Approval of the Minutes: Minutes from the meeting of December 13, 2007 were approved as distributed.

Remarks by the Provost

Dr. Johnson announced the beginning of the strategic planning process. The effort will be directed by an appointed Provost Steering Committee and the establishment of three working groups focused on Discovery, People and Ways and Means. The major goal of the process will be to establish 3-5 crosscutting initiatives. Dr. Johnson hopes to have the plan to the trustees by June 2009.

FY 2008 Quarterly Operating Results

Dr. McGill began the discussion, noting that little had changed from the status of financial statements at the close of FY2007 and the four-month results presented earlier to the Finance Committee. While the overall modified cash results appear to be about on target relative to budget for the current fiscal year, on a GAAP basis there is a small continuing loss at 12/31/07 which will likely continue to fiscal year end. The primary external drivers remain the same — flattening grant and contract revenues, except at the APL, lower overhead recovery rates, and the need to continue investing in plant.

The University's operating results through December trail budget. The six-month operating surplus is $205.9 million compared to a budget of $226.8 million. Tuition revenue is above budget through December by $7.3 million (1.6%). Compared to last year, tuition revenues are up $37.6 million, 8.7%. Total grant and contract revenue is over budget ($6.1 million, 0.7%) through December. However, most of the positive variance is attributable to the APL. This revenue source for the rest of the University is on budget. Despite being on budget in grants and contracts, F&A recoveries are considerably below budget ($8.6 million, 6.5%). All of the major research divisions are reporting lower than budgeted F&A recoveries, attributable to increased subcontracts (with limited F&A revenue) and foundation awards (generally lower F&A). Total expenditures are above budget $37.1 million (2.2%) through the first half of the year. Overall spending is expected to slow slightly for the remainder of the year but is still projected to exceed budget by 1.0%.

The year-end operating surplus is projected to be $91.4 million compared to a budgeted surplus of $84.3 million. Most sources of revenue are projected to be at budget or slightly over. The notable exceptions are Grants and Contracts and F&A recoveries, projected to be $30.0 million (3.3%) and $20.7 million (7.8%) below budget respectively. Expendable gifts are expected to be over budget by $16.4 million (13.9%) and affiliated revenues are projected to be up 11.0%. Several expenditure categories are expected to be over budget. Exceptions are Sponsored Research, General Services and Administration and Student Services. The largest projected increase compared to budget is in Plant Operations and Maintenance due to unbudgeted utility capacity charges and some reclassification from General Services and Administration. APL and Medicine plan to use surpluses and some reserves to fund capital projects.

Through December, operating surpluses are greater than budgeted in the Schools of Arts & Sciences, Education and Nursing as well as in the Sheridan Libraries and the APL. Of these divisions, only the Sheridan Libraries expect to end the year below budget. The School of Engineering expects to end the year with a slightly larger deficit than budgeted as increases in sponsored research are offset by lower tuition revenues.

Although anticipating a deficit as of December due to spending on prior year gifts, the School of Public Health had a larger shortfall than anticipated related to the downturn in Sponsored Research. The School expects to end the year in deficit of $11.7 million, or when adjusted for expected spending of $11.6 million in prior year funds, an operating deficit of $100 thousand. Like the School of Public Health, the School of Medicine is showing a deficit larger than budgeted as of December. It has both higher than budgeted revenues and expenditures, but the decrease in F&A recoveries and a shortfall in the clinical program are the most significant causes of the deficit. There will improvement in the second half of the year with Medicine projecting a year-end operating surplus of $18.8 million compared to a budgeted surplus of $21 million.

The Academic and Cultural Centers are trailing budget as of December and project to end the year with only a slight surplus. The Johns Hopkins Press is experiencing an operating deficit as of December due to timing of receipts and expects to end the year with an operating surplus due to successful sales in Project Muse and its journal division. JHPIEGO is performing better than budget as of December and projects similar success in the remainder of FY 2008. Finally, the Applied Physics Lab's operating surplus through December exceeds budget and will end the year over budget as well due to increases in several revenue sources.

The committee also reviewed the FY 2008 year-end projection to FY 2007 actual results with the operating surplus for FY 2008 lower than FY 2007, $91.4 million versus $128.2 million. Much of the difference is due to a one-time FY 2007 recording of a change in value of funds invested in the endowment pool. The divisions are currently projecting expenses to grow over FY 2007 by 7.8% while revenues are only expected to increase by 7.0%.

HopkinsOne Update

Ms. Reel and Mr. Tikka updated the group on HopkinsOne. Ms. Reel noted that the technology is reasonably stable and that the installation of 29 support packs was achieved almost seamlessly to end users. Successful changes have been the sponsored statement distribution, a simplified hire form and modified workflow for goods receipting. The team is currently prioritizing and planning the resolution of ongoing issues and would like faculty input in the process. Mr. Tikka indicated that some problems will be resolved through business process redesign and policy changes. The HopkinsOne Faculty Advisory Committee will participate in these decisions. Dr. Woodson said that staff is still complaining about the time it takes to complete tasks and that staffing has had to increase. Mr. Tikka indicated that a future upgrade may improve some process times. Dr. McGill confirmed that some workload has been pushed down to the divisions but that as expertise grows, process times will go down and the savings will be experienced centrally. Those savings will be returned to the divisions.

Technology Transfer Report

Aris Melissaratos, Senior Advisor to the President updated the committee on progress in technology transfer. Wes Blakeslee has been made the permanent director of Technology Transfer and Glen Steinbach has put in a world-class system. Hopkins gets back relatively little for its size as it completes the same number of deals as peers but with lower value. Moving forward, there will be a greater emphasis on looking at the big picture and clustering ideas. Currently, 90% of activity is in the School of Medicine with the remainder of activity spread among Arts & Science, Engineering and Public Health. Revenue projections for FY 2008 are $10.5- $11 million, up from $9 million last year. Net revenue is approximately $2 million but there are additional costs in the schools that are not covered. Fifteen percent of revenue is being invested in enhancing infrastructure and staffing, and Technology Transfer is projected to break even in about 4 years. Mr. Melissaratos also updated the Committee on opportunities for co-location and collaboration that will be forthcoming in East Baltimore and Montgomery County.

Respectfully submitted,
Linda R. Nathan

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