Thursday, September 7, :30 am Florida International University Modesto A. Maidique Campus Graham Center Ballrooms

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1 FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES FINANCE AND FACILITIES COMMITTEE Thursday, September 7, :30 am Florida International University Modesto A. Maidique Campus Graham Center Ballrooms Committee Membership: Leonard Boord, Chair; Justo L. Pozo, Vice Chair; Cesar L. Alvarez; Dean C. Colson; Natasha Lowell; Marc D. Sarnoff; Kathleen L. Wilson AGENDA 1. Call to Order and Chair s Remarks Leonard Boord 2. Approval of Minutes Leonard Boord 3. Follow-up from Previous Meeting Leonard Boord 4. Action Items FF1. Mental Health Counseling and Public Safety Officers Implementation Plans FF2. Investment Policy Amendment Kenneth A. Jessell Kenneth A. Jessell 5. Discussion Item (No Action Required) 5.1 Financial Performance Review FY Kenneth A. Jessell 6. Reports (For Information Only) 6.1 Athletics Update Pete Garcia 6.2 Business Services Report Aime Martinez 6.3 Emergency Management Status Report Ruben D. Almaguer 6.4 Facilities and Construction Update John Cal 6.5 Foundation Report Andre L. Teixeira

2 The Florida International University Board of Trustees Finance and Facilities Committee Agenda September 7, 2017 Page 2 6. Reports (Continued ) 6.6 Safety and Environmental Compliance Report Ruben D. Almaguer 6.7 Treasury Report Benjamin Jarrell 7. New Business (If Any) Leonard Boord 8. Concluding Remarks and Adjournment Leonard Boord The next Finance and Facilities Committee Meeting is scheduled for Thursday, December 7, 2017

3 2. Approval of Minutes Approval of Minutes THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 Subject: Approval of Minutes of Meeting held June 1, 2017 Proposed Committee Action: Approval of Minutes of the Finance and Facilities Committee meeting held on Thursday, June 1, 2017 at the FIU, Modesto A. Maidique Campus, College of Business Complex, Special Events Center, Room 233. Background Information: Committee members will review and approve the Minutes of the Finance and Facilities Committee meeting held on Thursday, June 1, 2017 at the FIU, Modesto A. Maidique Campus, College of Business Complex, Special Events Center, Room 233. Supporting Documentation: Minutes: Finance and Facilities Committee Meeting, June 1, 2017 Facilitator/Presenter: Leonard Boord, Finance and Facilities Committee Chair 3/86

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5 DRAFT FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES FINANCE AND FACILITIES COMMITTEE MINUTES JUNE 1, Call to Order and Chair s Remarks The Florida International University Board of Trustees Finance and Facilities Committee meeting was called to order by Committee Chair Leonard Boord at 8:47 am on Thursday, June 1, 2017, at the Modesto A. Maidique Campus, College of Business Complex, Special Events Center, Room 233. The following attendance was recorded: Present Leonard Boord, Chair Justo L. Pozo, Vice Chair Cesar L. Alvarez Dean C. Colson Natasha Lowell Marc D. Sarnoff Kathleen L. Wilson Board Chair Claudia Puig, and Trustees Gerald C. Grant, Jr. and Krista M. Schmidt also were in attendance. Committee Chair Boord welcomed all Trustees, faculty, and staff to the meeting. 2. Approval of Minutes Committee Chair Boord asked that the Committee approve the Minutes of the meeting held on March 3, A motion was made and passed to approve the Minutes of the Finance and Facilities Committee Meeting held on Friday, March 3, Action Items FF1. Proposed University and Direct Support Organizations (DSO) Operating Budgets Senior Vice President and Chief Financial Officer Kenneth A. Jessell presented the University and DSO Operating Budgets, totaling $1,411.1M, for Committee review and in connection therewith, provided a detailed summary of key aspects of each budget. He added that authority for the University President to amend the budget is necessary to accommodate changes in circumstances. 4/86

6 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 2 DRAFT In response to Trustee Cesar L. Alvarez s inquiry on how full-time equivalent (FTE) student numbers referenced in the budget presentation are calculated, Sr. VP and CFO Jessell noted that while the calculation is lower in other states, under the State University System of Florida, the factors for calculating the number of student FTE s are 40 undergraduate student credit hours equal one FTE, and 32 graduate student credit hours equal one FTE. Trustee Marc D. Sarnoff inquired about the potential impacts to the University s budget if Governor Rick Scott made significant vetoes eliminating not only FIU-specific projects, but also reducing State University System funding and the University s plans of action for addressing any possible budgetary challenges resulting from proposed changes to the Board of Governors (BOG) Performance Metrics. Committee Chair Boord noted that authority for the University President to amend the budget is necessary to accommodate changes in circumstances. Sr. VP and CFO Jessell added that Florida law prescribes levels that must be maintained in terms of reserve balances, adding that the University s current unencumbered reserve totals $26M. He stated that should the University experience a shortfall in Performance Based funding, reserve balances may be drawn upon. He added that an approximate $46M in anticipated carryforward balances may be utilized to then cover reserve funds. In response to Committee Chair Boord s inquiry on the factors that have contributed to the growth in tuition, Sr. VP and CFO Jessell explained that this can be attributed to a growth in student headcount and also regular tuition increases in past years. Committee Chair Board recommended that Consumer Price Index data be included in future budgetary presentations. In addition, Committee Chair Boord recommended that, within the context of online education s continued growth trajectory, the Board of Trustees, during the next year, engage with University administration to review fully online degree offerings so as to identify what portion of the University s revenue stream distance-learning represents in order to develop a strategy that ensures responsiveness to student and market demand. Provost and Executive Vice President Kenneth G. Furton indicated that he serves on the BOG s Task Force for Strategic Planning for Online Education and explained that by year 2020, the majority of the University s degrees will have a fully online mode of delivery as set forth in the 20 Critical Performance Indicator Goals of the FIUBeyondPossible2020 Strategic Plan. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the Board of Trustees (the BOT) approve the FIU University and Direct Support Organizations Operating Budgets and authorize the University President to amend the budgets consistent with Legislative, Board of Governors and BOT directives and guidelines. FF2. Proposed Fixed Capital Outlay Budget Sr. VP and CFO Jessell presented the University s Fixed Capital Outlay Budget for Committee review, noting that the Fixed Capital Outlay Budget governs the University s capital expenditures during the year. He added that FIU s request for Capital Outlay Budget for Public Education Capital Outlay (PECO) projects totaled $28,913,226 for critical deferred maintenance, phase II of the School of International and Public Affairs building, and phase I and II of the Engineering building. He explained that FIU s request for Fixed Capital Outlay 5/86

7 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 3 DRAFT Budget for Capital Improvement Trust Fund (CITF) projects totaled $6,475,636 for improvements to the Graham Center. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the BOT approve Florida International University s Fixed Capital Outlay Budget and authorize the University President to amend the budget as necessary, consistent with Legislative, Florida Board of Governors, and BOT directives and guidelines. FF3. Request for Approval of Florida International University s Fixed Capital Outlay Legislative Budget Request, consisting of the five-year Capital Improvement Plan Sr. VP and CFO Jessell presented the request for approval of FIU s Fixed Capital Outlay Legislative Budget Request, consisting of the five-year Capital Improvement Plan, for Committee review, noting that the Fixed Capital Outlay Budget Request set forth the University s proposed capital expenditures during the next five years. He presented FIU s request for Capital Outlay Budget for PECO-eligible projects for facilities infrastructure, strategic land acquisition, engineering building and science laboratory complex, which, as he explained, totaled $99,100,000. In response to Trustee Natasha Lowell s inquiry, Sr. VP and CFO Jessell noted that the PECO request for the Strategic Land Acquisition pertained to the current land occupied by the Youth Fair. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the BOT approve FIU s Fixed Capital Outlay Legislative Budget Request, consisting of the five-year Capital Improvement Plan and authorize the University President to amend the Legislative Budget Request as necessary, consistent with Florida Board of Governors and BOT directives and guidelines. FF4. Self-Supporting Program Tuition, Academic Year Sr. VP and CFO Jessell presented the academic year Self-Supporting Program Tuition proposals for the Doctorate of Athletic Training (DAT) and the Master of Science in Applied Behavior Analysis (MSABA) for Committee review. He noted that the DAT and MSABA are self-supporting graduate degree programs offered through the University s Continuing Education and all costs are covered by student tuition. He stated that Educational and General funds are not used to support the programs. Committee Chair Boord requested for future proposals of self-supporting program tuition that business plans be presented for BOT review. Sr. VP and CFO Jessell noted that the MSABA was approved by the BOT in March and that the business plan for DAT is on the June 2, 2017 meeting agendas for the Academic Policy and Student Affairs Committee and BOT. Sr. VP and CFO Jessell also noted that the University conducts extensive benchmarking and market studies in order to ensure that the proposed programs meet new and unmet educational needs for which there are no existing state resources. 6/86

8 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 4 DRAFT A. Doctorate of Athletic Training Sr. VP and CFO Jessell noted that upon approval of the DAT program by the BOT, in accordance with BOG Regulation, FIU will submit the DAT proposal to the BOG for authorization subsequent to BOT approval. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the BOT approve the self-supporting tuition of $16,800 annually for 24 credits for the Doctor of Athletic Training beginning academic year pending program approval by the BOT. B. Master of Science in Applied Behavior Analysis Sr. VP and CFO Jessell reported that the FIU Board of Trustees approved the MSABA at its March 3, 2017 meeting, indicating that in accordance with BOG Regulation, FIU will submit the MSABA proposal to the BOG for authorization subsequent to BOT approval. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the BOT approve the self-supporting tuition of $25,393 for 45 credits completed in four semesters for the Master of Science in Applied Behavior Analysis (MSABA) beginning academic year The BOT approved the program at its March 2017 meeting. FF5. Approval of Amendment to the Campus Master Plan for the Modesto A. Maidique Campus to Accommodate the Construction of a Hotel, Conference Center, Alumni Center and Parking and Approval of Terms of the Ground Lease Associated with the Hotel, Conference Center, Alumni Center and Parking Sr. VP and CFO Jessell presented, for Committee review, the request for approval of the amendment to the Campus Master Plan for the Modesto A. Maidique Campus to accommodate the construction of a Hotel, Conference Center, Alumni Center and Parking and approval of terms of the ground lease associated with the Hotel, Conference Center, Alumni Center and parking. He added that the Hotel, Conference Center, and Alumni center were included in FIU s and Campus Master Plans and Board of Trustees/BOG Capital Improvement Plans and have received Legislative authorization. He explained that the Hotel and Conference Center would meet the needs of the University community in terms of academic conferences and meeting and seminar rooms. He indicated that the Alumni Center would help create affinity and encourage alumni to remain engaged members of the University community. Sr. VP and CFO Jessell reported that an initial feasibility study was conducted in 2008, adding that updated studies followed in 2013 and Sr. VP and CFO Jessell noted that the amendment to the Campus Master Plan for the Modesto A. Maidique Campus was necessitated in order to change 5.21 acres currently designated as special purpose recreation open space to multi-purpose space and reflect that the conference facility would be located immediately adjacent to the hotel and alumni center. He stated that the Project would be located in the SW corner of the intersection of SW 8 th Street and SW 112 th Avenue. He described the Project process and timeline. Sr. VP and CFO Jessell explained that Hotel and Conference Center amenities included 150 guest rooms, a ballroom and multiple conference rooms, an indoor fitness center, an outdoor swimming 7/86

9 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 5 DRAFT pool and a minimum of 300 parking spaces. He delineated the Hotel and Conference Center funding structure, noting that the Project will be designed, built, owned and operated by the Developer/Operator and that FIU and the FIU Foundation will have no financial obligation or debt obligations. He added that the University will approve design, that land will not be subordinated to any debt, and that FIU will receive market value ground rent and/or net income in return for leasing the parcel of land to the hotel operator. He further stated that while the University will agree to refer campus visitors requiring overnight accommodations to the Hotel and will direct all FIUpaid/reimbursed local lodging to the Hotel on a best-price match basis, that FIU will not guarantee any number of room nights or any level of revenue operating support. Sr. VP and CFO Jessell mentioned that the Alumni Center will consist of 13,737 sq. ft. and will be managed by the FIU Foundation. He presented a funding overview, noting that the Alumni Center will cost $6.8M, with $1.3M from Bank of America royalties, accumulated fund balances and new cash gifts as well as $5.5M in direct investment. He stated that the FIU Foundation will create a wholly-owned subsidiary for the operation and maintenance of the Alumni Center. Sr. VP and CFO Jessell presented Project renderings and provided a detailed summary of key terms, financial projections, and concluded by discussing possible benefits to the University and next steps. He noted that the University is in discussions with the Project Developers, Concord Eastridge, Inc., and Benchmark Management Company, LLC, regarding the possible use of the University s chiller water and sewer services to be reimbursed at the University s costs. Sr. VP and CFO Jessell indicated that this cooperation has proven effective for other University projects, such as Bayview Student Housing at FIU s Biscayne Bay Campus, allowing for lower expenses that translate to lower costs to the University community. Sr. VP and CFO Jessell presented an aerial overview of the proposed Project. Senior Vice President, University Advancement Howard R. Lipman stated that naming opportunities were available and in response to Trustee Justo L. Pozo s inquiry, noted that the downstairs bar, library, and conference rooms have been named in association with multi-million dollar gifts. Committee members engaged in a substantive discussion regarding the Project terms and scope. Trustee Lowell requested that for the next regularly scheduled Committee meeting, the Evaluation Committee member biographies be furnished. Trustee Gerald C. Grant, Jr. stated that he endorsed the Project, noting the positive benefits to the University in its having no financial obligations over funding. Trustee Alvarez noted that the Project can benefit greatly from the knowledge and expertise within the University s faculty and graduate students, and recommended that the FIU administration consider ways of collaboration, and he also inquired as to the determined land valuation. Sr. VP and CFO Jessell noted that prior to the approval by the Trustees of the Internal Improvement Trust Fund to sublease the land, documentation of assessed land value will be required. Trustee Kathleen L. Wilson noted that the FIU Faculty Senate s Environment and Planning Committee participated in the planning process and encouraged a continued collaboration with the University s faculty in the Project development phase. 8/86

10 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 6 DRAFT In response to Trustee Dean C. Colson s inquiry on whether the proposed square footage of the Alumni Center would be sufficient, Sr. VP Lipman noted that the Project was designed in order to ensure financial sustainability. Sr. VP Lipman added that the Alumni Center receives the first right of refusal based upon usage and that the intended outcome was for all units to work together for the best result for the institution. Trustee Marc D. Sarnoff stated that he did not endorse the Project, noting that the proposed horizontal structure posed constraints that would not meet immediate and future needs. Trustee Pozo mentioned that the Project has been under development for many years and has been reviewed by the University s Alumni Association Board of Directors and the FIU Foundation Board of Directors, where issues of size and usability were thoroughly vetted. Trustee Lowell inquired as to whether changes could be made to decrease the stipulated grace period during which no ground rent would be paid to FIU. Committee Chair Boord inquired as to the University s first right of refusal and requested that in addition to receiving audited statements, the University also should retain the right to audit the Project s financial statements. A motion was made and passed that the FIU Board of Trustees Finance and Facilities Committee recommend that the BOT hereby approve an amendment to the Campus Master Plan for the Modesto A. Maidique Campus to accommodate the construction of a Hotel, Conference Center, Alumni Center and Parking; and approve the terms of the Ground Lease and other key terms associated with the Hotel, Conference Center, Alumni Center and Parking. In addition to the key terms presented, the Finance and Facilities Committee incorporated the following three additional terms as part of its approval: FIU receives the first right of refusal to purchase the Project in the event the Project is sold FIU has the right to receive and audit the financial statements associated with the operation of the Project FIU limits the grace period during which no ground rent is paid to FIU to no more than 24 months after execution of the Ground Lease Trustee Sarnoff voted against the motion. 4. Discussion Items 4.1 Review of FIU Financial Statement Audit for Fiscal Year Ended June 30, 2016 Sr. VP and CFO Jessell reported on the results from the State of Florida s Auditor General Financial Statements Audit for Fiscal Year ended June 30, 2016, noting that the audit disclosed that the University s basic financial statements were presented fairly in all material respects in accordance with prescribed financial reporting standards. He stated that the audit results disclosed no instances of noncompliance or other matters that are required to be reported. He further noted that the audit did not identify any deficiencies in internal control over financial reporting that were considered material weaknesses. 9/86

