Changes at UVA. David Boling Deputy Comptroller, UVA May 17 th, 2012

Transcription

1 Changes at UVA David Boling Deputy Comptroller, UVA May 17 th,

2 Changes at UVA New Leadership A New Financial Model Financial Reporting to the Board 2

3 New Leadership New President August 2010 New Executive VP and COO July 2011 New Provost July 2011 VP and CFO search underway 3

4 New Leadership Teresa Sullivan Became UVA s first female president in August, 2010 Formerly the Provost at the University of Michigan 4

5 New Leadership Michael Strine Became UVA s Executive VP and COO in July, 2011 (Took over for Leonard Sandridge) Formerly the Vice President for Finance, Chief Financial Officer and Treasurer at Johns Hopkins University 5

6 New Leadership John Simon Became UVA s Executive VP and Provost in July, 2011 Formerly the Vice-Provost for Academic Affairs at Duke University 6

7 New Leadership VP and Chief Financial Officer vacancy Yoke San Reynolds retiring at the end of May Has been at UVA for 11 years 7

8 New Internal Financial Model President has mandated adoption of a new funding model that will emphasize: 1. Transparent decision making 2. Incentive based allocations 3. Prudent stewardship of the University s resources (Some know this approach as Responsibility Center Management (RCM) or Activity Based Costing ) 8

9 New Internal Financial Model Current model is highly centralized Tuition revenue State appropriations revenue F&A recoveries Unrestricted gifts and unrestricted endowment spending distribution O&M expense (facilities maintenance) Central admin and other support costs 9

10 New Internal Financial Model Goals of the New Model: 1. Decentralize authority and accountability for resource planning 2. Empower and increase self-reliance of the schools, and other major units 10

11 New Internal Financial Model How will this happen? By associating institutional revenues and expenditures with the activities that generate them. In effect, ALL sources of revenue will be identified and attributed to the units that generate them, and ALL support costs will be either be charged out or allocated out to the academic units 11

12 New Internal Financial Model In the new (decentralized) model, what happens to.? Tuition revenue State appropriations revenue F&A recoveries Unrestricted gifts and endowment spending distribution O&M expense (facilities maintenance) Central admin and other support costs 12

13 FY11 Operating Revenues and Expenditures, Actual (DRAFT UNOFFICIAL AND UNAUDITED DRAFT (for illustration purposes only!) ACADEMIC UNITS Total A&S Architecture Batten Curry Darden Engineering Law Libraries McIntire Medicine Nursing SCPS Acad Units Revenues: State Appropriations Tuition and Fees (Note 1 and 3) 788,239 78,640 11,650 87,829 35,463, ,365 40,642,517 1,011 12,056, ,407 37,937 14,407, ,034,029 Less RP1 Revenue already in T&F and St Approp (note 2) (698,348) (43,140) (10,740) (71,341) 0 (163,441) 0 (66,268) (78,375) (214,400) (25,200) (11,598,597) (12,969,850) SG/SR Funding Allocation (E&G, Research, and Fin Aid) (note 3) 112,873,167 7,609, ,999 14,861, ,220 31,302,038 6,289,081 21,194,466 7,436,664 54,957,351 6,967,187 14,181, ,786,926 Sponsored Programs (Note 4) 39,239, ,005 20,798 13,868, ,070 43,024,970 1,673,999 1,817, ,753,598 2,535, , ,165,766 Endowment Spending Distribution Received (Note 5) 13,981, ,624 4,949, ,596 4,979,291 3,844,911 1,938,546 2,243,310 3,423,731 31,174,200 1,760,149 56,761 69,665,224 Endowment Admin Fee Received (Note 5) 813,269 35, ,554 27, , ,902 93, , ,275 1,584,614 83, ,559,850 Spendable Gifts 12,254, ,872 3, ,039 10,172,811 4,260,342 3,805, ,638 2,113,613 23,641, ,947 18,351 58,384,673 Sales and Services (Note 6) 1,635, ,116 11,050 2,485,311 2,021,179 1,086, , ,439 20,868 4,452, , ,903 13,504,368 Interest Earnings, net (Note 7) 112,339 (182) ,872 50,149 (27,868) 2, , ,709 3,891 7, ,011 Other 3, ,079 21,144,249 (320) 21,151,208 Total Revenues 181,003,116 9,569,329 5,649,154 32,194,439 53,865,197 83,803,467 54,949,679 26,301,060 25,294, ,057,905 12,276,103 17,978, ,942,206 Expenditures (Unit Based): (Note 8) Instruction 100,522,377 6,633,930 2,804,863 11,683,491 26,089,746 26,643,732 27,236,152 17,909,365 64,130,408 5,663,440 5,548, ,866,347 Research 41,755, ,279 86,320 12,566,744 2,612,905 43,364, , ,426 89, ,877,515 1,798, ,032,149 Public Service 3,883, ,258 2,076 3,465,050 1,561,389 1,536,832 14, , ,018, ,455 1,166,852 18,227,831 Academic Support 11,414,428 1,435, ,118 2,724,842 7,066,729 5,259,536 4,679,943 (13,800) 3,286,478 20,730,693 2,326,848 7,225,643 67,105,187 Libraries 232, , ,705,469 26,924, ,480, ,266,330 Student Services 458, , , ,844 4,044, ,320 2,740, ,175 1,187, ,903 1,129,550 11,865,735 Financial Aid to Students 22,500,745 1,244, ,733 3,051,643 6,895,431 4,868,567 10,000, ,034 9,677,645 1,496,176 71,600 60,744,098 Institutional Support 3,132,299 30, , , ,907 3,357,391 Operation & Maintenance of Plant 181,569 31, ,817,870 1,195,061 3,792,761 90, ,702, ,118 9,629,369 Auxiliaries 10, , ,989 Other 0 1,881,796 7,148 0 (1,337) 1,887,607 Total Expenditures 184,091,198 10,357,170 4,500,757 34,026,831 51,012,151 83,358,110 52,881,482 27,734,082 24,087, ,818,182 11,977,974 16,397, ,243,033 GL Transfers: (Note 9) Self-Sufficiency Tax (3,150,561) (4,824,485) (1,127,017) (9,102,063) In-State Subsidy 325,000 1,010,000 1,335,000 (To)/From Reserves, Debt, or Capital Projects (Note 10) (1,848,494) (217,018) (9,416,400) 26 (2,275,301) (172,172) (3,910,964) 260,781 1,871,276 (28,207,311) (62,474) (1,537,977) (45,516,026) Total GL Transfers (1,848,494) (217,018) (9,416,400) 26 (5,100,862) (172,172) (7,725,449) 260, ,259 (28,207,311) (62,474) (1,537,977) (53,283,089) Net Increase/(Decrease) for FY11 (4,936,576) (1,004,859) (8,268,003) (1,832,365) (2,247,817) 273,185 (5,657,252) (1,172,241) 1,950,973 (5,967,588) 235,656 42,972 (28,583,916) 13

