Meeting of the Finance Committee November 13, 2014 Agen enda da - - PowerPoint PPT Presentation
Meeting of the Finance Committee November 13, 2014 Agen enda da I. ACTION ITEMS A. Medical Center Acquisition of 500 Ray C. Hunt Drive II. REPORTS A. Treasury Report B. University of Virginia Investment Management Company Report on the
Meeting of the Finance Committee November 13, 2014
Long-Term Pool – Market Value and Performance as of 9/30/2104
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PAT R I C K D . H O G AN E X E C U T I V E V I C E P R E S I D E N T A N D C H I E F O P E R AT I N G O F F I C E R
clinical and research park.
better patient services:
– Modern clinical space for Urology – Comprehensive clinical space for Cardiology
from Hospital Funds, reflects fair market value
renovation cost from Hospital Funds
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J AM E S M AT T E O A S S O C I AT E V I C E P R E S I D E N T & T R E A S U R E R
Opportune time to consider changes to debt portfolio:
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Optimization Considerations
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Refinancing of Commercial Paper Refunding of Series 2005 Bonds Refunding of VCBA Series 2004B Bonds Restructuring of Series 2003A Bonds $36 million callable on June 1, 2015 $18 million currently callable $78 million variable rate bonds outstanding supported by operating
Estimated $200 million outstanding at time of refinancing Series 2015 Bond Issue Size Up to $332 million of refunded debt
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through interest cost savings
Variable Rate Debt
short-term liabilities
Fixed Rate Debt
predict future interest rates; however, we can evaluate historical market conditions to help project possible future trends
given to historical interest rates and the predicted future rates as inherently shown in the future yield curve
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Tax-exempt Yield Curve vs Historical Average * Maturity Year
* Assumes market rates as of November 5, 2014 compared to historical average AAA tax-exempt rates since January 1, 1991
with the next bond issue
liabilities as a risk management tool.
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* Long-term Weighted Average Cost of Capital (“WACC”) does not take into consideration outstanding commercial paper. Assumes all variable rate debt is hedged at fixed payer swap rate. Source: Wells Fargo.
2009 2010 2011 2012 2013 2014 Fixed Rate $853,065 $839,645 $1,015,847 $994,608 $1,065,064 $1,052,073 Synthetic Fixed 100,000 100,000 100,000 100,000 100,000 100,000 Unhedged Variable 38,425 52,710 58,860 106,102 118,232 184,432 % Variable 4% 5% 5% 9% 9% 14% Total 991,490 992,355 1,174,707 1,200,710 1,283,296 1,336,505 Long-term WACC * 4.24% 4.24% 4.16% 4.16% 4.17% 4.17%
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financed
* Long-term WACC does not take into consideration outstanding commercial paper. FY15 fixed rate borrowing based on market rates as of October 14, 2014. FY18 fixed rate borrowing assumed at current market rates plus 200 bps yield.
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Long-term WACC * 4.17% 4.14% 4.14% 4.13% 4.30%
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variable rate debt
* Long-term WACC does not take into consideration outstanding commercial paper. FY15 fixed rate borrowing based on market rates as of October 14, 2014. FY18 fixed rate borrowing assumed at current market rates plus 200 bps yield.
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Long-term WACC * 4.17% 3.73% 3.74% 3.74% 3.69%
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associated with variable rate debt
* Long-term WACC does not take into consideration outstanding commercial paper. FY15 fixed rate borrowing based on market rates as of October 14, 2014. FY18 fixed rate borrowing assumed at current market rates plus 200 bps yield.