11 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 7 DRAFT 4.2 Financial Performance Review Third Quarter FY Sr. VP and CFO Jessell provided a brief overview of the Financial Performance Review for the third quarter of He reported that the University and direct support organizations operating revenues were above estimates by $9.5M (or 1 percent) and that expenses were below estimates by $26.0M (or 3 percent). 5. Reports Committee Chair Boord requested that the Athletics Update, Business Services Report, Emergency Management Status Report, Facilities and Construction Update, Foundation Report, Safety and Environmental Compliance Report, and Treasury Report be accepted as written. There were no objections. 6. New Business No new business was raised. 7. Concluding Remarks and Adjournment With no other business, Committee Chair Leonard Boord adjourned the meeting of the Florida International University Board of Trustees Finance and Facilities Committee on Thursday, June 1, 2017 at 11:21 am. Trustee Requests Follow-up Completion Date 1. Committee Chair Boord recommended that Consumer Price Index data be included in future budgetary presentations. Senior Vice President and Chief Financial Officer Kenneth A. Jessell Ongoing 2. Committee Chair Boord recommended that, within the context of online education s continued growth trajectory, the Board of Trustees, during the next year, engage with University administration to review fully online degree offerings so as to identify what portion of the University s revenue stream distance-learning represents in order to develop a strategy that ensures responsiveness to student and market demand. 3. Committee Chair Boord requested for future proposals of selfsupporting program tuition that business plans be presented for Board of Trustees review. Provost and Executive Vice President Kenneth G. Furton Provost and Executive Vice President Kenneth G. Furton Ongoing Ongoing 10/86

12 Florida International University Board of Trustees Finance and Facilities Committee Minutes June 1, 2017 Page 8 4. Trustee Natasha Lowell requested that for the next regularly scheduled Committee meeting, that Evaluation Committee member biographies be furnished. (Hotel, Conference Center, Alumni Center and Parking Project) Senior Vice President and Chief Financial Officer Kenneth A. Jessell DRAFT Next Regularly Scheduled Committee Meeting MB 11/86

13 3. Follow-up from Previous Meeting HOTEL, CONFERENCE CENTER, ALUMNI CENTER AND PARKING EVALUATION COMMITTEE MEMBERS RICHARD BRILLIANT SENIOR VICE PRESIDENT AND CHIEF AUDIT OFFICER, CARNIVAL CRUISE LINES, FIU FOUNDATION BOARD CHAIR Mr. Brilliant is currently Chief Audit Officer (CAO) for Carnival Corporation & plc, the largest cruise company in the world, with a portfolio of 10 cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise Line, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia), P&O Cruises (UK) and Fathom. Richard has been CAO for just under half of his 24-year career with Carnival Corporation & plc. Reporting directly to the Board of Directors, Mr. Brilliant leads a large global team that provides risk advisory and assurance services to the Board and Senior Executive Management. In 2012, the scope of risk services under Brilliant s responsibilities was increased to include safety, health, environmental and security risks, which was in addition to his existing responsibilities related to financial, operational, IT, and strategic risk. Prior to attaining the CAO role, Brilliant led a wide range of audit and management advisory services including implementing and leading the internal audit functions at several cruise brands, designing and implementing the SOX 404 compliance program, implementing the Enterprise Risk Management Framework, and participating in various special projects including various due diligence activities associated with Carnival's acquisition of brands. Prior to Carnival Corporation and plc, Brilliant began his career with Kenneth Leventhal & Company in 12/86

14 their Hospitality Consulting Services Group where he was responsible for performing feasibility studies and supporting various advisory services to real estate and hospitality industry clients and financial institutions. Mr. Brilliant completed his undergraduate work at the University of Florida where he was actively involved in various student government organizations. His accomplishments resulted in him earning membership in both the Florida Blue Key and Omicron Delta Kappa leadership honorary societies. He subsequently obtained his Masters of Science in Hospitality and Tourism Management from Florida International University and continues to be closely involved with FIU as Chair of the Foundation Board of Directors In 2011, he successfully completed Harvard Business School s Program for Leadership Development. Mr. Brilliant is a 2009 recipient of an FIU Distinguished Alumni Torch Award, 2010 FIU Presidential Medallion, was responsible for Carnival Corporation & plc winning a 2010 achievement award from the OCEG (a nonprofit think tank that helps organizations achieve Principled Performance). He also won a 2012 NOVO award as an Outstanding Board Leader presented by the Greater Miami Chamber of Commerce. An active member of the Institute of Internal Auditors and Association of Certified Fraud Examiners, Brilliant enjoys speaking to the profession on concepts and techniques associated with integrating risk management programs. 13/86 Page 2 of 9

15 AIME MARTINEZ ASSOCIATE VICE-PRESIDENT, FINANCE AND ADMINISTRATION Ms. Martinez has more than 19 years of experience in the areas of accounting and financial reporting, investments, strategic and business planning. At her current position at FIU, Ms. Martinez manages the following: Office of Financial Planning, which is responsible for the development, planning and monitoring of the University s $1.4 billion in operating and capital budgets. Office of Auxiliary and Enterprise Development which supports the University community by assisting existing enterprises and facilitating the creation of new entrepreneurial ventures seeking to increase streams of funding for the University. Office of Business Services which is responsible for the day to day management of over $43 million in sales from food service, book store, university service and supplies contracts, and over 55 independent retail outlets. Aime Martinez was the Assistant Vice President of the FIU Foundation, Inc. and Support Organizations. In this role, she managed and directed the entities accounting, investments, budgeting, and information systems and associated personnel. Ms. Martinez handled all internal and external audits and participated in University wide committees such as the University s Worlds Ahead Strategic Planning Committee, where she served as Chair for the Finance Committee. She also represented the Foundation and DSOs in various board, community and business meetings. Ms. Martinez was also the Foundation s Assistant Treasurer. After several years in the private sector as an auditor and tax preparer in a public accounting firm as well as an accounting manager for an oil and gas public company, handling their financial reporting, Ms. Martinez returned to FIU in She accepted a position as Assistant Controller and worked her way to become Assistant Vice President and Associate Controller. She served in that capacity for seven years, she managed several areas in the Controllers during her tenure, including financial reporting, purchasing card program, investment and construction accounting, cash management, accounts payable, general accounting, audit and payroll. For her outstanding service to the University Aime Martinez was awarded the FIU Presidential Excellence Award in Ms. Martinez received a Bachelor in Accounting in 1996 with a minor in International Business and a Masters in Accounting in 1999; she is also a licensed Certified Public Accountant. 14/86 Page 3 of 9

16 ERIC BECKMAN ASSISTANT PROFESSOR, CHAPLIN SCHOOL OF HOSPITALITY AND TOURISM MANAGEMENT Mr. Beckman is currently an Assistant Professor in the Chaplin School of Hospitality and Tourism Management at Florida International University. Prior to joining FIU, he taught in the hospitality program at South Dakota State University (where he was the program co-leader) and at University of Tennessee in Knoxville (while earning his PhD). Mr. Beckman has been a member of ICHRIE since 2009, and have published in journals such as Journal of Travel Research and International Journal of Tourism Research. His hospitality industry experience includes over a decade of lodging, food and beverage (country club) and event management. He was an executive board member for the South Dakota Hotel and Lodging Association and am currently an Executive Board member for the South Florida Chapter of Hospitality Sales and Marketing Association International (HSMAI). He is currently the SECSA ICHRIE Federation secretary in support of hospitality related research. His certifications include CHRM (Certified Hotel Revenue Manager), CHIA (Certified and Hotel Industry Analytics) and CMP (Certified Meeting Professional). ROBERT W. GRIFFITH DIRECTOR, FACILITIES PLANNING Mr. Griffith came to FIU in 1988 after 9 ½ years in private practice as an architect and planner. His postgraduate work experience in the application of microcomputer graphics to problems in architecture brought knowledge of computer technology into the FIU Physical Planning office during the onset of computer-aided design in planning and construction. His knowledge and expertise gave FIU an edge in technology innovation during early years of growth and development. Over nearly 30 years at FIU, Mr. Griffith has watched and influenced rapid significant growth in campus facilities and the built environment of the university. He provided management and oversight of Campus Master Plans in 1989 & 1991 with The Architects Collaborative, with Wallace Roberts & Todd, with Reynolds Smith & Hill, & /86 Page 4 of 9

17 with Perkins + Will. Since 1988, FIU has grown from 20,000 students to 50,000 + students. The facilities inventory has grown from 1.7 million square feet to 9.9 million square feet and from 33 buildings to 157 buildings. Mr. Griffith is currently responsible for management and coordination of campus master planning, long and short range comprehensive planning, capital project budget planning, legislative budget requests, physical planning, facilities programming, and competitive selections of construction professionals, negotiations and preparation of agreements. In addition, he manages the Building Code Enforcement and Fire Code compliance department and oversees asbestos abatement and space management approvals. THOMAS HARTLEY ASSISTANT VICE PRESIDENT, PARKING, SUSTAINABILITY & TRANSPORTATION Tom Hartley is the Assistant Vice President of Parking, Sustainability & Transportation at Florida International University. Mr. Hartley is responsible for developing new strategic business practices, and providing operational expansion, revenue creation, as well as stewardship of resources. He also ensures we maintain alignment with Florida International University s strategies and oversees our financial reports for the Office of Business and Finance as well as Board meetings and other Executive forums and meetings. After his twenty-two year tenure with Walt Disney World, Mr. Hartley transitioned into the parking industry as Director of Parking & Transportation Services at Mohegan. Prior to joining the FIU team, he was the Executive Director of Bethlehem Parking Authority in PA. and is a member of NPA. Mr. Hartley holds a Master of Hospitality Administration, a Master of Business Administration-Finance, and is currently pursuing his doctorate in Education. 16/86 Page 5 of 9

18 PATRICK MEAGHER DIRECTOR, CONSTRUCTION MANAGEMENT As Director of Facilities Construction at Florida International University, Pat Meagher is responsible for major and minor construction projects under the University s capital program throughout all campuses. His extensive leadership and management experience encompasses planning, engineering, construction management, contract management, facilities maintenance, and budgeting. Pat leads a Facilities Construction project management team focused on delivering quality construction projects on-budget and on-schedule consistent with FIU s status as a leading urban public research university dedicated to student learning, innovation, highquality teaching, and collaboration with local communities. Prior to joining FIU, Pat served 20 years in the U.S. Navy s Civil Engineer Corps in a variety of public works and construction management tours. From 1994 to 1996, Pat was an Assistant Resident Officer in Charge of Construction in Pearl Harbor and an Assistant Public Works Officer at Naval Air Station Barbers Point in Hawaii. From 1999 to 2001, he served as Company Commander and Air Detachment Officer-in-Charge in Naval Mobile Construction Battalion SEVENTY-FOUR. Public works and construction management tours followed in Singapore and Mechanicsburg, PA prior to his assignment to U.S. Southern Command in Miami, FL in While at SOUTHCOM, Pat was responsible for providing engineering support to the counternarcoterrorism, humanitarian assistance, and exercise related construction programs for the Andean Ridge countries of Colombia, Ecuador, Peru, and Bolivia. From 2010 until his retirement from active duty in 2014, he was the Public Works Officer at Naval Air Station Key West. Pat is a Registered Professional Engineer in the Commonwealth of Pennsylvania, a Certified Energy Manager, and a member of the American Society of Civil Engineers and the Association of Energy Engineers. 17/86 Page 6 of 9

19 DAVID SNIDER DIRECTOR OF BUDGET, AUXILIARY AND ENTERPRISE DEVELOPMENT Mr. Snider joined the Office of Auxiliary and Enterprise Development ( AED ) within the Office of Business and Finance early In his role as Director, he is responsible for a multifaceted office, which works closely with senior leadership on enterprise development (academic programs; auxiliary programs, e.g. student housing, and public private partnerships ( PPP ). He is also responsible for financial analysis and reporting, preparation of several aspects of the operating budget for FIU, the creation, management, and compliance with applicable FIU policies, procedures, and regulations in addition to board of governors rules; creation of board financial reports and presentations, long term financial planning, and rating agency reporting (including financial modeling of applicable ratios, etc.) for both FIU bonded auxiliaries (selfsupporting businesses at FIU) and PPP s. Most recently, Mr. Snider has worked on the financial modeling, analysis, and contract formation, in conjunction with FIU s General Counsel, for several new endeavors, both PPP and bonded, including the FIU Alumni Center, FIU Hotel and Conference Center, and the new FIU Parkview II student housing facility. Prior to joining AED, Mr. Snider worked in FIU s Office of Research and Economic Development ( ORED ), where his primary responsibilities included contract negotiation and formation, financial analysis and reporting, capital budgeting, and cost analysis for research related auxiliaries. In addition, Mr. Snider worked on federal reporting for all research funds at FIU and research related effort reporting. His work with ORED exposed him to an array of functional areas throughout the University, allowing him to explore new and innovated ways to improve operations and reporting. Prior to joining FIU eight years ago, Mr. Snider worked with State of Florida s Department of Revenue. During his time with the state, Mr. Snider was responsible completing complex audits of the largest corporations in Florida. As part of these audits, he was exposed to many different business models and industries, and completed detailed analysis of financial data and statements, while evaluating preventative and detective internal controls to address deficiencies. One of the most rewarding positions in Mr. Snider s career was working with a Florida municipality s finance department. At the City, Mr. Snider worked closely with the police and fire department pension funds, worked directly with the City s Treasurer and Director for Revenue Recovery on many aspects of governmental accounting, auditing, and budgeting. Furthermore, he created and maintained benchmarks for the City s multiple investment portfolios, as well as evaluated fixed income and equity investments. 18/86 Page 7 of 9

20 David earned a Juris Doctor and Master of Science in Finance from Florida International University, in addition to a Bachelor of Business Administration with a focus in Finance from the University of Florida. TONY VU UNIVERSITY TREASURER, OFFICE OF THE TREASURER Phong "Tony" Vu joined FIU in 2008 with 20 years of finance, banking and treasury experience. As the University Treasurer, Mr. Vu is responsible for the management of the university's $300 million operating funds investment portfolio and $200 million in outstanding debt. Mr. Vu received his BSBA in Finance and MBA in Finance/Competitive Strategy from the University of Florida. In 2010, Brickell Magazine recognized Mr. Vu in its "2010 Top 20 Professionals Under 40" cover story. Most recently, he completed The High Potential Leader Program with FIU's Center for Leadership and serves as a lecturer for the College of Business. DUANE WILES ASSOCIATE VICE PRESIDENT ADVANCEMENT/ ALUMNI AFFAIRS DIRECTOR, ALUMNI RELATIONS Named by Legacy Magazine Miami as one of South Florida s 50 most powerful, influential black professionals. Mr. Wiles is an experienced higher education and non-profit advancement professional with an extensive background in the areas of alumni relations and annual giving. Proven in leading and motivating volunteer leaders, building new programs, managing governing boards, developing strategic plans, fundraising and generating new revenue streams. Mr. Wiles is responsible for engaging FIU's dynamic alumni community and realizing the University's strategic vision for alumni affinity. His position provides direction and oversight for all aspects of Alumni Relations and Annual Giving, in partnership with the University President, University Advancement leadership and leading alumni volunteers. He has created and implemented a strategic plan to strengthen the lifelong connections of FIU alumni through the development of new and enhanced programs. 19/86 Page 8 of 9

21 Some of his day-to-day duties include, but not limited to, managing a 20-member board of directors, leading a team of 16 professional staff, overseeing a 2.6 million dollar fiscal year budget, and identifying new revenue streams supporting alumni programs and services. Mr. Wiles brings over 18 years of experience to the advancement profession having worked for the University of Nebraska Alumni Association, Inc. and University of Florida Alumni Association, Inc. He joined the FIU Alumni Association staff on December 1, During his tenure with the FIU Alumni Association, alumni affinity has strengthened through increased event attendance, merchandise sales, board participation, chapter development, and affinity revenues. He currently has alumni relations and annual giving strategically focused on aligning alumni engagement with university priorities to include fundraising, student recruitment, chapter and career development, legislative advocacy, and continuing education/lifelong learning. He is the recipient of two Council for Advancement and Support of Education (CASE) awards for alumni programming, he served as a distinguished faculty presenter at a National CASE Conference, a former Forman Fellow of the Council of Alumni Association Executives and graduate of the High Potential Leaders Class of 2011 from Florida International University. He has served as a faculty guest presenter at the University of West Indies Annual Volunteer Leadership Retreat, has volunteered as a distinguished judge for CASE District III awards, and presented at several CASE District III professional leadership conferences. As a former football player for the Nebraska Cornhuskers, Duane understands what it means to work hard, persevere, and chart the course. He is currently living out his career aspiration of serving as AVP & Executive Director for the FIU Alumni Association. 20/86 Page 9 of 9

