MINUTES OF A SPECIAL MEETING OF THE
BOARD OF VISITORS OF
VIRGINIA COMMONWEALTH UNIVERSITY
April 25, 1996
A special meeting of the Board of Visitors of Virginia Commonwealth
University was held on Thursday, April 25, 1996, at 9 a.m. in the University
Meeting Center.
Present were Messrs. Siegel (Rector), DeRusha, Flippen, Townes and
Weinberg; Drs. Johnson, White and Wootton; and Mesdames Powell and Teig.
Absent were Drs. Gilmer, Smith and Vaughan; Messrs. Framme and Markel; and
Mrs. Vaughan. Also present were Drs. Trani, Chandler, Dewey, Harris, Jones
and Rhone; Messrs. Bruegman, Bunce, Gehring, Ross and Wyeth; and
Mesdames, Burnside, Chinnici and Price.
Mr. Siegel called the meeting to order.
The University Budget was presented. Highlights of the University budget
are:
O The budget is in balance with University revenues expected to total
$384.1 million in 1996-97 and $403.8 million in 1997-98.
O Contingency funds representing approximately 1% of the budget and
totaling $4.3 million in 1996-97 and $4.1 million in 1997-98 have been set
aside to cover any unexpected revenue shortfalls and to support the
reallocation of resources in accordance with the Strategic Plan.
O The budget plan for next year includes salary increases of 5% for
instructional faculty, 4% for administrative faculty and 4.35% for classified
staff. Increases of 2% are planned in the following year for all employee
groups.
O Tuition and fees revenues are based on official enrollment projections for
each year of the biennium. Total Fall 1996 headcount is projected to be
22,085 or an increase of 736 students over final Fall 1995 enrollments.
Fall 1997 enrollments are projected to be 22,708, an increase over Fall
1996 projected enrollments of 623 students.
O In keeping with the intent of the General Assembly and the Governor,
there will be no tuition increase for resident Virginia undergraduate
students.
O A 3% increase is being recommended for graduate, dentistry, PharmD.
and nonresident students. For the School of Medicine, tuition rates are
recommended to increase 1% for resident students and 2% for
nonresidents.
O Increases to non-E&G fees and other charges are limited to $41,
comprised of a $45 adjustment to the University fee for full-time students
and a decrease of $4 for the student health fee. No increases are
recommended for dormitories or meal plans.
O In general, overall tuition and fees will increase $41 for full-time resident
undergraduate students; $152 for full-time resident graduate students;
and $363 for full-time nonresident undergraduate and graduate students.
O Tuition charges for medical students will increase by $96 for residents
and $476 for nonresidents. The University and the School of Medicine
use a revenue targeting process for medical student tuition. Under the
process, the School is assigned a tuition revenue target that the school
must achieve. The School of Medicine is responsible to cover any
shortfalls from the target, but also can retain any surpluses. Even with a
relatively low increase in tuition charges, the School is projected to
exceed the tuition target by $916,000. The excess funds will remain with
the School and be used to support the Generalist Initiative, to provide
matching funds for medical scholarships and to support the development
of a primary care base.
O Tuition charges for dentistry students increase at the same percentage
rate as graduate programs. For 1996-97, tuition for resident dentistry
students will increase $253 and $601 for nonresident students.
O Tuition charges for the PharmD. program will also increase at the same
percentage rate as graduate programs for 1996-97. In the transitional
PharmD. program, tuition will increase $142 for resident students and
$353 for nonresidents. The 1996-97 academic year will be the last year
for the transitional program. For the new PharmD. program, tuition will
increase $225 for resident students and $450 for nonresidents.
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O The new School of Engineering will also enroll the first class in Fall 1996.
A unique tuition rate has been established for the School of Engineering
at $3,700 for full-time resident students, compared to the typical
undergraduate tuition rate of $3,125. Other mandatory fee charges and
the nonresident tuition rate are the same as other undergraduate
programs.
