May 5, 2016 TO

May 5, 2016

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, MAY 11, 2016 3:00 p.m. 142 Gerberding Hall GOVERNANCE COMMITTEE: Regents Shanahan (Chair), Ayer, Blake, Jaech, Rice

THURSDAY, MAY 12, 2016 8:30 to 10:35 a.m. Petersen Room FINANCE AND ASSET MANAGEMENT Allen Library COMMITTEE: Regents Jaech (Chair), Ayer, Benoliel, Blake, Harrell

*10:50 a.m. to 12:20 p.m. Petersen Room ACADEMIC AND STUDENT AFFAIRS Allen Library COMMITTEE: Regents Rice (Chair), Kritzer, Riojas, Simon

12:45 p.m. Petersen Room REGULAR MEETING OF BOARD OF Allen Library REGENTS: Regents Shanahan (Chair), Ayer, Benoliel, Blake, Harrell, Jaech, Kritzer, Rice, Riojas, Simon

*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.

1.1/205-16 5/12/16 UNIVERSITY OF WASHINGTON BOARD OF REGENTS

Governance Committee Regents Shanahan (Chair), Ayer, Blake, Jaech, Rice

May 11, 2016 3:00 p.m. 142 Gerberding Hall

Approval of Minutes of Committee Meeting on February 10, COMMITTEE 2016 ACTION 1. Adopt Amendment to the Bylaws of the Board of Regents and ACTION G–1 Approve Changes to the Board of Regents Governance, Standing Orders, Chapter 4 Pat Shanahan, Board Chair Joanne Harrell, Regent

2. Approve Regent Appointments to the Board of Regents ACTION G–2 Diversity, Equity, and Inclusion Advisory Committee Pat Shanahan, Board Chair

3. Board Assessment Survey – Review Draft and Distribution List INFORMATION G–3 Pat Shanahan, Board Chair

4. Other Business

1.3.1/205-16 5/11/16 UNIVERSITY OF WASHINGTON BOARD OF REGENTS

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

May 12, 2016 8:30 to 10:35 a.m. Petersen Room, Allen Library

Approval of Minutes of Committee Meeting on April 14, 2016 COMMITTEE ACTION 1. Actions Taken Under Delegated Authority ($5-15M) INFORMATION F–1 Mike McCormick, Associate Vice President, Capital Planning and Development

2. UW One Capital Plan INFORMATION F–2 Paul Jenny, Senior Vice President, Planning and Management Chris Malins, Associate Vice President, Treasury Mike McCormick, Associate Vice President, Capital Planning and Development

3. Debt Management Annual Report INFORMATION F–3 Chris Malins, Associate Vice President, Treasury Bill Starkey, Senior Associate Treasurer, Asset Liability Management, Treasury

4. Approval of a Reduction in the Internal Lending Program (ILP) ACTION F–4 Interest Rate Chris Malins, Associate Vice President, Treasury Bill Starkey, Senior Associate Treasurer, Asset Liability Management, Treasury

5. UW Tacoma Court 17 Apartments: Approve Acquisition, Budget ACTION F–5 and Financing Harlan Patterson, Vice Chancellor for Finance & Administration, UW Tacoma Todd Timberlake, Chief Real Estate Officer, UW Real Estate Bill Starkey, Senior Associate Treasurer, Asset Liability Management, Treasury

6. Investment Program Annual Update INFORMATION F–6 Keith Ferguson, Chief Investment Officer, UWINCO Garth Reistad, Deputy Chief Investment Officer, UWINCO Scott Davies, Chief Operating Officer, UWINCO

1.2.1/205-16 5/12/16 AGENDA – Finance and Asset Management Committee Meeting on May 12, 2016 Page 2

7. Comparative Performance, Asset Allocation, Investment Cost, INFORMATION F–7 and Effective Spending Rate Max Senter, Investment Consultant and Managing Director, Cambridge Associates

8. Approve Amendment to the Statement of Investment Objectives ACTION F–8 and Policy for the Consolidated Endowment Fund Keith Ferguson, Chief Investment Officer, UWINCO Scott Davies, Chief Operating Officer, UWINCO

9. Approve Revised Timeline and Budget for HR/Payroll ACTION F–9 Modernization Program Gerald J. Baldasty, Interim Provost and Executive Vice President Kelli Trosvig, Vice President for UW Information Technology and CIO Aubrey Fulmer, Executive Program Director for the HR/Payroll Modernization Program

10. UW Medicine Board Update INFORMATION F–10 Rogelio Riojas, Regent

11. Executive Session (to consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price.)

12. Other Business

1.2.1/205-16 5/12/16 UNIVERSITY OF WASHINGTON BOARD OF REGENTS

Academic and Student Affairs Committee Regents Rice (Chair), Kritzer, Riojas, Simon

May 12, 2016 10:50 a.m. to 12:20 p.m. Petersen Room, Allen Library

Approval of Minutes of Committee Meeting on April 14, 2016 COMMITTEE ACTION 1. Academic and Administrative Appointments ACTION A–1 Gerald J. Baldasty, Interim Provost and Executive Vice President

2. Community College Engagement Initiative (CCEI) Update INFORMATION A–2 Paul Rucker, Associate Vice President for Alumni Relations, University Advancement Dr. Jill Wakefield, Chancellor, Seattle Colleges Gary Oertli, President, South Seattle College, Vice Chancellor for University Partnerships, Seattle Colleges Colleen Ferguson, Project Manager, Community College Engagement Initiative

3. Student Governance and Engagement in UW Decision-making INFORMATION A–3 Processes Vanessa Kritzer, Student Regent Tyler Wu, ASUW President Sophie Nop, ASUWT President Dominick Juarez, ASUWB President Alex Bolton, GPSS President Alice Popejoy, Chair of Provost Advisory Committee for Students (PACS) Karan Grewal, Chair of Arts & Sciences Advisory Council for Students (ASACS)

4. Executive Session (to evaluate the qualifications of an applicant for public employment or to review the performance of a public employee.)

5. Other Business

1.4.1/205-16 5/12/16 AGENDA

BOARD OF REGENTS University of Washington

May 12, 2016 12:45 p.m. Petersen Room, Allen Library (Item No.) I. CALL TO ORDER

II. ROLL CALL: Assistant Secretary Shelley Tennant

III. CONFIRM AGENDA

IV. PUBLIC COMMENT PERIOD

V. BOARD ITEMS

Safety Update B–1 Ana Mari Cauce, University President

Preliminary FY 2017 Operating Budget and FY 2017 Tuition Rates B–2 Sarah Norris Hall, Associate Vice Provost, Planning and Budgeting

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

VII. REPORT OF THE UNIVERSITY PRESIDENT: President Cauce

VIII. CONSENT AGENDA

Approval of Minutes of Meeting of April 14, 2016

Approval of a Reduction in the Internal Lending Program (ILP) Interest Rate F–4

UW Tacoma Court 17 Apartments: Approve Acquisition, Budget and F–5 Financing

Approve Amendment to the Statement of Investment Objectives and Policy for F–8 the Consolidated Endowment Fund

Approve Revised Timeline and Budget for HR/Payroll Modernization Program F–9

Adopt Amendment to the Bylaws of the Board of Regents and Approve G–1 Changes to the Board of Regents Governance, Standing Orders, Chapter 4

Approve Regent Appointments to the Board of Regents Diversity, Equity, and G–2 Inclusion Advisory Committee

1.1.1/205-16 5/12/16 AGENDA – Board of Regents Meeting on May 12, 2016 Page 2 IX. STANDING COMMITTEES

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

Academic and Administrative Appointments (Action) A–1

Community College Engagement Initiative (CCEI) Update (Information only) A–2

Student Governance and Engagement in UW Decision-making Processes A–3 (Information only)

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

Actions Taken Under Delegated Authority ($5-15M) (Information only) F–1

UW One Capital Plan (Information only) F–2

Debt Management Annual Report (Information only) F–3

Investment Program Annual Update (Information only) F–6

Comparative Performance, Asset Allocation, Investment Cost, and Effective F–7 Spending Rate (Information only)

UW Medicine Board Update (Information only) F–10

C. Governance Committee: Regent Shanahan – Chair

Board Assessment Survey - Review Draft and Distribution List (Information G–3 only)

X. REPORTS TO THE BOARD

Faculty Senate Chair – Professor Norman Beauchamp

Student Leaders: ASUW President – Mr. Tyler Wu GPSS President – Mr. Alex Bolton ASUW Tacoma President – Ms. Sophie Nop ASUW Bothell President – Mr. Dom Juarez

Alumni Association President – Mr. Jeff Rochon

XI. DATE FOR NEXT REGULAR MEETING: Thursday, June 9, 2016

XII. EXECUTIVE SESSIONS (to discuss with legal counsel litigation or potential litigation as defined in RCW 42.30.110.) (to review the performance of public employees.)

XIII. ADJOURN

1.1.1/205-16 5/12/16 OFFICIAL MINUTES

M I N U T E S

BOARD OF REGENTS University of Washington

May 12, 2016

The Board of Regents held its regular meeting on Thursday, May 12, 2016, beginning at 12:45 p.m. in the Petersen Room of the Allen Library. The notice of the meeting was appropriately provided to the public and the media.

CALL TO ORDER

The Board Chair, Regent Shanahan, called the meeting to order at 1:00 p.m. A delay of meeting notice was posted.

ROLL CALL

Assistant Secretary Tennant called the roll. Present were Regents Shanahan (chairing), Ayer, Benoliel, Blake (by telephone), Harrell, Jaech, Kritzer, Rice, Riojas, Simon; President Cauce, Provost Baldasty, Ms. Goldblatt; designated representatives: Professor Beauchamp, Mr. Bolton, Mr. Wu, Mr. Rochon.

CONFIRM AGENDA

The agenda was confirmed as presented.