14 FY11 and FY10 Operating Revenues and Expenditures, ACTUALS (DRAFT) UNOFFICIAL AND UNAUDITED DRAFT (for illustration purposes only!) A&S FY11 FY10 Change in $ Change in % Revenues: State Appropriations 0 0 Tuition and Fees (Note 1) 788,239 1,915,630 (1,127,391) -58.9% Less RP1 Revenue already in T&F and St Approp (note 2) (698,348) (658,242) (40,106) 6.1% SG Funding Allocation (E&G, Research, and Fin Aid) (note 3) 112,873, ,271,154 2,602, % Sponsored Programs (Note 4) 39,239,265 36,913,076 2,326, % Endowment Spending Distribution Received (Note 5) 13,981,767 13,374, , % Endowment Admin Fee Received (Note 5) 813, ,578 73, % Spendable Gifts 12,254,714 11,736, , % Sales and Services (Note 6) 1,635,503 1,628,047 7, % Interest Earnings, net (Note 7) 112,339 60,689 51, % Other 3,200 (232,678) 235, % Total Revenues 181,003, ,748,404 5,254, % Expenses (Unit Based): (Note 8) Instruction 100,522, ,228,300 (705,923) -0.7% Research 41,755,111 43,424,559 (1,669,448) -3.8% Public Service 3,883,694 3,919,743 (36,049) -0.9% Academic Support 11,414,428 12,779,143 (1,364,715) -10.7% Libraries 232, ,813 (673) -0.3% Student Services 458,835 1,174,740 (715,905) -60.9% Financial Aid to Students 22,500,745 22,402,324 98, % Institutional Support 3,132,299 3,799,842 (667,543) -17.6% Operation & Maintenance of Plant 181, ,052 (456,483) -71.5% Auxiliaries 10,000 9, % Other #DIV/0! Total Expenditures 184,091, ,609,470 (5,518,272) -2.9% GL Transfers: (Note 9) Self-Sufficiency Tax In-State Subsidy (To)/From Reserves, Debt, or Capital Projects (Note 10) (1,848,494) (9,148,657) 7,300, % Total GL Transfers (1,848,494) (9,148,657) 7,300, % Net Increase/(Decrease) (4,936,576) (23,009,723) 18,073, % 14

