
expansions fuel a 10.3 percent increase in the operating revenue
and expense. In addition, the Medical Center will continue to
collaborate with faculty on managing the cost of supplies and
improving documentation of clinical care and its coding; better
engage employees and enhance patient satisfaction; assess the
impact of the Culpeper Regional Hospital on patient volume and
examine the acceleration of patient progression in inpatient
units, operating rooms, and the emergency department.
For a full discussion of the budget proposal, as well as
comparative revenue and expenditure data for the Academic
Division, the College at Wise, and the Medical Center, please
refer to the budget summary, which accompanies this book.
Annual Renovation and Infrastructure Plan
Under Restructuring, the Board of Visitors was delegated
authority to approve all capital projects (acquisitions, capital
leases, or new construction or renovation projects costing more
than $1 million and impacting more than 5,000 gross square foot)
funded with non-general funds. The 2011 General Assembly
15
increased the minimum threshold for a capital project from $1
million to $2 million. To facilitate the consideration of
certain projects with no external impact, the Board of Visitors
considers the Annual Renovation and Infrastructure Plan (ARIP)
each year.
In the 2011-2012 Budget Summary, the Academic Division and
the Medical Center will present a detailed list of renovation
and infrastructure projects expected to cost between $2 million
and $5 million, to be funded with non-general fund cash (no
debt), and expected to be initiated within the next fiscal year.
This shorter, annual approval process allows these smaller
projects to be planned in a more appropriate timeline based on
the nature of the project. For example, renovating a lab for a
new scientist is a project for which the need will arise during
recruitment, and which must be completed before the scientist
joins the faculty.
The Academic Division’s ARIP totals $15.6 million to $19.0
million and includes a Pavilion X interior renovation,
Facilities Management yard improvements, several utility upgrade
projects, and renovations at Lambeth Field Apartments. All the
projects will be funded from cash, either from E&G maintenance
funds, private resources, or auxiliary reserves.
The Medical Center’s 2011-2012 ARIP Plan includes $9.7 to
$11.0 million in various renovation projects and infrastructure
upgrades. All projects will be funded from Medical Center
operating funds. Additionally, the Medical Center is authorized
to substitute a new project costing between $2 million and $5
million for a project included on the approved ARIP, provided
that the total capital budget as approved by the Board is not
exceeded and that a report is provided at each Board meeting
listing the changes made to the original project list.
Pratt Fund
In April 1976, the University received funds, designated
in the will of John Lee Pratt, to be used "to supplement
salaries of the professors of the Departments of Biology,
Chemistry, Mathematics and Physics, to purchase equipment for
these departments as suggested by the heads of the departments
and approved by the President and the Board of Visitors, and to
provide for scholarships in these departments for outstanding
students." Mr. Pratt’s will provides further that these funds
could be used "to support research in the School of Medicine and
to provide scholarships for medical students." The will
16
stipulates that the Pratt endowment reverts to Washington and
Lee University if the University of Virginia does not comply
with the provisions of the will. The original Pratt endowment
has been split into two equal endowments, with 50 percent of the
original principal assigned to the College of Arts and Sciences
and the remaining 50 percent assigned to the School of Medicine.
In 2011-2012, a distribution of $3.1 million from the
College of Arts and Sciences endowment and $3.8 million from the
School of Medicine endowment, for a total of $6.9 million, is
recommended. Committees in each of the schools developed the
proposal, which is included as an appendix to this document, to
spend the distribution in a manner consistent with previous
years.
Each dean, the Vice President for Research, the Executive
Vice President and Provost, and the President are required to
indicate their support of these projects. The table below shows
aggregate allocations; the attachment describes the specific
allocations.
2011-2012 Pratt Fund Allocation
Biology
Chemistry
Mathematics
Physics
New Faculty
Start-Up Fund
Arts & Sciences
Subtotal
School of
Medicine
TOTAL
Equipment
$(14,408)
-
Faculty
Salaries
$ 62,532
80,000
34,609
-
733,333
$718,925
733,334
$910,475
$
$
-
$ 718,925
Fellowships
$201,876
170,000
115,391
250,000
733,333
$1,470,600
Research
$
-
Total
$250,000
250,000
150,000
250,000
-
2,200,000
$3,100,000
$
-
$ 480,000
$3,320,000
$3,800,000
$ 910,475
$1,950,600
$3,320,000
$6,900,000
ACTION REQUIRED: Approval by the Finance Committee and the
Board of Visitors
17
APPROVAL OF THE 2011-2012 OPERATING BUDGET AND ANNUAL RENOVATION
AND INFRASTRUCTURE PLAN FOR THE ACADEMIC DIVISION
RESOLVED, the 2011-2012 Operating Budget and Annual
Renovation and Infrastructure Plan for the Academic Division is
approved, as recommended by the President and the Chief
Operating Officer.
APPROVAL OF THE 2011-2012 OPERATING BUDGET FOR THE UNIVERSITY OF
VIRGINIA'S COLLEGE AT WISE
RESOLVED, the 2011-2012 Operating Budget for The University
of Virginia’s College at Wise is approved, as recommended by the
President and the Chief Operating Officer.
APPROVAL OF THE 2011-2012 OPERATING AND CAPITAL BUDGETS AND
ANNUAL RENOVATION AND INFRASTRUCTURE PLAN FOR THE UNIVERSITY OF
VIRGINIA MEDICAL CENTER
RESOLVED, the 2011-2012 Operating and Capital Budget and
the Annual Renovation and Infrastructure Plan for the University
of Virginia Medical Center is approved, as recommended by the
President, the Chief Operating Officer, and the Medical Center
Operating Board.
APPROVAL OF THE 2011-2012 OPERATING AND CAPITAL BUDGETS FOR THE
UNIVERSITY OF VIRGINIA TRANSITIONAL CARE HOSPITAL
RESOLVED, the 2011-2012 Operating and Capital Budget for
the University of Virginia Transitional Care Hospital, presented
as a component of the Medical Center Operating Budget, is
approved, as recommended by the President, Chief Operating
Officer, and the Medical Center Operating Board.
APPROVAL OF PRATT FUND DISTRIBUTION FOR 2011-2012
RESOLVED, the budget for the expenditure of funds from the
Estate of John Lee Pratt is approved to supplement
appropriations made by the Commonwealth of Virginia for the
School of Medicine and the Departments of Biology, Chemistry,
Mathematics, and Physics in the College of Arts and Sciences.
Departmental allocations, not to exceed $6,900,000 for 20112012, are suggested by the department chairs and recommended by
the dean of each school. To the extent the annual income from
the endowment is not adequate to meet the recommended
distribution, the principal of the endowment will be disinvested
to provide funds for the approved budgets.
18
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.E.1. Hematology Oncology Patient
Enterprises, P.C.
BACKGROUND: This item includes two actions. The Board of
Visitors is required to approve the execution of any contract
where the amount per year is in excess of $5 million.
Additionally, individual quasi-endowment transactions of $2
million or more require the approval of the Board of Visitors.
DISCUSSION: At its February 2011 meeting, the Board of Visitors
authorized the Medical Center to acquire substantially all of
the assets of Hematology Oncology Patient Enterprises, P.C.
Since that time the deal has been restructured as a stock
acquisition from the six physician shareholders of the
practice. An approximate $3 million reserve against potential
liabilities of the practice will be established at the closing
of the transaction. Otherwise, the deal as now contemplated is
the same as presented to the Board of Visitors at its February
2011 meeting, including the purchase price which will be
determined by an appraisal from Ernst & Young.
Additionally, upon completion of the acquisition, the
Medical Center wishes to create a quasi-endowment to act as a
reserve account to provide incentive pay based on performance
metrics to the physicians located in the Hematology Oncology
Patient Enterprises, P.C. practice, beginning after five years.
The Medical Center plans to deposit $2.5 million into the quasi
endowment account. It is expected that the funds will be
invested for at least five years and endowment distributions
would be reinvested until the funds were needed to fund
incentive compensation based on performance metrics.
ACTION REQUIRED: Approval by the Medical Center Operating
Board, the Finance Committee, and by the Board of Visitors
19
APPROVAL TO ACQUIRE THE CAPITAL STOCK OF HEMATOLOGY ONCOLOGY
PATIENT ENTERPRISES, P.C. AND ESTABLISH A QUASI-ENDOWMENT TO
FUND PHYSICIAN PERFORMANCE METRICS
WHEREAS, the Medical Center Operating Board and the Finance
Committee find it to be in the best interests of the University
of Virginia and its Medical Center for the Medical Center to
acquire the capital stock of Hematology Oncology Patient
Enterprises, P.C. from the individual shareholders of the
practice; and
WHEREAS, the Medical Center wishes to create a quasiendowment to act as a reserve account in funding physician
performance metrics under a pending physician practice
acquisition; and
WHEREAS, the Board of Visitors must approve the creation of
any quasi-endowment greater than $2 million;
RESOLVED, the University, on behalf of the Medical Center,
is authorized to acquire the capital stock of Hematology
Oncology Patient Enterprises, P.C. from the individual
shareholders of the practice at a price to be determined by an
independent third party appraiser and on such terms to be
contained in a definitive agreement between the parties; and
RESOLVED FURTHER, the resolution adopted by the Board of
Visitors at its February 2011 meeting authorizing the
acquisition of substantially all the assets of Hematology
Oncology Patient Enterprises, P.C. is superseded by this
resolution; and
RESOLVED FURTHER, the Executive Vice President and Chief
Operating Officer of the University, in consultation with the
Vice President and Chief Executive Officer of the Medical
Center, and with the concurrence of the Chair of the Medical
Center Operating Board and the Chair of the Finance Committee,
is authorized to negotiate the terms of such acquisition,
including execution of the definitive agreement, contracts, and
all other documents necessary for the closing of the
transaction, on such terms as the Executive Vice President and
Chief Operating Officer of the University deems appropriate, and
to take such other action as the Executive Vice President and
Chief Operating Officer of the University deems necessary and
appropriate to consummate the foregoing; and
20
RESOLVED FURTHER, on completion of the acquisition, the
Board of Visitors authorizes the investment of $2.5 million to
establish and fund a quasi-endowment account to provide
incentive pay based on performance metrics to the physicians
located in the Hematology Oncology Patient Enterprises, P.C.
practice, beginning after five years.
