REVISED ED Board of Visitors Finance Committee Meeting March 2017 - PowerPoint PPT Presentation

REVISED ED Board of Visitors Finance Committee Meeting March 2017

Finance Committee Agenda ACTIO ION I N ITEMS MS A. 2017-2018 Faculty, Staff, and Student Housing Rates B. 2017-2018 Contract Rates for Dining Services C. Signatory Authority for Contract for Scientific Goods D. Signatory Authority for Medical Center Contract for Hospital Bed Replacement Project E. Signatory Authority for Master Brokerage and Consulting Services Agreement and Resultant Contracts for Employee Benefits REPORT RTS A. Endowment Report: Market Value and Performance as of December 31, 2016 B. VP & CHRO Report on First Six Months

2017-2018 Faculty , Staff, and Student Housing Rates

UVa a Fac acul ulty ty and and Staf aff Prope operty Rents ents State policy requires rents to reflect market rate for similar properties 80 Units 3.49% Average Increase 4

Studen tudent H Hous ousing R ng Rates ates 2017-2018 Acad ademic ic Y Year Ac Academic D Division College a e at Wise Number of Beds 6,804 706 Occupancy rate (fall 2016) 97% 75% Average increase (decrease) $166 or 2.8% ($31) or (.5%) Average double room charge $6,042 $6,212 (nine-month lease) 5

Break reakdow down of of Studen tudent Hous ousing ng Rate ate Inc ncre reas ase Average P Per- Percent of Total Do Dollars Cat atego egory Stud udent nt (3.4 .49% overall) Generated ed Increase In In Increase Debt Service Expense 1 $180 109% $1,609,000 Capital Renewal and Replacement 2 53 32% 475,000 Operational Savings 3 (67) (41%) (604,000) Total $166 $1 66 100% 00% $1, 1,480, 80,000 000 1. Includes increases in debt service for International Residential College renovations, site work for McCormick Road Residence Halls renovations, and Gooch Dillard renovations; less decreases for Gibbons House (adjusted to reflect final cost) and Woody House (debt satisfied May 2018). 2. Consistent with Board of Visitors’ policy on capital renewal and replacement which requires maintaining 1.5% of replacement value. The proposed increase also reflects increased capital costs associated with undergraduate enrollment growth and additional investments in major maintenance and repairs of existing facilities. 3. Reflects operational efficiencies. 6

201 016-2017 UVa a Studen tudent H Hous ousing R ng Rates ates VA A Publ Public, Pe Peer, & Sel Selected Ot Other her Ins nstitut utions Do Doubl uble Room om Rat Rate $10,000 UVa = UV = $5, $5,876 $9,000 Ave verage "Peer" & & Selected O Others = = $7,6 ,643 $8,000 $7,000 Ave verage V VA Public S c Sch chools = = $5, $5,813 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 7 7 Sources: SCHEV 2016-2017 Public Institutions survey & Business Operations web-based survey

201 016-20 2017 7 UVa-Wise S e Studen tudent H Hous ousing R ng Rates ates VA A Publ Public, Pe Peer, & Sel Selected Ot Other her Ins nstitut utions Do Doubl uble Room om Rat Rate $8,000 UVa Va-Wise = = $6, $6,234 $7,000 ....... .... Average VA Public Schools = $5,813 - - - - Average "Peer" & Selected Others(UMW) = $5,334 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 8 8 Sources: SCHEV 2016-2017 Public Institutions survey & Business Operations web-based survey

2017-2018 Contract Rates for Dining Services

2017 17-2018 D Dini ning ng Ser ervice R Rates ates 2017-2018 Acad ademic ic Y Year Ac Academic D Division College a e at Wise Average increase 1.3% 0.0% Meal Plan Rate Range $100 - $5,320 $165 - $4,112 10

201 016-2017 UVa a Dini ning ng Meal Meal Plan an Rates ates VA A Publ Public, Pe Peer & Se Selected Ot d Othe her Ins nstitut utions ns F Ful ull M Meal al Pl Plan an Rat Rate $7,000 UV UVa = = $4, $4,850 $6,000 Ave verage "Peer" & & Selected O Others = = $5,3 ,338 $5,000 Ave verage V VA Public S c Sch chools = = $4, $4,550 $4,000 $3,000 $2,000 $1,000 $0 Sources: SCHEV 2016-2017 Public Institutions survey & Business Operations web-based survey 1 1

201 016-20 2017 7 UVa-Wise e Dini ning ng Meal Meal Plan an Rates ates VA A Publ Public, Pe Peer, & Sel Selected Ot Other her Ins nstitut utions Ful ull Meal al Pl Plan an Rat Rate $7,000 UVa Va-Wise = = $4, $4,112 $6,000 .... .... Average VA Public Schools = $4,550 - - - - Average "Peer" & Selected Others = $4,152 $5,000 $4,000 $3,000 $2,000 $1,000 $0 12 Sources: SCHEV 2016-2017 Public Institutions survey & Business Operations web-based survey