Highlights in the expenditure budget are:
O The budget plan includes salary increases of 5% for instructional faculty,
4% for administrative and professional faculty and 4.35% for classified
staff in 1996-97. An additional 2% increase is budgeted in 1997-98. The
increases are effective on December 1 of each fiscal year.
O The budget plan for 1996-98 includes a number of Legislative and
University supported initiatives. The initiatives include:
1. An increase in State support for the School of Engineering, bringing
total general fund support for the School of Engineering up to $2.0
million annually. The first class of students for the new program will
begin in Fall 1996.
2. Additional support of $671,175 in 1996-97 and an additional
$250,690 in 1997-98 for the School of Pharmacy and the new
PharmD. program.
3. General funds and other budget support increases of $362,000 in
1996-97 for the School of Dentistry.
4. General funds and other budget support of $5,301,490 in 1996-97
have been identified for Information Technology. The funds will be
supplemented with up to $1.0 million of savings from the Workforce
Transition Act.
5. Additional general fund support of $750,000 in 1997-98 for medical
education.
6. An increase in the Strategic Reallocation Pool of $246,924 to $1.0
million in 1996-97.
7. An increase in the University Contingency to reach $2.0 million,
which is equivalent to approximately 1% of E&G revenues. Should
VCU not realize enrollment projections, the University will have the
contingency to draw upon.
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8. An increase in graduate fellowship support of $200,000 in 1996-97
and an additional $500,000 in 1997-98. The money will be used to
offset the 3% increase in graduate tuition.
9. The University Fee is being increased by $45, from $725 to $770 per
full-time student to support the following initiatives:
O For increased CAA Conference competitiveness in Intercollegiate
Athletics - $275,000 the first year and an additional $266,000 the
second year.
O Increases of $136,100 the first year and an additional $31,500 in
the second year for Recreational Facilities repair/replacement
reserves.
For MCV Campus aquatic and tennis center operations - $155,000
in 1996-97 and in 1997-98.
O Maintain current student parking services, include free satellite
parking - $200,000 for 1996-97 and an additional $130,000 for
1997-98.
10. There also were several reallocation actions initiated in 1995-96.
While VCU was able to eliminate some, others will be continued into
1996-97:
O Reducing the library materials budget by $500,000.
O Requesting the VCU Foundation to provide an additional $140,000
from the quasi-endowment fund for University support.
O Reducing summer school salary costs by $200,000.
O Realizing savings of $600,000 from operating budget reductions.
Realizing additional savings of $500,000 from the Workforce
Transition Act.
O Allocating $500,000 in overhead funds to support plant O&M costs.
O Reducing equipment funding by $250,000.
The actions will be restored in 1997-98.
11. The University student health fee is being decreased $4, from $140
to $136. The result is the elimination of central funding for the
immunization program for Hepatitis B inoculations.
12. No change will be made in room and board rates for 1996-97.
Occupancy reconfiguration will generate additional revenue in 1996-
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97 required to cover operating costs. The board contract with
ARAMARK will be extended for the full academic year.
13. An increase of 5% in subscriber parking rates for faculty and staff is
planned in 1996-97 and 1997-98. Student subscriber rates will
increase only 3%.
14. The student financial assistance budget plan includes an increase in
1996-97 of $168,000 in State discretionary aid for a total of
$7,974,000 in each year.
On motion made and seconded, the University Budget for 1996-98
was approved.
The MCVH Budget was presented. Highlights are:
O The budget is built based on patient statistics. Consistent with national
and historical trends, patient admissions are projected to decrease 3%,
patient days will decrease 4%, emergency visits will decrease 2% and
outpatient visits will increase slightly.
O Outpatient visits at Associated Physicians are expected to increase over
14%.
