Approval of minutes: Minutes of the meeting of December 13, 2000 were approved as distributed with one note of clarification. In section five, paragraph two (page nine) was rewritten as follows: Under the revised comparison, the KSAS revised basic sciences professorial average was estimated to be 7% higher than the revised School of Medicine's professorial average. (KSAS' faculty salaries were converted to a twelve-month equivalency.) When compared to their peer groups, KSAS' revised professorial average was 92% of the COFHE mean while the School of Medicine's revised professorial average was 93% of the AAMC mean.

Fiscal 2001 operating results through December 31, 2000

Mr. Puddester presented the University's key revenue indicators through December 31, 2000. General funds tuition revenue is $1.3 million (0.5%) lower than projected through December. This modest shortfall is due in large part to a $2.4 million under-attainment in the School of Public Health. This is the result of a timing change in the academic calendar and the School expects to exceed the revenue estimate by year-end. Several divisions reported higher tuition revenue than anticipated through December. The School of Advanced International Studies (SAIS) exceeded its estimate of 430 students by 40 and generated an additional $1.1 million compared to projected figures. The Schools of Medicine, Arts and Sciences and Engineering all reported modest additional tuition revenues for the period.

Tuition revenue for the School of Professional Studies is at budget for the period. The School of Nursing reported an $872 thousand shortfall in tuition revenue through December. The school indicated that the Doctor of Nursing Science (DNSC) program and the graduate programs experienced enrollment lower than projected, resulting in the shortfall.

F&A recoveries (net of the internal interdivisional transfer and settlement) are $6.7 million (8.8%) more than projected for December. All research divisions experienced significantly better recoveries than were projected earlier, except School of Engineering, which was slightly below budget. These results are consistent with reported increases in the sponsored research base throughout the University. Net recoveries are $11.7 million (16.4%) higher than this time last year, while sponsored grants and contracts revenue increased by $29.4 million (13.1%).

The organized research MTDC base is above projected amounts through December and has grown nearly 12% over last year. Both the School of Arts & Sciences and the School of Engineering have increases over projections in this year of 10% or greater. Of particular note is the growth associated with the Center of the Social Organization of Schools in the School (CSOS) of Arts & Sciences, which is $1.4 million ahead of budget. The School of Public Health reports under- attainment in its organized research base through December, reflecting the re-categorization of certain grants and contracts from organized research to other sponsored activity. The combined MTDC base through December exceeds budget.

The other sponsored activity MTDC base is also greater than projected through December with 10.4% ($4.8 million) growth over budgeted amounts. Led by Public Health and JHPIEGO, this growth rate represents an 20.7% ($8.8 million) increase over December of last year.

Chairman Young asked whether the University expects this type of growth in research to continue in the future. Mr. Puddester responded that the indicators are positive, especially given the recent increase in awards from the National Institutes of Health. Senior Vice President McGill added that the University has a negotiated indirect cost rate through fiscal 2003 and will begin rate negotiations with the federal government during fiscal 2003.

Clinical services revenue for the School of Medicine is 4.5% higher than projected through December. To date, clinical revenue is $95.4 million. This is $3.1 million (3.4%) higher than last year at this time.

Mr. Puddester presented the sources and uses of funds through December 31, 2000. The University's fiscal outlook as of the end of December 2000 is better than budgeted. Year-to-date results (TABLE 1, line 27) show a total operating surplus of $125.6 million compared to an estimated surplus, through December, of $74.7 million.

On Table 1, line 27, the general fund operating surplus totals $99.7 million, 18% higher than projected for this period. Higher than anticipated facilities and administrative recoveries and lower overall spending were the primary contributors to this improved position. Sponsored and designated funds show a surplus of $26.0 million through December. This compares to a projected (YTD Budget) mid-year shortfall of $9.8 million. The improved position is attributed to more sponsored grant and contract activity and the receipt of a large gift by the School of Medicine for a Cell Engineering program.

The unusually high operating surplus is anticipated at this time as most of the tuition revenue for the full year has been received and related spending for the second semester will take place over the second half of the fiscal year. As a result, surpluses are concentrated in the tuition reliant divisions including Arts and Sciences, Engineering, Professional Studies and Peabody.

December's results also represent an improvement over the same period last year. The total operating surplus last year at this time (TABLE 3, line 27) was $97.0 million, significantly less than the $125.6 million reported through December 2000. Positive results were experienced in both general and non-general funds when compared to last year.

