Multi-Year Financial Plan
Academic Division
FY2015-16 through FY2021-22
As of March 23, 2015
1
Multi-Year Financial Plan
• The accompanying projection has been prepared for the use of the
Board of Visitors and administration to guide the University of
Virginia in long-term financial planning.
• This forecast is based on best current views of future projections;
actual size and pace of investments, as well as returns, may vary.
There will usually be differences between the forecasted and actual
results, because events and circumstances frequently do not occur
as expected, and those differences may be material.
• We will update this set of long-term projections with the 2015-16
operating budget proposal, providing an opportunity to reassess
projected sources and uses, based on actuals, and recalibrate
investments, as needed.
• The Six-Year Plan submitted to the State will be aligned with the
multi-year financial plan and considered by the Board at its
September meeting.
As of March 23, 2015
2
Strategic Priorities
• Amounts shown for Generational Faculty Turnover and Cornerstone
Plan are the same as was presented to the Board of Visitors in
November 2014.
• Timing of expenditures for the Generational Faculty Turnover and
Cornerstone Plan may vary from the current plan, but will be presented
to the Board each year as part of the annual operating budget process.
• Model assumes sufficient investment income from operating fund
balances to address strategic investment requirements.
• The Managerial Reporting project is designed to improve managerial
data, reporting, and decision making tools, to facilitate strategic
planning at both the University and unit levels.
• Identified sources in the forecast period include the estimated
incremental benefit of strategic philanthropy arising as a result of the
Cornerstone Plan and related development efforts.
As of March 23, 2015
3
Multi-Year Financial Plan Assumptions: Sources
Category
Assumption
Inflation
• 2.5% (modified HEPI)
Enrollment
• BOV approved, no growth after FY17-18
Undergraduate Tuition
• After FY15-16, increase by inflation + 1% (equivalent to 3.5%); assumes no extraordinary
General Assembly actions which require institutional funding to implement. The one exception
is in FY18-19, assumes 4.65% increase to fund planned state-mandated VRS rate increase.
Graduate, Professional
School Tuition, and
Special programs
• Grad and SOM tuition: FY15-16, 0.2-3.8% annual increase; average 3.5% growth thereafter
• Law & Darden tuition: FY15-16, 3%-6% annual increase; 3% annual growth thereafter. (Selfsufficiency status is maintained.)
State Appropriations
• FY15-16 reflects state appropriation approved by General Assembly
• Increases will fund state share of authorized salary and benefit changes
Research Funds
• Federal funding for grants and contracts remains at current rate
• Federal F&A rate remains at 58%
Endowment Distribution
• 40 basis point spending increase from 4.22% to 4.62% balances market risk and stays within
BOV-approved band
• Assumes 7.5% rate of return
Gifts
• Expected 2.5% annual growth resulting from alignment with the Cornerstone Plan
• Assumes annual new gifts to endowment of $25 million
Other
• Auxiliary Enterprises Revenue: annual growth rate of 2.5%
• $10 million per year in SOM/Medical Center gainsharing
As of March 23, 2015
4
Multi-Year Financial Plan Assumptions: Uses
Category
Assumption
T&R Faculty Salary and Benefits
•
•
•
•
Annual merit pool of 3%
Base adjusted for anticipated Resignations/Tenure Denial/Retirements
Increases in research-funded salaries to come from research funds
Fringe rate at 27.5% of salary
Staff/A&P Faculty Salary and
Benefits
•
•
•
•
•
No increase in headcount
University staff and A&P: annual merit pool of 3% from 2015-22
Classified staff: 2% increase
Increases in research funded salaries to come from research funds
Fringe rate at 38.9% of salary
Wage and Other Employees
• No increase in headcount
• Annual fringe rate between 6%-7%
Other Than Personnel Services
• Annual increase at inflation rate of 2.0%
Transfers to Debt Service, Capital,
and Reserves
• No increase
Savings from Organizational
