UNIVERSITY OF VIRGINIA
BOARD OF VISITORS
MEETING OF THE
FINANCE COMMITTEE
WITH FULL BOARD
JUNE 12, 2015
FINANCE COMMITTEE WITH FULL BOARD
Friday, June 12, 2015
9:15 – 11:15 a.m.
Auditorium of the Albert & Shirley Small
Special Collections Library, Harrison Institute
Committee Members:
Victoria D. Harker, Chair
John A. Griffin, Vice Chair
Frank B. Atkinson
L.D. Britt, M.D.
Kevin J. Fay
John G. Macfarlane III
John L. Nau III
George Keith Martin, Ex-officio
Daniel M. Meyers, Consulting Member
Raymond C. Scheppach, Faculty
Consulting Member
AGENDA
I.
II.
PAGE
CONSENT AGENDA (Mr. Hogan)
A.
2015-2016 School of Continuing and Professional
1
Studies Tuition, Required Fees, and Other Charges
B.
Veterans Access, Choice and Accountability Act of 2014
1
C.
Property Disposition – Luttrell Estate
3
ACTION ITEMS (Mr. Hogan)
A.
2015-2016 Operating Budget (Mr. Hogan to introduce Ms.
5
Colette Sheehy and Mr. Larry L. Fitzgerald; Mr. Hogan,
Ms. Sheehy, and Mr. Fitzgerald to report)
1.
Academic Division
2.
Pratt Fund
3.
Annual Renovation and Infrastructure Plan
4.
The University of Virginia’s College at Wise
5.
Medical Center and Transitional Care Hospital
B.
Multi-Year Capital Program Update, 2016-2022
12
III. REPORTS BY THE EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING
OFFICER (Mr. Hogan)
A.
Six-Year Plan (Mr. Hogan to introduce Ms. Teresa A.
Sullivan; President Sullivan to present)
B.
Endowment Report: Market Value and Performance as
of March 31, 2015 (Written)
C.
Academic Division Financial Report as of March 31,
2015 (Written)
D.
Defined Contribution Retirement Plan: Retirement
Administrative Committee (Written)
16
17
35
42
PAGE
E.
F.
G.
H.
IV.
Endowment/Long-Term Investments, Including Related
Foundations as of March 31, 2015 (Written)
Quasi-Endowment Actions (Written)
Write-off of Bad Debts for Non-Patient Services,
Fiscal Year 2015 (Written)
2015 Summer Conference Rates (Written)
APPENDIX
A
2015-2016 Pratt Fund Allocations
B.
Multi-Year Major Capital Projects Plan
45
46
48
49
A1
B1
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS CONSENT AGENDA
I.A.
2015-2016 SCHOOL OF CONTINUING AND PROFESSIONAL STUDIES
TUITION, REQUIRED FEES, AND OTHER CHARGES
At the March 2015 meeting, the Board of Visitors approved
the 2015-2016 tuition and required fees for all undergraduate,
graduate, professional, and special programs. The rates for
non-Virginian students in the School of Continuing and
Professional Studies were recorded incorrectly in the resolution
approved by the Board. The resolution that follows corrects
this error and reflects the accurate rates for non-Virginian
students.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
I.B. VETERANS ACCESS, CHOICE AND ACCOUNTABILITY ACT OF 2014
The Veterans Access, Choice, and Accountability Act of 2014
provides greater access to higher education by granting in-state
tuition rates to certain veterans and their eligible dependent
family members. The U.S. Veteran’s Administration requires that
all public institutions of higher education verify their intent
to comply with this law. Although an institution cannot be
compelled to charge in-state tuition and fees to veterans and
their eligible dependent family members, only those institutions
that comply with the Act will be allowed to continue
participation in veterans’ benefits programs, including the
1
Post-9/11 GI Bill, the Montgomery GI Bill, and other scholarship
programs.
As more veterans and their dependents enroll at the
University, it is increasingly important that the University
continue to provide an affordable, high-quality educational
experience for all students, particularly those who have served
or are dependents of those who have served in the military.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
VETERANS ACCESS, CHOICE AND ACCOUNTABILITY ACT OF 2014
WHEREAS, The University of Virginia has the authority to
set tuition and fee charges; and
WHEREAS, 38 U.S.C. 3679(c), the Veterans Access, Choice and
Accountability Act of 2014 ("the Act") requires the U.S.
Department of Veterans Affairs to disapprove programs of
education for payment of benefits under the Post-9/11 GI Bill
and Montgomery GI Bill-Active Duty at public institutions of
higher education if such institutions charge qualifying veterans
and other qualified individuals ("covered individuals") tuition
and fees in excess of the rate for in-state students for terms
beginning after July 1, 2015; and
WHEREAS, “covered individuals” under the Act include:
A veteran who lives in Virginia, regardless of formal state
of residence or domicile, and enrolls in this institution
within three years of discharge from a period of active
duty service of 90 days or more using benefits under the
Post-9/11 GI Bill and Montgomery GI Bill-Active Duty.
Anyone using transferred benefits under the Post-9/11 GI
Bill and Montgomery GI Bill-Active Duty who lives in
Virginia, regardless of formal state of residence or
domicile, and enrolls in this institution within three
years of the transferor's discharge from a period of active
duty service of 90 days or more.
Anyone using benefits under the Marine Gunnery Sergeant
John David Fry Scholarship who lives in Virginia,
regardless of formal state of residence or domicile, and
enrolls in this institution within three years of the
2
Service member's death in the line of duty following a
period of active duty service of 90 days or more; and
Anyone described above while he or she remains continuously
enrolled (other than during regularly scheduled breaks
between courses, semesters, or terms) at the same school.
The person so described must have enrolled in the school
prior to the expiration of the three year period following
discharge, release, or death described above and must be
using educational benefits under either chapter 30 or
chapter 33, of title 38, United States Code.
WHEREAS, pursuant to Virginia Code § 23-7.4:2 (H), all
veterans residing within the Commonwealth shall be eligible for
in-state tuition charges;
RESOLVED, the tuition and fee rate for a course of
education pursued by “covered individuals” shall be equal to the
tuition and fee rate for that course of education charged to instate students; and
RESOLVED FURTHER, the President is delegated the authority
to attest to (1) this action by the Board of Visitors; and (2)
that this institution charges tuition and fees to uniformed
services veterans and other qualified individuals covered under
38 U.S.C. 3679(c) at a rate equal to in-state tuition and fees
for that course of education.
C.
PROPERTY DISPOSITION – LUTTRELL ESTATE
BACKGROUND: The Last Will and Testament of Deward H. Luttrell,
Jr. named The Rector and Visitors of the University of Virginia
as the sole beneficiary of his estate. Mr. Luttrell’s expressed
desire was to establish an annual scholarship, in a sum to be
determined by the University, to be awarded annually to one or
more ROTC cadets without depleting the principal.
DISCUSSION: The estate included five parcels of land in
Tishomingo County, Mississippi. T. K. Moffett, executor of the
Luttrell estate, has obtained these offers from five purchasers:
Parcel
Parcel
Parcel
Parcel
Parcel
1
2
3
4
5
–
–
–
–
–
1.19 acres, gross sale price $3,500
2.17 acres, gross sale price $36,500
10.45 acres, gross sale price $21,500
51.06 acres, gross sale price $69,000
82.9 acres, gross sale price $160,000
3
The executor believes these offers to be fair and
reasonable considering the market in that locality and the
condition of the property.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
DISPOSITION OF REAL PROPERTY – LUTTRELL ESTATE
WHEREAS, The Rector and Visitors of the University of
Virginia is the sole beneficiary of the Estate of Deward H.
Luttrell, Jr., and is the devisee of five parcels of land in
Tishomingo County, Mississippi, totaling approximately 147.72
acres; and
WHEREAS, the executor of Mr. Luttrell’s estate has obtained
five contracts to sell the parcels for a cumulative gross sales
price of $290,500; and
WHEREAS, the Board of Visitors finds it to be in the best
interest of the University to sell the Property;
RESOLVED, the Board of Visitors approves the sale of the
Luttrell Estate Property and the contracts of sale and purchase
described herein, but, should any such contract fail to close,
then the Board hereby authorizes the sale of such parcel or
parcels pursuant to terms and conditions that the Executive Vice
President and Chief Operating Officer may deem acceptable; and
RESOLVED FURTHER, the Executive Vice President and Chief
Operating Officer is authorized, on behalf of the University, to
approve and execute agreements, deeds, affidavits, and other
documents related to the sale of the subject real estate, to
incur reasonable and customary expenses, and to take such other
actions as deemed necessary and appropriate to consummate the
sale of the Property; and
RESOLVED FURTHER, all prior acts performed by the Executive
Vice President and Chief Operating Officer, and other
officers and agents of the University, in connection with such
sale of the Property, are in all respects approved, ratified,
and confirmed.
4
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
II.A.
2015-2016 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, the
Medical Center, and the Transitional Care Hospital. At its
March meeting, the Board of Visitors approved tuition, mandatory
fees, housing, and dining rates for 2015-2016, which comprise
significant revenue sources for the Academic Division operating
budget. During this fiscal year, the Board of Visitors has
received reports on the University’s budget requests to the
state and the preliminary budget assumptions for the 2015-2016
operating budget.
DISCUSSION: The 2015-2016 expenditure budget proposal for all
divisions of the University totals $3.07 billion, an 8.7%
increase compared with the 2014-2015 budget. Of this amount,
$1.52 billion relates to the Academic Division, $1.51 billion to
the Medical Center, and $41.3 million to The University of
Virginia's College at Wise.
Academic Division
The proposed Academic Division operating expenditure budget
will increase by 7.8% to $1.52 billion. The base operating
budget before strategic priorities will increase 3.6% to $1.47
billion. Funding the University’s Cornerstone Plan, start-up
packages for new Science, Technology, Engineering, and
Mathematics (STEM) faculty, the continued development of the
Managerial Reporting System, and the transformation of Human
Resources service delivery will require additional investments
of $44.9 million. Expenditure increases are partially offset by
operating savings. In 2015-2016, net tuition and fees (34.2%)
provides the greatest proportion of the operating budget,
followed by research grants and contracts (19.0%); sales and
services and investment income (16.5%); endowment distributions
(11.7%); state general funds (9.8%); and gifts (8.8%).
Personnel costs comprise 59.4% of total operating
expenditures in the Academic Division. The proposed budget
5
provides for an average 4.5% merit-based faculty salary pool,
which incorporates the 2% increase authorized in the state
budget. The remaining 2.5% will be funded through
reallocations. The state also authorized a 2% across-the-board
salary increase for classified staff employees who meet
expectations on their most recent performance evaluation
together with a compression adjustment of $65 per year of
service. For University staff, the proposed budget includes a
1% market adjustment and the state-authorized 2% merit-based
salary pool.
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
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% of the
original principal assigned to the College of Arts & Sciences
and 50% assigned to the School of Medicine.
The market value of the total Pratt endowment is $142.3
million as of March 31, 2015. In 2015-2016, a distribution of
$3.6 million from the College of Arts & Sciences endowment and
$7.8 million from the School of Medicine endowment, for a total
of $11.4 million, is recommended. Additionally, the College of
Arts & Sciences plans to use in 2015-2016 approximately $274,153
in funds that were allocated in 2014-2015 but will remain
uncommitted by the end of fiscal year 2014-2015. Committees in
each of the schools developed the proposal to spend the
distribution, which is included as an appendix to this document.
Each dean, the Vice President for Research, the Executive
Vice President and Provost, and the President are required to
indicate their support of the planned Pratt Fund allocations.
The following table shows aggregate allocations; the appendix
describes the specific allocations.
6
2015-2016 Pratt Fund Allocation
Annual Renovation and Infrastructure Plan (ARIP)
Under Restructuring, the Board of Visitors has delegated
authority to approve all capital projects (acquisitions, capital
leases, or new construction or renovation projects costing more
than $2 million and impacting more than 5,000 gross square feet)
funded with non-general funds. To facilitate the consideration
of certain projects with no exterior impact, the Board of
Visitors considers the Annual Renovation and Infrastructure Plan
each year.
Below is a detailed list of renovation and infrastructure
projects for the Academic Division and the Medical Center, each
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.
