University of Washington Makes Every Effort to Honor Disability Accommodation Requests

January 5, 2017

TO: Members of the Board of Regents Designated Representatives to the Board of Regents

FROM: Joan Goldblatt, Secretary of the Board of Regents

RE: Schedule of Meetings

WEDNESDAY, JANUARY 11, 2017 5:30 p.m. Gerberding Hall REGULAR MEETING OF THE BOARD OF Room 142 REGENTS: Regents Shanahan (Chair), Ayer, Benoliel, Blake, Harrell, Jaech, Rice, Riojas, Simon, Wright-Pettibone

THURSDAY, JANUARY 12, 2017 REGULAR MEETING OF THE BOARD OF REGENTS: The meeting will begin at 8:30 a.m. with portions of the day allocated as set forth below.

8:30 to 9:40 a.m. Dempsey Hall FINANCE AND ASSET MANAGEMENT Room 302 COMMITTEE: Regents Jaech (Chair), Ayer, Benoliel, Blake, Harrell

9:55* to 11:40 a.m. Dempsey Hall ACADEMIC AND STUDENT AFFAIRS Room 302 COMMITTEE: Regents Rice (Chair), Riojas, Simon, Wright-Pettibone

Noon Dempsey Hall MEETING OF THE FULL BOARD OF Room 302 REGENTS: Regents Shanahan (Chair), Ayer, Benoliel, Blake, Harrell, Jaech, Rice, Riojas, Simon, Wright-Pettibone

*or upon conclusion of the previous session. Unless otherwise indicated, committee meetings of the Board of Regents will run consecutively; starting times following the first committee are estimates only. If a session ends earlier than expected, the next scheduled session may convene immediately. Committee meetings may be attended by all members of the Board of Regents and all members may participate.

To request disability accommodation, contact the Disability Services Office at: 206.543.6450 (voice), 206.543.6452 (TTY), 206.685.7264 (fax), or email at [email protected]. The University of Washington makes every effort to honor disability accommodation requests. Requests can be responded to most effectively if received as far in advance of the event as possible.

1.1/201-17 1/12/17

AGENDA BOARD OF REGENTS University of Washington

Wednesday, January 11, 2017 5:30 p.m. Gerberding Hall, Room 142

I. CALL TO ORDER

II. ROLL CALL

III. CONFIRM AGENDA

IV. PUBLIC COMMENT PERIOD To provide public comment at this meeting, sign up at the meeting before the start of the meeting.

V. BOARD ITEMS

Faculty Senate Goals and Leadership Priorities (Information only) B–1 Zoe Barsness, Associate Professor, Milgard School of Business, UW Tacoma; Faculty Senate Chair Thaisa Way, Professor, Landscape Architecture, College of the Built Environment, UW Seattle; Faculty Senate Vice Chair Paul Hopkins, Professor and Department Chair Emeritus, Chemistry, UW Seattle; Chair of the Senate Committee on Planning and Budgeting Eric Bugyis, Lecturer, School of Interdisciplinary Arts & Sciences, UW Tacoma Patricia Kramer, Chair and Associate Professor, Anthropology, UW Seattle Hedwig E. Lee, Assistant Professor, Sociology, UW Seattle Casey Mann, Professor, Mathematics, UW Bothell Lauren Montgomery, Lecturer, School of Interdisciplinary Arts & Science, UW Tacoma Joseph T. Tennis, Associate Professor, Information School, UW Seattle Gordon Watts, Professor, Physics, UW Seattle

VI. ADJOURN

1.1.1/201-17 1/11/17 UNIVERSITY OF WASHINGTON BOARD OF REGENTS

Finance and Asset Management Committee Regents Jaech (Chair), Ayer, Benoliel, Blake, Harrell

January 12, 2017 8:30 to 9:40 a.m. Dempsey Hall, Room 302

Approval of Minutes of Committee Meeting on November 10, COMMITTEE 2016 ACTION 1. Portage Bay Insurance Annual Report INFORMATION F–1 Elizabeth Cherry, Associate Vice Provost, Compliance & Risk Services

2. Independent Auditor’s Report (KPMG) – UW Financial INFORMATION F–2 Statements for Period Ending June 30, 2016 Kristi Blake, Regent Richard Cordova, Executive Director, Internal Audit

3. Audit Advisory Committee Update INFORMATION F–3 Kristi Blake, Regent

4. UWINCO Board Update and Investment Performance Quarterly INFORMATION F–4 Report – Quarter Ended September 30, 2016 Keith Ferguson, Chief Investment Officer, UWINCO Scott Davies, Chief Operating Officer, UWINCO

5. Introduction of New Leadership: Executive Vice President, INFORMATION F–5 Finance and Administration Ana Mari Cauce, President Gerald Baldasty, Provost and Executive Vice President Jeffrey Scott, Executive Vice President, Finance and Administration

6. Monthly Capital Project and Debt Report and Update on Capital INFORMATION F–6 Project Governance and Process Improvements Chris Malins, Associate Vice President, Treasury Mike McCormick, Associate Vice President, Capital Planning and Development Jeffrey Scott, Executive Vice President, Finance and Administration

1.2.1/201-17 1/12/17 AGENDA – Finance and Asset Management Committee Meeting on January 12, 2017 Page 2

7. Computer Science & Engineering Expansion (CSE II): Stage 2 – ACTION F–7 Approve Budget and Funding Plan Mike McCormick, Associate Vice President, Capital Planning and Development Ed Lazowska, Bill & Melinda Gates Chair, Computer Science & Engineering Chris Malins, Associate Vice President, Treasury Jeffrey Scott, Executive Vice President, Finance and Administration

8. Animal Research and Care Facility – Approve Budget ACTION F–8 Adjustment Mike McCormick, Associate Vice President, Capital Planning and Development Jeffrey Scott, Executive Vice President, Finance and Administration

9. Other Business

1.2.1/201-17 1/12/17 UNIVERSITY OF WASHINGTON BOARD OF REGENTS

Academic and Student Affairs Committee Regents Rice (Chair), Riojas, Simon, Wright-Pettibone

January 12, 2017 9:55 to 11:40 a.m. Dempsey Hall, Room 302

Approval of Minutes of Committee Meeting on November 10, COMMITTEE 2016 ACTION 1. Academic and Administrative Appointments ACTION A–1 Gerald J. Baldasty, Provost and Executive Vice President

2. Establishing the Graduate Certificate in Electrical Engineering ACTION A–2 Foundations (School of Science, Technology, Engineering & Mathematics, Division of Engineering & Mathematics, UW Bothell) Rebecca Aanerud, Associate Dean for Academic Affairs & Planning, Graduate School Michael Stiber, Associate Dean for Research & Graduate Studies, UW Bothell School of STEM Jennifer McLoud-Mann, Chair, Engineering and Mathematics Division, UW Bothell School of STEM

3. Establishing the Master of Arts in Applied Child and Adolescent ACTION A–3 Psychology: Prevention and Treatment (Department of Psychology) Rebecca Aanerud, Associate Dean for Academic Affairs & Planning, Graduate School Lynn Fainsilber Katz, Research Professor, Department of Psychology Mona Murr Kunselman, Program Director, UW Educational Outreach Sheri Mizumori, Professor and Chair, Department of Psychology

4. Graduate and Professional Student Enrollment (Graduate INFORMATION A–4 School, School of Law, School of Medicine, School of Dentistry, School of Pharmacy) and “West Waiver” Program Updates (School of Law and Medicine Only) David Eaton, Dean and Vice Provost, Graduate School Kellye Testy, Toni Rembe Dean & Professor, Law Carol Teitz, Associate Dean for Admissions, School of Medicine Paul Ramsey, CEO, UW Medicine and Dean of the School of Medicine Mathiew Le, Assistant Dean of Admissions & Financial Aid, School of Law

1.4.1/201-17 1/12/17 AGENDA – Academic and Student Affairs Committee Meeting on January 12, 2017 Page 2 5. Diversity Blueprint INFORMATION A–5 Ana Mari Cauce, President Rickey Hall, Vice President & Chief Diversity Officer, Minority Affairs & Diversity Chadwick Allen, Associate Vice Provost for Faculty Advancement, Office of the Provost and Office of Minority Affairs & Diversity

6. The Innovation Imperative: Entre and Student Innovation at the INFORMATION A–6 Buerk Center for Entrepreneurship Connie Bourassa-Shaw, Director, Buerk Center for Entrepreneurship Alex Jiao, MiPS Labs Sam Tanner, Joe Chocolates Peter Keckemet, Joe Chocolates

7. Other Business

1.4.1/201-17 1/12/17 AGENDA

BOARD OF REGENTS University of Washington

Thursday, January 12, 2017 Noon Dempsey Hall, Room 302

(Item No.) I. CALL TO ORDER

II. ROLL CALL: Assistant Secretary Shelley Tennant

III. CONFIRM AGENDA

IV. PUBLIC COMMENT PERIOD

V. BOARD ITEMS

Safety Report – Monthly Update (Information only) B–2 Ana Mari Cauce, President

UW Medicine Board Report (Information only) B–3 Kristi Blake, Regent Rogelio Riojas, Regent Paul Ramsey, CEO, UW Medicine and Dean of the School of Medicine

Governmental Affairs Advisory Committee Update: Introduction of New B–4 Director of State Relations and Governor’s Budget Overview (Information only) Herb Simon, Regent, Chair of the Governmental Affairs Advisory Committee Randy Hodgins, Vice President, Office of External Affairs Joe Dacca, Director of State Relations, Office of External Affairs Becka Johnson Poppe, Senior Legislative Analyst, Office of Planning & Budgeting

Quarterly Compliance Report – Financial (Information only) B–5 Elizabeth Cherry, Associate Vice Provost, Compliance & Risk Services Ann Anderson, Associate Vice President and Controller Sarah Norris Hall, Associate Vice Provost, Office of Planning and Budgeting

Intercollegiate Athletics Annual Report to the Board on NCAA Compliance B–6 (Information only) Jennifer Cohen, Director of Athletics, Intercollegiate Athletics Jackie Mynarski, Associate Athletic Director of Compliance, Intercollegiate Athletics

VI. REPORT OF THE CHAIR OF THE BOARD OF REGENTS: Regent Shanahan

1.1.1/201-17 1/12/17 AGENDA – Board of Regents Meeting on January 12, 2017 Page 2 VII. REPORT OF THE UNIVERSITY PRESIDENT: President Cauce

VIII. CONSENT AGENDA

Approval of Minutes of Meeting of November 10, 2016

Establishing the Graduate Certificate in Electrical Engineering Foundations A–2 (School of Science, Technology, Engineering & Mathematics, Division of Engineering & Mathematics, UW Bothell)

Establishing the Master of Arts in Applied Child and Adolescent Psychology: A–3 Prevention and Treatment (Department of Psychology)

Computer Science & Engineering Expansion (CSE II): Stage 2 – Approve F–7 Budget and Funding Plan

Animal Research and Care Facility – Approve Budget Adjustment F–8

IX. STANDING COMMITTEES

A. Academic and Student Affairs Committee: Regent Rice – Chair

Academic and Administrative Appointments (Action) A–1

Graduate and Professional Student Enrollment (Graduate School, School of A–4 Law, School of Medicine, School of Dentistry, School of Pharmacy) and “West Waiver” Program Updates (School of Law and Medicine Only) (Information only)

Diversity Blueprint (Information only) A–5

The Innovation Imperative: Entre and Student Innovation at the Buerk Center A–6 for Entrepreneurship (Information only)

B. Finance and Asset Management Committee: Regent Jaech – Chair

Portage Bay Insurance Annual Report (Information only) F–1

Independent Auditor’s Report (KPMG) – UW Financial Statements for Period F–2 Ending June 30, 2016 (Information only)

Audit Advisory Committee Update (Information only) F–3

UWINCO Board Update and Investment Performance Quarterly Report – F–4 Quarter Ended September 30, 2016 (Information only)

Introduction of New Leadership: Executive Vice President, Finance and F–5 Administration (Information only)

Monthly Capital Project and Debt Report and Update on Capital Project F–6 Governance and Process Improvements (Information only)

1.1.1/201-17 1/12/17 AGENDA – Board of Regents Meeting on January 12, 2017 Page 3

X. REPORTS TO THE BOARD

Faculty Senate Chair – Professor Zoe Barsness

Student Leaders: ASUW President – Ms. Daniele Menez GPSS President – Ms. Soh Yeun (Elloise) Kim ASUW Tacoma President – Mr. Berkan Koroglu ASUW Bothell President – Ms. Tanya Kumar

Alumni Association President – Mr. Clyde Walker

XI. DATE FOR NEXT REGULAR MEETING: Wednesday, February 8 and Thursday, February 9, 2017

XII. EXECUTIVE SESSIONS

(to review the performance of public employees.)

(to discuss with legal counsel litigation or potential litigation as defined in RCW 42.30.110.)

XIII. ADJOURN

1.1.1/201-17 1/12/17 OFFICIAL MINUTES

M I N U T E S

BOARD OF REGENTS University of Washington

January 12, 2017

The Board of Regents held its regular meeting on Thursday, January 12, 2017, beginning at noon in Dempsey Hall, Room 302. The notice of the meeting was appropriately provided to the public and the media.

CALL TO ORDER

Regent Shanahan called the meeting to order at noon.

ROLL CALL

Assistant Secretary Tennant called the roll. Present were Regents Shanahan (chairing), Benoliel, Blake, Harrell, Jaech, Rice, Riojas, Simon, Wright-Pettibone; President Cauce, Provost Baldasty, Ms. Goldblatt; designated representatives: Professor Barsness, Ms. Kim, Ms. Menez, Mr. Walker.

Absent: Regent Ayer

CONFIRM AGENDA

The agenda was confirmed as presented.

Regent Shanahan invited Jim Jiambalvo, Dean of the Foster School of Business, to welcome the Board to Dempsey Hall and say a few words.

Dean Jiambalvo said the meeting room, Anthony’s Forum, was made possible by a generous gift from alumnus Bud Gould, owner of Anthony’s restaurants. Dean Jiambalvo talked about Dempsey Hall and other Foster School facilities and their impact on the Foster School. In recent Bloomberg rankings, the UW was the fifth highest ranked public business school (behind UC Berkeley, UCLA, Michigan, and the University of Virginia). He attributes part of the success to the facilities and their impact on the ability to attract faculty and deliver on team-based learning. The Foster School has hired faculty from prestigious private universities, which would have been unlikely given the former facilities. Team-based learning is fostered by team rooms occupied throughout the day. This training helps ensure students become great team members who are prepared to lead teams. The facilities have created “Foster pride” among students, faculty, and staff.

Regent Shanahan provided an overview of the meeting and its framework. His slides are attached to these minutes. He linked the vision “to be the best public university in the world as measured by impact” to the plan, and described how the Board aligns with the plan. The plan calls for impact at scale in three broad areas: innovation, population BOARD OF REGENTS 2 January 12, 2017 health, and diversity. The mission is always about excellence and is to recruit and retain the best faculty, assure student access, and staff leadership development. Advancement – work with long-term investors, members of the legislature, and donors to create sustainability. To accomplish the goals in the plan, the University has to change, including transforming its administrative structure to deliver the best systems to support the work. This is a coordinated tri-campus effort. UW Medicine, as half of UWs enterprise, must be prepared for the future. The Board meeting structure is tailored around the elements of the plan with the goal to make productive use of meeting time.

PUBLIC COMMENT PERIOD

No-one signed up to provide public comment.

BOARD ITEMS

Regent Shanahan changed the order of presentation to begin with the UW Medicine Board Report

UW Medicine Board Report (Agenda no. B–3)

Dr. Paul Ramsey, CEO, UW Medicine and Dean of the School of Medicine, said “Change is the constant in medicine.” He thanked Regents Blake and Riojas for their active service on the UW Medicine Board and several of its committees. UW Medicine also assesses what it does by measuring impact. The recent Medicine Board meeting was divided into three sections:

1. Special topic – attempt to address topics that are impacting health The special topic was cardiovascular health. The UW’s Institute of Health Metrics and Evaluation data show three major categories of disease – brain, heart, and cancer. More individuals die from heart disease than from cancer. UW leaders are addressing cardiovascular health through research, education and patient care.

2. Reports from senior leaders Jacquie Cabe, CFO, reported UW Medicine is not performing financially as well as would she like. Half way through fiscal year, it is slightly less than 1% behind budget. The team is working to understand expenses and modeling reduced expenses in an effort to improve financial performance by the end of the fiscal year. Care transformation is a huge area of change in medicine. Over 300 faculty physicians form a leadership group designing programs to improve quality, improve measurement of quality, improve access, and reduce costs. In a campaign update, UW Medicine feels confident it is on the path to meet its goal to raise $2 billion. The UW Medicine Board will hold a retreat in March devoted to strategic planning.

3. Review by committee chairs of committee activities The Board heard a report from UW Medicine’s new Chief Security Officer about compliance in the area of information security. The Finance and Audit Committee summarized the KPMG audits of the eight entities of UW Medicine, terming this a “clean” audit. At its last meeting, the Strategy Committee discussed a potential new BOARD OF REGENTS 3 January 12, 2017 Precision Medicine Institute, in collaboration with the Fred Hutchinson Cancer Research Institute and Seattle Children’s. The Patient Safety and Quality Committee reported the National Center for Medicare, which ranks hospitals on a one to five star basis, ranked UW Medical Center as one of only two academic hospitals with a five star rating.

See Attachment B–3.

Safety Report – Monthly Update (Agenda no. B–2)

President Cauce provided a brief monthly update regarding safety on campus. She updated the Regents on legionella at UW Medicine, saying no further cases have been reported since the Board met in November.

She believes the next week could be potentially challenging. There will be many events on campus, including those celebrating Martin Luther King with a day of service on Monday. On Wednesday, the UW is hosting County Councilmember Larry Gossett. She expressed concern about safety on inauguration day. Off-campus events sometimes make their way onto campus. On Friday, a controversial speaker who has sparked a lot of interest across the state, and further will be on campus, along with a number of other events on that day. The Ethnic Cultural Center is hosting an all-day student event with Kathleen Cleaver, former Communications Secretary for the Black Panther Party. There will be an all-day conversation about health equity. An event called “Design as Protest” will examine how elements of design are used in protest movements. UW administrators are coordinating with UWPD to be ready for whatever might happen and assure the physical safety of students, faculty, and staff.

See Attachment B–2.

Governmental Affairs Advisory Committee Update: Introduction of new Director of State Relations and Governor’s Budget Overview (Agenda no. B–4)

Regent Herb Simon, Chair of the Governmental Affairs Advisory Committee, introduced Joe Dacca, State Relations Director. A native of Gig Harbor, Mr. Dacca graduated from the UW in 2006 with a B.A. in Political Science.

Most recently, Mr. Dacca served as District Director for Congressman Derek Kilmer. In that role, he managed staff at three Washington State offices and directed Rep. Kilmer's local outreach efforts.

Prior to his role with Rep. Kilmer, Mr. Dacca served for five years on the staff of Congressman Norm Dicks and spent two years working as a Legislative Assistant to then State Senator Derek Kilmer in Olympia.

Mr. Dacca and his wife Marian are newlyweds who split time at their home in West Seattle and Olympia during the legislative session.

Regent Simon mentioned two upcoming events in Olympia and invited Regents to attend:

BOARD OF REGENTS 4 January 12, 2017 1. Council of Presidents Legislative Reception on Tuesday, January 24. President Cauce will attend along with other four-year presidents and alumni association directors. 2. Regents and Trustees Day in Olympia on Thursday, February 2, will provide governing Boards from state institutions of higher education with the opportunity to promote higher education with key legislators.

Mr. Dacca provided an overview of the current legislative session and discussed the UW’s budget and policy agenda for this year. He said it is widely known this will be a challenging, and likely long, session. There is a large bill to be paid for K-12 funding, and it will dominate the conversation and the focus of lawmakers. With a split legislature it will be a challenge to find an approach to pay that bill. The two parties are far apart in their approaches. He sees his charge as telling the UW’s story and presenting a positive agenda. The overall theme is keeping the university competitive and keeping the state competitive. He listed the UW’s operating and capital priorities.

Operating: • Funding for competitive compensation for faculty and professional staff; • Ensuring student access through the state need grant; • Making sure state employers are competitive – degree expansion on all three campuses in high-demand fields; • Investing in medical education and partnership in Spokane to serve the entire state, including rural communities. Capital: • Seismic safety – funding plan to reinforce old masonry buildings on the Seattle campus; • Population Health research facility construction funding and design funding for the Population Health classroom facility; • Planning funding to accommodate growth on the Bothell and Tacoma campuses; • Parrington Hall renovation; and • Burke Museum completion.

The UW is working with higher education partners on a consensus higher education agenda called, “Washington Competes.” This partnership advocates for fully funding the state need grant, ensuring competitive faculty compensation, expanding high- demand degrees, and ensuring programs are in place to assure students are successful in on-time graduation.

Becka Johnson Poppe, Senior Legislative Analyst in the Office of Planning & Budgeting, commented on the Governor’s operating and capital proposals released on December 14. The operating budget relies on a variety of tax modifications. It assumes revenues are projected slightly higher than in the November forecast. It includes major new items of funding for the UW, including compensation support and partial funding for collective bargaining agreements. There is $15.5 million tuition backfill in exchange for a resident undergraduate tuition freeze. Included is new funding for 70 students per cohort for WWAMI in Spokane. There is $116 million in new funding for the state need grant, which would serve 14,000 more eligible students and decrease the number of unserved students by about 60%. The Governor’s capital budget includes the remaining funding to BOARD OF REGENTS 5 January 12, 2017 complete the Burke Museum, $20 million for the Population Health Sciences Building, a portion of funding for seismic upgrades at the UW Seattle, additional funding for the Computer Science & Engineering 2 Building, and additional funding for the Center for Advanced Materials and Clean Energy. $71 million from the UW building account is directed to support the preservation and renewal of facilities across all three campuses. There is $1 million to fund soil remediation at the UW Tacoma. The Governor’s budget is the first step in a long budget process. House and Senate leaders will be putting forward their proposals throughout the session.

Randy Hodgins, Vice President of External Affairs, answered questions about revenue projections and K-12 funding.

See Attachment B–4.

Quarterly Compliance Report - Financial (Agenda no. B–5)

Elizabeth Cherry, Associate Vice Provost for Compliance and Risk Services, introduced the quarterly report, which focused on financial compliance in two priority areas. She provided an overview of the Structural Compliance calendar. University-wide compliance was divided into six subject areas displayed on Attachment 1, which also shows the coordination teams involved in preparing risk assessments for each area. Working committees in six subject areas meet monthly. The Compliance Steering Committee, chaired by the Provost, includes vice presidents and vice provosts who recommend significant operational and policy changes.

Ann Anderson, Associate Vice President and Controller, described the financial compliance assessment. She reviewed priority item 2, the payment card industry data security standard.

Sarah Norris Hall, Associate Vice Provost, Office of Planning and Budgeting, reviewed priority item 1, compliance of expenditures of state provisos and federal funds.

See Attachment B–5.

Intercollegiate Athletics Annual Report to the Board on NCAA Compliance (Agenda no. B–6)

Jennifer Cohen, Director of Athletics in Intercollegiate Athletics, introduced Husky Football Linebacker Keishawn Bierria, and announced he earned a 3.4 GPA during autumn quarter. Ms. Cohen praised him as a great student and athlete, but also a tremendous leader who has earned the respect of his teammates and coaches. Mr. Bierria brought the Pac-12 Championship trophy with him. Mr. Bierria talked about being part of the conference championship season. He said it was truly a team effort with team members trying to reach excellence as athletes, people, and as students. Regents said it was a great season and congratulated the team on its efforts.

Ms. Cohen introduced Jackie Mynarski, Associate Athletic Director of Compliance, Intercollegiate Athletics, who provided a report on NCAA Compliance. Senior Associate BOARD OF REGENTS 6 January 12, 2017 Athletic Director, Shondell Reed, was also present. Ms. Cohen said ICA is committed to NCAA compliance – it is a huge priority for them. She feels good about the culture. There was discussion about athletes returning to campus to complete their degrees. Ms. Mynarski said the number of athletes leaving before graduation is increasing. Ms. Cohen said about twenty athletes come back each year to complete their degrees. ICA sets aside funds to support this. Regent Shanahan said it was great to hear about the emphasis on the student. He is proud of their athletic and academic achievements. Regarding compliance, Regent Shanahan suggested striving for zero violations, rather than a range considered in the norm. This eliminates the imaginary threshold where people say, “It’s okay.” He encouraged a focus on “near misses” rather than violations, which are lagging indicators.

See Attachment B–6.

REPORT OF THE CHAIR OF THE BOARD OF REGENTS: Regent Shanahan

Regent Shanahan shared his thoughts for 2017 and said the work the Board is doing is very important and the Board takes its responsibilities seriously. He wants to build on the progress made in 2016 and shared his thoughts going forward.

Regent Shanahan said he is totally convinced the University knows exactly where it is going. The Board is on strong footing and is a strong team. He feels strongly there is unbelievable opportunity ahead. There is an amazing amount of talent and resources. In 2017, the Board needs to continue to increase engagement and alignment and build on relationships fostered over the last few years. He encouraged a focus on relationships and said the team has the ability to take action. He believes writing down the plan supports finding a way to bring everyone together. Although, it is unnatural for an engineer to focus on language, he expressed confidence the plan will get all to a common place and help develop language to communicate more naturally. When working together, the team can achieve the most and do something special. Because of the UW’s resources, it can do something at scale. The effort around meetings is to shape an agenda that matches all the process cycles and support timely decisions that influence processes. He sees this year evolving with a stronger plan for financial stability, connecting more of the dots, managing costs, and doing a better job of managing growth and implementing improved systems. Coming together cohesively as a team will result in higher levels of performance. He would like to see more time shifted to medicine, as it comprises half of the UW’s enterprise.

Regent Shanahan said the University and the Board has to take risks and make changes. He recalled a quote from Dr. Norm Beauchamp by futurist Joel Barker, “Vision without action is merely a dream, action without vision, just passes time. Vision with action can change the world.”

Regent Shanahan closed by saying, “We can change the world if we, together, take action. . . . to make an impact.”

REPORT OF THE UNIVERSITY PRESIDENT: President Cauce

BOARD OF REGENTS 7 January 12, 2017 President Cauce thanked the Board for the ways they have participated in supporting the UW Football student athletes. The Volleyball team also was Pac-12 champion. President Cauce reported on attending Pac-12 meetings and observing the leadership of Jennifer Cohen, as the only female athletic director in the conference.

President Cauce said the state legislative session is on the forefront for her. The UW is coming in with a strong team and is part of the Washington Competes partnership with other universities and community colleges. Her goal is to build for the future and try to not lose ground. She is optimistic about the possible funding for the state need grant. She thanked all in advance for traveling to Olympia to meet with legislators. She thanked Regent Simon for his support and advocacy on behalf of the University. She intends to focus on ways to bring other community and business leaders together to support higher education and advocate on behalf of the University.

CONSENT AGENDA

Regent Shanahan noted there were five items for approval on the consent agenda, and called for a motion.

MOTION: Upon the recommendation of the Chair of the Board and the motion made by Regent Rice, seconded by Regent Benoliel, the Board voted to approve the five items on the consent agenda as shown below:

Minutes for the meeting of November 10, 2016

Establishing the Graduate Certificate in Electrical Engineering Foundations (School of Science, Technology, Engineering & Mathematics, Division of Engineering & Mathematics, UW Bothell) (Agenda no. A–2)

It was the recommendation of the administration and the Academic and Student Affairs Committee that the Board of Regents grant authority to the Graduate Faculty of the UW Bothell School of Science, Technology, Engineering & Mathematics (STEM), Division of Engineering & Mathematics, to offer the Graduate Certificate in Electrical Engineering Foundations, effective Autumn Quarter 2017. This will be a fee-based program offered in coordination with UW Professional & Continuing Education. The graduate certificate program will have provisional status with a review to be scheduled for the 2022-2023 academic year. At such time that continuing status is granted, a ten-year review cycle would begin.

See Attachment A–2.

Establishing the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment (Department of Psychology) (Agenda no. A–3)

It was the recommendation of the administration and the Academic and Student Affairs Committee that the Board of Regents grant authority to the Department of Psychology to offer the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment, effective Autumn Quarter 2017. This degree program will be fee-based. The BOARD OF REGENTS 8 January 12, 2017 graduate degree program will have provisional status with a review to be scheduled in the 2020-2021 academic year. At such time that continuing status is granted, a ten-year review cycle would begin.

See Attachment A–3.

Computer Science & Engineering Expansion (CSE II): Stage 2 – Approve Budget and Funding Plan (Agenda no. F–7)

It was the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve the project budget; and a Funding Plan, including the use of the Bridge Program, with a maximum borrowing of $25 million and a term not to exceed five years from the date of Board approval.

See Attachment F–7.

Animal Research and Care Facility – Approve Budget Adjustment (Agenda no. F–8)

It ws the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve a Project Budget increase of $18.5M.

See Attachment F–8.

STANDING COMMITTEES

ACADEMIC AND STUDENT AFFAIRS COMMITTEE: Regent Rice, Chair

Academic and Administrative Appointments (Agenda no. A–1)

MOTION: Upon the recommendation of the administration and the motion made by Regent Rice, the Board voted to approve the personnel appointments. Regent Wright-Pettibone abstained from the discussion and vote.

See Attachment A–1.

Graduate and Professional Student Enrollment (Graduate School, School of Law, School of Medicine, School of Dentistry, School of Pharmacy) and “West Waiver” Program Updates (School of Law and Medicine Only) (Agenda no. A–4)

See Attachment A–4.

Diversity Blueprint (Agenda no. A–5)

See Attachment A–5.

The Innovation Imperative: Entre and Student Innovation at the Buerk Center for Entrepreneurship (Agenda no. A–6)

BOARD OF REGENTS 9 January 12, 2017 See Attachment A–6.

FINANCE AND ASSET MANAGEMENT COMMITTEE: Regent Jaech, Chair

Portage Bay Insurance Annual Report (Agenda no. F–1)

See Attachment F–1.

Independent Auditor’s Report (KPMG) – UW Financial Statements for Period Ending June 30, 2016 (Agenda no. F–2)

See Attachment F–2.

Audit Advisory Committee Update (Agenda no. F–3)

See Attachment F–3.

UWINCO Board Update and Investment Performance Quarterly Report – Quarter Ended September 30, 2016 (Agenda no. F–4)

See Attachment F–4.

Introduction of New Leadership: Executive Vice President, Finance and Administration (Agenda no. F–5)

See Attachment F–5.

Monthly Capital Project and Debt Report and Update on Capital Project Governance and Process Improvements (Agenda no. F–6)

See Attachment F–6.

REPORTS TO THE BOARD OF REGENTS

Faculty Senate Chair: Professor Zoe Barsness

Professor Barsness thanked the Regents for giving faculty the opportunity to share and dive more deeply into important topics at the meeting on Wednesday night where faculty members communicated the merits and challenges of their work. She said they would be happy to return to follow up and explore further.

The Faculty Senate is hosting a series of seminars where faculty and staff can further develop an understanding of their positions and the role of higher education in the broader political context. Seminars will provide a space where faculty and staff can engage in dialogue with each other and discuss challenging topics. A series of 1.5 hour Friday seminars begin in February. Topics will include exploring higher education funding in the federal landscape, immigration law and DACA, the Affordable Care Act, BOARD OF REGENTS 10 January 12, 2017 climate and environmental science and policy, inclusive community building, and government-supported basic research.

To enhance leadership skills, the Faculty Senate is hosting a training session on race and equity for its leadership, chairs of faculty councils, and with members of the Board of Deans and Chancellors.

Professor Barsness outlined the Faculty Senate’s priorities for the legislative session. There was alignment across the faculty on three issues: 1) Faculty competitiveness, particularly compensation; 2) Student access, cost of attendance, assuring diversity; 3) Enhancing institutional quality, student experience, scholarships.

ASUW President: Ms. Daniele Menez

Ms. Menez reported ASUW’s student lobbyist, Alex Wurth, lives and works full time in Olympia during the winter quarter. He is advocating for ASUW’s main priority – fully funding the state need grant, which aligns with the University’s agenda. ASUW passed a city legislative agenda last week in the Senate. The main priorities are affordable housing and safety in the University District.

In coordination with the Office of Student Life, ASUW formed a Bias Incident Advisory Committee and recently launched an on-line reporting tool for students, faculty, and staff to report incidents of bias. The tool has received dozens of reports and allows follow-up and response to assure issues and concerns are being addressed.

Next month, Ms. Menez will deliver a quarterly State of the ASUW address at the Student Senate meeting. ASUW and GPSS students serve on nearly every university committee and task force. She wants to assure this opportunity is available to many different students.

GPSS President: Ms. Elloise Kim

The GPSS Vice President of External Affairs, James Moschella, is working in Olympia, to advance higher education and graduate student issues. The four main agenda items on the GPSS Legislative agenda are: 1) State support for academic excellence; 2) Transparency and equity for self-supported programs; 3) Graduate student mental health and wellness; 4) Sexual assault prevention and care.

Regarding fee-based programs, GPSS is pursuing a reform to change the way programs communicate per credit costs and eligibility to prospective and current students. Often incoming students do not fully know what benefits they can or may not explore (including TA/RA opportunities) and the amount of fees they must pay. Confusion continues during a student’s time in the programs, especially in programs that offer both fee-based and tuition-based options. Internally, a student advisory committee meets monthly with Vice Provost of Continuing Education Branon. BOARD OF REGENTS 11 January 12, 2017

GPSS will hold its first academic conference on May 6, entitled, “Our Work Now: the Critical Role of Graduate and Professional Students in Post-Election America.”

GPSS is working with the Graduate School to improve student participation in the program review process.

GPSS participates annually in the Martin Luther King Jr. Day of Service.

ASUW Tacoma President: Mr. Berkan Koroglu was not present.

ASUW Bothell President: Ms. Tanya Kumar was not present.

Alumni Association President: Mr. Clyde Walker

UWAA continues to focus on the priority of mobilizing, energizing, educating, and informing alumni and friends of the UW in service to the university.

Ahead of the Legislative session, last week UW Impact hosted a legislative preview, “The World of Higher Education in a Changing Economy.” Panelists included Rob McKenna, Maud Daudon, and Cyrus Habib.

UWAA an UW Impact are involved in the Washington Competes effort.

Mr. Walker reported on an upcoming event in Olympia on January 24, where representatives from Washington’s six baccalaureate institutions will gather with the Council of Presidents and elected officials to positively reaffirm shared values.

UWAA’s Columns Magazine was recently recognized by the CASE Foundation (Council for the Advancement and Support of Education) for awards in District VIII, which consists of 152 members across western Canada and the Pacific Northwest. Columns received a gold medal in the overall magazine category. Staff writer Julie Garner received two gold medals for feature writing for her articles on the UW transgender community and Harborview’s program providing palliative care to the homeless. Columns also received a silver medal for photography.

Mr. Walker highlighted the annual history lecture series, one of the most popular lifelong learning programs presented in partnership with the History Department. This year the lectures will focus on revolutions.

UWAA is working with UW administration to award the Alumnus Summa Laude Dignatus (ASLD), the highest award presented to a graduate.

Mr. Walker commented on the outstanding football season. He traveled to Atlanta to attend the Peach Bowl playoff game and said he personally enjoyed interacting with former student athletes. This season, UWAA hosted Warm-Ups at four away-game events. The event in Tucson was attended by 400 fans, and there were close to 600 at Cal. At the Pac-12 championship in Santa Clara, 1000 attended the Warm-Up, and over 3700 BOARD OF REGENTS 12 January 12, 2017 attended before the Peach Bowl in Atlanta. In addition, more than 800 alumni attended football viewing parties around the globe this past season.

President Cauce added the UW Marketing Team won four gold CASE awards.

DATE FOR NEXT MEETING

Regent Shanahan officially declared the meeting a success and reflected on the good work accomplished at the meeting.

The regular meeting scheduled on Wednesday, February 8, 2017, is canceled. The next regular meeting of the Board of Regents will be held on Thursday, February 9, 2017, on the UW Seattle campus.

EXECUTIVE SESSION

Following a three-minute break, Regent Shanahan announced the Board would hold an executive session to review the performance of public employees.

ADJOURNMENT

The regular meeting was adjourned at 2:32 p.m.

______Joan Goldblatt Secretary of the Board of Regents

Approved at the meeting of the Board on February 9, 2017. A–1 STANDING COMMITTEES

Academic and Student Affairs Committee

Academic and Administrative Appointments

RECOMMENDED ACTION

It is the recommendation of the administration and the Academic and Student Affairs Committee that the Board of Regents approve the appointments to the University faculty and administration as presented on the attached list.

Attachment Academic and Administrative Appointments

A–1/201-17 1/12/17

ADMINISTRATIVE APPOINTMENTS

College of Engineering Department of Computer Science and Engineering Grossman, Daniel Joseph Acting Chair, Computer Science and Engineering, effective 12/12/2016 Continuing Appointment: • Professor, Computer Science and Engineering Degrees: • PhD, 2003, Cornell University • MS, 2001, Cornell University • BA, 1997, Rice University • Bachelor Of Electrical Engeneering, 1997, Rice University

School of Public Health Fitzpatrick, Annette Lucille Associate Dean, Public Health , effective 11/1/2016 Continuing Appointments: • Research Professor, Family Medicine • Research Professor, Epidemiology • Research Professor, Global Health • Adjunct Research Professor, Global Health Degrees: • PhD, 1999, University of Washington • MA, 1981, Southern Illinois University • BS, 1975, Loyola University (Chicago)

ENDOWED APPOINTMENTS

College of Arts and Sciences School of Art, Art History, and Design Lingo, Estelle C. Donald E. Petersen Endowed Professorship, effective 9/16/2016 Continuing Appointments: • Associate Professor, Art, Art History, and Design • Adjunct Associate Professor, French and Italian Studies Degrees: • PhD, 1999, Brown University • MA, 1993, Brown University • BA, 1990, Wellesley College

A–1.1/201-17 ATTACHMENT Page 1 of 10 1/12/17 School of Medicine Department of Medicine Glenny, Robb William Endowed Chair In Pulmonary Disease Research, effective 11/1/2016 Continuing Appointments: • Professor, Medicine • Professor, Physiology and Biophysics Degrees: • MD, 1984, University of Virginia • MA, 1980, Duke University • Bachelor of Science Engineering, 1979, Duke University

Department of Psychiatry and Behavioral Sciences Ratzliff, Anna Kristina Marguerite de Haas Depression Therapy Research Endowed Professorship, effective 12/1/2016 Continuing Appointment: • Associate Professor without Tenure, Psychiatry and Behavioral Sciences Degrees: • MD, 2005, University of California (Irvine) • PhD, 2003, University of California (Irvine) • BS, 1994, Stanford University

School of Nursing Department of Biobehavioral Nursing and Health Systems Dougherty, Cynthia Marie Charles & Gerda Spence Endowed Professorship In Nursing, effective 9/16/2016 Continuing Appointments: • Professor, Biobehavioral Nursing and Health Systems • Adjunct Professor, Medicine Degrees: • PhD, 1990, University of Washington • MA, 1983, University of Iowa • BSN, 1979, University of Nebraska (campus unspecified)

Thompson, Hilaire J. Joanne Montgomery Endowed Professorship in Nursing, effective 9/16/2016 Continuing Appointment: • Professor, Biobehavioral Nursing and Health Systems Degrees: • PhD, 2003, University of Pennsylvania • MS, 1996, Virginia Commonwealth University • BSN, 1992, Catholic University of America • BS, 1991, University of Mary Washington

A–1.1/201-17 Page 2 of 10 1/12/17 Department of Psychosocial and Community Health Bekemeier, Elizabeth Ruth Ellery and Kirby Kramer Endowed Professorship in Nursing, effective 9/16/2016 Continuing Appointments: • Associate Professor, Psychosocial and Community Health • Adjunct Associate Professor, Health Services Degrees: • PhD, 2007, University of Washington • MPH, 1994, Johns Hopkins University • MSN, 1994, Johns Hopkins University • BSN, 1984, Pacific Lutheran University

NEW APPOINTMENTS

College of Built Environments Department of Architecture King, Donald Irvin Visiting Professor, Architecture, effective 12/16/2016 Degrees: • Master Of Architecture, 1978, University of California-Los Angeles • BFA, 1975, Wayne State University

College of Arts and Sciences Department of Mathematics Alper, Jarod Daniel Associate Professor, Mathematics, effective 12/16/2016 Degrees: • PhD, 2008, Stanford University • Scientiae Baccalaureus (ScB), 2002, Brown University

Department of Sociology Frost, Ann Christine Lecturer, Full-time, Sociology, effective 9/16/2016 Prior UW Appointment: Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • PhD, 2014, University of Washington • MA, 2009, University of Washington • JD, 2000, University of Washington • BA, 1997, University of Denver

A–1.1/201-17 Page 3 of 10 1/12/17 Department of Speech and Hearing Sciences Caldwell, Megan Alexis Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 2006, University of Washington • BS, 2004, University of Washington

Daniels, Jacqueline Leigh Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Degrees: • MA, 2005, University of Kansas • BA, 2003, University of Iowa

Jacobsen, Karen Melissa Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 1994, University of Wisconsin (Madison) • BS, 1989, Portland State University

Kapsner-Smith, Mara Rosann Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 2009, University of Washington • BA, 2002, University of Minnesota

Leighton, Kelsey Anne Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 2004, University of Washington • BA, 2001, Western Washington University

Leonardo, Julie Dalessio Senior Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 2002, University of Washington-Seattle Campus • BA, 1992, University of Massachusetts

A–1.1/201-17 Page 4 of 10 1/12/17 Nehilla, Lauren Braun Lecturer, Full-time, Speech and Hearing Sciences, effective 12/16/2016 Prior UW Appointment: Clinical Instructor, Salaried, Speech and Hearing Sciences Degrees: • MS, 2006, Emerson College • BA, 2001, University of Rochester

Law, Societies, and Justice Program Frost, Ann Christine Lecturer, Full-time, Law, Societies, and Justice, effective 9/16/2016 Prior UW Appointment: Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • PhD, 2014, University of Washington • MA, 2009, University of Washington • JD, 2000, University of Washington • BA, 1997, University of Denver

School of Art, Art History, and Design Smith, Michael P. Senior Lecturer, Full-time, Art, Art History, and Design, effective 12/1/2016 Prior UW Appointment: Lecturer Part-Time, Art, Art History, and Design Degrees: • Master Of Library And Information Science, 2006, University of Washington • BA, 2001, University of Washington

Michael G. Foster School of Business Department of Management and Organization Zuzul, Tiona Assistant Professor, Management and Organization, effective 7/16/2017 Degrees: • DBA, 2014, Harvard University • MS, 2006, London School of Economics and Political Science • BA, 2005, Harvard University

College of Education Rosenberg, Nancy E. Senior Lecturer, Full-time, Education, effective 6/16/2016 Prior UW Appointment: Teaching Associate, Education Degrees: • BS, 1987, Stanford University • MS, 1987, Stanford University

A–1.1/201-17 Page 5 of 10 1/12/17 Spaulding, Scott Senior Lecturer, Full-time, Education, effective 7/1/2016 Prior UW Appointment: Teaching Associate, Education Degrees: • PhD, 2001, West Virginia University • MA, 1997, West Virginia University • BA, 1989, University of Tennessee

College of Engineering Department of Bioengineering Berndt, Andre Assistant Professor, Bioengineering, effective 1/3/2017 Prior UW Appointment: Visiting Scientist, Bioengineering Degrees: • PhD, 2011, Humboldt University (Germany) • MS, 2007, Humboldt University (Germany) • BS, 2003, Humboldt University (Germany)

Department of Civil and Environmental Engineering Kumar, Nirnimesh Assistant Professor, Civil and Environmental Engineering, effective 9/1/2016 Degrees: • PhD, 2013, University of South Carolina-Columbia • MS, 2010, University of South Carolina-Columbia • BTech, 2007, Indian Institute of Technology Kharagpur

Department of Computer Science and Engineering Lee, Yin Tat Assistant Professor, Computer Science and Engineering, effective 9/1/2017 Degrees: • PhD, 2016, Massachusetts Institute of Technology • BS, 2012, Chinese University of Hong Kong Tung Wah Group of Hospitals Community College

Taylor, Michael Bradford Associate Professor, Computer Science and Engineering, effective 4/1/2017 Degrees: • PhD, 2007, Massachusetts Institute of Technology • SM, 1999, Massachusetts Institute of Technology • AB, 1996, Dartmouth College

A–1.1/201-17 Page 6 of 10 1/12/17 Department of Electrical Engineering Taylor, Michael Bradford Associate Professor, Electrical Engineering, effective 4/1/2017 Degrees: • PhD, 2007, Massachusetts Institute of Technology • SM, 1999, Massachusetts Institute of Technology • AB, 1996, Dartmouth College

Department of Mechanical Engineering Cobb, Corie Lynn Associate Professor Tenure Track, Mechanical Engineering, effective 3/16/2017 Degrees: • PhD, 2008, University of California-Berkeley • Master Of Mechanical Engineering, 2004, Stanford University • BSME, 2002, Stanford University

College of the Environment School of Environmental and Forest Sciences Bratman, Gregory Nelson Assistant Professor, School of Environmental and Forest Sciences, effective 9/16/2017 Degrees: • PhD, 2016, Stanford University • MEnvSc, 2008, University of California-Santa Barbara • BA, 1997, Princeton University

Harvey, Brian James Assistant Professor, School of Environmental and Forest Sciences, effective 3/16/2017 Prior UW Appointment: Affiliate Assistant Professor, School of Environmental and Forest Sciences Degrees: • PhD, 2015, University of Wisconsin-Madison • MA, 2010, San Francisco State University • BA, 2003, University of California-Santa Barbara

Park, Donghee Visiting Associate Professor, School of Environmental and Forest Sciences, effective 2/1/2017 Degrees: • PhD, 2005, Pohang University of Science & Technology • MS, 2002, Pohang University of Science & Technology • BS, 2000, Pohang University of Science & Technology

A–1.1/201-17 Page 7 of 10 1/12/17 School of Oceanography Bundy, Randelle M. Assistant Professor, Oceanography, effective 6/1/2017 Degrees: • PhD, 2014, University of California-San Diego • MS, 2010, University of California-San Diego • BS, 2008, University of California-San Diego

Gray, Alison Rogers Assistant Professor, Oceanography, effective 7/1/2017 Degrees: • PhD, 2014, University of Washington-Seattle Campus • MS, 2010, University of Washington-Seattle Campus • MS, 2009, University of Washington-Seattle Campus • BA, 2002, Rice University • BS, 2002, Rice University

Nuwer, Mikelle Senior Lecturer, Full-time, Oceanography, effective 12/1/2016 Prior UW Appointment: Lecturer Full-Time, Oceanography Degrees: • PhD, 2008, University of Washington • MS, 2004, University of Washington • BS, 1999, University of Washington

School of Medicine Department of Family Medicine Symington, Susan Lynn Associate Professor without Tenure, Family Medicine, effective 1/1/2017 Prior UW Appointment: Senior Lecturer, Full-time, Family Medicine Degrees: • MPAS (Master of Physician Assistant Studies), 1999, University of Nebraska (Omaha) • BS, 1992, Western Michigan University • BA, 1990, Spring Arbor University

Department of Medicine Acharya, Utkarsh Assistant Professor without Tenure, Medicine, effective 11/1/2016 Degrees: • Doctor of Osteopathic Medicine, 2009, Ohio University-Main Campus • BS, 2004, Wilmington College

A–1.1/201-17 Page 8 of 10 1/12/17 Stolla, Moritz Assistant Professor without Tenure, Medicine, effective 12/1/2016 Degrees: • PhD, 2008, Technische Universität München • MD, 2006, Ludwig Maximilians Universität München

Department of Orthopaedics and Sports Medicine Hebert-Davies, Jonah Assistant Professor without Tenure, Orthopaedics and Sports Medicine, effective 12/1/2016 Degree: • MD, 2008, University of Montreal (Canada)

Department of Pediatrics Dipple, Katrina Mae Professor without Tenure, Pediatrics, effective 12/1/2016 Degrees: • MD, 1995, Indiana University-Purdue University-Indianapolis • PhD, 1995, Indiana University-Purdue University-Indianapolis • BS, 1987, Indiana University-Bloomington

Menon, Shina Assistant Professor without Tenure, Pediatrics, effective 1/11/2017 Degree: • Bachelor of Medicine, Bachelor of Surgery (MB BS), 2002, Maulana Azad National Institute of Technology

School of Pharmacy Department of Pharmacy Haliski, Melissa Barker Research Assistant Professor, Pharmacy, effective 11/16/2016 Degrees: • PhD, 2013, University of Utah • BA, 2006, University of Oregon

School of Social Work Kanuha, Valli Kaleiokealohamaikalani Senior Lecturer, Full-time, Social Work, effective 1/3/2017 Degrees: • PhD, 1997, University of Washington-Seattle Campus • Master Of Social Work, 1975, University of Minnesota-Twin Cities • BA, 1973, University of Wisconsin Colleges

A–1.1/201-17 Page 9 of 10 1/12/17 Vesneski, William M. Lecturer, Full-time, Social Work, effective 9/16/2016 Prior UW Appointment: Lecturer Part-Time, Social Work Degrees: • PhD, 2012, University of Washington • Master Of Social Work, 1998, University of Washington • JD, 1991, Seattle University • BS, 1987, St. Martin's College

A–1.1/201-17 Page 10 of 10 1/12/17 A–2 STANDING COMMITTEES

Academic and Student Affairs Committee

Establishing the Graduate Certificate in Electrical Engineering Foundations (School of Science, Technology, Engineering & Mathematics, Division of Engineering & Mathematics, UW Bothell)

RECOMMENDED ACTION

It is the recommendation of the administration and the Academic and Student Affairs Committee that the Board of Regents grant authority to the Graduate Faculty of the UW Bothell School of Science, Technology, Engineering & Mathematics (STEM), Division of Engineering & Mathematics, to offer the Graduate Certificate in Electrical Engineering Foundations, effective Autumn Quarter 2017. This will be a fee-based program offered in coordination with UW Professional & Continuing Education. The graduate certificate program will have provisional status with a review to be scheduled for the 2022-2023 academic year. At such time that continuing status is granted, a ten-year review cycle would begin.