O Medicaid and Indigent Care reimbursement is budgeted for FY 97 and FY
98 to be capped at a total of $147.3 million, which is no increase over the
1995-96 funding. The Hospitals has no formal agreement with the State
on the funding and is at risk as volume and utilization changes. Even with
planned reductions in utilization, the Hospitals' cost for Medicaid and
Indigent Care is budgeted to exceed the reimbursement by $7.4 million in
FY 97 and $15.1 million in FY 98.
O Managed Care and Blue Cross revenue projections are based on current
contracts and anticipated future negotiations. Resulting in no increase
from the 1995-96 reimbursement.
O Medicare will increase DRG base reimbursement by 2.5%. It is projected
to increase revenue in 1996-97 by $1.8 million.
O Proposed Medicare changes in FY 97 will reduce support for Indirect
Medical Education from 7.7% to 6.7% and reductions in Direct Medical
Education are expected to reduce Medicare reimbursements by $4.3
million.
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O A charge increase is recommended. A 4% increase will help fund State-
mandated salary increases and supply cost increases. The increase will
generate only $1.7 million in new revenue. Only 10.8% of payers pay
based on charges.
O New programs, particularly an initiative to provide enhanced long-term
care management, will provide $1.6 million in new revenues to the
Hospitals and help position the Hospitals for continued growth in
managed care.
O VCU/MCVH is reducing charges related to commercial payers in the
Ambulatory Care Center's operating rooms to be more competitive. The
charges are expected to reduce revenue by $600,000 and is being
implemented to prevent erosion of outpatient surgery services.
El Fewer patient days and admissions related to commercial and managed
care payers is expected to reduce revenue by $5.3 million.
O The Hospitals' budget assumes classified salary increases of 4.35%,
administrative faculty increases of 4.0%, and instructional faculty
increases of 5.0% on December 1, 1996 and provides for Health Care
Provider increases of 4.0% and Housestaff increases of 3.0% on July 1,
1996.
O The budget contains a minimal $2.0 million contingency (funding for only
2 days operating expenses).
On motion made and seconded, the MCVH Budget for 1996-98 was
approved.
On motion made and seconded, the following bond resolution was
approved with Ms. Powell abstaining:
WHEREAS, there has been passed by the General Assembly of Virginia
an act entitled "Commonwealth of Virginia Higher Educational Institutions Bond
Act of 1996" (the "Act") which has been or is expected to be signed by the
Governor;
WHEREAS, the 1996 Act may be repealed but the Project, as defined
below, continued as an authorized project for bond financing through
subsequent legislation (the 1996 Act and any such subsequent legislation, the
"Act");
WHEREAS, pursuant to the Act, the Treasury Board of the
Commonwealth of Virginia (the "Treasury Board") is authorized, by and with the
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consent of the Governor, to sell and issue bonds of the Commonwealth of
Virginia for the purpose of providing funds, with other available funds, for paying
the cost of acquiring, constructing, renovating, enlarging, improving and
equipping certain revenue-producing capital projects at certain institutions of
higher learning of the Commonwealth and for paying issuance costs, reserve
funds and other financing expenses (the "Financing Expenses"), all in
accordance with the provisions of Section 9(c) of Article X of the Constitution of
Virginia;
WHEREAS, such revenue-producing capital projects include a parking
facility, the MCV Visitors parking deck (Capital Outlay Project Number 15160)
(the "Project"), for Virginia Commonwealth University (the "Institution"), which
will be a component of the Institution's parking system (the "System"); and
WHEREAS, the Treasury Board is proposing to sell and issue bonds
pursuant to the Act for such revenue-producing capital projects, in one or more
series;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF VISITORS
OF VIRGINIA COMMONWEALTH UNIVERSITY:
Section 1. The Board of Visitors of the Institution (the "Board") requests
the Treasury Board to sell and issue bonds in an aggregate principal amount not
to exceed $4,348,300 to finance all or a portion of the cost of the Project plus
Financing Expenses (the "Project Bonds"). The Project Bonds will be identified
by amount and maturities by the State Treasurer upon issuance of any bonds.