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 Long-term WACC * 4.17% 3.90% 3.90% 3.90% 3.62%
– Seek BOV Authorizing Resolution for bond issue – Seek BOV Approval to Amend the University’s Debt Policy to address:
– Formalizing liquidity targets would provide transparency and help ensure support from rating agencies and investors
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L AR RY K O C H AR D C H I E F E X E C U T I V E O F F I C E R O F U V I M C O
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Board of Directors
BOV, and one by the President
Staff
Associates, three Senior Analysts, and one Analyst
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As of June 30, 2014 $ Millions % 1 YR 3 YR 5 YR 10 YR 20 YR Long Term Pool 6,950 100.0 19.0 12.4 15.2 10.8 12.6 Policy Benchmark 100.0 16.6 8.9 12.4 7.5 7.6 Equity Public 1,530 22.0 26.8 15.9 22.9 14.4 12.9 Long / Short 1,611 23.2 11.3 11.7 10.7 9.8 10.2 Buyout 996 14.3 28.3 15.1 19.8 14.3
384 5.5 61.8 30.2 29.4 12.6 21.1 Total Equity 4,521 65.1 23.3 15.0 17.9 12.6 14.9 MSCI All Country World Equity 60.0 23.6 10.9 14.9 8.0 7.6 Real Assets Real Estate 527 7.6 14.7 12.1 1.0 (1.2) 3.8 Resources 340 4.9 27.1 11.6 26.0 21.2
867 12.5 19.3 11.5 15.5 10.7 11.8 MSCI Real Estate 10.0 11.6 9.7 18.6 8.7 8.6 Fixed Income, Cash & MAC Marketable Alternatives and Credit 761 10.9 14.6 11.1 12.9 7.4 8.1 Government Bonds 605 8.7 0.4 0.3 1.5 4.6 6.6 Cash & Currency 195 2.8 0.1 (0.0) 0.1
1,561 22.4 7.4 5.3 7.4 5.8 7.3 Barclays Aggregate Bond 30.0 4.8 4.1 4.7 4.9 6.2 Market Value Annualized
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Annualized Returns of the Long Term Pool Versus Benchmarks and Peers
Periods Ending June 30, 2014 1 YR 3 YR 5 YR 10 YR 20 YR Long Term Pool 19.0 12.4 15.2 10.8 12.6 Policy Portfolio Benchmark 16.6 8.9 12.4 7.5 7.6 Comparative Industry Data TUCS All Master Trusts Top Quartile (1) 17.6 10.5 13.4 7.7 9.2 TUCS All Master Trusts Median 15.7 9.4 12.1 7.0 8.6 TUCS All Master Trusts Bottom Quartile 12.6 7.6 10.2 6.3 8.0
(1)
Trust Universe Comparison Service (TUCS) reports performance of over 900 institutions representing $3.5 trillion in assets under management
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
As of June 30, 2014
Public Equity Long/Short Equity Private Equity Real Estate Resources Marketable Alternatives & Credit Bonds & Cash
22.0% 23.2% 19.8% 7.6% 4.9% 10.9% 11.5% 30% Fixed
Income
10% Real Assets 60% Equity Policy Portfolio
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Risk is the likelihood of a random, undesirable outcome
have on the operations of the institution
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M E L O D Y B I AN C H E T TO A S S O C I AT E V I C E P R E S I D E N T F O R F I N A N C E
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compared to 9/30/13
Uses, actual results as compared to the budget plan through 9/30/14
(U (Unaud udite ited, d, in millions ns)
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Statement of Net Position 9/30/14 6/30/14 Net Assets $ 6,547.0 $ 6,336.9 Statement of Revenue, Expenses, Change in Net Position 9/30/14 9/30/13 Net Tuition $ 251.6 $ 237.4 Grants & Contracts 86.8 85.1 State Appropriations 135.7 137.1 Gifts 37.9 28.2 Other 76.9 63.3 Operating Revenues 588.9 551.1 Operating Expenses 374.3 354.1 Net Operating Margin 214.5 197.1 Net Non-Operating Activity (4.4) 134.4 Change in Net Assets $ 210.1 $ 331.5
(in millions) ions)
9/30/14 Budget 9/30/14 Actual Net Tuition and Fees $ 258.1 $ 259.8 Grants & Contracts 70.0 68.6 Endowment Distribution and Gifts 106.0 108.2 State Appropriations 142.6 135.7 Other 111.0 112.1 Sources of Funds 687.7 684.4 Instruction 76.0 75.4 Research and Public Service 90.0 90.3 Academic Support 48.0 48.3 Other Education and General 70.5 69.1 Financial Aid, Auxiliary, Debt, and Other 114.5 112.1 Uses of Funds 399.0 395.2 Net Sources in Excess of Uses $ 288.7 $ 289.2
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PAT R I C K D . H O G AN E X E C U T I V E V I C E P R E S I D E N T A N D C H I E F O P E R AT I N G O F F I C E R
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“Need-blind” admission policy Commitment to meet 100% of students’ demonstrated financial need
UVa is one of only two public universities with need-blind admissions and a guarantee to meet 100% of all students’ demonstrated financial need
Acc ccess ess Affordabi dability ity
Goals: Attracting, enrolling, and graduating a socio- economically diverse student body Ensuring financial support to students demonstrating financial need Preserving AccessUVa program’s position as one of the strongest commitments to guaranteed need- based aid in the country
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23.7% 33.3% 0% 5% 10% 15% 20% 25% 30% 35% Fall 2005 Fall 2007 Fall 2009 Fall 2011 Fall 2013
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PERCENTAGE OF STUDENTS WITH NEED
Since the inception of the AccessUVa program, the percentage of undergraduate students with financial need has grown from 24% to 33%.
