Meeting of the Finance Committee November 15, 2013 1 FINANCE - - PowerPoint PPT Presentation

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Meeting of the Finance Committee November 15, 2013 1 FINANCE - - PowerPoint PPT Presentation

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Meeting of the Finance Committee November 15, 2013 1 FINANCE COMMITTEE CONSENT AGENDA ITEMS 1. Acquisition of Department of Forestry Property Located at 480 George Dean Drive, Charlottesville, Virginia 2. Amendment to the Qualified

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Meeting of the Finance Committee

November 15, 2013

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FINANCE COMMITTEE CONSENT AGENDA ITEMS 1. Acquisition of Department of Forestry Property Located at 480 George Dean Drive, Charlottesville, Virginia 2. Amendment to the Qualified Governmental Excess Benefit Arrangement Plan 3. Capital Project Approvals – Financial Plans

  • a. Education Resource Center
  • b. Gross Anatomy Renovation

4. Medical Center Participation in a Dialysis Joint Venture

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Acquisition of Department of Forestry Property Located at 480 George Dean Drive, Charlottesville, Virginia

Pat Hogan Executive Vice President and Chief Operating Officer

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Acquisition of Department of Forestry Property: 400 George Dean Drive

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Acquisition of Department of Forestry Property: 400 George Dean Drive

  • Department of Forestry owns 13.37 acres on George

Dean Drive

  • Price will approximate property valuation:
  • 2010 appraisal = $1.9 million
  • Assessed value = $1.6 million
  • Parcel is contiguous to UVa and foundation-owned

property

  • Authorizes Finance Committee Chair and EVP-COO to

determine appropriate terms and conditions, and to execute acquisition

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Amendment to the Qualified Governmental Excess Benefit Arrangement Plan

Pat Hogan Executive Vice President and Chief Operating Officer

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Amendment to the Qualified Governmental Excess Benefit Arrangement Plan

  • Used to defer taxation on retirement contributions

in excess of limitations otherwise imposed by IRS

  • n other retirement plans
  • Amendment proposed to offer additional forms of

distribution (other than just lump sum) by providing annuity options

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Capital Project Approvals: 1. Education Resource Center 2. Gross Anatomy Lab Renovation

Colette Sheehy Vice President for Management & Budget

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Project Approvals

  • Education Resource Center
  • Budget and scope revision
  • 45,900 GSF
  • $29.86 million cost funded with cash

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  • Gross Anatomy Lab Renovation
  • New project
  • Renovates and updates gross anatomy

teaching space and fresh tissue teaching labs in Jordan Hall to comply with accreditation standards

  • Estimated project cost of $4-5 million to be

funded by gifts

Project Approvals

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Medical Center Participation in a Dialysis Joint Venture

Pat Hogan Executive Vice President and Chief Operating Officer

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Medical Center Participation in a Dialysis Joint Venture

  • Proposal to operate a new dialysis clinic in Farmville,

Virginia through a joint venture with Centra Health

  • Medical Center’s ownership interest will be 51%
  • Enhances the UVa Medical Center’s opportunities to

achieve multiple goals of the current Strategic Plan

  • MCOB recommends approval of this joint venture by the

Board of Visitors

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FINANCE COMMITTEE REPORTS

  • 1. Organizational Excellence
  • 2. 2014-2015 Academic Division Budget

Planning and Preliminary Assumptions

  • 3. Treasury Report
  • 4. University Workforce
  • 5. Executive Vice President’s Remarks

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Organizational Excellence

Sarah Collie Assistant Vice President for Organizational Excellence

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  • Engage. Simplify. Enable the Mission.
  • Engage. Simplify. Enable the Mission.
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Organizational Excellence

Early Progress

  • Benefitting from strong academic-administrative

collaboration

  • Aligning initial activities with strategy to enhance

University capacity

  • Gathering enterprise-wide data from the Benchmarking

Study

  • Realizing higher quality and synergies, as well as cost-

savings and cost-avoidance

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  • Engage. Simplify. Enable the Mission.
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Aspiring to World-Class and Globally Distinguished Performance

World-class

EFFICIENCY

High Low High

EFFECTIVENESS EFFICIENCY

World-class EFFECTIVENESS

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  • Engage. Simplify. Enable the Mission.
  • New service models
  • Enhanced collaboration
  • Process and functional

improvements – (e.g. technology, space)

