Strategic Investment Fund Ad Hoc Committee. BOARD OF VISITORS September 2016

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1 Strategic Investment Fund Ad Hoc Committee BOARD OF VISITORS September

2 Strategic Investment Fund (SIF) History, Purpose, Sources APA Conclusions Proposed Process and Governance Proposed Policy Considerations Proposed SIF Grant Allocation Classes Access and Affordability Research Research Support/Infrastructure Academic Experience

3 SIF History April June 2014 Nov 2015 Jan 2016 Feb 2016 April 2016 General Assembly amended Code of Virginia to allow investments in the long-term investment pool BOV Finance Subcommittee formed to improve affordability and fund the Cornerstone Plan by leveraging strong balance sheet BOV approved new liquidity policy Lines of credit established BOV established SIF SIF Guidelines finalized and Evaluation and Advisory Committees formed 3

4 SIF Purpose Fund exceptional opportunities with potential to Transform a critical area of knowledge or operation Further research progress of the University Materially enhance the quality of the academic experience Support an affordable and excellent education for Virginians Expand economic development in the Commonwealth 4

5 SIF Sources Comprised of cash and investment balances, accumulated for specific purposes over an extended period of time Balances include: medical center reserves, health plan reserves, operating liquidity requirements (for bond rating), capital renewal/replacement reserves, philanthropy, and others The SIF does not include tuition revenue or state appropriations Core SIF balances will remain in place, continuing to serve as reserves for their intended purposes Investment earnings will be used to fund SIF grants Core balances subject to market fluctuations; there can be no assurance as to future investment earnings and the resultant impact on monies available for strategic investment 5

6 APA Findings Investment program is in compliance with Code of Virginia Balances are recorded in accordance with accounting standards and have been reviewed in annual audits Board of Visitors did appropriately authorize actions Lines of credit have not been utilized and are reserved for back up liquidity only No tuition and fees or general funds are included in balances All gift or contract agreement restrictions have been honored 6

7 Proposed Process and Governance UVA Academic Division, Medical Center and College at Wise (student, faculty or staff) Dean, VP, Executive Evaluation Committee (5 faculty) Advisory Committee (2 BOV, 2 BOV designees, Pres., 3 EVPs) BOV DEVELOP REVIEW AND EVALUATE AND ASSESS AUTHORIZE PROPOSAL FINALIZE RECOMMEND EVALUATIONS FUNDING PROPOSAL TO ADVISORY AND COMMITTEE RECOMMEND TO BOV 7

8 Proposed Policy Considerations Grants are awarded for a maximum of 3 years Proposals must align with Cornerstone Plan or the Health System Strategic Plan Proposals must also address: Bridge to sustainable funding if needs extend beyond 3 years Potential for economic development Corresponding impact on operating expenses or need for infrastructure improvements Awarded grants will be monitored for performance against established metrics and milestones Must demonstrate success to receive the next year s installment 8

9 Proposed SIF Grant Allocation Classes Access and Affordability Research Research Support/Infrastructure Academic Experience 9

10 Context Access and Affordability Less than 1/3 of undergraduate student body (out-ofstate students) contributes more than 2/3 net undergrad tuition revenue UVA is most affordable in the state for Virginians with income below $80,000 (70% of all Virginians) and demonstrated need Even for those without need, complete degree in 4 years in stable economic situation High starting salary Low levels of debt 10

11 Context Research Goal is to grow research significantly, and achieve $1 of research funding per $1 dollar invested from SIF Knowledge and discovery Spin-offs Medical advances Economic development Leverage federal, state, and philanthropic investments Recruit best faculty and students 11

12 Context Research Support/Infrastructure Labs and equipment Next generation technology Streamline and provide robust support for proposal development Ensure strong regulatory and compliance environment Reduce administrative burden of faculty 12

13 Context Academic Experience Curriculum Enhancement Internships/Career Advising Global Experiences Community Service 13

14 Access and Affordability Background Information

15 Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated) For a student with family income of $40,000, 4 in family, 1 in college, and no assets Note: Net price does not include loans or work-study allocations. Total price includes all tuition and fees, housing, meals, books, supplies, travel and miscellaneous 15 15

16 Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated) For a student with family income of $80,000, 4 in family, 1 in college, and no assets Note: Net price does not include loans or work-study allocations. Total price includes all tuition and fees, housing, meals, books, supplies, travel and miscellaneous 16 16

17 Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated) For a student with family income of $100,000, 4 in family, 1 in college, and no assets Note: Net price does not include loans or work-study allocations. Total price includes all tuition and fees, housing, meals, books, supplies, travel and miscellaneous 17 17

18 Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated) For a student with family income of $125,000, 4 in family, 2 in college, and no assets Note: Net price does not include loans or work-study allocations. Total price includes all tuition and fees, housing, meals, books, supplies, travel and miscellaneous 18 18