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23 4.1 FF1. Mental Health Counseling and Public Safety Officers Implementation Plans Agenda Item 4 FF1 THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 Subject: Mental Health Counseling and Public Safety Officers Implementation Plans Proposed Committee Action: Recommend to The Florida International University Board of Trustees (the BOT) adoption of the Mental Health Counseling and Public Safety Officers Implementation Plans. Background Information: The and State University System Legislative Budget Requests included funding for Mental Health Counseling Services and Campus Safety and Security. These requests were designed to increase campus counseling and public safety in order to address the critical need for student mental and behavioral health coverage and campus safety in a state university system that is steadily expanding in size, scope, and complexity. Universities are directly responsible for providing a safe educational, working, and living environment for students, faculty, staff and visitors. Although the Legislature has not funded these system-wide requests, FIU and the other universities are committed to ensuring that our campuses are safe and secure and that students have access to well-trained, professional counselors and counseling services to address the mental health and behavioral health of our students. Accordingly, each university has developed an implementation plan to address the mental health counseling and public safety needs at their institutions. Supporting Documentation: Mental Health Counseling and Public Safety Officers Implementation Plans Facilitator/Presenter: Kenneth A. Jessell 21/86

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25 MENTAL HEALTH COUNSELING IMPLEMENTATION PLAN The Division of Student Affairs Counseling and Psychological Services (CAPS) manages the services and programs addressing student mental health at FIU. CAPS includes the Victim Empowerment Program, and offers a series of specialized counseling services that include group counseling, individual and couple s counseling, victim services, psychological testing, de-stressing clinic, psychiatric services and a series of social services. The safety and wellbeing of our students is paramount, and critically important to their academic performance. There are two local factors and four inherent college student factors that have influenced FIU s efforts to address student mental health. Unique local factors: FIU is a university with a complex mix of full-time, part-time, commuter and residential students. FIU is situated in a large metropolitan location. Inherent college student factors: Regardless of levels of mental health services available, a majority of students never seek out the mental health services that are accessible to them. Nationally, only 11% of all students seek the mental health services that are available to them, and the vast majority of students that die as a result of suicide had never sought treatment prior to the suicide. Among students with mental illness, only 40% seek help. This indicates that universities need to focus efforts on providing opportunities for students in need of mental health services to actually seek the help they need. To bridge this gap, the more successful universities have focused on expanding prevention efforts, promoting the mental health of all students, and addressing the social and environmental risk factors that influence student mental health. Most mental health disorders have their peak onset during young adulthood. The most prevalent psychiatric disorders among college students are Anxiety and Depression. The use of alcohol and illicit drugs peaks during young adulthood and slowly declines with age. The presence of substance use disorders is the most prevalent problem among college students. From to , FIU has: Increased CAPS staffing by 41%, from 14.5 to 20.5 FTEs. Increased CAPS overall expenditures by 38%, from $2.4 million to $3.3 million. CAPS quality of professional services: FIU has focused on maintaining and improving the quality of CAPS services. CAPS has been accredited by the International Association of Counseling Services (IACS), maintains an American Psychological Association (APA) approved internship program, and is registered with the Association of Psychology Postdoctoral and Internship Centers (APPIC) as a postdoctoral training site. 22/86

26 CAPS clinical services aligned with local and college student factors: Student Outreach: o Student outreach has been expanded. Every FIU student receives the Student Health 101 monthly newsletter, which reports high utilization and positive outcomes with 17,189 unique visitors and 24,776 visits annually. o CAPS participates in orientations and Week of Welcome (first week of classes). This is important given the fact that national data indicates that freshmen are more vulnerable to sexual assault early in the semester; thus, a period of weeks have been designated the Red Zone to signal high alert. o CAPS is directly connected to the Disability Resource Office, Student Conduct and Conflict Resolution (SCCR) Committee, Residential Life, Student Health, and University Police. By serving as consultants to the SCCR Admissions Screening Committee, CAPS staff are involved in student mental health issues from the beginning to the end of students educational experience at FIU. To document and support institutionally integrated efforts to address incidents as well as students of concern, FIU utilizes, Maxient, a nationally recognized electronic behavior management system at colleges and universities. Maxient serves as an integral component for FIU s efforts in helping to identify students in distress and coordinate the efforts of various departments to provide follow-up. Training of Faculty and Staff: o CAPS has taken steps to address prevention and accessibility of mental health services to students through increased training and education of faculty and staff. For example, CAPS conducts the Dealing with Disruptive Students workshop, as well as the Friends of Student Affairs roundtable, which provides an opportunity to update strategic faculty and staff partners on student mental health issues. Furthermore, Housing and Residential life staff are trained to identify and deal with students experiencing mental health problems. Student Substance Abuse: o The use of alcohol and illicit drugs peaks during young adulthood. The most prevalent problem among college students is the presence of substance disorders. Approximately one in five college students meets the criteria for alcohol use disorders, and binge drinking (defined as consuming four standard drinks for women and five for men in a two-hour period) is a common mode of drinking among college students. Hazardous drinking and other drug consumption is commonly found together with other mental health problems among college students. To address this problem, CAPS has partnered with FIU Bridge, a research center in the Robert Stempel College of Public Health and Social Work. CAPS taps into FIU Bridge s expertise, and also provides opportunities for students with substance use issues to receive services. Current CAPS Clinical Services and Utilization: CAPS provides a variety of treatment resources to students in need of mental health services, including an online mental health screening, online Cognitive Behavioral Treatment (CBT), Acceptance and Commitment Therapy (ACT), and behavioral programs for anxiety and depression. 23/86

27 CAPS has specific programs consisting of Group Counseling, Individual and Couples Therapy, Victim Services, Psychological Testing, a De-stressing Clinic, Psychiatric Services, and case management. CAPS provides 24/7 crisis service and consultation through ProtoCall, which answered 503 calls last year. Students who access this service are assessed and if deemed necessary, FIU staff or police are contacted. CAPS staff accordingly follow up with students the next business day. Data indicates that this service has increased CAPS ability to facilitate emergency services to students. Through greater outreach within the University, CAPS utilization has been increasing. Between 2014 and 2017, utilization increased 40%. Victims Empowerment Program direct services increased by 79%. Additionally, CAPS crisis walk-in increased by 4% this past year. Plans for the next three years: In FY , FIU will fund salary equity for retention. Given that counseling centers nationwide are dealing with similar circumstances, staff retention has become increasingly challenging. In FY two new psychologist positions will be added to fill specialty needs, including risk assessment. In FY two additional psychologist positions will be added with specialization in areas of greatest need. A Student Mental Health Taskforce will be created. The Taskforce will make recommendations to the Provost by July 1, The Taskforce will have representation from CAPS, academic units with expertise in student mental health (e.g., CAPS, psychology, psychiatry, social work, nursing) and will focus on the following: 1. Creating programs/initiatives designed to increase student awareness and utilization of mental health resources through developmentally relevant communication approaches. 2. Increasing coordination and collaboration of CAPS with existing mental health resources in relevant FIU academic units (i.e., psychology, psychiatry, social work, nursing, and research centers focusing on youth mental health). 3. Refining and enhancing online tools that will allow students in need of help to realize such need without stigma. 4. Implementing required online gatekeeper training for faculty and staff. 5. Increasing engagement of existing student organizations on campus. 6. Making recommendations on how budgets directed at mental health and health services should be allocated on the basis of needs. 7. Adding an evaluation component that will assess the ongoing effectiveness of the implemented student mental health initiatives. 24/86

28 PUBLIC SAFETY OFFICERS IMPLEMENTATION PLAN In addition to ensuring the day-to-day safety and security of the Florida International University community, the Florida International University Police Department (FIUPD) bears the responsibility for investigating all campus-related criminal activities, providing security for our facilities, campuses, instructional sites, and University events. As a growing University within a complex external environment, FIU has provided significant resources in public safety and security to provide for the safety and security of our students, faculty, staff and visitors. From to , FIU has: Increased police staffing from 47 to 63 Increased the public safety expenditures from $5.1 million to $8.6 million Implemented a very robust Collective Bargaining Agreement ( ) in order to attract and, more importantly, retain the most qualified police officers, including: o Salary increase of 6 percent for year o Salary increase of 3 percent for year o Salary increase of 3 percent for year o Shift differential of 5 percent for those working evenings o Shift differential of 8 percent for those working midnights o Pay supplement of 5 percent for those performing as Field Training Officer, Field Training Supervisor and those who have been assigned to a specialty unit o Certification pay of $10 per pay period to those officers maintaining law enforcement certification standards Increased the number of senior staff to ensure that experienced leadership is always on duty and to initiate the FIUPD s succession plan for continued outstanding leadership Invested in state-of-the art equipment and technology Increased both internal and external training programs and opportunities for police officers Entered into mutual aid agreements with 6 local law enforcement agencies to provide mutual assistance in the event of emergencies or other unique circumstances The International Association of Chiefs of Police (IACP) has long utilized a national standard of two officers per 1000 students, with a minimum standard of two offers per 1,200 population. FIU will continue to benchmark to the IACP standard by adding additional officers, with the goal of adding two officers per year while recognizing that changes in University mission, campus locations, number of students, and other factors could increase or decrease the need for police officers. Additionally, FIU will continue to make required investments in training, equipment, and duty gear to ensure that the focus remains on the highest level of professionally trained public safety officers and not simply the quantity of officers. It is anticipated that the annual salary and benefits cost of adding two officers per year, including recurring expenses for training, uniform allowance, and equipment maintenance will be approximately $140,000. Additionally, there will be one-time officer equipment costs for uniforms and duty gear of approximately $24, /86

29 4.2 FF2. Investment Policy Amendment Agenda Item 4 FF2 THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 Subject: Investment Policy Amendment Proposed Committee Action: Recommend to The Florida International University Board of Trustees (the BOT) adoption of the revisions to the University s Investment Policy, in the form attached hereto. Background Information: The University Investment Committee is an advisory committee created by the BOT to make recommendations to the University administration and BOT regarding University investments. The University is recommending approval of the proposed revisions to the Investment Policy. The proposed revisions were ratified by the University Investment Committee on May 23, The major clarifications in the Governance section include selection of a Chair and Vice Chairperson by the Committee, review of spending requests by Staff, and communication of significant matters by Investment Managers. The major additions include expansion of the Diversification section, focus on Long-Term Target Allocation, Investment Costs, and Voting of Proxies. The major revisions include replacement of the detailed Asset Class Characteristics, Investment Guidelines for specific managers, and detailed policy benchmarks language with more robust direction. The revised policy also amends the asset allocation including increasing Working Capital Pool target from 30 percent to 40 percent, eliminating real estate investment trusts (REITs), master limited partnerships (MLPs), and private equity, replacing high yield bonds with bank loans, and increasing targets to investment grade bonds, investment grade corporate bonds and Treasury Inflation Protected Securities (TIPS). The BOT is authorized to adopt an investment policy pursuant to Sections and of the Florida Statutes. The University s Investment Policy was last revised on January 14, Supporting Documentation: Amended Investment Policy Proposed revisions to the University s Investment Policy in tracked form Facilitator/Presenter: Kenneth A. Jessell 26/86

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31 University Community (faculty, staff and students) SUBJECT (R*) EFFECTIVE DATE (R*) POLICY NUMBER (O*) INVESTMENT POLICY June 29, POLICY STATEMENT (R*) The purpose of this document is to set forth the goals and objectives of the Florida International University s operating funds investment portfolio (the Portfolio ), and to establish guidelines for the implementation of investment strategy. Any material revisions to this document may be made only with the approval of the Florida International University Finance and Facilities Committee. The Investment Committee ( Committee ) reports to the Finance and Facilities Committee and recognizes that a stable, well-articulated investment policy is crucial to the long-term success of the Portfolio. As such, the Investment Committee has developed this Investment Policy with the following goals in mind: To clearly establish the objectives and constraints that govern the investment of the Portfolio, To establish a long-term target asset allocation with a high likelihood of meeting the Portfolio objectives given the constraints, and To protect the financial health of the Portfolio through the implementation of this stable long-term investment policy. 27/86 1

32 I. Operating Funds Investment Portfolio Goals The overall goal of operating funds investment portfolio (the Portfolio ) is to provide funds through a carefully planned and executed investment program necessary for normal expenses, capital expenditures, and overall liquidity needs. There are both short term liquidity needs and longer term needs that allow for some incremental longer term growth of these assets. II. Statutory Requirements The Florida International University Board of Trustees ( BOT or the Board ) and the Committee will manage the assets of the Portfolio in accordance to the Prudent Expert Rule, in accordance with Florida Statutes and III. Governance A. Responsibilities of the Board 1. The Board is responsible for the oversight and approval of this Policy (and any amendments thereto) and oversight of the University's implementation of the Policy. 2. The Board authorizes the creation of the Committee to oversee the investments of the Portfolio. 3. The Board s responsibilities include periodic review of the Investment Policy and its: a. Investment goals and objectives b. Asset allocation policy targets, minimums and maximums c. Authorized investments B. Responsibilities of the Committee 1. The Committee recognizes that matters concerning the investment of the Portfolio assets owned by the University merit serious attention and frequent consideration. The Committee, at a minimum, will consist of: a. An individual designated by the BOT, b. The Chief Financial Officer of the University, c. The Treasurer of the University and d. A representative from University academics. 2. In addition, the Committee may include up to two business community and other representatives with specific expertise in investment and portfolio management to strengthen the Committee s capabilities. The need for adding members will be 28/86 2

33 determined by the Chair of the BOT, in consultation with the Chair of the Finance and Facilities Committee. 3. The Committee is responsible for hiring an investment consultant, consistent with University procurement requirements, and with the guidance and recommendations of the Investment Consultant: a. Directing all of its efforts toward the investment objectives stated herein b. Performing at least annually a review of the investment objectives stated herein c. Ensuring that the objectives stated in this Policy are practical and reflect the mission of the University d. Implementing and monitoring the asset allocation policy e. Conducting an annual formal review of the investment structure f. Selecting and monitoring of qualified, competent investment managers g. Terminating investment managers failing to maintain acceptable quantitative (e.g. risk/return profile) and/or qualitative (e.g. organizational changes) standards h. Developing and reviewing the objectives and guidelines given to each specific investment manager i. Meeting at least quarterly to review the results of the investment portfolios j. Determining whether the investment objectives set forth herein are being met and whether the investment guidelines are being followed k. Providing the BOT with regular performance reports on the investment portfolios l. Completing annually eight (8) hours of continuing education in subjects or courses of study related to investment practices and procedures, or the Chief Financial Officer shall complete this requirement. 4. Recommending and approving requests under the spending policy. 5. The Committee will annually select a Chair and a Vice Chair to preside over the meetings. C. Responsibilities of the Staff The staff is an integral part of the day-to-day requirements of the operating portfolio. The staff has the responsibility of administering and coordinating the implementation of decisions made by the Committee and the BOT. The staff is responsible for: 3 29/86

34 1. Administering the investments of the Portfolio at the lowest possible cost, being careful to avoid sacrificing quality. 2. Administering the rebalancing process. 3. Day-to-day interaction with the consultants and investment managers. 4. Administering the investment earnings distribution process. 5. Reviewing requests under the spending policy. D. Responsibilities of Investment Managers Investment managers are delegated the following responsibilities: 1. Each investment manager will have full discretion to make all investment decisions for the assets placed under its control, while operating within guidelines, constraints, and philosophies as outlined in this Policy. 2. Each investment manager will be expected to manage the Portfolio s assets in a manner consistent with the investment objectives, guidelines, and constraints in accordance with applicable state and federal laws. 3. The investment manager is required to communicate with the Investment Consultant and staff all significant matters pertaining to the investment of the Portfolio s assets on a timely basis. IV. Investment Objectives A. There are both short term liquidity needs and longer term needs that allow for incremental longer term growth of assets. B. While the Committee recognizes the importance of the preservation of capital, it also adheres to the theory of capital market pricing which maintains that varying degrees of investment risk should be rewarded with compensating returns. C. Specifically, the portfolio shall be managed with the following objectives in this order: 1. Risk - Maintain the safety of the principal a. To accept a reasonable level of risk required to achieve the Portfolio s return objective as stated immediately below. b. To limit the likelihood of experiencing a loss over any five-year period. c. To use diversification to minimize exposure to company and industry-specific risks in the aggregate investment portfolio. d. To the extent possible, minimize the annual volatility in the asset base. 30/86 4