Tuition & Fees $12,998 Orientation Fee 210 Room 5,492 Board 4,560 Books, Travel, Other 4,157 Total $27,417 % students on aid: 34% For students on aid: Average Grant Package $10,587 Average Net Price $16,830 Maximum Loan Offered Low-income: $3,500 Others with Need: $7,000 Tuition & Fees $42,184 Orientation Fee 210 Room 5,492 Board 4,560 Books, Travel, Other 5,390 Total $57,836 % students on aid 32% For students on aid: Average Grant Package $27,659 Average Net Price $30,177 Maximum Loan Offered $7,000
In-State Out-of-State
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Pell grant recipients Need-based financial aid recipients Student indebtedness Graduation rates
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UVa has been successful in increasing socioeconomic diversity, maintaining top graduation rates, and meeting 100% of need while limiting student indebtedness.
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Since the beginning of AccessUVa, the percentage of Pell Grant recipients among the total undergraduate population has almost doubled.
Source: Student Information System and financial aid applications. NCES College Navigator for peer data. 7.5% 13.2%
0% 5% 10% 15% 20% 25% 2000 2002 2004 2006 2008 2010 2012 2014
In-State Total Out-of-State
Fall Terms
AccessUVa Begins AccessUVa Fully Implemented
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($22,933) is lower than the following 2011-12 averages (most recent data available):
$25,017
$29,309
$29,400
AccessUVa program, 35% of UVa students borrow, compared to the national average of 71% and the State of Virginia average of 60%.
In line with national trends, UVa’s average undergraduate student indebtedness has risen from $15,176 to $22,933, an increase of 51%. This is due to increased cost of attendance, economic downturn, and funding pressures for financial aid.
Source: US News and World Report
$- $5,000 $10,000 $15,000 $20,000 $25,000
Average Total Student Debt upon Graduation (includes all education loans)
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rate of any public institution in the nation.
rate of Pell recipients among any public institution in the nation.
Source: Institutional Assessment & Students and US News & World Report dataset
Objective is to bring the Pell recipient graduation rate up to the level of students without need by:
to guide incoming students’ transition to and persistence in the University,
throughout their University career.
50% 60% 70% 80% 90% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008
Includes all 1st-time 1st-year students who entered in the given year.
Students without Need Students With Need but not Pell Pell Recipients Entering Fall Term
AccessUVa continues to be the premier need-based aid program for a public institution in the United States, supporting the University’s efforts to increase socioeconomic diversity. Focused Effort:
Bringing graduation rates of Pell recipients to the level of undergraduate students without need Moderating student indebtedness, mindful of the rising cost of attendance
An important challenge going forward is meeting the increasing need of middle-income families through an appropriate balance of grants and loans.
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Most notable areas of growth include tuition grants and loans.
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SOURCE: University of Virginia Institutional Assessment and Studies
Notes:
as of November 6, 2014.
above correspond with the 2012 federal poverty guidelines for a family of four.
