Strategic Investment Fund Ad Hoc Committee BOARD OF VISITORS

September 2016

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• 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

SIF History

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April 2002-2006

General Assembly amended Code of Virginia to allow investments in the long-term investment pool

June 2014 BOV Finance Subcommittee formed to improve affordability and fund the Cornerstone Plan by leveraging strong balance sheet

Nov 2015 BOV approved new liquidity policy

Jan 2016 Lines of credit established

Feb 2016 BOV established SIF

April 2016 SIF Guidelines finalized and Evaluation and Advisory Committees formed

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

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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

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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

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Proposed Process and Governance

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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 PROPOSAL

REVIEW AND FINALIZE

PROPOSAL

EVALUATE AND RECOMMEND TO ADVISORY COMMITTEE

ASSESS EVALUATIONS

AND RECOMMEND

TO BOV

AUTHORIZE FUNDING

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

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Proposed SIF Grant Allocation Classes

• Access and Affordability

• Research

• Research Support/Infrastructure

• Academic Experience

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Context – Access and Affordability

• Less than 1/3 of undergraduate student body (out-of-state 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

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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

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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

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Context – Academic Experience

• Curriculum Enhancement

• Internships/Career Advising

• Global Experiences

• Community Service

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Access and Affordability Background Information

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

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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

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

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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

Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated)

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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

Cost of Attendance vs. Net Price for Virginians Virginia Public Institutions (Updated)

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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

Family Scenarios Generated Using Net Price Calculator

Income Family Situation

UVA 2015-16

Total Price1

UVA 2015-16

Net Price2

UVA 2015-16

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

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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.

Family Scenarios Generated Using Net Price Calculator

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Income Family Situation

UVA 2015-16

Total Price1

UVA 2015-16

Net Price2

UVA 2015-16

Net Price After Loans and Work Study

Loans Offered

$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 assets3 $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 assets3 $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 assets3 $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 2016-17 for comparison purposes.

Total Grants to Undergraduates 43% of Undergraduates Receive Some Form of Grant

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Undergraduate Regular Session Grants, 2015-16 TotalInstitutional 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 86,470,805Total Students Receiving AccessUVA Grants 4,462% of Students Receiving AccessUVA Grants 28.2%

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 University Grants Awarded 79,232,095Total Federal, State, and Outside Grants Awarded 40,462,107Total Grants Awarded 119,694,202Total Students Receiving Grants 6,774% of Students Receiving Grants 42.8%

AccessUVA/ Need-based

grants

Total grants

Non-need-based grants

16.7% of in-state tuition; 15.6% of out-of-state tuition

43.3% of in-state students; 41.7% of out-of-state students

Distribution of Need Based Grants and Scholarships to In-State Undergrads By Income Ranges

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$0

$2,000

$4,000

$6,000

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$12,000

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Tota

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Thousands

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Family Income (thousands)

2015-16

Need Based Grants and Scholarships

Number of Students

$44.6M in need-based grants and scholarships received by 3,183 (29%) in-state undergrads

Distribution of Need and Non-Need Grants and Scholarships to In-State Undergrads By Income Ranges

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$0

$2,000

$4,000

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$10,000

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0

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2015-16

Total Grants and ScholarshipsNumber of Students

$57.6M in grants and scholarships received by 4,729 (43%) in-state undergrads

Can UVA’s AccessUVA be modified to benefit Virginians?

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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.

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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.

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What is the net revenue loss if we replace 100 out-of-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 2017-18 (and thereafter)

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