PUBLIC COMMENT PERIOD

Regent Shanahan announced the Board would receive comments from the public. This segment of the meeting is meant to give Board members a chance to hear directly from the public on any subject pertaining to the University. He noted while the Board would be pleased to have the opportunity to listen to any comments and consider them in its decision-making, the Board would not be in a position to directly act on the comments or provide a response. Any Board member who would like additional information would make a request through staff following the meeting. Regent Shanahan offered the opportunity to comment to people who signed up in advance.

Regents heard comments from the following individuals: BOARD OF REGENTS 2 May 12, 2016 • A neurosurgeon encouraged modernization in the surgical airway portion of the Harborview paramedic training program by using human-based simulators in place of live pigs. • A paramedic and emergency medical services provider voiced her opinion in favor of human-based methods of training using simulation mannequins, specifically to train the surgical airway portion, based on her experience conducting training and working in the field. • Two UW students spoke together against the University’s investments in fossil fuels and requested cooperative action for full reinvestment of the funds. They reminded the Board of the stake the University holds in the struggle for climate justice. • A former UW student spoke about the impacts of incarceration and racism and against prison industries and the current state of mass incarceration in the United States. He demanded the UW divest its endowment from prison industries by spring 2017 and reinvest in students and community members who have survived incarceration. • A UW student spoke about the UW’s current and historic treatment of its custodial staff and encouraged the UW to address under-staffing, work load, harassment, and discrimination. • A UW student voiced concern about faculty of color in the American Ethnic Studies Department and the recruitment and retention of faculty of color and asked Regents and the President to pressure the Deans to reallocate funds and invest in American Ethnic Studies. • A physician and clinical instructor in emergency medicine spoke against the use of live animals in the UW’s paramedic training program, specifically the use of pigs while teaching the surgical airway procedure. He cited his preference for the use of human simulation to teach paramedics.

Regent Shanahan thanked the speakers for expressing their views and for attending the meeting. A crowd, gathered in the meeting room, exited chanting, “We won’t rest ‘til you divest.”

BOARD ITEMS

Safety Update (Agenda no. B–1) (Information only)

Regent Shanahan reiterated the safety of students, staff, faculty, patients and visitors is a top priority for the University. In response to a request from the Regents for a monthly safety update, President Cauce provided an overview of the UW’s safety statistics for the last month citing accident reports as the most common. She reported on the formation of a task force on Health and Safety Governance to include student and labor representatives. She noted accident reports increased from March to April, likely due to seasonal reasons. She voiced her concerns about the level of deferred maintenance and the campus infrastructure and its impacts on safety. The number of students seeking advocacy services also increased, attributed to a change in the reporting structure. She BOARD OF REGENTS 3 May 12, 2016 reminded the Regents that during development of a culture of reporting there likely will be increases in the levels of reporting.

See Attachment B–1.

Preliminary FY 2017 Operating Budget and FY 2017 Tuition Rates (Agenda no. B– 2) (Information only)

Sarah Norris Hall, Associate Vice Provost, Planning and Budgeting, began a presentation of the draft budget scheduled for approval by the Board at its meeting in June.

As Ms. Hall began her presentation, a large group of people entered the meeting room and chanted in favor of the UW’s divestment from prisons and that Black lives matter. After listening to their message, Regent Shanahan notified the group it was disrupting the meeting and asked them to either be quiet or leave the meeting. They continued to chant, so Regent Shanahan declared the orderly conduct of the meeting to be infeasible due to the interruption of a group of persons, and therefore declared a ten minute recess. The crowd continued to chant for about five-and-a-half minutes, then marched out of the room. At the end of the ten minute recess the Board meeting resumed in open session.

Provost Baldasty reported on the budget development process and said the report would begin with a presentation of the operating revenue projections and assumptions. Then proposed tuition rates would be presented which would include the use of tuition revenue in tuition-funded aid.

Ms. Hall reminded Regents the budget process is year-long. The budget item reflects projected revenues and a spending plan for central operating resources resulting from a collaborative process involving consultation with leaders across campus, including students. The report focuses on university operating resources projections and planned uses of these funds.

Ms. Hall described the preliminary operating budget. It starts with university operating resources, General Operating Fund (GOF) and Designated Operating Funds (DOF), and includes projected revenue for the research enterprise, restricted funds, the medicine/health system, and auxiliary/self-sustaining activities. The UW assumes more allocation of tuition to financial aid than the state allocates. The Seattle, Bothell, and Tacoma campuses all project less tuition revenue in the upcoming year. This is largely attributed to lower revenue from resident undergraduate tuition due to the 10.5% tuition reduction in Senate Bill 5954. The DOF includes indirect cost recovery, institutional overhead from auxiliary and self-sustaining enterprises, summer quarter tuition, investment income, administrative overhead, and other such as miscellaneous fees.

Projected revenue and expenses are $7,066,869,460. Ms. Hall reviewed the areas listed on the materials distributed to the Regents in advance.

Provost Baldasty reviewed the tuition rate part of the item. The undergraduate resident rate reflects the legislative decision to reduce this tuition. He described the UW’s comparison with its peers for undergraduate resident and non-resident tuition and BOARD OF REGENTS 4 May 12, 2016 graduate school tuition (shown on Attachment 2, page 18). Overall graduate and professional tuition rates vary, and increases are projected to be modest, with a weighted average at UW Seattle of 1.6%, Bothell 0%, UW Tacoma 1%, and 1.5% average increase across the University. Dr. Baldasty explained the state requires 4% of tuition dollars be return to students as financial aid. Although tuition revenue is dropping, the budget proposes financial aid not drop at the level of tuition for fiscal year 2017. Provost Baldasty reviewed the cost of attendance information which still awaits updates of student fee rates, pending their approval.

Regent Shanahan questioned the use of revenue assumptions rather than cost assumptions and asked Provost Baldasty what the cost assumptions are that drive tuition, related to an approach to deferred maintenance, salary increases, and other costs given a limitation on revenue. Provost Baldasty described how the administration is reallocating and repurposing funds from other places. Regent Shanahan clarified his concern was with the long-term process and looking at the costs of doing business to find ways to deliver services at a lower cost without degrading the quality. President Cauce believes costs will increase to support the student body, along with deferred maintenance.

Regent Ayer asked about the budget process practice of beginning with sources of revenue rather than an environment driven to lower costs, with a cost metric, such as cost per student or cost per degree. He advocated for a “cost” budget with continuous improvement in the process.

President Cauce and Provost Baldasty affirmed they are creating a culture of cost savings. Regent Benoliel agreed that this culture shift will require real focused effort and discipline to get everyone thinking in terms of bending the cost curve, getting it flat, and working on reduction. He said this process starts with stopping the rate of increase.

Regent Shanahan summarized the discussion by encouraging the University to develop a process to target investments (scholarship, salaries, benefits, deferred maintenance) and a way to achieve those investments by offsetting them somewhere else in a systematic way.

See Attachment B–2.

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

Regent Shanahan said the meeting has been “robust” so far. He feels good about the future given the passion and involvement of the students. Keeping an open “ear and mind” is an important part of how the Regents conduct their business. He thanked everyone who is involved in the important work of the Board. UW Football Coach Petersen refers to the team as “OKG” (Our Kind of Guys) and Regent Shanahan said Regents aspire to be “BBE” (Best Board Ever) by fulfilling the responsibility of stewardship and being accountable to create alignment across the University. The Board does this best by being inclusive. He noted the University is a big system, and he hopes the Regents will be given time to make it work and be boundless in terms of making an impact. His goal is to shape the content of discussions from meeting to meeting to get into a good rhythm to find ways to make progress toward goals. Noting Professor BOARD OF REGENTS 5 May 12, 2016 Beauchamp’s fondness for aphorisms, Regent Shanahan paraphrased futurist Joel Barker, “Action without a vision is wasting time, vision without action is just a dream, but vision with action you can change the world.”

Regent Shanahan invited Regent Kritzer to describe the student Regent selection process. She said a student committee, including ASUW and GPSS student leaders and graduates and undergraduates from all three campuses, reviewed applications, conducted interviews, and selected three finalists from a competitive pool of applicants. They are Scott Spencer, Kiehl Sundt, and Austin Wright-Pettibone. Mr. Spencer was present and introduced himself. The appointment is now in the Governor’s hands.

Regent Shanahan said one highlight of the Governance Committee meeting was a change in the Standing Orders to create a Regents Advisory Committee on Diversity, Equity, and Inclusion. The Regent members of the Committee will be Joanne Harrell (Chair), Rogelio Riojas (Vice Chair), Jeremy Jaech, and Constance Rice. He invited Regent Harrell to comment. She said the Committee will focus on supporting the administration’s efforts across faculty, staff, students, and procurement and contracting. The Committee will have up to ten members, four of whom are Regents. There will be one student member, one faculty member, one member from the UW Foundation, and two community members. She hopes the Committee will create tighter alignment and better outcomes.

President Cauce said she believes progress in these areas can be made by working together. She appreciates the Board of Regents stepping up to this task.

Regent Shanahan invited President Cauce to provide the University President’s report.

REPORT OF THE UNIVERSITY PRESIDENT: President Cauce

President Cauce thanked the Regents for the respect they showed to students expressing their positions. A task force of students plans to meet with Regent Kritzer and staff from UW’s Treasury Office to discuss divestment. The University will review its investments to get more information. Dr. Cauce advocated working together to determine general principles around divestment as other issues arise.

President Cauce reported she has been speaking to a wide range of community groups, including delivering the keynote commencement speech to Everett Community College. She is spreading the message of the UW caring about the community and about the work being done by the University. She has received a warm reception and appreciation during all her visits.

The President said last week the UW kicked off a Population Health initiative. She sees many possibilities for the University to build on its strengths and link multidisciplinary efforts currently underway. She described the two key components to population health. The first is that health is more than the absence of disease. The second is that health is more than just about the health of individuals; it is about the health of communities. The UW is in a unique position to affect population health, especially by leveraging the BOARD OF REGENTS 6 May 12, 2016 strengths of the local community. This initiative also connects local and global health issues.