35 2. Liquidity - Maintain the necessary liquidity to ensure funds are available to support operational needs a. The Committee and Staff will monitor liquidity needs, spending projections, and the impact of changes in regulations or other circumstances. b. The Committee intends to invest no more than 25% of the Portfolio s assets in illiquid vehicles. Illiquid investments will be considered investments with less than monthly liquidity terms. 3. Return - Obtain a reasonable return for a prudent level of risk a. The Committee seeks to produce a return on investment which is based on levels of operating liquidity needs and investment risk that are prudent and reasonable, given prevailing capital market conditions. b. The Committee seeks to produce a return in excess of a passive policy index based on the asset allocation targets. Exceeding this objective indicates that the active management of the various portfolio components has added value over a passively-managed fund with a similar asset mix. c. The Committee seeks to produce an adequate real return over the expected rate of inflation, the primary driver of increased costs to the University. V. Role of Each Investment Pool A. Total Combined Pool This pool is the overall combined investments of the Portfolio. In its entirety, it is intended to satisfy the overall objectives and constraints set forth in this Policy. The Total Combined Pool is divided into three distinct pools; each pool has a different investment time horizon and investment objectives. B. Working Pool This pool is intended to provide for the immediate normal operating requirements of the University (funds awaiting clearance), and other short-term investments of the University. C. Strategic Pool This pool is intended to be invested over the medium-term and long-term, as the cash needs of this pool are intermediate and long-term in nature. D. Reserve Pool This pool encompasses a state-mandated unencumbered reserve. This pool is intended to be invested over the medium- and long-term. VI. Diversification 31/86 5

36 The Committee recognizes that an important element of risk control is diversification. Therefore, investments will be allocated across multiple classes of assets, chosen in part for their low correlation of returns. Within each asset type, the portfolio will distribute investments across many individual holdings, to further reduce volatility. VII. Asset Allocation The Committee recognizes that the allocation of monies to various asset classes will be the major determinant of the Portfolio return and risk experience over time. Therefore, the Portfolio will allocate investments across those asset classes that, based on historical and expected returns and risks, provide the highest likelihood of meeting the Portfolio s investment objectives. A. Permissible Asset Classes The Committee has specifically indicated those asset classes that may be utilized. The University invests mainly in commingled vehicles such as mutual funds, limiting the ability of the University or its representatives to impose investment guidelines. Permissible Asset Class Public Equity Private Equity Fixed Income Bank Loans Commodities Hedge Funds Cash and Cash Equivalents B. Expected Returns, Risks, and Correlations for Permissible Asset Classes The risk and return behavior of the Portfolio will be driven primarily by the allocation of investments across asset classes. In determining the appropriate allocation, the expected return and risk behavior of each asset class and the likely interaction of various asset classes in a portfolio will be considered. C. Total Combined Pool Exposure The total Combined Pool is expected (but not obligated) to be composed of the following split, on average, over the long term. The total Combined Pool is expected to be used for benchmarking purposes and total risk analysis; however the Committee has limited control over the level of assets in the Working Capital Pool which is expected to fluctuate throughout the year based on the normal operating requirements of the University. 32/86 % of Total Combined Pool Working Capital Pool 40% 6

37 Strategic Capital Pool 50% Reserve Capital Pool 10% Total Combined Pool 100% D. Long-Term Target Allocations for the Strategic and Reserve Pool Based on the investment objectives and constraints of the Portfolio, and on the expected behavior of the permissible asset classes, the Committee will specify a long-term target allocation for the combined Strategic and Reserve Pool. The long-term target allocations for the Strategic and Reserve are intended as strategic goals, not short-term imperatives. Thus, it is permissible for the Strategic and Reserve Pool s asset allocation to deviate from the long-term target, as would likely occur during transitioning, asset class restructurings, and other temporary changes in the Portfolio. Long term strategic asset allocation targets and allowable ranges for the Strategic and Reserve Pool are listed below. Strategic and Reserve Pool Target (%) Allowable Ranges (%) Equities 17.0 U.S. Equity 7.0 +/- 3 International Developed (Non-U.S.) Equity 5.0 +/- 3 Private Equity 5.0 +/- 3 Credit 5.0 Bank Loans 5.0 +/- 5 Rate-Sensitive 58.0 Investment Grade Bonds /- 5 Investment Grade Bonds (Corporate) /- 5 TIPS /- 5 Real Assets 5.0 Commodities 5.0 +/- 5 Other 15.0 Hedge Fund /- 5 Total 100 E. Rebalancing 7 33/86

38 Portfolio rebalancing is designed to provide disciplined approach to control the risk exposure of the portfolio. Rebalancing parameters are addressed at the asset class level. In general, cash flows to, from and within the Portfolio will be allocated in such a manner as to move each asset class toward its target allocation as is prudent. VIII. Review of Investment Policy, Asset Allocation, and Performance The Investment Policy will be reviewed at least annually to ensure that the objectives and constraints remain relevant. However, the Committee recognizes the need for a stable long-term policy for the Portfolio, and major changes to this policy will be made only when significant developments occur. The asset allocation of the Portfolio will be reviewed on an on-going basis, and at least annually, with the Investment Consultant. The Committee will evaluate the performance of the Portfolio relative to its objectives and to the returns available from the capital markets during the period under review. In general, the Committee will utilize relative, rather than absolute, benchmarks in evaluating performance. IX. Investment Manager Selection For the Strategic Capital and Reserve Pools, the Committee, with the guidance and recommendations of the Investment Consultant, is responsible for the selection and continued monitoring of qualified, competent investment managers in accordance with University policy and Florida law, while optimizing the financial return to the University, advancing its long-term financial interests and supporting the University s mission. For the Working Capital Pool, Staff is authorized to invest in the following managers and investments: 1. Florida State Treasury 2. State Board of Administration 3. Qualified Depositors as defined by the State of Florida 4. U.S. Government debt and its Agencies 5. Money Market and short term fixed income funds rated AA or higher by at least two of the following ratings agencies: Moody s Investors Services, Standard & Poor s or Fitch. X. Investment Costs Investment expenses will be considered during manager due diligence process conducted by the Investment Consultant. The Committee intends to monitor and control investment costs on a portfolio level. XI. Voting of Proxies The Committee recognizes that the voting of proxies is important to the Portfolio. The Committee has delegated the responsibility of voting all proxies to the investment managers. The Committee expects 34/86 8

39 that proxies will be executed in a timely fashion. Also, the Committee expects full accounting of all proxy votes, and upon request, a written explanation of individual voting decisions. 9 35/86

40 LEGAL AUTHORITY: RESPONSIBILITIES (O*) The BOT is authorized to adopt an Investment Policy pursuant to Section and of the Florida Statutes. HISTORY (R*) Effective Date: June 29, 2005; Revision Date(s): September 11, 2007; March 12, 2008; March 30, 2009; June 12, 2009; September 24, 2010, March 14, 2012; September 10, 2013; and January 14, RESPONSIBLE UNIVERSITY DIVISION/DEPARTMENT (R*) Office of the Treasurer Finance and Administration RESPONSIBLE ADMINISTRATIVE OVERSIGHT (R*) University Treasurer Florida International University S.W. Eighth Street, MARC 110 Miami, Florida Telephone: (305) Facsimile: (305) The University Policies and Procedures Library is updated regularly. In order to ensure a printed copy of this document is current, please access it online at For any questions or comments, the Document Details view for this policy online provides complete contact information. FORMS/ONLINE PROCESSES (O*) Links to the above referenced Form(s) available in the "Document Details" Section of the online version of this policy document. *R = Required *O = Optional 10 36/86

41 University Community (faculty, staff and students) SUBJECT (R*) EFFECTIVE DATE (R*) POLICY NUMBER (O*) INVESTMENT POLICY June 29, POLICY STATEMENT (R*) It is the policy of Florida International University (the University ) that: The investment of the purpose of this document is to set forth the goals and objectives of the Florida International University s operating funds investment poolportfolio (the Portfolio ) shall be based on an analysis that will, at a minimum, consider: ), and to establish guidelines for the implementation of investment strategy. the financial conditionany material revisions to this document may be made only with the approval of the Florida International University the expected long term capital market outlook the University s risk tolerance future planned capital expenditures Finance and cash requirementsfacilities Committee. debt service requirements current and projected expenses inflation The financial plan measures the potential impact of alternative investment policies in terms of risk and return based on various levels of asset diversification and the current and projected cash flows of the Portfolio. I. GENERAL INVESTMENT GOALS AND OBJECTIVES The general The Investment Committee ( Committee ) reports to the Finance and Facilities Committee and recognizes that a stable, well-articulated investment policy is crucial to the long-term success of the Portfolio. As such, the Investment Committee has developed this Investment Policy with the following goals in mind: To clearly establish the objectives and constraints that govern the investment goals established herein are designed to broadly take into account the purpose of of the Portfolio and articulate the philosophy and parameters by which, To establish a long-term target asset allocation with a high likelihood of meeting the University will manageportfolio objectives given the Portfolio s assets.constraints, and To protect the financial health of the Portfolio through the implementation of this stable long-term investment policy. 37/86 1

42 I. Operating Funds Investment Portfolio Goals The overall goal of operating funds investment portfolio (the Portfolio ) is to provide funds through a carefully planned and executed investment program necessary for regularnormal expenses, capital expenditures, and overall liquidity needs. There are both short term liquidity needs and longer term needs that allow for some incremental longer term growth of these assets. Specifically, the Portfolio shall be managed with the following objectives: i. Maintain the safety of the principal; ii. Maintain the necessary liquidity to ensure funds are available to support operational needs; iii. Obtain a reasonable return for a prudent level of risk. The University seeks to produce a return on investment which is based on levels of operating liquidity needs and investment risk that are prudent and reasonable, given prevailing capital market conditions. While the University recognizes the importance of the preservation of capital, it also adheres to the theory of capital market pricing which maintains that varying degrees of investment risk should be rewarded with compensating returns. II. GOVERNANCE Statutory Requirements BOT Finance and Audit Committee 38/86 2

43 The Florida International University Board of Trustees ( BOT ) or the Board ) and the Committee will manage the assets of the Portfolio in accordance to the Prudent Expert Rule, in accordance with Florida Statutes and III. Governance A. Responsibilities of the Board 1. The Board is responsible for the oversight and approval of this Policy (and any amendments thereto) and oversight of the University's implementation of the Policy. This Policy addresses specifics relating to: 2. investmentthe Board authorizes the creation of the Committee to oversee the investments of the Portfolio. 3. The Board s responsibilities include periodic review of the Investment Policy and its: a. Investment goals and objectives b. assetasset allocation policy targets specifying minimum, minimums and maximum rangesmaximums rebalancing policy selection of investment managers c. authorizedauthorized investments A.B. InvestmentResponsibilities of the Committee 1. The BOT s Investment Committee recognizes that matters concerning the investment of the operating fundportfolio assets owned by the University merit serious attention and frequent consideration. The Investment Committee, at a minimum, will consist of: a. An individual designated by the BOT, b. The Chief Financial Officer of the University, c. The Treasurer of the University and d. A representative from University academics. 2. In addition, the Investment Committee may include up to two business community representatives and other representatives with specific expertise in investment and 39/86 3

44 portfolio management to strengthen the Committee s capabilities. The need for adding members will be determined by the Chair of the BOT, in consultation with the Chair of the Finance and AuditFacilities Committee. 3. The Investment Committee, is responsible for hiring an investment consultant, consistent with University procurement requirements, and with the guidance and recommendations of the investment consultant hired by the University, is responsible forinvestment Consultant: a. directingdirecting all of its efforts toward the investment objectives stated herein b. performingperforming at least annually a review of the investment objectives stated herein c. ensuringensuring that the objectives stated in this Policy are practical and reflect the mission of the University hiring an investment consultant, consistent with University procurement requirements d. implementingimplementing and monitoring the asset allocation policy e. conductingconducting an annual formal review of the investment structure developing an updated financial projection a minimum of every three years f. selectingselecting and monitoring of qualified, competent investment managers g. terminatingterminating investment managers failing to maintain acceptable quantitative (e.g. risk/return profile) and/or qualitative (e.g. organizational changes) standards h. developingdeveloping and reviewing the objectives and guidelines given to each specific investment manager i. meetingmeeting at least quarterly to review the results of the investment portfolios j. determiningdetermining whether the investment objectives set forth herein are being met and whether the investment guidelines are being followed k. providingproviding the BOT with regular performance reports on the investment portfolios l. completingcompleting annually eight (8) hours of continuing education in subjects or courses of study related to investment practices and procedures, or the Chief Financial officerofficer shall complete this requirement. 4. Recommending and approving requests under the spending policy. 40/86 4

45 The 5. Committee will annually select a Chair and a Vice Chair to preside over the meetings. B.C. Responsibilities of the Staff The staff is an integral part of the day-to-day requirements of the operating portfolio. The staff has the responsibility of administering and coordinating the implementation of decisions made by the Investment Committee and the BOT. The staff is responsible for: 1. administeringadministering the investments of the Portfolio at the lowest possible cost, being careful to avoid sacrificing quality. 2. administeringadministering the rebalancing policyprocess. 3. dayday-to-day interaction with the consultants and investment managers. 41/86 5

46 III. INVESTMENT GUIDELINES 4. The investment guidelines set forth herein establish parameters for the Portfolio and for Administering the investment earnings distribution process. 5. Reviewing requests under the University sspending policy. D. Responsibilities of Investment Managers Investment managers are delegated the following responsibilities: 1. Each investment managers manager will have full discretion to follow in implementing their respectivemake all investment strategies. Thesedecisions for the assets placed under its control, while operating within guidelines, constraints, and philosophies as outlined in this Policy. 2. Each investment manager will be expected to manage the Portfolio s assets in a manner consistent with the investment objectives, guidelines address, and constraints in accordance with applicable state and federal laws. 3. The investment manager is required to communicate with the Investment Consultant and staff all significant matters pertaining to the investment of the Portfolio s assets on a timely basis. IV. Investment Objectives A. There are both short term liquidity needs and longer term needs that allow for incremental longer term growth of assets. B. While the Committee recognizes the importance of the preservation of capital, it also adheres to the theory of capital market pricing which maintains that varying degrees of investment risk should be rewarded with compensating returns. C. Specifically, the portfolio shall be managed with the following objectives in this order: 1. Risk - Maintain the safety of the principal a. To accept a reasonable level of risk required to achieve the Portfolio s return objective as stated immediately below. b. To limit the likelihood of experiencing a loss over any five-year period. c. To use diversification to minimize exposure to company and industry-specific risks in the aggregate investment portfolio. d. To the extent possible, minimize the annual volatility in the asset base. 2. Liquidity - Maintain the necessary liquidity to ensure funds are available to support operational needs 42/86 6

47 a. The Committee and Staff will monitor liquidity needs, spending projections, and the impact of changes in regulations or other circumstances. b. The Committee intends to invest no more than 25% of the Portfolio s assets in illiquid vehicles. Illiquid investments will be considered investments with less than monthly liquidity terms. 3. Return - Obtain a reasonable return for a prudent level of risk a. The Committee seeks to produce a return on investment which is based on levels of operating liquidity needs and investment risk that are prudent and reasonable, given prevailing capital market conditions. a.b. The Committee seeks to produce a return in excess of a passive policy index based on the asset allocation, restricted transactions, diversification, quality and turnover. targets. Exceeding this objective indicates that the active management of the various portfolio components has added value over a passively-managed fund with a similar asset mix. c. A. The Committee seeks to produce an adequate real return over the expected rate of inflation, the primary driver of increased costs to the University. V. Role of Each Investment Pools*Pool Total Combined Pool TOTAL COMBINED POOL A. This pool is the overall combined investments of the Portfolio. In its entirety, it is intended to satisfy the overall objectives and constraints set forth in this Policy. The Total Combined Pool is divided into three distinct pools; each pool has a different investment time horizon, and investment objective and minimum and maximum asset class allocationsobjectives. WORKING CAPITAL POOL B. Working Pool This pool is intended to provide for the immediate normal operating requirements of the University (funds awaiting clearance), and other short-term investments of the University. This pool includes funds that must be invested in a restricted manner in accordance with federal and/or state law. STRATEGIC CAPITAL POOL C. Strategic Pool This pool is intended to be invested over the medium-term and long-term, as the cash needs of this pool are intermediate and long-term in nature. 43/86 7