7
8
The University of Virginia’s College at Wise
The proposed operating expenditure budget for The
University of Virginia's College at Wise will decrease by $1.29
million, or 3.0%, in 2015-2016. State general funds are
projected to increase by 2.6% as compared to the projected 20142015 budget; this increase includes funding for additional
operational support and faculty salary increases. Net tuition
revenues are projected to increase by 2.7%, as a result of
projected increased summer school enrollment. Grants and
contracts will decrease by 28.9%. Sales and services, including
auxiliary sales and services revenues, will decrease by 11.6%
from the projected budget as a result of a decrease in the
approved Housing and Board Plan for 2015-2016. Key strategic
priorities addressed through this budget cycle are enrollment
growth, improving retention and graduation rates, supporting
federal mandates, outreach, addressing High Need Degrees: STEMH, improving summer programs, and undergraduate research.
Medical Center
Medical Center operating revenues, including Culpeper
Regional Hospital, in 2015-2016 are expected to total $1.5
billion, up from $1.4 billion projected for 2014-2015.
Including activity at Culpeper Regional Hospital provides
another $35 million in revenue. The Medical Center operating
expenditure budget (excluding Culpeper) is proposed to increase
by $98 million, or 7.4%, to $1.4 billion during 2015-2016. The
operating margin is expected to be $52 million or 3.5%.
The budget proposes an aggregate rate increase of 5.0%,
which is commensurate with rate increases that will generally be
implemented in the hospital industry, and enhanced personnel
compensation packages. The pay-for-performance pool has been
established at $9.4 million, which includes the impact on
benefit costs and is based on a 3.0% salary adjustment with an
October implementation date. Other salary adjustments, such as
market and compensation design adjustments, total $5.4 million,
including the impact on benefit costs. The Transitional Care
Hospital’s operating expenditure ($22.0 million) and capital
($289,950) budgets for 2015-2016 are consolidated with the
Medical Center’s budget.
For the Medical Center, the 2015-2016 operating plan was
developed through a priority-based budget process to align
resource allocations with the overarching Health System
9
strategic goal to become the safest health system to provide and
receive care with zero harm to providers and patients. The
operating plan was developed while considering the challenges of
providing patient care, teaching, and research services in an
increasingly changing health care industry. The full impact of
the Affordable Care Act will not be realized for a number of
years; however, many of its provisions have already been
effectuated. The result will be decreased reimbursements from
government payors and an industry-wide erosion of pricing power
with private payors. Nationally and locally hospital admissions
continue to decline, shifting to growth in demand for outpatient
services. At the same time, there is continued upward pressure
on the costs associated with providing quality patient care due to increases in medical supply, pharmaceutical and medical
device expenses - and the shortage of health care workers
presents further financial and operational challenges. These
pressures require proactive fiscal planning now to ensure
meeting the mission of the Health System in the future.
From the operating margin and from the capital reinvestment
plan, the Medical Center has set aside a total of $52 million
for the Strategic Investment Pool to be used to fund future
proposals that best align the allocation of resources with
Medical Center strategies and goals.
ACTION REQUIRED: Approval by the Finance Committee and by the
Board of Visitors
2015-2016 OPERATING BUDGET AND ANNUAL RENOVATION AND
INFRASTRUCTURE PLAN FOR THE ACADEMIC DIVISION
RESOLVED, the 2015-2016 Operating Budget and Annual
Renovation and Infrastructure Plan for the Academic Division are
approved as recommended by the President and the Chief Operating
Officer.
PRATT FUND DISTRIBUTION FOR 2015-2016
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 $11,339,000 for 20152016, are suggested by the department chairs and recommended by
10
the dean of each school; the disbursement of each allotment will
be authorized by the Executive Vice President and Provost. 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.
2015-2016 OPERATING BUDGET FOR THE UNIVERSITY OF VIRGINIA'S
COLLEGE AT WISE
RESOLVED, the 2015-2016 Operating Budget for The University
of Virginia’s College at Wise is approved as recommended by the
President and the Chief Operating Officer.
2015-2016 OPERATING AND CAPITAL BUDGETS AND ANNUAL RENOVATION
AND INFRASTRUCTURE PLAN FOR THE UNIVERSITY OF VIRGINIA MEDICAL
CENTER
RESOLVED, the 2015-2016 Operating and Capital Budgets and
the Annual Renovation and Infrastructure Plan for the University
of Virginia Medical Center are approved as recommended by the
President, the Chief Operating Officer, and the Medical Center
Operating Board.
2015-2016 OPERATING AND CAPITAL BUDGETS FOR THE UNIVERSITY OF
VIRGINIA TRANSITIONAL CARE HOSPITAL
RESOLVED, the 2015-2016 Operating and Capital Budgets for
the University of Virginia Transitional Care Hospital, presented
as a component of the Medical Center Operating Budget, are
approved as recommended by the President, Chief Operating
Officer, and the Medical Center Operating Board.
11
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
II.B. Multi-Year Capital Program Update,
2016-2022
BACKGROUND: The University has a Multi-Year Major Capital
Program (Capital Plan), consisting of capital projects
authorized by the Board of Visitors. The University updates the
Capital Plan to identify new projects and make necessary
revisions to existing projects in the plan. The Capital Plan
was last approved by the Board of Visitors in April 2013. Since
that time, any additions to the Capital Plan have come before
the Board for approval. The current Capital Plan is reported
routinely in the Miscellaneous Buildings and Grounds Reports.
The full update for projects expected through fiscal year
2022 will be used as a planning tool and as support for state
capital project funding priorities. The Capital Plan
categorizes the projects into the near term (expected to be
initiated by 2018) and long term (expected to begin after 2018).
Any projects in the long-term view that are accelerated to begin
earlier than anticipated will be brought back to the Finance
Committee for a full review of the financial plan. Capital
project requests for general funds will be submitted to the
Governor in mid-June; the Governor’s staff will evaluate the
University’s request and make recommendations in the Governor’s
2016-2018 budget proposal.
DISCUSSION: The proposed Multi-Year Capital Program (2016-22),
found in Appendix B, updates the previously approved plan with
current cost estimates, adds new projects, and removes projects
no longer planned within the next six years. New projects
submitted for consideration include:
12
Division
Near or Long
Term
Academic
Near
Academic
Near
Academic
Near
Med Center
Med Center
Near
Near
Med Center
Near
Wise
Near
Wise
Wise
Wise
Long
Long
Long
Wise
Long
Project
McCormick Road Utility Tunnel (formerly
authorized as part of the Annual
Renovation and Infrastructure Program)
Ductbank for Dominion Virginia Power-UVa
Substation Interconnection
Laboratory Renovations for New Faculty
Hires
Medical Center Data Center
545 Ray C. Hunt Drive Renovation
Emily Couric Clinical Cancer Center 5th
Floor Fit-Out
Campus Welcome Center/Public Safety
Facility
Bowers-Sturgill Renovation
Darden Hall Renovation
Zehmer Hall Renovation
Sandridge Science Center Lab Wing
Renovation
Detailed project descriptions for both new and resubmitted
projects can be found in Appendix B. The University’s senior
management has reviewed the preliminary financial plans for each
of the near term projects and found them acceptable. The
financial plan reviews included private funding assessments and
strategies, the repayment of debt service, and required funding
of incremental operating and maintenance costs. As reflected in
the table in Appendix B, some proposed projects are dependent
upon external fund sources (state general funds, private
fundraising, or grants); if these funds are not forthcoming, the
projects will not proceed unless other means of funding can be
identified. The maintenance reserve project is a request made
to the state each biennium to address deferred maintenance items
in Educational and General buildings.
There are often projects being studied that are not ready
to be brought before the Committee for approval, but we want to
make sure the committee members are aware of the work being
done. Some have undergone preliminary planning and are at a
stage where fundraising needs to take place before any further
action is taken. Summaries of five such projects are included
in Appendix B:
•
The Frank Batten School of Leadership and Public
Policy
13
•
•
•
•
The
The
The
The
McIntire School of Commerce
Center for Politics
Elson Student Health Center
Football Operations Center
Overall Debt Assessment
The University’s Treasury Department has conducted an
assessment to evaluate the impact of projects to be debt-funded
on the University’s key debt ratios as outlined in the Board of
Visitors approved debt policy. For projects expected to begin
by 2018, Treasury concluded there is sufficient capacity for the
$26.76 million debt required, based on the historical rate of
capital draws.
Should there be an acceleration of the rate at which draws
occur, the debt capacity analysis will be updated. Treasury
will conduct a project-specific creditworthiness check prior to
initiating debt for any project. By accepting the Treasury
Department’s assessment, the Board of Visitors does not
authorize the issuance of debt or any other long-term financial
obligation; rather, the Board of Visitors approves the inclusion
of these debt-funded projects as a part of the update of the
Multi-Year Capital Program.
Overall Private Funding Assessment
The University’s Senior Vice President for Advancement has
conducted an assessment of each program sponsor’s ability to
meet the philanthropic requirements as outlined in the project
financial plan. For projects expected to begin by 2018, gifts
are either in-hand, have written enforceable pledges, or remain
to be raised. It is the University’s assessment that the total
private funding component of $83.58 million sought for new
projects proposed in the near term, while perhaps a stretch goal
for some project sponsors, is consistent with current private
fundraising objectives and opportunities.
It is the University’s policy that the design phase of a
project may begin only after design funding is in-hand in a
University account. Further, the construction phase for giftfunded projects will begin only if: (1) 50% of philanthropy,
valued on a present value basis, is received and deposited into
a University account with the remaining 50% committed via
written enforceable pledges; and (2) 100% of the written
14
enforceable pledges will be collected prior to the project’s
completion, or the project sponsor is prepared to use short-term
financing to bridge cash collections of pledges.
ACTION REQUIRED: Approval by the Buildings and Grounds
Committee, the Finance Committee, and by the Board of Visitors
UPDATE OF THE UNIVERSITY’S MULTI-YEAR CAPITAL PROGRAM FOR FISCAL
YEARS 2016-2022
WHEREAS, it is important for the University to set forth
its capital needs to the Commonwealth for full consideration;
and
WHEREAS, the Board of Visitors supports the raising of
private funds for high priority capital projects; and
WHEREAS, the Executive Vice President and Chief Operating
Officer will confirm that appropriate funding is in place before
any project commences construction;
RESOLVED, the update of the Multi-Year Capital Program for
fiscal years 2016-22 is approved; and
RESOLVED FURTHER, the financial plans for the new capital
outlay projects expected to begin by 2018 in the update of the
Multi-Year Capital Program are complete, and are approved.
15
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.A.
ACTION REQUIRED:
None
Six-Year Plan
BACKGROUND: Pursuant to the Higher Education Opportunity Act of
2011 (HEOA), in odd-numbered years each public institution of
higher education must develop, adopt, and submit a six-year plan
addressing the institution’s academic, financial, and enrollment
plans. The initial draft of the 2016-22 Six-Year Plan is due to
the State Council of Higher Education for Virginia (SCHEV) on
July 1. In August, President Sullivan, along with members of the
senior leadership team, will meet with the Director of SCHEV, the
Secretaries of Education and Finance, the Director of the
Department of Planning and Budget, and the Staff Directors of the
House Appropriation and Senate Finance Committees to discuss the
University’s plan. As part of the process, written comments will
be provided to the University by the State. The University will
respond to these comments in the final Plan, which will be
brought before the Board of Visitors in September for
consideration before being submitted to the State by October 1.
DISCUSSION: President Sullivan will report on the University’s
planned strategies for the 2016-22 Six-Year Plan.
16
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.B. Endowment Report: Market Value and
Performance as of March 31, 2015 (Written Report)
ACTION REQUIRED:
None
BACKGROUND: The University of Virginia Investment Management
Company (UVIMCO) provides investment management services to the
Rector and Visitors of the University of Virginia and its
related foundations. Assets deposited in UVIMCO are held in the
custody and control of UVIMCO on behalf of the University and
Foundations within a long-term, co-mingled investment pool.
UVIMCO’s primary objective in managing the pool is to
maximize long-term real return commensurate with the risk
tolerance of the University. To achieve this objective, UVIMCO
actively manages the pool in an attempt to achieve returns that
consistently exceed the returns on a passively managed benchmark
with similar asset allocation and risk. Recognizing that the
University must attract outstanding students, faculty, and staff
and provide them appropriate resources, UVIMCO attempts to
manage pool assets to provide long-term real returns that
compare favorably with the returns of endowments of other
outstanding schools. UVIMCO does not set spending rates.