19 Family Scenarios Generated Using Net Price Calculator Income Family Situation UVA Total Price 1 UVA Net Price 2 UVA Net Price After Loans and Work Study Work Study Offered Loans Offered $40,000 5 in family, 2 in college, no assets $28,856 $4,139 $139 $3,500 $1,000 $40,000 4 in family, 1 in college, no assets $28,856 $4,666 $666 $3,500 $1,000 $40,000 4 in family, 1 in college, $100,000 in assets $28,856 $10,470 $5,970 $3,500 $1,000 $80,000 5 in family, 2 in college, no assets $28,856 $10,191 $5,691 $0 $4,500 $80,000 4 in family, 1 in college, no assets $28,856 $14,804 $10,304 $0 $4,500 $80,000 4 in family, 1 in college, $100,000 in assets $28,856 $18,600 $14,100 $0 $4,500 $100,000 5 in family, 2 in college, no assets $28,856 $13,557 $9,057 $0 $4,500 $100,000 4 in family, 1 in college, no assets $28,856 $21,335 $16,835 $0 $4,500 $100,000 4 in family, 1 in college, $100,000 in assets $28,856 $25,401 $20,901 $0 $4,500 $125,000 5 in family, 2 in college, no assets $28,856 $17,360 $12,860 $0 $4,500 $125,000 4 in family, 2 in college, no assets $28,856 $18,270 $13,770 $0 $4,500 $125,000 4 in family, 1 in college, $100,000 in assets $28,856 $28,856 $ 28,321 $0 $535 1 Total price = all tuition and fees, housing, meals, books, supplies, travel and other. 2 Net price = Total price less grants that do not have to be repaid. 19

20 Family Scenarios Generated Using Net Price Calculator UVA Total Price 1 UVA Net Price 2 UVA Net Price After Loans and Work Study Loans Offered Income Family Situation $150,000 4 in family, 1 in college, no assets $28,856 $28,856 $28,856 $0 $150,000 5 in family, 2 in college, no assets $28,856 $22,165 $17,665 $4,500 $150,000 5 in family, 3 in college, no assets 3 $28,856 $19,060 $14,560 $4,500 $175,000 4 in family, 1 in college, no assets $28,856 $28,856 $28,856 $0 $175,000 5 in family, 2 in college, no assets $28,856 $26,292 $21,792 $4,500 $175,000 5 in family, 3 in college, no assets 3 $28,856 $22,287 $17,787 $4,500 $200,000 4 in family, 1 in college, no assets $28,856 $28,856 $28,856 $0 $200,000 5 in family, 2 in college, no assets $28,856 $28,856 $25,937 $2,919 $200,000 5 in family, 3 in college, no assets 3 $28,856 $25,413 $20,913 $4,500 1 Total price = all tuition and fees, housing, meals, books, supplies, travel and other. 2 Net price = Total price less grants that do not have to be repaid. 3 Modified for comparison purposes. 20

21 Total Grants to Undergraduates 43% of Undergraduates Receive Some Form of Grant Undergraduate Regular Session Grants, AccessUVA/ Need-based grants Total Institutional Grants from Tuition 52,903,432 Endowment Grants 6,387,994 University Achievement Awards 874,632 VAF Athletic Grants 3,495,169 Subtotal University AccessUVA Grants Awarded 63,661,227 Federal Grants (Pell and Other) 10,769,755 Outside Grants 6,078,101 State Grants 5,961,722 Total AccessUVA Grants Awarded 86,470,805 Total Students Receiving AccessUVA Grants 4,462 % of Students Receiving AccessUVA Grants 28.2% 16.7% of in-state tuition; 15.6% of out-of-state tuition Non-needbased grants Endowment/Institutional Grants 2,369,631 University Achievement Awards 1,876,547 VAF Athletic Grants 11,324,690 Subtotal University Grants Awarded 15,570,868 Federal Grants (Pell and Other) 2,783,041 Outside Grants 14,869,488 Total Non-need-based Grants Awarded 33,223,397 Total Students Receiving Non-need Grants 2,437 % of Students Receiving Non-need Grants 15.4% Total grants Total University Grants Awarded 79,232,095 Total Federal, State, and Outside Grants Awarded 40,462,107 Total Grants Awarded 119,694,202 Total Students Receiving Grants 6,774 % of Students Receiving Grants 42.8% 43.3% of in-state students; 41.7% of out-of-state students 21

22 Distribution of Need Based Grants and Scholarships to In-State Undergrads By Income Ranges Number of Students Need Based Grants and Scholarships Number of Students $44.6M in need-based grants and scholarships received by 3,183 (29%) in-state undergrads Thousands $12,000 $10,000 $8,000 $6,000 $4,000 Total Aid $2,000 $0 Family Income (thousands) 23

23 Distribution of Need and Non-Need Grants and Scholarships to In-State Undergrads By Income Ranges Number of Students Total Grants and Scholarships Number of Students $57.6M in grants and scholarships received by 4,729 (43%) in-state undergrads Thousands $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Total Aid Family Income (thousands) 24

24 Can UVA s AccessUVA be modified to benefit Virginians? 25

25 Can we moderate future tuition increases? Our revised multi-year financial plan already assumes a moderate increase for next year (1.5%, down from 3.5%) Net tuition revenue is critical to fund faculty and staff compensation increases and inflationary increases in utilities, library materials, IT, compliance requirements, and contractual commitments Within the multi-year plan, we have already planned for organizational excellence incremental savings of $16- $23M/year. We must consider contingency plans in the event of state budget reductions. 26

26 How much net tuition is generated by adding 100 in-state students? 100 additional in-state students will generate $900,000 in incremental net tuition, net of aid, annually Educating 100 additional students will cost $1.5 million annually for new faculty, instruction support, library and IT, and student services. This doesn t include potential capital needs for housing, dining, and other. 27

27 What is the net revenue loss if we replace 100 outof-state students with 100 in-state students? Replacing 100 out-of-state students with 100 in-state students will reduce net revenue by nearly $3,000,000 in (and thereafter) 28