15 New Internal Financial Model Lots of Issues/Questions to Resolve and Decisions to be Made 1. Winners and Losers 2. Subsidies to the have-nots 3. Charge out support services, apply a tax, or some combination of both? 4. Can academic units opt out of services? 5. Are admin units right sized to be most efficient and lowest cost? (Benchmarking!) 15

16 Board of Visitors Reporting New approach by the new leadership Reports on results of operations throughout the year, to include interim financial statements Multi-year trends analysis for revenues and expenditures Comparisons across UVA schools for key measures and trends 16

17 UNIVERSITY OF VIRGINIA - Academic Division Only Fiscal Year 2012 (July 1, 2011 June 30, 2012) Statement of Net Assets (Unaudited) at Mid-year As of December 31, 2011 and June 30, /31/2011 6/30/2011 Change in $ % Change ASSETS Current Assets Cash and short te rm inve stme nts $ 318,190,312 $ 210,518, ,671, % Receivables (accounts, notes, other) 267,700,935 33,599, ,101, % Receivable from Medical Center 12,507,016 2,450,649 10,056, % Receivable from UPG 219, , % Receivable from SWVHEC & agencies 2,756,258-2,756, % Inventories, prepaids and other 299, , % Total curre nt asse ts 601,673, ,868, ,805, % Noncurre nt Asse ts Endowment and other long-term investments 3,510,815,540 3,694,182,732 (183,367,192) -5.0% Notes receivables 19,437,576 18,888, , % Medical Center pooled bond receivable 321,603, ,458,157 (9,854,815) -3.0% De posits with bond truste e s 63,181, ,600,506 (46,419,493) -42.4% Capital asse ts, ne t 1,992,860,053 1,953,769,983 39,090, % Total noncurre nt asse ts 5,907,897,524 6,107,899,696 (200,002,172) -3.3% Total Assets $ 6,509,571,154 $ 6,354,767, ,803, % LIABILITIES Curre nt Liabilitie s Accounts payable and accrue d liabilitie s $ 34,311,052 $ 13,896,154 20,414, % Deferred revenues and deposits 148,114, ,648,956 (38,534,460) -20.6% Deferred revenues, spring tuition 230,000, ,000, % Comme rcial Pape r 87,491,000 76,850,000 10,641, % De posits he ld for UVA-Wise and SWVHEC 8,632,781 6,600,669 2,032, % Total curre nt liabilitie s 508,549, ,995, ,553, % Noncurre nt Liabilitie s Long-term debt 1,085,499,455 1,093,062,659 (7,563,204) -0.7% Othe r long-te rm liabilitie s 25,622 25, % Total noncurre nt liabilitie s 1,085,525,077 1,093,088,281 (7,563,204) -0.7% Total Liabilities 1,594,074,406 1,377,084, ,990, % NET ASSETS Invested in capital assets, net of related debt 1,183,635,917 1,154,553,281 29,082, % Re stricte d: None xpe ndable 475,596, ,391,529 26,205, % Expe ndable 2,132,441,799 2,257,581,756 (125,139,957) -5.5% Unre stricte d 1,123,822,149 1,116,157,191 7,664, % Total Net Assets 4,915,496,748 4,977,683,757 (62,187,009) -1.2% 17