UVIMCO communicates the pool’s risk and return estimates to the
University and foundations for their consideration in setting
spending rates.
DISCUSSION:
The March 31, 2015 report follows:
Quarter-End March 2015
SUMMARY
The following commentary summarizes the market environment
for the quarter ended March 31, 2015 as well as the current asset
allocation, performance and liquidity position of the Long Term
Pool. We conclude with an overview of the Long Term Pool’s risk
profile and risk management strategy.
17
The Long Term Pool outperformed the policy portfolio
benchmark in the first quarter of 2015, returning 3.9% against a
2.5% benchmark return.
Fiscal year-to-date, the Long Term Pool
has beaten the policy benchmark by 190 basis points, returning
4.9% against the 3.0% benchmark return.
Cash flows for all private investments for Q1 2015 were net
positive at $94 million with $185 million in distributions and
$91 million in capital calls.
Fiscal year-to-date numbers show
net inflows of $248 million on distributions of $550 million and
capital calls of $302 million.
The overall market risk of the
Long Term Pool remains consistent with that of the policy
portfolio benchmark.
MARKET ENVIRONMENT
The perfect storm of a stronger dollar and plunging oil
prices along with a harsh winter and lingering delays in
shipments from west coast ports combined to slow U.S.
manufacturing in the first quarter of 2015 to its lowest level
in almost two years.
The Institute for Supply Management’s
index, which measures the condition of the factory sector and
helps predict industrial production, has declined in each of the
last five months and now stands at its weakest level since May
2013.
The stronger dollar has made U.S. goods more expensive
overseas and a reduction in capital spending tied to the
collapse of oil prices has hampered manufacturers, which
represent about 12% of the economy.
Analysts expect a decline
in first quarter corporate earnings of roughly 2.0 to 2.2%.
These events, in turn, help explain the slowdown in hiring
during the first quarter of 2015 and continued flatness in real
wage growth.
Employers added a monthly average of 197,000 jobs
during the quarter, below the 200,000-plus monthly jobs growth
that the economy has posted for the past two years.
Still,
unemployment in March remained at 5.5% which is within the Fed’s
target range and unemployment has declined 1.1 percentage points
over the past twelve months.
The labor market, however, will
take much longer to recover than in previous recessions largely
because of underlying structural dislocations borne primarily
by permanent losses in “routine-manual” jobs in production and
manufacturing.
The Fed continues to cite labor market weakness
as reason not to move too quickly on rate tightening.
Despite
these assurances, market sentiment continues to price in a more
imminent rate increase.
18
Meanwhile, the global economy is reverting to the old
policy of relying upon U.S. demand as a source of growth. A
more balanced approach would embrace policies that diversify
demand for exports (on weakened local currencies) with those
that promote domestic consumption growth.
As it is, a global recovery that relies so heavily on one
source of growth lacks breadth and is therefore exposed to the
In any
risk that U.S. consumers may not deliver as expected.
case, low-growth worries continue to trump other risks,
especially those associated with a strengthening dollar.
However, countries that have issued dollar- denominated debt
and those that peg their currencies to the dollar have seen
debt loads rise and domestic growth suffer as a result of
tightening monetary policies to maintain local currency
parity.
In short, the continued dollar strength could
trigger a cascade of disruptive adjustments.
Against this backdrop, overarching concern persists that
the global recovery is too weak to remove stimulus. The
European Central Bank announced a 1 trillion euro (€60 billion a
month) quantitative easing (“QE”) program in January that
targets both government and private bonds.
This means both the
EU and Japanese economies will be in the early stages of
aggressive easing just as the U.S. begins moving domestic rates
higher.
Switzerland’s issuance of a 10-year, negative yield
note and Mexico’s issuance of 100-year euro bonds reflect this
development as yields on sovereign debt are being driven to alltime lows. In total, according to J.P. Morgan, there is as much
as €1.5 trillion of euro area debt maturing in more than a year
that pays a negative yield. The net effect of foreign QE
programs will continue to weaken those currencies and strengthen
European and Japanese exports, helping to fight disinflationary
pressures abroad.
But, as the interest rate differential
begins to favor the U.S., capital flows will likely favor U.S.
financial markets as investors seek higher yields.
Looking ahead, interest rate volatility may materialize as a
risk when the Fed begins to raise short term rates. Should the
Fed raise rates at the short end of the yield curve too much, or
too quickly, then it could trigger a jump at the long end of the
yield curve as jittery market participants revise inflation
expectations upward. Rising rate volatility will raise
uncertainty about discount rates and therefore security prices in
general. Financial markets have already begun to price these
risks.
19
Equity market performance ex-U.S. clearly reflects the costs
of a strengthening dollar, as summarized in the table below.
Local returns are shown in the bottom half of the table and
returns after converting to dollars, in the top half.
The
dollar has strengthened enough to effectively eliminate global
local returns and is a major concern regarding the impact on
multinational investors domiciled in the U.S.
The loss due to
the strengthening dollar is more understated for emerging
markets, which are not engaged in the same aggressive QE policies
currently being employed in the EU and Japan. Domestic investors
can expect continued headwinds from a strong dollar.
MSCI
d
MSCI
MSCI
MSCI
d
MSCI
MSCI
Return Impact of the Strengthening Dollar
Q1 2015 FYTD 2015 Currency
All Country World
2.4%
0.7%
USD
World Ex-US
4.0%
-5.5%
USD
Emerging Markets
2.3%
-5.5%
USD
All Country World
5.0%
9.1%
Local
World Ex-US
10.2%
12.9%
Local
Emerging Markets
4.9%
5.8%
Local
Fixed income assets continue to compete well against
equities.
The Barclays U.S. Aggregate Bond Index returned 1.6%
in Q1 2015 and 3.6% FYTD, while the BofA Merrill Lynch U.S. High
Yield Index returned 2.7% and 0.7%, respectively.
ASSET ALLOCATION
UVIMCO’s policy portfolio benchmark consists of 60% global
equity (MSCI All Country World Index, or MSCI ACWI), 10% global
public real estate (a blend of 50% MSCI U.S. Real Estate Index
and 50% MSCI All Country World Real Estate Index), and 30% global
investment grade fixed income (a blend of 50% Barclays U.S.
Aggregate Bond Index and 50% Barclays Global Aggregate Bond Index
hedged in to U.S. dollars).
The Long Term Pool’s actual allocation as of March 31, 2015
is 68.1% to equity managers, 10.0% to real asset managers, and
21.8% to fixed income (including marketable alternatives, credit,
and cash).
Looking through to our managers’ underlying
investments, the Long Term Pool has a 54.0% allocation to
equities, 11.6% allocation to real assets, and 34.4% allocation
to credit, fixed income, and cash.
The market risk of the Long
Term Pool continues to be consistent with the risk of the policy
portfolio benchmark.
20
PERFORMANCE
The UVIMCO Long Term Pool generated a 3.9% return during the
quarter ended March 31, 2015, outperforming the policy benchmark
by 140 basis points.
Fiscal year-to-date, the Long Term Pool
produced a 4.9% return relative to the benchmark return of 3.0%.
Our private equity portfolio led the way with an 11.3% return for
the quarter (14.6% FYTD) against its respective benchmark, MSCI
ACWI, return of 2.4% (0.7% FYTD).
Both public equity and longshort equity strategies earned respectable returns during the
quarter of 4.4% and 4.1%, respectively, versus the MSCI ACWI
return of 2.4% (5.0% and 6.6% FYTD returns, respectively, against
the 0.7% benchmark return).
Real estate returned 6.1% for the
quarter compared to its benchmark return of 4.1%.
Resources are
currently navigating a challenging market in the wake of the
general collapse in global commodity prices, and our resources
Our marketable
portfolio lost 14.9% in Q1 2015 and 17.5% FYTD.
alternatives and credit, fixed income, and cash portfolios are
also currently lagging their benchmark, the blended Barclays
Aggregate Index, returning 0.3% in Q1 versus the 1.7% benchmark
return and -0.7% FYTD versus the benchmark return of 4.4%. Our
low bond duration was the primary contributor to this
underperformance.
Our allocation to fixed income helps control
equity market risk on the Long Term Pool while providing a source
of liquidity.
In the event of a market dislocation, the fixed
income allocation will provide a much-needed source of risk
diversification.
The Pool has returned 12.4% per year over the past twenty
years compared to the 7.5% annualized return on the policy
benchmark for the same period, reflecting 490 basis points of
annualized excess return.
The Pool has returned 10.2% over the
past ten years, or 330 basis points of alpha over the policy
benchmark. Five-year performance has returned 400 basis points
of annualized alpha and three year performance, 350 basis points.
EQUITIES
Public Equity
The public equity portfolio returned 4.4% in the quarter
ending March 31, 2015, versus 2.4% for the MSCI All Country
World Index. Fiscal year-to-date, the Long Term Pool’s public
equities gained 5.0%, ahead of the 0.7% return posted by the
MSCI ACWI. U.S. market returns in the first quarter of 2015
21
were muted while overseas markets generally outperformed
domestic results. Much of these overseas gains have been driven
by easing monetary and fiscal policies, with indices in Europe,
Japan, and China all posting double digit returns for the period
in local currency terms.
As noted earlier in this commentary,
the European Central Bank announced a trillion dollar
quantitative easing program in January, driving increased equity
prices, a materially weaker euro, and new record lows in bond
yields.
Our public equity managers based outside the U.S.
generally performed well in the quarter, although currency
depreciation against the U.S. dollar negatively impacted
performance for some.
Our public equity returns remain outstanding over the long
term. On a five-year basis, the public equity portfolio
generated annualized returns of 16.7%, well ahead of the 9.6%
gain for MSCI ACWI. On a ten- year basis, the portfolio gained
12.8% annually, compared to 7.0% for the index.
Manager
selection has been the biggest driver of historical excess
returns, as our managers have demonstrated exceptional
capabilities in fundamental analysis and security selection.
UVIMCO’s bottom-up approach to manager selection remains our
primary focus, and we constantly evaluate our existing manager
relationships and search for new long term partnerships.
In
addition, we continue to opportunistically rebalance exposures
as markets continue to rise and future return potential
declines.
We do not expect the level of absolute and relative returns
from the public equity portfolio to be sustained indefinitely,
but we expect public equity to remain an important source of
both return and liquidity for the endowment in the future.
As
of March 31, 2015, the public equity portfolio accounted for
23.0% of the Long Term Pool.
Long/Short Equity
The long/short equity portfolio gained 4.1% in the first
calendar quarter, compared to a 1.8% gain in the Dow Jones Credit
Suisse Long/Short Equity Index (DJCS Long/Short Index) and the
2.4% return for the MSCI ACWI. Fiscal year-to-date, the
portfolio returned 6.6% versus 4.3% for the DJCS Long/Short Index
and 0.7% for the MSCI ACWI.
Performance for our long/short
equity managers continues to be driven by strong stock selection
on long investments. Today’s shorting environment remains quite
difficult, with many of our managers struggling to generate even
22
absolute dollar returns, much less alpha, on their short
investments.
We understand that short returns are episodic, and
we expect our talented long/short managers will take advantage of
an increased opportunity set on the short side in the event of
increased market volatility.
Longer-term returns from our long/short managers of 10.4%
and 9.4% per year over five and ten years, respectively, continue
to outpace the DJCS Long/Short Index which returned 6.2% and 6.6%
over the same time periods.
Meanwhile, five- and ten-year
annualized returns for the MSCI ACWI were 9.6% and 7.0%,
respectively.
We are pleased that our long/short portfolio has
outpaced the fully invested global index over the long term, but
this is not our expectation, particularly in rising markets with
declining levels of volatility and dispersion.
Rather, we
expect our long/short managers to deliver attractive riskadjusted returns and provide downside protection in market
drawdowns, and our managers have historically achieved both of
these objectives.
This is a testament to their stock selection
capabilities for both long and short positions, as well as their
prudent use of leverage.
UVIMCO’s focus on long-term relationships has been critical
to the quality of our partnerships within long/short equity.
We
will continue to build on these long-term relationships while
searching for the next generation of exceptional managers.
Long/short equity remains an important component of the
endowment, accounting for 25.0% of the Long Term Pool as of March
31, 2015.
Private Equity
The Long Term Pool’s private equity portfolio generated a
quarterly return of 11.3%, well ahead of the 2.4% return of its
benchmark, the MSCI ACWI.