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Scope of Benchmarking Study – Current State Assessment

Procurement

  • Supply Data Management
  • Requisition and PO Processing
  • Supplier Scheduling
  • Receipt Processing
  • Compliance Management
  • Customer Management
  • Sourcing Execution
  • Supplier Management and

Development

  • Function Strategy and Performance

Management

  • Sourcing & Supply Base Strategy
  • Function Management

Finance

  • Cash Disbursements

− Accounts Payable − Travel and Expenses

  • Revenue Cycle

− Credit − Customer Billing − Dispute Management − Collections − Cash Application

  • Accounting and External Reporting

− Fixed Assets − Intercompany accounting − General ledger accounting − Cost Accounting − External Reporting

  • Tax Management
  • Treasury Management

− Cash Management − Capital & Risk Management

  • Compliance Management
  • Planning & Performance Mgmt
  • Business Analysis
  • Function Management

Human Resources

  • Total Rewards Administration
  • Payroll Services
  • Data Mgmt, Reporting & Compliance
  • Staffing Services
  • Labor Relations
  • Workforce Development Services
  • Organizational Effectiveness
  • Total Rewards Planning
  • Strategic Workforce Planning
  • Function Management

Information Technology

  • IT Business Planning
  • Alignment, Prioritization
  • Enterprise Architecture Planning
  • Emerging Technologies
  • Infrastructure Development
  • Application Development and

Implementation

  • Quality Assurance
  • Infrastructure Management
  • End User Support
  • Application Maintenance
  • Risk Management
  • Function Management

Student Services

  • Admission services
  • Financial Aid Services
  • Academic Catalog and Records

Management

  • University Data Management,

Reporting & Compliance Research Administration

  • Pre-Award
  • Post-Award

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  • Engage. Simplify. Enable the Mission.
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Charting Our Progress - Examples

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Initiative Value Annual Savings/ Avoidance New Service Models

  • Virginia Higher Ed. Procurement Cooperative
  • Strategic Sourcing – office supplies
  • Back Office Service Sharing
  • Reduced demand of UVa

resources

  • More favorable pricing
  • Economies of scale

TBD $300,000 $430,000 Negotiated Contract Savings

  • Banking Services
  • Other Major Procurements
  • Greater efficiency
  • Improved service

$800,000 $160,000 Collaborations

  • Research Administration for Batten School by

School of Medicine

  • Expert full-service pre-

award, post-award, and closeout TBD Technology

  • UVa Box – secure cloud storage for

documents/data

  • Accessible, shareable
  • Reduces on-site servers

TBD Space

  • Relocation of Physician Billing and Call Center

to UVa Research Park

  • Improve space utilization
  • Strategic allocation

TBD Other

  • Health Plan - dependent audit, UVa Pharmacy

and change to Spousal Coverage $3.0 - $10.0 million (TBD)

  • Engage. Simplify. Enable the Mission.
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2014-2015 Academic Division Budget Planning and Preliminary Assumptions

Colette Sheehy Vice President for Management and Budget

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2014-15 Budget Planning Revenue Assumptions

Tuition:

  • Comprehensive undergraduate tuition and financial aid strategy

being developed for discussion with Board

  • Engineering will continue to phase in tuition differential
  • Enrollment growth will follow Board-approved plan
  • In April, the Board will consider undergraduate tuition, and will

consider graduate tuition, housing and dining rates in February.

Research Funding: projected 1.0% decrease Mandatory Auxiliary Fees: projected 2-2.5% increase

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2014-15 Budget Planning Revenue Assumptions (continued)

Housing and Dining rates: projected 3-4.5% increase Endowment: 4.68% of market value per approved spending policy State Appropriations: funding to support enrollment growth and any state authorized salary and benefit increases (e.g. VRS) Philanthropy: based on school and University Advancement estimates

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2014-15 Budget Planning Expenditure Assumptions

Efficiencies/Cost Savings: $8-9 million Financial aid: full funding for AccessUVa to meet 100% of need Compensation:

  • T&R Faculty – 4.75% merit increase pool per Board approved

resolution

  • A&P Faculty/University Staff – merit-based 3% increase
  • Classified Staff – as state budget dictates
  • Fringe rates are projected to increase for faculty and staff
  • 41% increase in VRS employer contribution rate
  • Health care premium increases average 7.0%