18 UNIVERSITY OF VIRGINIA - Academic Division Only Statement of Changes in Net Assets (Unaudited) For the Six Months Ended December 31, 2011 and 2010 FY12 FY11 OPERATING REVENUES AND EXPENSES: 12/31/ /31/2010 Change in $ % Change Operating Revenues Student tuition and fees, net 207,888, ,208,106 18,680, % Grants and contracts (federal, state, nongovernmental) 170,284, ,842,465 (5,557,567) -3.2% State appropriations (including federal stimulus) 126,918, ,406,177 (11,487,945) -8.3% Auxiliary enterprises revenues, net 83,933,947 74,484,220 9,449, % Gifts, current 48,696,679 50,580,851 (1,884,172) -3.7% Sales and services of educational departments 11,064,672 11,479,180 (414,508) -3.6% Pell grants 4,280,789 4,508,796 (228,007) -5.1% Total operating revenues 653,068, ,509,795 8,558, % Operating Expenses Instruction 150,468, ,010,870 (5,541,921) -3.6% Research 151,590, ,853,068 (5,262,498) -3.4% Public service 15,496,069 14,190,637 1,305, % Academic support 71,287,380 67,751,669 3,535, % Student services 18,508,415 18,988,400 (479,985) -2.5% Institutional support 39,526,868 37,928,431 1,598, % Operation of plant 49,543,885 48,984, , % Student aid, net 25,374,732 23,810,715 1,564, % Auxiliary 59,299,500 58,492, , % Depreciation 47,295,364 45,813,061 1,482, % Other 3,252,321 3,791,106 (538,785) -14.2% Total operating expenses 631,644, ,615,707 (971,654) -0.2% Operating revenues less operating expenses 21,423,976 11,894,088 9,529, % NONOPERATING REVENUES AND EXPENSES Nonoperating Revenues Capital appropriations, gifts, and grants 17,770,383 30,491,597 (12,721,214) -41.7% Investment income (loss) (112,976,962) 312,208,004 (425,184,966) % Additions to permanent endowments 25,680,580 5,683,275 19,997, % Other 16,142,609 19,489,658 (3,347,049) -17.2% Total nonoperating revenues (53,383,390) 367,872,534 (421,255,924) % Nonoperating Expenses Interest on capital asset related debt, net 14,510,606 15,687,211 (1,176,605) -7.5% Loss on capital assets (gain) 385,941 1,127,185 (741,244) -65.8% Other 15,331,048 3,158,946 12,172, % Total nonoperating expenses 30,227,595 19,973,342 10,254, % Nonoperating revenues less nonoperating expenses (83,610,985) 347,899,192 (431,510,177) % Total Revenues 599,684,639 1,012,382,329 (412,697,690) -40.8% Total Expenses 661,871, ,589,049 9,282, % Increase in net assets (62,187,009) 359,793,280 (421,980,289) % NET ASSETS Net assets - July 1 (Beginning) 4,977,683,757 4,251,643,417 Net assets -- December 31 (ending) 4,915,496,748 4,611,436, ,060, % 18

19 $500,000 Tuition & Fees Revenue $450,000 $400,000 in Thousands $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Gross Tuition and Fees Scholarship Discount & Allowance Net Tuition and Fees 19

20

21 Negotiated F&A Rates FY2002 through FY2015

22 50.0% 45.0% Effective F&A Recovery Rate by School 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 SoM Engineering A&S Curry Other Nursing All UVa 22

23 $80,000,000 F&A Recoveries by School $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 SoM Engineering A&S Curry Other Nursing 23

24 $3,600 UVA Endowment Growth (In $1,000's) As of June 30, 2011 $3,400 $3,200 $3,000 $2,800 $2,600 $2,400 $2,200 $2,000 $1,800 Market Value 6/30/84 $ 213 New Gifts to Endowment 484 Net Adds to Quasi Endowments 398 Inflation on (1984 MV & Gifts) 603 Subtotal 1,698 Performance, net of distributions: Market Appreciation 3,261 Distributions (1,587) Performance, net 1,674 Market Value 06/30/11 $ 3,372 $1,600 $1,400 Performance, net of distributions $1,200 $1,000 $800 Additions to Quasi Endowment $600 $400 New Endowment Gifts $200 $ Market Value MV New Gifts Adds to Quasi Performance (Mkt Apprec less Distrib) Inflation 24

25 Net Income (Modified GASB) FY2003 through FY2011 $1,000,000 $800,000 $600,000 $400,000 in Thousands $200,000 $ $200,000 -$400,000 -$600,000 -$800,000 -$1,000,000 Net Operating income (loss) Net Nonoperating income (loss) Total Net Income (loss)

26 Net Assets by Category FY2003 through FY2011 $7,000 $6,000 $5,000 $4,000 in Millions $3,000 $2,000 $1,000 $ Invested in Capital Assets, net of Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted

27 Billions Unrestricted Net Assets

28 O&M Cost Per Square Foot FY2003 through FY2011 $200,000,000 $22.00 $180,000,000 $20.00 $160,000,000 $18.00 $140,000,000 $16.00 Total O&M Cost $120,000,000 $100,000,000 $80,000,000 $14.00 $12.00 $10.00 Total O&M Cost Per Square Foot $60,000,000 $8.00 $40,000,000 $6.00 $20,000,000 $4.00 $0 $ Total O&M Cost Total O&M Cost per Square Foot

29 Long Term Debt by Component FY2003 through FY2011 $1,300,000 $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 in Thousands $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Current portion of long-term debt Commercial paper Long-term debt

30 What are the colleges spending their money on? Instructional vs. administrative spending ( to ) at public institutions Average increase in instruction 45.1% UVa increase 42.4% or $125.3 million Increase as a percent of E&G 39.3% to 41.6% Average increase in administration 65.1% UVa increase 68.9% or $33.6 million Increase as a percent of E&G 6.5% to 8.2%

31 What is behind the growth in administrative expenditures? % of $ chg. FY09 over FY03 Fundraising and alumni relations 40.0% Research administration 11.3% New functions 5.6% Compliance 6.3% Annual compensation increases 36.8% 100.0%

32 Questions? 34