The President praised the recent Celebration hosted by the Office of Minority Affairs and Diversity and the Friends of the Educational Opportunity Program. She looks forward to the upcoming ceremony to recognize the inaugural Husky 100. This new tradition recognizes 100 UW undergraduate and graduate students in all areas of study from Bothell, Seattle, and Tacoma who are making the most of their time at the UW.

CONSENT AGENDA

Regent Shanahan noted there were seven 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 Simon, the Board voted to approve the seven items on the consent agenda as shown below:

Minutes for the meeting of April 14, 2016

Approval of a Reduction in the Internal Lending Program (ILP) Interest Rate (Agenda no. F–4)

It was the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents reduce the Internal Lending Program (ILP) interest rate 25 basis points, from 4.75% to 4.50%, effective July 1, 2016.

See Attachment F–4.

UW Tacoma Court 17 Apartments: Approve Acquisition, Budget and Financing (Agenda no. F–5)

It was the recommendation of the Administration and the Finance and Asset Management Committee that the Board of Regents: 1. Approve the acquisition of UW Tacoma Court 17 Apartments. 2. Approve the project budget and financing for UW Tacoma Court 17 Apartments. 3. Delegate to the President the authority to execute all documents related to this transaction.

See Attachment F–5.

Approve Amendment to the Statement of Investment Objectives and Policy for the Consolidated Endowment Fund (Agenda no. F–8)

It was the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents adopt the amended “Statement of Investment Objectives and Policy for the Consolidated Endowment Fund.” BOARD OF REGENTS 7 May 12, 2016

See Attachment F–8.

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (Agenda no. F–9)

It was the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve the revised timeline and budget for the HR/Payroll Modernization Program.

See Attachment F–9.

Adopt Amendment to the Bylaws of the Board of Regents and Approve Changes to the Board of Regents Governance, Standing Orders, Chapter 4 (Agenda no. G–1)

It was the recommendation of the Governance Committee that the Board of Regents: 1) Adopt the amendment to Article IV of the Bylaws of the Board of Regents; 2) Approve changes to the Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents.

All amendments and changes are to be effective on May 12, 2016. Changes to the Standing Orders include creation of an Advisory Committee on Diversity, Equity, and Inclusion.

See Attachment G–1.

Approve Regent Appointments to the Board of Regents Diversity, Equity, and Inclusion Advisory Committee (Agenda no. G–2)

It was the recommendation of the Governance Committee that the Board of Regents approve Regent member appointments to the Diversity, Equity, and Inclusion Advisory Committee of the Board of Regents, effective on May 12, 2016, subject to the Governance Committee and Board of Regents approval of item G–1 to amend Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents, to create the Diversity, Equity, and Inclusion Advisory Committee of the Board of Regents.

Appointment Term Joanne Harrell, Committee Chair 5/12/2016 to 9/30/2016 Rogelio Riojas, Committee Vice Chair 5/12/2016 to 9/30/2016 Jeremy Jaech 5/12/2016 to 9/30/2016 Constance Rice 5/12/2016 to 9/30/2016

Appointments are for partial terms to coincide with Board officer elections and appointments in September.

See Attachment G–2.

BOARD OF REGENTS 8 May 12, 2016 STANDING COMMITTEES

ACADEMIC AND STUDENT AFFAIRS COMMITTEE: Regent Rice, Chair

At the request of Regent Rice, Provost Baldasty remarked the proposed list of appointments for approval was short, but strong, and reflected the University’s strategic approach to hiring.

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 academic and administrative appointments. Regent Kritzer abstained from the vote.

See Attachment A–1.

Community College Engagement Initiative (CCEI) Update (Agenda no. A–2) (Information only)

See Attachment A–2.

Student Governance and Engagement in UW Decision-making Processes (Agenda no. A–3) (Information only)

See Attachment A–3.

FINANCE AND ASSET MANAGEMENT COMMITTEE: Regent Jaech, Chair

Actions Taken Under Delegated Authority ($5-15M) (Agenda no. F–1) (Information only)

See Attachment F–1.

UW One Capital Plan (Agenda no. F–2) (Information only)

See Attachment F–2.

Debt Management Annual Report (Agenda no. F–3) (Information only)

See Attachment F–3.

Investment Program Annual Update (Agenda no. F–6) (Information only)

See Attachment F–6.

Comparative Performance, Asset Allocation, Investment Cost, and Effective Spending Rate (Agenda no. F–7) (Information only)

BOARD OF REGENTS 9 May 12, 2016 See Attachment F–7.

UW Medicine Board Update (Agenda no. F–10) (Information only)

See Attachment F–10.

GOVERNANCE COMMITTEE: Regent Shanahan, Chair

Board Assessment Survey - Review Draft and Distribution List (Agenda no. G–3) (Information only)

See Attachment G–3.

REPORTS TO THE BOARD OF REGENTS

Regent Shanahan invited ASUW Bothell President Dom Juarez and ASUW Tacoma President Sophie Nop to join the Board at the table.

Faculty Senate Chair: Professor Norman Beauchamp

Professor Beauchamp offered an aphorism, “Intelligence plus character, that is the goal of education.” He said faculty and students are learning in lots of ways, but with energy and amplitude around issues that matter. Often leaders who care deeply about issues become the focal point of criticism. He praised the manner in which the UW’s leaders have responded with integrity.

Dr. Beauchamp said he observed an enthusiastic response to the Population Health Initiative, particularly from faculty who expressed the sense of being part of something that matters and is expected to bring the strengths from across the University to a focal point.

The Faculty Senate is exploring its committee structure to address diversity, inclusion, and equity. To achieve a faster pace of action and breadth of response, the current Faculty Council on Multicultural Affairs and Faculty Council on Women in Academia will be restructured to encompass a larger group of issues.

Dr. Beauchamp commented on the Faculty Salary Policy, calling it an “epic journey.” He reported the policy was approved by the Faculty Senate and the Senate Executive Committee. The Policy will next advance to the Senate. If the Senate votes affirmatively, the Policy will be considered by the entire faculty. To inform the faculty, a “voters’ pamphlet” has been prepared.

ASUW President: Mr. Tyler Wu

Mr. Wu said the ASUW Seattle elections are complete and the 2016-17 officers would be announced that evening.

BOARD OF REGENTS 10 May 12, 2016 Mr. Wu commented on the protestors who attended the meeting, saying he represents those students and feels it is important to bring marginalized voices to the decision- making table. As ASUW President, he has the opportunity to see Regents’ and administrators’ commitment to equity, but knows the students want more. He is committed to cultivating an inclusive ASUW environment to empower and serve students, and emphasized the “serving students” part to make students’ experience better.

ASUW Bothell President: Mr. Dom Juarez

Mr. Juarez reported UW Bothell held its first Race and Equity Initiative committee meeting. Mr. Juarez reminded the Regents he was elected as part of a slate to represent marginalized voices and he plans to remain involved in student government next year. He believes in reaching out to diverse groups to make them feel like they are present on campus. UW Bothell plans to create a student council to provide input to the Chancellor and Vice Chancellors on issues related to academics and budget concerns.

ASUW Tacoma President: Ms. Sophie Nop

Ms. Nop said ASUW Tacoma would soon announce the results of its elections. She is excited about the on-boarding and transition of new officers to create a good legacy. The Washington Student Association (WSA) Student of Color Summit and General Assembly Board meetings are upcoming. The schedules were adjusted to allow student leaders to participate in both meetings.

Commencement is coming up in June. Ms. Nop is excited the capacity of the Tacoma Dome has doubled from 7,000 to 14,000, including limited view and screen view tickets, to accommodate graduating students with more tickets to distribute to their friends and families.

Alumni Association President: Mr. Jeff Rochon

Mr. Rochon said UWAA is busy preparing for commencements. The new graduates from three campuses will have the opportunity to purchase Grad Packs, with discounted UWAA membership rates, car license plate frames, and other goodies. UWAA is partnering with the senior class gift for the second year to offer a Class Act Package to those participating in the class gift. For this year’s class gift, students are funding an impact and diversity scholarship. The Grad Toast will be held on Thursday, June 9, at 6:00 p.m. in the Sylvan Grove. During this ceremony, graduates touch the columns and reflect on their years as students before embarking on their new identity as graduates.

During Commencement, UW Alumni Association members will serve as guardians of the gonfalons, escorting the students serving gonfalonieres. This offers alumni an opportunity to participate in Commencement and connect with students.

UWAA is honored to participate in the University’s annual awards process by administering the Alumnus Summa Laude Dignatus award, the highest award the University bestows on graduates. This year’s recipient is Sally Jewell, Secretary of the Interior and former UW Regent, who is also delivering the commencement speech. BOARD OF REGENTS 11 May 12, 2016

The latest issue of Viewpoint magazine features guest editor Bryan Monroe, a UW alumnus and former editor-in-chief of The Daily, who served as editor-in-chief of Ebony and Jet magazines. The issue format features interviews with alumni of color conducted by current students.

Mr. Rochon expressed UWAA’s gratitude for its partnership with the Graduate School to sponsor a series of lectures related to the Race and Equity Initiative. As part of the Initiative, three students of color attended a recent UWAA Board of Directors meeting to speak about the challenges they face at the University. UWAA looks forward to more connecting conversations between alumni and students. He said this was an impactful discussion and offered an opportunity to explore solutions.

GPSS President: Mr. Alex Bolton

Mr. Bolton reported GPSS held its elections and the 2016-17 President will be Elloise Kim. Ms. Kim is a PhD student in English and an international student from South Korea.

Mr. Bolton mentioned two upcoming events. GPSS is ending the year by celebrating its forty-year anniversary and the Husky Sunset end-of-year celebration for graduate and professional students will be held on June 2.

