Introduction and Roundtable Discussion

Dr. Hough opened the meeting with a discussion of suggested issues of interest to the Committee for future meetings. In addition to reviewing the standard reports, he suggested that the committee might want to focus generally on threats and opportunities facing JHU financially and what leverage points there are in the budget. He opened up the floor for suggested topics from the Committee. Suggestions included benchmark comparisons to other schools, parking, employee benefits, endowment, continuity of operations in case of disaster, and implications of the Spellings Commission.

Dr. Knapp alerted the Committee to ongoing trustee conversations regarding undergraduate tuition and affordability. The Sub-committee chaired by Trustee Coles performed an exhaustive review of Hopkins and peer data and made tuition policy recommendations and laid the foundation for efforts to raise money to support financial aid. A summary of that report will be shared with this committee at its next meeting.

Approval of the Minutes: Minutes of the meeting of May 1, 2006 were approved as distributed.

Fiscal 2006 Financial Results

Mr. Puddester presented the University's FY2006 financial results which he characterized as significantly better than budget for FY 2006, with the total operating surplus at $116.6 million compared to a budgeted surplus of $34.5 million. This operating surplus and some prior year reserves were used to fund capital improvements, principally at the Applied Physics Laboratory and the School of Medicine. This resulted in an increase to net assets of $18.0 million in FY 2006. This is an improvement compared to a budgeted decrease in net assets of $72.6 million.

Total University revenues in FY 2006 were $3.12 billion; $114.3 million (3.8%) more than budgeted. Most revenue sources were at or over budget, particularly gifts ($55.4 million), clinical revenue ($22.7 million), affiliated revenue ($22.0 million) and other sources ($22.2 million). Only F&A recoveries (down $12.1 million) were significantly below budget. F&A recoveries were lower due to a slightly lower research base and a lower effective recovery rate. The latter resulted from more off-campus research and more private research which have lower recovery rates.

Total expenditures were only slightly over budget for the year ($39.8 million, 1.3%). Most categories of spending were at or below budget. The exceptions were instruction and research, clinical services and plant spending. The most significant expense variances include instruction and research (up $39.8 million) tied to higher enrollments, clinical services (up $10.1 million) driven by higher volumes and plant spending (up $5.8 million) due to higher utility costs. All other spending categories were at or below budget.

Revenues and expenditures have both increased compared to last year with revenue growth (8.9%) exceeding expenditure growth (6.2%). Revenue attainment in FY 2006 was boosted by several large gifts received by the Schools of Public Health and Medicine. Conversely, the University made a one- time payout of $11.2 million in FY 2005 for over-recovery in prior years. Adjusting for these items, revenue growth still exceeded expenditure growth (7.2% vs. 6.6%).

Endowments and Other Balances

The Committee reviewed the FY 2006 results for the endowment and other balances.

In FY 2006, the endowment market value increased by $206.8 million rising from $1.995 billion to $2.202 billion. The increase is due to gifts of $85.5 million and $233.4 million in earnings offset by the payout, including management fees, of $112.4 million.

Other balances increased by $18.0 million to $677.1 million. The budget anticipated a $72.6 million decrease as large gifts were expended and the School of Medicine used cash reserves in lieu of debt for capital improvements. The improvement compared to budget is primarily due to the receipt of additional gifts and higher than expected affiliated and clinical revenues.

HopkinsOne Update

Dr. Steinwachs reported on the HopkinsOne Faculty Advisory Committee. The recent meetings have focused on communication strategies. HopkinsOne roles for faculty will be decided on a school by school basis, but the committee has initiated discussion of abbreviated training for the faculty who will have limited use of the system. Issues that arose from the discussion are the need for a faculty website relating to administrative systems and training and more University-wide information on compliance.

Dr. McGill updated the committee on the final stages of the implementation. He focused on three components: will the system work, how do we roll it out and are the users ready. He reported that the hardware and software have been tested, data simulations have been run and role mapping and training is ongoing. Although training has been running behind due to slower than expected course development and logistical issues, he remains guardedly optimistic for the January 1, 2007 go live.

Capital Projects

Dr. McGill presented an update on capital projects and noted several projects in particular. The plan for the joint School of Nursing/Bioethics Institute building has risen from $26 million to $59 million due in part to a 20% increase in size but primarily from a continuing escalation of construction costs. Charles Commons is open and has received great review from the Homewood student body. Gilman Hall renovations are budgeted at $14 million for a small scope project. The cost of doing a complete renovation to this 90 plus year old building would be $75 million. The School of Medicine education building and a new research building for the Wilmer Eye Institute will be funded from philanthropy. The University is beginning to see a decline in new buildings due mostly to the flattening of research funding. Dr. Hemker asked how Johns Hopkins compares to other schools. Dr. McGill noted that there is building going on at many schools but while JHU has been building just in time, other schools are hoping to attract occupants once they are complete, a risky strategy in today's research environment.

Respectfully submitted,
Frederick W. Puddester

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Last updated 16Mar07 by dgips@jhu.edu