Growth equity and venture capital
investments led the way for the quarter with returns of 15.6%,
and 22.4% respectively.
Over longer time periods, the private
equity portfolio continues to perform well.
For the five years
ending March 31, 2015, our private equity investments appreciated
21.1% per year versus 9.6% for the benchmark, and ten-year
annualized returns of 13.9% for our investments almost doubled
the 7.0% annualized return of the MSCI ACWI over the same time
period.
In comparison to 2014, the IPO market started off 2015 in a
more subdued manner. According to data from Thomson Reuters, IPO
23
activity during the quarter was the lowest for venture-backed
IPOs in the last two years.
Only 17 venture-backed companies
went public in Q1 2015, a 54% decrease from Q1 2014. The average
amount raised was $84.3 million, which was the lowest in more
than four years. However, given that a large number of companies
have recently filed to go public, many investors expect IPO
volume to pick up in the second quarter.
Venture capital-backed health care companies (mainly biotech
companies) have been the mainstay of the IPO arena for the last
12-18 months, and 13 of the 17 venture-funded deals in Q1 2015
were healthcare or biotech companies.
Technology IPOs have
suffered a recent drought but many technology companies don’t
seem to have any immediate need to raise capital through the
public markets.
Private companies have been the beneficiaries
of investors’ willingness to fund continuing rounds of private
growth capital.
Several high profile IPOs including Etsy, the
Brooklyn-based provider of an online marketplace for handcrafted
goods, and GoDaddy, a web domain marketplace and tech provider,
are teed up for the beginning of Q2.
Mergers and acquisitions had a strong first quarter of 2015
as reported by Thomson Reuters.
More than $843 billion of M&A
activity was transacted on a global basis.
This represents an
increase of 23% over the M&A activity of $694 billion in Q1 2014
and a staggering 72% increase over Q1 2013.
As with recent
quarters, healthcare led globally with $109.5 billion followed by
real estate at $94 billion, telecom at $90 billion and financials
at $78 billion.
Private equity backed deals, however, declined
significantly with only $35.3 billion of activity during the
quarter, according to Thomson Reuters, compared to $63.8 billion
in the first quarter of 2014. That represents a decline of 45%
in dollars and a decrease of 7.3% in the number of deals.
Reflective of what has been characterized by investors as a
“seller’s market,” the private equity portfolio had distributions
of $92 million in Q1 2015 versus $48 million in capital calls,
resulting in a net inflow of $44 million. Fiscal year-to-date,
we had distributions of $276 million and capital calls of $151
million, which resulted in a net inflow to UVIMCO of $125
million. As of March 31, 2015, the private equity portfolio
accounted for 20.1% of the Long Term Pool.
24
REAL ASSETS
Real Estate
The real estate portfolio returned 6.1% in the first quarter
of 2015, which compares favorably to the policy benchmark’s
return of 4.1% over the same period.
It is important to note
that the benchmark’s composition is significantly different from
that of UVIMCO’s real estate portfolio in that the benchmark is
much more weighted towards international securities and retail
assets.
Our real estate portfolio has performed well in the
later stages of the U.S. economic recovery, generating a threeyear annualized return of 12.8% versus the benchmark return of
12.3% per year over the same period.
U.S. REITs, as measured by the MSCI U.S. REIT Index, gained
3.9% for the quarter after a February decline of nearly 10% from
the January high.
This early price drop was a repeat of many
similar drawdowns over the last two years during which REITs sold
off in response to spiking Treasury yields.
Most expect this
volatility to continue until a clear plan for increasing Treasury
yields is evident.
According to SNL Financial, implied U.S.
REIT cap rates spreads to the 10-year U.S. Treasuries were
largely unchanged during Q1 2015, ending 265 basis points wider
than the end of last year.
Per Green Street Advisers’ Commercial Property Price Index,
U.S. commercial property values remain at an all-time high and
are now approximately 15% higher than the prior peak in 2007.
Green Street also estimates that U.S. REITs are trading at an
approximate 5% premium to NAV, slightly higher than the long term
average premium of 3.1%.
Property values are supported by open
capital markets.
U.S. REITs issued over $15 billion of debt and
equity capital in the first two months of 2015, more than all the
capital raised in the first quarter of last year.
Nearly all
U.S. REIT sectors showed strong gains in Q1 2015 and were again
led by the multifamily sector, which returned 7.8%.
The hotel
sector was down 4.4% during the quarter, in spite of an improving
fundamental outlook for what was a lagging sector in 2014.
During the first quarter, our real estate managers called $9
million of capital and returned $66 million via distributions,
resulting in a net inflow to UVIMCO of $57 million.
Capital
calls and distributions totaled $44 million and $160 million,
respectively, on a fiscal year-to-date-basis, resulting in a net
inflow of $116 million as our managers continue to take advantage
25
of an attractive divestiture market.
As of March 31, 2015, the
real estate portfolio accounted for 6.2% of the Long Term Pool.
Resources
The resources portfolio lost 14.9% in the first quarter of
2015, underperforming the 4.1% returned by the weighted policy
benchmark of publicly traded U.S and international real estate
securities return over the same period.
The resources portfolio
does not contain any real estate securities and is therefore not
expected to compare to the benchmark in any meaningful way.
The
Goldman Sachs Commodity Index lost 4.4% in the first quarter and
the S&P North American Natural Resources Equity Index lost 2.6%
over the same time period.
However, the SPDR S&P Oil and Gas
Exploration and Production ETF was up 6.9% in the first quarter,
reflecting a stabilizing oil price environment in March.
Of
note, UVIMCO’s natural resources portfolio consists of
investments in illiquid private equity funds, and changes in
valuation generally lag the public markets.
We expect
additional mark downs of our resources investments in Q2 2015 as
our managers continue to update their valuation models.
The NYMEX Henry Hub Natural Gas spot price closed the
quarter at $2.64, slightly lower than at the beginning of the
year.
Natural gas in storage ended the winter above last year’s
depressed levels but 11% below the five year average.
Shale
production remains strong and February was another record month
with over 40 billion cubic feet of production per day.
The WTI crude oil price closed at $49.34 on March 31, 2015,
down from $53.27 at the beginning of the year.
Brent crude
closed the quarter at $56.21, also down from the end of 2014.
All eyes are focused on the supply of oil coming from U.S. shale
formations, which have been deemed the new swing producers of
global oil.
Although U.S. rig counts are down to their lowest
level since 2010, domestic supply has continued to grow in 2015.
Many attribute the resilience of U.S. production to the
following: a) existing wells won’t stop producing unless prices
fall below the marginal cost of production (>$40), b) producers
are moving rigs to their best acreage, and c) supply costs have
come down 20%-30% while drilling technology continues to improve.
In spite of decreased commodity prices, investor demand for
energy exposure remains strong.
Many well-regarded private
resources firms have been oversubscribed for recent fundraises,
and a growing number of new funds are being raised to target
26
potential distress in energy capital markets.
However, private
transaction opportunities are sparse as sellers don’t want to
sell at the bottom and buyers don’t want to jump in too soon.
On the public side, investors have willingly accepted dilution
and have even rewarded E&P companies for issuing new equity or
arranging additional financing to allow them to live and fight
another day.
Our managers continue to evaluate their assets on a basin by
basin basis to determine which to mothball, which to sell (if
need be and possible) and which to drill (often just to hold
leases).
Relative to public companies, our managers tend to
make investments in earlier stage, exploration companies that are
less levered due to their relative lack of significant, mature,
producing wells.
Where they do have producing assets, UVIMCO’s
managers typically hedge a significant portion of their
production on a rolling one- to two-year basis.
Our resource managers called $16 million of capital in the
first quarter and returned $6 million, resulting in a net outflow
of $10 million.
Fiscal year-to-date, we’ve received a net
inflow of $2 million, resulting from $70 million capital calls
and $72 million distributions.
As of March 31, 2015, the
resources portfolio accounted for 3.8% of the Long Term Pool.
FIXED INCOME AND MARKETABLE ALTERNATIVES
Marketable Alternatives and Credit
For the first quarter of 2015, the marketable alternatives
and credit portfolio generated a return of 0.3% versus 1.7%
returned by the blended Barclays Aggregate Bond Index and 2.5%
returned by the Barclays High Yield Index.
Fiscal year-to-date,
the portfolio declined 1.8%, trailing the two aforementioned
benchmarks by 620 basis points and 140 basis points,
respectively.
The positive U.S. fixed income performance of 2014 continued
into the first quarter of 2015 as interest rates fell further,
resulting in positive returns across all fixed-income categories.
In particular, longer-duration and lower-credit quality bonds
experienced the largest gains.
As a result of both domestic and
foreign yield levels, most of our managers have found it
challenging to generate strong risk-adjusted returns in the
credit space. Some of our managers with flexible mandates are
27
investing in the equity of companies they know well and holding
higher levels of cash in anticipation of future opportunities in
the credit markets.
As of March 31, 2015 marketable alternatives and credit
funds represented 10.3% of the Long Term Pool. During the
quarter, our credit managers that employ drawdown fund structures
called $18 million of capital and distributed $21 million,
resulting in a net inflow of $3 million.
Fiscal year-to-date,
distributions have totaled $42 million versus capital calls of
$37 million, or a net cash flow of $5 million.
Bonds and Cash
Our bond and cash portfolios continue to be managed as
sources of liquidity for the Long Term Pool. As of March 31,
2015, our bond and cash portfolio comprised 11.5% of the Long
Term Pool, a decrease of 90 basis points from last quarter.
Over time, we continue to expect the sum of the liquid U.S.
Treasury bond and cash portfolios to vary between 8% and 12% of
the endowment.
While we are currently at the high end of this
range, creating a drag on returns (especially in a near zero
interest rate environment), we believe it provides insurance
against future volatility and will allow us to fund attractive
investments that will more than make up for the return drag.
The government bond portfolio consists of short-term U.S.
Treasury notes and bonds with maturities less than three years.
The average duration of this portfolio as of March 31, 2015 was
1.9 years.
We have continued to maintain our position in
shorter duration bonds, as we feel that the small additional
return earned from investing in longer duration bonds does not
compensate us for the risk of higher rates in the near future.
For the quarter ending March 31, 2015, the bond portfolio
returned 0.4% compared to the Barclays U.S. Treasury benchmark
which returned 1.6% for the same period.
Our primary objective for the cash portfolio is to provide
the Long Term Pool with a source of liquidity while preserving
capital.
The cash portfolio is invested in U.S. Treasury bills
and notes with maturities less than one year.
The duration of
the cash portfolio as of quarter end was 0.3 years.
The
negligible returns reported for the short-term cash investments
are consistent with an environment in which current interest
rates remain near zero.
28
RISK MANAGEMENT
Investors may be willing to bear risk if they are adequately
compensated with future higher returns.
At UVIMCO, we are
willing to bear certain risks, but others must be eliminated if
we are unable to absorb the downside losses or if we do not earn
a sufficient risk premium from assuming those risks.
We
consider three broad portfolio risks when managing the Long Term
Pool – market risk, manager risk, and liquidity risk – and
evaluate these factors relative to the risk tolerance of the Long
Term Pool shareholders.
Market Risk
The largest risk factor present in the Long Term Pool is
equity market risk.
On a long-term basis, we manage this
exposure by re-allocating capital across a broad set of
diversified managers.
On a short-term basis, we monitor our
equity exposure and rebalance using portfolio overlays through
the option and futures markets.
A common definition of market risk is the standard deviation
or volatility of a portfolio’s return.
Volatility provides a
useful proxy for market risk if returns are normally distributed.
However, it is clear that both the broad market as well as
individual investment strategies are not normally distributed,
but rather are subject to a much higher probability of negative
“tail” events.
Since investment returns are subject to “tail
risk”, it is useful to complement the standard deviation
statistic with an estimate of drawdown risk.
We manage market risk in the Long Term Pool by diversifying
across three broad asset classes: equity, fixed income, and real
assets.
Our objective is to maintain estimated market risk in
the Long Term Pool that is consistent with the estimated market
risk of the policy portfolio. Our current estimate of the
volatility of the Long Term Pool returns is 10.8% versus 11.3%
for the Policy Portfolio.
In addition, the one-percentile tail
annual drawdown on the Long Term Pool is estimated to be -25.3%,
less than the drawdown estimate of -26.2% on the Policy
Portfolio.