BACKGROUND

In November 2015, the Graduate School received notification of intent to plan the Graduate Certificate in Electrical Engineering Foundations from the School of Science, Technology, Engineering & Mathematics (STEM), Division of Engineering & Mathematics. After tri-campus stakeholder comment, the faculty developed a full proposal that was reviewed and approved by the Graduate Faculty of the Division of Engineering & Mathematics. On October 18, 2016, the UW Bothell General Faculty Organization Executive Council endorsed the Graduate Certificate in Electrical Engineering Foundations and recommended it be forwarded to the Graduate School for approval. The final proposal was submitted to the Graduate School in November 2016.

The curriculum of the graduate certificate is designed to cover critical knowledge from an ABET-approved Bachelor of Science in Electrical Engineering core curriculum, yet at a pace and intensity that is reflective of, and appropriate for, a graduate-level education. It is expected that applicants to the graduate certificate will bring with them a set of core technical skills that will enable them to be successful in an electrical engineering graduate program.

The graduate certificate is intended primarily as a mechanism for graduate non- matriculated students with degrees outside electrical engineering, such as other engineering degrees, mathematics, chemistry, or physics, to prepare for success in

A–2/201-17 1/12/17 STANDING COMMITTEES

Academic and Student Affairs Committee

an electrical engineering graduate degree program at UW Bothell or another institution.

The certificate will be offered as a self-sustaining program in collaboration with UW Professional & Continuing Education.

The Dean of the School of Science, Technology, Engineering & Mathematics, the Vice Provost and Dean of the Graduate School, and the Provost have reviewed and approved the recommendation to approve the Graduate Certificate in Electrical Engineering Foundations.

Attachment New Graduate Certificate Proposal – UW Bothell

A–2/201-17 1/12/17 New Graduate Certificate Proposal –UW Bothell

IDEA STAGE DRAFT PNOI PNOI COMMENT PERIOD •Follows Graduate School PNOI guidelines Conversations with: •OAAP sends out for 14 •Faculty lead engages UWB Curriculum Director (CD) day stakeholder • Faculty/Deans/Chancellors and Office of Academic Affairs and Planning (OAAP) comment period (all •PCE (fee based programs) in the Graduate School during PNOI development three campuses) •Office of Planning & •CD and OAAP review PNOI for completeness, •Includes UW Libraries, Planning Budgeting & Provost Office confirmed by DGS Registrar’s Office, GEMS •UWB Director of Graduate •GFO (EC) reviews/approves •Includes UWB main & Studies (DGS) •Council of Academic Deans notified; Dean and VCAA administrative units •Other stakeholders across sign impacted (e.g. IT, IP & B, the three campuses. •CD submits signed PNOI to OAAP. Enrollment).

Affairs FULL PROPOSAL DEVELOPMENT AC & GFO REVIEW •Follows Graduate School proposal guidelines •AC & GFO (EC) review proposal, including •Addresses stakeholder feedback final MOA (multiple iterations possible) Chancellor’s •Includes tuition tier (state‐funded programs) or •AC makes recommendation to VCAA & Office draft of MOA (fee based programs) and/or other Chancellor who informs Graduate School endorses applicable agreements Dean; includes OAAP and DGS on all proposal correspondence •CD reviews for completeness, confirmed by development, DGS •VCAA signs proposal and CD submits to notifying DGS Academic OAAP •Submit preliminary draft to OAAP; unit receives and OAAP. & incorporates feedback •Graduate School Dean authorizes sending

of •School/unit review and approval; Dean and proposal to Board of Regents. VCAA Sign; CD submits final proposal to OAAP. Office BOARD OF REGENTS CREATE CODE PROGRAM LAUNCH •Certificate approval OAAP directs Registrar to Certificate program 5 year •Provost confirms Regents’ approval. create new program code. review cycle begins.

A–2.1/201-17 ATTACHMENT Page 1 of 1 1/12/17 A–3 STANDING COMMITTEES

Academic and Student Affairs Committee

Establishing the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment (Department of Psychology)

RECOMMENDED ACTION:

It is the recommendation of the administration and the Academic and Student Affairs Committee that the Board of Regents grant authority to the Department of Psychology to offer the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment, effective Autumn Quarter 2017. This degree program will be fee-based. The graduate degree program will have provisional status with a review to be scheduled in the 2020-2021 academic year. At such time that continuing status is granted, a ten-year review cycle would begin.

BACKGROUND

In November 2015, the Graduate School received notification of intent from the Department of Psychology to plan the Master of Arts in Child Clinical Psychology. After tri-campus stakeholder review and comment, the faculty developed a full proposal which was submitted to the Graduate School on May 17, 2016. The proposal was reviewed by two external faculty who are from the Department of Educational and Counseling Psychology and Special Education, University of British Columbia, and the College of Education, University of Oregon. Both reviewers recommended that the graduate degree program be moved forward for approval. Based upon the external faculty review, the degree title was changed to Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment. On October 6, 2016, the Graduate School Council considered the proposal. The Council recommended that revisions be made to strengthen the proposal. On November 17, 2016, the Council considered the revised proposal and recommended to the Graduate School Vice Provost and Dean that the proposal be forwarded to the Board of Regents for final approval.

The Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment is a fee-based, 36-credit graduate degree program, with an initial cohort enrollment of 24 FTE. The program’s targeted population will be individuals who have completed an undergraduate degree in a social science, science or health science discipline, have experience working with children and previous course work in child development. The one-year Master’s program will allow individuals to enhance their experience and marketability in their careers or

A–3/201-17 1/12/17 STANDING COMMITTEES

Academic and Student Affairs Committee

Establishing the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment (Department of Psychology) (continued p. 2)

to continue with further graduate work. The program’s practicum component will also serve individuals who seek professional licensing. The program will provide an alternative option for students who do not wish to pursue a doctorate but will acquire the knowledge and expertise to practice in clinical/educational settings.

The program will be distinguished by its unique emphasis on "Child" psychology and its strong focus on Evidence‐Based Treatment. It will provide students with a background in biological, interpersonal and contextual processes that contribute to child psychopathology. They will be trained in evidence-based treatments for use with children and families, and will participate in clinical practicum placements to develop clinical skills while completing other program requirements. Program graduates will be prepared for a career in clinical prevention and intervention services to children in schools, community organizations, and health care facilities. The degree program will complement other professional fields as law, social work, nursing, medicine and education.

A market viability research was conducted which indicated that employer demand for child clinical psychology professionals increased 57.2 percent regionally and 40.1 percent nationally. National trends in the child and adolescent mental health field reflect an increased demand for reliable, cost-effective and evidence-based therapeutic interventions. Also, there is an increased interest in social-emotional development and its implications for long-term student adjustment and improved academic performance. The Washington State Legislature introduced recent bills for implementation of a social-emotional learning curriculum to teach student skills to manage life stresses. Trained child psychology professionals will be required to provide support to teachers in curriculum implementation and assessment of its effectiveness.

The Dean of the College of Arts and Sciences, the Vice Provost and Dean of the Graduate School, and the Provost have reviewed and approved the recommendation that the Board of Regents approve the Master of Arts in Applied Child and Adolescent Psychology: Prevention and Treatment degree program.

Attachment New Graduate Degree Proposal – UW Seattle

A–3/201-17 1/12/17 New Graduate Degree Proposal – UW Seattle

IDEA STAGE PLANNING NOTICE OF INTENT Conversations with: (PNOI) PNOI COMMENT PERIOD • Faculty/Deans/Chancellors; •Faculty lead contacts the Office of •10 day stakeholder comment •PCE (fee based programs); Academic Affairs and Planning period (all three campuses); •Office of Planning & Budgeting & (OAAP) in the Graduate School for • includes UW Libraries, Registrar’s Provost office; proposal guidelines; Office and GEMS. •Other stakeholders. •Submit PNOI to OAAP.

EXTERNAL REVIEW FULL PROPOSAL DEVELOPMENT •Unit submits revised proposal to •Addresses stakeholders feedback; GRADUATE SCHOOL OAAP; •Includes tuition tier (state-funded programs) •OAAP sends proposal to or draft of MOA (fee based programs); . Graduate School Dean authorizes external reviewers; •Unit contacts Student Financial Aid; •Unit responds to reviewers’ •Submit preliminary draft to OAAP for review proposal development comments. and comment.

GRADUATE SCHOOL COUNCIL PROGRAM LAUNCH •Council considers proposal BOARD OF REGENTS CREATE CODE • Unit works with including final MOA; • Degree approval; Graduate Enrollment OAAP directs •After presentation, unit • Provost confirms Management Services to incorporates feedback, if needed; Registrar to create create academic profile; Regents’ new program code. •Graduate Dean authorizes sending approval. •Degree Program 5 year Office of Academic Affairs Affairs & Planning Academic Office of proposal to Board of Regents. review cycle begins.

A–3.1/201-17 ATTACHMENT 1/12/17 Page 1 of 1 A–4 STANDING COMMITTEES

Academic and Student Affairs Committee

INFORMATION

For information only.

BACKGROUND

Graduate and Professional Student Enrollment Update

This update is a partner to the new undergraduate enrollment update provided to the Regents in November 2016, with a focus on the Graduate School, School of Law and School of Medicine, School of Dentistry, and School of Pharmacy.

The attachment provides overviews and key takeaways on application and enrollment trends for the past five years.

Additional data and information on Graduate School enrollment can be found on the Graduate School’s website.

Graduate and Professional Student “West Waiver” Program Updates

In January 2016, the Board approved an extension and modifications to the Graduate and Professional Student waiver program (known as the “West Waiver” program). The overall goal of the program is to increase class enrollment, quality, and/or diversity by recruiting highly qualified graduate and professional students, with an emphasis on applicants from disadvantaged backgrounds.

The School of Law and the School of Medicine are currently utilizing this program. An update will be provided in coordination with the enrollment update. Detailed reports are included in the attachments.

Attachments 1. Graduate and Professional Student Application & Enrollment Trends 2012-2016 2. 2016 Impact Report on Non-Resident Waiver Program, School of Law 3. West Waiver Report – Students entering in August, 2016, School of Medicine

A–4/201-17 1/12/17 Graduate and Professional Student Application & Enrollment Trends 2012-2016

A–4.1/201-17 ATTACHMENT 1 Page 1 of 33 1/12/17 UW Graduate School Applications by Residency

A–4.1/201-17 Page 2 of 33 1/12/17 UW Graduate School Enrollment by Residency

A–4.1/201-17 Page 3 of 33 1/12/17 UW Graduate School Applicant Student Profile – Ethnicity*

A–4.1/201-17 Page 4 of 33 1/12/17 UW Graduate School Enrolled Student Profile – Ethnicity*

A–4.1/201-17 Page 5 of 33 1/12/17 UW Graduate School Master’s Applications by Program Type

A–4.1/201-17 Page 6 of 33 1/12/17 UW Graduate School Doctoral Applications by Program Type

A–4.1/201-17 Page 7 of 33 1/12/17 UW Graduate School Master’s Enrollment by Program Type

A–4.1/201-17 Page 8 of 33 1/12/17 UW Graduate School Doctoral Enrollment by Program Type

A–4.1/201-17 Page 9 of 33 1/12/17 UW Graduate School Observations & Highlights

> Residency ⦁ 32,599 applications this year, up 25% from 2012 ⦁ 42% applications from international students, up by 30% from 2012 (37%) ⦁ New enrollment of international students grew by 33% in the past five years, and account for 22% of 2016 new enrollment. ⦁ The proportion of international students continues to grow as a proportion of all graduate students, 21%. ⦁ 45% of 2016 new enrollment was from Washington residents. ⦁ Domestic WA residents comprise 47% of the current graduate student body. > Degree and Program Types ⦁ Graduate student enrollment continues to rise, driven by Master’s and practice doctoral enrollment. Total enrollment is 13,590 and rose by 2.4% from Autumn 2015. ⦁ Enrollment in research doctoral programs continues to decline, despite an increase in applications, while enrollment in all other degree types (Masters, Education Specialist and Practice Doctoral) continues to rise. ⦁ Master’s currently accounts for 64% of total enrollment while research doctoral enrollment accounts for 32% of total enrollment. ⦁ Nearly 81% of the new enrollment growth was in Master’s programs, and over half of that new Master’s degree enrollment (53%) was in fee-based programs. ⦁ Total enrollment in Master’s fee-based programs has consistently risen for the past 10 years, and for the third straight year, accounts for more than half of all Master’s enrollments.

A–4.1/201-17 Page 10 of 33 1/12/17 UW Graduate School Observations & Highlights

> Underrepresented Minority Students ⦁ URM applications in STEM fields grew by 68%, from 9% in 2012 to 12% of all STEM applications among domestic students in 2016 ⦁ The number of URM applications in non-STEM fields grew by 34%, from 13% in 2012 to 16% of all non- STEM applications among domestic students in 2016 ⦁ The total number of URM applications grew by 45%, from 11% of domestic applications in 2012 to 15% in 2016. ⦁ New URM grad enrollment increased by 40% over the past five years, from 13% of total in 2012 to 16% in 2016. ⦁ The proportion of URM students continues to grow and constitutes 15% of current enrollment among domestic graduate students. ⦁ ‘Selectivity’ (applicants to offers) for URM applicants was o 50% and 55% for Master’s students in 2012 and 2016, respectively o 20% and 18% for Ph.D. students in 2012 and 2016, respectively ⦁ ‘Yield’ (offers to admissions) for URM applicants was o 62% for Master’s students in 2012 and remains unchanged in2016 o 41% and 32% for Ph.D. students in 2012 and 2016, respectively ⦁ Note: The URM/non-URM breakdown excludes international students and is computed using only domestic US residents.

A–4.1/201-17 Page 11 of 33 1/12/17 UW School of Law Applications by Residency

A–4.1/201-17 Page 12 of 33 1/12/17 UW School of Law Enrollment by Residency

A–4.1/201-17 Page 13 of 33 1/12/17 UW School of Law Applicant Student Profile – Ethnicity*

A–4.1/201-17 Page 14 of 33 1/12/17 UW School of Law Enrolled Student Profile – Ethnicity*

A–4.1/201-17 Page 15 of 33 1/12/17 UW School of Law Observations & Highlights

> Legal Education continues to adapt and acclimate to changing applicant behavior and UW Law is no exception. ⦁ The national applicant pool has decreased 19.7% since 2012, from 67,900 applicants to 54,500 in 2015 (2016 data is not yet available). ⦁ The Pacific Northwest has seen one of the largest declines in applications, down 23.3% between 2012 and 2015 and as a result, applicants from Washington state have dropped 26.9% since 2012, from 1,250 applicants to 914 in 2015. ⦁ International applicants grew by 14.7% from 5 years ago and we increased the number of enrolled international students by 25%. > Despite decreases in the applicant pool, UW Law continues to enroll an outstanding student body. ⦁ We increased our median UGPA to 3.68 from 3.65 the year prior. ⦁ Since 2008, we have maintained a median LSAT of 163-164 (~90th percentile). ⦁ Our selectivity remains highly competitive averaging 25.6% over the last 5 years.

A–4.1/201-17 Page 16 of 33 1/12/17 UW School of Law Observations & Highlights

> UW Law has adopted an ambitious Strategic Plan for Diversity, Inclusion, Equity, and Multiculturalism that commits us to continuing progress in the recruitment, admission and retention of students from underrepresented backgrounds. ⦁ Over the last 5 years, 26.7% of our incoming students are from underrepresented backgrounds. We increased that percentage this year to 26.9%. ⦁ Over 57% of the 2016 incoming class are women. ⦁ 26 is the average age of our incoming students and 14.1% of the class are 30 years or older.

A–4.1/201-17 Page 17 of 33 1/12/17 UW School of Medicine Applications by Residency

WAMI: Residents of Wyoming, Alaska, Montana, and Idaho Non-WWAMI: Residents from outside of Washington, Wyoming, Alaska, Montana and Idaho International students are not considered for admission

A–4.1/201-17 Page 18 of 33 1/12/17 UW School of Medicine Enrollment by Residency

WAMI: Residents of Wyoming, Alaska, Montana, and Idaho Non-WWAMI: Residents from outside of Washington, Wyoming, Alaska, Montana and Idaho International students are not considered for admission

A–4.1/201-17 Page 19 of 33 1/12/17 UW School of Medicine Applicant Student Profile – Ethnicity*

A–4.1/201-17 Page 20 of 33 1/12/17 UW School of Medicine Enrolled Student Profile – Ethnicity*

A–4.1/201-17 Page 21 of 33 1/12/17 UW School of Medicine Observations & Highlights

> UWSOM partners with the states of Washington, Wyoming, Alaska, Montana and Idaho (WWAMI) to train physicians to serve the region. ⦁ Non-WWAMI residents are admitted to the MD program if they are a mission fit with the medical school (demonstrated commitment to serving vulnerable populations or distance traveled). > New legislative funding allowed for the expansion of the 2016 entering class by 25 seats for a total class size of 270. ⦁ 20 out of the 25 additional seats are for Washington residents. > Matriculants that list Black or African American as one or more of their races increased by 150% since 2015. > Increased matriculation in targeted applicant pools from 2015: ⦁ Disadvantaged Applicants: + 49% ⦁ Rural Applicants: + 104% > New flexibility of the tuition waivers allowed for better retention of accepted regional underrepresented minorities. ⦁ Change since 2015: + 43% ⦁ Change since 2012: + 109%

A–4.1/201-17 Page 22 of 33 1/12/17 UW School of Medicine Observations & Highlights

> Five of the 12 tuition waiver recipients were the first in their families to go to college. ⦁ Six began working as teenagers to help support their families. ⦁ Four have authored scientific publications and three have created health-related organizations. ⦁ Two have MPH degrees. ⦁ All waiver recipients have done medically-related service work overseas including in Mexico, Central and South America, Africa, and Asia.

A–4.1/201-17 Page 23 of 33 1/12/17 UW SCHOOL OF DENTISTRY DDS PROGRAM ENROLLMENT, 2012-2016

70 60 6 UW School of Dentistry 7 13 9 7 2016 Enrollment 50 WA Residents: 88% 40 Nonresidents: 12% International: 0% 30 58 56 50 53 56 20 10 0 2012 2013 2014 2015 2016 WA Residents US Nonresidents International

SEATTLE

A–4.1/201-17 Page 24 of 33 1/12/17 UW SCHOOL OF DENTISTRY, 2012-2016 RACE CHARACTERISTICS OF ENROLLED STUDENTS DDS Enrollments 2012‐2016

2012 2013 2014 2015 2016

American Indian/Alaskan 10000 Asian 16 19 16 21 26 Black 00010 Native Hawaiian 00000 White 40 38 39 36 32 Two or more races 25323 Hispanic 42522 Int'l 00000 Unknown/Not Indicated 00000 TOTAL 63 64 63 62 63

SEATTLE

A–4.1/201-17 Page 25 of 33 1/12/17 UW SCHOOL OF DENTISTRY DDS PROGRAM APPLICANTS, 2012-2016

1600 1400 104 1200 14 1000 0 19 14 800 1051 600 804 773 804 887 400 200 218 254 254 204 195 0 2012 2013 2014 2015 2016 WA Residents US Nonresidents International

SEATTLE

A–4.1/201-17 Page 26 of 33 1/12/17 UW SCHOOL OF DENTISTRY, 2012-2016 RACE CHARACTERISTICS OF APPLICANTS TO THE DDS PROGRAM

DDS Application 2012-2016 2012 2013 2014 2015 2016 American Indian/Alaskan 12 3 9 8 3 Asian America 406 347 343 347 387 Black 25 19 23 13 22 Native Hawaiian 6 1 3 4 2 White 605 509 509 485 503 Two or more races 88 98 41 49 47 Hispanic 77 32 69 82 79 Int'l 104 0 19 14 14 Unknown/Not Indicated 50 49 30 20 39 Total 1373 1058 1046 1022 1096

SEATTLE

A–4.1/201-17 Page 27 of 33 1/12/17 GENERAL OBSERVATIONS AND TRENDS

• The School of Dentistry has a separate program for foreign‐trained dentists called the International DDS (IDDS) program. That program admits five to eight students per year to the second‐year dental school class. The application process and review for that program is separate from the regular DDS program. (International studentse ar admitted to the regular DDS program only if they qualify for Washington state residency by House Bill 1079 criteria.)

• The vast majority of DDS students are Washington residents. Washington state residents have priority in the DDS admissions process, followed by residents of states supporting the WICHE Professional Student Exchange Programr fo Dentistry (AK AZ HI MT NM ND WY).

• In 2015‐2016, five URM students declined offers of admission to the DDS program, and only two matriculated. Although the School of Dentistry has some well‐established pipeline programs for minority students, we lose applicants to other institutions due to the high cost of our tuition and limited scholarship dollars.

SEATTLE

A–4.1/201-17 Page 28 of 33 1/12/17 UW SCHOOL OF PHARMACY PHARM.D. PROGRAM ADMISSIONS, 2012-2016

UW School of Pharmacy UW School of Pharmacy Pharm.D. Admissions: 2012-2016106 2016 Admissions 99 96 90 92 WA Residents: 71% 6 0 Nonresidents: 24% 3 0 1 25 International: 5% 36 31 30 34

75 63 62 59 58

2012 2013 2014 2015 2016 WA Residents Nonresidents International

SEATTLE

A–4.1/201-17 Page 29 of 33 1/12/17 UW SCHOOL OF PHARMACY, 2012-2016 RACE CHARACTERISTICS OF ADMITTED STUDENTS PharmD Admits 2012-2016 2012 2013 2014 2015 2016 American Indian/Alaskan 1 1 1 0 1 Asian 52 46 45 52 49 Black 1221 4 Native Haw 1100 1 White 3430332631 Two or more races 4 4 3 6 5 Hispanic 2523 3 Int'l 0310 6 Unknown/Not Indicated 4 4 3 4 6 TOTAL 99969092106

SEATTLE

A–4.1/201-17 Page 30 of 33 1/12/17 UW SCHOOL OF PHARMACY PHARM.D. PROGRAM APPLICANTS, 2012-2016

SEATTLE

A–4.1/201-17 Page 31 of 33 1/12/17 UW SCHOOL OF PHARMACY, 2012-2016 RACE CHARACTERISTICS OF APPLICANTS TO THE PHARM.D PROGRAM

PharmD Application 2012-2016 2012 2013 2014 2015 2016 American Indian/Alaskan 4 0 1 1 1 Asian America 219 186 166 217 205 Black 12 15 20 7 15 Native Haw 1 2 1 0 1 White 125 128 118 114 106 Two or more races 10 22 15 18 24 Hispanic 8 5 18 16 12 Int'l 4 14 28 14 24 Unknown/Not Indicated 25 40 23 12 13 Total 408 412 390 399 401

SEATTLE

A–4.1/201-17 Page 32 of 33 1/12/17 GENERAL OBSERVATIONS AND TRENDS

• The number of Schools and Colleges of Pharmacy in the U.S. has increased by 40% in the past 2 decades. • Schools and Colleges of Pharmacy in the U.S. face a decline in applications to the professional degree programs. • No new Schools or Colleges of Pharmacy have opened in Washington state. However, the WSU College of Pharmacy has opened a satellite location in Yakima that is now enrolling approximately 40 students per year. • In spite of these trends, applications to the UW School of Pharmacy professional degree program has remained stable over the past 5 years.

SEATTLE

A–4.1/201-17 Page 33 of 33 1/12/17 To: Dean Kellye Testy From: Mathiew Le Re: 2016 Impact Report on Non-Resident Waiver Program Date: October 24, 2016 Following is the 2016 impact report on the Non-Resident Waiver Program approved by the Board of Regents in January 2016.

A. University of Washington School of Law B. Waiver amount approved: $227,000 C. How well did this help with recruitment? The waivers helped our recruitment efforts, particularly with students from racially/ethnically underrepresented backgrounds. We had a higher yield rate from students from racially/ethnically underrepresented backgrounds than in past years as noted in sections E and F. i. Number of waivers offered: 28 ii. Number accepted: 18 (64.3%) D. How did the waiver program help you with recruitment in terms of academic quality? i. Quantitative Profile of Waiver Class of 2019 Class of 2018 Offers Median LSAT 164 163 164 Median UGPA 3.55 3.68 3.65

ii. Qualitative • The waivers helped the law school maintain its standards for admissions and quality. E. What is the profile of those recruited with these waivers? i. Gender • Number of admission offers that included waivers: 20 females/8 males • Number accepted: 12 females/6 males

A–4.2/201-17 ATTACHMENT 2 Page 1 of 3 1/12/17 1. Overall gender profile for Class of 2019: 89 females/67 males; the waivers were a factor increasing our female enrollment. ii. Race/Ethnicity • Number of waivers offered to racially/ethnically underrepresented students: 13 • Number accepted: 10 (76.9%) 1. The waivers were a major factor in increasing our enrollment of students from racially/ethnically underrepresented backgrounds. Race/Ethnicity # of waivers offered Accepted American Indian or Alaska Native 0 0 Asian 3 2 Black or African American 4 4 Hispanic or Latino 5 3 Native Hawaiian/Other Pacific Islander 0 0 White 11 6 Two or More 1 1 Non-Resident Aliens 0 0 Did Not Indicate 4 2 Total 28 18

F. To what extent did the law school use the waivers to increase diversity? i. The law school used the waivers to attract admitted students with strong academic backgrounds while taking into consideration a multitude of factors including need, educational background, socio-economic status, among other factors within a holistic evaluation. ii. The law school enrolled 42 students from racially/ethnically underrepresented backgrounds for this year’s incoming class. Of these students, 10 received waivers, which is an increase of 3 students from last year. G. Analysis of non-matriculants who received waivers i. The law school continues to survey students who decide not to enroll at UW Law and only 5 students identified themselves in the survey and provided information.

A–4.2/201-17 Page 2 of 3 1/12/17 Here is the information collected from those 5 students who responded to the survey: • Institution enrolled 1. UCLA (2) 2. USC 3. Georgetown 4. Harvard • Why they decided not to enroll at UW Law 1. Ranking 2. Competitive counter scholarship In the sixth consecutive year where law schools nationwide saw a declining applicant pool, the waivers certainly assisted the law school and the admissions office in attracting students who otherwise would have not enrolled at the law school. We are therefore hopeful that we will be able to offer the waivers again next year in what promises to be another competitive year for admissions.

A–4.2/201-17 Page 3 of 3 1/12/17 West Waiver Report – Students entering in August 2016

School of Medicine

12 waivers allocated for MD students

22 offers of admission were made that included the waiver. 12 accepted and enrolled. (We enrolled 4 additional out of region applicants to the MD program, one of whom comes from a disadvantaged background.)

For the school of medicine, the goal of the waiver is to attract enrollment of exceptional applicants who are likely to serve medically underserved populations once they graduate from medical school or who, by virtue of their attributes and life experiences, enhance the diversity of the entering class.

On January 14, 2016 the Board of Regents approved a change in use of the West Waivers which, heretofore, had been authorized only for out-of-region applicants who would receive a waiver for the differential between out-of-region tuition and Washington state tuition thus allowing them to pay in-state tuition for 4 years. Under the new program approved in 2016, Washington state applicants are also eligible for the West Waivers and the waiver would cover three quarters of Washington state tuition for 4 years.

Although all of our accepted students are talented and altruistic, the students from outside the WWAMI region who are offered acceptance are held to a higher standard of service, particularly if they don’t come from a disadvantaged background. Life experiences really tell the tale of how these students are likely to contribute to our goals mentioned above.

Eight of this year’s 12 waiver recipients come from disadvantaged backgrounds (66%) compared with 22 % (56/251) of the rest of the MD class. 10 of 12 are women (83%) compared with 55% of the rest of the MD class. Ethnically and racially, three recipients are multiracial (one: Filipino, Native American, Black, and White. two: African American and White, three: Indonesian, Pacific Islander, and White). Among the other 9 are three additional Black students, (one of whom is African American, one Ethiopian, and one Arab); three Hispanic (one of whom is from Brazil), one Vietnamese, and two White (one of whom is Polish). In the remainder of the 2016 incoming MD class the declared racial/ethnic backgrounds follow:

Black: 5 Native American/Alaska Native: 2 Hispanic: 10 Vietnamese: 6 Japanese: 2 Chinese: 13 Korean: 8 Other Asian: 1 India/Pakistan: 9 Filipino: 1 White: 187 Other: 4 Declined to respond: 3

Tuition revenue: Increasing class size and revenue were not goals of our waivers.

A–4.3/201-17 ATTACHMENT 3 Page 1 of 2 1/12/17

Withdrawals The 10 students to whom we offered the waiver, but who chose to attend another medical school, enrolled at the following schools and 9 gave us reasons for withdrawal from UW School of Medicine: State of Residence and Matriculated Withdrawal reason ethnicity HI (white) UCLA More financial aid CA (Hispanic) UCLA More financial aid CA (Hispanic) UCLA Financial aid CA (Hispanic) UCSF Curriculum and combined MS/MD CA (Hispanic) UCSF Financial aid, close to home CA (Hispanic) UC Davis Financial aid, closer to home CA (African) U Illinois Financial aid, significant other, (Chicago) curriculum CA (African Temple More financial aid American) WI (Native American) U Wisconsin Family, maintain local ties WA (Hispanic) Harvard No reason given

A–4.3/201-17 Page 2 of 2 1/12/17 A–5 STANDING COMMITTEES

Academic and Student Affairs Committee

Diversity Blueprint

INFORMATION

This item is for information only.

BACKGROUND

The University of Washington’s Diversity Blueprint 2017-2021 will be presented to the Board. The University of Washington’s Diversity Blueprint articulates the tri-campus community’s aspirations for becoming a truly inclusive and equitable environment for learning, research, service, and outreach.

The Diversity Blueprint begins with the University of Washington’s Diversity Council, a body composed of faculty, staff, and students from across all academic and administrative units, which is charged with advising the Vice President of Minority Affairs and Diversity and Chief Diversity Officer on campus diversity issues. For the period 2010-2014, the first Diversity Blueprint established six broad goals for the UW:

1) Provide leadership and communicate commitment to diversity; 2) Attract, retain, and graduate a diverse and excellent student body; 3) Provide rich learning experiences and prepare students for global citizenship; 4) Attract and retain a diverse faculty and staff; 5) Encourage and support diversity research; and 6) Create and sustain a welcoming climate for diversity.

Specific metrics and specific targets were developed to assess progress for each goal area. Relevant data were collected in 2013 and 2014 and made available through a Goal Attainment Dashboard prepared by the Office of Educational Assessment (see: http://www.washington.edu/diversity/files/2015/02/Diversity- Blueprint.pdf.)

Although a number of the 2010-2014 Blueprint goals were attained or even exceeded, others require additional attention. There is room for continued improvement in the areas of student, faculty, and staff diversity, for instance, as well as in diversity research, campus climate, and diversity leadership. The President’s Race and Equity Initiative is one example of the University’s renewed response to these areas. The Initiative seeks new ways to support and sustain

A–5/201-17 1/12/17 STANDING COMMITTEES

Academic and Student Affairs Committee

Diversity Blueprint (continued p. 2)

diversity at the UW, centers on creating an inclusive experience for students, faculty, and staff, and directly addresses issues of institutional bias and structural racism. This initiative is one of several the Diversity Council considered while developing a new Diversity Blueprint to guide the UW’s efforts for the period 2017-2021.

To effectively respond to ongoing needs as well as to enhance progress already made, and in order to reflect current concerns of the University community, the Diversity Council has produced a new Diversity Blueprint for 2017-2021 organized around these six goals:

1) Cultivate an inclusive campus climate; 2) Attract, retain, and graduate a diverse and excellent student body; 3) Attract and retain a diverse faculty; 4) Attract and retain a diverse staff; 5) Assess tri-campus diversity needs; and 6) Improve accountability and transparency

The previous Blueprint fostered a number of student-related successes that the new Blueprint endeavors to build upon. For each goal, the Diversity Council has identified a number of strategic priorities and suggested action steps that are essential to progress.

Moving the University of Washington toward fulfilling the goals identified in the 2017-2021 Diversity Blueprint will require the combined efforts of administrative and academic units, as well as faculty, staff, and students, across our three campuses. The Office of Minority Affairs and Diversity, in collaboration with other diversity offices and programs across the UW, will offer assistance to units to formulate plans and identify resources for effective change.

Attachment UW Diversity Blueprint 2017-2021

A–5/201-17 1/12/17 UW Diversity Blueprint 2017-2021

Goal 1: Cultivate an Inclusive Campus Climate

The University must actively work to create and maintain learning, working, and living environments in which students, faculty, and staff from diverse backgrounds feel they can thrive. The climate should be inclusive, equitable, and welcoming on all UW campuses.

Recommended Priorities and Suggested Action Steps

 Create a framework to address the University’s challenges by developing, administering, and assessing an inclusive campus climate survey o Create an inclusive campus climate survey committee to design or commission a survey that is able to identify relevant issues that may be present on campus. o Appoint the appropriate level of leadership to administer a campus-wide climate survey that is distributed to all undergraduate, graduate, and professional students, faculty, and staff. o Publish climate survey results to serve as a reference for prospective and current students, faculty, and staff. o Provide relevant climate survey results to faculty and staff who are responsible for specific initiatives and programs and urge them to modify their programs and initiatives to address shortcomings. o Establish an exit survey for students, faculty, and staff who leave the university to determine whether campus climate contributed to their decision.

 Acknowledge and address student issues regarding equity and social justice o Identify and publicize the work of the UW research centers where issues of equity and social justice are critically examined. o Hold regular, facilitated conversations with students to learn about their experiences with issues of equity, difference, and privilege across the university. Create feasible action items to rectify the most glaring issues. o Create awareness about international student-related issues in the classroom and in other programs across the university. o Create awareness about graduate and professional student-related issues in the classroom and in other programs across the university. o Communicate the procedure that encourages students to report incidences of bias. Ensure that the current procedure minimizes the fear and repercussions that could result as a consequence of reporting. o Generate and publicize a directory of current diversity-driven student groups. Encourage those groups to collaborate to create solutions for diversity-related issues and engage in conversations around race, gender, sexuality, and difference.

 Enhance effectiveness of curriculum and educational programs with regards to diversity and inclusion

A–5.1/201-17 ATTACHMENT Page 1 of 8 1/12/17 o Increase opportunities for faculty members to learn and apply effective pedagogies for teaching diverse student populations by expanding offerings and resources within the Faculty Fellows program, the Center for Teaching and Learning, the Center for Communication, Difference, and Equity. o Provide systemic training to teaching and research assistants on the impact of diversity in the classroom, including climate, course design, pedagogy, assessment, and cultural responsiveness. o Create a diversity question bank that can be added to course evaluations and make it accessible to each department. Establish a searchable database of questions where units can share information. o Assess the impact of the recently implemented student diversity course requirement by including questions about it in the student climate survey.

Goal 2: Attract, Retain, and Graduate a Diverse and Excellent Student Body

The University must continue to actively recruit and support a diverse body of undergraduate, graduate, and professional students. The University must increase its capacity to serve students from historically underrepresented groups; students from low- and modest-income families; students who identify as disabled, LGBTQ+, and veterans; international students; transfer students; and students who are part of recent immigrant populations.

Recommended Priorities and Suggested Action Steps

 Ensure continued progress toward achieving diversity in the undergraduate student body o Establish collaborative relationships between central recruitment and outreach services and departments to better coordinate K-12 pipeline programs, two-year institutions, and initiatives to connect potential students to academic departments. o Explore multiple mechanisms and funding opportunities to expand recruitment and retention of students from underrepresented groups, veterans, LGBTQ+, recent immigrants, students with disabilities, and low-income students, and consult the Enrollment Management Advisory Committee, where possible. o Increase outreach to state community, two-year, and tribal colleges in order to create smoother pathways for diverse transfer students. o Work with Advancement and external communities to increase scholarship funding to support underrepresented minority students. o Monitor demographic trends in high school and community college student populations to prepare for shifting priorities in outreach and recruitment.

 Improve retention and graduation rates for underrepresented undergraduate students to reach rates comparable to all UW undergraduate students o Provide comprehensive financial aid packages that will enable students to earn degrees and implement proactive advising of students to ensure financial literacy and management of resources.

A–5.1/201-17 Page 2 of 8 1/12/17 o Document migration from pre-majors in high demand fields and develop strategies to improve access to majors of choice for underrepresented students. o Strengthen student mentoring by enhancing advising strategies, such as early warning and intervention systems, for underrepresented, veteran, first- generation, and low-income students. o Develop strong partnerships among diversity units and academic departments to secure outside funding for projects to increase the success of underrepresented students.

 Ensure continued progress toward recruitment and retention of graduate and professional students o Develop and strengthen relationships with existing pipeline initiatives to encourage underrepresented, veteran, LGBTQ+, first-generation, and low-income students from UW and other regional colleges and universities to attend graduate school at the UW. o Increase collaboration between GO-MAP and academic departments so that departments can contact, host, and recruit students interested in their programs. o Improve mechanisms for recruitment staff members across the University to collaborate on outreach to potential graduate students. o Develop competitive financial packages to increase enrollment of accepted students. Monitor impact of increased tuition and cuts to TA and RA positions on underrepresented students. o Develop or enhance diversity-related course offerings based on national trends in curriculum within each discipline. o Increase mentoring opportunities for underrepresented graduate and professional students.

Goal 3: Attract and Retain a Diverse Faculty

The University must maximize opportunities to recruit diverse faculty and ensure that efforts at retention and advancement become central. There must be a focus on issues of professional development and an establishment of support networks in order to successfully recruit, retain, and advance faculty.

Recommended Priorities and Suggested Action Steps

 Strengthen and diversify faculty hiring practices o Work toward goal of 100% participation of deans and associate/divisional deans in search committee training that addresses best practices, implicit bias, equity, and cultural responsiveness. o Encourage the dean of each school/college to certify that a broad and inclusive search has been conducted for each faculty hire by requesting availability pool data from the Office of Equal Opportunity and Affirmative Action.

A–5.1/201-17 Page 3 of 8 1/12/17 o Pursue cluster hires where appropriate, particularly when opportunities exist across units. Promote visibility of research area and teaching needs of each department. o Update current hiring practices by analyzing annual hiring data to help attract more diverse faculty applicant pools for each search.  Utilize best practices to improve the recruitment of underrepresented faculty o Encourage all search committee members to use the Handbook of Best Practices for Faculty Searches and online Toolkit in order to generate an understanding of techniques that may better attract a more diverse pool of applicants. o Utilize availability data and applicant flow information in faculty hiring processes to monitor and improve applicant pools. o Encourage units to create a database of information collected from relevant faculty pipeline programs so they can contact, host, and recruit program participants who are interested in faculty careers. o Explore post-doctoral opportunities that attract diverse faculty.  Develop school/college practices that support the retention and advancement of underrepresented faculty o Create opportunities that support professional development for faculty. Provide resources for units seeking assistance with developing these programs. o Work toward goal of 100% faculty participation in cultural responsiveness training. o Establish best practices in tenure and promotion review for how to recognize the contributions of faculty who mentor underrepresented students and provide service to underserved communities. Units should ensure that these contributions do not prohibit faculty from advancing in rank in a timely manner. o Provide professional development and leadership advancement opportunities to promote an equitable presence of URM faculty in University administration. o Offer workshops for junior faculty members to clarify the tenure and promotion process, including third-year reviews, annual reports, and compilation of tenure files. o Improve on-boarding for new faculty by providing them access to diversity resources and information regarding affinity groups.

Goal 4: Attract and Retain a Diverse Staff

The University must maximize opportunities to recruit diverse staff members and ensure that efforts at retention and advancement become central. There must be a focus on staff on-boarding and professional development to successfully recruit, retain, and advance staff.

Recommended Priorities and Suggested Action Steps

A–5.1/201-17 Page 4 of 8 1/12/17  Improve recruitment processes and strengthen staff hiring practices to diversify workforce o Update current hiring practices by analyzing annual hiring data to help attract more diverse staff applicant pools. o Provide potential job candidates with information about affinity groups to publicize the existence of URM networks. o Utilize availability data and applicant flow information in staff hiring processes to monitor and improve diversity of applicant pools. o Encourage units to use the Staff Diversity Hiring Toolkit to generate an understanding of techniques that may better attract a more diverse pool of applicants. o Modify the UWHR On-Boarding Toolkit to include information and spread awareness about affinity groups.

 Develop school/college practices that support the retention and advancement of underrepresented staff o Create opportunities that support professional development for staff. Provide a resource within UWHR for units seeking assistance with developing these programs. o Work toward goal of 100% staff participation in cultural responsiveness training. o Monitor the advancement of URM staff by conducting an annual review of staff reclassification and promotion within units. o Establish best practices on how to avoid placing the burden on staff of color to be the same, single representative on every search committee. o Provide professional development and leadership advancement opportunities to promote the equitable presence of URM staff in University administration. o Provide administrative leaders information on succession planning and diversity. o Encourage staff to participate in affinity groups by informing them of the existence of these networks. o Ensure that resources from OMA&D continue to be available to affinity groups and publicize best practices for how to efficiently use those resources.

Goal 5: Assess Tri-Campus Diversity Needs

The UW must assess tri-campus diversity needs regarding programming and related efforts that engage students, faculty, and staff in order to promote collaboration and inclusivity across the Seattle, Tacoma, and Bothell campuses. The UW must then work to increase access to information related to diversity and inclusion, encourage a broader range of perspectives, and promote a commitment to opportunities for shared experiences.

Recommended Priorities and Suggested Action Steps

A–5.1/201-17 Page 5 of 8 1/12/17  Enhance communication and collaboration across campuses o Establish regular meetings for Diversity Officers and Diversity Leaders from Seattle, Tacoma, and Bothell. o Develop an annual Diversity Update for each campus that is based on a standardized format of diversity-related data and programming. Create an annual comprehensive UW Diversity Update based on the Updates provided by each campus.

 Track and develop diversity-related programming that is accessible to faculty and staff at all three campuses o Create an inventory of and highlight existing diversity-related workshops, trainings, and resources, and communicate that faculty and staff are welcome and encouraged to attend trainings on any campus. o Establish, where needed, faculty and TA workshops that address diversity-related issues in the classroom, including the inequities that underrepresented populations face at their respective campus. o Create support for collaborative research efforts across the three campuses and recognize those faculty who demonstrate innovative contributions with a diversity research award. o Provide access to resources for faculty and for staff across the three campuses to develop peer communities that provide insight and best practices from their experiences to their members.

 Evaluate accessibility of diversity and inclusion resources at all three campuses o Coordinate online databases of diversity-related resources so that students, faculty, and staff from all campuses can easily access information. o Create a comprehensive diversity programming calendar across all three campuses. Publicize workshops that are open to all students, faculty, and staff. o Develop and publicize “diversity pride points” that describe the diversity-related progress made by students, faculty, and staff at each campus. o Publicize supplier diversity-related resources (departments, programs, workshops, websites and brown bag sessions) that students, faculty and staff can easily access.

Goal 6: Improve Accountability and Transparency

University leadership must commit to working towards established diversity and inclusion goals. Leaders at all levels must accept accountability by implementing new initiatives to achieve those goals, ensure that best practices are disseminated within and across all three campuses, and make clear the University’s commitment to diversity and inclusion.

Recommended Priorities and Suggested Action Steps

 Create standards to serve as a guide for deans and department chairs

A–5.1/201-17 Page 6 of 8 1/12/17 o Implement annual surveys that review the units' hiring, retention, utilization of diverse suppliers, and other diversity practices based on systematically collected data and create a report for deans, directors, and chairs. o Use data on faculty hiring and student enrollment when planning future courses of action regarding outreach and recruitment. Ensure that policies, planning, and decision-making processes are informed by diversity-related best practices. o Work toward goal of 100% participation of deans, associate/divisional deans, directors, and chairs in diversity training, and include diversity metrics as part of dean, associate/divisional dean, and program reviews. o Require the creation or renewal of unit-level diversity committees that must submit an annual diversity report that specifies progress on the diversity blueprint goals. Offer diversity committees a set of best practices that can be incorporated into their existing diversity plans. o Create a Standard Operating Procedure for communication between the Diversity Council and deans and associate/divisional deans. o Maintain an online database of best practices on the diversity portal that is accessible to faculty and staff.

 Ensure that University units successfully contribute toward compliance measures o Continue to build an institutional culture that values and supports the highest levels of compliance with federal, state, and local laws and regulations.

 Incentivize the implementation of successful diversity and inclusion initiatives for University units and engage University leadership in disseminating information about those efforts o Establish an annual President's Community Engagement and Diversity Award in recognition of a particular academic unit that impacted community and diversity at the University. The award should include a grant for future diversity-related initiatives. o Publicize and recognize units that have demonstrated successful outreach and recruitment efforts. o Appoint University leadership to host workshops for units to share best practices in recruiting and retaining diverse students, faculty, and staff, improving and surveying climates, and diversifying curriculum.

 Establish an understanding of diversity-related leadership o Create a University document that identifies the infrastructure of diversity offices and committees.

 Increase funding for diversity and inclusion initiatives o Fund diversity and inclusion proposals that focus on increasing the presence of faculty, staff and students from underrepresented groups. o Commit to making diversity and inclusion funding a priority in upcoming capital campaigns.

A–5.1/201-17 Page 7 of 8 1/12/17 Glossary of Terms

Affinity Groups: Groups of faculty and staff at the university who are linked by a common identity. Affinity groups are supported by the UW as a way to advance recruitment and retention efforts.

Availability Pool Data: The number and demographics of eligible and qualified individuals across the country for a particular faculty position.

Cluster Hiring: Hiring faculty into the same or multiple departments or schools based on shared and sometimes interdisciplinary research topics.

Cultural Responsiveness: Recognizing the importance of including cultural references in all aspects of learning.

Implicit Bias: Negative associations people knowingly or unknowingly hold that are expressed automatically, without conscious awareness.

Racial Equity: The condition that would be achieved if one's racial identity no longer predicted, in a statistical sense, how one fares.

URM: Underrepresented Minority

A–5.1/201-17 Page 8 of 8 1/12/17 A–6 STANDING COMMITTEES

Academic and Student Affairs Committee

The Innovation Imperative: Entre and Student Innovation at the Buerk Center for Entrepreneurship

INFORMATION

For information only.

BACKGROUND

The UW's Innovation Imperative aims to strengthen the innovation ecosystem to empower our students, faculty, region and world. One main thrust of the initiative is “inclusive innovation” - a more democratic style of innovation where the UW's commitment to the public good aligns with our role as the world's most innovative public university. Inclusive innovation takes innovation beyond technology and opens it up to a broader community to address a range of issues we face as a society.

The Buerk Center for Entrepreneurship, launched in 1991, supports and invests in student entrepreneurs—and the entrepreneurially curious—from across campus. The Center is a great example of how the UW can harness the power of inclusive innovation for our students, faculty, region and world.

The Center works to make entrepreneurship as real as possible within a university environment. In addition to a robust curriculum (26 classes at the graduate level and 14 at the undergraduate level), the Center offers:

• Competitions and challenges that give student teams a platform for pursuing their startup ideas, • A 6-month, milestone-driven accelerator that focuses on the students teams that are ready to make the transition to becoming startup companies, • A startup job fair that brings the founders of early-stage Seattle startups to campus to recruit interns as well as first hires, • A Technology Entrepreneurship Certificate for MS and PhD candidates in other disciplines, who study entrepreneurship in the same classes with our MBAs, • An Entrepreneurship Minor for Nonbusiness Students, which includes 31 credits of highly focused curriculum • A new MS in Entrepreneurship that blends a solid graduate curriculum in entrepreneurship with the speed of an accelerator and the practical wisdom of a group of Seattle entrepreneurs.

A–6/201-17 1/12/17 STANDING COMMITTEES

Academic and Student Affairs Committee

The Innovation Imperative: Entre and Student Innovation at the Buerk Center for Entrepreneurship (continued p. 2)

Attachments 1. ENTRE and student Innovation 2. Presenters’ Biographical Information

A–6/201-17 1/12/17 ENTRE and student INNOVATION

Connie Bourassa-Shaw, Director Managing Director, MS in Entrepreneurship [email protected]

A–6.1/201-17 ATTACHMENT 1 Page 1 of 15 1/12/17 What we KNOW to be true

An entrepreneur is someone with the DNA to see an opportunity and do something about it. • Strong need to achieve, create value • Proactive personality: optimistic, often visionary and pioneering; passionate, motivated and energetic; action oriented, observant, and incredibly persistent; willing to experiment • Higher tolerance for ambiguity

A–6.1/201-17 Page 2 of 15 1/12/17 Seattle is the #2 HOTTEST START-UP city in the country

A–6.1/201-17 Page 3 of 15 1/12/17 What are the HALLMARKS?

• Entrepreneurial culture • Research powerhouses • Support for early-stage entrepreneurs • Sources of capital • Talented pool of workers • Strong media • Business climate • “Anchor tenants”

A–6.1/201-17 Page 4 of 15 1/12/17 Can entrepreneurship be TAUGHT?

A–6.1/201-17 Page 5 of 15 1/12/17 Are you GOING FOR IT?

•Practical curriculum in entrepreneurship—including the ENTRE Minor and the new MS Entrepreneurship • Activities that make entrepreneurship real (and get students off campus) • Networking with the best of Seattle’s startup community • Competitions that mimic the real deal

A–6.1/201-17 Page 6 of 15 1/12/17 PLATFORM for startups

Since 1997, at least 987 companies have launched from the competition, and those companies have raised $397M million in outside funding.

Visibility + Networking

A–6.1/201-17 Page 7 of 15 1/12/17 Solutions for THE PLANET

Passion for the environment + prototypes and potential for impact

A–6.1/201-17 Page 8 of 15 1/12/17 Solutions for PEOPLE

New approaches to wellness, to care and treatment, to safety and access.

A–6.1/201-17 Page 9 of 15 1/12/17 Time to RAMP it up

Jones + Foster Accelerator • Milestones-based format, lasting 6 months. • Mentor teams • Up to $25,000 in follow- on funding • 29 companies still in existence

A–6.1/201-17 Page 10 of 15 1/12/17 When the RANKINGS go your way

#16 Undergraduates

#14 Graduate students

#11 Undergraduates

#5 Mentoring

A–6.1/201-17 Page 11 of 15 1/12/17 • Ideation, formation, execution, scale (4 quarters) • $24,900 for in-state students

A–6.1/201-17 Page 12 of 15 1/12/17 miPS Labs is giving consumers access to the unlimited potential of regenerative medicine: a future in which tissues and organs synthesized from your own cells can replace those affected by disease.