21
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.E.2. Program of All-Inclusive Care for
the Elderly (PACE)
BACKGROUND: The University of Virginia
to establish a Program of All-Inclusive
(PACE) by entering into a joint venture
System and the Jefferson Area Board for
Medical Center desires
Care for the Elderly
with Riverside Health
Aging.
DISCUSSION: PACE provides comprehensive health services for
individuals age 55 and over who are categorized as ―nursing home
eligible‖ by their state’s Medicaid program and who are dually
qualified for Medicare and Medicaid. The University of Virginia
Medical Center, Riverside Health System, and the Jefferson Area
Board for Aging will form a limited liability company for the
purpose of establishing a PACE Center in or around the
Charlottesville, Virginia area.
Riverside Health System operates two successful PACE
centers and will be the operating manager for the
Charlottesville center. The ownership of the new 501(c)(3)
corporation would be split among Riverside Health System (51
percent), the University of Virginia Health System (24.5
percent), and the Jefferson Area Board for Aging (24.5 percent).
A total of $1,000,000 cash equity will be contributed to the
project to establish the ownership stakes. The University of
Virginia Health System will contribute $245,000. The PACE
Center is expected to break even during year three. The center
is expected to have an operating margin of 9.18 percent at the
end of year six and a total operating margin during the first
six years of operations of 4.22 percent.
Program of All-Inclusive Care for the Elderly
Dollars in Millions
2012
2013
Revenue
4.14
Expenses
0.43
5.29
Net Operating Gains/Losses
(0.43) (1.15)
Operating Margin
-27.92%
22
Financial Pro Forma
2014
9.53
9.23
0.30
3.14%
2015
12.47
11.33
1.14
9.18%
2016
12.85
11.72
1.13
8.77%
2017
13.21
12.00
1.21
9.18%
TOTAL
52.20
50.00
2.20
4.22%
ACTION REQUIRED: Approval by the Medical Center Operating
Board, the Finance Committee, and by the Board of Visitors
APPROVAL TO ENTER INTO A JOINT VENTURE FOR A PROGRAM OF ALLINCLUSIVE CARE FOR THE ELDERLY
WHEREAS, the Medical Center Operating Board and the Finance
Committee find it to be in the best interests of the University
of Virginia and its Medical Center for the Medical Center to
enter into a joint venture with Riverside Health System and the
Jefferson Area Board for Aging for the purpose of establishing a
Program of All-Inclusive Care for the Elderly in the
Charlottesville, Virginia area; and
WHEREAS, Section 23-77.3 of the Code of Virginia grants
authority to the Medical Center to enter into joint ventures;
RESOLVED, the University, on behalf of the Medical Center,
is authorized to enter into a joint venture with Riverside
Health System and the Jefferson Area Board for Aging for the
establishment of a Program of All Inclusive Care for the Elderly
in the Charlottesville area, provided the Medical Center’s
interest in such joint venture shall not exceed 25 percent; and
RESOLVED FURTHER, the Executive Vice President and Chief
Operating Officer of the University, in consultation with the
Vice President and Chief Executive Officer of the Medical
Center, and with the concurrence of the Chair of the Medical
Center Operating Board and the Chair of the Finance Committee,
is authorized to negotiate the terms of such joint venture,
including execution of contracts and all other documents
necessary for the establishment of such joint venture, on such
terms as the Executive Vice President and Chief Operating
Officer of the University deems appropriate, and to take such
other action as the Executive Vice President and Chief Operating
Officer of the University deems necessary and appropriate to
consummate the foregoing.
23
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
II.E.3.
Nephrology Acquisition
BACKGROUND: The Medical Center desires to acquire certain
assets of the former Piedmont Nephrology practice.
DISCUSSION: On March 1, 2011, the University of Virginia Health
Services Foundation, on behalf of the Division of Nephrology,
purchased the Piedmont Nephrology practice from Dr. Connie
Christ. Dr. Christ’s practice was located in Charlottesville.
The practice had 1,400 active patients, including 35 dialysis
patients. The practice was purchased in order to expand the
University of Virginia Health System clinical enterprise in
Charlottesville. The practice will ensure the University of
Virginia dialysis system remains viable, as many of Dr. Christ’s
former patients will eventually require dialysis and will
further use the University of Virginia Health System for more
complex care issues.
In order to comply with provider based clinic rules, the
University of Virginia Medical Center is purchasing from the
Health Services Foundation the medical records of the former
Piedmont Nephrology practice, which are valued at $45,000.
ACTION REQUIRED: Approval by the Medical Center Operating
Board, the Finance Committee, and by the Board of Visitors
APPROVAL TO ACQUIRE_NEPHROLOGY PRACTICE
WHEREAS, the Medical Center Operating Board and the Finance
Committee find it to be in the best interests of the University
of Virginia and its Medical Center for the Medical Center to
purchase from the University of Virginia Health Services
Foundation the medical records of the former Piedmont Nephrology
practice;
RESOLVED, the University, on behalf of the Medical Center,
is authorized to purchase from the University of Virginia Health
Services Foundation the medical records of the former Piedmont
Nephrology practice, at a price of $45,000; and
24
RESOLVED FURTHER, the Executive Vice President and Chief
Operating Officer of the University is authorized to execute any
and all other documents necessary for the acquisition of the
medical records.
25
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
III.A.
ACTION REQUIRED:
None
Vice President’s Remarks
BACKGROUND: The Executive Vice President and Chief Operating
Officer will inform the Board of recent events that do not
require formal action, but of which it should be made aware.
26
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
III.B.
ACTION REQUIRED:
None
Access UVa
BACKGROUND: On February 6, 2004, the Board of Visitors
authorized the implementation of AccessUVa in order to ensure
that access to an undergraduate education at the University of
Virginia is available to all students regardless of their
financial circumstances. At that time, the University added
several innovative components to its already strong need-based
financial aid program, consisting of the following four
components:
1.
Full implementation in academic year 2004-2005 of the
program to offer financial aid to meet 100 percent of
demonstrated financial need for qualifying
undergraduate students at all income levels;
2.
Beginning in the academic year 2004-2005, a four-year
phase-in of a new commitment to replace need-based
loans with grants for qualifying undergraduate
students with family income at or below 150 percent of
the federal poverty level. In January 2005, the
criterion was raised by the Board of Visitors to 200
percent of the federal poverty level;
3.
Beginning in the academic year 2005-2006, a four-year
phase-in of a new commitment to replace need-based
loans, beyond a cumulative loan cap, with grants for
undergraduate students at all income levels. The loan
cap will be set every year for that year’s entering
class, at approximately 25 percent of the total of
UVa’s projected undergraduate in-state cost of
attendance over four years; and
4.
Beginning in the fiscal year 2004-2005, an ongoing
comprehensive financial literacy educational program
to provide to new students and parents information
about financial options and counseling services on
debt management. In 2008, the University was honored
27
with the National Student Loan Program (NSLP) Benjamin
Franklin Award, recognizing outstanding financial
literacy programs by postsecondary schools.
Since the AccessUVa program was first initiated in the
2004-2005 academic year, these four components were phased in
incrementally with each entering first-year class. Full
implementation of the comprehensive Access UVa program was
completed in the 2008-2009 academic year.
DISCUSSION: The Board of Visitors periodically has reviewed the
metrics used to measure the success and costs of AccessUVa. The
AccessUVa program has increased in cost from original
projections for the following reasons:
1.
The increase in tuition has been greater than originally
assumed.
2.
Enrollment has increased, resulting in higher dollar
costs even if the percentage of students on aid had not
changed.
3.
The percentage of students who qualify for need-based
aid has been greater than assumed, as a result of both
the recession and the change in the assumed costs of
attendance.
4.
Expected Family Contribution has been lower than
assumed.
5.
External sources of financial aid have decreased, or
grown at a rate that was lower than the growth in need,
and because AccessUVa has an objective of meeting 100
percent of need, institutional funds have been used to
make up the difference.
The Vice President and Chief Financial Officer Yoke San
Reynolds will review the program to date and discuss various
options for modifying the program to reduce costs, and their
implications for the original objectives that were approved by
the Board, as well as other impacts. She will also discuss
methods of managing future cost increases. The Dean of
Admission Greg Roberts will identify the impact of potential
program modifications on undergraduate admission.