Manager Risk
The Long Term Pool invests with more than one hundred
external managers.
We seek to maintain a portfolio of managers
29
that generates sufficient returns to compensate us for bearing
both market risk and the additional risk inherent in working with
individual managers.
Manager risk includes tracking error or
active bets away from the benchmark, operational or business
risks, lack of transparency, and leverage.
UVIMCO mitigates manager risk by diversification and
employing extensive and ongoing due diligence to assess both the
investment and operational aspects of our external fund managers.
Our Investment Policy Statement ensures a minimum level of
diversification by limiting our exposure to any single manager to
7.5% of the Long Term Pool.
As of March 31, 2015, our largest
manager exposure was 4.0% of the Long Term Pool.
Liquidity Risk
At UVIMCO, we define liquidity risk as an inability to meet
any of the following four primary liquidity requirements: (i)
withdrawals by the University and foundation investors, (ii) the
excess of capital calls over expected capital distributions from
private funds, (iii) the need to rebalance exposures following a
market decline, and (iv) the ability to deploy cash
opportunistically as new investment opportunities arise.
We
help manage this risk by maintaining a portfolio of Treasury
bills and bonds, maintaining sufficient liquidity with our public
equity and hedge fund managers, and managing the pace of
commitments to private investments.
Given our four primary liquidity requirements, we believe
that an appropriate target for liquidity is to have 10% of the
Long Term Pool invested in assets that are safe and highly
liquid, at least 20% of the Pool available for conversion to cash
within one quarter, and at least 30% of the Pool available for
conversion to cash in any 12-month period.
As of March 31,
2015, we had 11.5% of the Long Term Pool invested in Treasuries,
31% of the Long Term Pool that could be turned to cash within one
quarter, and 45% of the Pool that could be turned to cash within
one year.
We also limit our unfunded commitments to private
investments to be no more than 25% of the Long Term Pool, with
the goal of maintaining unfunded commitment levels that average
15% of the Pool.
As of March 31, 2015, unfunded commitments
were 13% of the Long Term Pool.
30
INVES TMENT MANAGEMENT COMPANY
Investment Report
March 31, 2015
Investment Activity
Beginning Net Asset Value (NAV)
Beginning Shares
Month
FYTD 2015 (1)
$7,205,947,473.90
856,313.35
$6,949,542,818.84
854,659.59
$8,131.36
$131,726,624.70
($150,535,932.30)
$340,702,429.67
($15,499,726.31)
$6,000,000.00
$8,415.08
$7,652,693.11
($48,178,426.38)
$97,715,465.22
($1,200,991.25)
$0.00
NAV Per Share at Beginning of Period
+ Contributions
– Redemptions
+ Investment Return
– Fees
+ Fee Rebates
Ending Net Asset Value (NAV)
Ending Shares
NAV Per Share at End of Period
$7,261,936,214.60
851,421.13
$8,529.19
$7,261,936,214.60
851,421.13
$8,529.19
Long Term Pool
% of NAV
$4,168,670,134.93
$1,639,523,031.12
$1,453,743,048.56
$7,261,936,214.60
57.4%
22.6%
20.0%
100.0%
Shareholder Summary
University of Virginia Endowment
Affiliated Organizations
University Operating Funds
Total
Performance
Market Value (2)
$ Millions
%
Long Term Pool
Total Equity
MSCI All Country World Equity
Real Assets
Real Estate
Resources
Total Real Assets
Total Fixed Income, Cash & MAC
Barclays Aggregate Bond
Portfolio Overlays (6)
Annualized
5 YR 10 YR
20 YR
100.0
1.4
3.9
4.9
13.1
12.8
12.8
10.2
12.4
(0.7)
2.5
3.0
7.6
9.3
8.7
6.9
7.5
1,668
1,817
1,456
23.0
25.0
20.1
(0.6)
0.9
5.0
4.4
4.1
11.3
5.0
6.6
14.6
14.7
10.2
34.6
16.7
11.6
22.6
16.7
10.4
21.1
12.8
9.4
13.9
12.6
10.7
21.3
4,941
68.1
60.0
1.6
(1.5)
6.3
2.4
8.3
0.7
18.5
6.0
16.5
11.3
15.6
9.6
12.1
7.0
14.8
7.4
450
278
6.2
3.8
3.5
(4.2)
6.1
(14.9)
8.7
(17.5)
11.0
1.8
12.8
4.9
5.4
17.0
(2.3)
15.8
3.7
--
10.0
0.5
(2.8)
(2.4)
6.8
9.6
13.7
8.0
11.2
10.0
0.3
4.1
11.3
19.5
12.3
13.2
7.8
9.0
750
678
158
10.3
9.3
2.2
0.9
0.2
0.0
0.3
0.4
0.0
(1.8)
0.5
0.0
3.0
0.7
0.1
9.3
0.4
0.0
8.3
1.0
0.1
6.6
4.2
--
7.6
6.5
--
1,586
21.8
0.5
0.3
(0.7)
1.8
4.4
4.5
5.4
7.0
30.0
0.5
1.7
4.4
6.5
3.8
4.5
4.9
6.1
0.1
0.1
0.0
(0.1)
(0.1)
--
--
--
--
729
MSCI Real Estate (4)
Fixed Income, Cash & MAC
Marketable Alternatives & Credit
Government Bonds
Cash & Currency
3 YR
100.0
7,262
Policy Benchmark (3)
Equity
Public
Long / Short
Private
Time-Weighted Returns
1 YR
MO CYTD FYTD
(5)
6
31
Short Term Pool
March 31, 2015
Investment Activity
FYTD 2015 (1)
Month
Beginning Net Asset Value (NAV)
$251,608,749.86
$266,823,936.10
251,216.12
266,498.60
Beginning Shares
$1,001.56
$35,942,946.68
$9,539.27
($1,893.23)
NAV Per Share at Beginning of Period
+ Net Contributions / (Redemptions)
+ Investment Returns
– Expenses
$1,001.22
$20,640,924.72
$112,007.62
($17,525.86)
$287,559,342.58
287,102.40
$1,001.59
Ending Net Asset Value (NAV)
Ending Shares
NAV Per Share at End of Period
$287,559,342.58
287,102.40
$1,001.59
Plan Account Summary
Short Term Pool
% of NAV
$184,979,677.45
$22,518,841.28
$80,060,823.85
$287,559,342.58
Long Term Pool Cash
Affiliated Organizations
University Operating Funds
Total Short Term Pool
64.3%
7.8%
27.8%
100.0%
Performance
Time-Weighted Returns
MO
FYTD CYTD
1 YR
Since Inception (Oct 2012)
Annualized Cumulative
Yield to
Maturity
Short Term Pool
0.00
0.04
0.03
0.05
0.07
0.17
0.04
3-Month Treasury Bills
0.00
0.02
0.00
0.03
0.06
0.15
0.02
Portfolio Composition
Maturity Distribution
70%
60%
U.S. Treasury
Bills
73.1%
50%
40%
34.8%
30.4%
30%
20%
Overnight
Funds
26.9%
13.9%
13.9%
7.0%
10%
0.0%
0.0%
5-14
Days
15-29
Days
0%
0%
20%
40%
60%
80%
0-4
Days
100%
32
30-59
Days
60-89
Days
90-179
Days
180-364
Days
Investment Report
March 31, 2015
Short-Term Liquidity(7)
Actual Liquidity (Cumulative Total % of NAV)
Weekly
Public Equity
Monthly
Quarterly
Semi-Annually
Annually
5%
7%
10%
12%
14%
-
0%
9%
11%
14%
Long / Short Equity
-
-
1%
1%
6%
Government Bonds
Marketable Alternatives & Credit
9%
9%
9%
9%
9%
Cash
2%
2%
2%
2%
2%
Total
17%
19%
31%
35%
45%
Available Liquidity ($ in Millions)
1,199
1,364
2,253
2,512
3,272
Europe
Asia
LAMA(9)
Market and Currency Exposure Estimates (8)
(% of NAV)
Policy
Ranges
Actual
Exposure
Equity
40 - 70
54.0
27.3
7.5
16.8
2.4
Real Assets
5 - 20
11.6
9.1
2.2
0.1
0.2
Credit
0 - 20
3.2
2.3
0.4
0.0
0.5
Government Bonds
5 - 20
9.6
9.6
-
-
-
Total Market Exposure
70 - 100
78.4
48.3
10.1
16.9
3.1
Policy Ranges
Cash & Currency
North
America
--
--
25 - 75
0 - 30
21.6
24.2
---
100.0
--
72.5
50 - 100
Currency Exposure
Policy Ranges
0 - 40
0 - 40
0 - 20
(2.2)
(0.1)
(0.2)
7.9
0 - 30
16.8
0 - 30
2.8
0 - 20
Private Investments Market Values and Uncalled Commitments (10)
Market Value of Private Investments
($ in Millions)
Uncalled Commitments
Amount
% of NAV
Public Equity
41
1%
14
Long / Short Equity
13
0%
10
0%
1,445
20%
394
5%
Real Estate
450
6%
209
3%
Resources
278
4%
206
3%
Marketable Alternatives & Credit
250
3%
96
1%
2,477
34%
929
13%
Private Equity
Total
Amount
% of NAV
0%
Historical Uncalled Commitments
Historical MV of Private Investments
50%
25%
Maxim um: 25%
20%
30%
15%
Target: 30%
33
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jan-11
Jan-15
Jul-14
Jan-14
Jul-13
0%
Jan-13
0%
Jul-12
5%
Jan-12
10%
Jul-11
10%
Jul-11
Target: 15%
20%
Jan-11
% of NAV
40%
Investment Report
March 31, 2015
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 2015 policy target allocations: 60% Equity, 10% Real Assets, 30% Fixed Income.
(4)
The Real Estate component of our Fiscal Year 2015 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 2015 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.
Represents the current market values and performance of overlay positions designed to change the Long Term Pool exposures.
Performance is calculated to reflect the impact of overlays relative to the entire Long Term Pool.
(6)
(7)
Represents securities and funds that may be readily sold for cash within the designated time periods.
(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)
Represents the market values and uncalled commitments of investments where capital calls and distributions are at the sole
discretion of the managers.
34
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.C. Academic Division Financial Report as
of March 31, 2015 (Written Report)
The unaudited financial report for the University’s
Academic Division for the nine months ended March 31, 2015
follows and includes:
•
•
•
statement of net position compared to June 30, 2014;
statement of revenues, expenses, and changes in net
position compared to the period ended March 31, 2014; and
cash-basis operating sources and uses, budget versus
actual results through March 31, 2015.
Statement of Net Position
This statement, on page 37, provides the Academic
Division’s net positions as of March 31, 2015 and June 30, 2014.
The unaudited statement is developed based on Generally Accepted
Accounting Principles (GAAP).
The $42.1 million in current receivables are primarily
comprised of a receivable due from the Medical Center ($7.9
million), tuition and other student charges ($6.9 million),
sponsored research ($25.5 million), and auxiliary operations and
other receivables ($1.8 million). Past due receivables over 120
days were $1.8 million, or 4.8% and well within the Commonwealth
of Virginia’s management standard of 10%.
Endowment and other long-term investments are up slightly
due to a few additional endowment gifts and a 5% return on the
University’s long-term pool. Further information on the
endowment’s performance this year is included in the written
report from the University of Virginia Investment Management
Company (UVIMCO) beginning on page 17.
Included in the $23.1 million non-current receivables are
the Federal Perkins Loan Program ($20.7 million) and the Federal
Nursing Student Loan Program ($1.1 million). In addition, the
35
University manages $21 million in loan programs through
endowments given for this purpose. The default rates by
University students on the federal loan programs are below
required thresholds: 4.13% for Perkins versus the federal
requirement of 15% and 1.6% for Nursing versus the 5% federal
threshold. Collectively, the default rate on University managed
loan programs stands at 2.48%.
Net position is up $314.9 million since June 30, 2014, due
primarily to the performance of the University’s endowment and
other long-term investments, which shows a 5% return through the
nine months of fiscal year 2015.