Alex Jiao, PhD Bioengineering 2016 Jenna Strully, MD, MBA 2016

A–6.1/201-17 Page 13 of 15 1/12/17 What’s not to love about really good chocolate with bits of coffee?

Sam Tanner, Business 2016 and Lavin Entrepreneurship Program Peter Keckemet, Business 2016

A–6.1/201-17 Page 14 of 15 1/12/17 Connie Bourassa-Shaw, Director Managing Director, MS in Entrepreneurship [email protected]

A–6.1/201-17 Page 15 of 15 1/12/17 Presenters’ Biographical Information

Connie Bourassa-Shaw Director, Buerk Center for Entrepreneurship

As director of the center, Bourassa-Shaw works to integrate entrepreneurship and innovation into the student experience at the University of Washington. She’s responsible for the strategic direction of the center, ensuring the relevance of its curriculum and practical experiences, working with student entrepreneurs, fundraising, and developing new initiatives. The Buerk Center for Entrepreneurship, which received a $5.2 million naming gift in January 2013, is currently ranked 16th in US News & World Report for entrepreneurship.

Bourassa-Shaw is on the executive committee of the Global Consortium of Entrepreneurship Centers (GSEC) and serves on the site selection committee. She’s also on the advisory board of Impact HUB Seattle and SURF. She won the Foster Business School’s Dean’s Leadership Award in 2008 and again in 2013 in recognition of her work across the UW campus. She served in Peace Corps Chile after graduating from the University of Montana, and spent more than a decade of her life as a magazine editor/writer before discovering her true love—early-stage entrepreneurship.

Alex Jiao, PhD CEO and co-founder, miPS Labs

Alex received his undergraduate degree in Biomedical Engineering from Northwestern University in 2010 and his PhD degree in Bioengineering from the University of Washington in 2016. His research focuses on stem cell-based engineering of 3D heart tissues for therapies and diagnostics, and he received prestigious fellowships from the American Heart Association as well as the National Institutes of Health for his research projects. Throughout his studies, he has received several other awards, published 8 peer-reviewed journal publications and filed 4 provisional patents.

Based off of the underlying biology of his research, Alex also co-founded miPS Labs in 2015 to offer consumers cell preservation today for tomorrow’s personalized therapies and diagnostics. miPS Labs has also won a number of awards, including from the University of Washington’s Buerk Center, has established lab space in UW CoMotion’s Incubator, and successfully closed an angel round in 2016. miPS Labs is planning a full launch in early 2017 and will join a Seattle accelerator program shortly after to expand and grow in the Pacific Northwest before scaling nationally.

ATTACHMENT 2 A–6.2/201-17 Page 1 of 2 1/12/17 Peter Keckemet Co-Founder, Joe Chocolates Company

As the co-founder of Joe Chocolates Company, Peter works behind the scenes to deliver the high-quality coffee and chocolate that help customers make the most of their days. He oversees the internal operations of the rapidly growing local food producer, eager to create jobs and value in his Seattle community, where he was born and raised.

Peter is a University of Washington Foster School of Business alum, and mentor to freshmen students in the Foster School. He is also a member of the Jones + Foster 2016 cohort. During his time at the University of Washington, Peter explored various entrepreneurial ventures, eventually falling in love with the business of food.

Sam Tanner Co-Founder, Joe Chocolates Company and 2016 UW Foster School of Business Graduate

As a 2016 Foster School of Business graduate and co-founder of a hand-crafted caffeinated chocolate company, Tanner uses his formal education in business and entrepreneurship on a daily basis. During his time at UW, Tanner was a member of the Lavin Program for Entrepreneurship, a participant at the bi-weekly Build Your Own Business meetings, a semi-finalist in the Business Plan Competition, and a member of the Jones+Foster Accelerator cohort twice over.

Tanner has founded two companies in vastly different industries. His first company, CardSwapper, aimed to liquidate the huge number of unused gift cards in every American household. Tanner and a small team raised early- stage funding, developed and launched a minimum-viable- product on the iOS App Store. Since then, Tanner has stepped away from the financial-technology sector and has focused his time on his love for food. Joe Chocolates was founded in the two-quarter Create a Company course, and aimed to give his collegiate peers a boost of energy from recognizable ingredients. Now, Tanner and his co-founder, Peter Keckemet are sharing their “Bits of Buzz” with the rest of the world. A–6.2/201-17 Page 2 of 2 1/12/17 F–1 STANDING COMMITTEES

Finance and Asset Management Committee

Portage Bay Insurance Annual Report

INFORMATION

For information only.

Attachment Portage Bay Insurance Annual Report

F–1/201-17 1/12/17 Portage Bay Insurance Annual Report

History Portage Bay Insurance (PBI) is a not-for-profit single parent captive insurance company. The Board of Regents authorized its creation on July 1, 2002 in order to allow UW to approach reinsurance markets, thereby increasing available markets for catastrophic coverage. Other purposes included retention of investment earnings, regulation by Hawaii Insurance Commissioner, and the ability to creatively craft policies to meet UW’s needs.

Lines of Coverage Healthcare professional, general, automobile and employment practices liability.

Goals

1. Satisfy UW’s liabilities in four coverage lines 2. Support cost-efficient, high quality reinsurance 3. Provide reasonable budgetary certainty to customers 4. Help reduce exposure to loss 5. Comply with all regulatory and audit requirements

Risk Assessment Risk assessments are done every other year. Currently, there are no extreme or high risks. There is one substantial risk, that being adverse loss experience impacting reinsurance cost or terms. Four medium risks include: deficiencies due to lower than expected investment returns in UW Invested Funds; long term staff or Board of Directors turnover; material changes in known exposures; and acquisition of challenging new exposures. Mitigation strategies have been or are being developed for these four risks.

Audited Financials

6/30/2016 6/30/2015

Assets $77M $88M Liabilities $52M $62M Required Capital $ 4M $ 4M Investment Return 0.7% 2.7%

Board Members and Officers

Elizabeth Cherry, Associate Vice Provost, Compliance and Risk Services (President) Marcia Rhodes, Director, UW-M and Health Sciences Risk Management (Vice President) Craig Watanabe, Strategic Risk Solutions, Hawaii (Secretary and Treasurer) Tim Dellit, UWP President, Associate Dean for Clinical Affairs, Associate Medical Director, HMC Mark Green, Vice Dean for Administration and Finance, Dean’s Office, SOM Mike Kelly, Michael Kelly Risk Management Services Sarah Norris Hall, Associate Vice Provost, Office of Planning and Budgeting Herb Van Der Veer, Insurance Consultant

Service Providers

Actuary Matt Corwin, Milliman Captive Manager Craig Watanabe, Strategic Risk Solutions Broker Ryan Roberts, Parker, Smith & Feek Legal Counsel Paul Shimomoto, Char Hamilton Yoshida & Shimomoto Auditor Amy Banovich, KPMG LLP Tax CPA Richard Buggy, Crowe Horwath LLP

F–1.1/201-17 ATTACHMENT Page 1 of 1 1/12/17 F–2 STANDING COMMITTEES

Finance and Asset Management Committee

Independent Auditor’s Report (KPMG) – UW Financial Statements for Period Ending June 30, 2016

INFORMATION

This item is for information only. There will be an oral report from the Audit Advisory Committee Chair (Regent Blake) during the Audit Advisory Committee Update.

Attachment 2016 Financial Report

F–2/201-17 1/12/17 2016 FINANCIAL REPORT

F–2.1/201-17 ATTACHMENT 1/12/17 TABLE OF CONTENTS

1 INDEPENDENT AUDITORS’ REPORT 3 MANAGEMENT’S DISCUSSION AND ANALYSIS 14 FINANCIAL STATEMENTS 18 NOTES TO FINANCIAL STATEMENTS 50 SCHEDULES OF REQUIRED SUPPLEMENTARY INFORMATION INSIDE BACK COVER BOARD OF REGENTS AND ADMINISTRATIVE OFFICERS

UNIVERSITY FACTS FISCAL YEAR 2016 FISCAL YEAR 2011 FISCAL YEAR 2006 Academic Year Academic Year Academic Year 2015–2016 2010–2011 2005–2006 STUDENTS

Autumn Enrollment 1 Undergraduate 40,163 35,615 31,086 Graduate 13,595 12,389 10,540 Professional 2,009 1,936 1,802 TOTAL 55,767 49,940 43,428

Extension course and conference registrations 78,426 64,961 44,823

Number of Degrees Awarded Bachelor’s 10,589 9,325 8,296 Master’s 4,072 3,524 2,866 Doctoral 803 723 631 Professional 518 528 496 TOTAL 15,982 14,100 12,289

FACULTY 1 (Professorial, Instructional, Research) 4,703 4,235 3,650

FACULTY AND STAFF2 28,910 25,143 23,935

RESEARCH FUNDING – ALL SOURCES (in thousands of dollars) $ 1,367,366 $ 1, 3 9 6 , 4 3 5 $ 967,456

SELECTED REVENUES (in thousands of dollars) Patient Service and Other Medical-Related Revenues 3 $ 2,408,791 $ 1, 3 6 2 , 5 9 4 $ 834,638 Gifts, Grants and Contracts 1,409,443 1,401,584 1,094,023 Tuition and Fees 4 948,751 594,915 358,130 Auxiliary Enterprises and Other Revenues 623,438 393,850 237,808 State Appropriations (Operating) 302,097 296,769 339,117 Investment Income 44,877 394,670 294,305

SELECTED EXPENSES (in thousands of dollars) Medical Related 3 $ 2,152,161 $ 1,160,595 $ 654,768 Instruction, Academic Support and Student Services 1,617,202 1, 2 3 3 ,7 70 956,517 Research and Public Service 790,218 821,081 632,007 Institutional Support and Physical Plant 506,015 325,980 260,926 Auxiliary Enterprises 422,474 169,876 125,591

CONSOLIDATED ENDOWMENT FUND5 (in thousands of dollars) $ 2,968,000 $ 2,168,000 $ 1,700,000

SQUARE FOOTAGE6 (in thousands of square feet) 23,129 21,655 18,097

1 Headcount 2 Full time equivalents 3 Includes Valley Medical Center (2016 only) and Northwest Hospital (2016 and 2011 only) 4 Net of scholarship allowances of $144,543,000 in 2016, $91,403,000 in 2011 and $53,780,000 in 2006 5 Stated at fair value 6 Gross square footage, all campuses KPMG LLP Suite 2900 1918 Eighth Avenue Seattle, WA 98101

INDEPENDENT AUDITORS’ REPORT

The Board of Regents University of Washington: We have audited the accompanying financial statements of the business-type activities and aggregate discretely presented component units of the University of Washington (the University), an agency of the state of Washington, which comprise the statements of net position as of June 30, 2016 and 2015, and the related statements of revenues, expenses, changes in net position, and cash flows for the years then ended, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of the University of Washington as of June 30, 2016 and 2015, and the respective changes in financial position and cash flows thereof for the years then ended, in accordance with U.S. generally accepted accounting principles.

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

FINANCIAL REPORT 2016 / 1 Emphasis of Matters As discussed in note 1, the financial statements of the University of Washington, an agency of the state of Washington, are intended to present the financial position, the changes in financial position, and where applicable, cash flows of only the respective portion of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the state of Washington that are attributable to the transactions of the University of Washington and its discretely presented component units. They do not purport to, and do not, present fairly the financial position of the state of Washington as of June 30, 2016 and 2015, the changes in its financial position or, where applicable, its cash flows for the years then ended, in accordance with U.S. generally accepted accounting principles. Our opinions are not modified with respect to this matter. As discussed in note 1 to the financial statements, on July 1, 2014, the University adopted new accounting guidance requiring governments providing defined benefit pensions to their employees to recognize their proportionate share of the pension plan’s net position liability or net pension asset, as well as recognizing most changes in the net position liability within pension expense. Our opinions are not modified with respect to this matter.

Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the management’s discussion and analysis on pages 3 through 12, and the schedules of required supplementary information on pages 50 through 51, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University’s basic financial statements. The accompanying information under the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Seattle, Washington October 21, 2016

UNIVERSITY OF WASHINGTON / 2 MANAGEMENT’S DISCUSSION AND ANALYSIS

The discussion and analysis below provides an overview to be included in pension expense in the period of the change, of the financial position and activities of the University of and others to be reported as deferred outflows of resources or Washington (“University”) for the years ended June 30, 2016 deferred inflows of resources on the Statements of Net Position. and 2015, with comparative financial information for 2014. Prior to adopting this Statement, the University reported pension This discussion has been prepared by management, and expense based on cash contributions paid to the pension plan since it includes highly summarized data, should be read in administrator. With the adoption of GASB Statement No. 68, net conjunction with the financial statements and accompanying position was restated at July 1, 2014 by a decrease of $832 million. notes which follow this section. Fiscal years 2016 and 2015 financial results reflect application of the accounting changes required by Statement No. 68, but those Financial Highlights for Fiscal Year 2016 changes have not been applied to fiscal year 2014 amounts due to the constraints of available information. The University recorded a decrease in net position of $82 million in fiscal year 2016, compared to an increase in net position of $235 million in 2015. Revenues from tuition and Economic Factors Affecting the Future patient services continued to show growth during 2016, and The state of Washington, which provided 7% of the University’s together with modest increases in revenues from research total revenues in fiscal year 2016, continues to emerge from the activities contributed to an overall increase in operating recession with moderate economic growth and commensurate revenues. Offsetting this, however, was an increase in increases in state tax collections. However, the state continues operating expenses, and a decrease in nonoperating to face significant budgetary pressure as a result of court- revenues, primarily investment income, which was impacted mandated increases to K-12 education funding (McCleary v. by decreased investment market values during the year. Washington). As a result, non-mandatory state programs, The University adjusts the carrying value of investments including higher education, have an uncertain funding outlook to market value each year, with the change recorded as for the 2017-19 biennium. investment income or loss. During the previous biennium (2013-15), the University Key Financial Results for Fiscal Years 2016, 2015 and 2014 committed to freezing resident undergraduate tuition rates in fiscal years 2014 and 2015 in exchange for increases in state (in millions) 2016 2015 2014 funding in both years. In 2015-17, the state mandated reductions Total operating revenues $ 4,352 $ 4,212 $ 3,914 in resident undergraduate tuition to 5% below 2015 rates in Total operating expenses 5,034 4,676 4,384 fiscal year 2016, and 15% below 2015 rates in fiscal year 2017. Operating loss (682) (464) (470) The state provided funds to backfill the lost tuition revenue in State appropriations 302 255 262 both years. Investment income 45 227 481 The University’s fiscal year 2017 general operating appropriation Gifts 220 200 191 from the state (excluding amounts appropriated for specific Other nonoperating revenues, net 33 17 14 purposes) is approximately $332 million, an increase from Increase (decrease) in net position (82) 235 478 $293 million in 2016 and $246 million in 2015. The significant Net position, beginning of year 6,046 6,643 6,165 increases in the latter two years are largely attributable to Cumulative effect of accounting change – (832) – tuition backfill funding, but also include targeted investments in Net position, beginning of year as restated 6,046 5,811 6,165 medical and computer science education. Net position, end of year $ 5,964 $ 6,046 $ 6,643 The University’s Board of Regents continues to have broad tuition and fee setting authority for categories other than resident Governmental Accounting Standards Board (GASB) principles undergraduate tuition. State funding for capital appropriations require that revenues from state appropriations, Pell grants, continues to be under pressure, though some state bonding and gifts be considered nonoperating while the expenses capacity was provided this biennium for critical capital projects. funded from these revenues are categorized as operating. As a UW Medicine formed an Accountable Care Network (ACN) result, the University will typically reflect an operating loss on its in 2014 with other selected healthcare organizations and Statements of Revenues, Expenses and Changes in Net Position. healthcare professionals in Western Washington to form a care The University implemented GASB Statement No. 68, “Accounting delivery network to assume responsibility for the healthcare and Financial Reporting for Pensions” during fiscal year 2015. This of contracted populations of patients in order to improve the Statement changed how the University reports its participation in healthcare experience for the individual, improve health for the certain cost sharing, defined-benefit pension plans administered overall population, and provide more affordable care. by the state of Washington Department of Retirement Systems • The ACN has contracted with the Washington Health Care (DRS). It requires governments providing defined-benefit Authority (HCA) to participate in its new Puget Sound pensions to their employees to recognize their proportionate Accountable Care Program (ACP) as a healthcare benefit share of the pension plan’s net pension liability or net pension option for Public Employees Benefits Board (PEBB) members. asset, which is measured as the total pension liability less The ACP is offered to all PEBB members who reside in the amount of the pension plan’s fiduciary net position. This Snohomish, King, Kitsap, Pierce, and Thurston Counties, with Statement also requires most changes in the net pension liability

Unaudited – see accompanying notes to financial statements

FINANCIAL REPORT 2016 / 3 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

possible expansion into a number of additional counties • Statements of Revenues, Expenses and Changes in Net planned in 2017. This contract with HCA to cover PEBB Position present the total revenues earned and expenses members began January 1, 2016. incurred by the University for operating, nonoperating and other related activities, during a period of time (fiscal years • A subset of the network members have also agreed to ended June 30, 2016 and 2015). Their purpose is to assess the participate with the ACN in a contract with Premera as part University’s operating and nonoperating activities. of its new Accountable Health System (AHS) product. As an AHS, the UW Medicine ACN will share in accountability for • Statements of Cash Flows present cash receipts and the quality and cost of healthcare for Premera members who payments of the University during a period of time (the fiscal select this plan. This product was sold both on and off the years ended June 30, 2016 and 2015). Their purpose is to Washington Health Exchange in select counties with coverage assess the University’s ability to generate net cash flows and that began January 1, 2016 and must have 5,000 plan-wide meet its obligations as they come due. members per product, per region to share in financial • Notes to the Financial Statements present additional savings and risk. information to support the financial statements. Their purpose • The UW Medicine ACN also entered into an agreement to is to clarify and expand on the information in the financial provide healthcare services to non-union employees of a large statements. Notes are referenced in this discussion to indicate local employer with coverage that began January 1, 2015. where details of the financial highlights may be found. These arrangements provide an opportunity for shared The University has been affiliated with Northwest Hospital & savings between the ACN and the contracted entity based on Medical Center (Northwest Hospital) since 2010, and has had achieving quality and financial benchmarks. If certain financial a strategic alliance with Valley Medical Center, a Washington benchmarks are not attained, UW Medicine, along with its public hospital district, since 2011. GASB standards require network members, is at risk for reductions in payment levels that these entities be presented as discrete component units from the contracted entity based on the agreement. of the University; therefore, their financial position at June 30, 2016 and 2015, and the results of their operations for the Rising benefit costs, particularly for pensions and healthcare, years ended June 30, 2016 and 2015, are reported in a separate continue to impact the University. Employer pension funding column for financial statement presentation purposes (see rates for the Public Employees’ Retirement System (PERS) Note 1 and Note 18 to the Financial Statements). pension plans increased 21% during fiscal year 2016, from 9.21% to 11.18% of covered salary, and will be increasing to The analysis presented below includes the consolidated 12.52% of covered salary during fiscal year 2018. Likewise, balances of the University of Washington and its blended the monthly employer base rate paid by the University for component units (see Note 1), but excludes the financial employee healthcare increased 27% during fiscal year 2016, position and results of operations of its discrete component from $662 to $840 per active employee, and will be increasing units (Northwest Hospital and Valley Medical Center). to $888 per active employee during fiscal year 2017. Both rates are likely to continue increasing over the next few years. Financial Health Using the Financial Statements STATEMENTS OF NET POSITION A summarized comparison of the University’s assets, The University’s financial statements are prepared in accordance liabilities, deferrals and net position as of June 30, 2016, with GASB principles, which establish standards for external 2015 and 2014, follows: financial reporting for public colleges and universities. GASB standards require that financial statements be presented on a (in millions) 2016 2015 2014 consolidated basis in order to focus on the University as a whole. Current assets $ 1,539 $ 1,402 $ 1,537 These financial statements include the following components: Noncurrent assets: Capital assets, net 4,353 4,172 4,045 • Independent Auditors’ Report presents an unmodified Investments, net of current portion 4,108 4,297 3,959 opinion prepared by our auditors, KPMG LLP, on the fairness Other 507 491 358 in all material respects of our financial statements. Total assets 10,507 10,362 9,899 Deferred outflows 179 111 14 • Statements of Net Position present the assets and deferred Total assets and deferred outflows 10,686 10,473 9,913 outflows of resources, liabilities and deferred inflows of Current liabilities 1,060 998 872 resources, and net position of the University at a point in Noncurrent liabilities: time (June 30, 2016 and 2015). Their purpose is to present Bonds payable 2,177 1,911 1,966 a financial snapshot of the University. This statement aids Other 1,363 1,249 432 the reader in determining the assets available to continue Total liabilities 4,600 4,158 3,270 the University’s operations, how much the University owes Deferred inflows 122 269 – to employees and vendors, whether the University has any Total liabilities and deferred Inflows 4,722 4,427 3,270 deferred outflows or inflows other than assets or liabilities, Net position $ 5,964 $ 6,046 $ 6,643 and a provides a picture of net position and its availability for expenditure by the University.

Unaudited – see accompanying notes to financial statements Unaudited – see accompanying notes to financial statements

UNIVERSITY OF WASHINGTON / 4 The University continues to maintain and protect its strong bonds issued during the year, and an increase in the University’s financial foundation. This financial health, as reflected in net pension liability, offset by $112 million of commercial paper the Statements of Net Position, results from the prudent debt that was refunded by the new general revenue bonds. The utilization of financial resources including careful cost controls, net pension liability was recorded for the first time in 2015 as a preservation of endowment funds, conservative utilization result of implementing GASB Statement No.68, and represents of debt and adherence to a long-range capital plan for the the University’s proportionate share of the collective amounts acquisition, maintenance and replacement of the physical plant. reported by the DRS. This noncurrent liability increased $183 Current assets include those that may be used to support million during 2016, reflecting a corresponding increase in the current operations, and consist primarily of cash, short-term state-wide amounts associated with these cost sharing, defined- investments and accounts receivable. Current liabilities benefit pension plans. generally are due and payable over the course of the following The difference between total assets and deferred outflows, fiscal year, and include accounts payable and other accrued and total liabilities and deferred inflows, is referred to as net liabilities, unearned revenues, and the current portion of long- position or “equity”. Over time, the change in net position is term debt. one indicator of the improvement or decline in the University’s The excess of current assets over current liabilities of $479 overall financial health when considered with nonfinancial million in 2016 and $404 million in 2015 reflects the continuing factors such as enrollment, research awards, patient levels, and ability of the University to meet its short-term obligations. the condition of facilities. Current assets increased $137 million in 2016, partly due to The University reports its “equity” in four categories: an increase in accounts receivable of $107 million associated with pending sales of investments, and decreased $135 million • Net Investment in Capital Assets – This is the University’s total in 2015, partly due to a decrease in the value of short-term investment in capital assets, net of accumulated depreciation investments of $106 million. Current liabilities increased $62 and amortization and outstanding debt obligations related to million in 2016, partly due to an increase in the liability for those capital assets. accrued annual leave of $11 million, together with an accrual • Restricted Net Position: for $16 million associated with the University’s portion of a – Nonexpendable net position, primarily endowments, settlement against the state of Washington in the Moore vs. represents the historical cost (corpus) of gifts to the HCA litigation. Current liabilities increased $126 million in University’s permanent endowment funds. These are 2015, primarily due to an increase in accounts payable of $102 funds on which the donor or other external party has million associated with pending purchases of investments. imposed the restriction that the corpus is not available for Noncurrent assets were mostly unchanged in 2016, as an expenditure, but rather for investment purposes only in increase in capital assets of $181 million was offset by a order to produce income that is to be expended for the decrease in long-term investments as a result of market value purposes specified. changes during the year for the University’s investments. – Expendable net position consists of resources which the Realized and unrealized losses in fiscal year 2016 totaled $54 University is legally or contractually obligated to spend in million, compared to $151 million of net realized and unrealized accordance with time or purpose restrictions placed by gains in 2015. Noncurrent assets increased $598 million in 2015, donors and/or other external parties, and includes the net primarily due to an increase in long-term investments. appreciation of permanent endowments. Deferred outflows of resources and deferred inflows of • Unrestricted Net Position – This is all other funds available to resources primarily represent pension-related deferrals the University for any purpose associated with its mission. associated with the implementation of GASB Statement No. 68 Unrestricted net position is not subject to externally imposed in 2015. The increase in deferred outflows in 2016 primarily stipulations, but often is internally designated for specific reflects the University’s proportionate share of an increase in purposes. the state-wide amounts reported by the DRS due to differences between expected and actual experience related to actuarial The University’s net position at June 30, 2016, 2015 and 2014 is assumptions. In 2015, the University recorded $86 million of summarized as follows: pension-related deferred outflows for the first time, primarily the deferral of pension contributions paid during the year. (in millions) 2016 2015 2014 Similarly, the decrease in deferred inflows in 2016 reflects the Net investment in capital assets $ 2,278 $ 2,156 $ 2,018 University’s proportionate share of a decrease in the state-wide Restricted: amounts due to differences between projected and actual Nonexpendable 1,419 1,322 1,257 investment earnings on pension plan assets. These deferred Expendable 1,591 1,699 1,629 inflows were recorded for the first time in 2015. Unrestricted 676 869 1,739 Total net position $ 5,964 $ 6,046 $ 6,643 Noncurrent liabilities increased $380 million in 2016, primarily due to $328 million of new general revenue and lease revenue

Unaudited – see accompanying notes to financial statements

FINANCIAL REPORT 2016 / 5 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

Net investment in capital assets increased $122 million, or returns include academic programs, scholarships, fellowships, 6%, in 2016, and $138 million, or 7%, in 2015. This balance professorships, chairs and research activities. Under the Board increases as debt is paid off, or when the University funds of Regents’ approved long-term spending policy for the CEF, fixed asset purchases without the use of external financing, for quarterly distributions to programs are made based on an example by using internal reserves. This balance decreases as annual percentage rate of 4%, applied to the five-year rolling assets are depreciated. average of the CEF’s market valuation. An additional 1% is distributed to support fundraising and stewardship activities Restricted nonexpendable net position increased $97 million, (0.80%) and investment management (0.20%). Similar to or 7%, in 2016, and $65 million, or 5%, in 2015. For both years, program distributions, the fee is based on the endowment’s the increase reflects the receipt of new endowment gifts, offset five-year average market value. by a decrease in the fair value of endowment investments. In September of 2015, the Board of Regents approved Restricted expendable net position decreased by $108 million, the establishment of an internal investment management or 6%, in 2016, and increased $70 million, or 4%, in 2015. This company, known as the University of Washington Investment category is primarily affected by new operating and capital gifts, Management Company (UWINCO). Under the new structure, and earnings or losses on restricted investments, including the UWINCO advisory committee was transitioned to an endowments. The change in market value for the Consolidated investment company advisory board (UWINCO Board). This Endowment Fund was the primary cause for the increase or change reflects industry best practices and trends among other decrease each year. peer institutions. Unrestricted net position decreased $193 million, or 22%, Endowment portfolios are commonly managed around in 2016, and decreased by $870 million, or 50%, in 2015. a core set of objectives focused on the need to provide The use of institutional reserves to partly fund select support for endowed programs in perpetuity. The Board of capital maintenance and construction projects contributed Regents, in conjunction with the UWINCO Board, establishes approximately $82 million to the 2016 decrease, together with the policy asset allocation judged to be most appropriate a $51 million decline in the market value for the Diversified for the University from a long-term potential return and risk Investment Pool. The decrease in 2015 was primarily due perspective. The policy asset allocation is reviewed annually to the impact of restating fiscal year 2015 beginning net for its continuing fit with the University’s risk profile, and with position as a result of implementing GASB Statement No. 68. consideration of the changing dynamics of the capital markets. In addition, the University began a formal program in 2015 to fund the construction of capital assets using internal reserves The CEF asset allocation includes two clearly defined categories by directing that a limited portion of the Invested Funds Pool of investments: those which facilitate growth or appreciation be available for investment in institutional infrastructure, (Capital Appreciation), and those which preserve endowment as opposed to financial assets. As a result, $128 million of values (Capital Preservation). At June 30, 2016, 77% of the construction costs were sourced during 2015 using internal CEF was invested in Capital Appreciation and 23% in Capital reserves. These amounts were reflected as a reduction of Preservation. Following an expectation that market returns for unrestricted net position, and an increase in net investment in equities will exceed bonds over the next decade, a medium- capital assets. term objective is maintained of generally overweighting equity-oriented strategies with a focus on quality companies Endowment and Other Investments and downside protection. The University also maintains Investment returns provide an important source of revenue ample liquidity within Capital Preservation to meet its for the University’s programs. Among the funds invested by the funding requirements, as well as to take advantage of market University are endowments, operating reserves, life income dislocations if opportunities arise. trusts, annuities and gifts. For the fiscal year ended June 30, 2016, the CEF returned -1.6% Endowed gifts supply permanent capital and an ongoing versus -0.2% for the passive benchmark. The CEF’s Emerging stream of current earnings to the University. Most endowments Markets Equity, Developed Markets Equity and Fixed Income are commingled in the Consolidated Endowment Fund (CEF), strategies drove both absolute and relative underperformance. a diversified investment fund. As in a mutual fund, each All other CEF strategies had strong relative performance against individual endowment maintains a separate identity and owns their benchmarks. Market conditions were exceptionally tough, units in the fund. particularly during late 2015, when a sluggish Chinese economy The CEF has experienced considerable growth over the past and falling energy prices weighed heavily on markets. With 10 years due to gifts and endowment returns. The number of the exception of the S&P 500, every major equity index had individual endowments in the CEF has grown to 4,506, and the negative returns in fiscal year 2016 and nearly all, including market value of the CEF has increased significantly, rising from the S&P 500, posted lower returns than fiscal year 2015. This $1.7 billion at June 30, 2006 to $3.0 billion at June 30, 2016. lower return trend is expected to continue, with the negative to low interest rate environment remaining a major driver of The impact to program support has been substantial, with investment performance. $870 million distributed over the past 10 years touching every part of the University. Programs supported by endowment

Unaudited – see accompanying notes to financial statements Unaudited – see accompanying notes to financial statements

UNIVERSITY OF WASHINGTON / 6 Longer-term, the CEF has consistently maintained The University takes its role of financial stewardship solid absolute and relative performance. The CEF has seriously and works hard to manage its financial resources outperformed both the passive benchmark, and public effectively. Continued high debt ratings are important university peers with $1 billion to $5 billion of assets, for the indicators of the University’s success in this area. 5, 10 and 20-year periods. The 20-year return for the CEF stands at +8.4%.

Consolidated Endowment Fund Market Value Moody’s Fiscal Year 2015 Public College and (in millions) University Rating Distribution $3,300 (As of the July 2016 Moody’s Median Report)

$3,076 $2,968 Aaa UW 8 $2,833 $2,800 Aa1 15

Aa2 38 $2,347 $2,300 Aa3 53 $2,161 $2,168 $2,098 $2,111 A1 68

$1,830 IN MILLIONS 40 $1,800 A2 $1,649 A3 23

Baa1 8 $1,300

Baa2 4

Baa3 4 $800 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Ba1 3

Ba2 1 A portion of the University’s operating funds, the Diversified Investment Pool, are invested in the CEF. As of B1 1 June 30, 2016, these funds comprise $731 million of the

CEF market value. Ca 1 Debt and Related Capital Improvements 0 10 20 30 40 50 60 70 The University’s general revenue borrowing platform, NUMBER OF INSTITUTIONS established in 2003, has been used to fund buildings that support the educational, research and service missions of the institution. The University’s debt portfolio consists primarily of fixed rate debt in the form of General Revenue Bonds, Lease Revenue Bonds and state issued bonds, as well as variable rate debt such as commercial paper. Credit ratings are a reflection of the University’s strength. During fiscal year 2016, the University was rated Aaa (Stable) (the highest rating) by Moody’s Investors Service and AA+ (Stable) by Standard & Poor’s. These strong ratings carry substantial advantages for the University: continued and wider access to capital markets when the University issues debt, lower interest rates on bonds and the ability to negotiate favorable bond terms.

Unaudited – see accompanying notes to financial statements

FINANCIAL REPORT 2016 / 7 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

The University uses three debt-related financial ratios In September 2015, the University issued $196 million as performance benchmarks to evaluate institutional of General Revenue Bonds with an average coupon of debt capacity and financial health. Spendable Cash and 4.03%. A portion of the proceeds was used to pay off $112 Investments to Total Debt is a measure of all available million of commercial paper. The balance was used to resources to pay debt, Total Debt to Operating Revenue is fund various projects such as renovation of Denny Hall, a measure of financial leverage, and Annual Debt Service construction of Animal Care and Research Facilities, South Coverage is a measure of cash flow available to pay debt West Campus Central Utility Plant and other projects. obligations. Each ratio is defined by Moody’s Investors In October 2015, the University, through Washington Service, and evaluated relative to the University’s debt policy Biomedical Research Properties 3.2, issued $132 million in and the appropriate peer group comparison. Lease Revenue Bonds with an average coupon of 4.42%. 9.5 Proceeds were used to fund the design, construction, and Spendable Cash and Investments equipping of a new biomedical research facility. to Total Debt 9.5 The University continues to expand its campuses and renovate existing facilities to meet the needs of its 3.0 Spendable Cash and Investments students, faculty and staff. Significant capital asset 2.5 to Total Debt 9.5 2.7 expenditures (greater than $20 million) during fiscal 2.0 Spendable Cash and Investments

RATIO 3.0 year 2016 included $65 million for the Animal Care and 1.5 to1.9 Total Debt 1.6 1.7 2.51.0 2.7 Research Facilities, $38 million for Phase 2 of the UW 3.02.00.5 Medical Center expansion, $37 million for the Molecular

RATIO 2.51.50.0 1.9 Engineering & Sciences Building, $36 million for the 1.6 1.7 2.7 2.01.0 2016 2015 2014 Moody’s Public renovation of Denny Hall, and $23 million for the South Universities RATIO 1.50.5 1.9 (Aaa median 2015) 1.7 West Campus Central Utility Plant. 1.00.0 1.6 This ratio shows that in 2016 the University had sufficient non- 0.5 2016 2015 2014 Moody’s Public9.5 Key projects placed in service during 2016 include: Universities restricted cash and investments to pay its outstanding(Aaa median 2015) debt 0.0 Total Debt to Operating Revenue • Maple Hall and Terry Hall - $112 million. These new 1.6 times. 2016 2015 2014 Moody’s Public Universities eight-story residential buildings include five wood-frame (Aaa median9.5 2015) 0.6 stories of housing consisting of two-bedroom suites, all 0.5 Total Debt to Operating Revenue 9.5 with private bathrooms. The lower two floors of each 0.4 0.5 0.5 0.5 building will be occupied by Housing and Food Services 0.6 0.3 Total Debt to0.4 Operating Revenue administration offices, common space for students, and 0.5 RATIO 0.2 some additional two-bedroom suites. A below-grade 0.40.6 0.5 0.5 0.5 0.1 parking garage connected to the Lander Hall garage and 0.30.5 0.4 0.0 the Lander Hall loading dock will extend below the new RATIO 0.20.4 0.5 0.5 0.5 2016 2015 2014 Moody’s Public Maple and Terry residence halls. The two new buildings 0.10.3 0.4 Universities (Aaa median 2015) will total approximately 440,000 square feet, with a RATIO 0.00.2 target bed count of 1,150 beds. 0.1 2016 2015 2014 Moody’s Public9.5 Universities • UW Medical Center Expansion Phase 2 - $121 million. 0.0 (Aaa median 2015) This project included a build-out of three inpatient This ratio shows2016Annual that inDebt2015 2016 Service the University2014 Coverage generatedMoody’s Public enough Universities9.5 bed floors, including the addition of intensive care and operating revenue to pay its total outstanding(Aaa debtmedian twice 2015) over. 4.0 medical/surgical beds as well as new operating rooms. Annual Debt Service Coverage0.5 4.09.5 3.0 • Montlake/Rainier Vista - $24 million. The scope of 3.3 3.1 4.0 this project included lowering NE Pacific Place, and 2.0 2.2Annual Debt Service Coverage RATIO 0.5 4.0 construction of the Rainier Vista Land Bridge to span 3.01.0 4.0 3.3 3.1 over NE Pacific Place and connect the Montlake Triangle in a seamless pedestrian experience. Also included 2.00.0 2.2 0.5 4.0

RATIO 3.0 2016 20153.3 2014 Moody’s Public were landscaping, hard surfacing, lighting and other site 1.0 3.1 Universities (Aaa median 2015) improvements. 2.0 2.2 RATIO 0.0 1.0 2016 2015 2014 Moody’s Public Universities (Aaa median 2015) 0.0 2016 2015 2014 Moody’s Public Universities (Aaa median 2015) This ratio shows that in 2016 the net operating income of the UniversitySpendable was sufficient Cash andto payInvestments the principal and interest 9.5 payments on its outstandingto Operating debt Expenses 2.2 times.

1.6 Spendable Cash and Investments 9.5 1.4 to Operating Expenses Unaudited – see accompanying notes to financial statements Unaudited – see accompanying notes to financial statements 1.4 1.2 Spendable Cash and Investments UNIVERSITY9.5 OF WASHINGTON / 8 1.61.0 to Operating Expenses 1.40.8 0.9 0.9 1.4 1.61.20.6 0.8 1.41.00.4 1.4 1.20.80.2 YEARS OF COVERAGE 0.9 0.9 0.8 1.00.60.0 0.80.4 2016 2015 2014 Moody’s Public 0.9 0.9 Universities 0.2 0.8 YEARS OF COVERAGE 0.6 (Aaa median 2015) 0.40.0 2016 2015 2014 0.2 Moody’s Public YEARS OF COVERAGE Universities 0.0 (Aaa median 2015) 2016 2015 2014 Moody’s Public Universities (Aaa median 2015) STATEMENTS OF REVENUES, EXPENSES AND The following table summarizes revenues from all sources CHANGES IN NET POSITION for the years ended June 30, 2016, 2015 and 2014: The Statements of Revenues, Expenses and Changes in Net Position present the University’s results of operations (in millions) 2016 2015 2014 and nonoperating items that result in the changes in net Tuition and fees $ 949 $ 914 $ 839 position for the year. In accordance with GASB reporting Patient services 1,435 1,362 1,207 principles, revenues and expenses are classified as either Grants and contracts 1,348 1,334 1,327 operating or nonoperating. A condensed comparison of Sales and services of 225 223 213 the University’s revenues, expenses and changes in net educational departments position for the years ended June 30, 2016, 2015 and Auxiliary enterprises 349 319 261 2014 follows: State funding for operations 302 255 262 Gifts 220 200 191 Investment income 45 227 481 (in millions) 2016 2015 2014 State funding for capital projects 39 21 8 Total operating revenues $ 4,352 $ 4,212 $ 3,914 Other 112 136 164 Total operating expenses 5,034 4,676 4,384 Total revenue - all sources $ 5,024 $ 4,991 $ 4,953 Operating loss (682) (464) (470) Nonoperating revenues, net of expenses 450 590 859 Grant Revenue Other revenues 150 109 89 One of the largest sources of revenue (27%) continues to Increase (decrease) in net position (82) 235 478 be grants and contracts. Total grants and contracts revenue Net position, beginning of year 6,046 6,643 6,165 increased $14 million, or 1%, in 2016, compared to an increase Cumulative effect of accounting change – (832) – of $7 million, or 1%, in 2015. Net position, beginning of year as restated 6,046 5,811 6,165 While federal revenue saw an increase during fiscal year Net position, end of year $ 5,964 $ 6,046 $ 6,643 2016 from several of the University’s top sponsors (National Science Foundation, Department of Defense, Department of Commerce), this increase was offset by a decrease in funding related to a significant federal flow-through relationship. During 2016, University researchers successfully completed The University has a diversified revenue base. No single the development and implementation of the Ocean source generated more than 29% of the total fiscal year Observatories Initiative’s Cabled Array, an underwater ocean 2016 revenues of $5.0 billion. observatory off the Pacific Northwest coast. In fiscal year 2015, the project generated $24.0 million in revenue, with a decline to $0.8 million as the project came to a close in fiscal year Sources of Funds 2016. Overall, consistent with fiscal year 2015, the slight decrease in 1% INVESTMENT INCOME 2% OTHER federal grant and contract revenues was offset by increases 4% SALES AND SERVICES OF EDUCATIONAL DEPARTMENTS 19% TUITION AND FEES in state and local, and nongovernmental, revenues. State and 7% AUXILIARY ENTERPRISES local revenues increased as a result of a boost in funding from the State Need Grant totaling $4.4 million. Nongovernmental 4% GIFTS revenue continued its five-year increasing trend, due to the 7% STATE FUNDING FOR cultivation of relationships with new sponsors and the addition OPERATIONS AND CAPITAL EXPENDITURES of new grants and contracts related to the portfolios of long- standing sponsor relationships. 27% GRANTS AND 29% PATIENT SERVICES CONTRACTS Grants and contracts provide the opportunity for graduate and undergraduate students to work with nationally recognized faculty in research as part of their educational experience.

Uses of Funds

7% DEPRECIATION/ 2% OTHER AMORTIZATION

23% INSTRUCTION 24% MEDICAL RELATED

Unaudited – see accompanying notes to financial statements

8% AUXILIARY 15% RESEARCHFINANCIAL REPORT 2016 / 9 3% SCHOLARSHIPS & FELLOWSHIPS 5% OPERATION & MAINTENANCE OF PLANT 5% INSTITUTIONAL SUPPORT 8% ACADEMIC SUPPORT MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)

Grant and contract revenue is earned when direct expenditures Tuition revenue increases were partially offset by an (such as researchers’ compensation or purchases of goods increase in scholarships and fellowships expense, and and services) are made; therefore, there is little effect on the scholarship allowances of $12 million in 2016, $11 million in University’s operating margin as a result of this direct expense 2015, and $2 million in 2014. reimbursement process. Self-sustaining educational programs (fee-supported Facility and administrative expenses necessary to support grants programs) include the following amounts for each of the and contracts are reimbursed by sponsors, along with direct fiscal years 2016, 2015 and 2014: UW Educational Outreach costs, by an indirect cost recovery. The current indirect cost (the continuing education branch of the University) $108 recovery rate for research grants is approximately 29 cents on million, $97 million and $96 million, respectively, summer every direct expenditure dollar. quarter tuition $54 million, $59 million and $42 million, respectively, and for Business School and School of Primary Nongrant Funding Sources Medicine programs $50 million, $47 million and $45 million, The University relies primarily on student tuition and fees and respectively. state appropriations as revenue sources to support its nongrant- funded educational operating expenses. State support for Patient Services–UW Medicine education has increased during the last few fiscal years, but is The financial statements of the University include the still significantly below historical levels. operations of the School of Medicine, three hospitals, associated physician group and clinics, Airlift Northwest, and Operating Support for Instruction the University’s share of two joint ventures. These entities, together with Harborview Medical Center (not included (in millions) 2016 2015 2014 in the University’s financial statements – see Note 13) State operating comprise UW Medicine, an umbrella organization serving to appropriations $ 302 24% $ 255 22% $ 262 24% coordinate these activities and promote quality healthcare Operating tuition in the Pacific Northwest and beyond, and to conduct cutting- and fees 661 53% 638 55% 594 54% edge medical research with worldwide benefit. Fees for self-sustaining educational programs 288 23% 276 23% 245 22% Patient care activities included in the University’s financial Total educational statements include: support $ 1,251 100% $ 1,169 100% $ 1,101 100% UW Medical Center (UWMC) is a 529-bed hospital that provides comprehensive healthcare services to the Puget Noncapital state appropriations are considered nonoperating Sound community and patients from throughout the revenue under GASB principles, and are reflected in the Pacific Northwest and beyond. UWMC also serves as the nonoperating section of the Statements of Revenues, Expenses major clinical, teaching and research site for students and Changes in Net Position; however, they are used solely for and faculty in the Health Sciences at the University. Over operating purposes. 18,000 patients receive inpatient care at UWMC each year. Specialized inpatient care needs are met by the Cancer Total revenue from tuition and fees, net of scholarship Center, the Regional Heart Center, the Neonatal Intensive allowances, increased to $949 million in fiscal year 2016, Care Unit (NICU) and the Organ Transplantation program. from $914 million in 2015 and $839 million in 2014. The 2016 increase was the result of enrollment growth, and moderate Valley Medical Center (VMC) is a 321-bed acute care tuition and fee rate increases for most student groups. Full- hospital and network of clinics that treats over 17,000 time equivalent (FTE) enrollment in undergraduate tuition- and inpatients per year, and is the oldest and largest public fee-based programs increased by 1.5% in the resident student district hospital in the state of Washington. VMC joined UW category, and by 6.4% in the nonresident student category. FTE Medicine in July, 2011. VMC’s Statements of Net Position enrollment in graduate and professional tuition- and fee-based and Statements of Revenues, Expenses and Changes in Net programs decreased by 1.7% in the resident student category Position are presented in a discrete column together with and increased by 5.4% in the nonresident student category. NWH on the financial statements of the University. Nonresident undergraduate tuition rates increased in 2016 by Northwest Hospital & Medical Center (NWH) is a 2%, while graduate and professional tuition rate increases were full-service medical facility with 281 beds, and treats generally in the 2-5% range, with variation by program and approximately 10,000 inpatients per year. NWH joined UW student residency. Rates for fee-based programs generally grew Medicine in January, 2010. NWH’s Statements of Net Position by 3-5%, with significant variation by program. These enrollment and Statements of Revenues, Expenses and Changes in Net growth and tuition and fee rate increases were partially Position are presented in a discrete column together with offset by a state legislatively mandated reduction in resident VMC on the financial statements of the University. undergraduate tuition rates of 5% below the prior year.

Unaudited – see accompanying notes to financial statements Unaudited – see accompanying notes to financial statements

UNIVERSITY OF WASHINGTON / 10 UW Neighborhood Clinics (Neighborhood Clinics) is Net appreciation (depreciation) includes both realized and a network of clinics with 12 neighborhood locations unrealized gains and losses. The unrealized gains, however, are throughout the greater Puget Sound area, providing not available until the underlying securities have been sold. Net primary, urgent and selected specialty care with a staff of investment income decreased by $182 million in 2016, compared 99 healthcare providers. The revenues, expenses, assets to a decrease of $254 million in 2015. The change in realized and and liabilities of Neighborhood Clinics are included in the unrealized gains and losses was the major factor in the decrease University’s financial statements. for both years. Sources of Funds UW Physicians (UWP) is the physician practice group Donor support increased by $20 million, or 10%, to $220 million for more than 1,800 faculty physicians and healthcare in 20161% from INVESTMENT $200 INCOMEmillion in 2015. Gifts are a2% key OTHER and necessary providers associated with UW Medicine. The revenues, 4%source SALES AND of supportSERVICES OF for a variety of purposes including capital expenses, assets and liabilities of UWP are included in the EDUCATIONALimprovements, DEPARTMENTS scholarships, research, and endowments19% TUITION for AND FEES University’s financial statements. 7%various AUXILIARY academic ENTERPRISES and research positions. 4% GIFTS Airlift Northwest is the preeminent provider of air Expenses 7% STATE FUNDING FOR medical transport services in the Pacific Northwest. Two primary functions of the University, instructionOPERATIONS and resear AND CAPITALch, EXPENDITURES The revenues, expenses, assets and liabilities of Airlift comprised 38% of total operating expenses. These dollars Northwest are included in the University’s financial provided instruction to nearly 56,000 students and funded over statements. 27% GRANTS AND 29% PATIENT SERVICES 5,000 researchCONTRACTS awards. Medical-related expenses, such as those The University is also a participant in two joint ventures: related to patient care, also continue to be one of the largest Seattle Cancer Care Alliance and Children’s University individual components. Medical Group. The University’s share of these activities is reflected in the University’s financial statements. Uses of Funds In combination, these organizations (not including VMC and NWH) contributed $1,435 million in patient services 7% DEPRECIATION/ 2% OTHER revenue in fiscal year 2016, $1,362 million in fiscal year AMORTIZATION 2015 and $1,207 million in fiscal year 2014. UWMC 23% INSTRUCTION generated 75% of this revenue in 2016, 76% in 2015 and 24% MEDICAL RELATED 77% in 2014. UWMC admissions exceeded 18,000 in 2016, a slight increase from 2015. Average patient length of stay was nearly 7.2 days, up from 7.0 days in 2015. The increase 8% AUXILIARY in patient services revenue during 2016 is partly due to 15% RESEARCH 3% SCHOLARSHIPS & higher capacity with the opening of three patient bed floors FELLOWSHIPS in the Montlake Tower, as well as strong case volumes in 5% OPERATION & oncology, cardiology and neurosurgery. MAINTENANCE OF PLANT 5% INSTITUTIONAL SUPPORT 8% ACADEMIC SUPPORT Gifts, Endowments and Investment Revenues Net investment income for the years ended June 30, 2016, 2015 and 2014 consisted of the following:

(in millions) 2016 2015 2014 Interest and dividends $ 69 $ 66 $ 73 Metropolitan Tract net income 22 16 8 Seattle Cancer Care Alliance increase 19 6 12 in equity Net appreciation (depreciation) of fair (54) 151 398 value of investments Investment expenses (11) (12) (10) Net investment income $ 45 $ 227 $ 481

Unaudited – see accompanying notes to financial statements

FINANCIAL REPORT 2016 / 11 9.5 Spendable Cash and Investments to Total Debt

3.0 2.5 2.7 2.0

RATIO 1.5 1.9 1.7 1.0 1.6 0.5 0.0 2016 2015 2014 Moody’s Public Universities (Aaa median 2015)

9.5 Total Debt to Operating Revenue

0.6 0.5 0.4 0.5 0.5 0.5 0.3 0.4

RATIO 0.2 0.1 0.0 2016 2015 2014 Moody’s Public Universities (Aaa median 2015)

9.5

Annual Debt Service Coverage

4.0 0.5 4.0 3.0 3.3 MANAGEMENT’S DISCUSSION AND ANALYSIS 3.1 2.0 2.2 RATIO 1.0

A comparative summary of the University’s expenses by The0.0 ratio of spendable cash and investments to operating 2016 2015 2014 Moody’s Public functional classification (purpose for which the costs are incurred) expenses (as defined by Moody’s Investors Service)Universities (Aaa median 2015) for the years ended June 30, 2016, 2015 and 2014 follows: measures the strength of available resources to cover annual operating expenses. This ratio, illustrated in the chart below, shows that in 2016 the University had (in millions) 2016 2015 2014 sufficient available resources to fund operations for a Operating expenses: period of 9.6 months. Educational and general instruction $ 1,172 $ 1,114 $ 1,037 Research 751 730 766 Spendable Cash and Investments Public service 39 35 42 9.5 Academic support 398 337 297 to Operating Expenses Student services 47 43 43 1.6 Institutional support 267 223 224 1.4 1.4 Operation and maintenance of plant 239 241 201 1.2 Scholarships and fellowships 156 147 138 1.0 Auxiliary enterprises 422 302 286 0.8 0.9 0.9 0.8 Medical-related 1,218 1,193 1,042 0.6 Depreciation/amortization 325 311 308 0.4 0.2 Total operating expenses $ 5,034 $ 4,676 $ 4,384 YEARS OF COVERAGE 0.0 2016 2015 2014 Moody’s Public Universities (Aaa median 2015) Overall, the University’s operating expenses increased by $358 million, or 8%, during 2016. Salaries expense increased $171 million, or 8%, due to employee merit increases and a modest increase in FTE’s. Expenses associated with employee benefits Operating Loss increased $99 million, or 15%, primarily due to higher costs The University’s operating loss increased to $682 million paid by the University for employee healthcare ($70 million), in 2016, from $464 million in 2015. The 2015 operating together with an increase in pension-related expenses as loss was a slight decrease from $470 million in 2014. calculated under GASB Statement No. 68 ($19 million). State appropriations are shown as nonoperating revenue, pursuant to GASB standards. If state appropriations In 2015, operating expenses increased by $292 million, or 7%, were classified as operating revenue, the operating loss over the prior year. Salaries expense increased $166 million, would have been $380 million in 2016, $209 million in or 8%, due to merit increases and a small increase in FTE’s. 2015 and $208 million in 2014. The University continues Despite an increase in the associated salaries, benefits expense to rely on nonoperating revenues such as gift revenues decreased by $12 million, or 2%, due primarily to a reduction and investment income distributions, in addition to state in pension expense as calculated under GASB Statement No. appropriations, to fund its operations. 68 when compared to the prior year, before implementation of the new accounting standard. Supplies and materials expense increased $44 million, or 11%, partly due to higher demand for medical supplies required by UWMC to support an increase in volumes related to patient care. Other operating expense increased by $35 million, or 34%, primarily due to increases in rental expense and costs associated with the University’s self- insurance program.