28
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
III.C. Endowment Report – Market Value and
Performance as of March 31, 2011
ACTION REQUIRED:
None
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.
DISCUSSION:
The March 31, 2011 Report is included below.
Quarter-End March 2011
SUMMARY
The Long Term Pool returned 3.9 percent in the quarter
ended March 31, 2011, beating the policy benchmark by 60 bps.
The attractive absolute and relative performance was boosted by
a 9.8 percent return on real assets, and the small overweight to
this asset class. This helped offset the slight under
performance in equities, which is due to our exposure to lowbeta quality equities. The Long Term Pool has returned 17.0
percent during the first nine months of the fiscal year, lagging
the benchmark return of 21.0 percent. We fully expect to lag
our benchmark during rapidly rising equity markets.
We work to manage three broad risks in the Long Term Pool’s
portfolio: market risk, liquidity risk, and manager risk.
Market risk can be further broken into two tail events
associated with negative real returns: deflation and inflation.
The Great Recession of 2008 illustrated why investment
portfolios should include fixed income or other investments that
provide protection in a deflationary environment. As the
recovery moves forward, policies put in place to reduce the
likelihood of a deflationary spiral or double dip recession have
encouraged investors to take more market risk, but they also
29
increase our odds for higher inflation over the next five to ten
years.
Federal Reserve officials have been quite open about their
rationale for quantitative easing. They fear the excess
leverage that led to the Great Recession poses a continuing
threat of a deflationary spiral as economic agents hunker down
and conserve their cash. By aggressively purchasing assets and
keeping interest rates near zero, the Fed has encouraged
investors to buy risky assets. They hope higher prices for such
assets will encourage more consumer spending and additional
business investment and hiring. The resulting higher economic
growth is expected to reduce the burden of excess leverage.
The exit strategy will be a challenge. While the Fed’s
recent policy choices have substantially reduced the risk of
deflation, policymakers will have to be equally creative on the
back end to avoid setting off an inflationary spiral similar to
what we saw in the 1970s. The economy is like a car stuck on a
sheet of ice. The Federal Reserve has the accelerator pedal
pressed to the floor and the wheels are spinning furiously, but
the car isn’t moving. Should the ice melt suddenly, the tires
will grab the pavement and the car will explode forward. The
markets recognize this possibility and expectations for 10-year
inflation have been increasing, but they still remain a modest
2.6 percent per year.
What if anything does this mean for managing the UVIMCO
portfolio? We cannot predict how or when the Fed will ―take
away the punch bowl‖ in the short term. Rather, we position the
Long Term Pool to take advantage of longer-term themes. As we
do so in 2011, it is worth considering the quote by Milton
Friedman: ―Inflation is always and everywhere a monetary
phenomenon.‖
We have taken three steps in response to the threat of
higher inflation. First, we have refined our analytical
understanding of how the Pool would be impacted by an
inflationary tail event. Second, we reduced our bond duration
to zero by selling all of the Pool’s bonds and increasing our
cash position. Third, we have increased our allocation to real
assets. As always, we seek outstanding active managers who are
exemplary investors unwilling to overpay for any investment. In
addition, we favor managers who are strong long-term partners,
who are properly compensated/motivated, and who have a unique
edge in executing their investment strategy.
30
EQUITY
Public Equity
Public equity returned 3.4 percent in the quarter ending
March 31, 2011, trailing the MSCI ACWI index by 110 bps. Fiscal
year-to-date, the public equity portfolio returned 29.0 percent
versus the 30.2 percent return earned by global equities.
UVIMCO’s public equity portfolio has a bias toward large cap
quality and emerging market companies. These tilts
underperformed the broad global equity benchmarks and led to the
slight underperformance in the first quarter of 2011. Strong
stock selection of our managers helped offset the
underperformance of the portfolio themes. However, we believe
these tilts will add value over time and combined with our
managers’ security selection will produce outperformance of our
public equity program relative to the passive benchmarks. Over
the past 10 years, our public equity portfolio returned 11.3
percent versus 5.5 percent on global equities. It is
unreasonable to expect to achieve that level of outperformance
in the coming decade.
Long/Short Equity
Long/short equity managers returned 1.8 percent for the
quarter. Fiscal year-to-date the long/short equity portfolio
returned 12.4 percent versus a return of 15.5 percent on the Dow
Jones Credit Suisse Long/Short Equity Index and 30.2 percent on
global equities. The strong absolute return of 12.4 percent is
weak relative to other long/short managers and to global
equities. This has been the case since global equities began
their dramatic rise in March 2009. While the long side of our
managers’ portfolios has generally kept pace with or
outperformed the broad market indexes, the short side continues
to offset the strong gains on the longs. Short selling has
faced several headwinds in recent months. The easy money, low
interest rate environment not only destroys the rebate short
sellers earn, it also makes it easier for lower quality
companies (which our managers have shorted) to finance their
businesses at reasonable rates. In addition, the business of
short-selling has become more competitive, leading to crowding
in good ideas, and increased costs. Although short selling has
been a drag on performance, we are convinced our managers will
adjust to the changed environment and the next few years will
offer better opportunities for our long/short managers, but we
continue to assess the risks to this thesis.
31
Over the past decade, the long/short equity portfolio
returned 8.5 percent versus the 7.1 percent return reported by
the Dow Jones Credit Suisse Long/Short Equity Index and 5.5
percent earned by global equities.
Private Equity
The private equity portfolio returned seven percent for the
quarter and 20.4 percent fiscal year to date. The continuing
economic recovery has led to an earnings rebound in many of our
private companies. This allowed many of our buyout funds to
position a number of the portfolio companies for sale at
exceptional prices, as strategic acquirers sought to deploy
excess capital built up over the last two years of relative
inactivity. In general, the surging equity markets,
stabilization in the credit markets, improved earnings, and a
more robust environment for Initial Public Offerings (IPOs) all
contributed to significant increases in valuations across our
private equity portfolio. For the one-year period ending March
31, the private equity portfolio returned 22.7 percent versus
14.6 percent earned by global equities. Buyout funds returned
22.3 percent, and the venture capital portfolio returned 25.4
percent.
For the 10-year period, our buyout portfolio returned 11.7
percent, our venture capital portfolio lost 7.1 percent, and
global equities earned 5.5 percent. Combined, the private
equity portfolio returned 4.8 percent over the last 10 years, on
an annualized basis.
REAL ASSETS
Resources
The first calendar quarter of 2011 brought new highs for
broad commodity prices, led by oil prices climbing to over
$100/barrel. Price appreciation in food and metals is beginning
to impact the global economy in a number of important ways, from
rising input costs and end prices in the developed world to
increasing unrest and civil discord in areas of the developing
world. Commodity prices reflect the compound effects of long
term secular forces driven by demand growth in China, India and
other industrializing countries; cyclical trends of economic
expansion as developed economies emerge from a deep recession;
and macroeconomic-oriented trading and hedging activity as
investors cope with the unprecedented monetary stimulus injected
by the leading central banks.
32
Amidst this backdrop, UVIMCO’s resources portfolio
continues to provide outstanding absolute and relative
performance, rising 16.2 percent in the first quarter of 2011
alone (46.4 percent fiscal year to date) versus 11.6 percent
returned by the Goldman Sachs Commodities Index and 4.4 percent
for the Dow Jones UBS Commodity Index. UVIMCO’s concentration
in onshore upstream oil and gas investments remains
advantageous, as increasing spot prices and relatively steep
forward curves provide a strong tailwind for asset owners. Our
active managers have also added significant value during the
last few years through adaptive use of new technologies, capital
allocation among assets, and the productive expansion of
existing asset bases. Our resources portfolio contains a higher
number of public securities than in years past, which will
increase its volatility compared to a wholly private portfolio.
Both our team and our managers have taken the opportunity
provided by the current market strength to sell down some of our
largest positions, thereby locking in gains and preserving cash
for future investments. We continue to evaluate both public and
private resources opportunities across sectors and geographies.
Real Estate
Our real estate portfolio returned 1.1 percent for the
first quarter of 2011 and 1.7 percent fiscal year to date.
Real estate markets have stabilized over the past 9-12 months as
greater visibility into end user dynamics as well as higher
transaction volumes have generated a degree of price discovery
elusive since the Lehman collapse. The persistence of low
interest rates and the return of credit markets for large,
stabilized assets have led to a frenzy surrounding core real
estate property. Cap rates for core properties in certain urban
markets are amazingly close to pre-crisis levels as investors
starved for yield seek to put large amounts of capital to work.
Publicly traded U.S. REIT securities have benefited, with prices
for some of the largest REITs eclipsing previous highs set in
2007. The MSCI Real Estate Index rose nearly six percent in the
first quarter of 2011 alone. It remains to be seen whether
current valuation levels will be able to withstand a rise in
interest rates over the coming years. UVIMCO does not currently
have an allocation to U.S. core real estate, nor to publicly
traded REITs. Our real estate portfolio remains in transition.