Mr. Bolton was pleased to report he purchased a UWAA lifetime membership with a Grad Pack.

DATE FOR NEXT MEETING

The next regular meeting of the Board of Regents will be held on Thursday, June 9, 2016, on the Seattle campus.

EXECUTIVE SESSION

Regent Shanahan announced the Board would hold an executive session to discuss with legal counsel litigation or potential litigation as defined in RCW 42.30.110.

Returning to open session, Regent Shanahan said the Board would hold an executive session to review the performance of public employees.

BOARD OF REGENTS 12 May 12, 2016

ADJOURNMENT

Returning to open session, Regent Shanahan adjourned the regular meeting at 3:15 p.m.

______Joan Goldblatt Secretary of the Board of Regents

Approved at the meeting of the Board on June 9, 2016. G–1 BOARD OF REGENTS GOVERNANCE COMMITTEE

Adopt Amendment to the Bylaws of the Board of Regents and Approve Changes to the Board of Regents Governance, Standing Orders, Chapter 4

RECOMMENDED ACTION

It is the recommendation of the Governance Committee that the Board of Regents: 1) Adopt the amendment to Article IV of the Bylaws of the Board of Regents; 2) Approve changes to the Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents.

All amendments and changes to be effective on May 12, 2016.

BACKGROUND

The Board of Regents amends its Bylaws and Standing Orders as necessary to accommodate changes in the Board’s and the University’s operations and policies.

HIGHLIGHTS OF THE PROPOSED CHANGES

Board of Regents Governance, Bylaws

• Article IV – Standing Committees. Allows the Board Chair to make temporary committee assignments for newly appointed regents, pending review and approval by the Governance Committee at its next scheduled meeting.

Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents

• Creates the Diversity, Equity, and Inclusion Advisory Committee. • Reorganizes the chapter’s content to consolidate information that pertains to all advisory committees into one section.

Attachments 1) Board of Regents Governance, Bylaws Article IV, Draft 2) Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents, Draft

G–1/205-16 5/11/16 University of Washington D R A F T Board of Regents Governance Bylaws Article IV

Committees of the Board

1. Standing Committees The standing committees set forth below are established to facilitate the business of the Board and the University. The chair, vice chair, and members of each standing committee shall be recommended by the Governance Committee and approved by the Board. Interim committee assignments of newly appointed regents shall be made by the Chair of the Board pending Governance Committee and Board approval. Each standing committee shall consist of at least four members, with at least three voting members. All committee chairs, vice chairs, and a majority of each committee shall be Board members.

The Chair of the Board shall be appointed only to the Governance Committee, but may act as an alternate, including voting, in the event of the absence of any committee member at any regular or special meeting scheduled pursuant to Article III of the Bylaws. The student regent may serve on the Academic and Student Affairs Committee but shall excuse himself or herself from participation or voting on matters relating to the hiring, discipline, or tenure of faculty members and personnel.

Any subject not assigned to a standing committee shall be retained for consideration by the Board itself. Such retained subjects specifically include selection and evaluation of the University President, establishment of operating and capital budgets, requests for appropriation of state funds, and institutional risk management.

Any matter that would typically fall within the responsibility of one standing committee may be directed by the chair of that committee or the Chair of the Board to any other standing or special committee or the Board itself for consideration.

All matters considered by the standing committees requiring action shall be referred to the Board for action except where such authority has been expressly delegated to a committee. Action taken by a committee under such delegated authority shall be promptly reported to the Board.

A majority of the committee's voting members shall constitute a quorum.

Minutes of all standing committee meetings shall be taken, submitted to the Board, kept by the Secretary, and be open to public inspection, following approval, in the office of the Secretary during regular University business hours.

A. Governance Committee The purpose of the Governance Committee is to ensure the integrity of the Board and enhance Board performance. The committee is responsible for:

1) Establishing and maintaining standards of Board conduct;

G–1.1/205-16 ATTACHMENT 1 5/11/16 2) Identifying the expertise and experience needed by the Board and, as appropriate, communicating this to the Governor;

3) Recommending a slate of officers for Board approval;

4) Recommending for Board approval individual members to act as the Board's representatives on outside boards and committees;

5) Ensuring that Board members have adequate orientation and ongoing education;

6) Assessing the performance of the Board and Board members;

7) Monitoring the activities of governance shared with the faculty;

8) Monitoring compliance with the conflict of interest policy;

9) Periodically reviewing and ensuring compliance with these Bylaws and other Board policies; and

10) Carrying out the statutory functions of an executive committee.

The Governance Committee shall include, and be chaired by, the Chair of the Board.

B. Academic and Student Affairs Committee The purpose of the Academic and Student Affairs committee is to oversee educational quality and the quality of the academic experience of students and student life at the University. The committee is responsible for monitoring:

1) Learning goals and outcomes;

2) Program quality, institutional and program accreditation, and program review;

3) Access and affordability of educational programs;

4) Student admission, retention, graduation (including the awarding of degrees), and job placement;

5) Public service programs;

6) Matters relating to faculty status, responsibilities, appointment, tenure, retention, promotion, and discipline;

7) Academic planning;

8) The structure of the academic programs;

9) University research;

10) Distance learning and educational outreach;

BRG, Bylaws, Article IV Page 2 G–1.1/205-16 5/11/16 11) The use of education technology; and

12) Other matters relating to the general welfare of students, including housing and food services, student fees, health services and health insurance, safety, extracurricular activities, sports programs, and policies governing student conduct and discipline and student organizations.

C. Finance and Asset Management Committee The purpose of the Finance and Asset Management Committee is to oversee the financial, capital, and other assets of the University. The committee is responsible for monitoring:

1) The University's financial health, including that of auxiliary activities such as medicine, athletics, and housing and food services;

2) Planning, development, maintenance, safety, and protection of all real property and physical assets of the University, including all campuses and stations and the facilities, buildings, and infrastructure thereon;

3) Investment of funds under the University's control;

4) Policies, practices, plans, and reports for compliance with legal and regulatory requirements;

5) Audit policies, practices, plans, and reports;

6) The fundraising efforts of the University, including gifts, grants, bequests, and trusts received by the University;

7) The University's intellectual properties and technology transfer activities;

8) The long term financing of capital projects and any other borrowings which may be required by the University;

9) Planning and maintenance of information systems;

10) Compensation and benefits of faculty and staff, including collective bargaining policy and agreements; and

11) Major acquisitions of equipment, goods and services, and the rental or leasing of facilities.

2. Special Committees Special committees may be established by the Board on the recommendation of the Governance Committee and given such powers and duties as the Board may determine. The chair, vice chair, and members of each special committee shall be recommended by the Governance Committee and approved by the Board. All matters considered by a special committee requiring action shall be referred to the Board for action except where such authority has been expressly delegated to a committee.

BRG, Bylaws, Article IV Page 3 G–1.1/205-16 5/11/16 3. Notice of Meetings of Standing and Special Committees Meetings of committees of the Board shall be held at such times and places as may be fixed by each committee or its chair. The Secretary of the Board shall give each member of the committee notice of committee meetings in sufficient time and manner to allow attendance at the meetings. Notice of meetings of any committee of the Board at which an action is taken on behalf of the Board pursuant to delegated authority shall be given, when required, in accordance with the applicable law of the state of Washington governing such meetings.

4. Communications to and Appearance Before Standing Committees Any person who wishes to bring a matter to the attention of a Standing Committee may do so by submitting such communication in writing to the Secretary of the Board of Regents for distribution in accordance with the direction of the committee chair.

The committee chair is authorized to determine whether any public comments will be permitted at a meeting of a Standing Committee and may place reasonable limits on the length of such comments.

5. Advisory Committees Advisory committees may be established by the Board on the recommendation of the Governance Committee to provide the University with expert advice on such subjects as the Board may specify. The chair, vice chair, and members of each advisory committee shall be recommended by the Governance Committee and approved by the Board. Every advisory committee shall include at least one member of the Board. An advisory committee shall have no delegated authority to act for the Board but shall simply offer their advice to the Board or to such standing or special committee as the Board determines.

BR, October 18, 1985; December 13, 1985; March 15, 1991; October 27, 1995; October 17, 1997; July 17, 1998; January 21, 2000; February 21, 2003; October 14, 2004; March 17, 2005; February 18, 2010; November 14, 2013 [Effective January 1, 2014]; May 14, 2015.

BRG, Bylaws, Article IV Page 4 G–1.1/205-16 5/11/16 University of Washington D R A F T Board of Regents Governance Standing Orders Chapter 4

Advisory Committees of the Board of Regents

Advisory committees may be established by the Board of Regents on the recommendation of the Governance Committee of the Board to provide the University with expert advice on such subjects as the Board may specify, in accordance with Article IV, Section 5 of the Board's Bylaws. All advisory committees established herewith are subject to the principles set forth in Section 2 below.

1. Advisory Committees

A. University of Washington Advisory Committee on Real Estate (ACRE) The Board of Regents of the University of Washington is vested by statute with responsibility for the management of the real properties of the University, including its Metropolitan Tract located in downtown Seattle. The Board has established an Advisory Committee on Real Estate (ACRE) and adopted the following principles.

1) Membership and Terms ACRE shall consist of no more than eight members to be appointed by the Board, plus the President of the University who shall serve ex officio. These appointments shall be based on recommendations submitted by the Governance Committee and approved by the Board after consultation with the Chair of ACRE and President of the University (or his or her designee).

One or two of the appointed members shall be selected from the Board. The remaining appointed members shall be experienced professionals of varying backgrounds.

There shall be a three-year term limitation for regent and non-regent members of ACRE, 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.

2) Functions ACRE shall advise the Board (and/or its appropriate committee) and the University President (and/or his or her designee) on matters relating to the management of the University’s commercial income producing properties and other significant real estate investments.

3) Administrative Support The Senior Vice President for Planning and Management shall ensure that ACRE has appropriate administrative support services, including secretarial assistance and record keeping.