Unaudited – see accompanying notes to financial statements Unaudited – see accompanying notes to financial statements

UNIVERSITY OF WASHINGTON / 12 Unaudited – see accompanying notes to financial statements

FINANCIAL REPORT 2016 / 13 UNIVERSITY OF WASHINGTON

STATEMENTS OF NET POSITION

DISCRETE UNIVERSITY OF COMPONENT WASHINGTON UNITS 1

June 30, June 30, ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 2016 2015 2016 2015 CURRENT ASSETS: CASH AND CASH EQUIVALENTS (NOTE 2) $ 93,485 $ 82,905 $ 63,998 $ 39,960

INVESTMENTS, CURRENT PORTION (NOTE 6) 700,821 679,505 16,460 24,477 ACCOUNTS RECEIVABLE (NET OF ALLOWANCE OF $58,643 AND $66,902) (NOTE 5) 687,248 596,453 120,361 110,297 OTHER CURRENT ASSETS 57,262 43,459 64,854 63,444 TOTAL CURRENT ASSETS 1,538,816 1,402,322 265,673 238,178 NONCURRENT ASSETS: DEPOSIT WITH STATE OF WASHINGTON (NOTE 3) 59,929 51,647 – – INVESTMENTS, NET OF CURRENT PORTION (NOTE 6) 4,108,149 4,297,157 56,229 66,168 METROPOLITAN TRACT (NOTE 7) 133,525 121,146 – – STUDENT LOANS RECEIVABLE (NET OF ALLOWANCE OF $6,209 AND $4,974) (NOTE 4) 71,721 73,384 – – DUE FROM DISCRETE COMPONENT UNITS 84,946 93,240 – –

OTHER NONCURRENT ASSETS 156,726 150,323 129,118 110,753

CAPITAL ASSETS (NET OF ACCUMULATED DEPRECIATION OF $3,798,831 AND $3,566,289) (NOTE 8) 4,353,141 4,172,378 461,017 467,701 TOTAL NONCURRENT ASSETS 8,968,137 8,959,275 646,364 644,622 TOTAL ASSETS 10,506,953 10,361,597 912,037 882,800 DEFERRED OUTFLOWS OF RESOURCES: UNAMORTIZED LOSS ON BOND REFUNDING 23,465 25,813 6,066 6,435 PENSION-RELATED DEFERRED OUTFLOWS (NOTE 15) 155,890 85,602 – – TOTAL DEFERRED OUTFLOWS OF RESOURCES 179,355 111,415 6,066 6,435 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 10,686,308 $ 10,473,012 $ 918,103 $ 889,235

LIABILITIES AND DEFERRED INFLOWS OF RESOURCES CURRENT LIABILITIES: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 652,471 $ 626,085 $ 136,970 $ 121,160 UNEARNED REVENUES 173,379 155,114 – – OTHER CURRENT LIABILITIES 97,170 92,982 16,932 11,743 LONG-TERM LIABILITIES, CURRENT PORTION (NOTES 9-11) 137,036 124,137 13,619 9,001 TOTAL CURRENT LIABILITIES 1,060,056 998,318 167,521 141,904 NONCURRENT LIABILITIES: U.S. GOVERNMENT GRANTS REFUNDABLE 58,754 51,985 – – DUE TO PRIMARY GOVERNMENT – – 84,946 93,240

LONG-TERM LIABILITIES, NET OF CURRENT PORTION (NOTES 9-11) 2,676,019 2,484,522 307,901 320,232

NET PENSION LIABILITY (NOTE 15) 805,174 622,589 – – TOTAL NONCURRENT LIABILITIES 3,539,947 3,159,096 392,847 413,472 TOTAL LIABILITIES 4,600,003 4,157,414 560,368 555,376 DEFERRED INFLOWS OF RESOURCES: PROPERTY TAXES – – 26,744 9,625 PENSION-RELATED DEFERRED INFLOWS (NOTE 15) 122,417 269,135 – – TOTAL DEFERRED INFLOWS OF RESOURCES 122,417 269,135 26,744 9,625 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 4,722,420 4,426,549 587,112 565,001 NET POSITION NET INVESTMENT IN CAPITAL ASSETS 2,277,608 2,156,229 71,275 67,033 RESTRICTED: NONEXPENDABLE 1,419,311 1,321,979 1,927 1,943 EXPENDABLE 1,591,440 1,699,135 8,788 8,471 UNRESTRICTED 675,529 869,120 249,001 246,787 TOTAL NET POSITION 5,963,888 6,046,463 330,991 324,234 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 10,686,308 $ 10,473,012 $ 918,103 $ 889,235

1 See Note 18 See accompanying notes to financial statements. Dollars in thousands

UNIVERSITY OF WASHINGTON / 14 UNIVERSITY OF WASHINGTON

STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

DISCRETE UNIVERSITY OF COMPONENT WASHINGTON UNITS 1

Year ended June 30, Year ended June 30, REVENUES 2016 2015 2016 2015 OPERATING REVENUES: STUDENT TUITION AND FEES (NET OF SCHOLARSHIP ALLOWANCE OF $144,543 AND $142,685) $ 948,751 $ 914,419 $ – $ – NET PATIENT SERVICE REVENUES (NET OF PROVISION FOR UNCOLLECTIBLE ACCOUNTS OF $17,219 AND $15,947) 1,434,696 1,362,279 877,461 822,421 FEDERAL GRANTS AND CONTRACTS 990,396 999,189 – – STATE AND LOCAL GRANTS AND CONTRACTS 90,213 87,629 – – NONGOVERNMENTAL GRANTS AND CONTRACTS 213,834 193,840 – – SALES AND SERVICES OF EDUCATIONAL DEPARTMENTS 224,747 223,494 – – AUXILIARY ENTERPRISES: – HOUSING AND FOOD SERVICES 114,448 111,531 – – SPORTS PROGRAMS (NET OF SCHOLARSHIP ALLOWANCE OF $8,231 AND $6,495) 62,690 67,727 – – OTHER AUXILIARY ENTERPRISES 171,712 139,974 – – OTHER MEDICAL-RELATED REVENUE 51,001 45,157 45,633 53,165 OTHER OPERATING REVENUE 49,841 66,340 – – TOTAL OPERATING REVENUES 4,352,329 4,211,579 923,094 875,586

EXPENSES OPERATING EXPENSES (NOTE 12): SALARIES 2,363,848 2,192,781 422,294 384,254 BENEFITS 749,407 649,923 103,837 99,346 SCHOLARSHIPS AND FELLOWSHIPS 155,449 146,570 – – UTILITIES 51,421 60,454 8,673 8,480 SUPPLIES AND MATERIALS 481,428 463,624 138,058 161,694 PURCHASED SERVICES 750,078 707,678 158,279 142,741 DEPRECIATION/AMORTIZATION 324,602 310,960 46,822 49,238 OTHER 157,932 144,087 55,993 20,048 TOTAL OPERATING EXPENSES 5,034,165 4,676,077 933,956 865,801 OPERATING INCOME (LOSS) (681,836) (464,498) (10,862) 9,785

NONOPERATING REVENUES (EXPENSES) STATE APPROPRIATIONS 302,097 255,156 – – GIFTS 115,000 115,636 297 342 INVESTMENT INCOME (NET OF INVESTMENT EXPENSE OF $10,871 AND $11,741) 44,877 227,404 7,182 4,385 INTEREST ON CAPITAL ASSET-RELATED DEBT (72,678) (79,259) (22,023) (23,004) PELL GRANT REVENUE 47,699 48,471 – – PROPERTY TAX REVENUE – – 19,902 18,132 OTHER NONOPERATING REVENUES 13,133 22,273 12,475 630 NET NONOPERATING REVENUES 450,128 589,681 17,833 485 INCOME (LOSS) BEFORE OTHER REVENUES (231,708) 125,183 6,971 10,270 CAPITAL APPROPRIATIONS 39,221 20,812 – – CAPITAL GRANTS, GIFTS AND OTHER 21,645 21,986 (214) 2 GIFTS TO PERMANENT ENDOWMENTS 88,267 67,359 – 167 TOTAL OTHER REVENUES 149,133 110,157 (214) 169 INCREASE (DECREASE) IN NET POSITION (82,575) 235,340 6,757 10,439

NET POSITION NET POSITION – BEGINNING OF YEAR (NOTE 1) 6,046,463 5,811,123 324,234 313,795 NET POSITION – END OF YEAR $ 5,963,888 $ 6,046,463 $ 330,991 $ 324,234

1 See Note 18 See accompanying notes to financial statements. Dollars in thousands

FINANCIAL REPORT 2016 / 15 UNIVERSITY OF WASHINGTON

STATEMENTS OF CASH FLOWS

UNIVERSITY OF WASHINGTON

Year Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES 2016 2015 STUDENT TUITION AND FEES $ 913,941 $ 882,465 PATIENT SERVICES 1,449,111 1,328,801 GRANTS AND CONTRACTS 1,317,899 1,291,442 PAYMENTS TO SUPPLIERS (469,826) (466,542) PAYMENTS FOR UTILITIES (51,952) (60,056) PURCHASED SERVICES (740,575) (708,302) OTHER OPERATING DISBURSEMENTS (153,006) (139,559) PAYMENTS TO EMPLOYEES (2,357,060) (2,186,431) PAYMENTS FOR BENEFITS (683,786) (588,216) PAYMENTS FOR SCHOLARSHIPS AND FELLOWSHIPS (155,449) (146,570) LOANS ISSUED TO STUDENTS (14,474) (24,858) COLLECTION OF LOANS TO STUDENTS 22,906 23,530 OTHER MEDICAL CENTER RECEIPTS 51,001 45,157 AUXILIARY ENTERPRISE RECEIPTS 347,924 305,523 SALES AND SERVICES OF EDUCATIONAL DEPARTMENTS 222,515 220,004 RECEIPTS FROM OUTSIDE AFFILIATED AGENCIES 766,993 714,996 DISBURSEMENTS TO OUTSIDE AFFILIATED AGENCIES (757,478) (712,292) OTHER RECEIPTS 37,227 91,322 NET CASH USED BY OPERATING ACTIVITIES (254,089) (129,586)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES STATE APPROPRIATIONS 304,786 255,613 GIFTS AND GRANTS FOR OTHER THAN CAPITAL PURPOSES 47,699 48,471 PRIVATE GIFTS 95,519 91,574 PERMANENT ENDOWMENT RECEIPTS 88,267 67,359 DIRECT LENDING RECEIPTS 219,000 239,000 DIRECT LENDING DISBURSEMENTS (231,295) (240,607) TRANSFERS (TO) FROM COMPONENT UNITS 6,143 (100,945) OTHER 15,387 65,744 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 545,506 426,209

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES PROCEEDS FROM CAPITAL DEBT 388,420 450,469 STATE CAPITAL APPROPRIATIONS 41,078 20,928 CAPITAL GRANTS AND GIFTS RECEIVED 20,499 21,651 ACQUISITION AND CONSTRUCTION OF CAPITAL ASSETS (471,545) (432,885) PRINCIPAL PAYMENTS ON CAPITAL-RELATED DEBT AND LEASES (234,825) (386,874) INTEREST PAYMENTS ON CAPITAL-RELATED DEBT AND LEASES (79,780) (98,911) OTHER (7,407) 5,427 NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (343,560) (420,195)

UNIVERSITY OF WASHINGTON / 16 UNIVERSITY OF WASHINGTON

Year Ended June 30,

CASH FLOWS FROM INVESTING ACTIVITIES 2016 2015 PROCEEDS FROM SALES OF INVESTMENTS 8,495,341 6,931,799 DISBURSEMENTS FOR PURCHASES OF INVESTMENTS (8,512,358) (6,874,325) INVESTMENT INCOME 79,740 69,875 NET CASH PROVIDED BY INVESTING ACTIVITIES 62,723 127,349

NET INCREASE IN CASH AND CASH EQUIVALENTS 10,580 3,777 CASH AND CASH EQUIVALENTS-BEGINNING OF THE YEAR 82,905 79,128 CASH AND CASH EQUIVALENTS-END OF THE YEAR $ 93,485 $ 82,905

RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES OPERATING LOSS $ (681,836) $ (464,498) ADJUSTMENTS TO RECONCILE OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: DEPRECIATION/AMORTIZATION EXPENSE 324,602 310,960 CHANGES IN ASSETS AND LIABILITIES: RECEIVABLES 10,625 (13,716) OTHER ASSETS (17,749) (39,571) PENSION-RELATED DEFERRED INFLOWS AND OUTFLOWS OF RESOURCES (217,007) 264,460 NET PENSION LIABILITY 182,585 (289,763) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 66,750 24,763 UNEARNED REVENUE 18,265 (10,813) OTHER LONG-TERM LIABILITIES 51,244 89,920 U.S. GOVERNMENTAL GRANTS REFUNDABLE 6,769 (442) LOANS TO STUDENTS 1,663 (886) NET CASH USED BY OPERATING ACTIVITIES $ (254,089) $ (129,586)

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES STOCK GIFTS $ 19,481 $ 24,062 INCREASE IN INTEREST IN SEATTLE CANCER CARE ALLIANCE 18,932 6,319 NET UNREALIZED GAINS (LOSSES) (94,881) 79,724 TOTAL NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES $ (56,468) $ 110,105

See accompanying notes to financial statements. Dollars in thousands

FINANCIAL REPORT 2016 / 17 NOTES TO FINANCIAL STATEMENTS

NOTE 1: Summary of Significant Accounting Policies

FINANCIAL REPORTING ENTITY The University of Washington (University), an agency of the state of Washington, is governed by a 10-member Board of Regents appointed by the governor and confirmed by the state senate.

The financial statements include the individual schools, colleges and departments of the University, the University of Washington Medical Center (UWMC), Portage Bay Insurance (a wholly-owned subsidiary of the University) and certain affiliated operations determined to be a part of the University’s financial reporting entity. Affiliated organizations are evaluated for inclusion in the reporting entity as component units based on the significance of their relationship with the University.

Harborview Medical Center (HMC), a component unit of King County, Washington, is a related party to the University, but is not reflected as part of the financial reporting entity (Note 13).

Component units are legally separate organizations for which the University is financially accountable. Financial accountability is demonstrated when one of several conditions exist such as when the University appoints a voting majority of the organization’s board, is able to impose its will on the organization, receives specific financial benefit or incurs specific financial burdens from the organization, or the organization is fiscally dependent on the University. These entities may be reported in the financial statements of the University in one of two ways: the component units’ amounts may be blended with the amounts reported by the University, or they may be shown in a separate column, depending on the application of the criteria of Governmental Accounting Standards Board (GASB) Statement No. 61, “The Financial Reporting Entity: Omnibus.” All component units of the University meet the criteria for blending except Northwest Hospital & Medical Center and Valley Medical Center. They are reported discretely, since they have separate boards of directors and they do not provide services exclusively to the University.

BLENDED COMPONENT UNITS The following entities are presented as blended component units because they provide service exclusively or almost exclusively to the University. Financial information for these affiliated organizations is available from their respective administrative offices.

The Association of University Physicians dba UW Physicians (UWP) UWP was established as a tax-exempt entity for the exclusive benefit of the University of Washington School of Medicine (UWSOM). UWP employs UWSOM faculty and bills and collects for their clinical services as an agent for UWSOM. UWP had operating revenues of $234,798,000 and $204,079,000 in 2016 and 2015, respectively.

UW Medicine Neighborhood Clinics (Neighborhood Clinics) Neighborhood Clinics was established as a tax-exempt entity for the benefit of UWSOM, UWP and its affiliated medical centers, HMC and UWMC, exclusively for charitable, scientific and educational purposes. Neighborhood Clinics was organized to coordinate and develop patient care in a community clinical setting. They enhance the academic environment of UWSOM by providing additional sites of primary care practice and training for faculty, residents and students. Neighborhood Clinics had operating revenues of $15,076,000 and $16,008,000 in 2016 and 2015, respectively.

Real estate financing entities The entities listed below are nonprofit corporations that were formed to acquire or construct certain real properties for the benefit of the University in fulfilling its educational, medical or scientific research missions. These entities issue tax- exempt and taxable bonds to finance these activities.

• Washington Biomedical Research Properties I • Washington Biomedical Research Properties II • Washington Biomedical Research Facilities 3 • Washington Biomedical Research Properties 3.2

These entities collectively have net capital assets of $277,820,000 and $278,928,000, and long-term debt of $424,766,000 and $281,550,000, in 2016 and 2015, respectively. These amounts are reflected in the University’s financial statements.

UNIVERSITY OF WASHINGTON / 18 DISCRETELY PRESENTED COMPONENT UNITS Northwest Hospital UW Medicine and Northwest Hospital & Medical Center (NWH), a 281-bed full-service acute care hospital, have been affiliated since January 1, 2010. The University is the sole corporate member of NWH. The audited financial statements of NWH are available by contacting Northwest Hospital & Medical Center at 1550 N. 115th Street, Seattle, Washington 98133- 9733, Mailstop X-112.

Valley Medical Center UW Medicine and Public Hospital District No. 1 of King County, a Washington public hospital district dba Valley Medical Center (VMC), have had a strategic alliance since July 1, 2011. Valley Medical Center owns and operates a 321-bed full- service acute care hospital and 45 clinics located throughout southeast King County. The audited financial statements of VMC are available by contacting Valley Medical Center at 400 S. 43rd Street, Renton, Washington 98055 or online at the following address: www.valleymed.org/about-us/financial-information/.

JOINT VENTURES The University, together with Seattle Children’s Hospital and Fred Hutchinson Cancer Research Center, established the Seattle Cancer Care Alliance (SCCA). The SCCA integrates the cancer research, teaching and clinical cancer programs of all three institutions to provide state-of-the-art cancer care. Each member of the SCCA has a one-third interest. The University accounts for its interest in SCCA under the equity method and has recorded $126,636,000 and $107,704,000 in Other Assets, together with $18,932,000 and $6,319,000 in Investment Income, for its share of the joint venture in 2016 and 2015, respectively.

The University and Seattle Children’s Hospital established Children’s University Medical Group (CUMG) to assist the organizations in carrying out their pediatric patient care, charitable, educational, and scientific missions. CUMG employs UWSOM faculty physicians, and bills and collects for their services as an agent for UWSOM. The University records revenue from CUMG based on the income distribution plan effective December 31, 2008. The University’s patient services receivable (Note 5) includes amounts due from CUMG of $16,905,000 and $18,852,000 in 2016 and 2015, respectively.

CHANGES IN REPORTING ENTITY In fiscal year 2016, Washington Biomedical Research Properties 3.2 began operations and commenced construction of facilities that will be utilized by the University to fulfill its mission. Based on its relationship with the University, management has determined that it meets the criteria of a blended component unit for presentation in the University’s financial statements. As such, its financial activities are aggregated with those of the University and intra-entity transactions have been eliminated.

BASIS OF ACCOUNTING The financial statements of the University have been prepared in accordance with GASB Statement No. 34, Basic“ Financial Statements — and Management’s Discussion and Analysis — for State and Local Governments,” as amended by GASB Statement No. 35, “Basic Financial Statements — and Management’s Discussion and Analysis — for Public Colleges and Universities.” The University is reporting as a special-purpose government engaged in business-type activities (BTA). In accordance with BTA reporting, the University presents Management’s Discussion and Analysis, Statements of Net Position, Statements of Revenues, Expenses and Changes in Net Position, Statements of Cash Flows and Notes to the Financial Statements. The financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting.

Under the accrual basis of accounting, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Significant intra-agency transactions have been eliminated. The University reports capital assets net of accumulated depreciation/amortization (as applicable), and reports depreciation/amortization expense in the Statements of Revenues, Expenses and Changes in Net Position.

On July 1, 2014, the University adopted GASB Statement No. 68, “Accounting and Financial Reporting for Pensions.” This Statement requires governments providing defined benefit pensions to their employees to recognize their proportionate share of the pension plan’s net pension liability or net pension asset, which is measured as the total pension liability less the amount of the pension plan’s fiduciary net position. The total pension liability is determined by discounting projected benefit payments based on the benefit terms and legal agreements existing at the pension plan’s fiscal year end. This Statement requires that most changes in the net pension liability be included in pension expense in the period of the change. Prior to adopting this Statement, the University reported pension expense based on cash contributions paid to

FINANCIAL REPORT 2016 / 19 NOTES TO FINANCIAL STATEMENTS (CONTINUED) the pension plan administrator. In addition to the reporting changes described above, implementation of this Statement resulted in the restatement of fiscal year 2015 beginning unrestricted net position, reducing it by $831,426,000. Below is a reconciliation of total net position as previously reported at June 30, 2014, to the restated net position.

(Dollars in thousands) NET POSITION AT JUNE 30, 2014, AS PREVIOUSLY REPORTED $ 6,642,549 ADOPTION OF GASB STATEMENT NO. 68 (831,426) NET POSITION AT JULY 1, 2014, AS RESTATED $ 5,811,123

On July 1, 2014, the University adopted GASB Statement No. 69, “Government Combinations and Disposals of Government Operations.” This Statement requires disclosures to be made about government combinations and disposals of government operations, in order to enable financial statement users to evaluate the nature and financial effects of those transactions. There was no impact to the financial statements of the University as a result of implementing this Statement.

On July 1, 2014, the University adopted GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date,” an amendment of GASB Statement No. 68, “Accounting and Financial Reporting for Pensions.” The purpose of this Statement is to address application of the transition provisions of GASB Statement No. 68, and to clarify guidance regarding contributions made by a state or local government employer, or nonemployer contributing entity, to a defined benefit pension plan after the measurement date of the government’s beginning net pension liability. Implementation of this Statement impacted the restatement of fiscal year 2015 beginning unrestricted net position required by GASB Statement No. 68, reducing it by $80,926,000.

On July 1, 2015, the University adopted GASB Statement No. 72 “Fair Value Measurement and Application”. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. It also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The Statement establishes a three-level hierarchy of inputs to valuation techniques used to measure fair value and requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation techniques. There was no impact to the fair value measurements presented in the Statements of Net Position or Statements of Revenues, Expenses and Changes in Net Position of the University as a result of implementing this Statement. University disclosures related to fair value measurement, however, have been updated where necessary (Note 6).

On July 1, 2015, the University adopted the portion of the guidance in GASB Statement No. 73, “Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68” that pertains to amendments to Statement No. 68. There was no impact to the financial statements of the University as a result of implementing this portion of the Statement.

On July 1, 2015, the University adopted Statement No. 76, “The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments”. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. There was no impact to the financial statements of the University as a result of implementing this Statement.

On July 1, 2015, the University adopted GASB Statement No. 82, “Pension Issues—an amendment of GASB Statements No. 67, No. 68, and No. 73”. This Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance of Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The University either already complies with, or is unaffected by, the topics addressed by this Statement, therefore, there was no impact to the University’s financial statements, note disclosures or required supplementary information as a result of implementation.

ACCOUNTING STANDARDS IMPACTING THE FUTURE In June 2015, the GASB issued Statement No. 73, “Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68”. The portion of this guidance pertaining to pension plans not within the scope of Statement No. 68 will be effective for the fiscal year ending June 30, 2017. The guidance is intended to improve the financial reporting of governments whose employees are provided with pensions that are not within the scope of Statement No. 68, and improve the usefulness of information associated with governments that hold assets accumulated for purposes of providing defined benefit pensions not within the scope of Statement No. 68. The University of Washington Supplemental Retirement Plan (UWSRP, Note 15) does not currently fall within the scope of GASB 68 since the assets set aside to pay retiree benefits have not been segregated and

UNIVERSITY OF WASHINGTON / 20 restricted in a trust or equivalent arrangement. Implementing this Statement will require that the University recognize the remaining unamortized pension plan liability for the UWSRP, together with any associated deferred inflows and deferred outflows of resources, and to restate net position for all periods presented.

In June 2015, the GASB issued Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions” (OPEB), which will be effective for the fiscal year ending June 30, 2018. This Statement establishes standards of accounting and financial reporting for defined benefit OPEB and defined contribution OPEB that are provided to the employees of state and local governmental employers through plans that are administered through trusts or equivalent arrangements. This Statement also establishes standards of accounting and financial reporting for OPEB plans that are not administered through trusts or equivalent arrangements. The University’s participation in OPEB is described in Note 14, and does not currently impact the University’s financial statements. As a result of implementing this Statement, the University will be required to recognize its proportionate share of the state’s actuarially determined OPEB liability, net of any assets segregated and restricted in a qualified trust, together with any associated deferred inflows and deferred outflows of resources, benefit expense related to the plan, and to restate net position for all periods presented.

In August 2015, the GASB issued Statement No. 77, “Tax Abatement Disclosures”, which will be effective for the fiscal year ending June 30, 2017. This Statement defines a tax abatement as resulting from an agreement between a government and an individual or entity in which the government promises to forgo tax revenues, and in exchange, the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens. This Statement requires governments that enter into tax abatement agreements to disclose information about these agreements. VMC, a discretely presented component unit of the University, is the only organization within the University’s financial reporting entity that receives tax revenues. VMC does not enter into tax abatement agreements, therefore, implementation of this Statement is not expected to have an impact on the financial statements of the University.

In January 2016, the GASB issued Statement No. 80, “Blending Requirements for Certain Component Units”, which will be effective for the fiscal year ending June 30, 2017. This Statement amends requirements for the financial statement presentation of component units of all state and local governments. New criteria will require presenting a component unit’s balances and activities blended with the primary government, and the elimination of intra-entity transactions, when the component unit is incorporated as a not-for-profit corporation and the primary government is the corporation’s sole corporate member. The University is the sole corporate member of NWH, which is currently presented as a discretely presented component unit. Implementation of this Statement will require that the University begin reflecting NWH as a blended component unit, beginning in the fiscal year ending June 30, 2017.

In March 2016, the GASB issued Statement No. 81, “Irrevocable Split-Interest Agreements”, which will be effective for the fiscal year ending June 30, 2018. Irrevocable split-interest agreements are a specific type of giving arrangement used by donors to provide resources to two or more beneficiaries, including governments. This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Implementation of this Statement will require the University to report its beneficial interest in irrevocable split-interest agreements, including those held by an intermediary such as an outside trust. The University has lead income rights in many outside trusts. This Statement will require that the beneficial interest received be initially recorded at fair value as a deferred inflow of resources, and then revalued at the end of each financial reporting period with the change in fair value recognized as revenue. The University currently reports revenue based on income distributions received.

USE OF ESTIMATES The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles involves management estimates that affect the reported amounts of assets, liabilities, deferrals, revenues and expenses during the reporting period. Actual results could differ from those estimates; however, in each case, the University believes that allowances, reserves and estimates of expected liabilities are adequate.

The University estimates the pollution remediation liability (Note 9) by reviewing the current status of known polluted sites and developing estimates of cleanup costs. These estimates are subject to change due to improvements in technology, inflation, changes in the scope of work, and the pursuit of reimbursement from other responsible parties.

Allowances (Notes 4 and 5) are estimates based on the historical experience of the University and current economic circumstances with respect to the collectability of accounts and loans receivable.

FINANCIAL REPORT 2016 / 21 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The University’s share of pension plan assets, liabilities, deferrals and expenses related to the plans administered by the Washington Department of Retirement Systems, and the liability and expense related to the UWSRP (Note 15), are based on actuarial valuations prepared by an external actuary. The results of an actuarial valuation are estimates based on historical data, actuarial assumptions, and the demographics of the employee population.

The self-insurance reserve (Note 16) is estimated through an externally prepared actuarial calculation using individual case-basis valuations and statistical analyses. Considerable variability is inherent in such estimates.

OTHER ACCOUNTING POLICIES Investments. Investments are generally carried at fair value. The fair value of all debt and equity securities with a readily determinable fair value is based on quotations from major securities exchanges. Alternative investments, which are not readily marketable, are carried at the estimated fair values provided by the investment managers. The University reviews and evaluates the values provided by the investment managers and agrees with the valuation methods and assumptions used in determining the fair value of the alternative investments. Those estimated fair values may differ significantly from the values that would have been used had a ready market for these securities existed. Investments under long-term strategies are considered noncurrent. Short-term investments consist primarily of cash equivalents and fixed income vehicles which management has identified as available to meet the day-to-day obligations of the University.

Inventories. Inventories are carried at the lower of cost or market value and are reflected on the Statements of Net Position in Other Current Assets. Consumable inventories, consisting of expendable materials and supplies, are generally valued using the weighted-average method. Merchandise inventories are generally valued using the first-in, first-out method.

Capital Assets. Land, buildings, equipment, library books and intangibles are stated at cost or, if acquired by gift, at fair market value at the date of the gift. Additions, replacements, major repairs and renovations are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, generally 15 to 50 years for building components, 20 to 50 years for infrastructure and land improvements, 5 to 7 years for equipment, 15 years for library books, and 3 to 15 years for intangibles.

Capital assets which are financed by capital leases are depreciated in the same manner as other capital assets.

Interest incurred on capital asset-related debt was $85,856,000 and $86,931,000 during 2016 and 2015, respectively. The University capitalized $13,178,000 and $7,672,000 of this cost during 2016 and 2015, respectively.

Unearned Revenues. Unearned revenues occur when funds have been collected in advance of when the associated goods or services have been provided, such as advance ticket sales, summer quarter tuition and unspent cash advances on certain grants.

Cost-Sharing Pension Plans. The net pension asset or liability is measured as the University’s proportionate share of the collective total pension liability, less the fiduciary net position, of the cost-sharing pension plans in which the University participates. The total pension liability is determined by discounting projected benefit payments based on the benefit terms and legal agreements existing at the pension plan’s fiscal year-end. Projected benefit payments are required to be discounted using a single rate that reflects the expected rate of return on investments, to the extent that plan assets are available to pay benefits. The University’s proportionate share is determined based on the relationship of University contributions to total contributions to the plan by all participating employers. Pension expense is recognized for benefits earned during the period, interest on the unfunded liability and changes in benefit terms. Differences between expected and actual experience, and changes in assumptions about future economic or demographic factors, are reported as deferred inflows of resources or deferred outflows of resources, and are recognized over the average expected remaining service period for employees eligible for pension benefits. Differences between expected and actual investment returns are reported as deferred inflows of resources or deferred outflows of resources, and are recognized over five years. Contributions made to the plan subsequent to the measurement date and prior to the University’s fiscal year-end are reported as a deferred outflow of resources, and recognized in the subsequent fiscal year. The measurement date for the cost-sharing plans in which the University participates is June 30 of the prior fiscal year.

Split-Interest Agreements. Under such agreements, donors/beneficiaries receive income for their lifetime or for a stated term, with the University receiving the remaining principal. The University records an asset related to these agreements at fair market value at year-end. The University also records a liability related to the split-interest agreements equal to the present value of expected future distributions; the discount rates applied range from 3.4% to 7.5%.

UNIVERSITY OF WASHINGTON / 22 Compensated Absences. University employees accrue annual leave at rates based on length of service, and for sick leave at the rate of one day per month. Sick leave balances, which are unlimited, can be converted to monetary compensation annually at 25% of the employees’ normal compensation rate for any balance that exceeds 480 hours, or for any balance upon retirement or death. Annual leave accrued at June 30, 2016 and 2015 was $104,330,000 and $93,328,000, respectively, and is included in Accounts Payable and Accrued Liabilities. Sick leave accrued at June 30, 2016 and 2015 was $42,191,000 and $37,984,000, respectively, and is included in Long-Term Liabilities (Note 9).

Scholarship Allowances. Tuition and Fees are reported net of scholarship allowances that are applied to students’ accounts from external funds that have already been recognized as revenue by the University. Student aid paid directly to students is reported as scholarships and fellowships expense.

Net Patient Services Revenue. Patient services revenue is recorded at the estimated net realizable amounts from patients, third-party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. Revenue related to charity care provided to patients is excluded from net patient services revenue.

Third-party payor agreements with Medicare and Medicaid provide for payments at amounts different from established rates and are part of contractual adjustments to net patient services revenue. Medicare reimbursements are based on a tentative rate, with final settlement determined after submission of annual cost reports and audits thereof by the Medicare fiscal intermediary. The estimated final settlements for open years are based on preliminary cost findings after giving consideration to interim payments that have been received on behalf of patients covered under these programs.

For more information about Net Patient Services Revenue, see the audited financial statements of the UW Medicine Clinical Enterprise - UW Division, which are contained in the latest Bondholders Report at http://f2.washington.edu/ treasury/policies-reports/reports/financing.

Charity Care. Charity care provides patient care without charge or at amounts less than established rates to patients who meet certain criteria under the charity care policy. Records are maintained to identify and monitor the level of charity care provided. These records include charges foregone for services and supplies furnished under the charity care policy to the uninsured and the underinsured. Collection of these amounts is not pursued and as such they are not reported as net patient service revenue. The cost of charity provided is calculated based on the aggregate relationship of costs to charges. The estimated cost of charity care provided for fiscal years ended June 30, 2016 and 2015 was $14,690,000 and $11,530,000, respectively.

State Appropriations. The state of Washington appropriates funds to the University on both annual and biennial bases. These revenues are reported as nonoperating revenues in the Statements of Revenues, Expenses and Changes in Net Position when underlying expenditures are made.

Operating Activities. The University’s policy for reporting operating activities in the Statements of Revenues, Expenses and Changes in Net Position is to include activities that generally result from exchange transactions. Examples of exchange transactions are payments received for tuition, patient services or grants under which services are performed, as well as payments made for the delivery of goods or services. Certain other significant revenue streams used for operations, such as state appropriations, Pell grants, gifts and investment income are recorded as nonoperating revenues, as prescribed by GASB Statement No. 35.

Net Position. The University’s net position is classified as follows: Net investment in capital assets: The University’s investments in capital assets, less accumulated depreciation/amortization, net of outstanding debt obligations related to capital assets;

Restricted net position – nonexpendable: Net position subject to externally-imposed requirements that it be maintained permanently by the University, including permanent endowment funds and annuity and life income trusts;

Restricted net position – expendable: Net position that the University is obligated to spend in accordance with restrictions imposed by external parties, generally for scholarships, research and departmental uses;

Unrestricted net position: Net position not subject to externally-imposed restrictions and which may be designated for specific purposes by management or the Board of Regents.

Tax Exemption. The University, as an agency of the state of Washington, is not subject to federal income tax pursuant to Section 115 of the Internal Revenue Code, except for tax on unrelated business income and certain federal excise taxes.

Reclassifications. Certain amounts in the 2015 financial statements have been reclassified for comparative purposes to conform to the presentation in the 2016 financial statements.

FINANCIAL REPORT 2016 / 23 NOTES TO FINANCIAL STATEMENTS

NOTE 2: Cash and Cash Equivalents Cash includes cash on hand, petty cash and bank deposits. Cash equivalents includes treasury securities with maturities of less than 90 days and money market funds with remaining maturities of one year or less at the time of purchase. Most cash, except for cash held at the University and cash held in foreign banks, is covered by the Federal Deposit Insurance Corporation (FDIC), or if greater than FDIC limits, by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC).

At June 30, 2016 and 2015, bank balances not covered by FDIC or PDPC protection were $334,000 and $391,000, respectively.

NOTE 3: Deposit with State of Washington State law requires the University to deposit certain funds with the state treasurer, who holds and invests the funds. These deposits include amounts held for the University’s permanent land grant funds, and the University of Washington building fee collected from students. The fair value of these funds approximates the carrying value.

NOTE 4: Student Loans Receivable Net student loans of $71,721,000 and $73,384,000 at June 30, 2016 and 2015, respectively, consist of $55,804,000 and $55,537,000 from federal programs, and $15,917,000 and $17,847,000 from University programs, at June 30, 2016 and 2015, respectively. Interest income from student loans for the years ended June 30, 2016 and 2015 was $1,881,000 and $1,690,000, respectively. These unsecured loans are made primarily to students who reside in the state of Washington.

NOTE 5: Accounts Receivable The major components of accounts receivable as of June 30, 2016 and 2015 were:

(Dollars in thousands) 2016 2015 NET PATIENT SERVICES $ 303,109 $ 325,813 GRANTS AND CONTRACTS 172,429 179,621 INVESTMENTS 137,359 31,392 DUE FROM OTHER AGENCIES 54,819 47,851 SALES AND SERVICES 34,590 32,357 TUITION 16,040 12,094 ROYALTIES 3,234 4,893 STATE APPROPRIATIONS 1,384 5,930 OTHER 22,927 23,404 SUBTOTAL 745,891 663,355 LESS: ALLOWANCE FOR DOUBTFUL ACCOUNTS (58,643) (66,902) TOTAL $ 687,248 $ 596,453

UNIVERSITY OF WASHINGTON / 24 NOTE 6: Investments

INVESTMENTS - GENERAL The Board of Regents of the University of Washington is responsible for the management of the University’s investments. The Board of Regents establishes investment policy, which is carried out by the Chief Investment Officer. In 2016, the Board of Regents approved the establishment of the University of Washington Investment Management Company (“UWINCO”), an internal investment management company. The former investment management advisory committee was replaced with an investment management advisory board known as the University of Washington Investment Management Company Board (“UWINCO Board”).

The University holds significant amounts of investments that are measured at fair value on a recurring basis. Shown below is a tabular format for disclosing the levels within the fair value hierarchy. The three-tier hierarchy of inputs is summarized as follows:

• Level 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities that a government can access at the measurement date • Level 2 Inputs – Inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly or indirectly • Level 3 Inputs – Unobservable inputs for an asset or liability

TABLE 1 – INVESTMENTS (Dollars in thousands) Fair Value Measurement Inputs Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Inputs INVESTMENTS BY FAIR VALUE LEVEL 2016 Assets (Level 1) (Level 2) (Level 3) FIXED INCOME SECURITIES U.S. TREASURY SECURITIES $ 640,448 $ 13,646 $ 626,802 $ – U.S. GOVERNMENT AGENCY 535,750 – 535,750 – MORTGAGE BACKED 172,199 – 172,199 – ASSET BACKED 133,567 – 133,567 – CORPORATE AND OTHER 141,644 21,243 120,401 – TOTAL FIXED INCOME SECURITIES 1,623,608 34,889 1,588,719 – EQUITY SECURITIES GLOBAL EQUITY INVESTMENTS 626,622 573,552 52,025 1,045 PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 11,291 6,160 – 5,131 REAL ESTATE 3,851 – – 3,851 OTHER 226 – – 226 TOTAL EQUITY SECURITIES 641,990 579,712 52,025 10,253 TOTAL INVESTMENTS BY FAIR VALUE LEVEL 2,265,598 $ 614,601 $ 1,640,744 $ 10,253 INVESTMENTS MEASURED USING NET ASSET VALUE (NAV) GLOBAL EQUITY INVESTMENTS 1,055,272 ABSOLUTE RETURN STRATEGY FUNDS 463,366 PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 329,719 REAL ASSETS FUNDS 183,481 OTHER 106,729 TOTAL INVESTMENTS MEASURED USING NAV 2,138,567 TOTAL INVESTMENTS MEASURED AT FAIR VALUE 4,404,165 CASH EQUIVALENTS AT AMORTIZED COST 404,805 TOTAL INVESTMENTS $ 4,808,970

FINANCIAL REPORT 2016 / 25 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

TABLE 1 – INVESTMENTS continued (Dollars in thousands) Fair Value Measurement Inputs Quoted Prices in Active Significant Other Significant Markets for Identical Observable Inputs Unobservable Inputs INVESTMENTS BY FAIR VALUE LEVEL 2015 Assets (Level 1) (Level 2) (Level 3) FIXED INCOME SECURITIES U.S. TREASURY SECURITIES $ 607,182 $ 3,484 $ 603,698 $ – U.S. GOVERNMENT AGENCY 585,745 – 585,745 – MORTGAGE BACKED 204,546 – 204,546 – ASSET BACKED 227,077 – 227,077 – CORPORATE AND OTHER 103,781 23,211 80,570 – TOTAL FIXED INCOME SECURITIES 1,728,331 26,695 1,701,636 – EQUITY SECURITIES GLOBAL EQUITY INVESTMENTS 939,403 839,007 99,943 453 PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 11,405 6,458 – 4,947 REAL ESTATE 7,829 – – 7,829 OTHER 514 – – 514 TOTAL EQUITY SECURITIES 959,151 845,465 99,943 13,743 TOTAL INVESTMENTS BY FAIR VALUE LEVEL 2,687,482 $ 872,160 $ 1,801,579 $ 13,743 INVESTMENTS MEASURED USING NET ASSET VALUE (NAV) GLOBAL EQUITY INVESTMENTS 823,675 ABSOLUTE RETURN STRATEGY FUNDS 510,975 PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 340,231 REAL ASSETS FUNDS 191,083 OTHER 137,496 TOTAL INVESTMENTS MEASURED USING NAV 2,003,460 TOTAL INVESTMENTS MEASURED AT FAIR VALUE 4,690,942 CASH EQUIVALENTS AT AMORTIZED COST 285,720 TOTAL INVESTMENTS $ 4,976,662

Fixed income and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Fixed income and equity securities classified in Level 2 are valued using observable inputs including quoted prices for similar securities and interest rates. Private equity, real assets and other investments classified in Level 3 are valued using either discounted cash flow or market comparable techniques.

The University’s interests in certain non-readily marketable alternative investments, such as hedge funds and private equity limited partnerships, are stated at fair value based on net asset value (NAV) estimates used as a practical expedient reported to the University by investment fund managers.

UNIVERSITY OF WASHINGTON / 26 The valuation method for investments measured using NAV per share (or its equivalent) is presented on the following table.

TABLE 2 – INVESTMENTS MEASURED USING NAV (Dollars in thousands) Unfunded Redemption Frequency Redemption 2016 Fair Value Commitments (If Currently Eligible) Notice Period GLOBAL EQUITY INVESTMENTS $ 1,055,272 $ 23,846 MONTHLY TO ANNUALLY 30-60 DAYS ABSOLUTE RETURN STRATEGY FUNDS 463,366 15,728 QUARTERLY TO ANNUALLY 30-60 DAYS PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 329,719 204,399 N/A – REAL ASSETS FUNDS 183,481 55,503 N/A – OTHER 106,729 850 QUARTERLY TO ANNUALLY 30-95 DAYS TOTAL INVESTMENTS MEASURED USING NAV $ 2,138,567

Unfunded Redemption Frequency Redemption 2015 Fair Value Commitments (If Currently Eligible) Notice Period GLOBAL EQUITY INVESTMENTS $ 823,675 $ 16,798 MONTHLY TO ANNUALLY 30-60 DAYS ABSOLUTE RETURN STRATEGY FUNDS 510,975 68,820 QUARTERLY TO ANNUALLY 30-60 DAYS PRIVATE EQUITY AND VENTURE CAPITAL FUNDS 340,231 129,715 N/A – REAL ASSETS FUNDS 191,083 90,883 N/A – OTHER 137,496 23,685 QUARTERLY TO ANNUALLY 30-95 DAYS TOTAL INVESTMENTS MEASURED USING NAV $ 2,003,460

1. Global Equity: This investment category includes public equity investments in separately managed accounts, long-only comingled funds, unconstrained limited partnerships, and passive market indices. Fair values have been determined using the NAV per share of the investments, except for the separately managed accounts. For 2016 and 2015, approximately 62% of the value of the investments in this category can be redeemed within 60 days, and 94% can be redeemed within one year. The remaining balance of these investments contain restrictions that do not allow for redemption within one year. 2. Absolute Return: This category includes investments in stable income and low-to-medium beta funds. Management of these funds seeks low correlation to broad equity markets by investing in assets that exhibit low volatility, deep discounts, and/or hedges against market downturns. Fair values have been determined using the NAV per share of the investments. Approximately 89% of the value of the investments in this category can be redeemed within one year. The remaining balance of these investments contain restrictions that do not allow for redemption within one year. 3. Private equity: This category includes buyout, venture, and special situations funds. Fair values have been determined using the NAV per share (or its equivalent) of the ownership interest in partners’ capital. These investments can never be redeemed with the funds. Distributions from each fund will be received as the underlying investments of the funds are liquidated. It is expected that the underlying assets of the funds will be liquidated over the next 7 to 10 years. 4. Real assets: This category includes real estate, natural resources, and other hard assets. Fair values have been determined using the NAV per share (or its equivalent) of the ownership interest in partners’ capital. These investments can never be redeemed with the funds. Distributions from each fund will be received as the underlying investments of the funds are liquidated. It is expected that the underlying assets of the funds will be liquidated over the next 7 to 10 years. 5. Other: This category consists of fixed income and opportunistic investments and includes various types of non- investment grade and non-rated credit plus nominal equity exposure. Fair values have been determined using the NAV per share (or its equivalent) of the ownership interest in partners’ capital. Approximately 45% of the value of the investments in this category can be redeemed or anticipate distribution within one year. The remaining balance of these investments contain restrictions on redemption within one year or will be distributed as underlying investments are liquidated. It is expected that the underlying assets of the funds will be liquidated over the next 10 years.

FINANCIAL REPORT 2016 / 27 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

INVESTMENT POOLS The University combines most short-term cash balances into the Invested Funds Pool. At June 30, 2016 and 2015, the Invested Funds Pool totaled $1,491,692,000 and $1,526,380,000, respectively. The Invested Funds Pool also owns units in the Consolidated Endowment Fund (CEF) valued at $730,501,000 and $806,198,000 at June 30, 2016 and 2015, respectively. By University policy, departments with qualifying funds in the Invested Funds Pool receive distributions based on their average balances and on the type of balance. Campus depositors received 2% in fiscal years 2016 and 2015. Endowment operating and gift accounts received 3% in fiscal years 2016 and 2015. The difference between the actual earnings of the Invested Funds Pool and the calculated distributions is used to support activities benefiting all University departments.

The majority of the endowed funds are invested in the CEF, a pooled fund. Individual endowments purchase units in the pool on the basis of a per-unit valuation of the CEF at fair value on the last business day of the calendar quarter. Income is distributed based on the number of units held. RCW 24.55 of the Washington State Code and the Uniform Prudent Management of Institutional Funds Act allow for total return expenditure under comprehensive prudent standards.

Under the CEF spending policy approved by the Board of Regents, quarterly distributions to programs are based on an annual percentage rate of 4%, applied to the five-year rolling average of the CEF’s market valuation. Additionally, the policy allows for an administrative fee of 1% supporting campus-wide fundraising and stewardship activities (0.80%) and offsetting the internal cost of managing endowment assets (0.20%).

The University records its permanent endowments at the lower of original gift value or current market value in the Restricted Nonexpendable Net Position category. Of the endowments that are recorded at current market value, the net deficiency from the original gift value is $12,170,000 and $2,986,000 at June 30, 2016 and 2015, respectively.

Funds in irrevocable trusts managed by trustees other than the University are not reported in the financial statements. The fair value of these funds was $107,800,000 and $111,442,000 at June 30, 2016 and 2015, respectively. Income received from these trusts, which is included in Investment Income, was $4,487,000 and $6,162,000 for the fiscal years ended June 30, 2016 and 2015, respectively.

Net appreciation (depreciation) in the fair value of investments includes both realized and unrealized gains and losses on investments. The University realized net gains of $41,086,000 and $71,485,000 in fiscal years 2016 and 2015, respectively, from the sale of investments. The calculation of realized gains and losses is independent of the net appreciation of the fair value of investments. Realized gains and losses on investments that have been held in more than one fiscal year and are sold in the current year include the net appreciation (depreciation) of these investments reported in the prior year(s). The net appreciation (depreciation) in the fair value of investments during the years ended June 30, 2016 and 2015 were $(53,795,000) and $151,209,000, respectively.

FUNDING COMMITMENTS The University enters into contracts with investment managers to fund alternative investments. As of June 30, 2016 and 2015, the University had outstanding commitments to fund alternative investments of $300,326,000 and $329,901,000, respectively. These commitments are expected to be called over a multi-year time frame. The University believes it has adequate liquidity and funding sources to meet these obligations.