Excellence
• $16-23 million/year; targeted goal of $150 million over FY16-22, including
reallocations necessary to absorb annual increases in OTPS
Risks Considered
•
•
•
•
•
•
Unexpected revenue cycles
Ongoing declines in state revenues and mandated cost contributions
Changes in federal research support
Market corrections
General economic downturn, rising interest, and hyper inflation
Elimination of Perkins Loans ($3.5 million annual decrease)
Safety, Student Counseling &
Compliance Improvements
•
Increase of $4.4 million in FY16 and inflation rate of 2.5% thereafter, as discussed
with Finance Committee
As of March 23, 2015
5
Multi-Year Financial Plan Projection
Revised
Budget
FY14-15
Actual
FY13-14
(Baseline Tuition : BOV approved policies)
(All numbers are in $ million)
PROJECTIONS
FY15-16
FY16-17
FY17-18
FY18-19
FY19-20
FY21-22
FY20-21
BASE OPERATIONS
SOURCES
$
253.05
17.79
126.23
96.74
493.81
$
236.56
16.28
123.96
95.68
472.49
State Appropriations
Additional State Funds for Salary and Associated Fringe Increases, VRS
Research Funds
Endowment Distribution and Fee
Gifts
Incremental Benefit from Strategic Philanthropy
Sales, Investment, Other, and Cash Balances
145.71
144.82
282.24
159.79
133.24
284.48
157.13
127.71
Net Undergraduate Tuition and E&G Fees
Net Graduate Tuition and E&G Fees
Net Professional Tuition and E&G Fees
Net Special Programs Tuition and E&G Fees
Net Tuition and E&G Fees
Total Operating Sources of Funds
YoY growth
$
$
269.52
18.65
130.02
101.56
519.74
$
150.70
280.89
19.73
133.92
107.97
542.52
$
293.93
20.74
137.94
113.18
565.79
$
301.17
21.65
142.08
118.58
583.47
$
150.70
4.65
287.74
172.46
134.17
211.98
1,504.22 $
2.7%
150.70
9.07
288.55
176.77
137.53
217.03
1,545.44 $
2.7%
150.70
14.21
289.14
181.19
140.96
5.00
222.20
1,586.89 $
2.7%
(472.11) $
(408.97)
(85.71)
(966.79)
226.41
1,419.88 $
4.9%
222.72
1,430.67 $
0.8%
286.07
168.25
130.90
209.48
1,465.15 $
2.4%
(394.55) $
(323.64)
(96.26)
(814.45)
(427.23) $
(358.82)
(79.13)
(865.19)
(437.92) $
(376.91)
(80.91)
(895.75)
(448.34) $
(388.09)
(82.61)
(919.04)
(460.96) $
(396.03)
(84.11)
(941.10)
(918.97)
(106.29)
(58.58)
(942.79)
(115.74)
(58.58)
16.72
17.13
544.99
(962.25)
(127.15)
(58.58)
20.42
17.13
558.61
(982.10)
(137.38)
(58.58)
21.58
17.13
572.58
307.51
22.60
146.34
124.16
600.61
$
150.70
18.76
289.74
185.72
144.49
15.00
227.51
1,632.52 $
2.9%
314.61
23.43
150.73
129.94
618.70
$
150.70
23.60
290.33
190.36
148.10
20.00
232.94
1,674.74 $
2.6%
322.07
24.25
155.25
135.91
637.48
150.70
28.63
290.92
195.12
151.80
30.00
238.52
1,723.18
2.9%
USES
Faculty Salaries & Benefits
$
Staff Salaries & Benefits
Wages , Adjuncts , Overtim e, GTA/GRAs , and Other
Personnel
(1,001.09)
(111.06)
(115.35)
Total Other Than Personal Services
Financial Aid
Transfers to Debt Service, Capital, and Reserves
Savings from Organizational Excellence
Other Central Services
Recoveries from Internal Service Providers
18.97
678.83
17.13
531.69
(482.99) $
(494.96) $
(507.59)
(419.20)
(429.68)
(440.42)
(87.34)
(89.09)
(90.88)
(989.53)
(1,013.73)
(1,038.88)
(1,026.81)
(158.62)
(58.58)
23.43
17.13
601.56
(1,003.44)
(147.82)
(58.58)
23.25
17.13
586.89
(1,050.64)
(169.61)
(58.58)
23.63
17.13
616.60
(1,074.96)
(180.93)
(58.58)
23.83
17.13
632.02
Total Operating Uses of Funds
YoY growth
(35.62)
(37.83)
(38.04)
(40.26)
(20.56)
(23.26)
(31.02)
(33.22)
(35.41)
$ (1,364.71) $ (1,423.46) $ (1,465.06) $ (1,504.07) $ (1,543.28) $ (1,584.98) $ (1,629.24) $ (1,673.25) $ (1,720.64)
2.9%
4.3%
2.9%
2.7%
2.6%
2.7%
2.8%
2.7%
2.8%
Baseline Operations: Sources over Uses
$
All Other Uses
55.17
$
7.21
$
0.09
$
0.15
$
2.16
$
1.91
$
3.28
$
1.49
$
2.54
STRATEGIC PRIORITIES
USES
Cornerstone Plan
Generational Faculty Turnover
Managerial Reporting One-time
TOTAL STRATEGIC INVESTMENT USES
SOURCES
Earnings on operating investments
Net Strategic Investments
As of March 23, 2015
$
$
$
$
(17.37) $
(40.89)
(13.00)
(71.26) $
71.26
-
$
$
(24.88) $
(47.92)
(7.00)
(79.80) $
79.80
-
$
$
(26.45) $
(49.13)
(6.00)
(81.58) $
81.58
-
$
$
(25.45) $
(51.91)
(3.00)
(80.37) $
80.37
-
$
$
(23.83) $
(50.30)
(74.13) $
74.13
-
$
$
(22.10) $
(47.58)
(69.68) $
69.68
-
$
$
(22.65)
(39.42)
(62.07)
62.07
-
6