Signatory Authority for Contract for Scientific Goods

Signat gnatory A Author uthority to o Ex Exec ecute C e Contra ontract for or Scient entific Goods Goods • Cooperative contract through Virginia Association of State College and University Purchasing Professionals • Term contract to procure scientific equipment, supplies and chemicals, to be utilized by multiple academic departments • This contract streamlines the process, as departments previously used many individually negotiated sole source or competitively bid contracts. • Two year contract, with option to renew for four additional two year terms • Estimated annual spend will exceed $5 million 14

Signatory Authority for Medical Center Contract for Hospital Bed Replacement Project

Signat gnatory A Author uthority to o Ex Exec ecute Medi e Medical al Cente enter Cont ontract for or Hos ospi pital Bed ed Repl eplac acem ement Proj oject • Negotiated a contract to replace approximately 100 Intensive Care Unit beds and 450 Acute Care beds • Total contract value of $12 million • Estimated annual spend will exceed $5 million 16

Signatory Authority for Master Brokerage and Consulting Services Agreement and Resultant Contracts for Employee Benefits

Si Signa natory Aut utho hority for Mas aster Br Brokerag age and and Co Cons nsul ulting Se Services Agree eemen ent and and Resul ultan ant Co Cont ntrac acts for Em Empl ployee Be Bene nefits • Negotiated a master brokerage agreement to procure employee benefit related insurance and services • This contract provides access to expert knowledge, efficiency gains and better pricing • Estimated annual value of premiums associated with the contracts to be executed under the master brokerage agreement is expected to exceed $5 million annually 18

Endowment Report

Outl utline ne  Governance and Staffing  Performance Review  Asset Allocation  Current Environment  Going Forward 20

Go Gover ernan nance and and Staf affing ng Board of Directors • 11 members led by David MacFarlane as Chair, three appointed by the BOV, and one by the President • BOV representatives are John Harris, John Macfarlane and Timothy O’Hara • Meets four times a year Staff • 36 UVIMCO team members • Investment team comprised of CEO/CIO, six Managing Directors, two Senior Investment Associates, four Investment Associates, and one Investment Analyst • Average of 20 years of investment experience among senior staff 21

Perform ormanc nce R e Rev eview As o of D Decem ecember er 3 31, 2 2016 Market Value Annualized FYTD $ Millions % 1 YR 3 YR 5 YR 10 YR 20 YR Dec-16 Long Term Pool 8,035 100.0 4.4 7.0 10.4 8.0 11.1 5.3 Policy Benchmark 100.0 6.6 4.3 8.0 4.4 6.3 2.8 Equity Public 1,996 24.8 7.1 6.2 13.7 8.4 10.9 7.4 Long / Short 1,673 20.8 (0.3) 3.4 9.0 7.2 10.7 3.6 Private 1,322 16.5 (2.5) 15.7 15.9 11.8 18.5 2.7 Total Equity 4,991 62.1 1.9 7.9 12.6 9.3 13.2 4.8 MSCI All Country World Equity 60.0 8.5 3.7 10.0 4.1 6.1 6.8 Real Assets Real Estate 456 5.7 8.4 14.9 14.1 (1.9) 3.8 3.8 Resources 456 5.7 23.5 3.5 5.4 12.6 -- 24.3 Total Real Assets 912 11.4 16.2 11.2 11.1 6.9 11.1 13.1 MSCI Real Estate 10.0 3.7 8.6 10.0 2.5 6.7 (5.6) Fixed Income, Cash & MAC Marketable Alternatives and Credit 1,138 14.2 9.4 4.0 7.3 6.6 6.5 5.3 Government Bonds 733 9.0 0.8 0.5 0.4 3.4 5.7 (0.5) Cash & Currency 262 3.3 0.3 0.1 0.1 -- -- 0.2 Total Fixed Income, Cash & MAC 2,133 26.5 5.7 2.5 3.8 5.1 6.2 2.7 Barclays Aggregate Bond 30.0 3.3 3.6 2.9 4.4 5.3 (2.2) 22

Asset A Alloc ocati ation on 100% 90% 24.8% 80% 60% 70% Equity 20.8% 60% 50% 16.5% 40% 10% Real 5.7% 30% Assets 5.7% 20% 14.2% 30% Fixed 10% Income 12.3% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Portfolio Public Equity Long/Short Equity Private Equity Real Estate Resources Marketable Alternatives & Credit Bonds & Cash As of December 31, 2016 23

Curr urrent nt Env Environ onment nt Valuations Macroeconomic challenges: wide range of outcomes o Inflation/Interest rates o Central bank policies o Geopolitical risks (e.g., Europe, China) o Trade policy o Fiscal stimulus o US tax reform Competing pools of capital/opportunities 24

Goi Going ng For orwar ard  Constantly reassess the current portfolio  Manage risk and rebalance  Use market weakness as an opportunity to add to high conviction managers  Continue to co-invest with our managers  Be opportunistic  Most importantly, understand our edge 25

VP & CHRO REPORT on First Six Months