36
UNIVERSITY OF VIRGINIA - Academic Division Only
Statement of Net Position (Unaudited)
As of 03/31/15
ASSETS
Current Assets
Cash and short term investments
Receivables (accounts, notes, other)
Inventories, prepaids and other
Total current assets
As of 6/30/14
(in 000s)
$
Noncurrent Assets
Endowment and other investments
Receivables (notes)
Deposits with bond trustees & other
Capital assets, net
Total noncurrent assets
619,497
42,088
249
661,834
$
4,949,896
23,106
14,370
2,193,870
7,181,242
Total assets
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities
Unearned revenues and deposits
Commercial paper
Internal deposits held for Wise, SWVHEC and agencies
Total current liabilities
4,704,472
22,486
15,528
2,186,184
6,928,670
$
7,843,076
$
7,459,657
$
23,021
171,960
251,923
8,325
455,229
$
14,609
131,700
205,893
7,276
359,478
Noncurrent Liabilities
Long-term debt & other liabilities
Total noncurrent liabilities
Total Liabilities
NET POSITION
Net investment in capital assets
Restricted:
Nonexpendable
Expendable
Unrestricted
Total Net Position
$
736,084
736,084
763,321
763,321
1,191,313
1,122,799
1,207,811
$
530,050
2,943,373
1,970,529
6,651,763
Total Liabilities & Net Position
$
37
492,845
37,893
249
530,987
7,843,076
1,265,394
512,240
2,868,908
1,690,316
6,336,858
$
7,459,657
Statement of Revenues, Expenses, and Changes in Net Position
(SRECNP)
Shown on the following page, this statement outlines the
Academic Division’s revenues, expenses, and other changes in net
position as of March 31, 2015 as compared to the same period
last year. It is developed based on GAAP but is unaudited.
Operating Revenues
Total operating revenues for the nine months ended March
31, 2015 were $1.1 billion, an increase of 2.6% over the prior
year. There were modest increases in most revenue categories.
Grants and contracts revenue had a very slight 1% increase for
the first nine months of the fiscal year. Student tuition and
fees are reported net of discounts and allowances and are up
4.3% as compared to last year, due to undergraduate enrollment
growth and increases in undergraduate, graduate, and
professional tuition and fees approved by the Board of Visitors
in February and April of 2014.
State appropriations remained relatively flat at $144.9
million compared to this same point last year. The FY 2015
appropriation incorporates a permanent $8.2 million, or 6.6%,
budget reduction, partially offset by technical adjustments
related to health insurance, retirement, and other benefit
adjustments.
Auxiliary revenues have increased by 6.5% through the third
quarter primarily due to additional ACC revenue distribution.
Investment income is down significantly when compared to the
same period last year. Investment earnings for the first nine
months of FY 2015 were $243.6 million, compared to $431.8
million at March 31, 2014. This difference is due to market
performance in each period – the long-term pool returned 10.4%
as of March 31, 2014 FYTD, while it returned 4.9% as of March
31, 2015 FYTD.
Operating Expenses
Operating expenses were up 4% for the period ended March
31, 2015 compared to the same period last year. This is
attributable to an October 2014 pay increase for faculty and
University staff.
38
39
Comparative Statement of Sources and Uses of Funds
This report, on the following page, reviews actual results
for period ended December 31, 2015 compared to budgeted sources
and uses of funds of the Academic Division. The cash-based
operating plan differs from GAAP in the following ways:
• External debt service, UVa Health Plan activity, and
endowment investment performance are excluded, while
repayments of debt to the internal bank and the expendable
endowment distribution are included.
• Depreciation is excluded and most equipment purchases are
reported as a use of funds, and are not capitalized.
• Only gifts received and available for the operating plan
are included. Pledges, non-cash gifts, gifts transferred
to the endowment or capital program, and gifts held at
foundations are excluded.
• The cash-based operating plan nets financial aid funded
from tuition from gross tuition, but does not net financial
aid funded from other sources (gifts, endowments, and
grants).
• The cash-based operating plan reflects mandatory fees
collected for auxiliaries and internal revenues collected
from internal departments as other tuition and fees, sales,
investment, and other revenue.
• The cash-based operating plan excludes unrealized gains.
Through March 31, 2015, Academic Division sources in excess
of uses total $55.2 million.
Sources of Funds
Total sources of available funds were $1.3 billion which is
1.6% more than budgeted for the period. The 2014-15 revised
budget includes the final actions taken by the General Assembly
in June 2014 to reduce the expected FY 2015 state general fund
appropriation by $8.2 million. The November 2014 $8.16 million
reduction is reflected in the actual state appropriation
received.
Uses of Funds
Total uses of available funds were $1.08 billion which is
3.1% less than budgeted for the period.
40
University of Virginia - Academic Division Only
Comparative Statement of Sources and Uses of Funds, Year to Date
2014-15
Original
Budget
SOURCES OF AVAILABLE FUNDS
Tuition and Fees
Undergraduate
Less: Tuition to financial aid
Net Undergraduate
2014-15
Quarterly
Budget
Actuals
Over
(Under)
Budget
Actuals
Through
3/31/2015
---------------------------------------(in 000s)------------------------------------292,112 $
(39,061)
253,051
294,000 $
(45,000)
249,000
292,588 $
(44,263)
248,325
Graduate
Less: Tuition to financial aid
Net Graduate
48,138
(30,348)
17,790
48,000
(30,000)
18,000
Professional (Law, Darden, McIntire & SEAS Exec.)
Less: Tuition to financial aid
Net Professional
105,499
(8,198)
97,301
School of Medicine
Less: Tuition to financial aid
Net School of Medicine
Other
Less: Tuition to financial aid
Net Other
Net Tuition & Fees
$
State Appropriations
Grants & Contracts
Facilities & Administrative Cost Recoveries
Endowment Distribution & Fee
Gifts-Via Affiliated Foundations
Expendable Gifts
Sales, Investment & Other
Operating Cash Balances
Total Sources of Available Funds
Actuals
Over/(Under)
as a % of
Budget
$
(1,412)
737
(675)
-0.5%
-1.6%
-0.3%
47,981
(27,845)
20,136
(19)
2,155
2,136
0.0%
-7.2%
11.9%
105,000
(8,000)
97,000
105,155
(8,614)
96,541
155
(614)
(459)
0.1%
7.7%
-0.5%
29,442
(510)
28,932
29,000
(500)
28,500
29,465
(510)
28,955
465
(10)
455
1.6%
2.0%
1.6%
97,929
(1,188)
96,741
493,815
98,000
(1,000)
97,000
489,500
100,936
(553)
100,383
494,340
2,936
447
3,383
4,840
3.0%
-44.7%
3.5%
1.0%
144,822
224,877
59,600
157,126
101,255
26,451
192,244
30,478
144,822
178,000
47,000
156,000
77,000
20,000
163,000
0
136,697
176,596
47,949
162,544
82,379
15,375
180,205
(8,125)
(1,404)
949
6,544
5,379
(4,625)
17,205
0
-5.6%
-0.8%
2.0%
4.2%
7.0%
-23.1%
10.6%
n/a
1,430,668
$
1,275,322
$
1,296,085
$
20,763
1.6%
(11,668)
10,866
(230)
(1,130)
(4,976)
(8,919)
(5,612)
-4.0%
4.9%
-0.2%
-3.3%
-6.9%
-10.1%
-5.7%
Uses of Available Funds
Direct Instruction
Research & Public Service
Academic Support
Student Services
General Administration
Operation & Maintenance of Physical Plant
Scholarships, Fellowships, & Other
$
Auxiliary Enterprises
Internal Debt Service/Transfers
380,067 $
291,292
146,868
45,763
95,320
108,734
106,285
292,000 $
224,000
116,000
34,000
72,000
88,000
99,000
280,332 $
234,866
115,770
32,870
67,024
79,081
93,388
167,289
81,841
132,000
61,000
128,621
51,631
(3,379)
(9,369)
-2.6%
-15.4%
$ (34,417)
-3.1%
$
35.1%
Total Uses of Available Funds
$
1,423,459
$
1,118,000
$
1,083,583
Net Sources in Excess of Uses
$
7,209
$
157,322
$
212,502
41
55,180
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.D. Defined Contribution Retirement Plan:
Retirement Administrative Committee (Written
Report)
BACKGROUND: The University is the plan sponsor of a number of
defined contribution retirement plans, including the Optional
Retirement Plan for Employees of the University of Virginia and
the Optional 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.
On May 20, 2015, Ms. Victoria Harker, Finance Committee
Chair, and Mr. John Griffin, Finance Committee Vice Chair, 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 follow.
42
Minutes
University of Virginia
Board of Visitors Finance Committee Appointees on Retirement
Administrative Committee
May 20, 2015
11:00 a.m.
Madison Hall Lower Conference Room
Board of Visitors Finance Committee Appointees (via phone):
Victoria Harker and John Griffin
Also in Attendance: Pat Hogan, Executive Vice President and
Chief Operating Officer (EVP-COO); Susan Carkeek, Vice President
and Chief Human Resource Officer; Barry Schmitt, CAPTRUST
Financial Advisor (via phone); Megan Lowe, Assistant Vice
President and Chief of Staff to the EVP-COO; Leora Friedberg,
Retirement Advisory Committee (RAC) member; Nicholas Mendyka,
RAC member; Kristina Alimard, RAC member.
There were two agenda items for this meeting: the annual review
of fund performance and future initiatives under consideration.
I.
December 31st, 2014 Annual Performance Review
Barry Schmitt 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 once per
year each of the vendors is invited to the RAC to present on
their participant activity and fund performance. The details of
the report are provided in attachment A.
II. Future initiatives under consideration
The following initiatives are under consideration by the RAC:
403(b) Oversight: Numerous regulations were fully implemented
in 2009 for 403(b) plans. Many institutions, including UVa,
began to look in more detail into the overall operation and
structure of their retirement programs and the efficiency within
these programs. The RAC has explicit responsibility for
oversight of the retirement plans but is not required to have
the same level of fiduciary oversight of the 403(b) Plan. UVa
is now considering whether or not to further expand our
fiduciary oversight for these plans. One of the driving forces
would be to eliminate disparate fund offerings between the ORP
and the 403(b), thereby reducing participant confusion.
Closing/Mapping Funds: Generally, if a particular fund no
longer meets policy guidelines, it is “closed” for future
43
contributions and replaced with a similar type of fund. The RAC
does not monitor the performance of closed funds. Should the
fund line-up be significantly changed, consideration would also
be given to closing and then mapping funds from the closed fund
to the replacement fund. Historically, the RAC has not “mapped”
funds once a fund is closed, but a change in this strategy is
under consideration.
Asset Class Structure: It has been several years since a
significant change has been made to the fund selections with
each vendor. In 2008, the RAC (with approval from the BOV)
better aligned the investments across all three vendor platforms
(Fidelity, TIAA-CREF, and Vanguard). This process eliminated
overlap of funds, created a “best in class” fund structure, and
“froze” assets of funds that were not performing to the goals
and objectives stated within the Investment Policy. In 2011,
after a comprehensive review, eliminated Vanguard as a record
keeper, while, at the same time, migrating virtually all current
Vanguard mutual funds onto the Fidelity platform. The RAC felt,
at the time, it was important for continuity reasons, to not
eliminate/consolidate funds at the time. Currently, the RAC
monitors 41 fund options plus the target date fund options.
However, the RAC feels that it is time to consider the
elimination/consolidation of funds to continue our strategy in
offering “best in class” fund offerings on each of the
remaining two platforms (Fidelity and TIAA-CREF).
CAPTRUST has recommended a “four tier” structure: Tier I QDIA/Target date; Tier II - a core set of passively managed
options; Tier III - a core set of actively managed options; and
Tier IV - a brokerage window. CAPTRUST will work with the RAC to
finalize the asset class structure in 2015.
2014 Cost Savings: With the help of CAPTRUST, the RAC was able
to secure annual savings of $765,000 for faculty and staff
participants through lowered administrative costs with TIAACREF. CAPTRUST will continue to monitor upcoming TIAA-CREF
share class changes which will possibly provide additional
reduction in costs.
Communication, Education and Advice Opportunities: Modeling
after the successful Hoos Well wellness program, the RAC is
reviewing options for a financial wellness component to better
prepare faculty and staff for retirement. There are several
educational initiatives that will be reviewed and then shared
with the UVa community.
The meeting was adjourned at 11:45 a.m.