Revenues

Total revenues received through December (TABLE 1, line 17) were $1.1 billion, 4.6% greater than expected for the period. General funds came in as expected: higher F&A recoveries and clinical revenues offset slightly lower than expected tuition and greater than anticipated financial aid. The higher than anticipated F&A recoveries continues a trend reported in December and is consistent with reported increases in the sponsored research base throughout the University.

Total sponsored and designated fund revenue represents a significant improvement over estimated levels through December. Sponsored and designated funds total $620.9 million through December, $44.8 million, 7.8%, more than expected. Higher than expected grant and contract activity and gifts are the primary contributors to this positive result.

Compared to last year at this time ( TABLE 3, line 17), almost all revenues have increased significantly. Total revenues are up $130.4 million, which represents a 13.4% increase over last December. The principal contributors are gifts (up $40.2 million), grants and contracts (up $29.4 million), APL contract revenue (up $15.7 million), facilities and administrative recoveries (up $9.1 million) and tuition (up $8.8 million).

Expenditures

Total expenditures through December (TABLE 1, line 26) are consistent with expectations. Mid-year expenditures total $974.2 million, compared to a budget of $976.7 million. General fund expenditures are slightly lower than anticipated due to lower than anticipated plant costs and lower expenses at the Applied Physics Lab. Most other categories of general fund expenses are either at or below anticipated levels through December. Sponsored and designated fund spending is slightly higher (1.5%) than expected for the period. Most of the increase is attributed to higher than expected spending in instruction and research.

Total expenditures are 11.7% higher than the same period last year (TABLE 3, line 26). General fund spending increased in almost every category, with the exception of the Applied Physics Lab, and represented a 7.5% increase over the prior year. Expenditures in the sponsored and designated category increased by 16.5% over fiscal year 2000, led by increases in instruction and research. In all cases these increased expenditures were more than offset by larger increases in revenues.

Year-End Projections

Consistent with prior practice, the divisions have provided a general fund projection to year-end based on results through December. Overall the divisions expect to end fiscal year 2001 with a general fund surplus of $8.9 million (TABLE 2, line 30). This compares favorably to a budgeted surplus of $4.9 million. This improvement is due almost entirely to increased F&A recoveries, which are projected to be $8.3 million, 5.1%, over budget. Most other revenue sources and expenditure categories are projected to be at or near budget.

As in past years, each division will need to recognize gifts, unrestricted endowment or other funds to balance its general fund budget. The amount of those transfers is displayed on lines 28 and 29 of the statement. ("Transfers from net assets" represent drawdowns of general fund reserves and "transfers among fund categories" displays the amount transferred from designated funds, principally unrestricted gifts and endowment payout, to the general fund.) Projections of these transfers are generally consistent with budget and do not contribute significantly to the projected surplus.

Dr. Steinwachs asked for an example of an item that would be reported on line 29, transfers among fund categories. Mr. Puddester stated that transfers from designated funds to general funds in support of operations were an example. Another example would be a transfer of funds to capital accounts or balance sheet accounts, for instance to permanent endowment. Chairman Young asked if it were possible to add additional footnotes for significant items. Mr. Puddester responded that this would prove difficult to add on the existing TABLE 1 (due to space constraints) and that as an alternative he would highlight significant items during his report to the Committee.

Sponsored research peer data

In response to the Committee's request, Vice Provost for Research Poehler presented the sponsored research trends for the University. TABLE 4 depicts the University's total sponsored research expenditures (in millions of dollars) from fiscal years 1984 through 2000. The Applied Physics Laboratory (APL) sponsored research has declined as a percentage of the Total University's sponsored research during this time span. In fiscal 1984 APL represented approximately 67% of the University's research dollars while in fiscal 2000 APL represented only approximately 39%. TABLE 5 divides these total expenditures by funding sources (federal, private and other.) Private funds include corporate, foundation and association funds while other funds contain state and local government funds. Dr. Poehler stated that the University is doing well at attracting new grants. Chairman Young asked what would happen to the University's transfer from the Applied Physics Laboratory (APL) if there were a decline in research activity, since APL is approximately 50% of the total expenditures of the University? Provost Knapp responded that the APL transfer is subject to a floor amount and a ceiling amount that is currently under renegotiations with the Lab.

Dr. Poehler also distributed the University's success rate for competing proposals submitted. This was a ten-year comparison broken down with detail by division for fiscal 2000. The success rate is defined as the number of proposals actually funded versus the total number of proposals submitted. For fiscal 2000 the overall University's success rate was 44.8%. Dr. Paulaitis asked what caused the divisional differences in dollars awarded for projects when the actual amount of projects awarded are similar. For instance, Arts and Sciences received 116 awards totaling $17.0 million; however, Engineering received 101 awards totaling $7.9 million. Even though the two schools are close in the amount of projects awarded the awarded amount is twice as much for Arts and Sciences then Engineering. Dr. Poehler responded that this relates to the types of grants and contracts awarded.