G–1.2/205-16 ATTACHMENT 2 REVISED 5/12/16 B. Audit Advisory Committee The Board of Regents of the University of Washington is vested by statute with responsibility for the governance of the University. The Board hereby establishes an Audit Advisory Committee, with the following principles.

1) Membership and Terms The Audit 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 of varying 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.

2) Functions The Audit Advisory Committee shall advise the Board or its appropriate standing committee 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.

3) Administrative Support The Vice President for Finance and Facilities shall ensure that the Audit Advisory Committee has appropriate administrative support services, including secretarial assistance and record keeping.

C. Governmental Affairs Advisory Committee The Board of Regents of the University of Washington is vested by statute with responsibility for the governance of the University. The Board hereby establishes a Governmental Affairs Advisory Committee, with the following Statement of Principles.

1) Membership and Terms 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).

BRG, Standing Orders, Chapter 4 Page 2 G–1.2/205-16 REVISED 5/12/16 One or two of the appointed members shall be selected from the Board. The remaining appointed members shall be experienced professionals with relevant backgrounds.

2) Functions The Governmental Affairs Advisory Committee shall advise the Board or its appropriate standing committee 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.

3) Administrative Support The Vice President for External Affairs shall ensure that the Governmental Affairs Advisory Committee has appropriate administrative support services, including secretarial assistance and record keeping.

D. Diversity, Equity, and Inclusion Advisory Committee The Board of Regents of the University of Washington is vested by statute with responsibility for the governance of the University. The Board hereby establishes a Diversity, Equity, and Inclusion Advisory Committee, with the following principles.

1) Membership and Terms The Diversity, Equity, and Inclusion Advisory Committee shall consist of no more than ten 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).

Up to four of the appointed members shall be selected from the Board of Regents. The President of the University shall be a member ex officio. One member shall be a member of the University of Washington faculty, selected in consultation with the Faculty Senate leadership. One member shall be a UW student, selected in consultation with ASUW and GPSS leadership. One member shall be on or closely associated with the Foundation Board, selected in consultation with the executive committee of the Foundation Board. The remaining appointed members shall be community members with relevant backgrounds.

There shall be a three-year term limitation for regent, faculty, Foundation Board, and community 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. The student and Regent members shall serve a one-year terms, renewable by the Board.

BRG, Standing Orders, Chapter 4 Page 3 G–1.2/205-16 REVISED 5/12/16 2) Functions The Diversity, Equity, and Inclusion Advisory Committee shall advise the Board or its appropriate standing committee and the University President, or his or her designee, on matters relating to diversity, equity, and inclusion for faculty, students, staff, and in procurement and contracting.

3) Administrative Support The Office of the President shall ensure that the Diversity, Equity, and Inclusion Advisory Committee has appropriate administrative support services, including secretarial assistance and record keeping.

2. Principles that Apply to All Advisory Committees

A. Committee Members Members of all Board-created advisory committees serve at the pleasure of the Board and include appointments made by the Board for specified periods of time according to the organizational documents approved or authorized by the Board.

B. Meetings The advisory committees shall establish a regular meeting schedule. Other meetings may be called by the Chair of the advisory committee at any time. The Chair of the advisory committee may invite experts who are not members of the advisory committee to attend specific meetings to provide additional guidance, advice, and information.

C. Indemnification and Compensation The University shall indemnify members of the advisory committees to the fullest extent permitted by law, the Standing Orders, and Regent Policies of the Board. Advisory committee members will not be paid for service on the committee.

D. Conflict of Interest Regental members of the advisory committees are governed by conflict of interest rules applicable to regents. Non-regent members shall comply with the following conflict of interest provisions:

1) Beneficial Interest When a member of an advisory committee knows that the University is considering a transaction in which he or she has or may have a beneficial interest, the member shall (1) alert the Chair of the advisory committee of such beneficial interest, and (2) not participate in the formulation or rendering of advice with respect to the transaction.

2) Best Interests of the University Committee members shall not participate in the formulation or rendering of advice by the advisory committees where their participation could be influenced by financial or other considerations that would conflict or could reasonably appear to conflict with their obligations to only consider the best interests of the University. Where a

BRG, Standing Orders, Chapter 4 Page 4 G–1.2/205-16 REVISED 5/12/16 member is uncertain about the application of this rule to particular circumstances, he or she should consult the Chair of the advisory committee, who may seek the advice of the Attorney General's Office as appropriate.

3) Engagement in Transactions Committee members may engage in transactions with the University if the Chair of the advisory committee and the University President (who may consult with the Attorney General's Office as he or she deems appropriate) determine that the member has not participated in the formulation or rendering of advice by the advisory committee to the University regarding the transaction.

E. Chair and Vice Chair The Chair and Vice Chair of the advisory committees shall be recommended by the Governance Committee and approved by the Board. During the absence of the Chair or while he or she is unable to act, the Vice Chair shall perform the duties and exercise the powers of the Chair.

F. Communication The Chair of the advisory committee shall provide quarterly reports to the Board or its designated standing committee.

G. Amendments Amendments to these principles (both those unique to a committee and those held in common) shall be subject to the approval of the Board.

BR, January 21, 1977; October 1989; June 9, 1995; September 17, 1999; January 21, 2000; July 12, 2012; November 14, 2013 [Effective January 1, 2014]; May 14, 2015; September 10, 2015; RC, October 1, 2015.

BRG, Standing Orders, Chapter 4 Page 5 G–1.2/205-16 REVISED 5/12/16 G–2 BOARD OF REGENTS GOVERNANCE COMMITTEE

Approve Regent Appointments to the Board of Regents Diversity, Equity, and Inclusion Advisory Committee

RECOMMENDED ACTION

It is the recommendation of the Governance Committee that the Board of Regents approve Regent member appointments to the Diversity, Equity, and Inclusion Advisory Committee of the Board of Regents, effective on May 12, 2016, subject to the Governance Committee and Board of Regents approval of item G–1 to amend Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents, to create the Diversity, Equity, and Inclusion Advisory Committee of the Board of Regents.

Appointment Term Joanne Harrell, Committee Chair 5/12/2016 to 5/11/20199/30/2016 Rogelio Riojas, Committee Vice Chair 5/12/2016 to 5/11/2019 9/30/2016 Jeremy Jaech 5/12/2016 to 9/30/2018*2016 Constance Rice 5/12/2016 to 9/30/20165/11/2019

*Members serve three-year terms. Regent Jaech’s appointment to the Board of Regents is through September 30, 2018.

Appointments are for partial terms to coincide with Board officer elections and appointments in September.

BACKGROUND

It is expected the non-Regent members of the Diversity, Equity, and Inclusion Committee will be considered for approval by the Governance Committee at its next meeting, scheduled on July 13, 2016.

Excerpt from proposed Board of Regents Governance, Standing Orders, Chapter 4, Advisory Committees of the Board of Regents:

G–2/205-16 REVISED 5/11/16 BOARD OF REGENTS GOVERNANCE COMMITTEE

Approve Regent Appointments to the Board of Regents Diversity, Equity, and Inclusion Advisory Committee (continued p. 2)

There shall be a three-year term limitation for regent, faculty, and community 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. The student member shall serve a one-year term, renewable by the Board.

2) Functions The Diversity, Equity, and Inclusion Advisory Committee shall advise the Board or its appropriate standing committee and the University President, or his or her designee, on matters relating to diversity, equity, and inclusion for faculty, students, staff, and in procurement and contracting.

G–2/205-16 REVISED 5/11/16 G–3 BOARD OF REGENTS GOVERNANCE COMMITTEE

Board Assessment Survey – Review Draft and Distribution List

In 2014, the Board conducted an Assessment Survey. This was administered online through UW’s Catalyst tool. The survey consisted of 38 questions about the performance and operations of the Board and offered opportunities to include open-ended comments. Participants were offered the option to reply to questions with strongly agree, agree, disagree, strongly disagree, and don’t know.

Regents, President, Provost, Senior Vice President for Finance & Facilities, and Vice Provost for Planning & Budgeting were invited to complete the survey. Nine Regents and three administrators responded. Regent Smith presented a summary of the results to the Governance Committee and Board in October 2014.

Survey questions were organized under the following subject areas:

A. Board Structure and Composition B. Board Meeting Preparation C. Board Meeting Operations D. Critical Responsibilities E. Committee Performance F. Other Comments or Concerns

The survey was anonymous but respondents were asked to indicate if they were a Regent or an Administrator.

At its last meeting the Governance Committee agreed to: • Conduct the survey annually in late May/early June with a report on the results in July; • Use the same survey questions to allow comparison from year to year; • Expand the list of administrators participating in the survey. • Include respondents’ names in the survey. Although survey results will be anonymous, request names so the Board Secretary can track and follow up on replies.

Attachments 1) 2016 Board of Regents Assessment Survey Draft 2) Draft Survey Distribution List

G–3/205-16 5/11/16 https://catalyst.uw.edu/webq/begin_preview/joangold/287497

This is only a preview of the survey. Responses will not be saved. Close 2016 Board of Regents Assessment Survey Page 1 of 1

A. Board Structure and Composition

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Is the size of the Board optimal? Is the standing and advisory committee structure appropriate for dealing with the Board’s responsibilities? Does the Board have the appropriate set of skills to perform its functions? In what areas could the Board improve its skills? Are you satisfied with the level of diversity represented on the Board?

Comments on Board Structure and Composition

B. Board Meeting Preparation

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Do Board members contribute sufficiently

G–3.1/205-16 ATTACHMENT 1 5/11/16 Catalyst WebQ - Preview Page 1 of 7 https://catalyst.uw.edu/webq/begin_preview/joangold/287497

to the identification and selection of agenda items? Do agenda items address the most important strategic, operational, and constituent issues? Has the Board satisfactorily communicated its information requirements? Is the information you receive prior to Board meetings clear, concise and delivered in a timely manner? Is the information sufficient for you to make the decisions that are required of you? Do the Board members receive timely information on emerging issues between meetings?