All Undergraduate Students Students with Need (AccessUVa Recipients) 15,544 5,179 $0 - 46,100 1,069 1,051 $46,101 - $92,200 700 668 >92,200 1,284 605 Did not Apply for Aid 1,485 Subtotal 4,538 2,324 $0 - 46,100 798 750 $46,101 - $92,200 823 759 >92,200 3,222 1,346 Did not Apply for Aid 6,163 Subtotal 11,006 2,855
All Undergraduate Students
Total Minority Students Other Students
33% of undergraduate student population
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SOURCE: University of Virginia Institutional Assessment and Studies
All Undergraduate Students Students with Need (AccessUVa Recipients) 10,742 3,680 $0 - 46,100 783 767 $46,101 - $92,200 536 508 >92,200 1,028 427 Did not Apply for Aid 1,201 Subtotal 3,548 1,702 $0 - 46,100 632 592 $46,101 - $92,200 628 569 >92,200 2,292 817 Did not Apply for Aid 3,642 Subtotal 7,194 1,978
In-State Undergraduate Students
Total Minority Students Other Students
Notes:
as of November 6, 2014.
above correspond with the 2012 federal poverty guidelines for a family of four.
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SOURCE: University of Virginia Institutional Assessment and Studies
All Undergraduate Students Students with Need (AccessUVa Recipients) 4,802 1,499 $0 - 46,100 286 284 $46,101 - $92,200 164 160 >92,200 256 178 Did not Apply for Aid 284 Subtotal 990 622 $0 - 46,100 166 158 $46,101 - $92,200 195 190 >92,200 930 529 Did not Apply for Aid 2,521 Subtotal 3,812 877
Out-of-State Undergraduate Students
Total Minority Students Other Students
Notes:
as of November 6, 2014.
above correspond with the 2012 federal poverty guidelines for a family of four.
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2013-2014 2014-2015 AccessUVa
# Students, with federal need # Diverse Students, with federal need Institutional Funds # Students, with federal need # Diverse Students, with federal need Institutional Funds
In-state - family income range: $0 - $46,100 1,355 754 $ 9,009,931 1,359 767 $ 8,776,797 In-state - family income range: $46,100 - $92,200 1,109 513 5,817,453 1,077 508 6,720,086 In-state - family income range: above $92,200 1,158 391 1,075,992 1,244 427 1,385,509
Total In-State
3,622 1,658 15,903,376 3,680 1,702 16,882,392 Out-of-state - family income range: $0 - $46,100 441 266 15,745,217 442 284 15,042,740 Out-of-state - family income range: $46,100 - $92,200 326 149 7,949,898 350 160 9,162,273 Out-of-state - family income range: above $92,200 711 190 6,114,866 707 178 6,965,775
Total Out-of-State
1,478 605 29,809,981 1,499 622 31,170,788
Total In-State and Out-of-State
5,100 2,263 $ 45,713,357 5,179 2,324 $ 48,053,180 Notes: The schedule shows how only unrestricted dollars from tuition and unrestricted private funds are distributed through the AccessUVa program. In addition, roughly an additional $30M in grants funded from federal, state, external, and restricted gifts and endowment sources are distributed. From all sources, more than half of all grants are allocated to in-state students and half of all grants are allocated to out-of-state students each year. In-state tuition is used only for aid to in-state students, while out-of- state tuition is used only for aid to out-of-state students. The above figures include all undergraduate students who submitted a FAFSA and who had financial need based on federal guidelines. The income ranges used above correspond with the 2012 federal poverty guidelines for a family of four. Data as of 11/06/14. SOURCE: University of Virginia Institutional Assessment and Studies
PAT R I C K D . H O G AN E X E C U T I V E V I C E P R E S I D E N T A N D C H I E F O P E R AT I N G O F F I C E R
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approved 3% merit pool
Faculty and Staff Merit-Based Salary Increases
– $7.3 million other sources (grants, contracts, auxiliary, etc.) – $8.1 million BOV-authorized funds
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Employee Type Total # Eligible # Received Increase % Received Increase Average % Increase Teaching + Research Faculty
2,293 1,679* 73% 4.5%
Professional Research Staff
327 217 66% 2.6%
Administrative + Professional Faculty
468 398 85% 3.1%
University Staff
2,987 2,718 91% 2.9%
TOTAL
6,075 5,012 83%
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*Excludes SOM clinical faculty with the opportunity for compensation increases through UPG. Note: In 2013-14, UVa’s compensation ranking among AAU peer institutions was #27. The goal is to reach the 20th position.