Lastly, the Committee reviewed a comparison of the University's and its peer schools sponsored research by category. The source of this report is data extracted by the American Association of Universities Data Exchange and provides a consistent basis for evaluating the schools.

Dr. Steinwachs questioned what is the right rate of growth for the University? How big do we want to be? Dr. Steinwachs pointed out that the data does not reflect divisional stressors such as space and faculty issues and that each school needs to determine if it is fulfilling its core values. Dr. Steinwachs highlighted that the School of Public Health is trying to control growth in effort to elude some of these stressors.

Trends and revenue sources by major categories

Mr. Puddester presented the trends and revenue sources by major categories (e.g., tuition and fees, grants and contracts, endowment, etc.) The University has budgeted $2.0 billion in total revenues for fiscal 2001. This is a 4.8% increase ($94.2 million) over actual fiscal 2000. The three largest components of revenue sources are grants and contracts (25.7%, $525.1 million), the Applied Physics Laboratory (23.4%, $478.7 million), and tuition and fees (14.6%, $298.2 million.) TABLE 6 summarizes this information; and the detail by division as distributed via Attachment D for the meeting can be viewed at the FBAC website www.jhu.edu/news_info/faculty_budget/minutes/mar01/march01.pdf.

Mr. Puddester highlighted those divisions that are heavily dependent on tuition and less dependent on grants and contracts. Those divisions include Arts & Sciences (51.8%), Engineering (59.9%), Nursing (60.3%), Professional Studies (71.2%), Peabody Institute (69.1%), School of Advanced International Studies (53.7%) and Bologna Center (68.5%). Mr. Puddester noted that Public Health is the only school primarily dependent on grants and contracts revenue (65.3%) while Medicine is dependent on both grants and contracts revenue (34.8%) and clinical services revenues (25.1%). The remaining schools are dependent primarily upon endowment payout and gifts.

Fiscal 2002 budget assumptions

The Committee discussed a summary of the assumptions for the fiscal 2002 budget and plan. Undergraduate tuition is recommended to increase by 3.8%, plus $330 for a student activities fee. The total undergraduate tuition would be $26,210. The room and board rates are still under review but preliminary numbers show an increase of approximately 3.9%. Generally, salary budgets are not to exceed 3.5% plus an additional 0.5% targeted at the lower pay grades where salaries fall below market rates. The personnel benefits rate for fiscal 2002 was previously negotiated at 29.0%, which is up from 28.5% from fiscal 2001. The on-campus organized research rate is 63.5% of which 57% is budgeted for operations and 6.5% is budgeted for one-time uses such as capital projects and faculty recruitment. Endowment distribution represents a 4.0% increase from fiscal 2001 and maintains the overall payout rate at 5.0% of the trailing three-year average market value. New development initiatives will be funded from endowment payout. The full- time equivalent increase for Maryland State aid is 8.1%. The divisions projected a 2.5% increase during last year's planning process. Maryland State aid, in total, increased 9.5% due to the increases in enrollment.

Follow up on the results of the faculty retention survey

Associate Provost Zeller discussed the preliminary results of the faculty retention survey that was sent on March 2, 2001. The survey requests were sent to the Chairs, Directors, and Presidents across Hopkins eight academic divisions. Of the approximate 136 surveys sent, 25 valid responses (encompassing 356 tenured/tenure-track faculty) were received in time for this Committee meeting.

The preliminary results reported that within the last five years 119 faculty members received serious overtures from outside prospects. 86 faculty (or 72 percent) decided to leave Hopkins for another institution or organization. The survey results revealed that the reasons for the departures of the 86 faculty members varied across departments. The top three reasons included promotion, family reasons and not specified.

The final question on the survey requested data on the number of tenured/tenure-track faculty that were recruited to Hopkins. The 25 responding departments indicated a total of 77 offers made of which 62 resulted in acceptances. Of the 62 acceptances, 25 were full professors, 12 were associate, 20 were assistant and 2 were instructor. The remaining three faculty members had a rank below instructor.

The survey results cautioned against extrapolating the results to the University at large due to the low response rate. Associate Provost Zeller stated that the Provost Office would continue to collect the responses and provide an update at the next Committee meeting.

The meeting adjourned at 12:00 p.m.

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