Section 2. The Board (a) covenants to fix, revise, charge and collect
rates, fees and charges for or in connection with the use, occupation and
services of the System and (b) pledges such rates, fees and charges remaining
after payment of the expenses of operating the System ("Net Revenues") to the
payment of the principal of, premium, if any, and interest on the Project Bonds.
The Board further covenants that it will fix, revise, charge and collect such rates,
fees and charges in such amounts so that Net Revenues will at all times be
sufficient to pay, when due, the principal of, premium, if any, and interest on the
Project Bonds and on any other obligations secured by Net Revenues (such
payments collectively the "Required Payments"). The Project Bonds shall be
secured on a parity with such other obligations so secured by Net Revenues
(other than any obligations secured by a prior right in Net Revenues). Any Net
Revenues pledged herein in excess of the Required Payments may be used by
the Institution for any other lawful purpose.
Section 3. It is hereby found, determined and declared that, based upon
responsible engineering and economic estimates and advice of appropriate
officials of the Institution, as shown on the Financial Feasibility Study attached
hereto as Exhibit A, the anticipated Net Revenues pledged herein will be
sufficient to pay the Required Payments so long as the aggregate amount of net
debt service on the Project Bonds actually payable in any bond year does not
exceed the amounts assumed in the Financial Feasibility Study.
Section 4. The Board covenants that the Institution will furnish the
Treasury Board its general purpose financial statements, within 30 days of their
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issuance and receipt, audited by a firm of certified public accountants or the
Auditor of Public Accounts which shall include a schedule of revenues and
expenditures for auxiliary enterprise systems. At the same time, the Institution
will furnish the Treasury Board a certificate of the chief financial officer of the
Institution stating whether Net Revenues were sufficient to pay Required
Payments during the period covered by such financial statements. If Net
Revenues were insufficient to pay Required Payments during such period, such
certificate shall include the Institution's plan to generate Net Revenues sufficient
to make Required Payments in the future.
Section 5. The Board covenants that so long as any of the Bonds are
outstanding, the Institution will pay to the State Treasurer, not less than 30 days
before each interest or principal payment date, the amount certified by the State
Treasurer to be due and payable on such date as principal of, premium, if any,
and interest on the Project Bonds.
Section 6. The Board covenants that the Institution will pay from time to
time its proportionate share of all expenses incurred in connection with the sale
and issuance of any series of bonds that includes Project Bonds (the "Bonds")
and all expenses thereafter incurred in connection with the Bonds, including
without limitation the expense of calculating any rebate to the United States of
the earnings derived from the investment of gross proceeds of the Bonds, all as
certified by the State Treasurer to the Institution.
Section 7. The Board covenants that the Institution will not take or omit to
take any action the taking or omission of which will cause the Bonds to be
"arbitrage bonds" within the meaning of Section 148 of the Internal Revenue
Code of 1986, as amended, including regulations issued pursuant thereto (the
"Code"), or otherwise cause interest on the Bonds to be includable in the gross
income of the owners thereof for federal income tax purposes under existing
laws. Without limiting the generality of the foregoing, the Institution will pay from
time to time its proportional share of any rebate to the United States of the
earnings derived from the investment of the gross proceeds of the Bonds.
Section 8. The Board covenants that the Institution will proceed with due
diligence to undertake and complete the Project and that the Institution will
spend all of the available proceeds derived from the sale of the Project Bonds
for costs associated with the Project and appropriated for the Project by the
General Assembly.
Section 9. The Board covenants that the Institution will not permit the
proceeds of the Project Bonds to be used in any manner that would result in (a)
5% or more of such proceeds being used in a trade or business carried on by
any person other than a governmental unit, as provided in Section 141(b) of the
Code, (b) 5% or more of such proceeds being used with respect to any output
facility within the meaning of Section 141(b)(4) of the Code, or (c) 5% or more of
such proceeds being used directly or indirectly to make or finance loans to any
persons other than a governmental unit, as provided in Section 141(c) of the
Code. The Institution need not comply with such covenants if the Institution
obtains the written approval of the State Treasurer and an opinion of nationally
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recognized bond counsel acceptable to the Treasury Board that such covenants
need not be complied with to prevent the interest on the Bonds from being
includable in the gross income of the owners thereof for federal income tax
purposes.