44
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.E. Endowment/Long-Term Investments,
Including Related Foundations as of March
31, 2015 (Written Report)
(in thousands)
Source: Associate Vice President for Finance
Date: May 4, 2015
45
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.F. Quasi-Endowment Actions (Written Report)
January 1, 2015 – March 31, 2015
BACKGROUND: 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 Assistant Vice President
for Finance and University Comptroller, 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 quasiendowment 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.
46
Source: Associate Vice President for Finance
Date: May 4, 2015
47
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.G. Write-off of Bad Debts for NonPatient Services, Fiscal Year 2015 (Written
Report)
BACKGROUND: The University's write-off of non-patient bad debts
for the fiscal year 2015 is $335,642. The largest category,
tuition and fees, represents only 0.02% of the fiscal year 2014
tuition and fee revenue. The write-offs, listed below, do not
constitute a compromise, settlement, of discharge of the debts,
but rather an acceleration of the use of collection agencies,
state tax liens, and the court system for the collection of
these debts. For the past ten years, the University is
averaging a collection rate of approximately 48% on previously
written off student debts.
48
UNIVERSITY OF VIRGINIA
BOARD OF VISITORS AGENDA ITEM SUMMARY
BOARD MEETING:
June 12, 2015
COMMITTEE:
Finance
AGENDA ITEM:
III.H. 2015 Summer Conference Rates (Written
Report)
BACKGROUND: 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 Patrick Hogan,
Executive Vice President and Chief Operating Officer, and are
hereby being reported to the Board of Visitors as required.
Approved
University of Virginia
Summer 2014
Summer Conference Meal Rates (per person)
Breakfast
$5.75
Lunch
$7.75
Dinner
$9.25
Proposed
Increase 2015
Proposed
Summer 2015
Percent
Increase
$0.25
$0.25
$0.25
$6.00
$8.00
$9.50
4.3%
3.2%
2.7%
JPJ Arena dining room labor charge,
(per person per meal)
$1.00
$0.00
$1.00
(2015 Summer Conference Housing rates were approved at the May 2013 BOV meeting.)
0.0%
University of Virginia –
College at Wise
Approved
Proposed
Summer 2014 Increase 2015
Summer Conference Meal Rates (per person)
Breakfast (M-F)
$5.30
$0.00
Lunch (M-F)
$7.05
$0.00
Dinner (M-F)
$8.60
$0.00
Brunch (Sa-Su)
$7.05
$0.00
Dinner (Sa-Su)
$8.60
$0.00
Group rate (25 +), per person per day
B/L/D (M-F)
$19.75
$0.00
Summer Conference Housing (per person, per night, double occupancy)
McCraray Hall
$20.00
$0.00
All other halls & houses
$24.00
$0.00
49
Proposed
Summer 2015
Percent
Increase
$5.30
$7.05
$8.60
$7.05
$8.60
0.0%
0.0%
0.0%
0.0%
0.0%
$19.75
0.0%
$20.00
$24.00
0.0%
0.0%
APPENDICES
APPENDIX A
2015-2016 PRATT FUND ALLOCATIONS
ARTS & SCIENCES - $3,572,000 allocation for 2015-2016, plus
$274,153 anticipated carryforward of remaining
2014-2015 funds
The March 31, 2015 market value of the Pratt Bequest for
the College of Arts & Sciences is $84.5 million. The $3,572,000
request from Arts & Sciences detailed below represents the
regular endowment distribution on this amount.
Biology – The 2015-16 Pratt fund allocation for Biology is
$250,000. The department proposes to allocate $170,000 for
graduate fellowships; $10,674 to be used for new faculty startup equipment; and $69,326 of its 15-16 allocation and $4,470
from previous years’ balance to support the salaries of the
Director and Associate Director of the Mountain Lake Biological
Station.
Chemistry – The 2015-16 Pratt fund allocation for Chemistry is
$250,000. - The department proposes to allocate $310,500 for
graduate support in 2015-16. $210,500 will come from the 201516 allocation, while an additional $100,000 will be drawn from
the outstanding balance from prior years’ allocations Pratt
funds are a crucial component of the total support package
assembled to attract outstanding graduate students. The
department proposes to use the balance of the 2015-16
distribution, $39,500, to provide summer wages to faculty
holding key departmental administrative posts, including the
graduate program director, the undergraduate program director,
and the associate chair of the department.
Mathematics – The 2015-16 Pratt fund allocation for the Math
Department is $150,000. The Department proposes to allocate
$107,863 in partial support of the salaries of four Whyburn
Postdoctoral Fellows. Internationally recognized for its
excellence, the Whyburn postdoctoral program brings new Ph.D.
recipients in mathematics to UVA as faculty instructors for
three years of teaching and research. Pratt funds support 40%
of the academic year compensation plus one month of summer wages
for each fellow. The department proposes to allocate $35,000 in
faculty summer wages for faculty members serving as mentors in
the summer REU program and for the associate chair.
The department proposes to spend $20,000 in 2015-16 to
provide fellowship support for students engaged in Ph.D.
Appendix A – Page 1
APPENDIX A
research. This funding allows the department to be competitive
with peer institutions in attracting graduate students.
The department also proposes to spend $15,000 in support of
computer upgrades and related costs to facilitate the
continuation of faculty research programs.
Proposed expenditures in 2015-16 total $177,863 of which
$150,000 will be funded from the 2015-16 allocation with the
balance of $27,683 to be drawn from the projected 2014-15 yearend balance.
Physics – The 2015-16 Pratt fund allocation for Physics is
$250,000. The department proposes to allocate $355,630 for
fellowship support to outstanding graduate students. Pratt
funds are crucial to the department’s ability to provide
competitive multi-year packages to attract the most highly
qualified physics graduate students. The department proposes to
allocate $36,370 of the 2015-16 allocation for summer wages for
two new faculty members and for a month of summer wages for the
associate chair.
Proposed expenditures in 2015-16 total $392,000 of which
$250,000 will be funded from the 2015-16 allocation with the
balance of $142,000 to be drawn from the projected 2015-16 yearend balance.
New Faculty Start-up Fund – A total of $2,672,000 is requested
by the College to use as components of start-up packages
associated with new hires and to support other strategic needs.
SCHOOL OF MEDICINE — $7,767,000 allocation for 2015-2016
The March 31, 2015 market value of the Pratt Bequest for
the School of Medicine is $57.8 million. The $7,767,000 million
request from the School of Medicine detailed below represents
the regular allocation of $1,300,000 and a special distribution
of $1,467,000 to support graduate programs and central research
efforts. Additionally, the School requests a $5,000,000
divestment to support its strategic mission.
Support and Training of Student Researchers - $1,309,000 Graduate students and postdoctoral 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
Appendix A – Page 2
APPENDIX A
attract exceptional students. These individuals are critical in
enhancing the quality of research in the Ph.D. and MD/Ph.D.
programs at the University, and the success of these programs
has a direct impact on the quality of faculty research at the
School of Medicine.
Core Facility Support - $1,458,000 – Research core facilities –
including, but not limited to: the Small Animal Multimodality
Imaging Core, Advanced Microscopy Facility, Biomolecular
Research Facility, Gene Targeting & Transgenic Facility,
Biorepository, BioNMR Core, and the Exercise Physiology 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, the core
facilities average a cost recovery of 72%, with the differential
funded by Pratt allocations. These resources provide a
competitive advantage to acquiring emerging technologies, and
they are critical to the School of Medicine’s success in
recruitment and retention of faculty and its ability to continue
to grow its externally funded research programs.
Strategic Commitments - $5,000,000 - The School of Medicine
proposes a special distribution to support research-mission
costs including the School’s share of Institutional Review Board
(IRB) and Center for Comparative Medicine costs which were
approximately $2.2 million in fiscal year 2014. In addition,
the School will utilize the funds for strategic faculty
recruitments to bolster its research portfolio.
Appendix A – Page 3
APPENDIX B
MULTI-YEAR MAJOR CAPITAL PROJECTS PLAN
PROJECT DESCRIPTIONS
NEAR TERM
ACADEMIC DIVISION
2015-2018
Maintenance Reserve
State GF: $18.4M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the Academic Division’s Educational & General (E&G) facilities.
This is a standard request that appears in each biennium of the
capital program.
Gilmer Hall and Chemistry Building Renovations
State GF: $180.0M
Originally approved by the Board of Visitors in 2009, this project
will renovate the aging infrastructure and redesign the outdated
teaching and research laboratories that have been identified as
key programmatic requirements to meet the growing demand for
Science, Technology, Engineering, and Mathematics (STEM) programs.
The infrastructure in Gilmer Hall and the Chemistry Building in
particular, is nearing fifty years of age and with few exceptions
has outlived its design lifespan. A comprehensive renewal of the
mechanical, electrical, and plumbing systems for the entire
420,000 GSF in Gilmer Hall and Chemistry is required. The project
will replace antiquated and inefficient systems with a modern,
efficient, and adaptable infrastructure for each building. In
addition, over 350,000 GSF of instruction and research space will
be renovated to maximize space utilization through efficient and
flexible laboratory design. Renovations of inefficient and
outmoded research laboratories will be required to accommodate
interdisciplinary, collaborative research essential to modern
methods of scientific investigation and education. Since this is
a renovation project, incremental operating and maintenance costs
are not expected.
Preplanning authority of $1.8 million ($250,000 general
funds, $1.55 million non-general funds) was authorized by the
state in the 2012-2014 biennium, with non-general funds advanced
by the University to be reimbursed from general funds.
Additional planning was authorized under Chapter 2, April 1,
2014 in the 2012-2014 biennium under item C-39.05 allowing the
university to proceed to detailed planning with additional nongeneral funds to be reimbursed upon state approval of
Appendix B – Page 1
APPENDIX B
construction funding. Total cost is projected between $170.0 $180.0 million, inclusive of the above noted planning funds.
Alderman Library Renewal
State GF: $160.5M
Originally approved by the Board of Visitors in 2011, this
project will renew Alderman Library’s 278,539 gross square feet
for the 21st century without changing its footprint and
construct a second 14,000 gsf high density storage facility
adjacent to Ivy stacks sharing its head house and
infrastructure. It will install complete fire suppression and
alarm systems, improved emergency warning systems, egress and
signage addressing safety concerns. It addresses accessibility
by renovating spaces in accordance with ADA guidelines including
elevators and bathrooms. It replaces all mechanical, electrical
and plumbing systems to provide better protection for
collections, more comfort to people and more sustainable energy
efficiency. Alderman Library houses nearly three million volumes
and serves over 730 thousand visitors per year. The current
life safety and operational systems range in age from twentyfive to seventy-five years and do not properly protect or serve
the assets it houses or the many visitors. Any incremental
annual operating and maintenance costs for this facility would
result in a request for shared state funding.
Laboratory Renovations for New Faculty Hires
State GF: $8.0M
As new faculty are hired over the next two year period it will
be necessary to renovate lab space for those in STEM disciplines
in Arts and Sciences, Engineering, and Medicine. This project
would allow for lab reconfiguration, new building systems
distribution (HVAC, electrical, plumbing, telephone/data),
finishes, and casework for approximately 20,000 square feet of
lab space. We estimate the capacity to address nine wet lab
renovations and three dry lab renovations with the funds
requested. The ability to perform small lab renovations as new
faculty are hired is critical to recruiting the high quality
faculty we will need to replace those retiring.
Physics Building Renewal
State GF: $35.0M
Originally approved by the Board of Visitors in 2013, this
project will renew nearly 135,000 gross square feet of research
and instruction space in the physics building which is now
nearly 60 years old. Included in the proposed scope is the
renewal of mechanical systems and improved energy performance;
addition of fire detection and suppression; repair of the
Appendix B – Page 2
APPENDIX B
exterior envelope and structure, renewal of interior systems,
finishes, and furnishings.
SEAS: Systems Upgrades at Clean Room - Thornton Hall C Wing
State GF: $2.43M
Approved by the Board of Visitors as a legislative amendment in
2014, this project involves renovation of 6,000 gsf for the UVa
Microfabrication Laboratories (UMVL), a 1980s clean room located
in C wing of Thornton Hall requiring highly controlled, low
contaminant environment including instrumentation for National
Radio Astronomy Observatory contracts. The lab provides a dust
free, temperature and humidity controlled environment necessary
for fabrication of microelectronic materials, circuits, and
devices. The project’s repairs and system upgrades address
safety deficiencies. These include: no functioning fire
suppression, no back-up power on hoods and exhaust, exhaust fans
located inside the building, and incorrect control system
function. Activities of the UMVL support Engineering, Arts and
Sciences and Medicine teaching and funded research.