48 RESERVE POOL D. Reserve Pool This pool encompasses a state-mandated unencumbered reserve. This pool is intended to be invested over the medium-longer term. *University and affiliated-organization bond proceeds are outside the purview of this Policy and will be invested in compliance with all relevant federal and state laws. B. Asset Class/Category Characteristics CASH EQUIVALENTS The purpose of the cash equivalents portfolio is to provide liquidity to fund operational expenses, debt service and other short term cash needs. FIXED INCOME Investment Grade This asset class is intended to be representative of the overall U.S. investment grade bond market. The purpose of the fixed income asset class is to provide a high level of current income to provide liquidity for intermediate cash flow needs and to provide diversification benefits during periods of a stock market decline. High Yield This asset class is intended to be representative of the non-investment grade U.S. bond market (bonds rated BB or lower). The purpose of this fixed income asset class is to provide a higher level of current income to compensate for the additional level of credit risk employed. The purpose of this asset class is to provide some return enhancement and diversification benefit in order for the Portfolio to realize long-term growth above inflation. EQUITIES U.S. Equity This asset class is intended to be representative of the overall U.S. stock market. The purpose of the equity asset class is to provide a high level of capital appreciation in order for the Portfolio to realize long-term growth above inflation. 44/86 8

49 International Equity The purpose of the international equity asset class is to provide exposure to equities in international equity markets. Exposure to international equities enhances returns of the combined equity portfolio while reducing return volatility. Private Equity The purpose of the private equity asset class is to provide a global exposure to private equity markets that is diversified by geography, investment type (venture capital, growth equity, buyout, mezzanine, distressed and special situations) and vintage year. Exposure to the private equity market is expected to provide access to outsized returns as compared to the public equity market. REAL ASSETS Treasury Inflation Protected Securities ( VI. Diversification The Committee recognizes that an important element of risk control is diversification. Therefore, investments will be allocated across multiple classes of assets, chosen in part for their low correlation of returns. Within each asset type, the portfolio will distribute investments across many individual holdings, to further reduce volatility. VII. Asset Allocation The Committee recognizes that the allocation of monies to various asset classes will be the major determinant of the Portfolio return and risk experience over time. Therefore, the Portfolio will allocate investments across those asset classes that, based on historical and expected returns and risks, provide the highest likelihood of meeting the Portfolio s investment objectives. A. Permissible Asset Classes TIPS) This asset class is intended to be representative of the fixed income investments in which the principal is adjusted periodically based on changes in CPI. The purpose of the TIPSCommittee has specifically indicated those asset class is to provide fixed income returns with the additional diversification benefits of inflation protection. Real Estate Investment Trusts (REITS) This asset class is intended to be representativeclasses that may be utilized. The University invests mainly in commingled vehicles such as mutual funds, limiting the ability of the Real Estate Investment Trust market. The purpose of the REIT asset class is to provide a higher level of current income and capital appreciation than fixed income with diversification benefits from University or its low correlation to both stocks and bonds. representatives to imposecommodities This asset class is intended to be a passively managed representation of a direct investment in a diversified commodities strategy. A direct investment is either through the purchase of the physical commodity (e.g., crude oil, metals) or the purchase of derivatives (e.g., futures). The principal roles for commodities in the Portfolio are as a risk diversifier, and an inflation hedge, providing an expected offset to assets such as fixed rate instruments, which typically lose value during periods of unexpected inflation. ABSOLUTE RETURN This asset class is intended to be representative of a broadly diversified hedge fund strategy intended to provide an absolute return in any market environment with low to intermediate level of risk. This strategy is intended to provide modest return enhancement to that of fixed income with diversification benefits derived from its low correlation to other asset classes. C. Authorized Investments and Restrictions 45/86 9

50 The following authorized investments and restrictions establish the parameters the University s investment managers must follow in implementing their respective investment strategies. Each underlying manager will have a specific set of guidelines that may be more restrictive than those set forth herein.. 46/86 10

51 Authorized Investments:Permissible Asset Class Public Equity Private Equity Fixed Income securities issued in the U.S. investment grade bond market Rule 144A securities with registration rights Non dollar securities and securities of issuers outside the U.S. Bank Loans CommoditiesU.S. Treasury, Agency, Eurodollar, and Swap financials futures Hedge FundsInterest rate swaps Cash and Cash Equivalents Options on securities otherwise allowable under the guidelines Agency mortgage dollar rolls Authorized Authorized Restrictions: Maximum invested in securities not paying in US dollars Maximum invested in issuers domiciled outside the US Maximum invested in non US dollar-denominated assets Cross-currency hedging Rated by both S&P Moody's (except US government and agency securities) Rated BBB-/Baa3 or higher at time of purchase Convertible securities and preferred stocks Maximum position in securities not rated or rated BB+ /Bal or lower Collateralized securities must have a credit quality rated AAA by S&P and rated Aaa by Moody's Interest-only (IO) securities Collateralized Bond Obligations, Collateralized Debt Obligations, and Collateralized Loan Obligations Guideline 10% of account market value 10% of account market value 10% of account market value Prohibited Required Required Prohibited 5% of account market value Required Prohibited Prohibited Credit derivatives Prohibited Maximum per any one issuer 5% of account market value Maximum duration exposure derived from futures, options or swaps 20% Borrowing and/or lending of funds or securities Prohibited Leverage Prohibited 47/86 11

52 B. Expected Returns, Risks, and Correlations for Permissible Asset Classes The risk and return behavior of the Portfolio will be driven primarily by the allocation of investments across asset classes. In determining the appropriate allocation, the expected return and risk behavior of each asset class and the likely interaction of various asset classes in a portfolio will be considered. C. Total Combined Pool Exposure The total Combined Pool is expected (but not obligated) to be composed of the following split, on average, over the long term. The total Combined Pool is expected to be used for benchmarking purposes and total risk analysis; however the Committee has limited control over the level of assets in the Working Capital Pool which is expected to fluctuate throughout the year based on the normal operating requirements of the University. Investment Guidelines - High Yield Fixed Income Authorized Investments: Registered high yield and Rule 144A, with registration rights, fixed income securities and debt obligations issued by public, corporate, and sovereign entities Securities issue or guaranteed by the US government, its agencies and instrumentalities Forward contracts on "eligible" securities Common stock, preferred stock and options or warrants to purchase common or preferred stock only where included in a unit with, or attached to, fixed income securities or upon conversion of a convertible security or exercise of a warrant or option or received in a reorganization Convertible securities and preferred stocks, if most of their value is attributable to their yield and other fixed income features Cash vehicle through trustee Restrictions: Maximum position in an individual security (excluding Government securities) Maximum position in any one issuer (excluding Government securities) Maximum position in Rule 144A, with registration rights, securities Maximum position in emerging market debt (corporate or sovereign debt of countries with credit rating BB+/Ball or lower) Working Capital PoolPurchase of securities on margin Strategic Capital PoolShort sales Status Authorized Authorized Authorized Authorized Authorized Authorized Guideline 5% of account market value 5% of account market value 5% of account market value 5% of account market valuetotal Combined Pool Prohibited40% Prohibited50% 48/86 12

53 Securities lendingreserve Capital Pool Total Combined PoolEmploy leverage Prohibited10% Prohibited100% Structured securities (e.g. ABS, CMBS, CDO) except for equipment trust certificates Maximum position in equipment trust certificates Investment in direct real estate or real estate mortgage loans Debt issued by corporate entities involved in real estate otherwise allowed under these guidelines Investment in commodities or commodity contracts All securities at the time of purchase must be rated single-b or higher by both S&P and Moody's (securities issued w/o rating are exempt if one can be reasonable expected within one month of issuance) Maximum invested in securities not rated single-b or higher by both S&P and Moody's and any equity securities received into the account Prohibited 5% of account market value Prohibited Permitted Prohibited Required 5% of account market value 49/86 13

54 D. Long-Term Target Allocations for the Strategic and Reserve Pool Based on the investment objectives and constraints of the Portfolio, and on the expected behavior of the permissible asset classes, the Committee will specify a long-term target allocation for the combined Strategic and Reserve Pool. The long-term target allocations for the Strategic and Reserve are intended as strategic goals, not short-term imperatives. Thus, it is permissible for the Strategic and Reserve Pool s asset allocation to deviate from the long-term target, as would likely occur during transitioning, asset class restructurings, and other temporary changes in the Portfolio. Long term strategic asset allocation targets and allowable ranges for the Strategic and Reserve Pool are listed below. Strategic and Reserve Pool Target (%) Allowable Ranges (%) Equities 17.0 U.S. Equity 7.0 +/- 3 International Developed (Non-U.S.) Equity 5.0 +/- 3 Private Equity 5.0 +/- 3 Credit 5.0 Bank Loans 5.0 +/- 5 Rate-Sensitive 58.0 Investment Grade Bonds /- 5 Investment Grade Bonds (Corporate) /- 5 TIPS /- 5 Real Assets 5.0 Commodities 5.0 +/- 5 Other 15.0 Hedge Fund /- 5 Total 100 E. Rebalancing Portfolio rebalancing is designed to provide disciplined approach to control the risk exposure of the portfolio. Rebalancing parameters are addressed at the asset class level. In general, cash flows to, from and within the Portfolio will be allocated in such a manner as to move each asset class toward its target allocation as is prudent. VIII. Review of Investment Policy, Asset Allocation, and Performance 50/86 14

55 The Investment Policy will be reviewed at least annually to ensure that the objectives and constraints remain relevant. However, the Committee recognizes the need for a stable long-term policy for the Portfolio, and major changes to this policy will be made only when significant developments occur. The asset allocation of the Portfolio will be reviewed on an on-going basis, and at least annually, with the Investment Consultant. The Committee will evaluate the performance of the Portfolio relative to its objectives and to the returns available from the capital markets during the period under review. In general, the Committee will utilize relative, rather than absolute, benchmarks in evaluating performance. IX. Investment Manager Selection Hedge Funds The Absolute Return asset class shall be implemented through a fund-of-funds investment vehicle. The organization managing the fund-of-funds vehicle must be registered with the SEC. Specific investment guidelines will be reviewed and approved by the Investment Committee prior to the implementation of such an investment vehicle. Guidelines for Commingled Investment Vehicles and/or Mutual Funds Investment may be made in commingled vehicles and/or mutual funds in which a specified set of guidelines developed for a broad number of institutions are already predetermined. These investments will be managed in a manner consistent with the authorized investments and restrictions set forth herein. These guidelines will be reviewed and approved by the Investment Committee prior to the implementation of such an investment vehicle. IV. Asset Allocation Guidelines The long-term allocation guidelines herein are expressed in terms of a target and ranges for each asset class to provide sufficient flexibility to take advantage of shorter-term market opportunities as they may occur. The asset allocation shall be sufficiently diversified to maintain risk at a reasonable level without imprudently sacrificing return. The target allocation to each asset class will differ between the various pools as denoted in a previous section of this Policy. The asset allocation of each of the individual investment pools and the total combined pool are summarized in Appendix I Asset Allocation Targets and Rebalancing Policy. 51/86 15

56 V. Manager Selection For the Strategic Capital and Reserve Pools, the Investment Committee, with the guidance and recommendations of the consultantinvestment Consultant, is responsible for the selection and continued monitoring of qualified, competent investment managers in accordance with University policy and Florida law, while optimizing the financial return to the University, advancing its longterm financial interests and supporting the University s mission. For the Working Capital Pool, staffstaff is authorized to invest in the following managers and investments: 1. Florida State Treasury 2. State Board of Administration 3. Qualified Public DepositoriesDepositors as defined by the State of Florida 4. U.S. Government debt and its Agencies 5. Money Market and Short Term Fixed Income Fundsshort term fixed income funds rated AA or higher by at least two of the following ratings agencies: Moody s Investors ServiceServices, Standard & Poor s andor Fitch. VI. Performance Measurement & Evaluation Investment objectives provide quantifiable standards to measure and evaluate the progress of both the investment pools and each individual investment manager. For the purpose of monitoring and evaluating the ongoing investment activity and results, both relative and comparative performance standards and objectives are defined. Relative standards are used to review the return and risk at both the pool and individual manager level. The relative standards for the pool level will represent a target policy index that will be constructed from the relative market indices weighted by the Portfolio s target allocation to each asset class. Each individual investment manager will be evaluated relative to an appropriate benchmark. An appropriate benchmark is defined as an identifiable market index or a normal portfolio that is constructed to replicate the manager s investment style. Benchmarks for each investment manager are identified in the Individual Manager section of this document. Comparative standards are used to evaluate the returns of both the pool and each of its asset class components. Investment objectives are established to measure the long-term (3 to 5 years) results of the Total Pool and each investment manager. The Committee must recognize the limitations of reviewing results over short-term horizons; however, current performance can serve as an early indication of the Portfolio s progress toward meeting the more fundamental primary objectives. The Portfolio s performance objectives may be divided into two components: objectives for the overall fund and objectives for the individual portfolio components. Both levels of objectives will be incorporated into quarterly reviews of the Portfolio s performance. The performance objectives for each individual investment pool and the X. Investment Costs Investment expenses will be considered during manager due diligence process conducted by the Investment Consultant. The Committee intends to monitor and control investment costs on a portfolio level. XI. Voting of Proxies 52/86 16

57 The Committee recognizes that the voting of proxies is important to the Portfolio. The Committee has delegated the responsibility of voting all proxies to the investment managers. The Committee expects that proxies will be executed in a timely fashion. Also, the Committee expects full accounting of all proxy votes, and upon request, a written explanation of individual voting decisions. Total Combined Pool are detailed in Appendix II Performance Objectives. 53/86 17

58 REASON FOR POLICY (O*) This document will provide the framework for the investment management of the Portfolio. Specifically, it will address: the general goals of the investment Portfolio the guidelines and parameters for the management of the Portfolio the asset allocation guidelines performance objectives This Policy is intended to allow for sufficient flexibility in the management process to capture investment opportunities as they may occur, yet set forth reasonable parameters to ensure prudence and care in the execution of the investment program. 54/86 18

59 RELATED INFORMATION (O*) APPENDIX I Asset Allocation Targets & Rebalancing Policy Asset Allocation Guidelines The asset allocation guidelines differ between the various pools, and are summarized as follows: Working Strategic Total Capital Pool Capital Pool Reserve Pool Combined Pool % of Total Combined Pool 30% 60% 10% 100% Cash Equivalents 40.00% 0.00% 0.00% 12.00% Short-Int. Fixed Income 60.00% 0.00% 0.00% 18.00% Fixed Income (Inv. Grade) 0.00% 29.50% 29.50% 20.65% High Yield 0.00% 10.00% 10.00% 7.00% Total Fixed Income % 39.50% 39.50% 57.65% TIPS 0.00% 14.00% 14.00% 9.80% Commodities 0.00% 10.00% 10.00% 7.00% REITS 0.00% 5.50% 5.50% 3.85% Total Real Assets 0.00% 29.50% 29.50% 20.65% Domestic Equity 0.00% 5.50% 5.50% 3.85% International Equity 0.00% 5.50% 5.50% 3.85% Private Equity 0.00% 10.00% 10.00% 7.00% Total Equity 0.00% 21.00% 21.00% 14.70% Absolute Return 0.00% 10.00% 10.00% 7.00% Total % % % % Asset Allocation Ranges and Rebalancing Asset allocation refers to the strategic deployment of assets among the major classes of investments such as domestic equity, fixed income and cash equivalents. The asset allocation decision reflects the Portfolio s return requirements as well as the Portfolio s tolerance for return variability (risk) within the context of the expected liabilities of the fund. Asset allocation is widely recognized and accepted as the primary source of return and risk for an investment program. It is used for setting the parameters for long term risk and return in order to meet the University s long-term financial objectives. The tables below set forth the asset allocation for the Portfolio, the strategic target weights and the allowable ranges around the target weights: Total Combined Pool Target (%) Minimum (%) Maximum (%) Working Capital Pool Strategic Capital Pool Reserve Pool Working Capital Pool Target (%) Minimum (%) Maximum (%) Cash Equivalents Short Term Fixed Income /86 19