DERIVATIVES The University’s investment policies allow investing in various derivative instruments, including futures, swaps and forwards, to manage exposures within or across the portfolio and to improve the portfolio’s risk/return profile. Futures are financial contracts obligating the buyer to purchase an asset at a predetermined future date and price. Total return swaps involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. Derivative instruments are recorded on the contract date and are carried at fair value using listed price quotations or amounts that approximate fair value. The fair value and notional amount of investment derivative instruments outstanding at June 30, 2016 and 2015, categorized by type, are as follows:

TABLE 3 – INVESTMENT DERIVATIVES (Dollars in thousands) Notational Amount as of June 30 Fair Value as of June 30 Change in Fair Value DESCRIPTION 2016 2015 ASSET CLASSIFICATION 2016 2015 INCOME CLASSIFICATION 2016 2015 FUTURES CONTRACTS $ 64,428 $100,747 INVESTMENTS $ 65,218 $ 100,286 INVESTMENT INCOME $ 790 ($ 461)

UNIVERSITY OF WASHINGTON / 28 Credit exposure represents exposure to counterparties relating to financial instruments, where gains exceed collateral held by the University or losses are less than the collateral posted by the University. There was no credit exposure as of June 30, 2016 or 2015. No derivative instruments have been reclassified from a hedging instrument to an investment instrument.

Details on foreign currency derivatives are disclosed under Foreign Exchange Risk.

INTEREST RATE RISK Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of fixed income securities. The University manages interest rate risk through its investment policies and the investment guidelines established with each manager. Each fixed income manager is assigned a maximum boundary for duration as compared to the manager’s relevant benchmark index. The goal is to allow ample freedom for the manager to perform, while controlling the interest rate risk in the portfolio. Effective duration is a commonly used measure of interest rate risk. The longer the duration, the more sensitive the portfolio is to changes in interest rates. The weighted average effective duration of the University’s fixed income portfolio was 2.77 years and 2.28 years at June 30, 2016 and 2015, respectively.

CREDIT RISK Fixed income securities are subject to credit risk, which is the risk that the issuer or other counterparty to a financial instrument will not fulfill its obligations, or that negative perceptions of the issuer’s ability to make these payments will cause prices to decline. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The University Investment Policies limit fixed income exposure to investment grade assets. The Investment Policy for the Invested Funds’ cash pool requires each manager to maintain an average quality rating of “AA” as issued by a nationally recognized rating organization. The Invested Funds’ liquidity pool requires each manager to maintain an average quality rating of “A” and to hold 25% of their portfolios in government and government agency issues. The Investment Policy for the CEF reflects its long-term nature by specifying average quality rating levels by individual manager, but still restricting investment to investment grade credits.

Duration is a calculation of the number of years required to recover the true cost of a bond. The duration measures presented in Table 4 below represent a broad average across all fixed income securities held in the CEF, the Invested Funds Pool (IF or operating funds) and debt service reserve funds. The CEF and IF portfolios are managed to have a duration below their policy benchmarks to protect principal and provide liquidity to the overall portfolio.

Duration and credit risk figures at June 30, 2016 and 2015 exclude $13,860,000 and $12,019,000, respectively, of fixed income securities held outside the CEF and the IF. These amounts make up 0.85% and 0.70%, respectively, of the University’s fixed income investments, and are not included in the duration figures detailed in Table 4.

The composition of fixed income securities at June 30, 2016 and 2015, along with credit quality and effective duration measures, is summarized as follows:

TABLE 4 – FIXED INCOME: CREDIT QUALITY AND EFFECTIVE DURATION (Dollars in thousands) 2016 Investment Non-Investment Duration Investments U.S. Government Grade* Grade Not Rated Total (in years) U.S. TREASURIES $ 636,485 $ – $ – $ – $ 636,485 3.24 U.S. GOVERNMENT AGENCY 531,795 – – – 531,795 2.54 MORTGAGE BACKED – 94,054 54,797 23,348 172,199 2.20 ASSET BACKED – 113,715 2,627 17,225 133,567 0.96 CORPORATE AND OTHER – 111,977 20,225 3,500 135,702 4.04 TOTAL $ 1,168,280 $ 319,746 $ 77,649 $ 44,073 $ 1,609,748 2.77

2015 Investment Non-Investment Duration Investments U.S. Government Grade* Grade Not Rated Total (in years) U.S. TREASURIES $ 603,698 $ – $ – $ – $ 603,698 2.00 U.S. GOVERNMENT AGENCY 582,472 – – – 582,472 2.72 MORTGAGE BACKED – 107,070 75,060 22,415 204,545 2.01 ASSET BACKED – 195,968 6,998 24,111 227,077 1.73 CORPORATE AND OTHER – 98,320 – 200 98,520 3.25 TOTAL $ 1,186,170 $ 401,358 $ 82,058 $ 46,726 $ 1,716,312 2.28 * Investment Grade securities are those that are rated BBB and higher by Standard and Poor’s or Baa and higher by Moody’s

FINANCIAL REPORT 2016 / 29 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOREIGN EXCHANGE RISK TABLE 5 – INVESTMENTS DENOMINATED IN FOREIGN CURRENCY Foreign exchange risk is the risk (Dollars in thousands) 2016 2015 that investments denominated in EURO (EUR) $ 123,075 $ 174,487 foreign currencies may lose value INDIAN RUPEE (INR) 122,738 112,679 due to adverse fluctuations in the CHINESE RENMINBI (CNY) 109,170 211,184 value of the U.S. dollar relative to JAPANESE YEN (JPY) 79,512 110,617 foreign currencies. The University’s BRAZIL REAL (BRL) 74,582 54,225 investment policies permit HONG KONG DOLLAR (HKD) 58,655 60,046 investments in international equity SOUTH KOREAN WON (KRW) 53,278 56,835 and other asset classes, which can RUSSIAN RUBLE (RUB) 50,132 36,218 include foreign currency exposure. BRITISH POUND (GBP) 44,802 54,880 The University also enters into CANADIAN DOLLAR (CAD) 30,634 35,385 foreign currency forward contracts, SWISS FRANC (CHF) 28,931 39,061 futures contracts, and options MEXICAN PESO (MXN) 28,693 23,898 to manage the foreign currency TAIWANESE DOLLAR (TWD) 27,573 27,055 exposure. The University held non- PHILIPPINE PESO (PHP) 25,265 29,100 U.S. denominated securities at June REMAINING CURRENCIES 152,562 169,400 30, 2016 and 2015 of $1,009,602,000 TOTAL $ 1,009,602 $ 1,195,070 and $1,195,070,000, respectively.

NOTE 7: Metropolitan Tract The University of Washington Metropolitan Tract (“the Metropolitan Tract”), located in downtown Seattle, comprises approximately 11 acres of developed property, including office space, retail space, residential apartments, parking, and a luxury hotel. This land was the original site of the University from 1861 until 1895 when the University moved to its present location on Lake Washington. Since the early 1900s, the Metropolitan Tract has been leased by the University to entities responsible for developing and operating the property.

The balances as of June 30, 2016 and 2015 represent operating assets net of liabilities, and land, buildings and improvements stated at appraised value as of November 1, 1954. The balances also include subsequent capital additions and improvements at cost, less retirements and accumulated depreciation of $177,659,000 and $166,124,000, respectively, and are net of the outstanding balance of the associated long-term debt.

In March 2015, $8,500,000 of Metropolitan Tract commercial paper was refinanced and replaced by the issuance of University General Revenue and Refunding Bonds, 2015 A&B, as described in the refunding activity section of Note 11. The loan amount as of June 30, 2016 and 2015 was $5,710,000 and $8,535,000, respectively. In addition, $33,400,000 of bond proceeds were loaned to the Metropolitan Tract as part of the Cobb Building lease termination. The loan amount as of June 30, 2016 and 2015 was $32,890,000 and $33,564,000, respectively. Both loans are unsecured, but expected to be repaid through revenues generated by the Metropolitan Tract properties.

OFFICE PROPERTIES From July 18, 1953 to October 31, 2014, the University leased a significant portion of the 11 acre site to Unico Properties, LLC (“Unico”). Upon expiration of the Unico Lease, the following events occurred:

• The University entered into an agreement with Wright Runstad to undertake activities relating to the redevelopment of the site currently occupied by the Rainier Square (“Predevelopment Agreement”). The agreement commenced on November 1, 2014 and expires upon the completion of certain development milestones. An 80-year ground lease with Wright Runstad will commence upon fulfillment of the terms of the Predevelopment Agreement • The University terminated the ground lease with Unico for the Cobb Building, and paid a termination price of $33,400,000

UNIVERSITY OF WASHINGTON / 30 • Ownership of the Palomar Garage property transferred to the University as agreed to in the Unico Lease • In accordance with the Predevelopment Agreement, the University entered into an Interim Agreement for the Rainier Square development site that provides Wright Runstad with significant control over the management and operation of the Rainier Square Building in exchange for a fixed rent schedule for up to seven years • In connection with the Interim Agreement for the Rainer Square site, the University entered into a property management agreement with Wright Runstad for the Rainier Tower Building • The University hired Unico Properties, LLC to oversee leasing for all of the office buildings and property management for all of the office buildings except the Rainer Tower

HOTEL On January 18, 1980, the Board of Regents entered into a lease (“the Hotel Lease”) for the Olympic Hotel property, which expires in 2040. The hotel was operated as the Four Seasons Olympic Hotel until July 31, 2003. On August 1, 2003, the remaining lease term was assigned to LHCS Hotel Holding (2002), LLC. The hotel was renamed the Fairmont Olympic Hotel and managed by Fairmont Hotels and Resorts, Inc.

On June 1, 2015, the University consented to the assignment of the Hotel Lease from LHCS Hotel Holding (2002), LLC to IC/ RCDP Seattle Hotel, an entity owned by affiliates of Rockwood IX REIT, Inc. and an affiliate of DiNapoli Capital Partners, LLC. The tenant under the Hotel Lease remained the same, and the management of the hotel by Fairmont Hotels and Resorts, Inc. did not change.

NOTE 8: Capital Assets Capital asset activity for the two-year period ended June 30, 2016 is summarized as follows:

Balance at Additions/ Balance at Additions/ Balance at (Dollars in thousands) June 30, 2014 Transfers Retirements June 30, 2015 Transfers Retirements June 30, 2016 LAND $ 126,795 $ 1,953 $ – $ 128,748 $ – $ – $ 128,748 INFRASTRUCTURE 194,002 11,068 –205,070 36,738 –241,808 BUILDINGS 5,244,985 70,936 2,575 5,313,346 307,470 9,142 5,611,674 FURNITURE, FIXTURES AND EQUIPMENT 1,223,811 104,985 84,785 1,244,011 119,989 96,495 1,267,505 LIBRARY MATERIALS 325,663 13,521 1,767 337,417 13,933 1,834 349,516 CAPITALIZED COLLECTIONS 7,093 65 –7,158 25 –7,183 INTANGIBLE ASSETS 105,319 25,484 6,946 123,857 16,538 1,240 139,155 CONSTRUCTION IN PROGRESS 121,696 224,043 1,931 343,808 9,057 3,280 349,585 INTANGIBLES IN PROCESS 25,412 17,615 7,775 35,252 22,669 1,123 56,798 TOTAL COST 7,374,776 469,670 105,779 7,738,667 526,419 113,114 8,151,972 LESS ACCUMULATED DEPRECIATION/ AMORTIZATION: INFRASTRUCTURE 95,351 4,921 –100,272 6,281 –106,553 BUILDINGS 1,946,659 175,159 2,106 2,119,712 187,934 6,425 2,301,221 FURNITURE, FIXTURES AND EQUIPMENT 982,794 101,464 71,228 1,013,030 104,453 84,248 1,033,235 LIBRARY MATERIALS 239,087 12,546 1,317 250,316 12,740 1,387 261,669 INTANGIBLE ASSETS 66,089 16,870 –82,959 13,194 –96,153 TOTAL ACCUMULATED 3,329,980 310,960 74,651 3,566,289 324,602 92,060 3,798,831 DEPRECIATION/AMORTIZATION CAPITAL ASSETS, NET $ 4,044,796 $ 158,710 $ 31,128 $ 4,172,378 $ 201,817 $ 21,054 $ 4,353,141

FINANCIAL REPORT 2016 / 31 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9: Long-Term Liabilities

UNIVERSITY OF WASHINGTON Long-term liability activity for the two-year period ended June 30, 2016 is summarized as follows:

Balance at Additions/ Balance at Additions/ Balance at Current Current (Dollars in thousands) June 30, 2014 Transfers Reductions June 30, 2015 Transfers Reductions June 30, 2016 Portion 2015 Portion 2016 BONDS PAYABLE: GENERAL OBLIGATION BONDS PAYABLE (NOTE 11) $ 165,044 $ 260 $ 15,740 $ 149,564 $ 30,145 $ 52,655 $ 127,054 $ 18,290 $ 17,230 REVENUE BONDS PAYABLE (NOTE 11) 1,764,855 291,750 347,540 1,709,065 327,580 43,700 1,992,945 41,055 47,555 UNAMORTIZED PREMIUM ON BONDS 101,456 39,709 15,978 125,187 28,980 17,025 137,142 13,416 14,974 TOTAL BONDS PAYABLE 2,031,355 331,719 379,258 1,983,816 386,705 113,380 2,257,141 72,761 79,759 NOTES PAYABLE AND CAPITAL LEASES: NOTES PAYABLE & OTHER -CAPITAL ASSET RELATED (NOTE 11) 24,008 7,205 2,975 28,238 1,715 5,306 24,647 5,020 5,721 NOTES PAYABLE & OTHER – NONCAPITAL ASSET RELATED (NOTE 11) 1,822 – 65 1,757 1,000 1,441 1,316 1,546 1,318 CAPITAL LEASE OBLIGATIONS (NOTE 10) 20,457 – 4,641 15,816 – 4,594 11,222 3,479 2,676 TOTAL NOTES PAYABLE AND CAPITAL LEASES 46,287 7,205 7,681 45,811 2,715 11,341 37,185 10,045 9,715 OTHER LONG-TERM LIABILITIES: OBLIGATIONS UNDER SPLIT-INTEREST AGREEMENTS 36,684 5,614 – 42,298 3,889 7,033 39,154 – 3,517 POLLUTION REMEDIATION LIABILITY (NOTE 1) 22,000 – – 22,000 – 1,000 21,000 4,000 3,000 UNEARNED REVENUE (NOTE 13) 16,366 11,760 5,500 22,626 43,215 38,231 27,610 8,500 10,400 SICK LEAVE (NOTE 1) 36,174 6,852 5,042 37,984 9,861 5,654 42,191 4,974 5,348 SELF-INSURANCE (NOTE 16) 67,450 29,495 14,744 82,201 24,778 27,826 79,153 20,459 21,285 COMMERCIAL PAPER – 111,545 – 111,545 – 111,545 – – – UWSRP NET PENSION OBLIGATION (NOTE 15) 198,895 53,057 3,766 248,186 53,057 4,257 296,986 3,398 4,012 OTHER NONCURRENT LIABILITIES – 12,192 – 12,192 7,443 7,000 12,635 – – TOTAL OTHER LONG-TERM LIABILITIES 377,569 230,515 29,052 579,032 142,243 202,546 518,729 41,331 47,562 TOTAL LONG-TERM LIABILITIES $ 2,455,211 $ 569,439 $ 415,991 $ 2,608,659 $ 531,663 $ 327,267 $ 2,813,055 $ 124,137 $ 137,036

DISCRETE COMPONENT UNITS Long-term liability activity for the two-year period ended June 30, 2016 is summarized as follows:

Balance at Additions/ Balance at Additions/ Balance at Current Current (Dollars in thousands) June 30, 2014 Transfers Reductions June 30, 2015 Transfers Reductions June 30, 2016 Portion 2015 Portion 2016 VALLEY MEDICAL CENTER LIMITED TAX GENERAL OBLIGATION BONDS $ 243,503 $ – $ 6,271 $ 237,232 $ – $ 6,487 $ 230,745 $ 6,535 $ 6,780 REVENUE BONDS 18,858 – 1,376 17,482 – 1,523 15,959 1,650 1,720 BUILD AMERICA BONDS 61,155 – – 61,155 – – 61,155 – – NOTES PAYABLE & OTHER 1,407 – 513 894 – 291 603 291 259 TOTAL LONG-TERM LIABILITIES $ 324,923 $ – $ 8,160 $ 316,763 $ – $ 8,301 $ 308,462 $ 8,476 $ 8,759

NORTHWEST HOSPITAL REVENUE BONDS $ 73,400 $ – $ 73,400 $ – $ – $ – $ – $ – $ – NOTES PAYABLE & CAPITAL LEASES 13,645 – 1,175 12,470 1,520 932 13,058 525 4,860 TOTAL LONG-TERM LIABILITIES $ 87,045 $ – $ 74,575 $ 12,470 $ 1,520 $ 932 $ 13,058 $ 525 $ 4,860

UNIVERSITY OF WASHINGTON / 32 NOTE 10: Leases Future minimum lease payments under capital leases, and the present value of the net minimum lease payments, as of June 30, 2016, are as follows:

CAPITAL LEASES Future Year (Dollars in thousands) Payments 2017 $ 2,898 2018 1,580 2019 1,494 2020 1,494 2021 1,494 THEREAFTER 3,106 TOTAL MINIMUM LEASE PAYMENTS 12,066 LESS: AMOUNT REPRESENTING INTEREST COSTS 844 PRESENT VALUE OF MINIMUM PAYMENTS $ 11,222

OPERATING LEASES The University has certain lease agreements in effect that are considered operating leases, which are primarily for leased building space. During the years ended June 30, 2016 and 2015, the University recorded rent expense of $44,047,000 and $44,736,000, respectively, for these leases. Future lease payments of June 30, 2016 are as follows:

Future Year (Dollars in Thousands) Payments 2017 $ 84,387 2018 80,324 2019 77,774 2020 74,483 2021 57,991 2022 - 2026 136,722 2027 - 2031 54,132 2032 - 2036 52,538 2037 - 2041 55,882 2042 - 2046 31,621 2047 - 2051 21,661 2052 - 2056 25,011 2057 - 2061 28,884 2062 - 2066 12,336 TOTAL MINIMUM LEASE PAYMENTS $ 793,746

FINANCIAL REPORT 2016 / 33 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: Bonds and Notes Payable The bonds and notes payable at June 30, 2016 consist of state of Washington General Obligation and Refunding Bonds, University Revenue Bonds, and Notes Payable. These obligations have fixed interest rates ranging from 0.61% to 6.40%. Debt service requirements at June 30, 2016 were as follows:

BONDS AND NOTES PAYABLE (Dollars in thousands) STATE OF WASHINGTON UNIVERSITY OF WASHINGTON NOTES PAYABLE GENERAL OBLIGATION BONDS GENERAL REVENUE BONDS AND OTHER Year Principal Interest Principal Interest Principal Interest 2017 $ 17,230 $ 6,132 $ 47,555 $ 84,791 $ 7,039 $ 859 2018 13,890 5,256 74,585 83,197 4,762 697 2019 13,920 4,520 54,135 80,895 3,261 555 2020 10,385 3,905 55,380 78,735 3,178 425 2021 10,890 3,374 58,650 76,418 3,108 296 2022 - 2026 51,035 8,234 308,220 342,419 3,991 397 2027 - 2031 9,704 424 345,185 269,845 232 96 2032 - 2036 – – 372,705 195,434 232 96 2037 - 2041 – – 384,030 103,037 160 77 2042 - 2046 – – 282,750 16,798 – – 2047 - 2051 – – 9,750 589 – – TOTAL PAYMENTS $ 127,054 $ 31,845 $ 1,992,945 $ 1,332,158 $ 25,963 $ 3,498

State law requires that the University reimburse the state for debt service payments relating to its portion of the state of Washington General Obligation and Refunding Bonds from Medical Center patient revenues, tuition, timber sales and other revenues.

ISSUANCE ACTIVITY On September 9, 2015, the University issued $195,510,000 in General Revenue Bonds, 2015 C&D, at a premium of $13,279,000. The proceeds were used to fund various projects such as renovation of Denny Hall, construction of Animal Care and Research Facilities, South West Campus Central Utility Plant, and other projects. In addition, proceeds were used to pay off $111,545,000 in commercial paper. The 2015 C&D bonds have coupon rates ranging from 1.40% to 5.00% with an average coupon rate of 4.03%. The average life of the 2015 C&D General Revenue bonds is 15.60 years with final maturity on December 1, 2045.

On October 7, 2015, the Washington Biomedical Research Properties 3.2 issued $132,070,000 in Lease Revenue Bonds 2015 A&B, at a premium of $10,926,000. The 2015 A&B bonds have coupon rates ranging from 1.49% to 5.00% with an average coupon rate of 4.42%. The average life of the 2015 A&B Lease Revenue Bonds is 15.87 years with final maturity on January 1, 2048.

REFUNDING ACTIVITY On August 21, 2014, the Washington Biomedical Research Properties II refunded Lease Revenue Bonds totaling $118,915,000 with new bond issuances totaling $115,660,000 and premium of $13,263,000. The refunded bonds had coupon rates ranging from 4.40% to 5.50% with an average interest rate of 5.03%; the new bonds have an average interest rate of 4.48%. The refunding decreased the total debt service payments to be made over the next 12.2 years by $15,026,000 and resulted in a total economic gain of $12,572,000. The average life of the Washington Economic Development Finance Authority Lease Revenue Refunding Bonds, 2014 is 11.95 years with final maturity on June 1, 2038.

On March 4, 2015, the University issued $218,270,000 in General Revenue & Refunding Bonds, 2015 A&B, at a premium of $26,315,000. A portion of the proceeds (new par of $176,090,000 plus premium of $26,396,000) was used to refund existing debt of $190,195,000. The refunded bonds had coupon rates ranging from 4.00% to 5.00% with an average interest rate of 4.98%; the new bonds have an average coupon of 4.22% with an average interest rate of 4.40%. The refunding decreased the total debt service payments to be made over the next 14.92 years by $74,997,000 and resulted in a total economic gain of $38,083,000. The remainder of the proceeds, issued at a slight discount, was used to pay off $42,500,000 in commercial paper. The average life of the 2015 A&B General Revenue bonds is 14.82 years with final maturity on December 1, 2044.

UNIVERSITY OF WASHINGTON / 34 On October 8, 2015, the state of Washington refunded General Obligation Bonds totaling $34,285,000 (UW portion) with new bond issuances totaling $30,145,000 and premium of $4,775,000. The refunded bonds had an average interest rate and coupon rate of 5.00%; the new bonds have an average coupon rate of 5.00%. The refunding decreased the total debt service payments to be made over the next 10 years by $5,621,000 and resulted in a total economic gain of $5,230,000.

COMMERCIAL PAPER PROGRAM The University has a commercial paper program with a maximum borrowing limit of $250,000,000, payable from University general revenues. This short-term borrowing program is primarily used to fund capital expenditures. As of June 30, 2016 and 2015, there was $50,000,000 and $161,545,000, respectively, in outstanding commercial paper.

During fiscal year 2015, the University issued $111,545,000 and refunded $42,500,000 of commercial paper debt with General Revenue Bonds, 2015 A&B.

During fiscal year 2016, the University refunded $111,545,000 of commercial paper debt with General Revenue Bonds, 2015 C&D.

SUBSEQUENT DEBT ACTIVITY On July 14, 2016, the state of Washington refunded General Obligation Bonds totaling $9,800,000 (UW portion) with new bond issuances totaling $9,100,000 and premium of $1,700,000. The refunded bonds had an average interest rate and coupon rate of 5.00%; the new bonds have an average coupon rate of 4.90%. The refunding decreased the total debt service payments to be made over the next seven years by $1,100,000 and resulted in a total economic gain of $961,000.

On July 20, 2016, the University issued of $45,000,000 of commercial paper debt. The proceeds will be used to fund various projects such as Phases 3 and 4a of the Housing Master Plan, Animal Research and Care Facilities and UWMC Expansion Phase 2.

On October 18, 2016, the University sold $205,160,000 in General Revenue & Refunding Bonds, 2016A&B, at a premium of $35,596,000. Part of the proceeds were used to refund existing debt, as well as retire $45,000,000 of commercial paper debt and pay cost of issuance. The amount refunded was $38,220,000; the new par was $35,020,000 (plus premium of $4,989,000). Proceeds are expected to fund various University projects. The closing date is November 9, 2016.

DEFEASED BONDS The University defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. The trust account assets and the liability for the defeased bonds are not included in the University’s financial statements. As of June 30, 2016 and 2015, $139,038,000 and $252,973,000, respectively, of bonds outstanding are considered defeased.

NOTE 12: Operating Expenses by Function Operating expenses by functional classification for the years ended June 30, 2016 and 2015 are summarized as follows:

OPERATING EXPENSES (Dollars in thousands) 2016 2015 INSTRUCTION $ 1,171,803 $ 1,113,959 RESEARCH 751,262 729,608 PUBLIC SERVICE 38,956 35,428 ACADEMIC SUPPORT 398,286 336,747 STUDENT SERVICES 47,113 43,101 INSTITUTIONAL SUPPORT 267,070 223,217 OPERATION & MAINTENANCE OF PLANT 238,945 241,719 SCHOLARSHIPS & FELLOWSHIPS 155,449 146,570 AUXILIARY ENTERPRISES 422,474 301,543 MEDICAL-RELATED 1,218,205 1,193,225 DEPRECIATION/AMORTIZATION 324,602 310,960 TOTAL OPERATING EXPENSES $ 5,034,165 $ 4,676,077

FINANCIAL REPORT 2016 / 35 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Instruction Instruction includes expenses for all activities that are part of an institution’s instruction program. Expenses for credit and noncredit courses; academic, vocational, and technical instruction; and tutorial instruction are included in this category. The University’s professional and continuing education programs are also included.

Research The research category includes all expenses for activities specifically organized to produce research, which are funded by federal, state, and private institutions.

Public Service Public service includes activities conducted primarily to provide non-instructional services to individuals and groups other than the University and its students, such as community service programs, conferences, institutes and general advisory services.

The activities of the University’s public radio stations, Center for Educational Leadership and clinical trials are included in this category.

Academic Support Academic support includes expenses incurred to provide support services for the institution’s primary missions: instruction, research, and public service. The activities of the University’s academic administration, libraries, museums and galleries, and information technology support for academic activities are included in this category.

Student Services The student services category includes the Offices of Admissions and the University Registrar. The activities of the Center for Undergraduate Advising, Diversity, and Student Success, and the operations of the Rubenstein Pharmacy in the student health center are also included in this category.

Institutional Support The institutional support category includes central activities that manage long-range planning for the institution, such as planning and programming operations, legal services, fiscal operations, space management, procurement and activities concerned with community and alumni relations. The University’s central administration departments and information technology support for non-academic activities are included in this category.

Operation and Maintenance of Plant The operation and maintenance of plant category includes the administration, operation, maintenance, preservation, and protection of the institution’s physical plant.

Scholarships and Fellowships This category includes expenses for scholarships and fellowships and other financial aid not funded from existing University resources. Financial aid funded from existing University resources are considered scholarship allowances, which are reflected as an offset to tuition revenues. Expenditure of amounts received from the Washington State Need grant, Washington Higher Education grant, and Pell grants are reflected in this manner.

Auxiliary Enterprises Auxiliary enterprises furnish goods or services to students, faculty, staff or the general public. These units charge a fee directly related to the cost of the goods or services. A distinguishing characteristic of an auxiliary enterprise is that it operates as a self-supporting activity. The activities of the University’s Intercollegiate Athletics, Commuter Services and Housing and Food Services departments are included in this category.

Medical-related The medical-related category includes all expenses associated with patient-care operations, including nursing and other professional services, general services, administrative services, and fiscal services. The activities of UWMC, UWP, and Neighborhood Clinics are included in this category.

Depreciation/Amortization Depreciation and amortization reflect a periodic expensing of the cost of capitalized assets such as buildings, equipment, software or other intangible assets, spread over their estimated useful lives.

UNIVERSITY OF WASHINGTON / 36 NOTE 13: Related Parties Harborview Medical Center (HMC), a hospital and Level I adult and pediatric trauma center located in Seattle, is a component unit of King County, Washington. It has been managed by the University under a management contract between King County and the University since 1967. In February 2016, the University and King County entered into a Hospital Services Agreement. The term of the agreement, including extensions, will expire on December 31, 2045.

Under the agreement, the HMC Board of Trustees determines major institutional policies and retains control of programs and fiscal matters, while King County retains ultimate control over capital programs and capital budgets. The University is responsible for the operations of HMC, including the provision of medical, dental and management services. All of the individuals employed at HMC, including physicians, are employees of the University. HMC expenses, including payroll, are reimbursed to the University from HMC fund sources.

HMC revenues and expenses are not recognized in the University’s financial statements. The University’s financial statements do, however, include accounts receivable from HMC of $32,322,000 as of June 30, 2016 and $25,923,000 as of June 30, 2015, as well as HMC investments of $3,256,000 and $3,467,000, current accrued liabilities of $20,394,000 and $19,363,000, and long-term liabilities of $27,610,000 and $22,626,000, as of June 30, 2016 and 2015, respectively.

Under an annual agreement, HMC provides strategic funding to Neighborhood Clinics. Funding from HMC to Neighborhood Clinics was $10,339,000 and $6,400,000 during fiscal years 2016 and 2015, respectively, and is presented as Other Nonoperating Revenue in the Statements of Revenues, Expenses and Changes in Net Position. Additionally, UWMC provided $6,926,000 and $3,444,000 to NWH for strategic funding of operations during fiscal years 2016 and 2015, respectively. These amounts are presented in the Statements of Revenues, Expenses and Changes in Net Position for the University as Other Nonoperating Expense and for NWH as Other Nonoperating Revenue.

UW Medicine information technology operates as a self-sustaining activity of the University (ITS department). The ITS department records enterprise-wide information technology capital assets that are purchased for use by UW Medicine entities. The Unearned Revenue reflected in long-term liabilities (Note 9) of $27,610,000 and $22,626,000 at June 30, 2016 and 2015, respectively, represents HMC’s funding of the enterprise-wide information technology capital assets which will be included in the recharge rates of the ITS department over the useful life of the assets.

The University of Washington Foundation (UWF) is a nonprofit organization that performs fundraising activities on behalf of the University. The UWF is not included in the University’s financial statements as a component unit because gifts and grants that are made to the UWF are immediately transferred to the University. In 2016 and 2015, the UWF transferred $113,464,000 and $82,502,000, respectively, to the University in gifts and grants received on its behalf; these are included in the financial statements of the University. The remaining amounts retained by the UWF are not significant to the University’s financial statements.

The University of Washington Alumni Association is a tax-exempt entity that was established to connect and celebrate alumni and to support the University’s mission. The Alumni Association received $3,393,000 and $2,818,000 from the University in support of its operations in fiscal years 2016 and 2015, respectively. These amounts were expensed by the University.

During fiscal year 2015, NWH entered into a long-term financing agreement with the University to obtain funds for the defeasance and advance refunding of Series 2007 Revenue Bonds. Under the terms of this agreement, NWH is required to maintain annual debt service coverage equal to at least 1.25 and days cash on hand equal to at least 50 days. As of June 30, 2016 and 2015, $68,609,000 and $71,306,000, respectively, is payable to the University as a result of this financing agreement. The portion which is due in the next fiscal year is reported by NWH as Other Current Liabilities, and by the University as Other Current Assets, on the Statements of Net Position. The remaining long-term portion is reported on the Statements of Net Position by NWH as Due to Primary Government and by the University as Due from Discrete Component Units.

In addition, as of June 30, 2016 and 2015, respectively, NWH has a payable to the University of $28,894,000 and $29,402,000 for services purchased from the University during the current and prior fiscal years. The current portion of the payable is reported by NWH as Other Current Liabilities, and by the University as Other Current Assets, on the Statements of Net Position as of June 30, 2016 and 2015. The remaining long-term portion is reported on the Statements of Net Position by NWH as Due to Primary Government, and by the University as Due from Discrete Component Units.

FINANCIAL REPORT 2016 / 37 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 14: Other Post Employment Benefits (OPEB) Healthcare and life insurance programs for employees of the state of Washington are administered by the Washington State Health Care Authority (HCA). The HCA calculates the premium amounts each year that are sufficient to fund the statewide health and life insurance programs on a pay-as-you-go basis. These costs are passed through to individual state agencies based upon active employee headcount; the agencies pay the premiums for active employees to the HCA. The agencies may also charge employees for certain higher cost options elected by the employee.

State of Washington retirees may elect coverage through state health and life insurance plans, for which they pay less than the full cost of the benefits, based on their age and other demographic factors. The healthcare premiums for active employees, which are paid by the agency during employees’ working careers, subsidize the “underpayments” of retirees.

An additional factor in the OPEB obligation is a payment that is required by the state legislature to reduce the premiums for retirees covered by Medicare (an “explicit” subsidy). For both calendar years 2016 and 2015, this amount was $150 per retiree eligible for parts A and B of Medicare. This is also passed through to state agencies through active employee rates charged to the agency.

There is no formal state or University plan that underlies the subsidy of retiree health and life insurance.

ACTUARIAL STUDY Actuarial studies, performed every two years by the Washington Office of the State Actuary, calculated that the total OPEB obligation of the state of Washington at January 1, 2015 and 2013 was $5.3 billion and $3.7 billion, respectively. The annual required contribution was $498 million and $342 million for the state of Washington for 2015 and 2013, respectively. The actuary calculated the OPEB obligation based on individual state employee data, including age, retirement eligibility and length of service. The probability of an employee of a given age and length of service retiring and receiving OPEB benefits is based on statewide historical data.

The actuary’s allocation of the cumulative statewide liability related to the University and HMC (an unconsolidated related party), was estimated at approximately $997 million and $671 million for 2015 and 2013, respectively. These amounts are not included in the University’s financial statements.

The University paid $324 million and $248 million for healthcare expenses in fiscal years 2016 and 2015, respectively, which included its pay-as-you-go portion of the OPEB liability, calculated by the actuary at $7.9 million in both 2016 and 2015.

The State Actuary’s report is available at: osa.leg.wa.gov/Actuarial_Services/OPEB/OPEB.htm

NOTE 15: Pension Plans The University offers four contributory pension plans: 1) the Washington State Public Employees’ Retirement System (PERS) plan, 2) the Washington State Teachers’ Retirement System (TRS) plan, 3) the Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF) plan, and 4) the University of Washington Retirement Plan (UWRP). PERS, TRS, and LEOFF are cost sharing multiple-employer defined benefit pension plans administered by the Washington State Department of Retirement Systems (DRS). The University of Washington Retirement Plan (UWRP), a defined contribution plan, is administered by the University. The University of Washington Supplemental Retirement Plan, a noncontributory defined benefit pension plan which operates in tandem with the UWRP, is closed to new participants.

PLAN DESCRIPTIONS OF THE DRS PLANS Public Employees’ Retirement System PERS retirement benefit provisions are contained in chapters 41.34 and 41.40 of the Revised Code of Washington (RCW). PERS is a cost-sharing multiple-employer retirement system comprised of three separate pension plans for membership purposes. PERS Plan 1 and PERS Plan 2 are defined benefit plans, and PERS Plan 3 is a defined benefit plan with a defined contribution component. PERS members include higher education employees not participating in other higher education retirement programs.

UNIVERSITY OF WASHINGTON / 38 For accounting purposes, PERS is reported as three separate plans. Plan 1 accounts for the defined benefits of Plan 1 members, Plan 2/3 accounts for the defined benefits of Plan 2 and Plan 3 members, and Plan 3 accounts for the defined contribution portion of Plan 3 members. The defined benefit portions of Plan 2 and Plan 3 are accounted for in the same pension trust fund, and all assets of Plan 2/3 may legally be used to pay the defined benefits of any of the Plan 2 or Plan 3 members or beneficiaries.

Teachers’ Retirement System TRS retirement benefit provisions are contained in chapters 41.32 and 41.34 of the RCW. TRS is a cost-sharing, multiple- employer retirement system, comprised of three separate pension plans for membership purposes; TRS Plan 1 and TRS Plan 2 are defined benefit plans and TRS Plan 3 is a defined benefit plan with a defined contribution component. TRS eligibility for membership requires service as a certificated public school employee working in an instructional, administrative or supervisory capacity.

For accounting purposes, similar to PERS, TRS is reported as three separate plans. Plan 1 accounts for the defined benefits of Plan 1 members, Plan 2/3 accounts for the defined benefits of Plan 2 and Plan 3 members, and Plan 3 accounts for the defined contribution portion of Plan 3 members. The defined benefit portions of Plan 2 and Plan 3 are accounted for in the same pension trust fund, and all assets of Plan 2/3 may legally be used to pay the defined benefits of any of the Plan 2 or Plan 3 members or beneficiaries.

Law Enforcement Officers’ and Fire Fighters’ Retirement System LEOFF retirement benefit provisions are contained in chapter 41.26 of the RCW. LEOFF is a cost-sharing multiple- employer retirement system comprised of two separate pension plans for both membership and accounting purposes. The University participates in LEOFF Plan 2, which is a defined benefit plan. LEOFF membership includes full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians.

VESTING AND BENEFITS PROVIDED PERS Plan 1 and TRS Plan 1 PERS Plan 1 and TRS Plan 1 provide retirement, disability and death benefits. Both plans are closed to new entrants. All members were vested after the completion of five years of eligible service. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service. The AFC is the average of the member’s 24 highest-paid consecutive service months. The retirement benefit may not exceed 60% of the AFC.

Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from inactive status prior to the age of 65 may receive actuarially reduced benefits. Other benefits include duty and nonduty disability payments, an optional cost- of-living allowance, and a one-time duty-related death benefit, if the member is found eligible by the Washington State Department of Labor and Industries.

PERS Plan 2/3 and TRS Plan 2/3 PERS Plan 2/3 and TRS Plan 2/3 provide retirement, disability and death benefits. PERS Plan 2 and TRS Plan 2 members are vested after completion of five years of eligible service. PERS Plan 3 and TRS Plan 3 members are vested in the defined benefit portion of their plan after 10 years of service, or after five years of service if 12 months are earned after age 44. Retirement benefits are determined as two percent of the member’s AFC times the member’s years of service for Plan 2, and one percent of AFC times the member’s years of service for Plan 3. The AFC is the average of the member’s 60 highest- paid consecutive service months. There is no cap on years of service credit.

Members are eligible for retirement with a full benefit at age 65 with at least five years of service credit. Retirement before age 65 is considered early retirement. Members are eligible for early retirement with a reduced benefit at age 55 with at least 20 years of service credit. The benefit is reduced by a factor that varies according to age, for each year before age 65. Members who are age 55 with at least 30 years of service credit can retire under one of two provisions, if hired prior to May 1, 2013:

• With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has less, or no, reduction (depending on age) but imposes stricter return-to-work rules

If hired on or after May 1, 2013, members have the option to receive a benefit that is reduced by five percent for each year before age 65.

FINANCIAL REPORT 2016 / 39 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, a cost- of-living allowance (based on the Consumer Price Index) capped at three percent annually, and a one-time duty-related death benefit, if the member is found eligible by the Washington State Department of Labor and Industries.

LEOFF Plan 2 LEOFF Plan 2 provides retirement, disability and death benefits. Members are vested after completing five years of eligible service. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service, based on the member’s 60 highest-paid consecutive service months. Members are eligible for retirement with a full benefit at age 53 with at least five years of service credit. Members who retire prior to age 53 receive reduced benefits. At age 50, members with at least 20 years of service credit can receive a benefit that is reduced by three percent for each year prior to age 53. LEOFF plan 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit.

Other benefits include duty and non-duty disability payments, a cost-of-living allowance (based on the Consumer Price Index), capped at three percent annually, and a one-time duty-related death benefit, if the member is found eligible by the Washington State Department of Labor and Industries.

FIDUCIARY NET POSITION The pension plans’ fiduciary net positions have been determined on the same basis as they are reported by the pension plans. DRS financial statements have been prepared in conformity with generally accepted accounting principles (GAAP). The retirement plans are accounted for in pension trust funds using the flow of economic resources measurement focus and the accrual basis of accounting. Member contributions are recognized as revenues in the period in which the contributions are earned. Employer contributions are recognized when due, and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable, in accordance with the terms of each plan.

The RCW (chapter 43.33 A) authorizes The Washington State Investment Board (WSIB) to have the investment management responsibility for the pension funds. Investments are reported at fair value, and unrealized gains and losses are included as investment income in the Statement of Changes in Fiduciary Net Position presented in the DRS Comprehensive Annual Financial Report. Purchases and sales of investments are recorded on a trade-date basis.

DRS publishes an annual report for retirement plans, which is available at: http://www.drs.wa.gov/administration/ annualreport/.

ACTUARIAL ASSUMPTIONS Accounting requirements dictate the use of assumptions to best estimate the impact that pension obligations will have on the University. The professional judgments used in determining these assumptions are important, and can significantly impact the resulting actuarial estimates. Differences between actual results compared to these assumptions could have a significant effect on the University’s financial statements.

The total pension liability for each DRS plan was determined by an actuarial valuation, conducted by the Washington State Office of the State Actuary (OSA). The University’s 2016 pension liability is based on an OSA valuation performed as of June 30, 2014, with the results rolled forward to the measurement date of June 30, 2015. Likewise, the University’s 2015 pension liability is based on the valuation performed as of June 30, 2013, with the results rolled forward to the measurement date of June 30, 2014. The following actuarial assumptions have been applied to all prior periods included in the measurement:

INFLATION 3.0% TOTAL ECONOMIC INFLATION, 3.75% SALARY INFLATION SALARY INCREASE EXPECTED TO GROW BY PROMOTIONS AND LONGEVITY IN ADDITION TO SALARY INFLATION ASSUMPTION INVESTMENT RATE OF RETURN 7.50%

Mortality rates were based on the RP-2000 Combined Healthy Table and Combined Disabled Table published by the Society of Actuaries’ Retirement Plans Experience Committee (RPEC). As recommended by the RCEP, the OSA applied offsets to the base table and recognized future improvements in mortality by projecting the mortality rates using 100% Scale BB. Mortality rates are applied on a generational basis, meaning members are assumed to receive additional mortality improvements in each future year, throughout their lifetimes.

UNIVERSITY OF WASHINGTON / 40 The actuarial assumptions used in the June 30, 2014 and 2013 valuations were based on the results of OSA’s 2007-2012 Experience Study, which is a comprehensive review and update of prior actuarial assumptions. Additional assumptions for subsequent events and law changes are current as of the 2014 actuarial valuation report.

The long-term expected rate of return on pension plan investments was determined by the WSIB using a building block method in which a best estimate of expected future rates of return (expected returns, net of pension plan investment expense, but including inflation) are developed for each major asset class. Those expected returns make up one component of WSIB’s Capital Market Assumptions (CMAs). WSIB uses the CMAs and their target asset allocation to simulate future investment returns over various time horizons.

The long-term expected rate of return of 7.50% approximately equals the median of the simulated investment returns over a 50-year time horizon, adjusted to remove or damper any short term changes that are not expected over the entire 50-year measurement period.

Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation for each pension plan, as of the measurement dates of June 30, 2015 and 2014, are summarized in the following table:

2016 2015 (Measurement Date 2015) (Measurement Date 2014) Long-Term Long-Term Target Expected Arithmetic Target Expected Arithmetic Asset Class Allocation Real Rate of Return Allocation Real Rate of Return FIXED INCOME 20.00% 1.70% 20.00% 0.80% TANGIBLE ASSETS 5.00% 4.40% 5.00% 4.10% REAL ESTATE 15.00% 5.80% 15.00% 5.30% GLOBAL EQUITY 37.00% 6.60% 37.00% 6.05% PRIVATE EQUITY 23.00% 9.60% 23.00% 9.05%

The inflation components used to create the above table are 2.20% and 2.70% the measurement dates as of June 30, 2015 and 2014 respectively, and represents WSIB’s most recent long-term estimate of broad economic inflation.

DISCOUNT RATE The discount rate used to measure the total pension liabilities as of June 30, 2016 and 2015 was 7.50%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at contractually required rates, and that contributions from employers will be made at statutorily required rates, actuarially determined (including the component of PERS 2/3 and TRS 2/3 employer rates pertaining to the unfunded actuarial accrued liabilities for PERS 1 and TRS 1, respectively). Based on those assumptions, the fiduciary net position for each pension plan in which the University participates was projected to be sufficient to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Using the WSIB long-term expected rate of return, a 7.50% future investment rate of return on pension plan investments was assumed for the test. The expected return on plan assets is the estimated long-term rate of return that will be earned on the investments used to fund the pension obligation. Contributions from plan members and employers were assumed to continue to be made at contractually required rates (including the component of PERS 2/3 and TRS 2/3 employer rates pertaining to the unfunded actuarial accrued liabilities for PERS 1 and TRS 1, respectively, as provided for in chapter 41.45 of the RCW).

FINANCIAL REPORT 2016 / 41 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

SENSITIVITY OF THE NET PENSION LIABILITY (ASSET) TO CHANGES IN THE DISCOUNT RATE The following table presents the University’s net pension liability calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate.

DISCOUNT RATE SENSITIVITY – NET PENSION LIABILITY (ASSET) (Dollars in thousands) 2016 2015 Current Current Plan 1 % Decrease Discount Rate 1% Increase 1 % Decrease Discount Rate 1% Increase PERS 1 $ 530,652 $ 435,853 $ 354,335 $ 514,278 $ 417,231 $ 333,926 PERS 2/3 1,065,241 364,303 (172,379) 843,524 202,225 (287,608) TRS 1 5,089 4,049 3,154 3,707 2,881 2,172 TRS 2/3 4,100 969 (1,359) 2,191 252 (1,189) LEOFF 2 2,086 (2,083) (5,221) 1,217 (2,844) (5,891)

EMPLOYER CONTRIBUTION RATES Employer contribution rates are developed in accordance with Chapter 41.45 of the RCW by the OSA, and include an administrative expense component that is currently set at 0.18%. The statute provides authority to the Pension Funding Council to adopt changes to economic assumptions and contribution rates. The contribution rates and required contributions for each DRS plan in which the University participates are shown in the table below.

Description (Dollars in Thousands) PERS 1 PERS 2/3a TRS 1 TRS 2/3a LEOFF 2 2016 CONTRIBUTION RATE 11.18% 11.18% 13.13% 13.13% 8.59% CONTRIBUTIONS MADE $ 47,976 $ 59,820 $ 374 $ 606 $ 376 2015 CONTRIBUTION RATE 9.21% 9.21% 10.39% 10.39% 8.59% CONTRIBUTIONS MADE $ 38,503 $ 45,896 $ 286 $ 307 $ 299 a Plan 2/3 employer rate includes a component to address the Plan 1 unfunded actuarial accrued liability

UNIVERSITY PROPORTIONATE SHARE Collective pension amounts are determined as of a measurement date, which can be no earlier than an employer’s prior fiscal year. The measurement date for the net pension liabilities recorded by the University as of June 30, 2016 was June 30, 2015. Employer contributions received and processed by the DRS during fiscal year ended June 30, 2015 have been used as the basis for determining each employer’s proportionate share of the collective pension amounts reported by the DRS in their June 30, 2015 Schedules of Employer and Nonemployer Allocations. Likewise, the measurement date for the net pension liabilities recorded by the University as of June 30, 2015 was June 30, 2014, with employer contributions received and processed by the DRS during fiscal year 2014 used as the basis for determining each employer’s proportionate share of the June 30, 2014 collective pension amounts. The University’s proportionate share for each DRS plan is shown in the table below.

PROPORTIONATE SHARE (Dollars in thousands) PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 YEAR ENDED JUNE 30, 2016 8.33% 10.20% 0.13% 0.12% 0.20% YEAR ENDED JUNE 30, 2015 8.28% 10.00% 0.10% 0.08% 0.21%

UNIVERSITY OF WASHINGTON / 42 UNIVERSITY AGGREGATED BALANCES The University’s aggregated balances of net pension liabilities and net pension asset as of June 30, 2016 and 2015, respectively are presented in the table below.

(Dollars in Thousands) PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 Total 2016 NET PENSION LIABILITY $ 435,853 $ 364,303 $ 4,049 $ 969 $ – $ 805,174 NET PENSION ASSET $ – $ – $ – $ – $ 2,083 $ 2,083 2015 NET PENSION LIABILITY $ 417,231 $ 202,225 $ 2,881 $ 252 $ – $ 622,589 NET PENSION ASSET $ – $ – $ – $ – $ 2,844 $ 2,844

PENSION EXPENSE, DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES The tables below summarize the University’s pension expense, deferred outflows of resources and deferred inflows of resources related to the DRS pension plans, together with the related future year impacts to pension expense from amortization of those deferred amounts. Note that deferred outflows of resources related to University contributions subsequent to the measurement date are recognized as a reduction of the net pension liability in the following year, and are not amortized to pension expense.