Pre-crisis, development-oriented assets face extended
construction timelines and revamped business plans, and our
managers have not been able to capitalize on the present
investor appetite for current income. These projects will
continue to be an impactful component of the real estate
33
portfolio’s net asset value over the short- and medium-term, and
will most likely be a drag on our returns during that timeframe.
On the other hand, significant capital is being invested postcrisis into assets featuring in-place cash flow, attractive
value-added opportunities, and less overall institutional
attention. The managers and assets at the center of this effort
will become a greater percentage of our real estate allocation
in the coming years. Managers typically hold new acquisitions
at cost for some period of time before business plans begin to
demonstrate material progress.
FIXED INCOME
Absolute Return and Credit
The absolute return portfolio was flat for the first
quarter of 2011 but up 6.2 percent fiscal year to date. Given
the modest market exposures for the three managers in this
portfolio, we do not expect our absolute return allocation to
keep pace in a rapidly rising market. An environment of
decreasing volatility provides a significant headwind for one
manager that is long volatility.
The credit portfolio returned 3.3 percent for the quarter
and 9.6 percent for fiscal year-to-date, trailing the 3.9
percent and 14.4 percent return of the Barclays High Yield Index
over the respective time periods. Strong performance within the
portfolio’s allocation to publicly-traded debt, a combination of
mortgages and corporate bonds, was offset by muted returns in
the private assets. Credit spreads have narrowed to pre-crisis
levels. The existing portfolio of credit funds will shrink as
these drawdown funds distribute capital following the end of
their investment periods. With credit spreads narrow, patience
and security selection will be important going forward. Over
the past decade, the absolute return and credit portfolios
returned 6.6 percent and 9.8 percent, respectively.
Bonds and Cash
Our government bond portfolio is primarily a source of
liquidity, and low yields on longer duration bonds and a concern
for rising interest rates have caused us to hold the entire
portfolio in short term, high quality securities reflected in
―Cash and Currency‖ on our reports. The negligible returns
reported for these short-term cash investments are consistent
with an environment in which current interest rates are near
zero percent.
34
ASSET ALLOCATION
Our policy portfolio continues to be an allocation of 60
percent to equity, 10 percent to real assets and 30 percent to
fixed income. Hence, the policy portfolio benchmark is the
return on a portfolio that is 60 percent global public equity
plus 10 percent global public real estate plus 30 percent 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 is 61.6 percent to equity managers,
12.7 percent to real asset managers and 25.6 percent to fixed
income (including credit), cash and absolute return managers.
Looking through to our managers’ underlying investments, the
Long Term Pool has a 51.5 percent allocation to equities, 15.4
percent allocation to real assets and 33.1 percent allocation to
fixed income (including credit) and cash.
LIQUIDITY
We require sufficient liquidity within the Long Term Pool
to:
1. Meet redemptions and payouts for the university and
foundations,
2. Fund capital calls for our private managers when they
make investments,
3. Rebalance the portfolio, and
4. Fund opportunistic investment opportunities that occur
during infrequent market dislocations.
We continue to hold adequate liquidity within the Long Term
Pool to meet these liquidity needs. Cash and government bonds
have increased from $459 million at the end of 2010 to $611
million at the end of the first quarter in 2011. In part, this
increase in liquidity is the result of cash and stock
distributions from the entire private sector portfolio (private
equity, venture capital, real estate and resources). Total
private investment distributions for the quarter were $151
million, versus capital calls of $77 million. We expect the
increased pace of net distributions we have experienced over the
past five quarters will continue for the remainder of 2011. In
addition, our venture capital managers expect a strong year for
35
IPOs, as institutional investors seem eager to back growing
companies.
The percentage of the endowment that can be turned into
cash within one quarter now represents one third of the Pool,
and approximately half of the Pool can be liquidated within one
year. Unfunded private investment commitments have decreased
from $1.3 billion or 29 percent of the Long Term Pool at the end
of 2009 to $1.0 billion or 20 percent of the Long Term Pool as
of March 31, 2011.
36
INVESTMENT MANAGEMENT COMPANY
Investment Report
March 31, 2011
Investment Activity
Beginning Net Asset Value (NAV)
Month
FYTD 2011 (1)
$5,028,110,625.75
$4,454,689,896.34
947,137.74
$5,308.74
$1,334,791.37
($1,329,476.90)
$82,144,403.94
($838,018.44)
Beginning Shares
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
965,976.04
$4,611.59
$24,597,174.18
($109,854,438.91)
$750,511,150.77
($10,521,456.66)
$5,109,422,325.72
946,983.41
$5,395.47
$5,109,422,325.72
946,983.41
$5,395.47
Long Term Pool
% of NAV
Shareholder Summary
$3,187,028,169.51
$1,115,863,170.01
$806,530,986.20
$5,109,422,325.72
University of Virginia Endowment
Affiliated Organizations
University Operating Funds
Total
62.4%
21.8%
15.8%
100.0%
Performance
Market Value (2)
$ Millions %
Long Term Pool
Policy Benchmark
Equity
Public
Long / Short
Buyout
Venture Capital
Time-Weighted Returns
MO CYTD FYTD
1 YR
3 YR
100.0
1.6
3.9
17.0
15.3
2.7
7.1
8.5
12.2
100.0
(0.1)
3.3
21.0
12.5
2.7
4.3
6.2
7.8
1,042
1,147
828
132
20.4
22.4
16.2
2.6
2.2
(0.2)
3.7
1.7
3.4
1.8
6.4
11.0
29.0
12.4
20.0
22.9
21.3
6.7
22.3
25.4
3.2
0.0
(0.6)
(2.7)
7.0
6.1
9.7
4.9
11.3
8.5
11.7
(7.1)
12.0
--18.0
3,149
61.6
60.0
1.7
(0.1)
3.9
4.5
20.2
30.2
16.2
14.6
1.8
0.9
7.6
3.5
8.7
5.5
14.1
7.5
287
364
5.6
7.1
1.8
4.3
1.1
16.2
1.7
46.4
(16.8)
72.7
(27.4)
23.3
(15.9)
23.1
(5.3)
26.2
651
12.7
3.2
9.8
26.9
31.4
(1.7)
4.1
10.3
--
10.0
(0.9)
5.6
31.2
23.2
(0.5)
0.4
9.0
9.2
436
262
611
-
8.5
5.1
12.0
-
0.7
0.5
(0.0)
0.0
(0.1)
3.3
0.0
0.0
6.2
9.6
0.2
0.1
7.0
10.8
0.2
0.2
10.1
8.1
7.4
0.6
8.0
6.3
6.3
--
6.6
9.8
---
-----
1,309
25.6
0.4
0.8
4.8
6.3
8.1
7.2
7.2
8.2
30.0
(0.0)
0.1
1.0
3.9
4.8
5.5
5.2
6.7
5,109
(3)
Total Equity
MSCI All Country World Equity
Real Assets
Real Estate
Resources
Total Real Assets
MSCI Real Estate (4)
Fixed Income, Cash & AR
Absolute Return
Credit
Cash & Currency
Short-Term Borrowing
Total Fixed Income, Cash & AR
Barclays Aggregate Bond
(5)
37
Annualized
5 YR 10 YR
20 YR
---
Investment Report
March 31, 2011
Short-Term Liquidity(6)
Actual Liquidity (Cumulative Total % of NAV)
Weekly
Public Equity
Monthly
Quarterly
Semi-Annually
1 YR
2 YR
3 YR
2%
6%
14%
16%
18%
18%
18%
Long / Short Equity
-
2%
7%
7%
15%
18%
21%
Absolute Return
-
-
1%
2%
6%
7%
8%
1%
1%
1%
1%
1%
1%
1%
12%
12%
10%
10%
10%
10%
10%
15%
20%
33%
36%
50%
54%
58%
748
1,038
1,698
1,839
2,534
2,770
2,954
Resources
Cash
Total
Available Liquidity ($ in Millions)
Private Funds Market Values and Commitments (7)
($ in Millions)
Market Value of Private Investments
Amount
Public Equity
Long / Short Equity
95
% of NAV
2%
Uncalled Commitment
Amount
50
% of NAV
1%
Private Aggregate
Amount
145
% of NAV
3%
25
0%
-
-
25
0%
Private Equity
960
19%
399
8%
1,359
27%
Real Estate
287
6%
329
6%
616
12%
Resources
329
6%
138
3%
468
9%
43
1%
-
-
43
1%
261
5%
99
2%
360
7%
2,001
39%
1,014
20%
3,015
59%
North
America
Europe
Asia
LAMA(9)
Absolute Return
Credit
Total
Market and Currency Exposure Estimates (8)
(% of NAV)
Equity
Policy Ranges
Actual
Exposure
40 - 70
51.5
28.2
7.9
9.5
5.9
Real Assets
5 - 20
15.4
13.0
1.1
0.9
0.4
Credit
0 - 20
5.7
4.9
0.3
0.2
0.4
Government Bonds
5 - 20
-
-
-
-
-
Total Market Exposure
70 - 100
72.6
46.0
9.3
10.6
6.7
25 - 75
10 - 40
10 - 40
0 - 20
28.5
(1.1)
-
74.6
8.1
10.6
50 - 100
0 - 30
Policy Ranges
Cash & Currency
--
--
0 - 30
27.4
Currency Exposure
--
100.0
Policy Ranges
--
--
--
73.1
Market Beta Exposure (10)
38
--
--
0 - 30
--
6.7
0 - 20
--
Investment Report
March 31, 2011
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 2011 policy target allocations: 60% Equity, 10% Real Assets, 30% Fixed Income.