Section 10. The Board covenants that for so long as any of the Bonds
are outstanding the Institution will not enter into any operating lease,
management contract or similar agreement with any person or entity, other than
a state or local governmental unit, for all or any portion of the Project without first
obtaining the written approval of the State Treasurer and an opinion of nationally
recognized bond counsel acceptable to the Treasury Board that entering into
such agreement will not cause the interest on the Bonds to be included in the
gross income of the owners thereof for federal income tax purposes.
Section 11. The Board covenants that for so long as any of the Bonds
are outstanding, the Institution will not sell or dispose of all or any part of the
Project without first obtaining the written approval of the State Treasurer and an
opinion of nationally recognized bond counsel acceptable to the Treasury Board
that such sale or disposition will not cause interest on the Bonds to be included
in the gross income of the owners thereof for federal income tax purposes.
Section 12. The officers of the Institution are authorized and directed to
execute and deliver all certificates and instruments and to take all such further
action as may be considered necessary or desirable in connection with the sale
and issuance of the Bonds.
Section 13. The Board acknowledges that the Treasury Board will rely on
the representations and covenants set forth herein in issuing the Bonds, that
such covenants are critical to the security for the Bonds and the exclusion of the
interest on the Bonds from the gross income of the owners thereof for federal
income tax purposes, that the Board will not repeal, revoke, rescind or amend
any of such covenants without first obtaining the written approval of the Treasury
Board, and that such covenants will be binding upon the Board so long as any of
the Bonds are outstanding.
Section 14. This resolution shall take effect immediately.
Mr. Siegel appointed the Board Nominating Committee for the Rector. Mr.
Townes was asked to serve as Chair with Dr. Wootton, Mrs. Powell and Mr.
Weinberg serving as members.
On motion made and seconded, the Board convened into executive
session to discuss certain personnel matters involving the performance of
identifiable employees or faculty of VCU, and to discuss the evaluation of
performance of departments or schools of VCU where such matters regarding
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such individuals might be affected by such evaluation as authorized by Section
2.1-344 a(1) of the Virginia Freedom of Information Act.
Following executive session, on motion made and seconded, the following
resolution was approved by roll call vote:
Virginia Commonwealth University hereby certifies that, to the best of each
member's knowledge, (i) only public business matters lawfully exempted from
open meeting requirements by Virginia law were discussed in the executive
session meeting to which this certification resolution applies, and (ii) only such
public business matters as were identified in the motion convening the executive
session meeting were heard, discussed or considered by the Board of Visitors of
Virginia Commonwealth University.
Roll Call Vote Ayes Nays
Mr. Stuart C. Siegel, Rector X
Mr. William C. DeRusha X
Mr. Edward L. Flippen X
Mr. Lawrence H. Framme, Ill Absent
Dr. Robert D. Gilmer Absent
Dr. Harry I. Johnson, Jr. X
Mr. Steven A. Markel Absent
Ms. Diane Linen Powell X
Dr. Lindley T. Smith Absent
Ms. Eva S. Teig X
Mr. Clarence L. Townes, Jr. X
Dr. David A. Vaughan Absent
Ms. Sandra M. Adair Vaughan Absent
Mr. Jay M. Weinberg X
Dr. H. George White, Jr. X
Dr. Percy Wootton Left before voting
Vote:
Ayes: 9
Nays: 0
ABSENT DURING MEETING: 6
ABSENT DURING VOTING: 7
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On motion made and seconded, the faculty appointment of Victor A.
Yanchick as Dean of the School of Pharmacy was approved.
The meeting was adjourned at 10:30 a.m.
Clarence L. Townes, Jr. S retary
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