PROPORTIONATE SHARE OF PENSION EXPENSE (Dollars in thousands) PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 TOTAL YEAR ENDED JUNE 30, 2016 $ 28,799 $ 45,100 $ 1,248 $ 414 $ (66) $ 75,495 YEAR ENDED JUNE 30, 2015 $ 23,023 $ 32,567 $ 1,052 $ 237 $ (144) $ 56,735

DEFERRED OUTFLOWS OF RESOURCES (Dollars in thousands) PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 TOTAL 2016 CHANGE IN ASSUMPTIONS $ – $ 587 $ – $ 1 $ 5 $ 593 DIFFERENCE BETWEEN EXPECTED AND ACTUAL EXPERIENCE – 38,726 – 153 182 39,061 CHANGE IN UNIVERSITY’S PROPORTIONATE SHARE – 6,453 – 564 61 7,078 UNIVERSITY CONTRIBUTIONS SUBSEQUENT TO THE MEASUREMENT DATE OF THE COLLECTIVE NET PENSION LIABILITY a 47,976 59,826 374 606 376 109,158 TOTAL $ 47,976 $ 105,592 $ 374 $ 1,324 $ 624 $ 155,890 2015 CHANGE IN UNIVERSITY’S PROPORTIONATE SHARE $ – $ 410 $ – $ 311 $ – $ 721 UNIVERSITY CONTRIBUTIONS SUBSEQUENT TO THE MEASUREMENT DATE OF THE COLLECTIVE NET PENSION LIABILITY 38,503 45,486 286 307 299 84,881 TOTAL $ 38,503 $ 45,896 $ 286 $ 618 $ 299 $ 85,602

a Recognized as a reduction of the net pension liability as of June 30, 2016

DEFERRED INFLOWS OF RESOURCES (Dollars in thousands) PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 TOTAL 2016 DIFFERENCE BETWEEN PROJECTED AND ACTUAL EARNINGS ON PLAN INVESTMENTS, NET $ 23,846 $ 97,252 $ 300 $ 376 $ 631 $ 122,405 CHANGE IN UNIVERSITY’S PROPORTIONATE SHARE – – – – 12 12 TOTAL $ 23,846 $ 97,252 $ 300 $ 376 $ 643 $ 122,417 2015 DIFFERENCE BETWEEN PROJECTED AND ACTUAL EARNINGS ON PLAN INVESTMENTS, NET $ 52,172 $ 214,360 $ 505 $ 578 $ 1,505 $ 269,120 CHANGE IN UNIVERSITY’S PROPORTIONATE SHARE – – – – 15 15 TOTAL $ 52,172 $ 214,360 $ 505 $ 578 $ 1,520 $ 269,135

FINANCIAL REPORT 2016 / 43 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Amounts reported as deferred outflows of resources, exclusive of contributions made after the measurement date, and deferred inflows of resources will be recognized in pension expense as follows:

AMORTIZATION OF DEFERRED INFLOWS AND DEFERRED OUTFLOWS OF RESOURCES (a) (Dollars in thousands) YEAR PERS 1 PERS 2/3 TRS 1 TRS 2/3 LEOFF 2 TOTAL 2017 $ (9,242) $ (24,475) $ (116) $ 26 $ (202) $ (34,009) 2018 (9,242) (24,475) (116) 26 (202) (34,009) 2019 (9,242) (24,534) (116) 26 (202) (34,068) 2020 3,880 21,998 48 212 154 26,292 2021 – – – 52 46 98 THEREAFTER – – – – 11 11 TOTAL $ (23,846) $ (51,486) $ (300) $ 342 $ (395) $ (75,685) (a) Negative amounts shown in the table above represent a reduction of expense

University of Washington Retirement Plan (403(B)) Faculty, librarians and professional staff are eligible to participate in the University of Washington Retirement Plan (UWRP), a 403(b) defined-contribution plan administered by the University.

403(b) Plan Description Contributions to the plan are invested by participants in annuity contracts or mutual fund accounts offered by one or more fund sponsors. Employees have at all times a 100% vested interest in their accumulations. Benefits from the plan are available upon separation or retirement at the member’s option. RCW 28B.10.400 et. seq. assigns the authority to the University of Washington Board of Regents to establish and amend benefit provisions.

The number of participants in the 403 (b) plan for the years ended June 30, 2016 and 2015 were 15,962 and 15,415, respectively.

403(b) Funding Policy Employee contribution rates, based on age, are 5%, 7.5% or 10% of salary. The University matches the contributions of employees. Within parameters established by the legislature, contribution requirements may be established or amended by the University of Washington Board of Regents. Employer contributions for the years ended June 30, 2016 and 2015 were $111,015,000 and $105,266,000, respectively.

University of Washington Supplemental Retirement Plan (401(A)) The University of Washington Supplemental Retirement Plan (UWSRP), a 401(a) defined-benefit retirement plan, operates in tandem with the 403(b) plan to supplement the expected defined contribution retirement savings accumulated under the UWRP. The UWSRP was closed to new participants effective March 1, 2011.

The Unfunded Actuarial Accrued Liability (UAL) and Annual Required Contribution (ARC) as of July 1 of the respective years were:

(Dollars in thousands) 2015 2013 2011 UAL $ 373,711 $ 292,535 $ 235,048

NORMAL COST $ 14,250 $ 9,529 $ 10,774 AMORTIZATION OF UAL, INCLUDING INTEREST 38,807 29,021 19,607 ARC $ 53,057 $ 38,550 $ 30,381

Actuarial Assumptions (Dollars in thousands) 2015 2013 2011 PAYROLL COVERED BY PLAN $ 1,050,000 $ 1,047,000 $ 1,129,000 RATE OF RETURN ASSUMPTION 4.00% 4.25% 4.25% SALARY INCREASES FOR YEARS 1 AND 2 3.75% 3.00% 2.00% SALARY INCREASE FOR THIRD YEAR 3.75% 3.00% 4.00% SALARY INCREASES THEREAFTER 3.75% 3.00% 4.00% The UAL and ARC were established using the entry age normal cost method.

UNIVERSITY OF WASHINGTON / 44 The following table reflects the activity in the UWSRP Net Pension Obligation for the years ended June 30, 2016, 2015 and 2014:

(Dollars in thousands) 2016 2015 2014 BALANCE AT BEGINNING OF FISCAL YEAR $ 248,186 $ 198,895 $ 163,372 ARC 53,057 53,057 38,550 PAYMENTS TO BENEFICIARIES (4,257) (3,766) (3,027) BALANCE AT END OF FISCAL YEAR $ 296,986 $ 248,186 $ 198,895

401(a) Plan Description This plan provides for a supplemental payment component, which guarantees a minimum retirement benefit based upon a one-time calculation at each eligible participant’s retirement date. The University makes direct payments to qualifying retirees when the retirement benefits provided by the 403(b) plan do not meet the benefit goals.

401(a) Plan Funding The University received an actuarial valuation of the UWSRP with a valuation date of July 1, 2015. The previous evaluations were performed in 2013 and 2011. The University has set aside $198,831,000 and $188,881,000 as of June 30, 2016 and 2015, respectively, for this liability. These funds do not meet the GASB technical definition of “Plan Assets” since they have not been segregated and restricted in a trust or equivalent arrangement. The UAL shown in the table above, therefore, does not reflect a credit for these amounts.

NOTE 16: Commitments and Contingencies Authorized expenditures for construction projects unexpended as of June 30, 2016 and 2015 were $245,773,000 and $157,034,000, respectively. These expenditures will be funded from institutional reserves, debt proceeds and state appropriations.

The University receives and expends substantial amounts under federal and state grants, contracts and programs. This funding is used for research, student aid, Medical Center operations and other programs, and is subject to audit by governmental granting agencies. Certain grant and contract costs billed to the federal government are subject to audit under 2 CFR 200 , “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.” The University is also involved in various other claims and legal actions arising in the ordinary course of business. University management believes that any liabilities arising from these matters will not have a material effect on the University’s financial statements.

The University is exposed to risk of loss related to tort liability, injuries to employees and loss of property. The University purchases insurance protection for workers’ compensation as well as marine, aviation and certain other risks. The University also purchases insurance protection for loss of property at self-sustaining units, bond-financed buildings and where otherwise required by contract; otherwise, the risk of property loss is retained, unfunded. For medical professional, general, employment practices, automobile liability, and information security and privacy protection, the University maintains a program of self-insurance reserves and excess insurance coverage. The self-insurance reserve represents the estimated ultimate cost of settling claims resulting from events that have occurred on or before the Statements of Net Position date. The reserve includes the undiscounted amounts that will be required for future payments of claims that have been reported, and claims related to events that have occurred but have not yet been reported.

The self-insurance reserve is estimated through an actuarial calculation and included in Long-Term Liabilities. Changes in the self-insurance reserve for the years ended June 30, 2016, 2015, and 2014 are noted below:

(Dollars in thousands) 2016 2015 2014 RESERVE AT BEGINNING OF FISCAL YEAR $ 82,201 $ 67,450 $ 79,708 INCURRED CLAIMS AND CHANGES IN ESTIMATES 24,778 29,495 13,917 CLAIM PAYMENTS (27,826) (14,744) (26,175) RESERVE AT END OF FISCAL YEAR $ 79,153 $ 82,201 $ 67,450

FINANCIAL REPORT 2016 / 45 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 17: Blended Component Units Condensed combining statements for the University and its blended component units are shown below: Total Blended (Dollars in thousands) Combined University of Component Medical Real Estate Statements of Net Position – June 30, 2016 Entities Eliminations Washington Units Entities Entities ASSETS TOTAL CURRENT ASSETS $ 1,538,816 $ (30,409) $ 1,369,221 $ 200,004 $ 65,627 $ 134,377 NONCURRENT ASSETS: TOTAL OTHER ASSETS 4,614,996 – 4,498,009 116,987 99,473 17,514 CAPITAL ASSETS, NET 4,353,141 – 4,059,598 293,543 15,723 277,820 TOTAL ASSETS 10,506,953 (30,409) 9,926,828 610,534 180,823 429,711 DEFERRED OUTFLOWS OF RESOURCES 179,355 – 179,355 – – – TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 10,686,308 $ (30,409) $ 10,106,183 $ 610,534 $ 180,823 $ 429,711 LIABILITIES TOTAL CURRENT LIABILITIES $ 1,060,056 $ (6,972) $ 964,331 $ 102,697 $ 77,832 $ 24,865 TOTAL NONCURRENT LIABILITIES 3,539,947 (9,753) 3,124,372 425,328 – 425,328 TOTAL LIABILITIES 4,600,003 (16,725) 4,088,703 528,025 77,832 450,193 DEFERRED INFLOWS OF RESOURCES 122,417 – 122,417 – – – TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 4,722,420 (16,725) 4,211,120 528,025 77,832 450,193 NET POSITION NET INVESTMENT IN CAPITAL ASSETS 2,277,608 – 2,277,789 (181) 15,723 (15,904) RESTRICTED: NONEXPENDABLE 1,419,311 – 1,419,311 – – – EXPENDABLE 1,591,440 – 1,591,440 – – – UNRESTRICTED 675,529 (13,684) 606,523 82,690 87,268 (4,578) TOTAL NET POSITION 5,963,888 (13,684) 5,895,063 82,509 102,991 (20,482) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 10,686,308 $ (30,409) $ 10,106,183 $ 610,534 $ 180,823 $ 429,711

Total Blended (Dollars in thousands) Combined University of Component Medical Real Estate Statements of Net Position – June 30, 2015 Entities Eliminations Washington Units Entities Entities ASSETS TOTAL CURRENT ASSETS $ 1,402,322 $ (22,327) $ 1,355,339 $ 69,310 $ 66,437 $ 2,873 NONCURRENT ASSETS: TOTAL OTHER ASSETS 4,786,897 – 4,675,492 111,405 86,557 24,848 CAPITAL ASSETS, NET 4,172,378 – 3,878,199 294,179 15,251 278,928 TOTAL ASSETS 10,361,597 (22,327) 9,909,030 474,894 168,245 306,649 DEFERRED OUTFLOWS OF RESOURCES 111,415 – 111,415 – – – TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 10,473,012 $ (22,327) $ 10,020,445 $ 474,894 $ 168,245 $ 306,649 LIABILITIES TOTAL CURRENT LIABILITIES $ 998,318 $ (31,313) $ 932,905 $ 96,726 $ 66,701 $ 30,025 TOTAL NONCURRENT LIABILITIES 3,159,096 – 2,864,897 294,199 – 294,199 TOTAL LIABILITIES 4,157,414 (31,313) 3,797,802 390,925 66,701 324,224 DEFERRED INFLOWS OF RESOURCES 269,135 – 269,135 – – – TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 4,426,549 (31,313) 4,066,937 390,925 66,701 324,224 NET POSITION NET INVESTMENT IN CAPITAL ASSETS 2,156,229 – 2,155,933 296 15,251 (14,955) RESTRICTED: NONEXPENDABLE 1,321,979 – 1,321,979 – – – EXPENDABLE 1,699,135 – 1,699,135 – – – UNRESTRICTED 869,120 8,986 776,461 83,673 86,293 (2,620) TOTAL NET POSITION 6,046,463 8,986 5,953,508 83,969 101,544 (17,575) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 10,473,012 $ (22,327) $ 10,020,445 $ 474,894 $ 168,245 $ 306,649

UNIVERSITY OF WASHINGTON / 46 (Dollars in thousands) Total Blended Statements of Revenues, Expenses and Changes Combined University of Component Medical Real Estate in Net Position – Year ended June 30, 2016 Entities Eliminations Washington Units Entities Entities REVENUES OPERATING REVENUES: STUDENT TUITION AND FEES $ 948,751 $ – $ 948,751 $ – $ – $ – PATIENT SERVICES 1,434,696 (20,475) 1,206,817 248,354 248,354 – GRANT REVENUE 1,294,443 –1,294,443 – – – OTHER OPERATING REVENUE 674,439 (40,847) 660,223 55,063 1,520 53,543 TOTAL OPERATING REVENUE 4,352,329 (61,322) 4,110,234 303,417 249,874 53,543 EXPENSES OPERATING EXPENSES: OTHER OPERATING EXPENSES 4,709,563 (43,232) 4,434,370 318,425 289,864 28,561 DEPRECIATION / AMORTIZATION 324,602 –307,928 16,674 1,820 14,854 TOTAL OPERATING EXPENSES 5,034,165 (43,232) 4,742,298 335,099 291,684 43,415 OPERATING INCOME (LOSS) (681,836) (18,090) (632,064) (31,682) (41,810) 10,128 NONOPERATING REVENUES (EXPENSES) STATE APPROPRIATIONS 302,097 –302,097 – – – GIFTS 115,000 –115,000 – – – INVESTMENT INCOME 44,877 –43,978 899 899 – OTHER NONOPERATING REVENUES (EXPENSES) (11,846) (4,580) (36,589) 29,323 42,358 (13,035) NET NONOPERATING REVENUES (EXPENSES) 450,128 (4,580) 424,486 30,222 43,257 (13,035) INCOME (LOSS) BEFORE OTHER REVENUES (231,708) (22,670) (207,578) (1,460) 1,447 (2,907) CAPITAL APPROPRIATIONS, GRANTS, GIFTS AND OTHER 60,866 –60,866 – – – GIFTS TO PERMANENT ENDOWMENTS 88,267 –88,267 – – – TOTAL OTHER REVENUES 149,133 – 149,133 – – – INCREASE (DECREASE) IN NET POSITION (82,575) (22,670) (58,445) (1,460) 1,447 (2,907) NET POSITION NET POSITION – BEGINNING OF YEAR 6,046,463 8,986 5,953,508 83,969 101,544 (17,575) NET POSITION – END OF YEAR $ 5,963,888 $ (13,684) $ 5,895,063 $ 82,509 $ 102,991 $ (20,482)

(Dollars in thousands) Total Blended Statements of Revenues, Expenses and Changes Combined University of Component Medical Real Estate in Net Position – Year ended June 30, 2015 Entities Eliminations Washington Units Entities Entities REVENUES OPERATING REVENUES: STUDENT TUITION AND FEES $ 914,419 $ – $ 914,419 $ – $ – $ – NET PATIENT SERVICE REVENUES 1,362,279 (8,913) 1,151,404 219,788 219,788 – GRANT REVENUE 1,280,658 –1,280,658 – – – OTHER OPERATING REVENUE 654,223 (25,677) 642,671 37,229 299 36,930 TOTAL OPERATING REVENUE 4,211,579 (34,590) 3,989,152 257,017 220,087 36,930 EXPENSES OPERATING EXPENSES: OTHER OPERATING EXPENSES 4,365,117 (33,911) 4,134,172 264,856 251,450 13,406 DEPRECIATION / AMORTIZATION 310,960 –293,441 17,519 1,666 15,853 TOTAL OPERATING EXPENSES 4,676,077 (33,911) 4,427,613 282,375 253,116 29,259 OPERATING INCOME (LOSS) (464,498) (679) (438,461) (25,358) (33,029) 7,671 NONOPERATING REVENUES (EXPENSES) STATE APPROPRIATIONS 255,156 –255,156 – – – GIFTS 115,636 –115,636 – – – INVESTMENT INCOME (LOSS) 227,404 –231,471 (4,067) (4,067) – OTHER NONOPERATING REVENUES (EXPENSES) (8,515) 394 (20,913) 12,004 31,674 (19,670) NET NONOPERATING REVENUES (EXPENSES) 589,681 394 581,350 7,937 27,607 (19,670) INCOME (LOSS) BEFORE OTHER REVENUES 125,183 (285) 142,889 (17,421) (5,422) (11,999) CAPITAL APPROPRIATIONS, GRANTS, GIFTS AND OTHER 42,798 –42,798 – – – GIFTS TO PERMANENT ENDOWMENTS 67,359 –67,359 – – – TOTAL OTHER REVENUES 110,157 – 110,157 – – – INCREASE (DECREASE) IN NET POSITION 235,340 (285) 253,046 (17,421) (5,422) (11,999)

NET POSITION NET POSITION – BEGINNING OF YEAR 5,811,123 9,271 5,700,462 101,390 106,966 (5,576) NET POSITION – END OF YEAR $ 6,046,463 $ 8,986 $ 5,953,508 $ 83,969 $ 101,544 $ (17,575)

FINANCIAL REPORT 2016 / 47 NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 17 CONTINUED

(Dollars in thousands) Total Blended Statements of Cash Flows – Combined University of Component Medical Real Estate Year ended June 30, 2016 Entities Eliminations Washington Units Entities Entities NET CASH PROVIDED (USED) BY: OPERATING ACTIVITIES $ (254,089) $ – $ (270,971) $ 16,882 $ 4,432 $ 12,450 NONCAPITAL FINANCING ACTIVITIES 545,506 – 542,546 2,960 2,960 – CAPITAL AND RELATED FINANCING ACTIVITIES (343,560) – (472,234) 128,674 (102) 128,776 INVESTING ACTIVITIES 62,723 – 216,968 (154,245) (14,968) (139,277) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,580 – 16,309 (5,729) (7,678) 1,949

CASH AND CASH EQUIVALENTS – BEGINNING OF THE YEAR 82,905 (9,728) 73,573 19,060 18,034 1,026 CASH AND CASH EQUIVALENTS – END OF THE YEAR $ 93,485 $ (9,728) $ 89,882 $ 13,331 $ 10,356 $ 2,975

(Dollars in thousands) Total Blended Statements of Cash Flows – Combined University of Component Medical Real Estate Year ended June 30, 2015 Entities Eliminations Washington Units Entities Entities NET CASH PROVIDED (USED) BY: OPERATING ACTIVITIES $ (129,586) $ (9,728) $ (106,453) $ (13,405) $ (18,746) $ 5,341 NONCAPITAL FINANCING ACTIVITIES 426,209 – 403,128 23,081 23,081 – CAPITAL AND RELATED FINANCING ACTIVITIES (420,195) – (412,579) (7,616) (1,612) (6,004) INVESTING ACTIVITIES 127,349 – 129,076 (1,727) (1,727) – NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,777 (9,728) 13,172 333 996 (663)

CASH AND CASH EQUIVALENTS – BEGINNING OF THE YEAR 79,128 – 60,401 18,727 17,038 1,689 CASH AND CASH EQUIVALENTS – END OF THE YEAR $ 82,905 $ (9,728) $ 73,573 $ 19,060 $ 18,034 $ 1,026

UNIVERSITY OF WASHINGTON / 48 NOTE 18: Discrete Component Units Condensed combining statements for the University’s discrete component units are shown below:

June 30, 2016 June 30, 2015 Total Discrete Valley Total Discrete Valley (Dollars in thousands) Component Northwest Medical Component Northwest Medical Statements of Net Position Units Hospital Center Units Hospital Center

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES TOTAL CURRENT ASSETS $ 265,673 $ 76,962 $ 188,711 $ 238,178 $ 78,426 $ 159,752 NONCURRENT ASSETS: TOTAL OTHER ASSETS 185,347 51,315 134,032 176,921 48,895 128,026 CAPITAL ASSETS, NET 461,017 111,815 349,202 467,701 117,735 349,966 TOTAL DEFERRED OUTFLOW OF RESOURCES 6,066 6,066 – 6,435 6,435 – TOTAL ASSETS AND DEFERRED OUTFLOWS $ 918,103 $ 246,158 $ 671,945 $ 889,235 $ 251,491 $ 637,744 OF RESOURCES

LIABILITIES AND DEFERRED INFLOWS OF RESOURCES TOTAL CURRENT LIABILITIES $ 167,521 $ 63,516 $ 104,005 $ 141,904 $ 52,083 $ 89,821 TOTAL NONCURRENT LIABILITIES 392,847 93,144 299,703 413,472 105,185 308,287 TOTAL DEFERRED INFLOWS OF RESOURCES 26,744 –26,744 9,625 – 9,625 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 587,112 156,660 430,452 565,001 157,268 407,733

NET POSITION NET INVESTMENT IN CAPITAL ASSETS 71,275 30,674 40,601 67,033 33,864 33,169 RESTRICTED: NONEXPENDABLE 1,927 1,927 – 1,943 1,943 – EXPENDABLE 8,788 754 8,034 8,471 459 8,012 UNRESTRICTED 249,001 56,143 192,858 246,787 57,957 188,830 TOTAL NET POSITION 330,991 89,498 241,493 324,234 94,223 230,011 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 918,103 $ 246,158 $ 671,945 $ 889,235 $ 251,491 $ 637,744

Year Ended June 30, 2016 Year Ended June 30, 2015 (Dollars in thousands) Total Discrete Valley Total Discrete Valley Statements of Revenues, Expenses and Component Northwest Medical Component Northwest Medical Changes in Net Position Units Hospital Center Units Hospital Center

REVENUES OPERATING REVENUES: PATIENT SERVICES $ 877,461 $ 357,598 $ 519,863 $ 822,421 $ 341,405 $ 481,016 OTHER OPERATING REVENUE 45,633 15,153 30,480 53,165 15,649 37,516 TOTAL OPERATING REVENUE 923,094 372,751 550,343 875,586 357,054 518,532

EXPENSES OPERATING EXPENSES: OTHER OPERATING EXPENSES 887,134 373,426 513,708 816,563 352,124 464,439 DEPRECIATION / AMORTIZATION 46,822 17,495 29,327 49,238 18,027 31,211 TOTAL OPERATING EXPENSES 933,956 390,921 543,035 865,801 370,151 495,650 OPERATING INCOME (LOSS) (10,862) (18,170) 7,308 9,785 (13,097) 22,882

NONOPERATING REVENUES (EXPENSES) PROPERTY TAX REVENUE 19,902 –19,902 18,132 –18,132 INVESTMENT INCOME 7,182 2,516 4,666 4,385 981 3,404 OTHER NONOPERATING EXPENSES (9,251) 11,143 (20,394) (22,032) 6,769 (28,801) NET NONOPERATING REVENUES (EXPENSES) 17,833 13,659 4,174 485 7,750 (7,265) INCOME (LOSS) BEFORE OTHER REVENUES 6,971 (4,511) 11,482 10,270 (5,347) 15,617 CAPITAL GRANTS, GIFTS AND OTHER (214) (214) – 169 169 – INCREASE (DECREASE) IN NET POSITION 6,757 (4,725) 11,482 10,439 (5,178) 15,617

NET POSITION NET POSITION – BEGINNING OF YEAR 324,234 94,223 230,011 313,795 99,401 214,394 NET POSITION – END OF YEAR $ 330,991 $ 89,498 $ 241,493 $ 324,234 $ 94,223 $ 230,011

FINANCIAL REPORT 2016 / 49 SCHEDULES OF REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Proportionate Share of the Net Pension Liability Schedule of Contributions PERS 1 PERS 1 (Dollars in thousands) 2016 2015 (Dollars in thousands) 2016 2015 UNIVERSITY’S PROPORTION OF THE NET CONTRACTUALLY REQUIRED CONTRIBUTION $ 2,155 $ 2,058 PENSION LIABILITY 8.33% 8.28% CONTRIBUTIONS IN RELATION TO THE UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRACTUALLY REQUIRED CONTRIBUTION $ 2,155 $ 2,059 NET PENSION LIABILITY $ 435,853 $ 417,231 CONTRIBUTION DEFICIENCY (EXCESS) $ – $ (1) UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 22,341 $ 25,376 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 19,450 $ 22,341 UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRIBUTIONS AS A PERCENTAGE OF NET PENSION LIABILITY AS A PERCENTAGE OF COVERED-EMPLOYEE PAYROLL 11.08% 9.21% COVERED-EMPLOYEE PAYROLL 1950.91% 1644.20% PLAN FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 59.10% 61.19%

Schedule of Proportionate Share of the Net Pension Liability Schedule of Contributions TRS 1 TRS 1 (Dollars in thousands) 2016 2015 (Dollars in thousands) 2016 2015 UNIVERSITY’S PROPORTION OF THE NET CONTRACTUALLY REQUIRED CONTRIBUTION $ 38 $ 44 PENSION LIABILITY 0.13% 0.10% CONTRIBUTIONS IN RELATION TO THE UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRACTUALLY REQUIRED CONTRIBUTION $ 38 $ 42 NET PENSION LIABILITY $ 4,049 $ 2,881 CONTRIBUTION DEFICIENCY (EXCESS) $ – $ 2 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 423 $ 514 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 306 $ 423 UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRIBUTIONS AS A PERCENTAGE OF NET PENSION LIABILITY AS A PERCENTAGE OF COVERED-EMPLOYEE PAYROLL 12.42% 10.40% COVERED-EMPLOYEE PAYROLL 957.21% 560.51% PLAN FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 65.70% 68.77%

Schedule of Proportionate Share of the Net Pension Liability Schedule of Contributions PERS 2/3 PERS 2/3 (Dollars in thousands) 2016 2015 (Dollars in thousands) 2016 2015 UNIVERSITY’S PROPORTION OF THE NET CONTRACTUALLY REQUIRED CONTRIBUTION $ 107,424 $ 83,323 PENSION LIABILITY 10.20% 10.00% CONTRIBUTIONS IN RELATION TO THE UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRACTUALLY REQUIRED CONTRIBUTION $ 108,413 $ 83,342 NET PENSION LIABILITY $ 364,303 $ 202,225 CONTRIBUTION DEFICIENCY (EXCESS) $ (989) $ (19) UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 904,661 $ 856,839 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 967,955 $ 904,661 UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRIBUTIONS AS A PERCENTAGE OF NET PENSION LIABILITY AS A PERCENTAGE OF COVERED-EMPLOYEE PAYROLL 11.10% 9.21% COVERED-EMPLOYEE PAYROLL 40.27% 23.60% PLAN FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 89.20% 93.29%

Schedule of Proportionate Share of the Net Pension Liability Schedule of Contributions TRS 2/3 TRS 2/3 (Dollars in thousands) 2016 2015 (Dollars in thousands) 2016 2015 UNIVERSITY’S PROPORTION OF THE NET CONTRACTUALLY REQUIRED CONTRIBUTION $ 956 $ 558 PENSION LIABILITY 0.12% 0.08% CONTRIBUTIONS IN RELATION TO THE UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRACTUALLY REQUIRED CONTRIBUTION $ 985 $ 555 NET PENSION LIABILITY $ 969 $ 252 CONTRIBUTION DEFICIENCY (EXCESS) $ (29) $ 3 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 5,367 $ 3,391 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 7,507 $ 5,367 UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRIBUTIONS AS A PERCENTAGE OF NET PENSION LIABILITY AS A PERCENTAGE OF COVERED-EMPLOYEE PAYROLL 12.73% 10.40% COVERED-EMPLOYEE PAYROLL 18.05% 7.43% PLAN FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 92.48% 96.81%

UNIVERSITY OF WASHINGTON / 50 Schedule of Proportionate Share of the Net Pension Liability Schedule of Contributions (Asset) LEOFF 2 LEOFF 2 (Dollars in thousands) 2016 2015 (Dollars in thousands) 2016 2015 CONTRACTUALLY REQUIRED CONTRIBUTION $ 384 $ 303 UNIVERSITY’S PROPORTION OF THE NET CONTRIBUTIONS IN RELATION TO THE PENSION LIABILITY (ASSET) 0.20% 0.21% CONTRACTUALLY REQUIRED CONTRIBUTION $ 384 $ 300 UNIVERSITY’S PROPORTIONATE SHARE OF THE CONTRIBUTION DEFICIENCY (EXCESS) $ – $ 3 NET PENSION LIABILITY (ASSET) $ (2,083) $ (2,844) UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 4,474 $ 3,534 UNIVERSITY’S COVERED-EMPLOYEE PAYROLL $ 3,534 $ 3,581 CONTRIBUTIONS AS A PERCENTAGE OF UNIVERSITY’S PROPORTIONATE SHARE OF COVERED-EMPLOYEE PAYROLL 8.58% 8.57% THE NET PENSION LIABILITY (ASSET) AS A PERCENTAGE OF ITS COVERED-EMPLOYEE PAYROLL -58.94% -79.42% PLAN FIDUCIARY NET POSITION AS A PERCENTAGE OF THE TOTAL PENSION LIABILITY 111.67% 116.75%

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2016 The Office of the State Actuary calculates the actuarially determined contributions (ADC) based on the results of an actuarial valuation consistent with the state’s funding policy defined in Chapter 41.45 RCW. Consistent with the state’s contribution-rate adoption process, the results of an actuarial valuation with an odd-numbered year valuation date determine the ADC for the biennium that ensues two years later. For example, the actuarial valuation with a June 30, 2013, valuation date, completed in the fall of 2014, determines the ADC for the period beginning July 1, 2015, and ending June 30, 2017.

FINANCIAL REPORT 2016 / 51

BOARD OF REGENTS* ADMINISTRATIVE OFFICERS* Patrick M. Shanahan, Chair Ana Mari Cauce Mindy Kornberg President Vice President for Human Resources Jeremy Jaech, Vice Chair Gerald J. Baldasty Connie Kravas William S. Ayer Provost and Executive Vice President Vice President for University Joel Benoliel Advancement Elizabeth Cherry Kristianne Blake Interim Vice President for Finance and Paul G. Ramsey Facilities CEO, UW Medicine, Executive Vice President Joanne R. Harrell for Medical Affairs and Dean of the School Rickey Hall of Medicine Constance W. Rice Vice President for Minority Affairs and Rogelio Riojas Diversity Denzil Suite Vice President for Student Life Herb Simon Randy Hodgins Vice President for External Affairs Kelli Trosvig Austin Wright-Pettibone Vice President for UW Information Vikram Jandhyala Technology and Chief Information Officer Vice President for Innovation Strategy

* As of October 21, 2016

This publication was prepared by Financial Management. Published December 2016. The 2016 UW Financial Report and reports from previous years are available at annualreport.uw.edu. For more information, contact Financial Accounting at 206.221.7845 or [email protected]

PHOTOGRAPHY: Stephen Forbes, Katherine B. Turner

DESIGN, PRODUCTION, AND PRINT COORDINATION: UW Creative Communications

VISIT OUR WEBSITE: uw.edu

F–3 STANDING COMMITTEES

Finance and Asset Management Committee

Audit Advisory Committee Update

INFORMATION

For information only.

BACKGROUND

The University of Washington Audit Advisory Committee was established in January 2014 as an advisory committee to the Board of Regents, its appropriate standing committees, and the University President, or his or her designee, on matters relating to the University’s financial practices and standards of conduct. The committee is responsible for reviewing and advising on any external and internal financial audits and internal controls. The committee may, through its Chair or a majority vote of its members, ask management to address specific issues within the responsibilities of the committee.

As noted in the Board of Regents Governance, Standing Orders, Chapter 4, Section 3, the Audit Advisory Committee will consist of no more than eight members to be appointed by the Board. The Audit Advisory Committee is comprised of both Regent and non-Regent members. Members will be asked to make a minimum commitment of three consecutive years, and will serve at the pleasure of the Board.

As approved by the Board at its September 11, 2014 meeting, the Audit Advisory Committee members are:

Regent Kristianne Blake (Chair) 9/1/14 to 8/31/17 Robert L. (Bob) Gerth 9/1/14 to 8/31/17 Richard D. Greaves 9/1/14 to 8/31/17 Brandon S. Pedersen 9/1/14 to 8/31/17

F–3/201-17 1/12/17 F–4 STANDING COMMITTEES

Finance and Asset Management Committee

UWINCO Board Update and Investment Performance Quarterly Report – Quarter Ended September 30, 2016

INFORMATION

For information only.

Attachment University of Washington Quarterly Investment Performance Report as of September 30, 2016

F–4/201-17 1/12/17 University of Washington Quarterly Investment Performance Report As of September 30, 2016

University of Washington Investment Management Company

Published December 2016

F–4.1/201-17 ATTACHMENT 1/12/17 University of Washington Quarterly Investment Performance Report As of September 30, 2016

Table of Contents

UW Financial Assets Overview ...... 1

Consolidated Endowment Fund (CEF) Asset Allocation ...... 2 ......

CEF Performance Summary ...... 3

CEF Performance Update ...... 4

CEF Activity and Campus Support From Investments ...... 5

CEF Exposures ...... 6

Invested Funds Portfolio Summary ...... 7 ......

F–4.1/201-17 1/12/17 UW Financial Assets Overview1 As of September 30, 2016

($ in Millions) Total Assets $4,948

Endowment & Similar Funds Operating & Reserve Funds Endowment Funds $2,335 Invested Funds - Cash & Liquidity2,3 $1,606 2 5 Diversified Investment Pool 586 Endowment Invested Funds - Capital Assets Pool 141 Operating & 6 Consolidated Endowment Fund $2,921 & Similar Bond Retirement & Building Funds 20 Reserve Funds 7 Life Income Trusts 81 Funds Bond Proceeds and Reserves 21 $1,788 Outside Trusts 107 $3,160 Non-CEF Endowments 14 Permanent Fund4 37 $3,160 $1,788

1 Assets whose management falls under the auspices of the Finance & Asset Management Committee of the Board of Regents, excluding Metro Tract and Forest Trust Lands. 2 Invested Funds Diversified Investment Pool holds units of the Consolidated Endowment Fund (CEF) valued at $586 million. To avoid double counting, the dollars are included only in the CEF total. 3 Excludes general operating account balances of $36 million held to meet the next day operating expense payments. 4 Proceeds from sale of land grants and subsequent investment returns on deposit with the state of Washington. 5 Capital Assets Pool (CAP) consists of UW internally financed projects. 6 Bond Retirement Fund and Building Fund on deposit with the state of Washington. 7 Debt service reserve funds and construction project funds which have not yet been disbursed.

F–4.1/201-17 1 1/12/17 CEF Asset Allocation As of September 30, 2016

($ in Millions) Total CEF $2,921

Current Allocation Policy Fixed Target Range Income 8% Emerging Markets Equity $560 19% 17% Absolute Emerging Developed Markets Equity 1,075 37% 30% Return Markets 16% Equity Private Equity 343 12% 15% 19% Real Assets 179 6% 5% Opportunistic 68 2% 3% Capital Appreciation $2,225 76% 70% 55% - 85% Real Assets 6% Absolute Return 472 16% 19% Fixed Income 224 8% 11% Private Developed Capital Preservation $696 24% 30% 15% - 45% Equity Markets 12% Equity 37% Consolidated Endowment Fund* $2,921 100%

* Uncalled capital commitments: 12% Opportunistic 2% Note: Percentages may not sum due to rounding.

F–4.1/201-17 1/12/17 2 CEF Performance Summary As of September 30, 2016

Rolling Year Returns (%) Fiscal Year1 Returns (%)

1 Year 3 Year 5 Year 10 Year 20 Year 2016 2015 2014 2013 2012

CEF Return 8.5 6.8 9.0 5.8 8.5 CEF Return -1.6 6.8 15.8 13.5 -0.9 Passive Benchmark 1 9.2 4.4 8.0 4.5 5.8 Passive Benchmark 2 -1.2 1.1 16.2 11.2 -2.7

Capital Appreciation 10.2 7.9 10.8 6.3 8.9 Capital Appreciation -2.7 8.1 18.8 17.0 -1.9 MSCI ACWI (Net) 12.0 5.2 10.6 4.3 5.8 MSCI ACWI (Net) -3.7 0.7 22.9 16.6 -6.5

Capital Preservation 3.0 3.7 4.3 3.5 6.3 Capital Preservation 1.1 2.7 8.0 5.9 1.2 BC Intermediate Gov't Bond 2.4 2.2 1.6 3.7 4.7 BC Intermediate Gov't Bond 3.9 1.8 1.5 -0.6 5.0

1 70% MSCI ACWI & 30% Barclays Intermediate Government Bond Index 1 The University of Washington fiscal year runs from July 1st to June 30th 2 70% MSCI ACWI & 30% Barclays Intermediate Government Bond Index

Cambridge Public Colleges with Endowments $1 to $5 Billion Market Value and Distributions Over 20 Years For Periods Ending 09/30/16 ($ in Millions) $4,500 $4.5B

University of Washington Cambridge Associates Median (Preliminary) $4,000 CEF Campus Distributions

$3,500 CEF Market Value

$3,000 $2.9 B

$2,500

$2,000 9.0% 8.5% 8.4% $1,500 6.9% 6.8% 5.8% 5.0% 4.9% $1,000

$500

$0 1 Year 3 Year 5 Year 10 Year 1st Quartile 1st Quartile 1st Quartile 1st Quartile

F–4.1/201-17 1/12/17 3 CEF Performance Update As of September 30, 2016 Rolling Returns % Quarter YTD 1 Year 3 Year 5 Year 10 Year

CONSOLIDATED ENDOWMENT FUND 4.6 6.9 8.5 6.8 9.0 5.8 Passive Benchmark1 3.6 5.7 9.2 4.4 8.0 4.5

CAPITAL APPRECIATION 5.5 8.1 10.2 7.9 10.8 6.3 MSCI ACWI (Net) 5.3 6.6 12.0 5.2 10.6 4.3

Emerging Markets Equity 7.0 12.0 15.3 6.3 8.9 9.6 Developed Markets Equity 5.5 7.4 11.0 6.7 12.8 5.3 Opportunistic (started 7/1/2010) 5.6 14.2 14.1 12.0 14.3 -- Subtotal 6.0 9.1 12.5 6.8 11.3 -- MSCI ACWI (Net) 5.3 6.6 12.0 5.2 10.6 4.3

Private Equity2 4.0 5.3 3.8 13.3 11.6 9.8 PE Benchmark2 3.0 2.3 1.2 12.6 11.3 10.0

Real Assets2 3.5 4.2 2.1 7.5 7.0 2.7 RA Benchmark2 4.4 1.9 -0.7 3.6 6.0 6.3

CAPITAL PRESERVATION 1.8 2.6 3.0 3.7 4.3 3.5 BC Intermediate Government Bond -0.2 3.3 2.4 2.2 1.6 3.7

Absolute Return 2.4 3.0 4.1 4.4 6.1 5.6 Policy Benchmark3 1.9 0.3 0.3 2.2 3.1 3.1 Fixed Income 0.5 1.6 1.0 1.9 1.6 2.2 BC Intermediate Government Bond -0.2 3.3 2.4 2.2 1.6 3.7

MARKET INDICES S&P 500 3.9 7.8 15.4 11.2 16.4 7.2 Russell 2000 9.0 11.4 15.5 6.7 15.8 7.1 MSCI EAFE 6.5 2.2 7.1 1.0 7.9 2.3 MSCI EMF 9.2 16.4 17.2 -0.2 3.4 4.3 BC High Yield 5.6 15.1 12.7 5.3 8.3 7.7

1 70% MSCI ACWI & 30% Barclays Intermediate Government Bond Index 2 Reported on a quarter lag 3 Preliminary F–4.1/201-17 1/12/17 4 CEF Activity and Campus Support As of September 30, 2016 ($ = Millions)

CEF Activity Rolling Years FYTD 2017 FY 2016 FY 2015 3 Year 5 Year 10 Year 20 Year

Beginning Balance $2,968 $3,076 $2,833 $2,450 $2,014 $1,723 $561

Gifts 15 89 52 201 319 690 1,150 Transfers 9 23 8 45 57 95 191 Operating Funds (163) (25) 121 80 92 213 300 Total Additions ($138) $88 $181 $326 $468 $999 $1,641

Net Investment Return 125 (55) 194 541 1,051 1,295 2,333 Distributions to Unit Holders (27) (113) (105) (317) (491) (878) (1,323) Internal Fees Advancement Support (5) (23) (21) (63) (98) (175) (228) used Investment 70% MSCI Administration ACWI (Gross) & 30% Barclays Intermediate(1) Government(6) Bond(5) Index (16) (25) (44) (64) Ending Balance $2,921 $2,968 $3,076 $2,921 $2,921 $2,921 $2,921

Campus Support from Investments

CEF Distributions to Unit Holders 27 113 105 317 491 878 1,323 Advancement Support from CEF 5 23 21 63 98 175 228 Invested Funds Distributions* 0 50 43 129 212 445 905 Total Campus Support $33 $185 $170 $509 $801 $1,497 $2,457

* Invested Funds Distributions are made annually in June.

F–4.1/201-17 1/12/17 5 CEF Exposures As of September 30, 2016

Exposure by Strategy Short-Term Liquidity as a % of CEF

Emerging Developed Absolute 2016 PE RA * FI Markets Markets Return

Emerging Developed Absolute 2015 PE RA * FI Markets Markets Return

77%

Emerging Developed Absolute 57% 2014 PE RA * FI Markets Markets Return 39% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

PE = Private Equity; RA = Real Assets; * = Opportunistic; FI = Fixed Income Weekly Monthly Quarterly 1 Year

Geographic Exposure* Equity Sector Exposure

Industrials Information 12% Technology 15% Materials 4% EM Asia Healthcare Telecom 3% North America 10% 14% Utilities 2% 62% 2nd Quartile Cash 4% EM EMEA 3% Financials 16% Consumer Discretionary EM LatAm 4% 13% Dev Europe & Japan 4% Energy Middle 12% East 10% Dev Asia ex Japan 3% Consumer Staples 9%

*Foreign currency exposure: 34%.

F–4.1/201-17 6 1/12/17 Invested Funds (IF) Portfolio Summary As of September 30, 2016

Returns (%) Fund Allocation By Pool Fund Allocation Duration (Years) Range Quarter 1 Year 3 Year 5 Year 10 Year MV (in millions) Actual Maximum

Cash & Liquidity Pools 0.2 2.0 1.6 1.3 2.9 Cash Pool 674 29% 10%-40% 0.7 3.0 Weighted Benchmark -0.2 1.8 1.6 1.2 3.0 Liquidity Pool 933 40% 25%-60% 3.5 5.0 DIP1 586 25% 15%-45% IF including DIP1 1.5 4.1 3.0 3.2 3.5 IF excluding CAP2 2,192 94% Weighted Benchmark 0.9 4.4 2.5 2.8 3.7 Capital Assets Pool 2 141 6% 0%-15%

1 2 IF including DIP & CAP 1.5 4.1 3.0 3.2 3.5 Total Invested Funds 2,333 100% Information Purposes Only

1 Diversified Investment Pool (DIP) is designed to improve the risk profile and/or enhance 1 DIP currently consists of CEF units and are included in the CEF market value. the IF performance through investment in CEF units or other investment vehicles. 2 Capital Assets Pool (CAP) consists of UW internally financed projects. 2 Capital Assets Pool consists of UW internally financed projects.

Mix of Investments: IF Including CAP Growth of $10,000: Impact of Diversified Investment Pool (DIP) $15,000

Mortgage $14,115 Related 18% Cash 5% $14,000

$13,000 DIP 25% $13,281

Asset Backed 5% $12,000 IF including DIP

IF excluding DIP

Other 6% $11,000 Treasury & Agencies 35% $10,000 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16

F–4.1/201-17 1/12/17 7 F–5 STANDING COMMITTEES

Finance and Asset Management Committee

Introduction of New Leadership: Executive Vice President, Finance and Administration

INFORMATION

For information only.

BIOGRAPHICAL INFORMATION

Jeffrey Scott was named Executive Vice President, Finance and Administration for the University of Washington effective December 5, 2016. Scott provides leadership for the central business services of the University, including finance and facilities, human resources, information technology, and capital planning and development.

Scott comes to UW after two years at Georgia Tech, where he led the Institute’s finance, budget, capital planning, real estate, and institutional research departments. He strengthened financial governance and accountability, led improvements in financial processes and training, enhanced the management of international operations, and began the planning, selection and implementation of a new financial system.

Prior to Georgia Tech, Scott spent six years at Columbia University, leading its student and administrative services. He directed student accounts, financial aid, housing, dining, health services, information technology, and human resources. Before entering higher education in 2008, Scott held a number of positions in the private and public sectors. He spent 13 years in a variety of positions, including chief strategy officer at FMC Corporation, a machinery and chemical multinational company. He also served in Washington as the chief financial officer of the Export-Import Bank of the United States. Scott spent his early career at the Office of Management and Budget, and the Pentagon.

Scott graduated from Harvard College and received a master’s in public policy from Harvard’s Kennedy School. He holds a Doctorate in Education from the University of Pennsylvania.

F–5/201-17 1/12/17 F–6 STANDING COMMITTEES

Finance and Asset Management Committee

Monthly Capital Project and Debt Report and Update on Capital Project Governance and Process Improvements

INFORMATION ITEM

For information only.

BACKGROUND

The Capital Project and Debt Report is a standing agenda item. In addition to the monthly report, Mike McCormick, Associate Vice President of Capital Planning and Development, will provide an oral update on capital project governance and process improvements put into place over the past year.