Bayly Building Addition/Renovation at the Fralin Museum of Art
State GF: $14.0M
Private:
$14.0M
$28.0M
Originally approved by the Board of Visitors in 2009, this
project will build on the work completed in the 2009 renovation
of the Bayly Building, making further upgrades to Bayly to
complete life safety, accessibility, and systems modernization
and compliance. The project will also include construction of a
roughly 32,000 GSF addition to the west side of Bayly to house
two major galleries, conservation and education space, as well
as administrative and support spaces. The project will support
the activities of an academic research museum: study, display,
conservation, and storage of art in a secure, environmentally
correct, and accredited environment. It will also facilitate the
teaching and outreach programs of the museum.
McCormick Road Utility Tunnel
Debt: $ 9.1M
Other: $ 4.9M
$14.0M
The McCormick Road Utility Tunnel project was initially budgeted
at $4.9 million under existing Annual Renovation and
Infrastructure Project authority for utility work of
approximately 1,000 linear feet (LF) of 8x8 precast tunnel to
provide Medium Temperature Hot Water and Chilled Water to the
McCormick Road Residence Halls (MRRH) and Gilmer/Chemistry
Appendix B – Page 3
APPENDIX B
upgrades. The project now consists of 1,325 LF of 8'x 8' precast
tunnel and 6 cast-in-place vaults for tunnel access, running
under McCormick Road from Engineers Way to Alderman Road. The
bottom of the tunnel will be approximately 20' below grade.
Heating water piping will run in the tunnel and chilled water
piping will run along the tunnel. The work period is limited to
Summer Break 2015 and requires the closure of McCormick Road.
The major cost drivers, in addition to the increased scope, are
the depth of the tunnel that is required to clear existing
North-South utilities (approximately 20ft below grade to the
bottom of the tunnel) and the extremely compressed schedule.
Anheuser-Busch Coastal Research Center – Phase II
Private: $6.28M
Originally approved by the Board of Visitors in 2009, this
project will add research, outreach, and housing space for the
Coastal Research Center with three buildings totaling 20,000
gross square feet comprised of a laboratory building housing
seawater labs, teaching labs, herbarium, computational lab, and
library space, a cabin with support space able to house up to 36
individuals, and a commons meeting space/outreach building
including catering (warming) kitchen to support larger meeting
and lecture functions.
Ductbank for Dominion Virginia Power-UVa Substation Interconnection
Debt: $15.0M
This project involves three-and-a-half to four miles of
University designed and installed underground ductbank to house
Dominion Virginia Power (DVP) conductors. The purpose is to
improve power quality and reliability by interconnecting the DVP
transmission substation with the University’s two distribution
substations. Eliminating overhead power lines is expected to
eliminate most, if not all, power disruptions resulting in
improved performance in research and patient care.
Contemplative Sciences Center
Private: $53.3M
This project, originally approved by the Board of Visitors in
April 2013, constructs a 60,000 gsf facility providing dedicated
space for the Contemplative Sciences Center to address program
growth and progress toward making the University a national and
world leader as a contemplative sciences theory and practical
application resource. The project will include office space,
contemplative and meditation space, showers and locker rooms,
customer service areas, a fifty person classroom, small
conference room, research and assessment space, storage and
parking. The project will allow for a single consolidated space
Appendix B – Page 4
APPENDIX B
for these programs, while positively impacting Intramural/
Recreational space availability and functionality.
The
Buildings and Grounds Committee approved Concept/Site/Design
Guidelines for the project in June 2014.
Baseball Stadium Expansion
Private: $12.66M
Originally approved by the Board of Visitors with a different
scope in 2007, this project provides for a 40,000 gross square
feet expansion to the existing baseball stadium with over 1,400
new grandstand and club seating to fulfill baseball’s
programmatic goals. The expansion will complement recent
stadium additions and enhancements and includes the addition of
permanent grandstand seating along the first and third
baselines, and new restrooms, suites and other amenities on the
main concourse level. Furthermore, the addition of a new
operations area on the ground level will help to consolidate the
coaching and support staff. Upgrades to the surrounding site
will also be assessed to better connect pedestrians to the
stadium via the Copeley Road entrance.
MEDICAL CENTER
2016-2018
Medical Center Data Center
Operating Cash: $22.98M
The Medical Center’s replacement data center will provide space
needed to keep up with current and future computing needs. The
Medical Center’s primary data center is currently housed in the
basement of Stacey Hall on West Main St. where it has existed
for more than 25 years. Significant IT projects such as
implementation of an electronic medical record system (EPIC)
expansion of centralized patient monitoring, and additional
enterprise systems to support patient access and care, as well
as the potential integration of Culpeper Hospital’s computing
needs, are stressing the capabilities of the existing data
center.
545 Ray C. Hunt Drive Renovation
Operating Cash: $10.12M
In order to maximize highest and best use of Medical Center
facility assets, a significant renovation of 26,000 gsf at 545
Ray C. Hunt Dr. is being proposed at the Fontaine Research Park.
The renovations will provide space for the new Sports Medicine
program. Renovations include exam rooms, waiting/registration
room, adding 2 x-ray rooms and general sports medicine spacespecific renovations.
Appendix B – Page 5
APPENDIX B
Emily Couric Clinical Cancer Center 5th Floor Fit-Out
Operating Cash: $7.06M
The build out of the 22,000 gsf shell space in the Cancer Center
will allow expansion of the Oncology clinical enterprise by
providing new exam and treatment suites, expansion of the stem
cell processing clinical laboratory, a day hospital to support
expanded infusion services and administrative and patient
support.
COLLEGE AT WISE
2016-2018
Maintenance Reserve
State GF: $1.2M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the College’s facilities. This is a standard request that
appears in each biennium of the capital program.
Wyllie Library Conversion
State GF: $12.44M
Originally approved by the Board of Visitors in 2009, this
project converts 28,400 gross square feet of library space to be
vacated upon completion of the new library currently under
construction, to provide additional classrooms, study space, and
faculty offices to meet the current and anticipated growth needs
of the College. This will be an interior re-use of an existing
building and therefore is not expected to have any incremental
operation and maintenance cost.
Campus Welcome Center/Public Safety Facility
State GF: $2.07M
At present, there is no centralized parking or facility for
campus visitors. This 5,900 gsf facility, to be located on land
owned by The College on the western edge of campus, would serve
as a gateway to the campus, provide a dedicated space for the
Campus Police Department and improve the physical connection
between The College and The Town of Wise. This new location
would greatly improve the overall visibility of the Police and
enable them to quickly access all areas of the campus community.
Appendix B – Page 6
APPENDIX B
CAPITAL PLAN
PROJECT DESCRIPTIONS
LONG TERM
2018-2020
Maintenance Reserve
State GF: $19.5M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the Academic Division’s Educational & General (E&G) facilities.
This is a standard request that appears in each biennium of the
capital program.
Fiske Kimball Fine Arts Library
State GF: $18.50M
Private:
$ 0.21M
$18.71M
Originally approved by the Board of Visitors in 2009, this
project will renovate 27,000 gross square feet in the existing
fine arts library to increase study and research space, renew
building systems including heating, plumbing, ventilation, air
conditioning, and electrical systems, install security and
automation systems and add an elevator and accessible bathrooms
and a high density shelving system, consolidating the Music and
Fine Arts Libraries into a single location.
New Music Building
Private: $52.1M
Originally approved by the Board of Visitors in 2009, this
project will construct a new 50,000 gross square feet Music
Building providing purpose-built facilities to include soundisolated rehearsal and performance spaces, classrooms, teaching
studios, practice rooms, efficient instrument storage, faculty
offices, graduate student office space, lounges and a main
administrative office.
New South Lawn Academic Building-Phase II
Private: $27.41M
Originally approved by the Board of Visitors in 2013, this
project proposes a 28,000 gross square foot academic building
adjacent to the South Lawn and Central Grounds as envisioned in
the original master plan for the South Lawn project. The
proposed academic building will house office and classroom
instructional space to accommodate enrollment growth.
Appendix B – Page 7
APPENDIX B
Thornton Hall D-Wing & B-Wing Renovation
State GF: $21.39M
Private:
$0.36M
$21.75M
Originally approved by the Board of Visitors in 2009, the
Thornton Hall D-Wing and B-Wing were last partially renovated in
the late 80’s to early 90’s. The previously untouched offices
and teaching & research labs now require full renovation and the
earlier, partial renovations need to be updated and completed.
North Grounds to Old Ivy Ductbank
Other (Util): $5.24M
Auxiliary:
$0.36M
$5.60M
Originally approved by the Board of Visitors in 2009, this
project will install roughly 7,000 feet of ductbank along with
two feeders from the North Grounds Substation to Old Ivy Road.
Roughly half of the project (3,500 feet) will support growth in
the Massie Road/North Grounds area and serve existing and new
facilities in the area of Old Ivy Road improving service
reliability via dual, underground electrical feeds.
2020-2022
Maintenance Reserve
State GF: $20.7M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the Academic Division’s Educational & General (E&G) facilities.
This is a standard request that appears in each biennium of the
capital program.
Old Cabell Hall Renewal
State GF: $41.3M
Private
$0.5M
$41.8M
Originally approved by the Board of Visitors in 2009, this Old
Cabell Hall renewal will restore its 76,000 gross square feet of
space as a core multi-purpose classroom and academic building on
the Lawn. The project will restore the exterior and interior of
this historic building.
Drama Building: Phase II South Addition
Private: $17.9M
Originally approved by the Board of Visitors in 2009, this
project will construct a 21,000 gross square foot addition
including a dance studio theater, black box theater, faculty and
Appendix B – Page 8
APPENDIX B
graduate offices, costume construction suite, integrated media
studio, and a lighting studio with storage and equipment rooms.
Science & Engineering Teaching & Research Facility
State GF: $ 63.1M
Private
$ 87.2M
$150.3M
Originally approved by the Board of Visitors in 2011, the
project proposes a 150,000 gross square foot science facility to
support growth in teaching and collaborative learning across
multiple schools, and to support strategic research
collaborations involving multiple disciplines.
Science/Engineering Plant: Replace Chemistry Chillers
Other (Util): $19.97M
Auxiliary:
$ 3.09M
$23.06M
Originally approved by the Board of Visitors in 2011, the scope
of this project is to replace the existing 3,600 tons of
capacity in the Chemistry Addition plant building with up to
4,500 tons of capacity. The actual size will be limited to and
determined by available space and available chiller technology
at the time of this project.
COLLEGE AT WISE
2018-2020
Maintenance Reserve
State GF: $1.3M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the College’s facilities. This is a standard request that
appears in each biennium of the capital program.
Proscenium Theatre
State GF: $31.6M
Originally approved by the Board of Visitors in 2009, this
project will develop a 600-seat proscenium theatre as well as
provide the stage requirements for both College and community
programs.
Football Building
Private: $2.7M
Originally approved by the Board of Visitors in 20013, this
8,400 gross square foot building will house offices for the
football coaching staff, two conference rooms and two large open
storage rooms for football equipment. The project will locate
Appendix B – Page 9
APPENDIX B
the football staff at the stadium providing them with more
effective interaction with the team.
Bowers-Sturgill Renovation
State GF: $4.2M
This project would completely update and upgrade the facility's
aging infrastructure (mechanical, electrical, and plumbing)
while giving an opportunity to address needed operational
changes or improvements to accessibility. As a historic
building, the renovation would need to be sensitive to those
requirements.
2020-2022
Maintenance Reserve
State GF: $1.5M
This project is for the repair and replacement of plant,
property and equipment to maintain or extend the useful life of
the College’s facilities. This is a standard request that
appears in each biennium of the capital program.
Darden Hall Renovation
State GF: $18.98M
This would be a renovation of the interior of the building;
updating of the mechanical, electrical, and plumbing
infrastructure; addressing any known accessibility and/or
operational shortcomings; improving some known exterior facade
deficiencies.
Zehmer Hall Renovation
State GF: $16.8M
This would primarily be an interior renovation and update to the
infrastructure of the building, addressing any known
operational, accessibility, or exterior issues.
Sandridge Science Center Lab Wing Renovation
State GF: $32.3M
This project would update the science laboratories, replace
aging infrastructure and renovate faculty office and academic
gathering spots within the facility.
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