The Board of Visitors Finance Committee met Friday to hear from various members of University leadership and the Weldon Cooper Center for Public Service. University leadership shared updates on the debt profile and endowment fund and the Weldon Cooper Center presented a report on the University’s impact on various regions in the state and the state as a whole.
The Finance Committee, chaired by Rector Rachel Sheridan, is responsible for the University’s financial affairs and business operations, managing the budget, tuition and student fees. The Committee also maintains a relationship with the University of Virginia Investment Management Company, which manages the University’s Endowment Fund.
Rachel Hobbs, program director for the University’s Economic Development department, and Terry Rephann, regional economist from the Weldon Cooper Center for Public Service, presented the economic impact of the University to the Board.
The Economic Development program is a department in the University that focuses on maximizing the economic impact the University has on the state, and the Weldon Cooper Center is an academic department that conducts research centered around public policy for governments and non-profits. This was the first time the study was done since 2015 and it divided the report into three sections — the Academic Division, U.Va. Health and the College at Wise.
The report stated that the University contributed to $11.9 billion of the Virginia economy. This number was further divided into three categories — direct impact, indirect impact and induced impact.
The report said the University generated $6.6 billion of direct impact — operational spending including employee compensation and spending by patients and visitors to the region. It also generated $2.6 billion in indirect impact — spending by companies and people who do business with the University — and $2.7 billion of induced impact — money spent by households and vendors who receive money from the University.
Beyond this impact, the report said that the University is responsible for over 67,000 jobs and $455 million in local and state government revenue. It also went on to say that the area that encompasses Charlottesville and surrounding counties, was the source of almost 75 percent of the total employment and output.
The College at Wise is also responsible for 1 in 72 jobs in the LENOWISCO Plateau Planning District, representing Lee, Wise and Scott County as well as Norton City, and Cumberland Plateau Planning Districts, representing Buchanan, Dickenson, Russell and Tazewell County.
“We have every intention of using [the report] … to educate the general assembly on the incredible return on investment that they get for the resources they provide the University,” Rephann said.
In addition to this, Jennifer Wagner Davis, executive vice president and chief operating officer, brought several proposals to the Financial Committee, all of which were unanimously approved. Among them was an expansion to U.Va. Health’s retirement plan eligibility to include medical residents and fellows, known as house staff. Currently, house staff do not qualify for retirement plans as they are considered temporary trainees. The Committee approved the proposal, making house staff eligible for retirement benefits.
The plan, as passed, would parallel the retirement plan for staff at U.Va. health, applying to 1,000 residents and fellows and costing the University $450,000 annually. Other universities, including Johns Hopkins, Duke and Emory, already include house staff in retirement benefit plans.
“After a lot of consultation discussion, including with the residents themselves, house staff felt strongly that they would like to have the opportunity to also build their financial security early in their medical careers,” Davis said. “To advance the University's continued investment and well-being of its healthcare trainees, we are proposing, therefore, that the University provide House staff with a retirement benefit.”
Another proposal brought to the Financial Committee included increasing the signatory authority threshold for contracts. The University can approve any contract without consulting the Board of Visitors as long as it is under $5 million. This threshold was set in 1982 and, if adjusted for inflation, would be $16 million in today's money.
Davis asked the Board to increase the threshold to $10 million, with the exception of contracts for professional services, as it was an area of interest to senior management and the Board. Davis contrasted this with other universities, like the University of Delaware and George Mason University, that delegate all spending matters to management. This proposal was approved by the Committee.
“The nature of what it costs to run a modern university and the health system has changed quite dramatically, and the mismatch between spend growth and the unchanged approval and threshold creates lots and lots of work for [the Committee] to go through all this,” Davis said.
Augie Maurelli, vice president for finance and chief financial officer, presented a breakdown of the endowment fund to the Committee. The fund has a valuation of $15.5 billion and had an annual yield of 12.5 percent for the 2025 fiscal year.
Robert Durden, chief executive officer of the University of Virginia Investment Management Company, also presented on the endowment fund. He said the fund has outperformed passively managed portfolios by investing in an array of assets, including real estate and even SpaceX.
Durden explained that $1 in an index fund in 2005 would be worth $4.22, while the same dollar invested in the endowment fund would be worth $6.31. The fund has also outperformed the average return of 30 peer institutions in the one, five, 10 and 20-year periods.
“... We’re pleased with long term performance … fiscal year to date, we estimate we’re up about 7 percent, so we’re off to a good start in fiscal [year] 26 as well,” Durden said.
The endowment fund prevents some costs from being passed on to students. Davis said that the fund gives each student a $5,800 hidden scholarship.
The meeting also included presentations to the Board about the debt portfolio, presented by University Treasurer Julie Richardson. The University’s debt portfolio is currently at $3.2 billion, and the University is looking to issue more. Over the past 15 years, the weighted average cost of capital has decreased by approximately 90 bps to 3.3 percent and the average loan term has increased by 14 years to an average lifespan of 36 years.
Almost half the debt issues happened from 2019 to 2021 when interest rates were low. Due to how the University handles debt, it has amassed a AAA credit rating, the highest rating to achieve for an organization. It signifies to lenders that the borrower has the lowest risk of defaulting. Over the next 10 years, the University will need an additional $1 billion to complete projects like the Paul and Diane Manning Institute of Biotechnology, upperclassmen housing and Fontain energy plant.
“I consider ourselves in a hold tight environment, but continue to monitor, watch and act quickly and try to capitalize on any market anomalies and get in and out if the opportunity presents itself,” Richardson said.
The Committee will reconvene during the March Board meetings.
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