Attachments 1. Monthly Debt Report as of 11/30/2016 2. One Capital Plan (2017-2023) – for reference 3. Capital Project Approval Process – for reference 4. Active Capital Projects Summary as of November 30, 2016

F–6/201-17 1/12/17 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.50% Weighted Average Cost of Capital: 3.43% Monthly Debt Report As of 11/30/2016

Recent Events

. The current 30 year weighted average fixed borrowing cost is estimated to be 4.04%(1)

. Bonds yields have increased significantly over the last two months. Since the University priced bonds on October 18th, long-term tax-exempt interest rates have increased by approximately 0.60%. Expectation of a rate hike by the Federal Reserve, funds leaving the municipal market, high issuance of debt, and uncertainty surrounding the Presidential election have all impacted interest rates

. Focusing on the short-term market, rates had increased dramatically by mid-October in anticipation of money market regulatory reform but have since stabilized and slightly declined. The short-term tax exempt index (SIFMA) is currently it is 0.66%. The University priced $42 million of commercial paper (to support HR Payroll) on December 1st at 0.80%

Estimated Project Capacity

FY 2016-2021 (in millions) As of 11/30/2016 . A project capacity update was presented at the May 2016 Regents Total Debt Capacity $ 755 meeting based on 2015 audited financial statements and projections Plus: Remaining CAP(2) 100 855 . Figures represent the estimated amount of additional debt the Less: Authorized Projects(3) (430) University can issue over the next five years while aligning with peer minimum ratios Project Capacity $ 425 . $405 million of project capacity is available of which $305 million (4) (20) Less: Projects authorized this year can come from debt plus $100m from CAP Remaining Project Capacity $ 405

External Debt Portfolio - $2,384 Million

. The University has $2,384 million of external debt outstanding. This is approximately $118 million higher than the previous report (9/30/2016) due to $3 million of principal payments and $121 million Non-ILP Debt, of new debt through the issuance of the 2016 GRBs and refunding of the 2008 GRBs 27%

. Weighted average cost of capital: 3.43% ILP Debt, 73% . Portfolio Composition: 98% fixed rate; 2% variable rate

. $142 million in internal funding provided by the CAP is excluded from the external debt portfolio

Annual Debt Service (5)

$210 Maximum Annual Debt Service: $206M $180 Millions

$150

$120

$90

$60

$30

General Revenue Bonds State Issued Bonds, Payable by UW Lease Revenue Bonds Other CP (6) NWH

(1) 80/20 weighting between the tax-exempt and taxable 30 year long term interest rates to illustrate the University's portfolio (2) 10% of the Invested Funds (IF), less previously allocated Capital Assets Pool (CAP) dollars (3) Projects approved before the May debt capacity analysis, including Life Sciences, Housing Phase 4a and other authorized projects (4) Includes Court 17 (5) Excludes Valley Limited Tax General Obligation Bonds and Revenue Bonds (6) Excludes principal payments on Commercial Paper F–6.1/201-17 ATTACHMENT 1 Page 1 of 2 1/12/17 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.50% Weighted Average Cost of Capital: 3.43% Monthly Debt Report As of 11/30/2016

Outstanding External Debt (in millions) Project Purpose Balance(1) Final Maturity % by Purpose Molecular Engineering Building Instruction and Research 70.4 2043 Animal Research and Care Facilities Instruction and Research 69.4 2047 Dempsey Hall Instruction and Research 38.5 2041 Instruction and Foege Building Instruction and Research 30.4 2031 Research, 15% UW Bothell Phase 3 Instruction and Research 25.0 2043 William H. Gates Law School Instruction and Research 23.5 2028 AAALAC Instruction and Research 22.4 2035 Ben Hall Instruction and Research 17.8 2037 Denny Hall Instruction and Research 15.0 2046 Ocean Sciences Instruction and Research 12.4 2024 Physics-Astronomy Instruction and Research 5.8 2023 Other Instruction and Research Instruction and Research 26.4 various

Subtotal Instruction and Research 357.1 UW Medicine, 31% South Lake Union (Ph I, II, 3.1, & 3.2) UW Medicine 395.8 2048 UWMC Expansion UW Medicine 201.9 2046 NW Hospital UW Medicine 72.3 2033 UWMC Surgery Pavilion UW Medicine 43.8 2028 Other UW Medicine UW Medicine 25.2 various Subtotal UW Medicine 739.0 Housing Expansion Student Life 392.2 2045 Husky Union Building Student Life 103.9 2043 IMA Building Student Life 31.7 2030 Radford Court Apartments Student Life 31.6 2032 Nordheim Court Student Life 20.8 2033 Bothell Student Center Student Life 17.3 2046 Student Life, 27% Ethnic Cultural Center Student Life 12.9 2043 UW Tacoma YMCA Student Life 11.8 2046 Other Student Life Student Life 28.9 various Subtotal Student Life 651.1 UW Tower Academic Support 105.4 2037 0 0 Cobb Building Academic Support 32.9 2045 0 0 HR Payroll Modernization Academic Support 25.0 n/a 0 0

West Campus Utility Plant - Academic Support 21.3 2047 Academic Support0 ,0 4225 Roosevelt Academic Support 16.4 2029 11% 0 0 4545 Building Academic Support 15.1 2024 0 0 Other Academic Support Academic Support 35.7 various 0 0 Subtotal Academic Support 251.8 Husky Stadium Athletics 226.3 2045 Athletics, 10% Husky Ballpark Athletics 11.6 2045 Other Athletics Athletics 6.5 various

Subtotal Athletics 244.3 Unallocated, 6% Available Proceeds - Unallocated 141.0 Total University Outstanding Debt 2,384.3 100% (1) Will not exactly match ILP balances due to bond premiums and use of the CAP

F–6.1/201-17 Page 2 of 2 1/12/17 Approved 9/8/16 One Capital Plan (2017-2023)

Project Project Information Project Funding Funding in $ MillionsBudget Total GSF New GSF O&M Previous State Debt Donor Local Other Campus Wide Planning Targets: $ 2,425 2,000,000 $100 $250 $425 $450 $600 $600 STUDENT EXPERIENCE

Improving the Learning Environment

1 Classroom Improvements (6-year plan) $ 30 60,000 ------30 -

2 Population Health Education Facility (T-Wing addition) $ 94 120,000 120,000 1.5 1 60 - 23 10 -

3 T-Wing Renovation Phase 2 (pre-design) $ 2 150,000 - - - 2 - - - -

4 UW Library Storage / Repurpose on-campus space 15$ 35,000 13,000 0.2 - - 10 - 5 -

5 Schmitz Hall Improvements $ 15 80,000 ------15 -

6 Evans School - Parrington Hall Remodel $ 20 59,000 - - - 10 - 10 - -

7 Foster School of Business - MacKenzie Hall Replacement $ 65 90,000 25,000 0.3 - - - 65 - -

8 Miller Hall Renovation (pre-design / design) $ 4 72,500 - - - 5 - - - -

9 Anderson Hall Renovation (design) $ 3 33,500 - - - 2 - - - - Accommodating Growth

10 Computer Science & Engineering Building 2 $ 105 130,000 130,000 1.6 42 - - 64 - -

11 College of Engineering - Interdisciplinary Education & Research $ 150 200,000 50,000 0.9 - 50 - 50 50 -

12 UW Bothell Phase 4 - Academic STEM Building $ 75 105,000 105,000 1.3 1 54 20 - - -

13 UW Bothell Campus Development - Add'l. Academic Space $ 30 50,000 50,000 0.6 - - 30 - - -

14 UW Tacoma Phase 4 - Academic Building $ 35 60,000 60,000 0.7 - 30 5 - - -

15 UW Tacoma Campus Development - Add'l. Academic Space $ 20 54,000 54,000 0.7 - - 10 - 10 - Providing Quality Student Housing

16 Student Housing - North Campus Phase 4b $ 140 355,000 150,000 1.1 - - 65 - 75 -

17 UW Bothell Housing - Student Housing & Dining $ 50 125,000 125,000 0.9 - - 40 - 10 -

18 UW Tacoma - Student Housing - Court 17 Acquisition $ 24 107,000 65,000 - - - 19 - 5 -

19 UW Tacoma Housing - Private Development $ 35 n/a n/a ------35 subtotal:$ 912 INNOVATION MINDSET

Leveraging Interdisciplinary Strengths

20 Population Health Sciences Building $ 230 300,000 212,000 2.6 - 20 - 210 - -

21 UW Medicine - South Lake Union Phase 3.3 $ 197 262,000 262,000 4.5 - - 100 48 49 -

22 UW Medicine - Harborview Hall Lease $ ------

23 College of Arts & Sciences - Kincaid Hall Backfill $ 15 85,000 ------15 - Developing an Innovation District

24 Center for Advanced Materials and Clean Energy Technologies$ 168 172,000 172,000 - 9 20 20 30 - 89

25 Industry District Partnership Lab Development $ 300 350,000 350,000 ------300 subtotal:$ 910 PUBLIC AS A PHILOSOPHY Sharing with the Community

26 Burke Museum $ 79 102,000 34,000 1.1 55 24 - - - -

27 Intellectual House Phase 2 $ 8 8,200 8,200 0.1 - - - 8 - -

28 Burke Gilman Trail Improvements - Phase 3 $ 16 ------16 Improving the Public Realm

29 West Campus Park $ 25 ------25

30 Waterfront Improvements in South Campus & the Cut $ 10 ------5 5 -

31 UW Tacoma - Soil Remediation $ 7 - - - - 6 - - - - subtotal:$ 145

F–6.2/201-17 ATTACHMENT 2 Page 1 of 2 1/12/17 Approved 9/8/16 One Capital Plan (2017-2023)

Project Project Information Project Funding Funding in $ MillionsBudget Total GSF New GSF O&M Previous State Debt Donor Local Other TRANSFORMING ADMINISTRATION Consolidating to Make Room for Growth

32 University District Development at Sound Transit $ 150 200,000 200,000 2.4 - - 120 - 30 -

32 UW Medicine - South Lake Union Rosen Remodel $ 6 60,375 ------6 -

34 UW Seattle - Parking garage(s) - Add'l. 500 Spaces $ 30 - - tbd - - 24 - 6 -

35 UW Bothell - Parking Garage $ 25 ------25 Addressing Critical Renewal

36 UW Medicine IT Core Applications and Infrastructure $ 74 ------74 -

37 Enterprise Information Systems (financial system) $ 100 - - - - - 50 - 50 -

38 UW Medicine - Core Research Facilities $ 12 11,000 ------12 -

39 Seismic Improvements (6-year plan) $ 55 200,000 - - - 55 - - - -

40 Fuel Switching / Power Plant Upgrade $ 150 ------150

41 Minor Capital Repair $ 208 ------208 -

42 UW Seattle - Parking lot improvements (6-year plan) $ 14 - - - - - 11 - 3 - subtotals:$ 824 Totals: $ 2,791 3,636,575 2,185,200 $ 20 $108 338$ 524$ 513$ 668$ 640$ Targets: $ 2,425 2,000,000 $100 $250 $425 $450 $600 $600 Note: Item numbers do not represent priorities

F–6.2/201-17 Page 2 of 2 1/12/17

Capital Project Approval Process

This document is intended to explain the process by which the University and Board of Regents authorizes the physical development of the university.

Process goals: • Ensure controls are in place → establish and standardize processes • Ensure capital plan is in place → establish and update One Capital Plan • Manage & implement the plan → prioritize projects and identify funding or financing → establish project budget and manage to the plan

F–6.3/201-17 ATTACHMENT 3 Page 1 of 1 1/12/17 Project Name Financial Details Schedule Business Equity Project Health Funding Budget Forecast Total Spend Target Forecast Business Equity Spend Budget Funding Schedule Safety Committed

HR Payroll Modernization n/a n/a $75.90 $75.90 $49.00 $75.90 2/14 6/17

NanoEngineering and Sciences Building ZGF / Hoffman * $87.80 $85.20 $51.80 $67.20 10/16 7/17 $6.95 13.4%

West Campus Utility Plant Miller Hull / Mortensen * $44.20 $44.20 $37.95 $44.20 1/17 1/17 $6.22 16.4%

Animal Research and Care Facility ZGF / Skanska * $123.50 $142.00 $105.67 $123.60 4/17 4/17 $13.68 12.9%

ARCF/ARCF/WCUP Utlity Project ZGF / Skanska * $8.58 $8.58 $8.58 $8.58 4/17 4/17

UWMC Expansion Phase II NBBJ / Mortenson * $186.30 $198.70 $129.57 $140.10 5/17 7/18 $27.08 20.9%

Fluke Hall Renovation HDR / Hoffman * $37.00 $36.70 $16.40 $31.50 7/17 8/17 $1.05 6.4%

UW Medicine South Lake Union 3.2 n/a n/a Vulcan / Perkins & Will / Lease Crutcher Lewis * $143.00 $149.40 $20.30 $143.00 9/17 6/18

Tacoma Urban Solutions Center Miller Hull / Mortensen $28.00 $26.50 $14.05 $26.50 9/17 4/17 $0.60 4.3%

GIX Tenant Improvements n/a n/a Wright Runstad * $20.99 $20.99 $2.50 $20.99 9/17 9/17

UWMC ED East Expansion LMN / Skanska * $13.80 $13.80 $0.77 $2.51 3/18 3/18 $0.02 2.8%

North Campus Housing Phase 4a Kieran Timberlake / W.G. Clark * $240.00 $241.10 $36.54 $240.70 6/18 6/18 $7.77 21.3%

Life Sciences Building Perkins & Will / Skanska * $164.80 $163.10 $21.80 $164.80 7/18 7/18 $0.98 4.5%

Computer Science and Engineering Exp. LMN Architects / Mortensen * $105.50 $105.50 $7.12 $33.70 12/18 12/18 $0.09 1.2%

North Campus Housing Phase 4b Kieran Timberlake / W.G. Clark * $10.00 $9.20 $0.77 $10.20 8/19 8/19 $0.14 17.8%

New Burke Museum Olsen Kundig / Skanska * $79.00 $79.00 $12.80 $58.30 9/19 9/19 $1.05 8.2%

Totals $1,368.37 $1,399.87 $515.64 $1,191.78 $65.62 13%

Notes: Legend: Business Equity numbers are now shown for all but the developer led projects. Numbers are improving. On Track NanoEngineering & Sciences is tracking within budget, schedule is lagging due to added 1st floor build-out. Recovery Plan in Place Animal Research and Care project continues to be over-budget. Budget adjustment will be required. Unrecoverable UW Medical Center remains over budget. Efforts are focused on reducing the scope to match budget/funding. Arrow Up Trending Up Month Over Month South Lake Union 3.2 is moving in the right direction, but may still require a budget adjustment & funding. Arrow Down Trending Down Month Over Month North Campus Housing is trending well, budget target is well within reach. $ All Dollars in Millions

ATTACHMENT 4 12/27/2016 F–6.4/201-17 Active Capital Projects Summary Attachment 3 Page 1 of 1 1/12/17 F–7 STANDING COMMITTEES

Finance and Asset Management Committee

Computer Science & Engineering Expansion (CSE II): Stage 2 – Approve Budget and Funding Plan

RECOMMENDED ACTION

It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve:

1) the Project Budget; and

2) a Funding Plan, including the use of the Bridge Program with a maximum borrowing of $25million and a term not to exceed five years from the date of Board approval.

BACKGROUND

Detailed project information is included in the attachments.

Attachments 1. Computer Science & Engineering Expansion (CSE II) Project Summary 2. Computer Science & Engineering Expansion (CSE II) Bridge Financing Strategy 3. Computer Science & Engineering (CSE II) Building Renderings

F–7/201-17 1/12/17 Computer Science & Engineering Expansion (CSE II)

Regent Actions Delegate authority to award design contract to LMN Architects Stage 1 Actions: Approve alternative public works contracting (GC/CM) January 2015 Delegate authority to select the GC/CM and award preconstruction contract

Stage 1 Actions: Approve site (Development Site 16c) February 2016 Approve preferred development alternative and mitigation effort

Stage 2 Actions: Approve project budget and funding plan January 2017 Objective To provide collaborative research and teaching space to meet increasing demand for growth in the Computer Science and Engineering program for the next ten years and enable the program to remain competitive.

Description Design and construct an approximately 135,000 gross square foot building to provide space for an additional 30 full-time faculty, associated post-docs, graduate students and researchers. The facility will have an undergraduate focus and foster interdisciplinary research and collaboration. The program includes 16 labs, a lecture hall, two classrooms, three seminar rooms, an event space, communal and study spaces, office and support spaces, and is planned for LEED Silver. Financials

Proposed Budget Proposed Funding Consultant Services $ 10,129,000 10% State Funds $ 17,500,000 17% Construction Cost $ 78,849,000 75% UW Building Fund $ 15,000,000 14% FF&E & Other Costs $ 11,464,000 11% UW Central Funds $ 4,000,000 4% Contingency $ 3,402,000 3% UW - CSE Dept. Funds $ 3,000,000 3% Escalation $ 1,656,000 2% UW - College of Engineering $ 2,000,000 2% Total Project Cost $ 105,500,000 100% Gift Funding $ 55,700,000 53% UW - Cash Reserves (backstop) $ 8,300,000 8% Total Funds $ 105,500,000 100%

Benchmarks Costs escalated to 2017 (project costs) Cornell University, William and Melinda Gates Hall ($887/GSF) University of Texas Austin, Bill & Melinda Gates Computer Science Complex ($1,048/GSF) Carnegie Mellon, Gates Center for Computer Science ($608/GSF) University of Washington, Paul G. Allen Center for Computer Science and Engineering ($713/GSF) Metrics & Indicators

Current Targets Current Targets Net Assignable SF (NASF) 77,366 77,006 Construction Cost/GSF $582 $589 Gross SF (GSF) 135,401 133,820 Project Cost/GSF $779 $788 Efficiency (NASF/GSF) 57% 58% Operating Cost/GSF $12.22 -

Schedule

F–7.1/201-17 ATTACHMENT 1 Page 1 of 1 1/12/17

Computer Science & Engineering Expansion (CSE II)

Bridge Financing Strategy

While private fundraising was initially impeded by the delay of the final site selection, progress has been strong since then. Microsoft President Brad Smith is leading the 14-person CSE Campaign Committee, working closely with CSE professor Ed Lazowska. Of the $64 million to be raised privately for this project, there is currently $55.7 million pledged, leaving $8.3 million remaining. Because confidence is high that this additional fundraising will be successful, UW cash reserves will be held as a backstop so the project can continue moving forward. Based on the cash flow diagram below, the risk is limited because the funding will not be required until spring 2018.

As of December 31, 2016, $18 million of pledged funds have been received by the University. This number will increase as pledges are fulfilled, with $32 million of pledged funds expected to be on- hand by the end of 2017. When combined with State and University funds, these funds are expected to fund project expenditures into Spring of 2018. At that point, project expenditures will exceed available funds and the Bridge program will be used to fund expenditures relating to unfulfilled gifts. Based on estimated gift flows, the maximum outstanding Bridge Loan will be $23.3 million. To allow for a slight lag in pledge realization, the maximum requested loan size is $25 million. Any Bridge Loan in excess of $25 million will require Board approval.

F–7.2/201-17 ATTACHMENT 2 Page 1 of 2 1/12/17

Computer Science & Engineering Expansion (CSE II)

Outstanding Bridge Loan Balance $25,000 Max Balance: $23.3 Million $20,000

$15,000

$10,000 Millions

$5,000

$0 17 17 18 18 19 19 20 20 21 21 22 17 17 18 18 19 19 20 20 21 21 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Jul Jul Jul Jul Jul Jan ‐ Jan ‐ Jan ‐ Jan ‐ Jan ‐ Jan ‐ Oct ‐ Oct ‐ Oct ‐ Oct ‐ Oct ‐ Apr Apr Apr Apr Apr

The Bridge Loan will accrue interest at a short-term market rate determined at the time of the initial draw. This interest rate will be fixed for the life of the Loan. The interest will be paid monthly from CSE revenues. As gift pledges are realized, the gift funding will pay down the Loan as estimated above. The entire balance will be completely paid by January 31, 2022, five years from the Board approval of the Loan.

F–7.2/201-17 Page 2 of 2 1/12/17

Computer Science & Engineering Expansion (CSE II)

F–7.3/201-17 ATTACHMENT 3 Page 1 of 1 1/12/17 F–8 STANDING COMMITTEES

Finance and Asset Management Committee

Animal Research and Care Facility – Approve Budget Adjustment

RECOMMENDED ACTION

It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve:

1) a Project Budget increase of $18.5M.

BACKGROUND

In November 2013, the Board approved a budget of $123.5 million for the ARCF, a centralized facility designed to accommodate 10 years of growth and address deficiencies previously identified by AAALAC, the accrediting body for animal research. In November 2014, this budget was again approved, along with the final site selection. Construction began in December 2014. The project is now scheduled for substantial completion at the beginning of May 2017.

Unfortunately, the approved budget has proven inadequate to complete such a complex project due to a number of factors, including very complicated systems, unforeseen below grade conditions, and significant ground water issues. We are therefore requesting a budget increase of $18.5M.

The forecasted total project cost ($142M) will be comparable to other similar projects on a cost per square foot basis, as shown in the attached summary.

Attachment Animal Research and Care Facility (ARCF) Project Summary

F–8/201-17 1/12/17 Animal Research and Care Facility (ARCF)

Regent Actions Delegated authority to award design contract to ZGF/Flad Architects Stage 1 Actions: Approved alternative public works contracting (GC/CM) September 2012 Delegated authority to select the GC/CM and award preconstruction contract

Approved Project Budget and ILP Loan Stage 2 Actions: November 2014 Approved Project Site Delegated Authority to Award GC/CM Construction Contract

Stage 2 Actions: Approve Project Budget Increase of $18.5M January 2017

Objective To provide a new animal research facility to allow the UW to address regulatory requirements for centralized administration in its animal care facilities and support increased animal census at the UW. The ARCF is intended to provide a capacity solution for the UW for the next ten years. Description

Design and construct a 83,000 gross square foot, underground animal research building. The new facility will provide flexible housing and research space for both large and small animals. Significant features of the facility include highly reliable and redundant mechanical and electrical systems with full interstitial mechanical spaces above the occupied floors, durable interior construction, extensive automation and energy conservation features.

Financials

Proposed Budget Proposed Funding Consultant Services $ 13,006,448 9% UW Internal Lending Program $ 97,500,000 77.44% Construction Cost $ 104,630,370 74% UW Central Funds $ 26,000,000 20.65% FF&E & Other Costs $ 10,843,437 8% UW Central Funds (Imaging Suite) $ 900,000 0.71% Contingency $ 13,522,121 10% CPD Funds (COBie) $ 47,500 0.04% Escalation $ 0 0% Facility Services Funds (Plywood Deck $ 135,000 0.11% Total Project Cost $ 142,002,376 100% Additional Funds Approved 2016 $ 1,319,376 1.05% Total Funds $ 125,901,876 100% Required Additional Funding $ 16,100,500

Benchmarks

Costs escalated to 2017 (project costs) Harvard University Biology Research Infrastructure - BRI ($1,653/GSF) Baylor College of Medicine Transgenic Mouse Facility ($1,692/GSF) UCSF Weill Institute of Neuroscience ($1409/GSF) Metrics & Indicators

Current Targets Current Targets Net Assignable SF (NASF) 42,000 42,000 Construction Cost/GSF $1,163 Gross SF (GSF) 90,000 83,000 Project Cost/GSF $1,578 Efficiency (NASF/GSF) 47%

2012 2013 Schedule 2014 2015 2016 2017

F–8.1/201-17 ATTACHMENT Page 1 of 1 1/12/17 B–1 BOARD OF REGENTS MEETING

Faculty Senate Goals and Leadership Priorities

INFORMATION

This item is for information only.

BACKGROUND

Faculty Senate leadership have identified a number of priorities for the current academic year. Chair Zoe Barsness outlined these priorities in a message to faculty, including:

1. The Faculty Salary Policy: [The] first priority is to sustain [the] momentum and continue [the] efforts to implement a salary policy that minimizes compression, compensates faculty commensurate with peer institutions, and accommodates the flexibility deemed necessary by faculty in different schools, colleges and campuses. While, the particular salary policy proposal that was brought forward last spring for a vote did not prevail, it’s critical to understand that the multi-year effort around the faculty salary policy which culminated in that vote was not wasted. There was a robust, transparent, and widely engaged process. As a consequence of that process we have developed a much clearer understanding of the concerns any changes to the faculty salary policy need to address. Our focus this coming year will be to leverage the insights we’ve gained and momentum we’ve achieved to address these concerns more incrementally, working to strengthen the tools we have available to us in the existing faculty salary policy and identify areas where the current policy might be tweaked to extend and redirect its focus more appropriately.

2. The Role of the Lecturer: Teaching is a core part of our mission. Lecturers play an absolutely central role in this mission. Establishing a track for advancement, a mechanism for job security, competitiveness of compensation and a voice in decision making have been areas of focused effort for the Senate. Ultimately, the goal must be to create a culture that values the role of lecturers. We will continue our efforts bringing forward resolutions and initiatives needed to more fully support our colleagues.

3. Diversity, Equity and Inclusion: Creating and sustaining a diverse faculty is the only way we will continue to excel as a faculty. The Faculty Councils on Multicultural Affairs and the Faculty Council on Women in Academia are maintaining their great momentum by considering issues such as equity in compensation, researching and developing an actionable-agenda for overcoming the barriers women and faculty of color face in academic advancement, and sustaining our efforts, in collaboration with the

B–1/201-17 1/11/17 STANDING COMMITTEES

BOARD OF REGENTS MEETING

Faculty Senate Goals and Leadership Priorities (continued p. 2)

administration, to provide training in best practices for faculty hiring committees and ultimately tenure and promotion committees. In addition to these efforts, we will continue work through our faculty councils, and in partnership with the administration, to enhance sexual assault policies at the UW. We will also seek to align the efforts of our faculty councils with the other great work that is occurring across our three campuses under the auspices of the university’s Diversity Blueprint and Race and Equity Initiative.

4. Tri-campus Relations: This coming year we will be directing our attention to the relationship between our three campuses. The UW is now a true multi- campus system. The two smaller campuses, which might have been launched as “interesting experiments” in response to a legislative mandate, have become thriving and substantial institutions in their own right, each with its unique character. In order for the UW as a whole to sustain its ability to respond effectively to the changes buffeting higher education today, continued strategic growth is required not only for the UW Seattle, but also the UW Bothell and the UW Tacoma, indeed it is expected and anticipated. A pressing question then is how we build upon the respective strengths and leverage the unique character of the UW’s individual campuses to create something that delivers greater returns to the institution and our stakeholders at every level— both local and global. Several new initiatives focused on addressing these broader institutional needs and the challenges associated with collaboration and coordination across our three campuses will be undertaken.

5. Shared Governance: Although last year’s effort to adopt a new faculty salary policy was unsuccessful, we saw mobilization of faculty voices that was unprecedented in recent history. A key goal for this year is to build on this energy to ensure that the Senate and Faculty Councils are identifying the issues that are most important to sustain the missions of the faculty. We will also focus on strengthening shared governance at every level of the institution by enhancing coordination with and the support we provide to our School, College and Campus Elected Faculty Councils. Most important, every senator must come to the meetings informed and prepared to represent the concerns of the faculty they represent and committed to bringing back needed solutions.

Faculty senate leadership will lead a “deep dive” discussion with the Board on priority 1) faculty salary policy (compensation) and 2) lecturers, and they will also moderate a panel of faculty members who will share additional information about current leadership projects that are aligned with the remaining priorities.

B–1/201-17 1/11/17 STANDING COMMITTEES

BOARD OF REGENTS MEETING

Faculty Senate Goals and Leadership Priorities (continued p. 3)

The discussion will focus on overall goals, progress to date, alignment with administrative leadership, and how the Board can provide support for key priorities.

Attachments 1. Faculty Senate Goals and Leadership Priorities Agenda 2. Faculty Senate Goals and Leadership Priorities Presentation 3. Presenter’ Biographical Information 4. Trends in Racial/Ethnic Distribution of Professorial Faculty 5. Trends in Gender Distribution of Professorial Faculty 6. Academic Personnel Fact Sheet 2015 7. Academic Personnel Autumn Quarter 2015

B–1/201-17 1/11/17

Faculty Senate Goals and Leadership Priorities Wednesday, January 11, 2017

1) 2016-2017 Senate Priorities Highlights (5 minutes)  Zoe Barsness, Chair Faculty Senate  Thaisa Way, Vice Chair Faculty Senate

2) Faculty Salary Policy Update (20 minutes)  Paul Hopkins, Chair Senate Committee on Planning and Budget (10 minutes)  Q&A panel: Paul Hopkins, Zoe Barsness, Thaisa Way (10 minutes)

3) Lecturer Progress and Continuing Challenges (30 minutes)  Introduction, Zoe Barsness  Eric Bugyis, Lecturer, UWT (speaker)  Q&A panel Eric Bugyis, Gordon Watts (Chair, Faculty Council on Faculty Affairs); Lauren Montgomery (Vice Chair UWT Faculty Assembly); Casey Mann (Chair UWB General Faculty Organization)

4) Faculty Leadership Panel (60 minutes)  Introduction (Thaisa Way) (5 minutes)  Task Force on Enrollment Management, Admissions and Transfer (Patricia Kramer) (10 minutes)  Interdisciplinary Collaborative Scholarship and Community Engagement: Population Health Initiative (Hedy Lee) (10 minutes)  Enhancing Diversity & Inclusion of Mid-career Faculty (Joe Tennis) (10 minutes)  Panelist Q&A (20 minutes)

5) Wrap-up (5 minutes)  Zoe Barsness

ATTACHMENT 1 B–1.1/201-17 Page 1 of 1 1/11/17 FACULTY SENATE GOALS AND LEADERSHIP PRIORITIES

Board of Regents January 11, 2017

FACULTY SENATE

B–1.2/201-17 ATTACHMENT 2 Page 1 of 9 1/11/17 2016-2017 Priorities

> Faculty Salary Policy > Lecturers > Diversity, Equity and Inclusion > Tri-campus Relations

FACULTY SENATE

B–1.2/201-17 Page 2 of 9 1/11/17 Key Levers

> Culture > Intention > Assessment > Partnerships

FACULTY SENATE

B–1.2/201-17 Page 3 of 9 1/11/17 Demographic Highlights: Professorial Faculty

Tenure Track Faculty

ACTING ASSISTANT PROFESSOR 71.4% 28.6%

ASSISTANT PROFESSOR 47.2% 52.8%

ASSOCIATE PROFESSOR 45.4% 54.6%

PROFESSOR 29.8% 70.2%

TOTAL TT 37.7% 62.3%

Female Male WOT Faculty

ASSISTANT PROFESSOR 52.8% 47.2%

ASSOCIATE PROFESSOR 41.1% 58.9%

PROFESSOR 29.4% 70.6%

TOTAL WOT 40.7% 59.3%

Female Male

B–1.2/201-17 Page 4 of 9 1/11/17 Demographic Highlights: Instructional Faculty

Full‐Time Instructional Faculty

SR. ARTIST IN RESIDENCE/PROFESSOR OF … 42.9% 57.1%

ARTIST IN RESIDENCE 33.3% 66.7%

PRINCIPLE LECTURER 59.0% 41.0%

SENIOR LECTURER 55.0% 45.0%

TEACHING ASSOCIATE 76.0% 23.5%

PROMOTION ELIGIBLE LECTURER 60.1% 39.9%

NON‐PROMOTION ELIGIBLE LECTURER 61.2% 38.8%

TOTAL FT INSTRUCTIONAL 64.6% 35.1%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

Female Male

Part‐Time Instructional Faculty

SENIOR LECTURER 76.0% 24.0%

PROMOTION ELIGIBLE LECTURER 55.6% 44.4%

NON‐PROMOTION ELIGIBLE LECTURER 49.2% 50.4%

TOTAL PT INSTRUCTIONAL 51.7% 47.9%

Female Male

B–1.2/201-17 Page 5 of 9 1/11/17 Filling the Faculty Pipeline

Incumbency vs. Estimated Availability

Arts & Sciences Professorial Public Health Professorial Minority Female Minority Female Total Employment Employment % 22.2 40.1 Total Employment Employment % 17.80 42.4 704 Availability % 24.1 44.4 118 Availability % 26.9 55.3 Statistical Value 1.216 2.314 Statistical Value 2.223 2.815

Medicine Professorial UW Tacoma Instructional Minority Female Minority Female Total Employment Employment % 21.7 37.2% Total Employment Employment % 18.1 58.7 1703 Availability % 26.2 50.6 138 Availability % 10.5 72.3 Statistical Value 4.216 11.052 Statistical Value 3.568

NOTES: • Employment data as of 12/31/2015 • Yellow shading indicates placement goals; red text indicates areas that require more focus. • Standard deviations of 2.00 or greater are generally regarded as statistically significant.

FACULTY SENATE

B–1.2/201-17 Page 6 of 9 1/11/17 LECTURER UPDATE

FACULTY SENATE

B–1.2/201-17 Page 7 of 9 1/11/17 Lecturer Trends 2012 -2015

Full time Lecturers All Campuses 300

250

200 35 70 178 150 127

100 147 139 50 95 85 0 2012 2013 2014 2015

Non‐Promotion Eligible Promotion Eligible

Full‐Time Lecturers Full‐Time Lecturers UW Bothell UW Tacoma 45 80 40 70 35 60 30 50 25 29 14 41 40 31 20 10 23 2 15 11 30 20 10 34 38 16 25 26 5 11 8 10 10 0 0 2012 2013 2014 2015 2012 2013 2014 2015

Non‐Promotion Eligible Promotion Eligible Non‐Promotion Eligible Promotion Eligible

B–1.2/201-17 Page 8 of 9 1/11/17 Lecturer Highlights

> Security of employment for many enhanced – Non-promotion eligible to promotion Non-promotion eligible full time dropped from 147 in 2012 to 85 in 2015. – Promotion-eligible full-time increased from 35 in 2012 to 178 in 2015. – Since 2012, lecturers eligible for promotion and multi- year appointments increased by more than 400%. > Lecturer guidelines were updated in 2016 to include the appointment of > 50% annual and multi-year part-time lecturers.

FACULTY SENATE

B–1.2/201-17 Page 9 of 9 1/11/17 Faculty Senate Goals and Leadership Priorities Presenters’ Biographical Information Wednesday, January 11, 2017

Zoe I. Barsness, Associate Professor, Milgard School of Business, UW Tacoma Zoe I. Barsness is an associate professor of management in the Milgard School of Business at the University of Washington Tacoma. She received her B.A. in Comparative History from Harvard University and M.S. and Ph.D. degrees in Organizational Behavior from the Kellogg Graduate School of Management at Northwestern University. Her research focuses on negotiation and the impact of developments in communications technology, organization structure, and work arrangements on individuals and groups in organizations. Her research has examined the costs and benefits of different alternative dispute resolution processes, cross-cultural negotiation processes, the influence of gender and technologically-mediated communication on negotiation, the strategies adopted by remote workers to manage their workplace performance more effectively, and the impact of social networks and alternative work arrangements on individuals, group processes and organizational performance. She is currently serving as Chair of the University of Washington Faculty Senate and previously served as Chair of the University of Washington Tacoma’s Faculty Assembly.

Eric Bugyis, Lecturer, UW Tacoma Eric Bugyis was born and raised in Parkersburg, WV. He has a B.S. in Biochemistry and a B.A. in Religious Studies from Case Western Reserve University in Cleveland, OH. After spending three weeks in medical school at West Virginia University, he decided to follow his real passion for teaching the liberal arts, specifically religious studies and philosophy. So, he left medical school and pursued graduate studies first at Yale Divinity School, where he completed an M.A. in Religion, and then at Yale University, where he earned his Ph.D. in Religious Studies, focusing on the philosophy of religion and Christian thought. Before coming to University of Washington Tacoma as a lecturer in religious studies and philosophy in 2014, he spent five years teaching theology and liberal studies at the University of Notre Dame in South Bend, IN.

ATTACHMENT 3 B–1.3/201-17 Page 1 of 5 1/11/17

Paul B. Hopkins, Professor, Chemistry, UW Seattle Paul B. Hopkins is the Leon C. Johnson Professor of Chemistry and Chair Emeritus of the Department of Chemistry. He holds the BS in Chemistry from Purdue University (1977) and the Ph.D. in Chemistry from Harvard University (1982). At Harvard, Hopkins studied with E. J. Corey, the leading practitioner in the field of synthetic organic chemistry. Hopkins, Corey et al. solved the problem of chemically synthesizing the stereochemically complex aglycone of erythromycin A, an important antibiotic substance. Since 1982, Hopkins has been a member of the faculty at the University of Washington, and served as Department Chair from 1995 to 2015. In his independent research, Hopkins pursued problems in the field of organic and biological organic chemistry. Important research contributions included the first determination of the sequence-dependent dynamics of duplex DNA on the microsecond time scale, and the three-dimensional structure of the major interstrand cross-link formed in DNA by the important antitumor substance cisplatin. As Chair of Chemistry, he hired some forty faculty members, and oversaw dramatic expansions of the undergraduate, graduate, and research programs. On his watch the endowment of the Department grew some ten-fold, from about $2M to nearly $20M. Hopkins has received a number of awards, including having been a Searle Scholar, Sloan Fellow, Cope Scholar of the American Chemical Society, and Fellow of the American Association for the Advancement of Science.

Patricia Kramer, Professor, Anthropology, UW Seattle Patricia Kramer is an Associate Professor and current Chair of the Department of Anthropology, College of Arts and Sciences. Her research passion is the biomechanical study of human walking, from an evolutionary (yes, she loves fossils) and a contemporary (e.g. recovery from injury, prosthetic design) standpoint. As a first generation, female STEM scientist (with an undergraduate degree in Civil Engineering from UTexas Austin, 10 years of experience in aerospace structural analysis, and a firm commitment to the social science method), her motivation to make sure that UWS admits, retains, and graduates the next generation of Washington State leaders is deep-seated. A college education is transformative. It must, therefore, be attainable for the best and brightest of this state. The core work of the task force on Undergraduate Enrollment Management is to facilitate that goal now and to think / plan proactively so that UWS is positioned to take advantage of the opportunities and respond to the challenges of the coming decade.

B–1.3/201-17 Page 2 of 5 1/11/17

Hedwig E. Lee, Associate Professor, Sociology, UW Seattle Hedy Lee is an Associate Professor of Sociology at the University of Washington (UW) in Seattle. She received her BS in Policy Analysis from Cornell University in 2003 and her PhD in Sociology from the University of North Carolina at Chapel Hill in 2009. After receiving her PhD, she was a Robert Wood Johnson Foundation Health & Society Scholar at the University of Michigan from 2009 to 2011. She is a faculty affiliate of the Center for Research on Demography and Ecology, West Coast Poverty Center, and Center for Statistics and the Social Sciences and co-leads the Northwest Region Scholars Strategy Network. She was also recently appointed to the 30-member Executive Council for UW’s new Population Health Initiative. She has a broad background in sociology and demography. Her research focuses on the social contexts that characterize the lives of vulnerable and racial/ethnic minority populations and how this shapes health and the production of health disparities. Her research involves working in interdisciplinary collaborations to examine relationships between race, racism, criminal justice contact, socioeconomic status, and multiple dimensions of social well- being and health.

Casey Mann, Professor, Mathematics, UW Bothell Casey Mann is a professor of mathematics at UW Bothell and 2016-17 chair of the UW Bothell General Faculty Organization. Professor Mann’s research is in the area of discrete and computational geometry, with a focus on tilings of the plane, knot theory, and algorithmic self- assembly. Professor Mann is interested in engaging undergraduate students in mathematical research, and is Co-PI for the NSF- funded Research Experience for Undergraduates site at UW Bothell, which recruits talented students, especially from underrepresented groups, from around the U.S. to participate in an intensive 8-week summer mathematics research experience on the UW Bothell campus. He is currently serving as Chair of the University of Washington Bothell’s General Faculty Organization.

B–1.3/201-17 Page 3 of 5 1/11/17 Lauren Montgomery, Lecturer, School of Interdisciplinary Arts & Sciences, UW Tacoma Lauren Montgomery is a developmental psychologist who earned her doctorate from the University of Washington, Seattle in 1988. A further postdoctoral clinical training allowed her to practice psychology as well as conduct research. Her interest in promoting individual development and human relationships in the context of our growing technological world is expressed through her work with students as a senior lecturer at the University of Washington, Tacoma, and in her private practice in marriage and family therapy in north Seattle. She is currently serving as Vice Chair of the University of Washington Tacoma’s Faculty Assembly.

Joseph T. Tennis, Associate Professor, Information School, UW Seattle Joseph T. Tennis is an Associate Professor and Associate Dean of Faculty Affairs at the University of Washington Information School, Adjunct Associate Professor in Linguistics, and a member of the Textual Studies and Museology faculty advisory groups at the University of Washington. He is President of the International Society for Knowledge Organization and Immediate Past Chair of the Dublin Core Metadata Initiative. He is on the Library Quarterly and Knowledge Organization editorial boards, and a member of the InterPARES Trust research team – a multidisciplinary digital records preservation research project with researchers across six continents.

Tennis works in classification theory, metadata versioning, ethics of knowledge organization work, descriptive informatics, and authenticity. He teaches courses in classification, metadata, and intellectual foundations of information science at the University of Washington iSchool.

He won the 2013 ALISE/Bohdan S. Wynar Award, for "The Strange Case of Eugenics: A Subject’s Ontogeny in a Long-Lived Classification Scheme and the Question of Collocative Integrity" [1]; and one of three best papers in the Theory and Methodology Track at Digital Cultural Heritage 2015 for his paper, "Archival Metadata for Digital Cultural Heritage: Conceptual Provenance, Contextual Forensics, and the Authority of the Found Digital Object," [2].

Tennis holds his Bachelor of Arts in Religious Studies from Lawrence University, and Master of Library Science, and Specialist Degree in Book History both from Indiana University, and a PhD in Information Science from the University of Washington. He has thrice been a visiting scholar at the State University of São Paulo. And in the spring of 2016 he was an invited professor at the Université Charles-de-Gaulle - Lille 3.

B–1.3/201-17 Page 4 of 5 1/11/17

Thaisa Way, Professor, Landscape Architecture, College of the Built Environment, UW Seattle Thaisa Way ASLA, BS UC Berkeley, M’ArchH UVa, PhD Cornell University is an urban landscape historian teaching and researching history, theory, and design in the Department of Landscape Architecture at the College of Built Environments, University of Washington, Seattle. She has published and lectured on feminist histories of landscape architecture. Her book, Unbounded Practices: Women, Landscape Architecture, and Early Twentieth Century Design (2009, University of Virginia Press) was awarded the J.B. Jackson Book Award in 2012. Her book From Modern Space to Urban Ecological Design: the Landscape Architecture of Richard Haag (University of Washington Press 2015) explores the narrative of post-industrial cities and the practice of landscape architecture. She has edited two books in urban environmental history and practice including Now Urbanism (Routeledge, 2013) with Jeff Hou, Ken Yocom, and Ben Spencer, and River Cities/City Rivers (Harvard Press, forthcoming). She recently completed the monograph, Landscape Architect A.E. Bye: Sculpting the Earth, Modern Landscape Design Series (Norton Publishing, 2017). She serves as Chair and Senior Fellow at the Dumbarton Oaks Garden and Landscape Studies, member of the jury for the ASLA professional awards and was selected and served as the 2015-2016 Garden Club of America Fellow in Landscape Architecture at the American Academy in Rome. She currently serves as the founding director of Urban@UW, a coalition of urban researchers and teachers collaboratively addressing complex urban challenges.

Gordon Watts, Professor, Physics, UW Seattle G. Watts joined the University in fall of 1999. His research interests focus on experimental particle physics and understanding the mechanism of electro-weak symmetry breaking – how do the fundamental building blocks of our universe fit together. G. Watts is a member of the CERN ATLAS experiment and was one of the experimentalists involved in the discovery of the Higgs, which was awarded a Nobel prize in 2012. G. Watts has been involved in faculty governance a little over five years, first as a member of the faculty senate, then a member of the Faculty Council on Faculty Affairs, and finally as chair of the FCFA. Faculty Salary Policy and Lecturer Career, Governance, and other issues have been the main focus of the FCFA during this time.

B–1.3/201-17 Page 5 of 5 1/11/17 Trends in Racial/Ethnic Distribution of Professorial Faculty

New Hires

American Pacific Not Refused to Academic Year White Asian Black Hispanic Indian Islander Multi-Racial Reported Respond 2015-16 148 54 8 13 3 1 4 52 11 (294 total) 64.1% 23.4% 3.5% 5.6% 1.3% 0.4% 1.7% 2014-15 178 52 2 22 7 0 6 30 N/A (297 total) 66.7% 19.5% 0.7% 8.2% 2.6% 0.0% 2.2% 2013-14 150 54 3 18 1 1 4 57 N/A (288 total) 64.9% 23.4% 1.3% 7.8% 0.4% 0.4% 1.7% 2012-13 140 38 1 17 0 0 7 40 N/A (243 total) 69.0% 18.7% 0.5% 8.4% 0.0% 0.0% 3.4% 2011-12 115 29 8 8 0 0 3 43 N/A (206 total) 70.6% 17.8% 4.9% 4.9% 0.0% 0.00% 1.8% 2010-11 155 35 4 5 1 0 3 30 N/A (233 total) 76.4% 17.2% 2.0% 2.5% 0.5% 0.00% 1.5% 2009-10 135 46 8 3 1 0 2 19 N/A (214 total) 69.2% 23.6% 4.1% 1.5% 0.5% 0.00% 1.0% 2008-09 162 60 10 6 0 N/A 0 47 N/A (285 total) 68.1% 25.2% 4.2% 2.5% 0.0% - 0.0% 2007-08 157 51 6 9 1 N/A 5 20 N/A (249 total) 68.6% 22.3% 2.6% 3.9% 0.4% - 2.2% 2006-07 167 46 4 7 1 N/A 8 16 N/A (249 total) 71.7% 19.7% 1.7% 3.0% 0.4% - 3.4% Resignations

American Pacific Not Refused to Academic Year White Asian Black Hispanic Indian Islander Multi-Racial Reported Respond 2014-15 48 20 4 8 1 0 1 3 0 (85 total) 58.5% 24.4% 4.9% 9.8% 1.2% 0.0% 1.2% 2013-14 75 34 3 8 0 0 1 11 N/A (121 total) 62.0% 28.1% 2.5% 6.6% 0.0% 0.0% 0.8% 2012-13 82 18 3 2 0 0 5 4 N/A (114 total) 74.5% 16.4% 2.7% 1.8% 0.0% 0.0% 4.5% 2011-12 63 15 1 8 0 0 0 3 N/A (90 total) 72.4% 17.2% 1.1% 9.2% 0.0% 0.0% 0.0% 2010-11 71 20 7 4 1 0 0 4 N/A (107 total) 68.9% 19.4% 6.8% 3.9% 1.0% 0.0% 0.0% 2009-10 60 18 1 1 0 0 0 6 N/A (86 total) 75.0% 22.5% 1.3% 1.3% 0.0% 0.0% 0.0% 2008-09 64 13 2 2 0 N/A 0 3 N/A (84 total) 79.0% 16.0% 2.5% 2.5% 0.0% - 0.0% 2007-08 83 20 4 1 0 N/A 0 2 N/A (110 total) 76.9% 18.5% 3.7% 0.9% 0.0% - 0.0% 2006-07 83 13 2 1 0 N/A 0 0 N/A (99 total) 83.8% 13.1% 2.0% 1.0% 0.0% - 0.0% 2005-06 83 12 2 0 0 N/A 6 1 N/A (104 total) 80.6% 11.7% 1.9% 0.0% 0.0% - 5.8% Overall Profile

American Pacific Not Refused to Academic Year White Asian Black Hispanic Indian Islander Multi-Racial Reported Respond 2015-16 3030 622 70 168 17 3 62 154 86 (4212 total) 76.3% 15.7% 1.8% 4.2% 0.4% 0.1% 1.6% 2014-15 3049 591 69 167 18 2 54 147 N/A (4098 total) 77.2% 15.0% 1.7% 4.2% 0.5% 0.1% 1.4% 2013-14 3043 578 72 158 12 2 49 131 N/A (4045 total) 77.7% 14.8% 1.8% 4.0% 0.3% 0.1% 1.3% 2012-13 3037 538 73 141 11 1 49 105 N/A (3956 total) 78.9% 14.0% 1.9% 3.7% 0.3% 0.0% 1.3% 2011-12 2990 507 72 125 10 0 43 133 N/A (3880 total) 79.8% 13.5% 1.9% 3.3% 0.3% 0.0% 1.1% 2010-11 3015 493 74 124 11 0 40 113 N/A (3870 total) 80.3% 13.1% 2.0% 3.3% 0.3% 0.0% 1.1% 2009-10 3017 485 73 115 10 0 38 85 N/A (3823 total) 80.7% 13.0% 2.0% 3.1% 0.3% 0.0% 1.0% 2008-09 2978 459 68 114 9 N/A 31 97 N/A (3756 total) 81.4% 12.5% 1.9% 3.1% 0.2% - 0.8% 2007-08 2957 436 61 43 9 N/A 91 55 N/A (3652 total) 82.2% 12.1% 1.7% 1.2% 0.3% - 2.5% 2006-07 2971 399 59 40 8 N/A 82 43 N/A (3602 total) 83.5% 11.2% 1.7% 1.1% 0.2% - 2.3% B–1.4/201-17 ATTACHMENT 4 Page 1 of 1 1/11/17 Percentages included in this report show the distribution of all reported races/ethnicities for the given academic year Includes tenure track/tenure, without tenure by reason of funding, research Updated Feb 2016 to add October 31, 2015 data Trends in Gender Distribution of Professorial Faculty

New Hires

2015-16 2014-15 2013-14 2012-13 2011-12 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Professor 7 29.2% 17 70.8% 24 10 34.5% 19 65.5% 29 5 16.1% 26 83.9% 31 3 14.3% 18 85.7% 21 3 17.6% 14 82.4% 17 Assoc Prof 7 25.0% 21 75.0% 28 16 43.2% 21 56.8% 37 15 33.3% 30 66.7% 45 17 56.7% 13 43.3% 30 8 36.4% 14 63.6% 22 Asst Prof 120 49.6% 122 50.4% 242 129 55.8% 102 44.2% 231 114 53.8% 98 46.2% 212 86 44.8% 106 55.2% 192 79 47.3% 88 52.7% 167 Total 134 45.6% 160 54.4% 294 155 52.2% 142 47.8% 297 134 46.5% 154 53.5% 288 106 43.6% 137 56.4% 243 90 43.7% 116 56.3% 206

2010-11 2009-10 2008-09 2007-08 2006-07 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Professor 7 26.9% 19 73.1% 26 9 33.3% 18 66.7% 27 9 22.5% 31 77.5% 40 5 23.8% 16 76.2% 21 4 17.4% 19 82.6% 23 Assoc Prof 14 48.3% 15 51.7% 29 14 51.9% 13 48.1% 27 10 41.7% 14 58.3% 24 14 42.4% 19 57.6% 33 5 15.6% 27 84.4% 32 Asst Prof 75 42.1% 103 57.9% 178 73 45.6% 87 54.4% 160 104 47.1% 117 52.9% 221 83 42.6% 112 57.4% 195 85 43.8% 109 56.2% 194 Total 96 41.2% 137 58.8% 233 96 44.9% 118 55.1% 214 123 43.2% 162 56.8% 285 102 41.0% 147 59.0% 249 94 37.8% 155 62.2% 249

Resignations

2014-15 2013-14 2012-13 2011-12 2010-11 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Professor 5 22.7% 17 77.3% 22 10 32.3% 21 67.7% 31 4 18.2% 18 81.8% 22 5 26.3% 14 73.7% 19 5 29.4% 12 70.6% 17 Assoc Prof 5 29.4% 12 70.6% 17 10 34.5% 19 65.5% 29 15 41.7% 21 58.3% 36 15 55.6% 12 44.4% 27 10 34.5% 19 65.5% 29 Asst Prof 26 56.5% 20 43.5% 46 45 62.5% 27 37.5% 72 25 44.6% 31 55.4% 56 17 38.6% 27 61.4% 44 29 47.5% 32 52.5% 61 Total 36 42.4% 49 57.6% 85 65 49.2% 67 50.8% 132 44 38.6% 70 61.4% 114 37 41.1% 53 58.9% 90 44 41.1% 63 58.9% 107

2009-10 2008-09 2007-08 2006-07 2005-06 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Professor 4 16.7% 20 83.3% 24 3 15.8% 16 84.2% 19 6 26.1% 17 73.9% 23 6 26.1% 17 73.9% 23 10 40.0% 15 60.0% 25 Assoc Prof 6 30.0% 14 70.0% 20 7 26.9% 19 73.1% 26 10 27.8% 26 72.2% 36 9 42.9% 12 57.1% 21 8 25.0% 24 75.0% 32 Asst Prof 24 57.1% 18 42.9% 42 20 51.3% 19 48.7% 39 20 39.2% 31 60.8% 51 27 49.1% 28 50.9% 55 19 40.4% 28 59.6% 47 Total 34 39.5% 52 60.5% 86 30 35.7% 54 64.3% 84 36 32.7% 74 67.3% 110 42 42.4% 57 57.6% 99 37 35.6% 67 64.4% 104

Overall Profile

2015-16 2014-15 2013-14 2012-13 2011-12* Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total 1659 39.4% 2553 60.6% 4212 1589 38.8% 2509 61.2% 4098 1535 37.9% 2510 62.1% 4045 1471 37.2% 2484 62.8% 3955 1407 36.2% 2477 63.0% 3880 4 not reported

2010-11* 2009-10 2008-09* 2007-08* 2006-07 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total 1388 35.8% 2490 64.2% 3870 1359 35.7% 2464 64.5% 3823 1299 34.5% 2463 65.5% 3756 1245 34.1% 2411 65.9% 3652 1210 33.6% 2392 66.4% 3602 8 not reported 6 not reported 4 not reported

*Total reflects overall number of faculty members in the given year; does not factor in those who elected not to report gender B–1.5/201-17 Page 1 of 1 1/11/17 Includes tenure track/tenure, without tenure by reason of funding, research ATTACHMENT 5 Updated Feb 2016 to add October 31, 2015 data Office of the Vice Provost for Academic Personnel

FACT SHEET 2015

ACADEMIC PERSONNEL

MISSION VISION

The primary mission of Academic Personnel is to To be recognized and respected as a provider support the appointment and retention of the best of superior services and an expert institutional faculty, librarians, and other academic personnel resources in support of a high quality work and for a global university. learning environment.

FACULTY STATISTICS BY RANK AS OF 10/31/2015

Refused To Race Not Total Male Female American Indian Asian Black Hispanic Pacific Islander White Multiple Race Respond* Reported

Professorial Faculty 4227 2566 1661 17 622 71 169 3 3040 62 86 157

Professor 1841 1284 557 4 194 24 42 0 1512 12 33 20

Associate Professor 1307 739 568 6 214 23 67 0 902 28 24 43

Assistant Professor 1079 543 536 7 214 24 60 3 626 22 29 94

Instructional Faculty 473 197 276 1 53 7 22 0 364 9 6 11

Principal Lecturer 39 16 23 0 2 0 1 0 35 1 0 0

Senior Lecturer 171 77 94 0 20 3 6 0 137 2 3 0

Lecturer 263 104 159 1 31 4 15 0 192 6 3 11

Total Faculty 4700 2763 1937 18 675 78 191 3 3404 71 92 168

*“Refused to Respond” was added as an option to race reporting on the Affirmative Action Data Form starting in 2015. **The total number of academic personnel is 18,392. Appointments excluded from the above data include clinical faculty (5,847), affiliate faculty (2,865), and other faculty and academic personnel (4,980).