60 Strategic Capital Pool Target (%) Minimum (%) Maximum (%) Cash Equivalents Fixed Income (Investment Grade) TIPS Absolute Return High Yield Commodities REITS International Equity Domestic Equity Private Equity Reserve Pool Target (%) Minimum (%) Maximum (%) Cash Equivalents Fixed Income (Investment Grade) TIPS Absolute Return High Yield Commodities REITS International Equity Domestic Equity Private Equity Portfolio rebalancing is designed to provide a disciplined approach to control the risk exposure of the Portfolio to the investment categories that have deviated from the established target policy weights. Rebalancing parameters are addressed at the asset class level. Rebalancing requires a reallocation to be made whenever the quarter-end allocations exceed the minimum or maximum allocations specified above. Naturally occurring cash flows shall be used to the fullest extent possible to minimize transaction costs and rebalance toward policy targets. The funding of the private equity asset class occurs over the term of the investment. In order to maintain the Policy s overall target allocation to equity, the Portfolio may maintain an overweight (or underweight) position to public equity no greater than the corresponding underweight (or overweight) target allocation to private equity. The staff and consultants will annually review the rebalancing to take into account the funding of private equity. Appendix II Performance Objectives The performance objectives for the overall fund are threefold: 1. objective relative to asset allocation targets 2. objective relative to capital market assumptions 3. objective relative to inflation The first objective results in a comparative index that reflects the University s unique asset allocation policy (see example in Table 1). Exceeding this objective indicates that the active management of the various portfolio components has added value over a passively-managed fund with a similar asset mix. The second objective, to compare asset class performance to the capital market assumptions, ensures that the asset mix continues to achieve the long-term goals of the Portfolio. The inflation objective requires that the investment performance provide an adequate real return over the expected rate of inflation, the primary driver of costs. Individual portfolio components also have performance objectives reflecting the unique investment style of each category. The investment style and performance benchmarks are also shown below: 56/86 20

61 Five-Year Performance Objectives Methodology Relative to asset allocation targets, indexes that represent appropriate asset classes Target Portfolio Weight x Representative cash equivalent portfolio Target Portfolio Weight x Investment grade fixed income index Target Portfolio Weight x TIPS index Target Portfolio Weight x Absolute return benchmark Target Portfolio Weight x High yield fixed income index Target Portfolio Weight x Global REIT index Target Portfolio Weight x Commodity index Target Portfolio Weight x Broad U.S equity index Target Portfolio Weight x International equity index Target Portfolio Weight x Private equity benchmark % Total Portfolio Benchmark Total Combined Pool Objectives (net of all fees and costs) Relative to asset allocation targets, index weighted by: 30.00% x 91-Day Treasury Bill rate 20.65% x Barclays U.S. Aggregate Bond Index 9.80% x Barclays TIPS Index 7.00% x ML High Yield Master II Index 7.00% x CPI % (Absolute Return benchmark) 7.00% x Dow Jones - UBS Commodity Index 3.85% x FTSE EPRA / NAREIT Developed Real Estate 3.85% x Wilshire 5000 Index (US Equity broad market) 3.85% x MSCI All Country World ex-u.s. Index (int l equity market) 7.00% x Wilshire 5000 (1-quarter lag) + 3% % Total Combined Pool Benchmark Relative to inflation: Consumer Price Index + 3.5% Working Capital Pool Objectives (net of all fees and costs) Relative to asset allocation targets, index weighted by: % x 91-Day Treasury Bill rate % Working Capital Pool Benchmark Strategic Capital and Reserve Pool Objectives (net of all fees and costs) Relative to asset allocation targets, index weighted by: 29.50% x Barclays U.S. Aggregate Bond Index 14.00% x Barclays TIPS Index 10.00% x CPI % (Absolute Return benchmark) 10.00% x ML High Yield Master II Index 5.50% x FTSE EPRA / NAREIT Developed Real Estate 10.00% x Dow Jones UBS Commodity Index 5.50% x Wilshire 5000 Index (US Equity broad market) 5.50% x MSCI All Country World ex-u.s. Index (int l equity market) 10.00% x Wilshire 5000 (1-quarter lag) + 3% % Strategic Capital or Reserve Pool Benchmark Relative to capital market assumptions: (Wilshire s Asset Allocation Return and Risk Assumptions, most recent published date, or equivalent publication). 57/86 21

62 LEGAL AUTHORITY: RESPONSIBILITIES (O*) The BOT is authorized to adopt an Investment Policy pursuant to Section and of the Florida Statutes. HISTORY (R*) Effective Date: June 29, 2005; Revision Date(s): September 11, 2007; March 12, 2008; March 30, 2009; June 12, 2009; September 24, 2010, March 14, 2012; and September 10, 2013; and January 14, RESPONSIBLE UNIVERSITY DIVISION/DEPARTMENT (R*) Office of the Treasurer Finance and Administration RESPONSIBLE ADMINISTRATIVE OVERSIGHT (R*) University Treasurer Florida International University S.W. Eighth Street, MARC 110 Miami, Florida Telephone: (305) Facsimile: (305) The University Policies and Procedures Library is updated regularly. In order to ensure a printed copy of this document is current, please access it online at For any questions or comments, the Document Details view for this policy online provides complete contact information. FORMS/ONLINE PROCESSES (O*) Links to the above referenced Form(s) available in the "Document Details" Section of the online version of this policy document. *R = Required *O = Optional 58/86 22

63 5.1 Financial Performance Review, FY Florida International University Financial Summary Overview 1 FY Year To Date June 2017 Variance Budget Current Year Actual ($ in millions) $ % Revenue / Receipts University Educational and General (net) 2 $ $ $ 6.3 1% University % College of Medicine % FIU Self Insurance Program (0.1) 25% Auxiliary Enterprises % Intercollegiate Athletics % Activities and Service % Technology Fee % Board Approved Fees % Contracts and Grants % Student Financial Aid (1.6) 1% Concessions % Direct Support Organizations FIU Athletic Finance Corp (0.8) 17% FIU Foundation Inc % FIU Health Care Network % FIU Research Foundation % Interfund Adjustments 3 (5.7) (5.7) 0% Total Operating Revenues $ 1,098.2 $ 1,125.9 $ % University Treasury (net) (0.3) 6% FIU Foundation Inc % Total Investment Revenues $ 14.6 $ 33.3 $ % Total Revenues / Receipts $ 1,112.8 $ 1,159.2 $ % Expenses University Educational and General (net) $ $ $ % University % College of Medicine % FIU Self Insurance Program % Auxiliary Enterprises % Intercollegiate Athletics (2.3) 9% Activities and Service % Technology Fee (0.4) 4% Board Approved Fees % Contracts and Grants (6.1) 5% Student Financial Aid (3.3) 2% Concessions % Direct Support Organizations FIU Athletic Finance Corp (0.3) 13% FIU Foundation Inc (2.9) 11% FIU Health Care Network (0.5) 11% FIU Research Foundation % Interfund Adjustments 3 (5.7) (5.7) 0% Total Expenses 1, , % Principal Payment of Debt (0.3) 4% Change in Net Assets (incl. Investments) $ 34.0 $ 93.1 $ % Change in Net Assets (excl. Investments) $ 19.4 $ 59.8 $ % 59/86

64 Financial Highlights: Operations By Fund and Direct Support Organization Florida International University Financial Summary Overview 1 FY Educational and General Variance: Revenues $6.3M, Expenses $26.9M I. University (ex College of Medicine) Variance: Revenues $5.7M, Expenses $22.3M Revenues State Appropriations: Additional pass through distribution from the state to cover higher risk management and health insurance premiums, $3.7M 3.7 Tuition: Undergraduate base: resident student credit hour enrollment down by 253 FTE or 1.1% mainly in transfers, offset by an increase of 245 FTE or 14.3% in non resident enrollment Tuition differential: slightly above target Graduate and Professional: higher resident student credit hour enrollment of 167 FTE or 5.6% primarily in Masters Programs, offset by lower than budgeted non resident enrollment of 199 FTE or 17.4% FIU Online 2.0: student credit hour enrollment lower than budget by 155 FTE or 8.0% Dual Enrollment: institutional financial aid and fee waiver savings from 16.4% or 164 FTE lower than budgeted enrollment Shorelight Enrollment: 35.1% lower than budgeted enrollment offset by savings in institutional financial aid Other: Mainly higher incidental fees combined with lower bad debt offset by higher institutional financial aid and waivers (3.8) (1.0) 0.5 (0.9) 3.1 Total Revenues $ 5.7 Operating Expenses: Higher than budgeted summer faculty salaries (4.7) Vacancies in faculty, administrative, and staff positions, $9.6M, one time savings due to parental and sabbatical leave paid out of fringe benefit pool, $3.1M, change in funding source and other savings, $2.8M, offset by filled unbudgeted positions, ($8.9M) Budgeted Salary Float Year to date budget from vacant administrative positions that are returned centrally 6.6 (1.2) Centralized Expenditures: Placeholder for benefits pass throughs and salary increases 4.5 Sub Total Position Salaries and Benefits 5.1 Other In Unit Expenses: Variance primarily due to minor repairs and maintenance projects that were budgeted in full but will be completed in FY , $4.5M, savings in general maintenance expenses, $0.5M and delays in spending on strategic investments, $5.9M Total Expenses $ 22.3 II. College of Medicine Variance: Revenues $0.6M, Expenses $4.6M Revenues are above target primarily due to lower than budgeted bad debt allocation and additional pass through distribution from the state Expenses are below target mainly due to vacant positions $4.6M FIU Self Insurance Program Variance: Revenues $ 0.1M, Expenses $0.3M Revenues are below target due to lower than anticipated expenses (revenues are driven by expenses). Expenses are below target due to lower than anticipated expenses. Auxiliary Enterprises Variance: Revenues $7.7M, Expenses $0M Favorable revenue variances are driven largely by higher than anticipated sales in the Panther Tech store, higher rebates and departmental printing, new information technology and external relations initiatives, and more parking revenues from more on campus events and higher citation payments, partially offset by lower enrollment across market rate and self supporting academic programs. Expenditures are on budget. Postponed housing projects and lower expenses across all academic auxiliaries are offset by higher operating costs associated with higher sales in the Panther Tech computer store, and unanticipated expenses in the Division of Information technology to replace a faulty storage system and renew software licenses. 60/86

65 Intercollegiate Athletics Variance: Revenues $2.2M, Expenses $ 2.3M Florida International University Financial Summary Overview 1 FY Revenues are below target primarily due to a transfer from the Athletic Finance Corp. to cover the cost of a new video board and stadium turf expenses, a one time NCAA disbursement, and higher fees from higher student credit hour enrollment. Expenditures are above budget mainly due to higher cost of new video board and equipment upgrades and higher salary and benefit expenses associated with the recent change in the football team coaching staff, reduced by less scholarships due to more student athlete financial aid from other sources. Student Activity and Service Variance: Revenues $0.4M, Expenses $1.4M Revenues are higher than target mainly due to higher activity and service fee revenue mainly from higher than budgeted total student credit hour enrollment and lower bad debt allocation. Higher than anticipated orientation program revenues and other unbudgeted student activity revenues also contributed to the favorable variance. Expenses are below target due to generally lower expenses across student activity operations and centers and clubs and organizations, and delays in projects approved by the student government. Technology Fee: Revenues $0.2M, Expenses $ 0.4M Revenues are higher than target mainly due to higher than budgeted student credit hour enrollment. Expenses are below target mainly due to vacancies, project deadline extensions, and delays in materials and supplies orders on projects. Board Approved Fees: Revenues $0M, Expenses $0M Revenues are slightly above budget. Expenses are on target. Contracts and Grants Variance: Revenues $6M, Expenses $ 6.1M Sponsored Research: The favorable variance in revenues of $5.8M is mainly due to higher than budgeted revenues in federal and state grants, and unbudgeted private revenues. Expenditures are above budget $6.7M commensurate with higher revenues than budgeted, combined with higher than expected commitments against F&A returns spent by the colleges, units, centers and researchers. External Contracts: Revenues are on budget, however, timing of DSO reimbursements, mainly Capital Campaign, Museums, College of Medicine Humanities, Health, and Society project are offset by unbudgeted incidental revenues from Wolfsonian Downtown and higher contractual service revenue for HCN Faculty Practice. Expenses are below budget by $0.6M primarily driven by lower expenses in the College of Medicine Faculty Practice, and less DSO reimbursable expenses associated with the Capital Campaign slightly offset by higher spend by other units. Student Financial Aid Variance: Revenues $ 1.6M, Expenses $ 3.3M Student financial aid revenue is below target. Lower Pell awards and Bright Futures, less qualifying students than anticipated due to higher academic requirements, are offset by additional institutional aid from Treasury and higher than budgeted donor related / departmental scholarships. Student financial aid expense is above target. Higher institutional aid disbursements and additional donor related / departmental scholarships, are offset by lower Pell and Bright Futures disbursements. The negative change in net assets of $6.7M is primarily due to spend down of institutional aid fund balances. Concessions Variance: Revenues $0.1M, Expenses $0.2M Vending machine sales commissions are higher than budget due to higher volumes driven by increased credit card sales and more sales of higher priced items. Expenditures are lower than budget primarily due to unallocated reserves, and unspent con ngencies in vending and laundry opera ons. 61/86

66 Florida International University Financial Summary Overview 1 FY FIU Athletic Finance Corp Variance: Revenues $ 0.8M, Expenses $ 0.3M Operating Revenues are below budget due to an unanticipated decrease in conference television revenue and lower revenue from premium seating sales and concessions. Expenses are higher than target due to higher stadium enhancement costs, higher debt service costs associated with refinancing the stadium debt, and unbudgeted maintenance costs. FIU Foundation Inc. Variance: Revenues $5.7M, Expenses $ 2.9M The favorable variance in operating revenues is mainly driven by gifts received in excess of the budget. Foundation operating expenses are below target mainly due to timing of scholarships and program disbursements across all areas, offset by unbudgeted salaries related to the Capital Campaign. FIU Health Care Network Variance: Revenues $1.6M, Expenses $ 0.5M Operating revenues are higher than budget due to more enrolled students and higher management fee income from the international student programs. Additionally, higher management fee income from higher clinical revenues is driven by increased patient volumes at Student Health Centers, practice locations, and mobile health clinics. Expenses are above budget. Expenses associated with increased enrollment in the international student programs and higher pharmaceutical and medical supplies costs associated with greater patient volume are offset by salary savings due to vacancies and positions filled later than anticipated. FIU Research Foundation Variance: Revenues $0M, Expenses $0M Operating revenues are above target due to one time payment of royalty revenues. Expenses are below budget due to lower than anticipated professional service costs. Net Investment Returns: $18.7M University Treasury investments fiscal year to date returns are 5.3% or $14.8M. The favorable gross investment revenues variance of $3.0M is driven mainly by the Strategic Capital and Reserve Pool. The $6.3M of net investment revenues are comprised of $7.7M of investment income and $7.1M of unrealized gains offset by $8.9M of investment fees and Treasury operating expenses. Foundation investments fiscal year to date gains are 12.0% or $28.7M, generating a positive variance of $19.0M mainly from equities. Investment returns for the full fiscal year were budgeted at 4.0%, or $9.7M. Principal Payments of Debt: $ 0.3M Unbudgeted payment for MRI machine. Notes: 1 The financials presented above reflect the state budgeting methodology which differs from full accrual financial statements. The following have the most significant impact: Depreciation of Assets: For budgeting purposes equipment purchases are fully expensed in their acquisition year, therefore depreciation is not included in the budget. Unrealized gains and losses: The investment gains / losses are recognized as revenues in the budget however GASB accounting principles require that it be recorded as a non operating revenue / expense. 2 E&G revenues include State Funding and Tuition and are net of waivers, uncollectible amounts and 30% Financial Aid need based amounts per BOG regulation. Any differences between E&G Revenues and Expenses will be funded from prior year balances carried forward. 62/86

67 Florida International University Financial Summary Overview 1 FY Interfund transfers have been included resulting in higher revenues and expenses by fund allowing for an individual fund performance analysis. The interfund adjustments eliminate this double counting. However, interfund transactions such as tuition funded by scholarships and auxiliary services provided to other units have not been eliminated. Since revenues and expenses are equal, the interfund adjustments are the same for both. Principal payment of debt reflected above per BOG requirement that debt service payments be shown on a cash basis. 63/86

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69 6.1 Athletics Update THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 Reports (For Information Only no action required) Fundraising Report Pete Garcia, Executive Director of Sports and Entertainment FIU Foundation, Inc. Unaudited Preliminary Recap Through the Period Ended June 30, 2017 (in thousands) Budget Actual Variance Revenues $1,058 $1,856 $798 Favorable budget to actuals is a result of Riccardo Silva gift agreement. Athletics Finance Corporation FIU Athletics Finance Corporation Unaudited Preliminary Recap Through the Period Ended June 30, 2017 (in thousands) Budget Actual Variance Revenues $4,566 $3,761 ($805) Expenses $1,233 $1,373 ($140) Year-to-date Net Income excluding debt service was $2,388,000, unfavorable to budgeted $946,000. o Primary drivers include: Recalculation of revenue due to AFC from conference revenues due to loss of television revenue. Expense variance due to unbudgeted maintenance and repair expenses and closing costs associated with the refinancing of the loan. The debt coverage covenant requirement was met for the period ending June 30, Loan refinancing was completed on December 21, 2016 retiring the taxable bonds and setting up a fixed rate for the $9 million that was previously under a variable rate. 64/86