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Budget Development Timeline

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December 2013- January 2014 Develop tuition, fees, and financial aid requirements February 2014 Discuss tuition, fees, and financial aid scenarios with Finance Committee; approve graduate tuition and fees, housing, and dining April 2014 BOV approves undergraduate tuition and fees May 2014 Complete 2014-15 budget development June 2014 BOV approves 2014-15 budget

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Treasury Update

Jim Matteo University Treasurer

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Treasury Update

  • 1. Outstanding debt
  • 2. Fixed vs. variable rate debt
  • 3. Peer comparison on cost of capital
  • 4. Aaa rating benchmarks
  • 5. Key debt capacity ratios
  • 6. Cash on hand

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Outstanding Debt @ 9/30/13 ($millions)

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Fixed vs. Variable Rate Debt

100.0 98.6 91.9 91.8 89.4 85.3 81.0 49.2 1.4 8.1 8.2 10.6 14.7 19.0 50.8

10 20 30 40 50 60 70 80 90 100

INDIANA U UWASHINGTON UTEXAS TEXAS A&M PURDUE UNC UVA UMICHIGAN

Fixed Rate Debt Variable Rate Debt

(%)

Source: Moody’s MFRA

Public Aaa Peers; FY12 Financial Data

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Peer Comparison – Weighted Average Cost of Capital & Effective Duration

Source: Barclays Capital

“Efficient Frontier”

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Moody’s Scorecard Rating for Aaa-rated Public Universities

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Key Debt Ratios

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Debt Capacity Projection

Source: JPMorgan

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Monthly Days Cash on Hand @ FYE 2012

(Monthly Liquidity x 365) / (Total Expenses – Depreciation and Additional, Unusually Large Non-Cash Expenses)

SG 341 251 251 203 185 177 157 141 Baa A3 A2 A1 Aa3 Aa2 Aa1 Aaa 50 100 150 200 250 300 350 400

Ratings Purdue (Aaa) Texas A&M (Aaa) Indiana U (Aaa) UVA (Aaa) UMichigan (Aaa) UTexas (Aaa) UNC (Aaa) UW (Aaa)

(x)

Source: Moody’s Municipal Financial Ratio Analysis (MFRA); certain figures calculated by Morgan Stanley from audited financials where available

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Closing Comments

Strengths

  • FY13 performance maintained and enhanced key financial

strengths

  • Balance sheet growth supported by strong investment

performance and superior fundraising

  • Positive operating results fueled by strong performance of the

health care enterprise and growth in net tuition revenue

  • Maintenance of liquidity levels that provide a solid cushion for

potentially stressful environments Challenges

  • High exposure to the rapidly changing and challenging

healthcare marketplace

  • Uncertain federal research funding outlook
  • Relationship with the Commonwealth and the level of state

appropriations

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University Workforce

Susan Carkeek Vice President and Chief Human Resources Officer

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UVa Employee Categories

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Employee Category Head Count Comparison to October 2012 Additional Description Teaching & Research Faculty 2,467

  • 1.9%

Includes 1,511 tenure track (-4.1%) and 956 non tenure track (-2.3%); also includes 1,061 faculty in the School of Medicine Temporary/Wage Faculty 375

  • 25.9%

Part-time faculty typically teaching one course. Administrative & Professional Faculty 548

  • 14.4%

Professional Research Staff 449

  • 9.1%

Staff 4,981

  • 3.7%

Includes 1,903 Classified Staff (38%) and 3,078 University Staff (62%) Temporary/Wage Staff 682

  • 8.8%

Graduate Assistants 1,561

  • 2.4%

Includes 928 Teaching Assistants and 633 Research Assistants Student Employees 2,530

  • 2.1%

Includes 238 student employees at College at Wise College at Wise 445 +21.9% Includes 94 T&R faculty (+2.2%), 40 A&P Faculty (no change), 172 staff (+ 3.0%), and 139 temp/wage employees (+110.6%) Medical Center 7,306 +1.2% Includes 5,989 salaried employees (+2.6%), 555 temp/wage employees (-10.6%), and 762 “house staff” i.e. medical residents TOTAL 21,344

  • 2.5%
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Executive Vice President’s Remarks

Pat Hogan Executive Vice President and Chief Operating Officer

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Executive Vice President’s Remarks

  • Quarterly Financial Report
  • Annual Audit
  • Impact of Federal Shutdown

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