Comments on Board Meeting Preparation

C. Board Meeting Operations

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Does the Board hold the right number of Board meetings? Are Board members adequately prepared for meetings and do they contribute effectively to the work of the Board?

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Is the Board meeting time appropriately allocated between Board discussion and staff presentations? Is the time allotted to the Board’s most important responsibilities appropriate? Strongly Strongly Agree Agree Disagree Disagree Don't Know Are the right staff people in attendance at Board meetings to adequately address Regent questions? Are staff members in attendance using their time wisely by attending meetings? Are Board meetings conducted in a manner that ensures open communications, meaningful participation, and timely resolution of issues? Are executive sessions candid and constructive, and conducted in a manner that encourages civil disagreement and questioning? Strongly Strongly Agree Agree Disagree Disagree Don't Know Are deliberations robust with all relevant perspectives and information considered before a decision is made? Are you satisfied the relationship among Regents is constructive? Are you satisfied with the quality of the relationships between the Board and our management? Is the substance and volume of work expected of Regents appropriate?

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Comments on Board Meeting Operations

D. Critical Responsibilities

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Does the Board effectively discharge its statutory responsibilities? Does the Board have a clear set of goals for the year and beyond? Are the Board’s goals, expectations, and concerns openly communicated to the President and senior executives? Does the Board know and understand the institution’s values, mission, goals, and strategic business plans? Strongly Strongly Agree Agree Disagree Disagree Don't Know Does the Board review strategic, operational, and capital plans and regularly monitor progress and evaluate performance throughout the year? Does the Board have sufficient metrics and other information to evaluate progress and performance? Does the Board understand the major risks to the institution and exercise effective

G–3.1/205-16 5/11/16 Catalyst WebQ - Preview Page 4 of 7 https://catalyst.uw.edu/webq/begin_preview/joangold/287497

oversight of management’s plans for prevention and remediation at the Board or committee level? Is the Board adequately communicating on a regular basis with the President and other senior administrators? Strongly Strongly Agree Agree Disagree Disagree Don't Know Is the Board effectively evaluating the President in a constructive manner? Does the Board engage with important constituents sufficiently to understand their concerns? Is the orientation program for new Regents effective in communicating the Board’s responsibilities and facilitating effective participation?

Comments on Critical Responsiblities

E. Committee Performance

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Are you satisfied with the leadership and composition of the standing and advisory committees? Are the committees functioning properly

G–3.1/205-16 5/11/16 Catalyst WebQ - Preview Page 5 of 7 https://catalyst.uw.edu/webq/begin_preview/joangold/287497

and are you satisfied with the quality of reports given by Board committees? Are the responsibilities of each committee clearly understood? Is the division of responsibilities between Board, standing committees, and special committees appropriate?

Comments on Committee Performance

F. Other Comments or Concerns

Required. Strongly Strongly Agree Agree Disagree Disagree Don't Know Do Regents have a clear understanding of events they are expected to attend?

Please Provide Other Comments or Concerns

Are you a Regent or an Administrator?

Required. Regent

Administrator

G–3.1/205-16 5/11/16 Catalyst WebQ - Preview Page 6 of 7 https://catalyst.uw.edu/webq/begin_preview/joangold/287497

Name:

Required.

Thank you for completing this survey.

Submit responses

Questions or Comments? Contact Joan Goldblatt, Secretary of the Board of Regents at [email protected]

G–3.1/205-16 5/11/16 Catalyst WebQ - Preview Page 7 of 7

2016 Board Assessment Survey Suggested Participants

Below is a list of proposed 2016 Board Assessment Survey participants, in addition to ten current Regents.

Title Name Relationship to Board 1. President Ana Mari Cauce

2. Provost Jerry Baldasty

3. Senior Vice Provost for Paul Jenny Planning and Management 4. Executive Director of Richard Cordova Audit Advisory Internal Audit Committee 5. Vice President for External Randy Hodgins Governmental Affairs Affairs Advisory Committee 6. Chief Real Estate Officer Todd Timberlake ACRE

7. Chief Investment Officer Keith Ferguson UWINCO

8. Associate Vice President, Chris Malins Treasury Office 9. UW Division Chief, Karin Nyrop Attorney General’s Office 10. Director of Strategic Margaret Shepherd Initiatives

When the survey was conducted in 2014, the President, Provost, Senior Vice President for Finance & Facilities (V’Ella Warren), and Vice Provost for Planning & Budgeting (Paul Jenny) were invited to participate, in addition to the Regents. Nine Regents and three administrators responded.

ATTACHMENT 2 G–3.2/205-16 5/12/16 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–1/205-16 5/12/16

ADMINISTRATIVE APPOINTMENTS

College of Arts and Sciences Cole, Catherine Melinda Divisional Dean, Arts and Sciences, effective 7/1/2016 Degrees: • PhD, 1996, Northwestern University • AB, 1986, Occidental College

Department of Anthropology Kramer, Patricia Ann Chair, Anthropology, effective 7/1/2016 Continuing Appointment: • Associate Professor, Anthropology Degrees: • PhD, 1998, University of Washington • BS, 1984, University of Texas

School of Law Knudsen, Sanne H. Associate Dean, Law, effective 6/16/2016 Continuing Appointment: • Associate Professor, Law Degrees: • JD, 2002, University of Michigan (Ann Arbor) • MS, 2002, University of Michigan (Ann Arbor) • BS, 1998, Northwestern University

Schumacher, Scott A. Associate Dean, Law, effective 3/1/2016 Continuing Appointment: • Professor without Tenure, Law Degrees: • Master Of Laws, 1991, New York University • JD, 1990, Seattle University • BA, 1986, Loyola Marymount University

A–1.1/205-16 ATTACHMENT Page 1 of 9 5/12/16 School of Medicine Department of Pathology Alpers, Charles E. Acting Chair, Pathology, effective 3/15/2016 Continuing Appointments: • Professor, Pathology • Adjunct Professor, Medicine Degrees: • MD, 1978, University of Rochester • BA, 1973, Yale University

ENDOWED APPOINTMENTS

College of the Environment School of Aquatic and Fishery Sciences Branch, Trevor Richard C & Lois M Worthington Endowed Professorship In Fisheries Management, effective 7/1/2016 Continuing Appointment: • Associate Professor, Aquatic and Fishery Sciences Degrees: • PhD, 2004, University of Washington • MSC, 1998, University of Capetown (South Africa) • BSC, 1994, University of Capetown (South Africa)

School of Law Knudsen, Sanne H. Stimson Bullitt Endowed Professorship In Environmental Law, effective 9/16/2015 Continuing Appointment: • Associate Professor, Law Degrees: • JD, 2002, University of Michigan (Ann Arbor) • MS, 2002, University of Michigan (Ann Arbor) • BS, 1998, Northwestern University

A–1.1/205-16 Page 2 of 9 5/12/16 Schnapper, Eric Betts, Patterson, & Mines P.S. Endowed Professoship In Trial Advocacy, effective 9/16/2015 Continuing Appointment: • Professor, Law Degrees: • Bachelor Of Laws, 1968, Yale University • Bachelor of Philosophy, 1965, Oxford University (UK) • MA, 1963, Johns Hopkins University • BA, 1962, Johns Hopkins University

School of Medicine Department of Pathology Alpers, Charles E. Fausto-De Lancey Endowed Chair in Pathology, effective 3/15/2016 Continuing Appointments: • Professor, Pathology • Acting Chair, Pathology • Adjunct Professor, Medicine Degrees: • MD, 1978, University of Rochester • BA, 1973, Yale University

School of Pharmacy Department of Pharmacy Gray, Shelly Lynn Shirley and Herb Bridge Endowed Professorship for Women in Pharmacy, effective 4/1/2016 Continuing Appointment: • Professor, Pharmacy Degrees: • MS, 2001, University of Washington • PharmD, 1989, University of Michigan

Odegard, Peggy Lynn Soule Lynn & Geraldine Brady Endowed Professorship, effective 7/1/2016 Continuing Appointments: • Professor, Pharmacy • Associate Dean, Pharmacy Degrees: • PharmD, 1990, University of Washington • BS, 1985, University of Washington

A–1.1/205-16 Page 3 of 9 5/12/16 School of Public Health Department of Health Services Stillman, Dennis Austin Ross Endowed Chair In Health Administration, effective 7/1/2015 Continuing Appointment: • Senior Lecturer, Full-time, Health Services Degrees: • MHA, 1979, University of Washington • BA, 1971, University of Puget Sound

NEW APPOINTMENTS

College of Arts and Sciences Department of Applied Mathematics Bozic, Ivana Assistant Professor, Applied Mathematics, effective 3/16/2017 Degrees: • PhD, 2012, Harvard University • MA, 2007, University of Belgrade (Serbia) • BSC, 2005, University of Belgrade (Serbia)

Leung, Siu-Tang Assistant Professor, Applied Mathematics, effective 9/16/2016 Degrees: • PhD, 2008, Princeton University • BS, 2003, Cornell University

Department of Germanics Oehme, Annegrat Acting Assistant Professor, pending Ph.D., Germanics, effective 9/16/2016 Degrees: • PhD - Expected, 2016, Duke University • MA, 2011, Freie University of Berlin (Germany) • BA, 2008, Freie University of Berlin (Germany)

A–1.1/205-16 Page 4 of 9 5/12/16 Department of Near Eastern Languages and Civilization Benson, Susan Elizabeth Lecturer, Full-time, Near Eastern Languages and Civilization, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, Near Eastern Languages and Civilization Degrees: • MA, 1983, University of Utah • BA, 1979, University of Utah • Martin, Gary Dean Senior Lecturer, Full-time, Near Eastern Languages and Civilization, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, Near Eastern Languages and Civilization Degrees: • PhD, 2007, University of Washington • MA, 2003, University of Washington • BA, 2001, University of Washington • BA, 1975, Whitman College