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71 6.2 Business Services Report THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 BUSINESS SERVICES REPORT AS OF August 1, 2017 NEW SERVICES FIU Office of Business Services began a trial period for a new vending machine operator. Pharmabox is a cutting edge service that immediately supplies FIU's students, faculty and staff with health needs by distributing over the counter (OTC) pharmaceutical products through a brilliantly designed vending machine. The machine is equipped with the latest vending technology and the service is available 24 hours a day, 7 days a week. Sales for the trial period have far exceeded expectations and a formal, long term agreement will be signed soon. The initial locations are in the Green Library, which is now open 24/5 and the Graham Center. Sales results show purchases well into the night demonstrating that the machines are providing a true service to the campus community. Sergios Cuban Kitchen is bringing their Bowl concept to the Graham Center for Fall They will occupy one of the three storefronts currently used by Subway. The fast-casual concept serves authentic Cuban food in addition to a healthy menu, with items catering to paleo and low-sugar diets. While the menu is still being finalized, expect to see a selection of bowls with rice, beans, and traditional Cuban dishes like vaca frita and pork chunks. Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 65/86

72 Misha s known for their delicious cupcakes will be coming to PG5 Fall They carry a wide assortment of cupcakes in two different sizes, regular and mini. They are sure to satisfy any sweettooth. They will occupy the location of the former Juice Blendz. KEY HIGHLIGHTS Fleet Services: Completed agreement with First Vehicle Services (FVS) to assume the full responsibility including repairs and preventive maintenance of the FIU fleet across the Modesto A. Maidique (MMC) and Biscayne Bay (BBC)campuses. FVS began operations April 4, 2016 and has immediately improved service levels to University departments. FVS was a winner of the 2017 edition of the Top 100 Best Fleets in the Americas, ranked 82 nd by the National Association of Fleet Administrators (NAFA). The program recognizes and rewards peak performing fleet operations in North America, not limited to academic insitutions. Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 66/86

73 Food Services: For the period ended June 30, 2017, food services sales totalled $25.8M, an increase of $.5M (or 2%) as compared to the same period last year primarily due to an increase in average check balances across all retail locations as well as the successful sales of the new venue, Vicky Cafe. Sustainability: Our Eco friendly car wash surpassed 13,500 cars washed for the year ending June In doing so it also achieved a sustainabilty milestone in conserving water. The average car wash uses 75 gallons of water per car. GTEco uses gallons of water using it s mist technology. As a result, GTEco was able to save over one million gallons of water for the year Technology: The long awaited app has been soft launched by GTEco Car Wash. The app, found in the app store (IOS and Android), enables the user to register personal information, vehicle information, and payment data. Thereafter, the user can request an exterior car wash through the app and enter the current location of the vehicle (e.g. Gold Garage) and GTEco will locate the vehicle and wash it at the parking space where it is located and bill the user directly for the type of wash selected. There is no need to drop a car off unless the user needs interior cleaning or full detail. Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 67/86

74 Tapingo/shopFIU: The food ordering service, which is embedded in the shopfiu app allows users to place an order at any of the dining venues at MMC or BBC. The order is processed, payment is made via credit card or FIU One Card, and users are then notified via text that the order is ready for pick-up. No more waiting in lines. The results for the Fall/Spring (August July) year over year reflects a net increase in sales of $213,780 (or 1%). B&N Bookstore General Site: Textbook sales declined 7% ($583K) despite a 36% ($87K) increase in Digital Textbooks over the prior year. Sales decline can be attributed to competing platforms such as Amazon and Chegg. School supplies sales remained unchanged and Café/Convenience Store purchases fell slightly 5% ($65K) over the prior year. Non-textbook sales (commencement, school spirit clothing, accessories, dorm furnishings) and other sales (special commissions) offset these declines by outperforming the prior year by 8% ($196K) and 60% (353K). Overall, Net Bookstore sales fell nominally by 1% ($89K) from the prior year. Price Match: Barnes & Noble continues to offer the Price Match program as a way to counter sales from discount online retailers. In the Spring 2017 semester a total of $17,846 was matched bringing the program total to $59,856 since inception in Spring Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 68/86

75 Vending: For the period ended June 30, 2017, vending sales totaled $1.6M, an 8% increase compared to the same period last year primarily due to increased sales of higher priced items, operational improvements and the replacement of older machines. In total, there are 125 beverage machines and 119 snack/food machines across the MMC and BBC campuses. QUICK FACTS Services under Management 55 food and retail venues, beverage and snack vending, FIU One Card Program, fleet services, multi-use facilities, property management and advertising. All information on food and retail including hours of operation can be found at Investments For fiscal year , Business Services is committed to invest over $6.5M to improve and expand existing facilities, expand service offerings and increase indoor and outdoor seating to help foster affinity and retention at FIU. Business Services is also committed to contribute over $1.7M to fund University initiatives, provide scholarships, underwrite student services and support FIU facilities. Revenues For the period ended June 30, 2017, Business Services managed sales of $44M from operations, representing $8.6M in revenue to FIU ($6.7M in Commissions and $1.8M in Grants). Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 69/86

76 OPERATING REVENUES Finance and Administration SW 8 th Street * DC 121 * Miami, FL * Tel: (305) * Fax: (305) * Web: obs.fiu.edu 70/86

77 6.3 Emergency Management Status Report THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 EMERGENCY MANAGEMENT STATUS REPORT AS OF JULY 24, 2017 Report (For Information Only no action required) Training and Exercises In June, Department of Emergency Management (DEM) staff attended the Board of Governors and State University System s 2017 Safety and Security Summit hosted by the University of South Florida (USF). Following the Summit, DEM staff attended the second annual two (2) day meeting of the Council for Administration and Financial Affairs Inter-institutional Committee for Emergency Management also hosted by USF. Emergency Management Accreditation Program (EMAP) During the first week of August, seven (7) assessors from EMAP will be on-site reviewing documentation and conducting staff interviews as part of the accreditation process for FIU s emergency management program. Page 1 of 1 71/86

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79 6.4 Facilities and Construction Update THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 FACILITIES AND CONSTRUCTION UPDATE AS OF JULY 28, 2017 Report (For Information Only no action required) Projects Completed None during this reporting period. Projects under Construction Recreation Center Expansion (BT-903) - $26.7M Capital Improvement Trust Fund (CITF), Housing Auxiliary Fund, and Student Government Association (SGA) project budget. A/E HKS; CM Moss Construction (67,487 gsf). Funding spans five (5) years of CITF allocations. The project will expand the existing facility into Parking Lot #8 and will include an indoor basketball/volleyball gym, a weight training room, additional locker rooms, exterior basketball courts, sand volleyball courts, and a mezzanine level to include a jogging track. The expansion more than doubles the current capacity of 50,765 gsf. The formal topping-off milestone celebration was held April 19 th and drying-in of the building was accomplished in June. Site work, finish mechanical and electrical work continues along with interior finish work. $2.6M in additional funding was provided in May to renovate and expand Tropical Smoothie and refurbish the locker rooms in the existing Rec Center. Construction is 75% complete. Weather delays and unforeseen site conditions have pushed the delivery date for the entire project to September University City Prosperity Project (UCPP) (BT-904) - $14.7M TIGER Grant project budget; multiple funding sources. Design/Build Team MCM+FIGG. The project consists of urban design and infrastructure improvements along SW 109th Avenue between SW 6th Street and SW 10th Street, including a new pedestrian bridge over SW 8th Street, complete streets, and other pedestrian-oriented transit access improvements. These infrastructure improvements will support the synergistic integration of FIU and the adjacent City of Sweetwater. Most importantly, the pedestrian bridge will provide a safe way to reconcile pedestrian and vehicular traffic. FDOT has completed review of 100% construction documents for the roadway, foundation, bridge superstructure, and mechanical and electrical construction Page 1 of 4 72/86

80 documents. The U.S. Army Corps of Engineers (USACOE) has issued all required permits for construction. Construction started on March 1, 2017 with contractor mobilization. Work on the south tower and main bridge superstructures are underway while excavation for the canal bulkhead wall has begun. $567.5K in Transportation Alternatives Program (TAP) funding was approved by the Metropolitan Planning Organization (MPO) and FDOT and received for the pylon beacon, north plaza west stairway, bridge furniture, and power and data conduits for kiosks. A project design revision requested by FDOT to accommodate a future westbound lane on SW 8 th Street is under review. The $1.9M amendment for Alternate 1 increasing project scope to add improved connectivity from the south plaza to the Green Library has been executed and the design is at 90% Construction Documents. The anticipated 6 month delay to the project schedule due to the design revision and weather impacts has been reduced to 4 months. New target delivery date: October Multi-Purpose Practice Fields (BT-916) - $9.4M; multiple funding sources. A/E Stantec; CM Moss Construction. The project will construct two (2) full-sized practice fields, one natural grass and the other artificial turf, and a 3,500 gsf scalable multipurpose field support facility. It will also include a faculty-designed wetlands expansion south of the preserve. Grass installation on the natural turf field completed July 9, 2017 and the installation of the artificial turf has begun. Site work has begun for the support facility. Delivery of the artificial turf field is scheduled for July 30, 2017 and the natural turf field for mid-september pending the successful establishment of the grass. The faculty-approved landscape design drawings and specifications have been released for pricing by the CM. Delivery of the support building is pending final design and construction documents. Satellite Chiller Plant Expansion (BT-834) - $7.7M Public Education Capital Outlay (PECO). A/E SGM; CM Poole & Kent. The $7.6M initial phase of construction to complete the building with two chillers and two cooling towers was completed in February The $7.7M of additional funding for Phase II will add two generators, two additional chillers, two additional cooling towers, and the supporting equipment to complete the project. Space will still be available for a fifth and final chiller/cooling tower set when that capacity is needed. Owner direct purchase contracts of the equipment have been awarded and the equipment has been released for fabrication. The cooling towers arrived and installation work began on July 20, 2017 while the chillers are being manufactured offsite. Members of the project team observed initial testing of the chillers the week of July 17, 2017 during their fabrication. Long lead times for the electrical parallel panels have pushed the project completion date to November Page 2 of 4 73/86

81 Projects in Design Frost Museum of Science Batchelor Environmental Center at FIU (BT-913) (Phase II) - $1.8M privately funded project budget. A/E MC Harry & Associates; CM Stobbs Brothers Construction. To date, $200K has been received for Phase II design services. Combined with Phase I funding already received, $2.4M of the $5M commitment has been released to FIU. Phase II will be a classroom and lab building (approximately 3,000 gsf), with the bird rehab structure and the remaining animal holding areas to be added at a future date when additional grant funding is received by the Frost Museum. The $1.3M equipment budget for the project was reduced to increase the Phase II construction budget to $1.1M for the building only; the budget will require an additional contribution of $245,719 from the Frost Museum. Transfer of the project funding balance will be necessary once agreement is reached on the GMP to proceed with construction. 95% Construction Documents have been submitted for review. The project is on hold pending verification of gift agreement terms. Delivery date: TBD. International Center for Tropical Botany (BT-914) at The Kampong - $5.0M privately funded project budget. A/E MC Harry; CM Thornton Construction. The project will construct a new approximately 12,000 gsf facility on a site immediately adjacent to the National Tropical Botanical Garden (NTBG) property in Coconut Grove to house educational, lab, and office spaces. Programming was formally approved August 28, 2015 and the project went into design development based on the program criteria at that time. The warrant package submitted in June was revised and resubmitted on September 29, 2017 addressing all comments from the City of Miami Zoning and Planning Department. The revised submittal was accepted and approval has been placed on hold pending resolution of community concerns raised during several outreach meetings regarding building size, height, parking and site lighting. This effort is required to avoid an appeal of the warrant by the community. Subsequently, one of the neighboring property owners proposed adjustments to the building s aesthetic design as part of a gift agreement to the university. The architect and project team have determined these changes are possible within the current project budget, including the proposed additional gift. The project is back in schematic design to accommodate the changes requested as part of the agreement. Completion of the warrant process, design phase, and construction start is contingent upon finalizing the gift agreement with the donor and a separate agreement with the neighbors addressing their concerns. Target delivery date: TBD. Projects in Planning Stage Parkview II Housing (BT-892) - $66.5M bond proceed and Housing Auxiliary funded project budget. A/E TBD; CM TBD. The project includes construction of a new 656 private bedroom style residence hall on the Modesto A. Maidique campus Page 3 of 4 74/86

82 with a 300-car garage. The planning effort began on April 26, 2017 with a kick-off program committee meeting. Final selection and approval of the site in Parking Lot 6 was granted on July 11, Underground utility infrastructure and roadway modifications will be assessed to determine additional cost impacts. Hotel, Conference and Alumni Center Public-Private Partnership (P3) project. Developer/Operator - TBD; Architect - TBD; CM TBD. Award to the successful Invitation to Negotiate respondent is pending Board of Governors, Division of Bond Finance and Board of Trustees of the Internal Improvement Trust Fund approval, and the conclusion of negotiations resulting in fully executed Operating and Sublease agreements. School of International and Public Affairs (SIPA) Phase II (BT-887) - $30.0M PECO and privately funded project budget. A/E TBD; CM TBD. The project includes classrooms, conference facilities, offices, language and technology labs, negotiation and mediation facilities, and experimental teaching space. PECO funding for the project was received in June 2017 and the program committee is currently being formed. Engineering Building (Phase I and II) (BT-919) - $150.0M PECO and privately funded project budget. A/E TBD; CM TBD. The project to build a new engineering building on the Modesto A. Maidique Campus will include classrooms, teaching labs, study space, research labs, offices, and computer and instructional media spaces. $10M in PECO funding has been received to begin the initial planning effort. A program committee is currently being formed. Page 4 of 4 75/86

83 6.5 Foundation Report FIU FOUNDATION, INC. FINANCIAL STATEMENTS RECAP & INVESTMENT SUMMARIES June 30, /86

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85 (In Thousands of Dollars) Recap of Statement of Activities * FIU FOUNDATION, INC. For the Period Ended June 30, 2017 Page Budget to Actual Current Year to 12-Month 12-Month 12-Month Annual 12-Month Previous Year Budget Actuals Variance Budget Actuals Variance REVENUES: Cash Contributions $ 25,946 $ 31,091 $ 5,144 [1] $ 25,946 $ 27,376 $ 3,715 MARC Building $ 1,699 $ 1,779 $ 80 $ 1,699 $ 1,781 $ (2) Foundation Subsidiaries $ 1,159 $ 1,078 $ (82) $ 1,159 $ 510 $ 568 Estimated Investment Returns, Net of Fees $ 9,744 $ 28,721 $ 18,977 [2] $ 9,744 $ (5,503) $ 34,225 TOTAL REVENUES $ 38,548 $ 62,669 $ 24,119 $ 38,548 $ 24,164 $ 38,506 EXPENSES: University Programs: Scholarships & Programs $ 17,164 $ 22,625 $ (5,461) [3] $ 17,164 $ 19,602 $ (3,023) Building Funds $ 1,660 $ 316 $ 1,344 $ 1,660 $ 927 $ 611 Unrestricted Annual Expenses $ 2,171 $ 2,084 $ 87 $ 2,171 $ 2,156 $ 72 TOTAL UNIVERSITY PROGRAMS EXPENSES $ 20,995 $ 25,025 $ (4,030) $ 20,995 $ 22,685 $ (2,340) Operational: MARC Building $ 498 $ 464 $ 35 $ 498 $ 447 $ (17) Foundation Subsidiaries $ 970 $ 604 $ 366 $ 970 $ 453 $ (151) Administrative & Fund-Raising $ 5,180 $ 4,367 $ 813 $ 5,180 $ 6,708 $ 2,341 TOTAL OPERATIONAL EXPENSES $ 6,648 $ 5,435 $ 1,214 $ 6,648 $ 7,608 $ 2,173 TOTAL EXPENSES $ 27,643 $ 30,460 $ (2,816) $ 27,643 $ 30,293 $ (167) EXCESS REVENUES OVER EXPENSES $ 10,905 $ 32,209 $ 21,303 $ 10,905 $ (6,129) $ 38,339 *These financial statements recaps reflect expenses on an accrual basis and receipts on a cash basis, with the exception of investment returns. **Please refer to Appendix A for detailed variance notes. 77/86

