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March 2020 FBAC Meeting Summary

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Johns Hopkins University

Faculty Budget Advisory Committee

Summary of March 27, 2020 Meeting



Provost Kumar expressed his appreciation for the faculty’s resilience in transitioning to online teaching in response to the COVID-19 pandemic and provided a number of updates.  Homewood and Peabody undergraduate students were encouraged to leave campus, except those who could not return to their home countries due to travel restrictions.  The University will be refunding a pro-rata portion of housing and dining fees to residential students.  A communication will go out that gives students a pass/fail option for the spring semester, and Homewood undergraduate programs have adopted a universal pass/fail policy.  Early summer programming likely will not take place on campus.

Much of the University’s on-campus research activity has stepped down and/or moved to remote environment in an orderly fashion.  COVID-related research and clinical research with direct benefit to patients is continuing on campus.  The School of Medicine and Health System are halting elective surgery and treatments, protecting supplies and redeploying employees to create capacity for a surge in COVID-19 patients.

The Provost discussed the process underway for policy changes at the JHU divisions and for the University at-large with regard to the impact of the pandemic on faculty tenure and promotion.


Mr. Ennis reviewed the incident command structure that has been stood up, decision-making processes, and the outlook for financial impacts to the University from the COVID-19 pandemic.  Incident command meets daily. University and School leadership have been meeting twice per week for management to frame decisions for consideration.  Each division has also stood up its divisional incident command.  Decisions are being driven first and foremost by considerations and guidance regarding the health of the Hopkins community and support of broader public health.  An important point of focus has been support of the clinical enterprise as it navigates caring for COVID-19 patients.  A dedicated COVID hotline has been established for employees, giving those challenged by COVID-19 access to information and testing, and the student health care team has been very responsive and supportive of student health concerns.

Heading into the COVID crisis, the University was in a strong financial position with sufficient cash to absorb reasonable revenue declines and to withstand other potential liquidity shocks.  Likely operational challenges from the COVID emergency include significant one-time expenses, i.e. housing and dining refunds or credits, employee incremental paid leave for COVID-related illness, and widespread campus event cancellations.  There are also potentially bigger structural financial challenges, i.e. Center for Talented Youth summer program cancellations/movement to remote learning, Homewood in-person summer activity cancellations, threats to summer academic program starts for Bloomberg School of Public Health and Carey Business School, as well as threats to fall semester starts.  Clinical billing revenue is a significant concern given cancellations of non-emergency surgeries and reallocation of resources toward the COVID response.  Fortunately, the Applied Physics Laboratory has been assured continued funding for the near term and its work is deemed essential, so is not anticipating significant revenue disruption. As the University projects revenue decline scenarios, leadership’s goal will be to adjust University costs in strategic and values-aligned ways.

Mr. Ennis and Provost Kumar solicited member questions and feedback regarding process, policy direction, and communications surrounding the University’s COVID-19 response.  Provost Kumar and Mr. Ennis addressed several questions and concerns from members.  Action items include adding faculty members to the distribution of communications that go out to students and giving faculty some advance notice before policy changes are communicated to students.  Additionally, a sub-group of the FBAC (“rapid response team”) may be called on to provide advice to leadership on proposed policy changes, processes or planning decisions.


Mr. Perlioni reviewed FY19 endowment results, which ended the year with a return of 4.5%, slightly below benchmarks for the fiscal year. The key factors driving under-performance were the variance between public and private equity returns as well as the execution of a secondary sale of private assets, which cleared out the burden of monitoring many small illiquid assets and increased the liquidity in the portfolio.

Mr. Perlioni then discussed recent policy changes.  During FY19 the Investment Office and the Committee on Investments undertook a thorough review of the endowment Investment Policy Statement (IPS).  The IPS was re-drafted to better align with the strategy and long-term goals of the institution.  The portfolio is being positioned to focus on a smaller number of investment managers; as of 09/30/2019, the top 25 managers represented 58% of the portfolio’s net asset value, representing an increase from prior years.

Mr. Perlioni discussed the investment office’s activities and positioning heading into and during the COVID-19 crisis.  In a severe downturn, the portfolio management challenge is to balance and optimize the degree of offense in terms of ability to be opportunistic in this environment and the degree of defense in terms of scenario analysis and stress testing on the portfolio.  There is significant dislocation across markets and tremendous opportunity for those who can take advantage of the market.


As of December 2019, University GAAP results were positive compared budget.  Two areas driving favorable performance were the School of Medicine, which showed improvement against its restated budget, and Other Administration due to positive returns in the cash portfolio.

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