(4)
The Real Estate component of our Fiscal Year 2011 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 2011 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.
(10)
Estimated market beta of the Long Term Pool with each asset class adjusted for its level of market risk.
39
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 9, 2011
COMMITTEE:
Finance
AGENDA ITEM:
III.D.
ACTION REQUIRED:
None
Retirement Administrative Committee
The University is the plan sponsor of a number of defined
contribution retirement plans, including the Defined
Contribution Retirement Plan for the General Faculty and
Executive and Senior Administrative and Managerial and
Professional University Staff of the University of Virginia, and
the Defined Contribution Retirement Plan for Employees of the
University of Virginia Medical Center.
At its June 2, 2007 meeting, the Finance Committee of the
Board of Visitors approved a revised Retirement Program Policy.
The revised policy established the role of the Finance Committee
of the Board of Visitors to provide oversight of the retirement
plans and to report annually to the Board. The policy also
clarified the role of the University’s Retirement Administrative
Committee (RAC) to establish procedures and review investment
performance of the various funds offered. The RAC is chaired by
Yoke San Reynolds, Vice President and Chief Financial Officer of
the University. The RAC also established an Investment
Subcommittee, chaired by the CEO of UVIMCO. Susan Carkeek, Vice
President and Chief Human Resource Officer, is the retirement
program administrator.
At its April 11, 2008 meeting, the Finance Committee of the
Board of Visitors approved new Investment Procedures, creating a
menu of investment options for plan participants that includes a
full range of funds, regardless of which vendor a participant
elects. The new Investment Procedures also changed the role of
CAPTRUST (a third party engaged to provide analysis of
investment performance of the funds) from consultant to advisor
thus shifting fund selection and monitoring responsibility to
CAPTRUST.
Ms. Helen Dragas, as Finance Committee Chair, and Mr.
Marvin Gilliam, Finance Committee member, work with the
University’s Retirement Administrative Committee to oversee the
40
retirement program and report back to the Finance Committee on
an annual basis.
DISCUSSION: On May 24th, Ms. Dragas and Mr. Gilliam met with the
Executive Vice President and Chief Operating Officer and
representatives of the Retirement Administrative Committee to
review the Plan’s annual performance and to discuss the overall
program from participant and administrative perspectives.
Minutes of that meeting appear as Appendix B.
41
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42
MISCELLANEOUS FINANCIAL REPORTS
Finance Committee
University of Virginia
June 9, 2011
UNIVERSITY OF VIRGINIA
ACADEMIC DIVISION
ACCOUNTS AND LOANS RECEIVABLE
AS OF MARCH 31, 2011
Summary of Accounts Receivable:
The University's Academic Division's total accounts receivable at March 31, 2011 was
$30,566,000 as compared to $228,549,000 at December 31, 2010. The major sources of receivables at
March 31, 2011 were student accounts of $7,781,000 and sponsored programs of $20,187,000.
The past due receivables over 120 days old were $2,897,000 as of March 31, 2011 or 9.48 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
Total
$7,781,000
$20,187,000
$2,598,000
$30,566,000
$452,000
$915,000
$66,000
$1,433,000
$7,329,000
$19,272,000
$2,532,000
$29,133,000
$904,000
$1,829,000
$164,000
$2,897,000
SOURCE: Financial Administration
DATE:
April 14, 2011
43
UNIVERSITY OF VIRGINIA
ACADEMIC DIVISION
ACCOUNTS AND LOANS RECEIVABLE
AS OF MARCH 31, 2011
Summary of Loans Receivable:
The default rate for the Perkins Student Loan Program was 7.70 percent for the quarter ending March 31, 2011. This is based on
the cohort default calculation and is well below the 15 percent threshold set by federal regulations. The Health Professionals
Loan Program default rate remained the same at zero percent. The Nursing Undergraduate Student Loan Program default
rate decreased from 1.79 percent to 1.14 percent. Both medical loan programs are well below the five percent federal threshold.
The University Loan Program default increased from 2.65 percent to 2.75 percent for the quarter ending March 31, 2011.
Gross
Loan
Receivables
Perkins Student Loans
Current
Default
Rate
Inc/(Dec)
From Last
Quarter
$20,122,000
7.70%
1.01%
$0
0.00%
0.00%
$1,281,000
1.14%
-0.65%
University Loans
$16,789,000
2.75%
0.10%
Total Student Loans Outstanding
$38,192,000
Health Professions Loans
Undergraduate Nursing Loans
SOURCE: Financial Administration
DATE:
April 14, 2011
44
UNIVERSITY OF VIRGINIA
CAPITAL CAMPAIGN SUMMARY
AS OF MARCH 31, 2011
All Units
Expendable
Gifts and Pledge Payments
Outstanding Pledge Balances
Endowment
Total
1,031,215,939
168,238,078
456,191,517
44,971,174
1,487,407,456
213,209,252
Deferred Gifts
91,921,250
26,726,065
118,647,315
Private Grants
200,422,042
0
200,422,042
72,376,930
2,200,372
74,577,302
Gift and Pledge Total
1,564,174,239
216,217,293
530,089,128
59,039,769
2,094,263,367
275,257,062
Campaign Total
1,780,391,532
589,128,897
2,369,520,429
-192,224,239
1,097,960,872
905,736,633
1,371,950,000
1,628,050,000
3,000,000,000
Gifts in Kind
Future Support
Additional Amounts To Be Raised
(1)
Total
Rector & Visitors Gift Accounts Only
Expendable
Gifts and Pledge Payments
Endowment
Total
368,492,547
247,534,245
616,026,792
Outstanding Pledge Balances
31,937,666
5,712,885
37,650,551
Deferred Gifts
Private Grants
60,038,845
0
11,524,077
0
71,562,922
0
Gifts in Kind
30,388,775
23,212
30,411,987
490,857,833
264,794,419
755,652,252
127,254,333
9,165,594
136,419,927
Gift and Pledge Total
Future Support
Campaign Total
Additional Amounts To Be Raised
Total
618,112,166
273,960,013
892,072,179
TBD
618,112,166
TBD
273,960,013
TBD
892,072,179
8,717,953
0
8,717,953
200,000
220,460
0
0
200,000
220,460
9,138,413
0
9,138,413
Rector & Visitors Unrestricted Giving
Gifts and Pledge Payments
Deferred Gifts
Outstanding Pledge Balances
Total
(1) Excludes future or revocable support
SOURCE: Office of Development and Public Affairs
DATE:
April 14, 2011
45
UNIVERSITY OF VIRGINIA
INTERNAL LOANS TO UNIVERSITY DEPARTMENTS AND ACTIVITIES
AS OF MARCH 31, 2011
PURPOSE
DATE OF
LOAN
INTEREST
RATE
Cocke Hall
06/30/06
4.75%
1,941,787
1,866,198
75,589
June 2011
National Radio Astronomy
Observatory Piping
09/01/06
6.25%
706,833
640,574
66,259
August 2011
Varsity Hall
06/30/07
4.75%
1,517,726
1,203,021
314,705
March 2012
Wilsdorf Hall
11/01/06
4.75%
3,311,328
3,187,981
123,347
November 2011
Wise Football Facility
10/01/07
4.75%
629,171
144,158
485,013
October 2022
Total Internal Loans Subject to
ORIGINAL
PRINCIPAL PAYMENTS OUTSTANDING APPROXIMATE
LOAN AMOUNT
MADE TO DATE
PRINCIPAL
FINAL PAYMENT
$
8,106,845
$
7,041,932
$
1,064,913
$15M Limit Established by BOV1
NOTES: 1.
2.
Per January 1990 Board of Visitors resolution establishing the internal loan pool at $10 million and per April
2003 Board of Visitors resolution approving the expansion of the internal loan pool from $10 million to $15
million. All internal loans are subject to the approval of the Executive Vice President and Chief Operating
Officer.
The University's blended borrowing rate for tax exempt financing is 4.75%. A taxable rate of 6.25%
is being charged for the National Radio Astronomy Observatory Piping project.
SOURCE: Financial Administration
DATE:
April 13, 2011
46
UNIVERSITY OF VIRGINIA
REPORT ON WRITE-OFF OF NON PATIENT BAD DEBTS FOR
FISCAL YEAR 2010-2011
Report
Debts
ReportononWrite-Off
Write OffofofNon
NonPatient
PatientBad
Bad
Debts
The University's write-off of non-patient bad debts for fiscal year 2011 is $860,623. This year we are implementing a
new write off process that will allow for more aggressive collections of past due debts. These write-offs do not
constitute a compromise, settlement, or discharge of the debts, but rather an acceleration of the use of collection
agencies, state tax liens, and the court system for the collections of these debts. For the past ten years, the University
has averaged a collection rate of approximately 48% percent of all previously written-off student debts.
