REMARKS BY THE PROVOST

Dr. Kristina Johnson, Provost, addressed the Committee for the first time. After discussing the selection of Dr. Yash Gupta as the new Dean of the Carey Business School, she turned her attention to the University-wide issues capturing her attention. Specifically those issues are the distribution of resources across the University, the strategic response required from the downturn in research funding, and the need to look for other funding opportunities.

REVIEW OF COMMITTEE CHARGE

Dr. Hough distributed a document summarizing the mission of the Committee. The FBAC's role is primarily one of communication serving as a liaison between faculty and the administration and communicating back to the faculty issues and information of concern. The meeting agendas have set and variable pieces with discussion topics determined by members.

APPROVAL OF THE MINUTES

Minutes from the meeting of May 15, 2007 were approved as distributed.

FISCAL YEAR 2007 OPERATING RESULTS

Dr. McGill opened with a summary report of the results. He noted that operating margins on a full accounting basis are thin; unadjusted for non-recurring items, expenditure growth exceeded revenue growth; research funding, especially from NIH, was well below expected levels; and there was a draw-down of cash and reserves to fund capital projects.

On a "sources and uses" basis the overall operating results for the University were better than budget for FY 2007, with the total operating surplus at $128.2 million compared to a budgeted surplus of $57.6 million before considering capital expenditures. Every division but the Bologna Center performed better than budget. However, part of this result is due to $21.7 million in unbudgeted market value growth in operating funds invested in the endowment pool, which can not be assumed to reoccur, and $33.5 million in expendable gifts above budget. Concern is raised by the negative trend in sponsored research, more than commensurate decreases in facilities and administrative cost recoveries and increases in instruction and research spending.

Total University revenues in FY 2007 were $3.28 billion; $68.6 million (2.1%) more than budgeted. Most revenue sources were at or over budget with the most significant overages in expendable gifts ($33.5 million) and affiliated revenue ($25.8 million). Revenues related to sponsored research, direct and indirect, were less than budget by $51.4 million. Total expenditures, before capital, were slightly over budget for the year ($30.3 million, 1.0%). Several categories of spending were at or below budget. The exceptions were instruction and research, general services and administration and auxiliary enterprises.

Revenues and expenditures have both increased compared to last year with expenditure growth (5.6%) exceeding revenue growth (5.1%). However, if extraordinary gifts, which totaled $46 million in FY 2006 and $21 million in FY 2007, are discounted, revenues increased year to year by 6%, slightly higher than growth in expenditures.

The Committee also reviewed the FY 2007 results for the endowment. Overall, the market value of endowments on June 30, 2007 totaled $2.6 billion, an increase of $397.8 million (18.1%). The increase is attributed to gifts of $76.6 million and $440.9 million in earnings. The endowment payout, including management fees, was $119.4 million.

A major reason for these sobering operating results is a decline of 12% in inflation-adjusted dollars over the last four years of NIH funding. Sponsored grants and contracts grew only 1.9% against a budgeted 4.4% growth. Even more concerning is overhead recoveries had no growth in FY 2007, compared to budgeted growth of 9.6%. On a positive note, clinical revenues exceeded budget and were up 6.7% from the prior year. Also, the Applied Physics Laboratory, which continues to grow, funds much of its capital needs from its positive margins.

The Committee and administration discussed the plans to review expenditure and capital structures, to leverage recent investments in administrative systems and other actions, included increased investments in Development.

HOPKINSONE UPDATE

Dr. McGill shared that there are some improvements in productivity although some processes take longer due to compliance requirements. The project team is decreasing in size as planned but that a group remains that is dedicated to interacting directly with users. Despite these noted improvements, several members of the committee expressed concerns about the design of the system, the length of time it takes to transact business and the absence of good reporting. Dr. Links asserted that there is a need for more communication with the faculty that details priorities, timelines and training opportunities. The Committee also talked about plans to reconstitute a HopkinsOne Faculty Advisory Committee.

ROUNDTABLE

Dr. Hough requested suggestions for future discussion topics. Issues mentioned were technology transfer and intellectual property, government issues, and size and composition of the faculty. Efforts will be made to address these topics at upcoming meetings.

Respectfully submitted,
Linda R. Nathan

© 2007 The Johns Hopkins University. Baltimore, Maryland. All rights reserved.
Last updated 17Dec07 by dgips@jhu.edu