FACULTY PROFILE BY RANK INTERNATIONAL SCHOLARS AND TRACK AS OF 10/31/2015 Number of Scholars by Country 2015

THAILAND 20 CHINA 514 ARGENTINA 6 ROMANIA 2 Tenure WOT Research KOREA, SOUTH 153 BELGIUM 6 SINGAPORE 2 JAPAN 108 MISSING 6 UGANDA 2 ISRAEL 22 INDIA 107 NORWAY 6 UKRAINE 2 Professorial Faculty 2161 1731 335 CANADA 75 PAKISTAN 6 URUGUAY 2 BRAZIL 35 GERMANY 72 PERU 6 ALGERIA 1 ITALY 60 SWITZERLAND 6 BULGARIA 1 FRANCE 36 SPAIN 48 HONG KONG 5 CYPRUS 1 Professor 1136 603 102 TAIWAN 44 LEBANON 5 EL SALVADOR 1 UNITED KINGDOM 41 UNITED KINGDOM 41 N/A 5 ERITREA 1 FRANCE 36 VIETNAM 5 ESTONIA 1 TAIWAN 44 BRAZIL 35 FINLAND 4 ETHIOPIA 1 Associate Professor 601 581 125 ISRAEL 22 GHANA 4 GUYANA 1 THAILAND 20 HUNGARY 4 HONDURAS 1 SPAIN 48 AUSTRALIA 19 IRELAND 4 JORDAN 1 Assistant Professor 424 547 108 MEXICO 19 MALAYSIA 4 LATVIA 1 ITALY 60 IRAN 17 NEPAL 4 LITHUANIA 1 NETHERLANDS 15 COSTA RICA 3 LUXEMBOURG 1 GERMANY 72 SWEDEN 14 INDONESIA 3 MALAWI 1 AUSTRIA 11 SLOVAKIA 3 MOZAMBIQUE 1 CANADA 75 GREECE 10 SLOVENIA 3 NEW ZEALAND 1 TURKEY 9 SOUTH AFRICA 3 NIGERIA 1 INDIA 107 CZECH REPUBLIC 8 CAMEROON 2 SAUDI ARABIA 1 DENMARK 8 CHILE 2 SYRIA 1 AGE INFORMATION BY RUSSIA 8 EGYPT 2 TANZANIA 1 JAPAN 108 COLOMBIA 7 JAMAICA 2 UZBEKISTAN 1 POLAND 7 KENYA 2 VENEZUELA 1 RANK AS OF 10/31/2015 SOUTH KOREA 153 PORTUGAL 7 PHILIPPINES 2

CHINA 514 Median Min Max

Professorial Faculty 50 27 86

Professor 60 36 86 Number of Scholars by Visa Type Associate Professor 48 31 78

Assistant Professor 39 27 63 Total H-1 303

Instructional Faculty 49 25 77 Total J-1 1316

Principal Lecturer 60 36 75 Total TN 31

Senior Lecturer 54 31 74 Total Visas 1650

Lecturer 42 25 77 B–1.6/201-17 ATTACHMENT 6 Page 1 of 2 ap.washington.edu1/11/17 Office of the Vice Provost for Academic Personnel

NUMBER OF PROMOTIONS NEW HIRE STATISTICS BY RANK AND TRACK AS OF 10/31/2015 AWARDED IN 2015 American Pacific Multiple Refused to Not Total Male Female Asian Black Hispanic White Indian Islander Race Respond* Reported

Professorial Promotions 205 Professorial 294 160 134 3 54 8 13 1 148 4 11 52 Faculty Associate Professor to Professor 85 Professor 24 17 7 0 2 0 3 0 12 1 0 6 Assistant Professor to 120 Associate Professor Tenure 12 8 4 0 2 0 1 0 7 1 0 1

Instructional Promotions 20 WOT 10 8 2 0 0 0 1 0 5 0 0 4 Research 2 1 1 0 0 0 1 0 0 0 0 1 Senior Lecturer to Principal Lecturer 9 Associate 28 21 7 1 5 0 1 0 9 1 4 7 Lecturer to Senior Lecturer 11 Professor Tenure 11 8 3 1 1 0 1 0 2 0 3 3 Clinical Promotions 168 WOT 16 12 4 0 4 0 0 0 7 1 0 4

Affiliate Promotions 38 Research 1 1 0 0 0 0 0 0 0 0 1 0

Assistant Total Promotions 431 242 122 120 2 47 8 9 1 127 2 7 39 Professor

Tenure 101 51 50 1 18 6 8 1 48 1 4 14 QUARTERS OF PAID WOT 116 55 61 1 21 1 1 0 64 0 3 25 Research 25 16 9 0 8 1 0 0 15 1 0 0 PROFESSIONAL LEAVE Instructional 120 48 72 0 9 1 6 0 92 1 3 8 ALLOCATIONS BY SCHOOL/ Faculty Senior 24 11 13 0 0 0 1 0 22 0 1 0 COLLEGE/CAMPUS 2015-16 Lecturer Lecturer 96 37 59 0 9 1 5 0 70 1 2 8 Arts & Sciences 158 Total Faculty 414 208 206 3 63 9 19 1 240 5 14 60 Built Environments 13 *“Refused to Respond” was added as an option to race reporting on the Affirmative Action Data Form starting in 2015. Business 11 Dentistry 0 NEW HIRE STATISTICS BY YEAR – PROFESSORIAL FACULTY Education 12 American Pacific Multiple Refused to Not Year Total Male Female Asian Black Hispanic White Engineering 33 Indian Islander Race Respond* Reported

Environment 30 2011-2012 206 116 90 0 29 8 8 N/A 115 3 N/A 43 Information 3 100% 56% 44% 0% 14% 4% 4% N/A 56% 1% N/A 21% Law 2 2012-2013 243 137 106 0 38 1 17 0% 140 7 N/A 40 Medicine 7 100% 56% 44% 0% 16% 0% 7% 0% 58% 3% N/A 16% Nursing 7 2013-2014 288 154 134 1 54 3 18 1 150 4 N/A 57 Pharmacy 4 100% 53% 47% 0% 19% 1% 6% 0% 52% 1% N/A 20% Public Affairs 5

Public Health 4 2014-2015 297 142 155 7 52 2 22 0 178 6 N/A 30

Social Work 6 100% 48% 52% 2% 18% 1% 7% 0% 60% 2% N/A 10%

UW, Bothell 22 2015-2016 294 160 134 3 54 8 13 1 148 4 11 52

UW, Tacoma 34 100% 54% 46% 1% 18% 3% 4% 0% 50% 1% 4% 18%

TOTAL 351 *“Refused to Respond” was added as an option to race reporting on the Affirmative Action Data Form starting in 2015.

RESIGNATION STATISTICS BY YEAR – PROFESSORIAL FACULTY

American Pacific Multiple Not Year Total Male Female Asian Black Hispanic White Indian Islander Race Reported

2010-2011 107 63 44 1 20 7 4 N/A 71 0 4

100% 59% 41% 1% 19% 7% 4% N/A 66% 0% 4%

2011-2012 90 53 37 0 15 1 8 0 63 0 3

100% 59% 41% 0% 17% 1% 9% 0% 70% 0% 3%

2012-2013 114 70 44 0 18 3 2 0 82 5 4

100% 61% 39% 0% 16% 3% 2% 0% 72% 4% 4%

2013-2014 132 67 65 0 34 3 8 0 75 1 11

100% 51% 49% 0% 26% 2% 6% 0% 57% 1% 8%

2014-2015 85 49 36 1 20 4 8 0 48 1 3

100% 58% 42% 1% 24% 5% 9% 0% 56% 1% 4%

SEPARATION STATISTICS BY YEAR AND REASON – PROFESSORIAL FACULTY

Denied Promotion/ Year Total Resigned Retired Deceased Non-Renewed

2010-2011 205 107 92 2 4

2011-2012 160 90 62 5 3

2012-2013 192 114 71 2 5

2013-2014 238 132 95 5 6

2014-2015 179 85 87 2 5 B–1.6/201-17 Page 2 of 2 ap.washington.edu1/11/17 Data as of 10/31/2015 ACADEMIC PERSONNEL AUTUMN QUARTER 2015 2015 Academic Personnel University Wide By Appointment Type and Position Type with Race and Gender

Personnel Gender Not American Pacific Multiple Refused to Race Not Female Male Asian Black Hispanic White Total Reported Indian Islander Race Respond* Reported

Professorial Faculty

0101 Professor 1136 339 797 0 4 126 19 23 0 928 6 23 7

0102 Associate Professor 588 269 319 0 4 89 18 45 0 391 20 11 10

0109 Associate Professor Tenure Track 13 4 9 0 0 1 0 1 0 5 0 4 2

0111 Professor without Tenure 603 177 426 0 0 55 5 16 0 499 6 10 12

0112 Associate Professor without Tenure 581 239 342 0 2 105 4 18 0 409 8 6 29

0113 Assistant Professor without Tenure 547 289 258 0 4 97 8 23 2 324 11 12 66

0116 Assistant Professor 417 197 220 0 3 85 13 33 1 235 8 13 26

0123 Acting Assistant Professor, pending PhD 7 5 2 0 0 1 0 1 0 2 1 1 1

Professorial Faculty Total 3892 1519 2373 0 17 559 67 160 3 2793 60 80 153

Instructional Faculty

0115 Lecturer, full-time 85 52 33 0 0 5 3 4 0 64 2 3 4

0117 Senior Lecturer, full-time 171 94 77 0 0 20 3 6 0 137 2 3 0

0140 Lecturer, part-time, competitive recruitment 9 5 4 0 0 0 0 1 0 7 0 0 1

0169 Teaching Associate 358 272 84 2 1 33 9 16 2 219 15 4 59

0178 Senior Lecturer, part-time 50 38 12 0 0 3 0 3 0 42 0 0 2

0179 Lecturer, full-time, competitive recruitment 178 107 71 0 1 26 1 11 0 128 4 0 7

0180 Principal Lecturer 39 23 16 0 0 2 0 1 0 35 1 0 0

0181 & 0120 Senior Artist in Residence / Professor 7 3 4 0 0 0 0 0 0 4 0 0 3 of Practice

0182 Artist in Residence 30 10 20 0 0 0 2 2 0 21 0 0 5

0185 Lecturer, part-time 498 245 251 2 2 41 9 17 2 310 8 16 93

Instructional Faculty Total 1425 849 572 4 4 130 27 61 4 967 32 26 174

Research Faculty

0141 Research Professor 102 41 61 0 0 13 0 3 0 85 0 0 1

0142 Research Associate Professor 125 56 69 0 0 19 1 3 0 97 0 3 2

0143 Research Assistant Professor 108 45 63 0 0 31 3 3 0 65 2 3 1

0148 Research Associate 372 133 239 0 0 92 3 24 0 173 8 5 67

0150 Research Associate-Trainee 11 6 5 0 0 2 0 0 0 8 1 0 0

Research Faculty Total 718 281 437 0 0 157 7 33 0 428 11 11 71

Acting & Visiting Faculty

0121& 0122 Acting Professor / Acting Associate 7 3 4 0 0 0 0 0 0 5 1 0 1 Professor

0124 Acting Instructor 260 117 143 0 0 49 1 18 1 147 5 4 35

0125 Acting Assistant Professor, temporary 234 127 107 0 1 52 1 19 0 116 5 1 39

0131, 0132 & 0133 Visiting Professor / Visiting 15 3 12 0 0 0 0 1 0 7 0 0 7 Associate Professor / Visiting Assistant Professor

0135 Visiting Lecturer 21 13 8 0 0 2 0 1 0 8 0 0 10

Acting & Visiting Faculty Total 537 263 274 0 1 103 2 39 1 283 11 5 92

Librarians

0406 Librarian 36 27 9 0 0 3 0 0 0 32 1 0 0

0407 Associate Librarian 68 53 15 0 0 8 2 1 0 55 1 1 0

0408 Senior Assistant Librarian 25 21 4 0 0 4 0 0 0 17 2 2 0

0409 Assistant Librarian 13 13 0 0 0 1 0 0 0 11 0 1 0

Librarians Total 142 114 28 0 0 16 2 1 0 115 4 4 0

Residents and Fellows

0328 Resident 959 478 481 0 1 127 22 37 0 380 28 16 348

0329 & 0333 Chief Resident / Chief Resident, Non- 55 25 30 0 0 10 1 3 0 31 2 1 7 ACGME

0444 Fellow 284 142 142 0 0 40 4 4 0 110 7 5 114

0474 Psychology Intern 14 11 3 0 0 3 1 0 0 4 0 0 6

Residents and Fellows Total 1312 656 656 0 1 180 28 44 0 525 37 22 475 B–1.7/201-17 1/11/17 Page 1 of 2 *"Refused to Respond" was added as an option to race reporting on the Affirmative Action Data Form in 2015. ATTACHMENT 7 Personnel Gender Not American Pacific Multiple Refused to Race Not Female Male Asian Black Hispanic White Total Reported Indian Islander Race Respond* Reported

Others

0369 Affiliate in Medical/Dental Practice 77 22 36 19 1 11 1 4 0 29 0 0 31

0417 Educator 3 17 15 2 0 0 2 2 0 0 13 0 0 0

0418 Educator 2 31 30 1 0 0 1 0 2 0 19 3 0 6

0419 Educator 1 16 13 3 0 0 1 0 1 0 2 0 0 12

0437 Visiting Scientist 81 33 48 0 0 14 1 3 0 25 1 0 37

0438 Visiting Scholar 265 109 156 0 0 70 2 4 0 18 0 0 171

Others Total 487 222 246 19 1 99 6 14 0 106 4 0 257

Clinical Faculty - Salaried

0165 Clinical Professor, salaried 74 18 55 1 0 5 2 1 0 63 0 0 3

0166 Clinical Associate Professor, salaried 159 90 66 3 1 21 2 7 0 110 3 0 15

0167 Clinical Assistant Professor, salaried 240 147 89 4 0 51 6 9 1 129 4 4 36

0168 Clinical Instructor, salaried 180 99 78 3 1 25 0 10 2 87 3 1 51

Clinical Faculty - Salaried Total 653 354 288 11 2 102 10 27 3 389 10 5 105

Clinical Faculty - Dental Pathway

0137, 0138 & 0139 Clinical Professor, Dental Pathway / Clinical Associate Professor, Dental 17 6 11 0 0 4 0 2 0 10 0 0 1 Pathway / Clinical Assistant Professor, Dental Pathway

Clinical Faculty - Dental Pathway Total 17 6 11 0 0 4 0 2 0 10 0 0 1

Clinical Faculty

0161 Clinical Professor 344 68 270 6 1 20 4 3 0 291 0 0 25

0162 Clinical Associate Professor 766 227 511 28 2 53 10 16 0 596 1 2 86

0163 Clinical Assistant Professor 1500 639 791 70 2 137 12 31 2 880 14 4 418

0164 Clinical Instructor 2444 1178 1149 117 9 188 17 47 0 1074 29 7 1073

0366 & 0367 Clinical Associate / Clinical Assistant 123 76 45 2 1 7 0 4 0 74 1 1 35

Clinical Faculty Total 5177 2188 2766 223 15 405 43 101 2 2915 45 14 1637

Senior Fellows

0442 Senior Fellow Trainee 203 124 79 0 2 30 7 13 0 103 8 4 36

0445 Senior Fellow 426 188 238 0 0 114 9 35 0 184 8 11 65

Senior Fellows Total 629 312 317 0 2 144 16 48 0 287 16 15 101

APL Faculty

0104, 0105 & 0106 APL Professor WOT / APL Associate Professor WOT / APL Assistant Professor 12 2 10 0 0 1 0 0 0 10 0 1 0 WOT

APL Faculty Total 12 2 10 0 0 1 0 0 0 10 0 1 0

Affiliate Faculty

0171 Affiliate Professor 715 125 522 68 3 51 4 13 0 439 3 1 201

0172 Affiliate Associate Professor 477 135 298 44 0 25 4 11 0 308 1 1 127

0173 Affiliate Assistant Professor 774 271 461 42 1 78 0 24 1 430 7 3 230

0174 Affiliate Instructor 822 450 331 41 1 79 9 19 1 446 11 3 253

Affiliate Faculty Total 2788 981 1612 195 5 233 17 67 2 1623 22 8 811

Extension Lecturers

0312 Extension Lecturer, Part-time 6 5 1 0 0 0 0 0 0 6 0 0 0

0314 Extension Lecturer, Full-time 41 26 15 0 0 2 0 1 0 34 1 2 1

0315 Extension Lecturer 556 264 285 7 3 21 6 11 0 222 3 1 289

Extension Lecturers Total 603 295 301 7 3 23 6 12 0 262 4 3 290

B–1.7/201-17 1/11/17 Page 2 of 2 B–2 BOARD OF REGENTS MEETING

Safety Report – Monthly Update

INFORMATION

This is an oral report for information only.

BACKGROUND

In March 2016, the Board of Regents established the Safety Update as a standing agenda item to highlight leading safety indicators at the University of Washington. The Safety Update item will focus primarily on the areas of employee, student and patient safety.

Beginning September 2016, the format for this standing item changed. In place of the monthly "indicator" report, President Cauce will provide a brief safety update to the Board with relevant highlights from the past month. In addition, an in-depth safety report will be provided to the board quarterly in four key areas: student safety, patient safety, environmental health and safety, and Safe Campus.

The report this month is a brief monthly update with relevant highlights from the past month. The next in-depth quarterly report will be presented in February 2017.

B–2/201-17 1/12/17 B–3 BOARD OF REGENTS MEETING

UW Medicine Board Report

INFORMATION

For information only.

BACKGROUND

In January 2000, the Board of Regents established a board, known as the UW Medicine Board, to advise the Board of Regents, the University President, and the CEO of UW Medicine/Executive Vice President for Medical Affairs/Dean of the School of Medicine regarding the operation and governance of UW Medicine and to govern the patient care aspects of the University of Washington Medical Center.

Per UW Board of Regents standing order chapter 9 and UW Medicine Board bylaws Article 1 Section 1, the board consists of seventeen members, including the UW President and at least one member of the Board of Regents.

This update is a standing item to provide the Chief Executive Officer of UW Medicine, Dr. Paul Ramsey, and the Board of Regents representatives serving on the UW Medicine Board an opportunity to update the Board about current UW Medicine Board activities, discussions and actions.

UW Regents currently serving on the UW Medicine Board: Kristianne Blake Rogelio Riojas

B–3/201-17 1/12/17 B–4 BOARD OF REGENTS MEETING

Governmental Affairs Advisory Committee Update: Introduction of New Director of State Relations and Governor’s Budget Overview

INFORMATION

For information only.

BACKGROUND

The University of Washington Governmental Affairs Advisory Committee was established in January 2014 as an advisory committee to the Board of Regents, its appropriate standing committees, and the University President, or his or her designee, on matters relating to the University's relationship to federal, state, and local governments and agencies.

As noted in the Board of Regents Governance, Standing Orders, Chapter 4, Section C, the Governmental Affairs Advisory Committee shall consist of no more than eight members to be appointed by the Board. The Chair, Vice Chair, and members shall be recommended by the Governance Committee and approved by the Board after consultation with the President of the University and his or her designee(s).

One or two of the appointed members shall be selected from the Board. The remaining appointed members shall be experienced professionals with relevant backgrounds.

There shall be a three-year term limitation for regent and non-regent members, renewable by the Board. Members will be asked to make a minimum commitment of three consecutive years, and shall serve at the pleasure of the Board.

As approved by the Board at its October 9, 2014 meeting, the Governmental Affairs Advisory Committee members are:

Regent Herb Simon (Chair) 10/1/14 to 9/30/17 Regent Joanne Harrell 10/1/14 to 9/30/17 Mike Egan 10/1/14 to 9/30/17 Jerry Grinstein 10/1/14 to 9/30/17 Rob McKenna 10/1/14 to 9/30/17 Tony Williams 10/1/14 to 9/30/17

B–4/201-17 1/12/17 UW AT A GLANCE

74.5 PERCENT OF THE INCOMING CLASS, The incoming new class across all three INCLUDING FRESHMEN AND TRANSFER STUDENTS, campuses, including freshmen and transfer ARE WASHINGTON RESIDENTS students, totals 11,009.

Across all campuses, a record number of underrepresented students enrolled at the $12.5 B 2017 STATE LEGISLATIVE AGENDA UW this year — 1,646 compared to 1,449 last TOTAL ECONOMIC IMPACT GENERATED year. Since before the recession, the number and BY THE UW IN THE STATE OF WASHINGTON proportion of underrepresented students at the UW has increased, comprising 19.7 percent of the 2016 incoming domestic freshman class. TOGETHER

$565.7 million in tax revenue to state and local governments, including sales, property and UNDAUNTED 74 PERCENT OF ALUMNI STAY business tax payments. IN THE STATE OF WASHINGTON FOR A WORLD Nearly in 2015–16. 16,000 degrees conferred OF GOOD Through donations and volunteerism combined, UW employees and students contributed more than $149 million to local charitable RANKED NO. 1 IN PRIMARY CARE, in 2013–14. organizations RURAL AND FAMILY MEDICINE EDUCATION

Driven by the determination to transform our world, The UW is the third-largest non-federal people at the University of Washington are working to find employer in the state of Washington. The UW solutions to today’s major challenges, from producing supports 79,331 jobs across the state, including more health care professionals to serve in our state’s rural 45,330 related to UW Medicine. and underserved areas, to helping address critical NO. 5 workforce shortage areas in computer science and other science, technology and engineering fields, to working The UW was named the No. 25 university in RANKING BY REUTERS FOR MOST INNOVATIVE on breakthroughs in clean energy and environmental UNIVERSITIES IN THE WORLD, BASED ON the world on the Times Higher Education rankings sustainability. With campuses in Seattle, Bothell and PATENT APPLICATIONS AND IMPACT IN 2015 Tacoma, a world-class academic medical center, for 2017. and extensive continuing education programs, the opportunities at the UW are limitless. Kiplinger’s ranks the UW as the No. 9 best value in the nation for in-state students.

THE UW RANKED NO. 3 AMONG U.S. PUBLIC INSTITUTIONS ON UW OFFICE OF STATE RELATIONS THE U.S. NEWS & WORLD REPORT 206.543.7604 [email protected] HIGHER EDUCATION WORLD UNIVERSITY uw.edu/staterelations RANKINGS FOR 2017 OPERATING BUDGET PRIORITIES

STATE POLICY MAKERS HAVE AN OPPORTUNITY TO BUILD ON RECENT INVESTMENTS IN ORDER TO STRENGTHEN THE STATE’S COMPETITIVENESS BY INCREASING ENROLLMENTS IN HIGH-DEMAND FIELDS, INVESTING IN PROVEN STRATEGIES THAT RETAIN STUDENTS AND LEAD TO DEGREE COMPLETION, AND PROVIDING A CLASSROOM EXPERIENCE THAT EQUIPS STUDENTS WITH THE SKILLS NEEDED TO EXCEL IN TODAY’S COMPETITIVE LABOR MARKET.

Competing for excellence with an emphasis on historically disadvantaged students in high-demand fields. A quality education requires access to talented and dedicated faculty and staff. In order to attract and retain The UW supports fully funding the State Need Grant talented educators and maintain the quality of the program to improve college access and affordability for institution’s educational experience, scholarship and student Washington students. Last year, more than 24,000 success, the UW is requesting funding to invest in students in Washington state were eligible for the State competitive compensation for faculty and staff to better align Need Grant, but were unable to receive grant assistance with peer institutions. due to insufficient state funds. The UW is also seeking state support for the maintenance Targeted investments to address unmet KEY CAPITAL INVESTMENTS and operation of facilities that are critical to the UW’s workforce demands educational mission. A skilled and educated workforce is the foundation for a Investing in proven strategies to ensure students have prosperous economy, and Washington’s colleges and the resources to graduate universities play a key role in preparing students to fill jobs Seismic improvements Accommodating growth in high-demand fields. The UW is requesting $5.1 million for a tri-campus initiative The UW requests $25 million to upgrade unreinforced The UW requests $3.5 million in predesign and design to promote student success by expanding programs that There is a significant physician workforce shortage in masonry buildings on the Seattle campus in order to improve funding to address student enrollment growth in high- improve access, retention, graduation and career preparation eastern Washington that is worsening and is especially acute seismic preparedness and reduce the risk of the collapse demand programs at UW Bothell and UW Tacoma. in rural areas in the primary care specialties. The UW is of buildings and falling masonry. There are currently seven Parrington Hall renovation seeking $9.3 million to expand the UW School of Medicine- unreinforced masonry load bearing buildings and 19 buildings with unreinforced masonry façade elements on the campus. Gonzaga University Regional Health Partnership in Spokane The UW requests $10 million in design and construction This request will address four of the most critical buildings to address the shortage of health care professionals in rural funding to match a donation of $10 million for the renovation identified in UW’s comprehensive six-year plan to upgrade and underserved areas of our state. Studies indicate that of the historic Parrington Hall building that is home to unreinforced masonry buildings. receiving medical training in a certain geographic area provides the Daniel J. Evans School of Public Policy & Governance. the greatest likelihood for a physician to practice in that Population Health sciences The renovation will address deferred maintenance, area. The medical program returns 52 percent of students to upgrade HVAC and electrical systems, update underutilized Washington, compared to the national average of 38 percent. The UW requests $20 million for a Population Health space, enhance student learning and accommodate Additionally, 60 percent of program graduates enter primary research building to match $210 million in philanthropic growth. Enrollment at the Evans School of Public Policy & care, compared with the national average of 39 percent. support for construction of a new collaborative facility that Governance has doubled over the past 10 years. will include the Institute of Health Metrics and Evaluation, The UW is also seeking $16 million in funding to expand the Department of Global Health and the School of Public Burke Museum enrollment across our three campuses in high-demand Health. This facility will help promote and enhance research, fields such as engineering, computer science, ocean The Burke museum is engaged in a multi-year project innovation and collaboration to improve the health and engineering and cyber operations. The demand for to build a new facility. The 2015–17 capital budget included well-being of communities and people around the world. engineering and computer science degrees has almost $26 million to begin the construction of the museum. doubled since 2009. Due to capacity issues, only In addition, $10 million is requested for the design of a Funding in the amount of $24.2 million is requested to a third of these admitted UW students with declared interest shared Population Health academic facility for the six complete construction already underway. will receive a bachelor’s degree in engineering or computer schools of UW Health Sciences that will replace the use of science. These critical investments will make progress toward the Magnuson Health Sciences Teaching Center (T-wing). meeting our state’s significant and growing need for qualified applicants in high-demand fields. B–4.2/201-17 1/12/17

Washington Competes: A Sector-wide Agenda for Higher Education Growth and Completion In 2017, state policy makers have an opportunity to build on recent investments in order to serve more students and strengthen the state’s competitive advantage by increasing investment in Washington’s college and university systems. Because higher education is a public good, everyone benefits when there are more college graduates. Postsecondary education is essential to being competitive in today’s global economy. Washington’s economic vitality hinges on a strong and vibrant education system that includes early learning, K-12, and higher education. Increasing the number of individuals with a postsecondary credential reduces reliance on social support programs and ensures that Washington families are not left behind. Current Challenges: Unmet Workforce Demands – A skilled and educated workforce is the foundation of a prosperous economy. According to the Washington Roundtable, there will be 740,000 job openings in Washington in the next five years. Yet as identified in the WSAC’s Roadmap report, only 51% of adults currently possess a postsecondary credential. Our state’s colleges and universities are key to creating a local pipeline for Washingtonians to fill these jobs. Degree Attainment – Washingtonians ages 25 to 34 are projected to be the first generation in history with lower educational attainment than their parents. Many have some college credit but have not completed a degree. At the same time, a growing number of Washington students come from groups that have been historically underserved by higher education. Ensuring the academic success of these students requires strategies and investment in proven student success initiatives. Competing for Excellence – Providing quality education requires access to talented and dedicated faculty and staff. Yet Washington’s colleges and universities face an increasingly competitive national marketplace to attract and retain top-notch educators. The Path Forward: Addressing our educational and economic challenges requires increased state investment to improve student access and degree completion, preserve affordability, and maintain the high quality of our colleges and universities. Washington’s colleges and universities request funding to bolster certificate and degree production, student success, and educational quality. Degrees to meet demand: Address state needs through targeted investments ®® Expand capacity to support student completion in the areas they pursue. This includes enrollments that fill skill gaps in high- demand fields such as STEM, teacher preparation, health care, and priority workforce programs. ®® Reduce bottlenecks in high-demand and priority workforce programs and courses, and improve student time to degree or credential. ®® Ensure that graduates have the breadth of knowledge, aptitudes, and experiences enabling them to adapt to a changing economy and workforce. The workforce of tomorrow will need to be more nimble and flexible than before – the core skills that the -hu manities can provide lay the groundwork for a lifetime of learning and reinvention – of business, of themselves. Student success: Ensure that students have the resources to graduate ®® Invest in proven strategies that retain students and lead to degree completion. ®® Strengthen pathways for historically underserved populations, transfer students, veterans, and adult learners. ®® Fully fund the State Need Grant to permit more students to attend college and reduce student debt loads. High impact credentials: Ensure that all students excel in today’s competitive labor market ®® Provide an educational experience that equips students with knowledge, skills, and experiences that translate from the classroom to the workplace. ®® Invest in competitive compensation for faculty and staff in order to attract and retain quality educators. Each year, Washington’s 50 public and private colleges and universities together award 71,000 credentials to students in all 39 counties. However, we need to produce more to meet the state’s growing economic needs and to ensure that Washingtonians are not left behind. We are ready to build on nationally-recognized programs to increase the multi-billion dollar economic impact that our colleges and universities have on the state’s economy, as well as to enhance the economic well-being of all Washington residents.

THE COUNCIL OF PRESIDENTS • STATE BOARD FOR COMMUNITY & TECHNICAL COLLEGES • INDEPENDENT COLLEGES OF WASHINGTON B–5 BOARD OF REGENTS MEETING

Quarterly Compliance Report – Financial

INFORMATION

For information only.

BACKGROUND

In November 2015, Elizabeth Cherry, Associate Vice Provost, Compliance and Risk Services, presented a report on the University’s new Structural Compliance Program. Over an 18-month cycle, the Board of Regents will receive a quarterly report from each of the six key institution-wide compliance areas:

• Research • Health & Safety • Financial • Information • Special Areas (e.g. global activities) • Civil Rights/Employment

Attachments 1. University of Washington Compliance Calendar – Cycle One: 2015-17 2. University of Washington Financial Compliance 3. University of Washington Financial Compliance Priority Item 1: Expenditure of State Provisos and Federal Funds 4. University of Washington Financial Compliance Priority Item 2: Payment Card Industry Data Security Standard (PCI DSS)

B–5/201-17 1/12/17 UNIVERSITY OF WASHINGTON COMPLIANCE CALENDAR - Cycle One: 2015-17

2015 2016 2017

September October November December January February March April May June July August September October November December January February March April May June July

Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Coordination Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team Team

Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Working Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee

Compliance Compliance Compliance Compliance Compliance Compliance Compliance Compliance Steering Board of Steering Steering Steering Steering Steering Steering Steering Committee Regents: Committee Committee Committee Committee Committee Committee Committee Overview

Assessment: Research Meeting 1: Map Meeting 2: Develop Mitigation Plan: Laboratory Safety operations to 7 Establish mitigation Board of Board of Mid-Cycle elements, link compliance plans and Regents: Regents: to UW-wide priority areas prepare report Meeting Research Research compliance and mitigation for Regents Mitigation Plan: Post-approval Monitoring of Clinical Trials with Human Subjects opportunities

Assessment: Health & Safety Mitigation Plan: Health and Safety Governance Meeting 1: Map Meeting 2: Develop operations to 7 Establish mitigation Board of Mid-Cycle elements, link compliance plans and Regents: Mitigation Plan: Accident Prevention Plans Meeting to UW-wide priority areas prepare report Health & compliance and mitigation for Regents Safety opportunities Mitigation Plan: Safety of Minors in University-sponsored Programs

Assessment: Global Activities

Meeting 1: Map Meeting 2: Develop operations to 7 Establish mitigation Board of Mitigation Plan: Clery Act in Foreign Locations elements, link compliance plans and Regents: Mid-Cycle to UW-wide priority areas prepare report Global Meeting compliance and mitigation for Regents Activities opportunities Mitigation Plan: Export Control

Assessment: Information Mitigation Plan: Student Information and Meeting 1: Map Meeting 2: Develop operations to 7 Establish mitigation Board of Health or Safety Emergencies Mid-Cycle Information elements, link compliance plans and Regents: to UW-wide priority areas prepare report Information Meeting compliance and mitigation for Regents Mitigation Plan: Internet of Things (IoT) opportunities

Assessment: Financial Meeting 1: Map Meeting 2: Develop Mitigation Plan: Payment Card Industry Data Security Standard (PCI DSS) operations to 7 Establish mitigation Board of elements, link compliance plans and Regents: Mid-Cycle to UW-wide priority areas prepare report Financial Meeting compliance and mitigation for Regents Mitigation Plan: Expenditure of State Provisos and Federal Funds opportunities

Assessment: Civil Rights/Employment Mitigation Plan: Meeting 1: Map Meeting 2: Develop operations to 7 Establish mitigation Board of elements, link compliance plans and Mid-Cycle Regents: Civil Mitigation Plan: to UW-wide priority areas prepare report Rights/ Meeting compliance and mitigation for Regents Employment opportunities Mitigation Plan:

B–5.1/201-17 ATTACHMENT 1 Page 1 of 1 1/12/17 University of Washington Financial Compliance

Overview To fulfill its teaching, research and service mission, today’s public research university must function as a multi-faceted business enterprise, interfacing with tens of thousands of students, faculty, staff, researchers, patients, and visitors – as well as grantors, vendors, and third-party contractors – in myriad daily financial transactions.

Like any large business, institutions of higher education follow generally accepted accounting principles and ethical corporate practices. They also grapple with a complex matrix of federal and state laws and regulations that attach to nearly every aspect of their fiscal operations. Financial compliance obligations are everywhere: processing student aid, collecting tuition, fundraising, planning of capital projects, procurement of goods and services, and administration of payroll and benefits are just a few examples. Universities must remain diligent stewards of taxpayer funds no matter the recipient: the Ph.D student, the anthropology professor, or the principal investigator performing medical research. They must also ensure that the institution’s financial transactions – the successful entrepreneur making a donation to her alma mater, the parent paying his freshman’s tuition, the department administrator purchasing supplies on a university credit card – are handled appropriately.

The University of Washington employs dedicated financial professionals within colleges and schools, as well as in central administrative units – Financial Management, Office of Planning and Budgeting, Procurement Services, Research and Student Accounting, Treasury, Internal Audit, and University Advancement among them. Because federal and state funds are subject to complex monitoring, auditing, reporting, and internal control requirements, these subject matter experts maintain up-to- date, detailed knowledge and skills relevant to the ever-evolving obligations of financial compliance. And because most of today’s business transactions are conducted electronically, the UW, through the work of its security and privacy experts, takes appropriate steps to protect its systems from external threats.

Compliance Services facilitates and supports compliance work across the institution by providing a unifying framework for the University’s diverse compliance obligations and subject matter experts. The framework is based on seven elements that characterize effective compliance programs: 1) leadership and oversight, 2) standards of conduct, policies and procedures, 3) education and outreach, 4) monitoring and auditing, 5) receiving reports and investigating, 6) accountability, incentives and corrective action, and 7) response and prevention.

Compliance Services convenes subject matter experts for facilitated assessments designed to identify strategies or initiatives that strengthen the maturity of the University’s compliance functions and emphasize continuous improvement.

B–5.2/201-17 ATTACHMENT 2 Page 1 of 3 1/12/17 Assessment In October 2016, assessment sessions were held with financial compliance subject matter experts representing areas across the institution – benefits, tax, state budget compliance, debt management, grant and contract accounting, and enrollment management, among them. Through those meetings, two priority items were identified for focused attention over the next 18 months: 1) compliance with the Payment Card Industry Data Security Standard (PCI DSS); and, 2) Expenditure of State Provisos and Federal Funds.

The Financial compliance assessment was led by: Ann Anderson | Associate Vice President and Controller, Finance & Facilities Elizabeth Cherry | Associate Vice Provost, Compliance and Risk Services Sarah Norris Hall | Associate Vice Provost, Office of Planning & Budgeting

Subject matter experts: Jed Bradley | Higher Education Policy Analyst, Office of Planning & Budgeting Robert Bradshaw | Manager, Financial Accounting Sue Camber | Associate Vice President, Research & Student Accounting Pramilla Chand | Director of Operations, Procurement Services Christina Chang | Assistant Vice President, Finance & Administration, University Advancement Mark Conley | Executive Director, Procurement Services Cheryl DeBoise | Assistant Vice President, Financial Transformation, UW-IT Office of the Vice President Richard Cordova | Executive Director, Internal Audit Kirsten DeFries | Director, Grant and Contract Accounting, Research and Student Accounting Walt Dryfoos | Associate Vice President, Advancement Services, University Advancement Katy Dwyer | Executive Director, Benefits, Human Resources Sarah Garland | Assistant Director, Banking & Accounting Operations Mary Fran Joseph | Associate Dean for Administration and Finance, UW School of Medicine Kay Lewis | Assistant Vice President for Enrollment and Executive Director of Financial Aid and Scholarships Roy Lirio | Director, Student Fiscal Services Chris Malins | Associate Vice President, Treasury Ted Mordhorst | Director, Research Compliance & Operations Kojay Pan | Director, Finance and Administration, College of Engineering Kyle N. Richard | Director, Tax, Financial Management Dan Schaaf | Associate Controller, Financial Management Lupe Valencia | Director, Management Accounting and Analysis, Research and Student Accounting Erik Winger | Assistant Director, Financial Accounting

B–5.2/201-17 Page 2 of 3 1/12/17 Summary of Priority Items Priority Item 1: Expenditure of State Provisos and Federal Funds The University of Washington receives state appropriations and thousands of federally-sponsored grants, each of which requires compliance with complex conditions and limitations regarding expenditure. Failure to comply with funding requirements may result in expenditures being disallowed; funds not spent within the required timeline may expire; and administrative burden may increase due to strict, sponsor-imposed controls. Competition for federal and limited state resources is tight. The University must spend funds in accordance with legislative and funder intent, and within specified timelines, in order to maintain its reputation as a worthy investment for taxpayers and federal and state lawmakers.

Multiple projects are currently underway to strengthen internal controls, employ data analytics, and modernize University-wide financial systems in a broad-based effort to affect continuous improvement. This mitigation project focuses on developing coordinated, clear, customer-focused guidance and best practices regarding proper use of all funding, with special focus on federally-sponsored grants and state funds provided as provisos.

Priority Item 2: Payment Card Industry Data Security Standard (PCI DSS) Processing of payment card transactions is critical to the University of Washington’s ability to conduct business, and protection of cardholder data collected through such transactions is crucial to the institution and its community. Protection is accomplished via significant information security and financial control requirements, which are codified in the Payment Card Industry Data Security Standard (PCI DSS). In 2015 alone, the Standard applied to five million transactions totaling more than $220M – at Meany Hall, UWMC, Parking Services, ICA venues, University Advancement, and Housing and Food Services, and hundreds of other locations across the UW.

To ensure sound and compliant functioning of payment card processing, the UW has launched a multi- faceted project which includes assessment of card processing functions across the organization and targeted strategies for long-term compliance with the evolving data security standard.

B–5.2/201-17 Page 3 of 3 1/12/17 University of Washington Financial Compliance Priority Item 1: Expenditure of State Provisos and Federal Funds

Challenge Statement The University of Washington receives state appropriations and thousands of federally-sponsored grants, each of which requires compliance with complex conditions and limitations regarding expenditure. Failure to comply with funding requirements may result in expenditures being disallowed; funds not spent within the required timeline may expire; and administrative burden may increase due to strict, sponsor-imposed controls. Competition for federal and limited state resources is tight. The University must spend funds in accordance with legislative and funder intent, and within specified timelines, in order to maintain its reputation as a worthy investment for taxpayers and federal and state lawmakers.

Context The state and federal funding types with the most stringent requirements include: 1) “provisos,” which are appropriated state funds with specific conditions and limitations. Most provisos take the form of language in a legislative budget bill that requires the University to spend a designated amount of its appropriation on a certain activity, and 2) federally-sponsored grants, awarded by the National Science Foundation or National Institutes of Health, for example, in support of University research, training, education and public service programs.

Although recipients are responsible for understanding and managing the compliance obligations regarding their own funds, central administrative units provide critical guidance and support. The Office of Sponsored Programs reviews, negotiates, approves, and provides administrative oversight of grant proposals and establishment of awards on behalf of the University of Washington, in accordance with applicable policies and regulations. The Office of Planning & Budgeting develops the University’s annual budgets; submits biennial and supplemental operating budget requests to the state; and budgets and distributes state funds and other resources to units, including interpreting and communicating conditions and limitations on those resources. Financial Management functions include Procurement Services, which integrates reviews, training for departmental units, and controls into procurement processes and systems to support compliance with grants and state funds, and Research Accounting and Analysis, which is responsible for grant account set-up, accounts receivable, financial reporting, invoicing and post-award financial compliance guidance and counseling.

The decentralized nature of these units creates a healthy system of checks and balances in their operational work. However, they also provide fund recipients with separate training and education, which could be made more effective with enhanced coordination and alignment.

B–5.3/201-17 ATTACHMENT 3 Page 1 of 3 1/12/17 Mitigation Plan The Office of Planning & Budgeting, Procurement Services, and Research Accounting and Analysis will collaborate to: 1. Inventory existing training and outreach efforts, identify overlaps and gaps, and assess the effectiveness of different approaches being used to support compliant expenditure of funds – including written guidelines and policies, Administrator Toolkit, proviso letters, quarterly data analytics reports, and online and in-person trainings. 2. Develop clear, customer-focused guidance and best practices regarding proper use of all funding, with special focus on federally-sponsored grants and state funds provided as provisos. Information will be organized by funding type and span the period from receipt of funds through final reporting. The following elements will be incorporated: procurement guidelines/rules, ethics guidelines, UW policies, and best practices (e.g. spending on salaries, equipment and technology), as well as specific guidance on spending timelines and other requirements or restrictions. A user group of unit administrators will be convened to provide feedback as improvements are developed.

Project Leads Jed Bradley, Higher Education Policy Analyst, Office of Planning & Budgeting Pramilla Chand, Director of Operations, Procurement Services Ted Mordhorst, Director, Research Compliance and Operations, Research Accounting and Analysis

Sample of Relevant Laws and Regulations Federal • Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards: 2 CFR §200

State • Ethics in Public Service: Chapter 42.52 RCW • Use of State Resources: WAC 292-110-010 • Office of Financial Management: State Administrative & Accounting Manual (SAAM)

Related Initiatives Although not part of the scope of this mitigation project, related University initiatives currently underway include: • Internal controls – Assist units in establishing and documenting internal controls – following Committee of Sponsoring Organizations (COSO) principles – covering effectiveness and efficiency of operations, reliability of reporting for internal and external use, and compliance with applicable laws and regulations. Led by Financial Management. • Data analytics – Create detailed reports of transactions charged to federally-sponsored grants which have a higher than normal potential for disallowance. Reports encompass the entire

B–5.3/201-17 Page 2 of 3 1/12/17 University, with data identified by college/unit and distributed to administrators on a quarterly basis. Led by Research Accounting and Analysis. • Finance Transformation Project – Replace the University’s legacy systems, and modernize the core administrative and financial systems that support critical business operations. Led by the Provost.

State and Federal Funds: Process, Central Administration Roles, and Initiatives

B–5.3/201-17 Page 3 of 3 1/12/17 University of Washington Financial Compliance Priority Item 2: Payment Card Industry Data Security Standard (PCI DSS)

Challenge Statement Processing of payment card transactions is critical to the University of Washington’s ability to conduct business, and protection of cardholder data collected through such transactions is crucial to the institution and its community. Protection is accomplished via significant information security and financial control requirements, which are codified in the Payment Card Industry Data Security Standard (PCI DSS). In 2015 alone, the Standard applied to five million transactions totaling more than $220M – at Meany Hall, UWMC, Parking Services, ICA venues, University Advancement, and Housing and Food Services, and hundreds of other locations across the UW.

The University’s decentralized operations, and a low barrier of entry for units that wish to accept the cards, pose challenges for the institution’s compliance with the PCI DSS. Non-compliance with its requirements and possible security breaches could result in fines levied by individual card brands, higher processing fees paid by the University, or, in rare cases, suspension of the ability to process payment cards altogether.

Context The Payment Card Industry Security Standards Council, a consortium of the world’s major credit card companies (MasterCard, Visa, American Express, Discover, and JCB) was established in 2006 and monitors compliance with the PCI DSS. The Standard, most recently updated in April 2016, was created to align industry practices for accepting, processing, storing and transmitting payment card information in a secure environment. It serves to mitigate vulnerabilities in merchants’ environments and to protect cardholder data.

The PCI DSS includes 12 compliance requirements, organized into six control objectives: 1) build and maintain a secure network, 2) protect cardholder data, 3) maintain a vulnerability management program, 4) implement strong access control measures, 5) regularly monitor and test networks, and 6) maintain an information security policy.

Mitigation Plan To ensure sound and compliant functioning of the UW’s payment card processing, Financial Management – in consultation with the Office of the Chief Information Security Officer (CISO) and other units – will lead a project to: • Engage a consultant to help identify mitigation and risk reduction strategies, University resources (expertise, infrastructure), and operational issues (training, policies, procedures); • Assess card processing functions across the organization; • Complete and submit a University-wide “Self-assessment Questionnaire D,” as required by the UW’s merchant processor; • Develop a communications plan for working with the merchant processor; and,

B–5.4/201-17 ATTACHMENT 4 Page 1 of 2 1/12/17 • Investigate and develop a strategy for long-term compliance that effectively balances the cost of compliance with risk, particularly given the evolving data security standard.

Project Leads Sarah Garland, Assistant Director, Banking & Accounting Operations Dan Schaaf, Associate Controller, Financial Management

Sample of Relevant Laws and Regulations • PCI Data Security Agreement (PCI Security Standards Council, LLC License Agreement) • Personal Information – Notice of Security Breaches: Chapter 19.255 RCW

B–5.4/201-17 Page 2 of 2 1/12/17 B–6 BOARD OF REGENTS MEETING

Intercollegiate Athletics Annual Report to the Board on NCAA Compliance

INFORMATION

For information only.

BACKGROUND

This is an annual report to the Board of Regents regarding Intercollegiate Athletics actions and efforts regarding NCAA Compliance. The Board was last updated September 10, 2015.

Attachment Who We Are is Why We Win, Winter 2017

B–6/201-17 1/12/17 University of Washington Board of Regents

Winter 2017

B–6.1/201-17 ATTACHMENT Page 1 of 7 1/12/17 Today’s Report

• NCAA Violation Report • Continued Demonstration of Institutional Control • NCAA rule changes positively impacting our student‐ athlete experience

B–6.1/201-17 Page 2 of 7 1/12/17 2015‐16 Violation Summary: 17 total

• Administrative: • Staff member donated to a high school booster group • Marketing used an impermissible picture in a camp advertisement • Staff member incorrectly pro‐rated a scholarship value • An athletic trainer conducted a physical without a doctor present • Recruiting: • Impermissible contact with a junior prospect • “Retweeting” and Social Media Violations • Official Visit Length (exceeded 48 hours) • Meals and expenses provided to parents during an official visit • A prospect on an unofficial visit received a benefit • Playing and Practice Rules • 20 hours per week practice limits were exceeded

Autonomy and Deregulation has removed many commonly violated bylaws (ex. meals, benefits and team travel)

B–6.1/201-17 Page 3 of 7 1/12/17 Violation Notes:

• No Major Violations (Level I or II) • Level III violations were a mix of self‐reported and systems discovered violations. • One Level IV was reported to the PAC‐12 • While the majority of violations occur within Bylaw 13‐Recruiting, there is no clear trend or specific area where violations consistently occur. • Social Media violations will also decline after an additional round of deregulation this year

B–6.1/201-17 Page 4 of 7 1/12/17 Demonstrating Institutional Control

• Hosted staff members from the NCAA Enforcement Group • Monthly head coach meetings, “Compliance Camps” for special topics, and specialized team education sessions • Annual audits of compliance policies and procedures • 2016: Camps and Clinics • Bi‐annual meetings with student‐athletes each academic year • Created an external website with a tip box feature • Provided online access to forms and policies for our coaches • Increased monitoring efforts at practice and games with documentation

B–6.1/201-17 Page 5 of 7 1/12/17 Positively Impacting Student‐Athletes

• Multi‐year aid agreements and Cost of Attendance Scholarships provide stability and additional financial assistance for incidental expenses • Increased investment for post‐eligible medical needs and financial aid for degree completion • Enhanced nutrition and wellness programs • Through the NCAA Special Assistance Fund and NCAA deregulation, ICA can provide direct support: • Professional attire for award ceremonies and special events • Unique travel expenses (parents to attend Womens’ Final Four, surgeries, misfortune events) • Fees to attended conferences and professional development opportunities

B–6.1/201-17 Page 6 of 7 1/12/17 Jackie Mynarski Associate Athletic Director, Compliance (206) 543‐6468 [email protected]

B–6.1/201-17 Page 7 of 7 1/12/17 UW Board of Regents

Full Board Meeting January 2017

Patrick M. Shanahan Chair, Board of Regents Vision

> To be the best public university in the world as measured by IMPACT.

1 Our Plan

Lead > Innovation Imperative > Race and Equity > Population Health

Excel > Faculty recruitment and retention > Student access and excellence > Staff leadership development and retention

Advance > Campaign > Government Relations

Transform > Administrative structure > Transforming administration program > Tri-campus coordination > UW Medicine 2 Board Alignment

January February March (Bothell) LEAD • Diversity Blueprint • Global Health • Population Health • CSE Phase II Anniversary with facility Melinda Gates • Faculty (Population demographics Health) (Diversity) EXCEL • Faculty leadership • Student success • UW Bothell strategic priorities priorities ADVANCE • Governor’s budget • UW Advancement • Campaign update overview and and Return on • Government Director of State Investment relations update Relations • Government relations update TRANSFORM • EVP leadership • HRP Update • Tri‐campus introduction (Jeff • Divestment policy coordination Scott) update

3 Open Public Comment Period

The Board of Regents welcome your comments and input.