FY
2010-11
as of 12/31/2010
FY
2009-10
as of 6/30/2010
FY
2008-09
as of 6/30/2009
FY
2007-08
as of 6/30/2008
599,950
327,460
396,423
197,824
Auxiliary Services Fines and Charges
92,674
69,173
67,143
108,517
UVA's College at Wise
80,430
46,005
30,300
29,882
Library Fines and Charges
16,855
6,111
6,448
15,522
University Student Loans
38,460
23,784
9,109
12,234
Uncollectible Salary Overpayments
13,039
7,094
0
0
Other Charges
19,215
27,413
42,121
29,300
TOTAL
860,623
507,040
551,544
393,279
Tuition and Fees
Report on Equipment Inventory
Equipment Inventory to be written off
Remaining
Book Value
$
2,341
Accumulated
Depreciation
$
847,316
Original
Cost
$
849,657
Write-off represents equipment that has been surplused, lost or disposed. Most of the items had useful lives of five or
10 years, and were purchased more than 10 years ago.
SOURCE: Financial Administration
DATE:
April 13, 2011
47
UNIVERSITY OF VIRGINIA
ENDOWMENT/LONG TERM INVESTMENTS FOR UVA AND RELATED FOUNDATIONS
AS OF MARCH 31, 2011
(in thousands)
The University of Virginia Medical School and related foundations
The College of Arts and Sciences and related foundations
The University of Virginia Law School and related foundation
Darden School and related foundation
Batten School of Leadership and Public Policy
The McIntire School of Commerce and related foundation
School of Engineering and related foundation
University of Virginia's College at Wise and related foundation
Graduate School of Arts and Sciences
School of Nursing
Curry School of Education and related foundation
School of Architecture and related foundation
School of Continuing and Professional Studies
Rector and
Visitors Funds
Related
Foundation Funds
Invested by
UVIMCO
Alumni
Association Funds
Invested by
UVIMCO
Related Foundation
Funds Invested by
Direction of
Foundation Board
$
$
$
$
758,766
322,147
42,495
107,559
106,913
74,171
84,479
41,623
48,165
38,173
12,470
16,079
1,663
32,693
46,943
209,611
203,297
2,928
5,000
7,833
426
-
7,770
10,250
25,985
2,619
1,964
1,824
389
47
University of Virginia Medical Center and related foundations
Centrally Managed University Scholarships
Athletics and related foundation
Provost
Alumni Association
Miller Center and related foundation
University of Virginia Foundation and related entities
Alumni Board of Trustees
University Libraries
384,446
149,314
38,513
87,485
51,487
48,895
51,296
61,172
8,497
58,889
49,418
-
4,215
358
53,140
33
University - Unrestricted but designated
University - Unrestricted Quasi and True Endowment
University - Unrestricted Other
299,157
156,703
145,270
-
-
All Other
216,526
192,222
$
3,232,499
$
930,225
26,746 **
495
11,452
114
-
56,330 *
$
164,924
4,156
94,351
6,827
930
2,247
2,447
1,626
606
-
$
$
799,229
383,496
346,457
317,683
106,913
101,086
92,273
51,034
48,165
39,997
21,929
17,500
1,710
466,703
149,314
100,538
87,485
64,592
59,984
59,003
49,418
48,928
-
299,157
156,703
145,270
5,548
470,626
157,545
$ 4,485,193
*Includes funds on deposit for other areas/schools not individually listed.
**Excludes approximately $46.9 million of board designated pension funds.
SOURCE: Financial Administration
DATE:
May 4, 2011
48
Total
UNIVERSITY OF VIRGINIA
QUASI-ENDOWMENT ACTIONS
JANUARY 1, 2011 TO MARCH 31, 2011
The quasi-endowment actions listed below were approved by either (1) the Executive Vice President and Chief
Operating Officer, under the following Board of Visitors’ resolutions, or (2) the Vice President and Chief Financial
Officer, under the delegation of authority from the Executive Vice President and Chief Operating Officer:

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
Gilbert Harry Bramhall Merit Scholarship
McIntire School of Commerce Bequest Gifts Quasi-Endowment
President's Fund for Excellence Unrestricted Quasi-Endowment
Research Activities Quasi-Endowment Fund
University Quasi-Endowment Fund (1)
Total Additions from Gifts to Quasi-Endowments
$
100,000.00
18,317.98
164,188.57
250,000.00
526,614.32
$
1,059,120.87
$
7,554.10
129,500.00
69,000.01
138,600.00
48,100.00
1,535.69
1,613.59
5,493.25
4,270.71
5,429.58
6,347.27
5,350.19
4,832.32
7,052.95
2,182.68
4,296.04
1,311.28
Additions from Endowment Income (Capitalizations)
Antrim, Lottie C. Income Capitalization Quasi-Endowment
Arts and Sciences Alumni Council Professorship #3 Quasi-Endowment
Athletics General Operations Quasi-Endowment
Bishko, Julian Eminent Scholar Quasi-Endowment
Burger, Albert Professorship Restricted Quasi-Endowment
Chrysler, W. P. Fund for Engineering Library
Class of 1955 Fund
Class of 1956 Fund
Class of 1957 Fund
Class of 1958 Fund
Class of 1959 Fund
Class of 1960 Fund
Class of 1961 Fund
Class of 1962 Fund
Class of 1963 Fund
Class of 1964 Fund
Class of 1965 Fund
49
Additions from Endowment Income (Capitalizations) (cont.)
Dermatology General Investment Fund
Ern, Ernest H. Professorship Restricted Quasi-Endowment
Hecht, Sidney M. Fellowship in Chemistry
Hecht-Cruachem Chemistry Quasi-Endowment #3
Holton Scholar Fund
Horton, Charles E. Professorship in International Plastic Surgery Quasi-Endowment
Hughes Endowment Income Capitalization Quasi-Endowment
Jordan, Harvey E. Lectureship
Low, Emmet F. and N. Alyce Chair Quasi-Endowment
McConnell, Joseph Professorship in Math Restricted Quasi-Endowment
McIntire Professorship Quasi-Endowment in Economics
McIntire School of Commerce Operations Fund
McIntire, Howard Quasi-Endowment in Neurology
Medical Center Capital Assets Quasi-Endowment (2)
Miller, Mae W. Cancer Research Quasi-Endowment
Moyston Quasi-Endowment for Ophthalmology
Moyston, Vernah Scott Professorship in Ophthalmology Investment Quasi-Endowment
Osher Reentry Scholarship Quasi-Endowment Fund
Plastic Surgery Quasi-Endowment Fund
Radiology Fund Special Diagnostic
Robertson Professorship in Media Studies Quasi-Endowment
Samuels, Bernard Ophthalmology Library Quasi-Endowment
School of Medicine Quasi-Endowment
Souder Family Professorship in Arts and Sciences Restricted Quasi-Endowment
Southwest-Dishner Gift Quasi-Endowment Fund
Taylor, Henry N. Fund
Virginia Quarterly Review - Anonymous
Weedon, Ellen B. Professorship in East Asian Studies Restricted Quasi-Endowment
Total Additions from Endowment Income to Quasi-Endowments
25,805.58
91,600.00
7,264.15
2,225.09
300,000.00
10,026.16
3,399.38
1,182.28
1,014.65
32,300.00
60,000.00
844,881.31
18,717.45
5,600,250.02
5,008.44
20,784.18
3,605.94
16,660.82
15,262.42
3,636.80
175,500.00
2,060.44
26,862.50
61,400.00
10,074.38
267.75
463.04
110,000.00
$
7,892,722.44
$
1,000,000.00
898,758.75
305,575.54
25,000.00
169,512.78
$
2,398,847.07
Divestments
Dean's Adenosine Patent Quasi-Unrestricted Income
McIntire School of Commerce Operations Fund
Miller Center Matching Unrestricted Quasi-Endowment
University Quasi-Endowment Fund
UVAW Athletics Special Gift Restricted Quasi-Endowment
Total Divestments from Quasi-Endowments
50
Notes:
* Quasi-endowment newly established or initially funded since December 31, 2010.
(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.
(2) Per February 7, 2008 BOV resolution, additional amounts up to $300 million can be transferred to this fund
from the depreciation reserve held by the state without further BOV approval.
SOURCE: Financial Administration
DATE:
April 13, 2011
51
UNIVERSITY OF VIRGINIA
SUMMER CONFERENCE RATES REPORT
2011 and 2012
On June 16, 2001, the Board approved the Signatory Authority Policy which delegates the "[e]stablishment of
summer conference rates for housing facilities and for meals, overnight accommodation rates for the Birdwood
Pavilion, and room rates for the International Center" to the "President, the Executive Vice President and Chief
Operating Officer and the Vice President for Finance". Any approved transaction must be reported to the Board of
Visitors at its next meeting following the action.
The rates below have been approved by Yoke San Reynolds, Vice President and Chief Financial Officer,
and are hereby being reported to the Board of Visitors as required.