School of Dance Psarra, Afroditi Assistant Professor, Dance, effective 9/16/2016 Degrees: • PhD, 2014, University of Madrid (Spain) • MA, 2008, University of Madrid (Spain) • BA, 2005, University of Ioannina

School of Drama Cole, Catherine Melinda Professor, Drama, effective 7/1/2016 Degrees: • PhD, 1996, Northwestern University • AB, 1986, Occidental College

Michael G. Foster School of Business Department of Accounting Elliott, Wynter Brooke Visiting Professor, Accounting, effective 7/25/2016 Degrees: • PhD, 2003, University of Washington • BS, 1999, Indiana University • MBA, 1999, Indiana University

A–1.1/205-16 Page 5 of 9 5/12/16

Department of Management and Organization Huwe, Ruth Ann Lecturer, Full-time, Management and Organization, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, Management and Organization Degrees: • PhD, 1995, University of Washington • MA, 1990, San Diego State University • BA, 1986, San Diego State University

McPherson, Richard Scott Lecturer, Full-time, Management and Organization, effective 9/16/2016 Prior UW Appointment: • Lecturer Part-Time, Management and Organization Degrees: • MBA, 1997, University of Denver • BBA, 1979, Arizona State University

School of Dentistry Department of Oral Health Sciences Heaton, Lisa Jeanne Assistant Professor without Tenure, Oral Health Sciences, effective 6/1/2016 Prior UW Appointment: • Clinical Assistant Professor, Salaried, Oral Health Sciences Degrees: • PhD, 2004, University of Kentucky • MS, 2002, University of Kentucky • BA, 1996, University of Massachusetts

School of Law Gardner, Trevor George II Assistant Professor, Law, effective 6/16/2016 Degrees: • PhD, 2014, University of California (Berkeley) • MA, 2010, University of California (Berkeley) • JD, 2003, Harvard University • BA, 1999, University of Michigan (Ann Arbor)

A–1.1/205-16 Page 6 of 9 5/12/16

School of Medicine Department of Comparative Medicine Snyder, Jessica M. Assistant Professor without Tenure, Comparative Medicine, effective 5/1/2016 Prior UW Appointment: • Acting Assistant Professor, temporary, Comparative Medicine Degrees: • MS, 2014, University of Washington • DVM, 2001, Virginia-Maryland Regional College of Veterinary Medicine • AB, 1997, Harvard University

Department of Family Medicine Robertson, Dale Lecturer, Full-time, Family Medicine, effective 4/11/2016 Degrees: • Master of Clinical Health Services, 2014, University of Washington • BCHS, 2007, University of Washington

Zhang, Ying Assistant Professor without Tenure, Family Medicine, effective 7/15/2016 Prior UW Appointment: • Acting Instructor, Family Medicine Degrees: • MD, 2011, East Carolina University • BS, 2007, Davidson College

Department of Medicine Tsui, Judith Ihseen Associate Professor without Tenure, Medicine, effective 4/15/2016 Prior UW Appointment: • Acting Assistant Professor, temporary, Medicine Degrees: • MPH, 2004, Emory University • MD, 1997, New York University • BA, 1991, Princeton University

Department of Pediatrics Shah, Seema Kirti Associate Professor without Tenure, Pediatrics, effective 5/15/2016 Degrees: • JD, 2005, Stanford University • AB, 2000, Stanford University

A–1.1/205-16 Page 7 of 9 5/12/16

Department of Psychiatry and Behavioral Sciences Wang, Lucy Yi-Hui Assistant Professor without Tenure, Psychiatry and Behavioral Sciences, effective 4/1/2016 Prior UW Appointment: • Acting Assistant Professor, temporary, Psychiatry and Behavioral Sciences Degrees: • MD, 2002, Pennsylvania State University • BS, 1998, Massachusetts Institute of Technology

Department of Radiology O'Malley, Ryan Blair Assistant Professor without Tenure, Radiology, effective 7/1/2016 Prior UW Appointment: • Acting Assistant Professor, temporary, Radiology Degrees: • MD, 2007, Wake Forest University • BS, 2003, University of Notre Dame

University of Washington, Tacoma Nursing Progam Yuwen, Weichao Acting Assistant Professor, pending Ph.D., Nursing, Tacoma, effective 6/16/2016 Degrees: • PhD - Expected, 2016, University of Washington • BS, 2010, Arizona State University

School of Interdisciplinary Arts and Sciences Beaudoin, Justin Blair Assistant Professor, School of Interdisciplinary Arts and Sciences, Tacoma, effective 7/16/2016 Degrees: • PhD, 2015, University of California (Davis) • MSC, 2006, University of British Columbia (Canada) • BComm, 2004, University of British Columbia (Canada)

Howson, Cynthia Dawn Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • PhD, 2011, University of London (UK) • MA, 2005, U Bordeaux 3, France • BA, 1999, Western Washington University

A–1.1/205-16 Page 8 of 9 5/12/16

Machine, Augustus Jonny Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • MA, 2004, University of Iowa • BA, 2002, University of Iowa

Nichols, Randall James Assistant Professor, School of Interdisciplinary Arts and Sciences, Tacoma, effective 8/16/2016 Degrees: • PhD, 2005, University of Oregon • MS, 2000, University of Oregon • BS, 1995, Texas A&M University

Tou, Erik Robert Assistant Professor, School of Interdisciplinary Arts and Sciences, Tacoma, effective 9/16/2016 Prior UW Appointment: • Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • PhD, 2007, Dartmouth College • MA, 2004, Dartmouth College • BA, 2002, Gustavus Adolphus College (Minnesota)

Velasquez, Tanya Grace Lecturer, Full-time, School of Interdisciplinary Arts and Sciences, Tacoma, effective 9/16/2016 Prior UW Appointment: • Lecturer Full-Time, School of Interdisciplinary Arts and Sciences, Tacoma Degrees: • Master Of Arts In Interdisciplinary Studies, 2011, University of Washington • BA, 1998, University of Washington

A–1.1/205-16 Page 9 of 9 5/12/16 A–2 STANDING COMMITTEES

Academic and Student Affairs Committee

Community College Engagement Initiative (CCEI) Update

INFORMATION

This item is for information only.

BACKGROUND

For decades, the UW has provided academic transfer opportunities for thousands of Washington residents who have attended Washington Community and Technical Colleges. The transfer relationship and its associated benefit to students, families and communities across the state of Washington, many of whom are first-generation, underrepresented and low-income, is deeply embedded in the public mission of the UW and our commitment to equity, access and inclusion. As a part of our ongoing work to define, enhance, and improve the Husky Experience, the transfer student experience and the UW’s relationship and engagement with the community college system warrants specific, proactive attention.

Sponsored by the President and the Provost, the Community College Engagement Initiative (CCEI) is a year-long self-study designed to review and assess the Washington community college transfer experience at the UW-Seattle. Focusing on the Seattle and Spokane Colleges, its purpose is to identify respective strengths, weaknesses, challenges and opportunities with the UW and Community and Technical College relationship and to make recommendations on future directions.

In October 2015, Associate Vice President for Alumni and Constituent Relations and UW Alumni Association Executive Director Paul Rucker was assigned additional duties and responsibilities as Special Assistant to the President and Provost for Community College Engagement to provide leadership on this initiative. His background in community college administration and current integrated responsibilities across the UW make him ideally suited to lead this effort. Rucker is joined in the CCEI leadership role by Gary Oertli, President of South Seattle College President and Vice Chancellor for University Partnerships for the Seattle College District.

A–2/205-16 5/12/16 STANDING COMMITTEES

Academic and Student Affairs Committee

Community College Engagement Initiative (CCEI) Update (continued p. 2)

The CCEI leadership team will return to the UW Board of Regents with final recommendations at the July meeting.

Attachments 1. Community College Engagement Initiative 2. Community College Engagement Initiative Seattle and Spokane Colleges Summary Project Charter 3. Community College Engagement Initiative (CCEI) timeline 4. Autumn Quarter 2015 New Undergraduate Student Profile 5. Special Assistant to the President and Provost for Community College Engagement Appointment Letter

A–2/205-16 5/12/16 Community College Engagement Initiative

October 2015 to July 2016

A–2.1/205-16 ATTACHMENT 1 Page 1 of 14 5/12/16 Project Purpose

Sponsored by the President and Provost, the Community College Engagement Initiative (CCEI) is a year-long self-study designed to review and assess the community college transfer student experience at the UW-Seattle. Focusing on the Seattle and Spokane Colleges, the CCEI purpose is to identify respective strengths, weaknesses, challenges and opportunities with the UW and Community & Technical College relationship and to make recommendations on future directions.

A–2.1/205-16 Page 2 of 14 5/12/16 Project Priorities and Outcomes

> Transfer Landscape Assessment – Gain a clear understanding of the effectiveness and efficiency of the current WA CC transfer environment > Academic Pathways – Gain a clear understanding of efficiency and effectiveness of existing academic planning and advising pathways between WA CC’s and UW-Seattle > Philanthropic Innovation – Assess opportunity to develop and implement a philanthropic pathway between high schools, community colleges and the UW-Seattle (Husky Promise).