86 Florida International University Foundation Preliminary Performance Summary As of June 30, 2017 Page 3 Asset Class/Manager Market Value ($000s) % of Total Long-Term Long-Term Policy Managed Assets Policy Target Ranges Current Month Calendar Year to Date Fiscal Year to Date Trailing 2- Years Ann. Trailing 3-Years Ann. Trailing 5-Years Ann. Trailing 10-Years Ann. Since Inception GMO Global Equity Asset Allocation 5, % Indus Markor Master Fund 3, % Kiltearn Global Equity Fund 11, % Maverick Long Fund, Ltd 9, % Vanguard Total World Stock Index 8, % Global Public Equity 38, % 11.5% 5.0%-25.0% D.E. Shaw Core Alpha Extension 11, % First Eagle U.S. Equity Fund 3, % Sirios Focus Fund 10, % HHR Titan Offshore 5, % U.S. Public Equity 30, % 13.5% 6.0%-35.0% Vanguard FTSE Dev. Markets % AKO European Master Fund 9, % Cevian Capital II 5, % Buena Vista Asian Opp. Fund 5, % Kabouter International Opps. Fund II 5, % Non-U.S. Developed Public Equity 27, % 8.5% 4.0%-25.0% DFA Emerging Markets Value 7, % Somerset Emerging Markets 4, % Polunin Developing Countries Fund 4, % Emerging Markets Public Equity 16, % 4.0% 0.0%-15.0% Total Public Long Equity 112, % 37.5% Global Private Equity 26, % 20.0% 0.0%-34.0% Total Long Public and Private Equity 138, % 57.5% 45.0%-70.0% Valinor Capital Partners 3, % Blue Harbour Strategic Value 3, % Roystone Master Fund 3, % Fir Tree International Value 3, % Pelham Long/Short Fund Ltd 4, % Highfields Capital 4, % Matrix Capital Offshore Fund Ltd 2, % Hedge Funds (Growth Objective) 24, % %-15.0% Brahman Capital Partners 2, % Naya Offshore Fund 3, % Janchor Partners 3, % Kensico Offshore II 4, % Indus Asia Pacific Sidepocket % Hedge Funds (Blended Objective) 14, % %-15.0% Davidson Kempner 3, % Kynikos Opportunity Fund 2, % Scopia PX Funds 3, % GMO Systematic Global Macro Fund 4, % ISAM Systematic Trend 1, % Luxor Capital Partners - SPV % Luxor - Holdback % Hedge Funds (Diversifying Objective) 16, % %-15.0% Total Hedge Funds 55, % 17.5% 10.0%-30.0% Parametric Global Defensive Equity 2, % Renaissance RIEF 3, % Other Diversifying Investments 6, % %-30.0% Total Diversified Growth 61, % 17.5% 10.0%-40.0% Van Eck Global Hard Assets 1, % SPDR Gold ETF 5, % Harvest MLP Income Fund 3, % Public Inflation Sensitive 10, % 2.0% 0.0%-12.5% Private Inflation Sensitive 7, % 8.0% 0.0%-20.0% Total Inflation Sensitive 17, % 10.0% % Fidelity Interm Treasury Bond Index Fund 27, % Cash Pending % SunTrust Cash 5, % Total Deflation Sensitive 33, % 15.0% 9.0%-30.0% Total Managed Assets Net of CA Fees 250, % 100.0% Foundation Enterprise Holdings I Student Managed Investment Fund SunTrust Balanced Annuity Account StoneCastle FICA Program 5, IR&M Short Fund 4, Archstone Offshore 2, State of Florida Treasury Fund 1, Other Alternatives 14, Total Assets Net of CA Fees 265, Notes: 1. Funds available for investment in the Wells Fargo operating account have been deployed to the investment portfolio as of December 31, Private Investments' trailing performance represents time-weighted quarterly returns. Data represents NAVs and performance through March 31, 2017, updated with cashflows through the most recent period. 78/86

87 Florida International University Foundation Preliminary Performance Summary As of June 30, 2017 Page 4 Asset Class/Composite Market Value ($000s) % of Total Managed Assets Long-Term Policy Target Long-Term Policy Ranges Current Month Calendar Year to Date Fiscal Year to Date Trailing 2- Years Ann. Trailing 3- Years Ann. Trailing 5- Years Ann. Trailing 10- Years Ann. Since Inception Global Public Equity 38, % 12.5% 5.0%-25.0% U.S. Public Equity 30, % 15.0% 7.5%-35.0% Non-U.S. Developed Public Equity 27, % 10.0% 5.0%-25.0% Emerging Markets Public Equity 16, % 5.0% 0.0%-15.0% Total Public Long Equity 112, % 37.5% Global Private Equity 26, % 15.0% 0.0%-25.0% Total Long Public Equity and Private Investments 138, % 57.5% 45.0%-70.0% Total Hedge Funds 55, % 17.5% 10.0%-30.0% Other Diversifying Investments 6, % %-30.0% Total Diversified Growth 61, % 17.5% 10.0%-40.0% Total Inflation Sensitive 17, % 10.0% 5.0%-20.0% Total Deflation Sensitive 33, % 15.0% 9.0%-30.0% Total Managed Assets Net of CA Fees 250, % 100.0% Total Assets Net of CA Fees 265, /86

88 Variance Notes: Appendix A [1] We had a successful fundraising year, resulting in a better than expected level of cash contributions. Our success resulted in a higher level of giving to the following areas: Athletics; College of Law; College of Arts, Science & Education; College of Nursing & Health Sciences; College of Engineering & Computing; Stempel College of Public Health & Social Work; and University-Wide Scholarships & Programs. [2] The favorable variance of $18,977,000 in investment returns is based on a budgeted return of 4% and an actual return fiscal year-to-date of 12.0%. The portfolio return is broken down by asset class as follows: long public and private equity (55.1% allocation) up 19.3%; diversified growth (24.5% allocation) up 9.1%; inflation sensitive (7.1% allocation) up 2.2%; and deflation sensitive (13.3% allocation) down 1.9%. [3] The increased spending on scholarships and programs is a result of our successful fundraising creating scholarships and programs that were not in existence at the time the budget was prepared. *Please note that the enclosed financial statements recaps and notes as of June 30, 2017 are preliminary. The additional invoices for expenses pertaining to this fiscal year may need to be recorded. 80/86

89 6.6 Safety and Environmental Compliance Report THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 SAFETY AND ENVIRONMENTAL COMPLIANCE REPORT AS OF JULY 26, 2017 Report (For Information Only no action required) Issue #1: RER-Division of Environmental Resource Management above ground storage tanks (AST) inspection finding in motor pool Agency: Miami-Dade County Department of Regulatory and Economic Resources (RER) Division of Environmental Resources Management On March 2017, the Miami-Dade County Department of Regulatory and Economic Resources (RER), Division of Environmental Resources Management conducted a routine inspection of the above ground storage tanks in the motor pool. This was the first inspection since the outsourcing of the motor pool operations. Contrary to past practice, EH&S was not contacted for the inspection and the records being requested were not provided resulting on a Notice of Violation (NOV). On June 2017, motor pool management brought this to the attention of EH&S and we contacted the inspector directly to discuss the findings and the organizational changes. Findings: 1) The inspector required 2 years worth of monthly visual inspection logs; 2) The current passing copy of the operability test for the veeder-root electronic monitoring panel; and 3) A renewal of the placard once the first two items were submitted and in compliance. Upon explaining the current organizational changes and the permittee points of contact, EH&S provided the compliant records to the inspector and the inspection NOV was closed with no fines or further implications and payment for the placard was processed. 81/86

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91 6.7 Treasury Report THE FLORIDA INTERNATIONAL UNIVERSITY BOARD OF TRUSTEES Finance and Facilities Committee September 7, 2017 Report (For Information Only no action required) TREASURY REPORT (For quarter ending June 30, 2017) OVERVIEW The University s total liquidity position of $331.5 million was 2.0 times the University s debt position of $162.5 million at the end of FY Including direct support organization ( DSO ) debt, the liquidity to total debt ratio was 1.7 times. These results are better compared to the end of FY 2016, where the liquidity to University debt and the liquidity to total debt ratios were 1.8 times and 1.5 times, respectively. LIQUIDITY ALLOCATION LIQUIDITY Real Days Payable At the year end, $180.5 million, or 54.4 percent, of the liquidity position was accessible within 5 business days (see Liquidity Allocation chart for detail). At the end of FY 2017, the University had 43 real days payable 1 ( RDP ) versus 40 RDP at the end of FY The increase in RDP was due to higher state inflows. Sources The University started the fiscal year with $89.4 million in cash balances 2. Total FY 2017 inflows Days 40% 120+ Days 5% Same Day 24% 1-5 Days 31% (state and operational) were $1,116.2 million as compared to $1,087.4 million for FY On average, $4.3 million flowed into the University each business day in FY 2017 and $4.2 million in FY Uses 1 Real Days Payable represents the available balance of liquid funds divided by the average cash outflows of the University. The calculation uses the available balance in the University s bank accounts plus the market value of investments that are accessible within 5 business days as its balance of liquid funds. 2 Cash includes Working Capital Pool assets and cash balances in the concentration bank account. 82/86

92 FY 2017, the University used $1,107.0 million as compared to $ million in the same period last fiscal year. The FY 2017 velocity cash outflow was $4.2 million per day and $4.1 million in FY The University ended the fiscal year with $98.6 million in cash balances. Stress Tests/Performance Simulations The University Office of the Treasurer ( Treasury ) analyzes the effect of negative market performance on its liquidity position through both value-at-risk (VAR) analysis and Monte Carlo simulation analyses. VAR analysis, completed quarterly, estimates the maximum potential loss during a specific time period at a given level of confidence. VAR uses the historical behavior of each asset class over various time horizons (five years, ten years, full history). Our VAR analysis predicts that there is a five percent probability that the portfolio (as of the FY 2017 ending balance) could have unrealized losses of up to $19.3 million and one percent probability of up to $33.3 million of unrealized losses within a twelvemonth period. At the end of FY 2017, the Monte Carlo analysis, generated by a bottom decile performance for fixed income investments, translated into median 2.0 percent, or $6.6 million, in unrealized losses. Liquidity, as measured by 5-day accessibility, would drop to 49.8 percent, or $165.2 million, of the total current available cash and investment balances. RDP would fall to 39 days based on current fiscal year outflows. The scenario with the bottom decile equity performance generates a median 3.5 percent, or $11.7 million, in unrealized losses. Liquidity, as measured by 5-days accessibility, would drop to $176.5 million or 53.2 percent of the total current available cash and investment balances. RDP would drop slightly to 42 days based on fiscal year outflows in this stress scenario. Bottom decile of overall portfolio performance represents a 4.9 percent loss, or $16.1 million, and a projected drop in liquidity to $154.8 million or 46.7 percent of the total current available balances. Furthermore, RDP would drop to 36 days. Forecast and Budget Actual balances at the end of FY 2017 were 4.0 percent higher than the rolling forecast, 9.1 percent higher than the budget, and 7.1 percent higher than prior year. For the next quarter, the University should experience an increase in the cash and investment balances lasting through the first quarter of FY INVESTMENTS Composition Asset allocations at the end of FY 2017 remained within policy guidelines (See Asset Allocation chart for quarter end detail). At the end of FY 2017, the market value of the University s operating funds portfolio and cash was $331.5 million. This balance reflects a decrease of ($5.0) million or 1.5 percent, from the previous quarter. The decrease reflects the quarter-to-quarter seasonal reduction in cash flows. The total portfolio market value was $22.0 million higher than the market value at the end of FY The increase was largely due to strong performance in the Strategic and Reserve Pool. ASSET ALLOCATION Absolute Return 8% Equity 19% Real Assets 19% 13% 24% 10% Policy Targets 23% 30% W/C Pool 30% Fixed Income 24% 83/86

93 Performance FIU s operating portfolio continues to outperform the State Treasury investment pool ( SPIA ), returning 4.0 percent since inception versus the SPIA s 2.6 percent for the same period. At the end of FY 2017, the portfolio returned 5.3 percent. This compares favorably to a 0.6 percent return at the end of FY The Strategic Capital and Reserve Pools returned 6.0 percent while the Working Capital Pool gained 1.0 percent. Returns from the SPIA totaled 1.5 percent at the end of FY 2017 (see FY Performance vs. Benchmarks chart for additional performance detail by asset class). The Working Capital Pool exceeded the benchmark by 0.4 percent. Equities were lower than their benchmarks, with returns of 15.2 percent (vs 19.5 percent benchmark). All other assets classes exceeded their respective benchmarks. Absolute Return returned 8.6 percent (vs. 4.9 percent benchmark), Real Assets returned -0.7 percent (vs -2.4 percent benchmark), Fixed Income returned 4.3 percent (vs 3.3 percent benchmark). 30.0% 20.0% 10.0% 0.0% -10.0% FY Performance vs Benchmarks 19.5% 15.2% 8.6% 3.3% 4.3% 4.9% 0.5% 1.0% 3.3% 5.3% -2.4% -0.7% Working Capital Fixed Income Real Assets Equity Absolute Return Portfolio Total Benchmark FYTD Performance DEBT Total Outstanding The University and DSOs ended FY 2017 with $196.9M million in outstanding debt versus $207.1M million at the end of FY The weighted average interest rate for the University and DSO issuances was 4.2% percent. At the end of the quarter, all of the University and DSOs outstanding debt was fixed rate. Bond Refunding The University and the Athletics Finance Corporation (AFC), has refunded/modified all eligible outstanding bond series. The refundings/modification are projected to save the University and AFC $10.1 million in interest expense over the term of the issuances. As of June 30, 2017, $2.3 million of interest savings have been realized from the refunding/modification activities. The University and AFC are expected to save an additional $0.9 million in interest expense in Fiscal Year 2018 and $3.5 million over the next 5 years. Housing Revenue Bond Issuance On June 22, 2017, the University received final approval from the Board of Governors to issue Housing revenue bonds in an amount not to exceed $63.0 million. The proceeds of the bonds will be used to build a suite-style residence hall with 656 beds and will include 300 parking spaces and ancillary space to service the residents. The bonds will be sold through competitive sale and the University anticipates the proceeds will be distributed before the end of December /86

94 OUTSTANDING DEBT Stadium $29.7 M MARC $4.6 M Housing $93.0M Parking $69.5M (Aa3/A/A+) (Aa3/AA-/A+) (Unrated) (Unrated) $20M ANNUAL DEBT SERVICE $10M $0M FY17 FY18 FY19 FY20 FY21 FY22 Housing 3.9% Parking 4.7% Stadium 4.4% MARC 1.9% 85/86

95 Period Ending June 30, 2017 OVERVIEW LIQUIDITY Liquidity/University Debt 2.04 Availability Liquidity/Total Debt 1.68 Same Day $ 78, Days 102,378 Liquidity Position Days 134,109 Cash + W/C Pool $ 98, Days 16,914 Strategic + Reserve Pools 232,945 Total $ 331,532 Total $ 331,532 Real Days Payable (<5 Days) Debt Position MTD Outflows 48 University Debt $ 162,475 QTD Outflows 43 DSO Debt 34,375 YTD Outflow 41 Total $ 196, Days 40% Finance and Administration Office of the Treasurer Treasury Summary (000's) LIQUIDITY ALLOCATION 120+ Days 5% Same Day 24% 1-5 Days 31% LIQUIDITY SOURCES AND USES INVESTMENTS Sources MTD QTD YTD Cash + W/C Pool Balance FYTD Last 1Y Opening W/C Pool Balance $ 115,102 $ 104,698 $ 88,773 W/C Pool $ 98, % 1.0% Opening Cash Balance 374 1, Cash % 0.0% From State 28,674 99, ,424 Strategic + Reserve Pools From Operations 37, , ,766 Fixed Income 80, % 4.3% Uses Real Assets 62, % -0.7% To Payroll (42,663) (136,832) (575,784) Equity 61, % 15.2% To Operations (34,194) (90,807) (312,242) Absolute Return 28, % 8.6% To Students (6,035) (41,752) (218,981) Total $ 331, % 6.0% Cash + W/C Pool $ 98,587 $ 98,587 $ 98,587 $400M $300M $200M CASH + INVESTMENTS FORECAST ASSET ALLOCATION Absolute Return 8% Equity 19% 13% 10% Policy Targets 30% W/C Pool 30% Cash 0% $100M $0M Actual Budget Forecast Trailing 12M J F M A M J J A S O N D Real Assets 19% 24% 23% Fixed Income 24% DEBT Stadium $29.7 M Parking $69.5M OUTSTANDING DEBT MARC $4.6 M Housing $93.0M (Aa3/A/A+) (Aa3/AA-/A+) (Unrated) (Unrated) ANNUAL DEBT SERVICE $20M $10M $0M FY17 FY18 FY19 FY20 FY21 FY22 Housing 3.9% Parking 4.7% Stadium 4.4% MARC 1.9% 86/86