Summer Conference Rates - Housing
ECONOMY SERVICE
Air Conditioned
Bice/Copeley III & IV/
Faulkner/Lambeth
Per person, per night, double
Per person, per night, single
Gooch/Dillard
Per person, per night, single
Lewis/Hoxton/Language Houses
Per person, per night, double
Per person, per night, single
Alderman/McCormick GA Suites
Per suite, per night rate, single
Cauthen/Woody/Kellogg/Bldgs 1&2
Per person, per night, double
Per person, per night, single
Hereford
Per person, per night, single
Non-Air Conditioned
Alderman/McCormick/Munford/
Gwathmey
Per person, per night, double
Per person, per night, single
Actual
Summer
2010
Approved
Summer
2011
Percent
Increase
2011
Proposed
Summer
2012
Percent
Increase
2012
$26.50
$38.00
$27.00
$39.00
1.9%
2.6%
$28.00
$40.00
3.7%
2.6%
$26.00
$27.00
3.8%
$28.00
3.7%
$26.50
$38.00
$27.00
$39.00
1.9%
2.6%
$28.00
$40.00
3.7%
2.6%
$27.00
$28.00
3.7%
$29.00
3.6%
$26.50
$35.00
$27.00
$36.00
1.9%
2.9%
$28.00
$37.00
3.7%
2.8%
$26.50
$27.00
1.9%
$28.00
3.7%
$20.00
$26.50
$20.00
$26.50
0.0%
0.0%
$21.00
$27.50
5.0%
3.8%
Average Economy Service Increase
2.2%
52
3.4%
PREMIUM SERVICE
Air Conditioned
Bice/Copeley/Faulkner/Lambeth
Per person, per night, double
Per person, per night, single
Brown College
Per person, per night, double
Per person, per night, single
Gooch/Dillard
Per person, per night, single
Lewis/Hoxton/Language Houses
Per person, per night, double
Per person, per night, single
Cauthen/Woody/Kellogg/Bldg 1&2
Per person, per night, double
Per person, per night, single
Hereford
Per person, per night, single
Non-Air Conditioned
Lawn/Range
Per person, per night, single
Actual
Summer
2010
Approved
Summer
2011
Percent
Increase
2011
Proposed
Summer
2012
Percent
Increase
2012
$38.00
$52.50
$39.00
$54.00
2.6%
2.9%
$40.00
$55.00
2.6%
1.9%
$38.00
$52.50
$39.00
$54.00
2.6%
2.9%
$40.00
$55.00
2.6%
1.9%
$41.00
$42.00
2.4%
$43.00
2.4%
$38.00
$52.50
$39.00
$54.00
2.6%
2.9%
$40.00
$55.00
2.6%
1.9%
$38.00
$49.00
$39.00
$50.00
2.6%
2.0%
$40.00
$51.00
2.6%
2.0%
$41.00
$42.00
2.4%
$43.00
2.4%
$41.00
$42.00
2.4%
$43.00
2.4%
Avergage Premium Service Increase
2.6%
2.2%
Average All Services Increase
2.4%
2.7%
GRADUATION HOUSING
Per person, 3 night, double room
rate (does not include Sun brunch)
Actual
Summer
2010
$140.00
53
Approved
Summer
2011
$145.00
Percent
Increase
2011
3.6%
Proposed
Summer
2012
$150.00
Percent
Increase
2012
3.4%
Summer Conference Rates - Dining
SUMMER CASUAL MEAL RATES
Approved
Summer
2008
Approved
Summer
2009
Approved
Summer
2010
$5.00
$6.75
$6.75
$8.00
$8.00
$8.75
$5.50
$7.25
$7.25
$8.50
$8.50
$9.25
$5.50
$7.25
$7.25
$8.50
$8.50
$9.25
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$5.50
$7.25
$7.25
$8.50
$8.50
$9.25
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
$4.75
$6.50
$7.75
$5.25
$7.00
$8.25
$5.25
$7.00
$8.25
$0.00
$0.00
$0.00
$5.25
$7.00
$8.25
0.0%
0.0%
0.0%
$6.50
$7.75
$8.50
$7.00
$8.25
$9.00
$7.00
$8.25
$9.00
$0.00
$0.00
$0.00
$7.00
$8.25
$9.00
0.0%
0.0%
0.0%
Breakfast - Youth
Breakfast - Adult
Lunch - Youth
Lunch - Adult
Dinner - Youth
Dinner - Adult
SUMMER CONFERENCE MEAL RATES
Youth (17 & under)
Breakfast
Lunch
Dinner
Adult
Breakfast
Lunch
Dinner
Proposed
2011 Amt
of Increase
Proposed
Summer
2011
Percent
Increase
Summer Housing and Dining Rates - College at Wise
Actual
Summer
2008
Actual
Summer
2009
Actual
Summer
2010
Proposed
2011 Amt
of Increase
Proposed
Summer
2011
Percent
Increase
SUMMER CONFERENCE MEAL RATES
Per person
Breakfast (M-F)
Lunch (M-F)
Dinner (M-F)
Brunch (Sa-Su)
Dinner (Sa-Su)
Group rate (25 +), per person per day
B/L/D (M-F)
$4.35
$5.85
$7.25
$6.25
$7.50
$4.50
$6.05
$7.50
$6.25
$7.50
$4.75
$6.35
$7.90
$6.35
$7.90
$0.15
$0.20
$0.10
$0.20
$0.10
$4.90
$6.55
$8.00
$6.55
$8.00
3.2%
3.1%
1.3%
3.1%
1.3%
$15.04
$16.90
$17.75
$0.75
$18.50
4.2%
SUMMER CONFERENCE HOUSING
Per person, per night, double occupancy
McCraray Hall
All other halls & houses
$18.00
$22.00
$18.00
$22.00
$19.50
$23.50
$0.00
$0.00
$19.50
$23.50
0.0%
0.0%
54
International Center – Room Rates
Guest lodgings are available for international visitors associated with the University of Virginia. The accommodation goal of the
International Center is to create a small community of visitors from around the world who need short-term lodgings (3-month
maximum stay).
Stays of 16 nights or fewer (per day)
Single occupancy
Double occupancy
Stays of more than 16 nights (per month)
Single, private bath
Double, private bath
Single, shared bath
Double, shared bath
Single “cozy” room
Actual
20010-11
Proposed
2011-12
Proposed
Increase
Percent
Increase
$40.00
$60.00
$40.00
$60.00
$0.00
$0.00
0.00%
0.00%
$750.00
$1,125.00
$650.00
$975.00
$550.00
$750.00
$1,125.00
$650.00
$975.00
$550.00
$0.00
$0.00
$0.00
$0.00
$0.00
0.00%
0.00%
0.00%
0.00%
0.00%
SOURCE: Business Operations
DATE:
April 13, 2011
55
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56
APPENDIX
APPENDIX A
2011-2012 PRATT FUND ALLOCATIONS
ARTS AND SCIENCES — $3,100,000
Biology - The department proposes to allocate $201,876 for
graduate fellowships in 2011-2012. Of this amount, $117,958
will be used to provide full support to two outstanding firstyear graduate students in Biology and augment the fellowship
packages of four President's Fellows. The remaining $83,918
will be allocated to satisfy the department’s membership and to
support two in-state students in the Biomedical Sciences
Graduate Program, an important interschool collaborative effort.
Biology proposes to use $62,532 in Pratt funds to augment the
salaries of the Director and Associate Director of the Mountain
Lake Biological Station. The University has made, and continues
to make, significant investments in the instructional and
research capacity of this Appalachian mountain field research
and teaching facility, which provides summer courses, a Research
Experiences for Undergraduates (REU) program, and hosts
researchers from around the world every summer. These
allocations exceed the $250,000 allocation to Biology by
$14,408. This additional cost will be met by transferring
$14,408 from savings related to purchase of a DNA sequencer with
2010-11 Pratt funds. No equipment funds are requested for 20112012.
Chemistry - The department proposes to allocate $170,000 of the
2011-12 allocation for graduate support, to be used as matching
funds for awards funded by The AES Corporation in support of
outstanding graduate students and for support of the summer
Research Experiences for Undergraduate (REU) program. The
department proposes to use $80,000 for Brooks Pate on the
National Science Foundation (NSF) – Center for Chemistry of the
Universe (CCU) award; for Brent T. Gunnoe on Department of
Education (DOE) award; for James Landers on new initiatives in
microfluidics design and development; for start-up support to
Cameron Mura and Ira Herbst; and for instructional development
to Charles Grisham, David Metcalf, James Demas and Graeme
Gerrans.
Mathematics - The department proposes to allocate $115,391 in
support of the Whyburn Postdoctoral Fellowship program.
Internationally recognized for its excellence, this competitive
program brings three new PhD recipients in mathematics to the
University as faculty instructors for three years of teaching
and research. The request for 2011-2012 is somewhat larger than
1
APPENDIX A
usual because of a one-time, one-year increase in the number of
Whyburn fellows from three to four.
The department proposes to allocate $29,575 in faculty summer
wages for the Director of Graduate Programs, to honor start-up
commitments, for faculty who serve as mentors in the summer REU
program, and for instruction of a summer graduate
preparatory/review course which was well received when piloted
in summer 2010.
The department proposes to spend $5,034 of the 2011-2012
allocation in support of student participants in the Summer 0
and Summer 1 programs which provide entering and rising secondyear graduate students with additional preparation for advanced
level courses and for the general exams in analysis, algebra,
and topology. These programs serve to reduce attrition and
reduce the time required for degree completion.
Physics - The department proposes to use the entire $250,000
allocation for graduate student support, providing fellowship
stipends as well as tuition, fees and insurance for outstanding
graduate students.
