March 2019 FBAC Meeting Summary

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Johns Hopkins University

Faculty Budget Advisory Committee

Summary of March 27, 2019 Meeting

RETIREMENT PLANS INVESTMENT COMMITTEE OVERVIEW

Ms. Heidi Conway, Vice President of Human Resources, provided an overview of the Retirement Plans Investment Committee (the “Committee”).  The Committee serves as the fiduciary for the following three retirement plans: The Johns Hopkins University 403(b) plan, The Johns Hopkins University Tax Sheltered Annuity Program for Former Employees of Johns Hopkins Bayview Physicians, and The Johns Hopkins University Income Deferral 403(b) Plan for Residents, Interns and Postdoctoral Fellows (collectively, the “Plans”).  The Committee is charged with selecting the menu of investment options available to participants in the Plans; evaluating and monitoring the Plans’ service providers; and evaluating and monitoring the performance of available investment options.

Ms. Conway outlined the Committee’s current membership, its fiduciary duties under the Employee Retirement Income and Security Act (“ERISA”), and highlighted some recent activities and decisions.  Ms. Conway noted that the Committee had engaged in a request for proposal for an investment consultant to aid the Committee in monitoring the Plans’ investment options and selected CAPTRUST Financial Advisors.  Provost Kumar and Ms. Conway noted that CAPTRUST Financial Advisors has extensive experience serving as an investment consultant for peer universities.

In the last several months, the Committee, together with CAPTRUST Financial Advisors, engaged in a benchmarking exercise which confirmed the reasonableness of the Plans’ fees within the current fee structure; approved changes to certain fund offerings that reduced expense ratios; and removed 20 funds from the Plans’ investment line-up.  The fund line-up changes were communicated to the Plans’ participants in February 2019.  Provost Kumar discussed the fact that he and Daniel Ennis, Senior Vice President for Finance & Administration, are very interested in having an FBAC member join the Committee.

FINANCE AND CAPITAL REPORT

Mr. Scott Jonas, Controller, and Ms. Helene Grady, Vice President for Planning & Budget, reviewed the status of University financial results and year-end projections compared to budget as of the end of the second quarter of FY19.  The University ended the second quarter with an operating surplus of $53 million, a margin of 1.7%, and $23 million favorable to the YTD budgeted result.  YTD results for FY19 and FY18 are relatively level after adjusting FY18 results for a one-time accounting change related to summer tuition recognition.  FY19 university-wide results are currently projected to end the year favorable to budget.  Mr. Jonas and Ms. Grady discussed YTD results and year-end projections for divisions that are projecting to end the year unfavorable to budget and also discussed the positive impact to projected year-end results from the significant Bloomberg gift for undergraduate financial aid that was announced in November 2018.

Ms. Grady reported that the academic year 2019-2020 tuition rate increases proposed by each school were approved by the Trustees at the March meeting and summarized key points from the Trustee discussions.

Mr. Bob McLean, Vice President for Facilities and Real Estate, briefed the Committee on a number of capital projects including:

• The status of planning efforts related to the Newseum Building in Washington, DC, for which the University has entered into a purchase and sale agreement. The facility is envisioned to consolidate the JHU D.C. academic facilities, accelerate and support efforts of JHU’s faculty to bring research to bear on policy-setting and create important convening capacity in a highly visible location. The University is currently within a negotiated study and due diligence period that will be complete in June 2019.
• Receipt of Trustee approval for site location and design of the SNF Agora Institute at the Wyman Park East location. The site chosen will contain sufficient square footage to allow for co-location with other current or future JHU programs.
• The launch of a feasibility study for a new University Student Center on the Homewood campus.
• Approval for design of a new WSE Materials Characterization and Processing Facility at Stieff Silver.
• The launch of a feasibility study for an East Baltimore Recreational and Wellbeing Center.