New Faculty Start-up Fund – A total of $2,200,000 is requested
by the College to use as components of start-up packages
associated with new hires, some of which are still being
negotiated; for costs sharing on grants and other opportunities
that may arise in the coming year; and for other strategic needs
in building the programs in these four departments. It is
estimated that this funding will be equally split between
equipment, faculty salaries, and fellowships. This $2,200,000
is comprised of a $400,000 reserve managed by the dean; a
previously-approved annual $500,000 distribution to a New
Faculty Start-Up Fund managed by the Executive Vice President
and Provost, and an additional $1,300,000 to this fund. This
reserve, which will be carefully allocated in accordance with
the terms of Mr. Pratt’s will, is critical in the recruitment of
faculty members in biology, chemistry, mathematics, and physics.
SCHOOL OF MEDICINE — $3,800,000
Support and Training of Student Researchers - $480,000 Graduate students and post-doctoral fellows are central to a
successful biomedical research program. A modest institutional
share from the Pratt bequest supplements funds from federal
government training programs and charitable foundations to
attract superlative students. These individuals are critical in
2
APPENDIX A
enhancing the quality of research in the Ph.D. and M.D./Ph.D.
programs at the University. The success of these programs has a
direct impact on the quality of faculty research at the School
of Medicine.
Core Facility Support - $820,000 - Core facilities – including,
but not limited to, the Small Animal Multimodality Imaging Core,
Advanced Microscopy Facility, Biomolecular Research Facility,
Gene Targeting & Transgenic Facility, Biorepository, and the new
BioNMR Spectroscopy Core, provide access to large, expensive
equipment and techniques that otherwise would not be available
or cost-effective to individual investigators. These facilities
operate on a fee-for-service basis and, after development costs
and other expenses, average a cost recovery of 60-80 percent,
with the differential funded by Pratt allocations. These
resources provide a competitive advantage to the University’s
research programs, provide flexibility to acquire emerging
technologies, and are critical to the School of Medicine’s
success in recruitment and retention and its ability to continue
to grow its externally-funded research programs.
The Decade Plan - $2,500,000 - The School of Medicine proposes a
special distribution to retain and recruit outstanding faculty
in the basic medical sciences, the Department of Medicine, and
the Cancer Center. This will be the first of four annual $2.5
million distributions for this purpose.
3
APPENDIX B
Minutes
University of Virginia
Board of Visitors Finance Committee Appointees on Retirement
Administrative Committee
May 24, 2011
3:00 p.m.
Madison Hall Lower Conference Room
Board of Visitors Finance Committee Appointees (via phone):
Helen Dragas and Marvin Gilliam.
Also in Attendance: Leonard Sandridge, Executive Vice President
and Chief Operating Officer; Yoke San Reynolds, Vice President
and Chief Financial Officer and Chair of the Retirement
Administrative Committee (RAC); Susan Carkeek, Vice President
and Chief Human Resource Officer; Barry Schmidt, CAPTRUST
Financial Advisor; Anne Broccoli, Director of Benefits; Megan
Lowe, Assistant Vice President and Chief of Staff to the
Executive Vice President and Chief Operating Officer; and, David
King, Executive Assistant to the Vice President and Chief Human
Resource Officer.
There were five agenda items for this meeting: the annual review
of fund performance, CAPTRUST’s review of the current threevendor arrangement, CAPTRUST’s recommendation, a master
administrator opportunity, and future considerations.
I.
December 31st, 2010 Quarterly Performance Review: Barry
Schmidt provided an overview of the annual report on fund
performance, reminding the appointees that the RAC meets
quarterly with CAPTRUST to monitor fund performance and each
quarter, one of the vendors is invited to the RAC to present on
their participant activity and fund performance. The overall
performance of the fund was in line with a strong market in
2010, with gains in each of the major asset classes as follows:
 S&P 500:
+15.6%
 Mid Cap Stocks:
+25.48%
 Small Cap Stocks:
+26.85%
 International Developed:
+8.21%
 Core Bond:
+6.54%
There are a few individual funds rebounding more slowly than
their peers that are being watched closely; all other funds are
meeting policy guidelines.
1
APPENDIX B
II. CAPTRUST’s Review of Current Three Vendor Arrangement: In
2007, the government issued sweeping changes to 403(b) plans
which increased fiduciary responsibility to the sponsoring
institutions. As these new regulations were fully implemented in
2009, many institutions, including UVa, began to look in more
detail into the overall operation and structure of their
retirement programs and the efficiency (or inefficiency) within
these programs. Changes were implemented in 2007 and 2008 for
UVa that positioned us to be in a favorable position when these
regulations were adopted. These changes included all three
vendors (TIAA-CREF, Fidelity, and Vanguard) adopting the same
investment structure and employees having access to the same
array of funds from any of the three vendors.
The Retirement Administrative Committee then asked our
retirement plan advisor, CAPTRUST, to review the overall program
from a participant and administrative perspective. In
particular, UVa participants have complex choices to make
related to their retirement - choosing one of the three vendors,
then selecting from the various fund options it offers. At the
same time, Vanguard came to UVa with a proposed fee increase.
Based on the way Vanguard prices their business, Vanguard
requested an additional annual fee of $12/participant per plan.
This has resulted in a total fee increase for all employees of
approximately $75,000/year. While CAPTRUST was able to negotiate
delaying implementation of this fee increase for 2010, Vanguard
implemented these fees in 2011.
In late 2009 and 2010, CAPTRUST researched the advantages and
disadvantages of the current three-vendor arrangement. The
major considerations of the CAPTRUST review focused on:
 Savings for participants: Reduce administrative fees and
thereby total expenses, which impacts participant’s rate
of return. Lower expenses can have an impact on
participant’s success in meeting their retirement goals.
 Convenience for participants: Maximize convenience for
participants to enroll and make changes to their
retirement accounts.
 Integration: Create a single portal to simplify the
participant experience as well as streamline the
administration of the plan with a main point of contact
and consolidated reporting. Integration also allows the
retirement plan to be branded as a UVa benefit rather
than the current vendor branding.
 Maximize Choice: Consider participant’s ability to
remain invested with current vendors, family of funds,
2
APPENDIX B

and possibly have the ability to invest across vendors
within the same plan.
No Participant Takeaways: Avoid increasing cost to
participants or making participant interface less
convenient.
III. CAPTRUST’s Recommendation: CAPTRUST made two
recommendations with which the Retirement Administrative
Committee concurred.
1. Given Vanguard’s inability to provide the required
compliance information, the fee increase imposed on
participants, their lack of an effective and consistent
on-site presence, and the ability for Fidelity and TIAACREF to add Vanguard funds on the existing platform,
CAPTRUST recommended migrating the existing Vanguard
assets in each of the plans to Fidelity. This has the
added advantage of simplifying the retirement plan
options for participants while offering the same Vanguard
funds on the Fidelity platform at no additional fees. In
essence, each Vanguard and Fidelity participant would
have the option to invest in both fund structures on the
Fidelity platform. Virtually all funds on Vanguard’s
platform will be re-registered to Fidelity, therefore
eliminating the need to liquidate and purchase the new
fund option. One benefit of this process is Vanguard’s
willingness to offer a lower share class on many of their
funds since they will no longer be responsible for the
recordkeeping of participant accounts. No re-enrollment
is necessary and contributions and investment allocations
will transfer over as-is to Fidelity from Vanguard with
no participant involvement. It was decided for the
reasons listed above, to move forward with the
elimination of Vanguard as a vendor with a tentative
effective date of October 1, 2011. During this review
process CAPTRUST was able to negotiate, through a
competitive process, a combined savings of almost
$500,000/year for participants currently invested in
Fidelity and Vanguard. At the same time, both Fidelity
and TIAA-CREF have committed to increased onsite presence
in order for participants to meet individually with
representatives from both organizations.
2. TIAA-CREF was also able to offer a decrease in fees
through a proposal to migrate current TIAA-CREF mutual
funds to a lower institutional share class. This will
result in savings to participants of more than $80,000.
3
APPENDIX B
IV. Master Administrator Opportunity: Fidelity has offered to
provide master record keeper services, acting as the UVa ―Master
Administrator‖ with TIAA-CREF as an additional vendor. While
there are a number of advantages to considering one master
administrator, the Retirement Administrative Committee concurred
with the recommendation to delay that implementation for now.
Some of the advantages of one master administrator include a
single portal for participants, enhanced reporting tools, as
well as administrative efficiencies gained by having one gateway
to all retirement activities. It was decided that it would be
helpful to first manage the conversion of Vanguard funds to
Fidelity and monitor the process as it unfolds. Additionally,
the Benefits Office is preparing to implement an advanced
benefits module in the Integrated System. It may be a more
efficient use of resources to align the move to a master
administrator to coincide with these internal systems
enhancements. Research is just now beginning on the
functionality and impact of that systems upgrade. The benefit
systems implementation is currently slated for late 2012 but we
will know more about the capabilities and enhancements by fall
2011. It was also agreed that both vendors should be
reevaluated as a potential master administrator at that time, as
experience and offerings may be more robust after more time has
elapsed.
V.
Future Considerations: Other items to consider included
further consolidation of similar investment vehicles where
efficiencies to benefit the participants are warranted.
The meeting was adjourned at 3:45 p.m.
4