A–2.1/205-16 Page 3 of 14 5/12/16 Emerging Areas of Focus

> Timing of transfer admissions notification > Specific recruitment and retention strategies for underrepresented minority (URM), first- generation, low income transfer students > Coordination of central and college/program advising and access to competitive majors > Increased visibility of transfer students in UW marketing and communications > Prospective transfer student scholarship pathways to UW

A–2.1/205-16 Page 4 of 14 5/12/16 WACC Students Applied, Admitted, Enrolled UW-Seattle, 1999 to 2015 Source: UW Office of Planning and Budgeting (OPB) – Running Start Data Excluded

6000

5403 Applied Admitted Enrolled 5500

4882 5000 4736

4390 4500 4270 4299 4303 4194 4167 4064 4126 4118 4000 3729 3650 3464 3500 3323

2933 3000 2751 2702 2663 2697 2584 2637 2484 2499 2512 2499 2503 2508 2464 2397 2402 2500 2314 2244 2166 2136 2091 2155 2038 2051 1986 2020 1983 1981 1951 1904 1957 2000 1879

1500

1000 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

A–2.1/205-16 Page 5 of 14 5/12/16 WACC Students Applied, Admitted, Enrolled UW-Tacoma, 1999 to 2015 Source: UW Office of Planning and Budgeting (OPB) – Running Start Data Excluded

2000 1921 Applied Admitted Enrolled 1820 1762 1800 1677 1589 1556 1600 1511 1525 1417 1408 1363 1400 1303 1285

1200 1079 1057 1055 1057 1025 1048 1032 1006 1007 988 953 969 1000 917 933 835 828 847 839 800 820 767 775 800 726 668 682 641 665 658 667 566 568 581 600 552 460 382 400

200 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

A–2.1/205-16 Page 6 of 14 5/12/16 WACC Students Applied, Admitted, Enrolled UW-Bothell, 1999 to 2015 Source: UW Office of Planning and Budgeting (OPB) – Running Start Data Excluded

2400 2342 Applied Admitted Enrolled 2200 2134 2033 2008 2000

1800 1727

1600 1475 1414 1358 1400 1233 1166 1178 1200

992 965 933 925 942 937 1000 882 905 823 826 824 817 823 803 747 767 800 674 698 664 657 640 612 626 627 596 575 559 600 526 507 526 516 507 469 475 491 417 416 400

200 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999

A–2.1/205-16 Page 7 of 14 5/12/16 Data Profile of 2014-15 WA Community College Transfer Students at the UW-Seattle Source: UW Office of Planning and Budgeting (OPB) – Running Start Data Excluded

Highlights

> 55% of CC applicants accepted | 55% High School > 78% of CC admitted enroll | 37% High School > Approx. 65% CC transfers enter with 90+ credits; approx. 28% CC transfers enter with 60-89 credits

> First Generation: 52% Transfers | 32% High School > URM: 19% Transfers | 15% High School > Pell eligible: 41% Transfers | 26% High School

A–2.1/205-16 Page 8 of 14 5/12/16 Community College Transfer Student Performance at the UW-Seattle

> Over the past 10 years, 85% of transfer students graduated within 6 years. > Mean GPA at 2014-15 graduation for transfer students is 3.34 compared to high school entrants at 3.32. > Top 10 majors for WACC Transfer Students 2000- 2015: Communication, Biology, Psychology, Political Science, Economics, Art, English, Chemistry, Sociology, Electrical Engineering > Highest proportion of transfer students who drop out do so after one quarter; high school entrants drop out after three quarters

A–2.1/205-16 Page 9 of 14 5/12/16 CCEI Focus Group Feedback

> Seattle, Spokane Colleges & SBCTC Leadership > Seattle & Spokane Colleges Advisers, Student Services Staff, Faculty, Deans > UW Undergraduate and Academic Department Advisers, Financial Aid Counselors > UW Faculty > UW Transfer Students

A–2.1/205-16 Page 10 of 14 5/12/16 UW Faculty Feedback

> Some transfer students struggle in their first quarter or two due to larger class sizes, more competition among peers, and shifting self- perceptions. > Transfer students who enroll in TRIG or TRAC courses build community, which translates into academic success. > Strong advising from the beginning is key for student readiness and entry to major. > Faculty are inspired by transfer students because they excel even with extra challenges.

A–2.1/205-16 Page 11 of 14 5/12/16 Adviser & Student Services Staff Feedback

> Clear, accurate information – regarding deadlines, course equivalencies, prerequisites - is key to the successful transfer of community college students. > The late timing of admissions notification disadvantages students in their academic planning, financial aid, and initial course registration. > More access to admissions staff – on the CTC campus and/or through a helpline – for both transfer students and advisers would be beneficial.

A–2.1/205-16 Page 12 of 14 5/12/16 Transfer Alumni Feedback (2014 Graduates)

> Alumni indicated that admission into a major was the most important factor for their successful transition into the UW. > 94% indicated they were able to transfer the credits they expected would transfer to UW. > 85% said they were able to register for courses for their major in their first quarter at the UW. > Transfer alumni are just as likely to agree with the statement “If I had to make my college choice again, I would choose to attend UW” compared to high school entrant alumni.

A–2.1/205-16 Page 13 of 14 5/12/16 CCEI Leadership/Contacts

Paul Rucker Special Assistant to the President and Provost for CC Engagement 206.685.9223 [email protected]

Gary Oertli President, South Seattle College Vice‐Chancellor for University Partnerships 206.934.6870 [email protected]

Colleen Ferguson Project Manager, CCEI 206.221.1958 [email protected]

A–2.1/205-16 Page 14 of 14 5/12/16

UNIVERSITY OF WASHINGTON

COMMUNITY COLLEGE ENGAGEMENT INITIATIVE SEATTLE and SPOKANE COLLEGES SUMMARY PROJECT CHARTER

PROJECT NAME: Community College Engagement Initiative (CCEI)

UW PROJECT SPONSOR: Ana Mari Cauce, UW President; Gerald Baldasty, UW Interim Provost and Executive Vice President

UW PROJECT LEAD/MANAGEMENT: Paul Rucker, Associate Vice President for Alumni and Constituent Relations and Special Assistant to the President and Provost for Community College Engagement; Colleen Ferguson, CCEI Project Manager.

UW PROJECT STAKEHOLDERS: Admissions, Financial Aid, Student Life, Undergraduate Affairs, Office of Minority Affairs and Diversity, External Affairs, Planning and Management, University Advancement, University Marketing and Communications and UW campuses, schools and colleges as appropriate

PROJECT PURPOSE: The purpose of this initiative is to develop a foundation to cooperatively investigate the substantive expansion of the UW and Seattle and Spokane College relationships AND provide recommendations to UW and Community College leadership for future program direction, design and implementation.

PROJECT DESCRIPTION: Serving as Special Assistant to the President and Provost for Community College Engagement, Paul Rucker will lead a cross-campus initiative with designated UW and CTC leadership to review and assess the UW-CTC transfer student landscape, identify respective strengths, weaknesses, challenges and opportunities and make recommendations on future directions. The project will initially focus on Seattle and Spokane Colleges.

INITIAL AREAS OF FOCUS 1. Transfer Landscape Assessment: Review effectiveness and efficiency of current transfer environment, review available data on student access, progression and retention; review pre-admissions communications, advising and coordination, application and admissions processes, timing of admissions notification, first-year program/orientation, academic advising, performance, retention, alumni engagement and philanthropic participation.

2. Structured Academic Pathways: Assess existing academic planning and advising pathways between the Seattle and Spokane Colleges and UW and explore feasibility of new and/or expanded structured academic pathways, including cohort-based advising/navigation, admissions, orientation and retention-related programs and services.

301 Gerberding Hall Box 351237 Seattle, Washington 98195-1237 206-543-7632 FAX: 206-685-3218 A–2.2/205-16 ATTACHMENT 2 Page 1 of 2 5/12/16 3. Philanthropic Innovation (Seattle): Assess opportunity to develop and implement innovative cohort-based philanthropic partnerships between Seattle Public Schools, the Seattle Colleges and the UW. Potential additional partners could include City of Seattle, The Bill and Melinda Gates Foundation, The Road Map Project, Alliance for Education, etc.

INITIAL PROJECT TIMELINE:

Nine Months. October 2015 – June 2016. If successful, the CCEI may serve as a framework to assess and explore expanded statewide UW and community college collaboration.

PROJECT GOALS / SUCCESS CRITERIA

• Develop a shared executive-level communications relationship/architecture which supports innovative collaboration between the UW and the Seattle and Spokane Colleges built on shared commitments to student access, success, community development and economic and workforce prosperity and impact • Increase shared evidence-based understanding of the presence, experience, performance and impact of transfer students at UW • Begin substantive efforts by November 15; assemble joint committee member structure, build rapport and shared commitment • Conclude ad-hoc working group efforts by April 1, 2016 • Provide UW and CTC leadership with recommendations for permanent partnership direction by May 1, 2016

BUDGET & RESOURCES

The Provost has committed funding to support this preliminary assessment phase. Resources to be used to fund a part-time hourly project manager and miscellaneous, non-salary operations and administrative expenses which may be incurred.

If this pilot initiative proves successful, it may provide a framework for expanded collaboration between the UW and Washington’s community and technical colleges outside of Seattle and across Washington State.

A–2.2/205-16 Page 2 of 2 5/12/16 COMMUNITY COLLEGE ENGAGEMENT INITIATIVE (CCEI)

Sponsored by the President and Provost, the Community College Engagement Initiative (CCEI) is a year-long self-study designed to review and assess the community college transfer student experience at UW. Focusing on the Seattle and Spokane College Districts, its purpose is to identify respective strengths, weaknesses, challenges and opportunities within the UW and Community and Technical College relationship and make recommendations on future directions.

OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY 2015 2016

CCEI Leadership/Contacts

Paul Rucker UW and CC Leadership and Internal Stakeholder Communications and Coordination (Regents, Trustees, Cabinet, Faculty, Staﬀ, FCAS and EMAC) Special Assistant to the President and Provost for CCEI 206.685.9223 [email protected] Create UW-CC CC Staﬀ and Faculty Focus Groups Work Teams Gary Oertli President, South Seattle College 206.934.6870 State Board for Community and Technical Colleges (SBCTC) Communications and Coordination [email protected] Colleen Ferguson Project Manager, CCEI Internal UW Transfer Student Data Analysis Transfer student focus groups & surveys 206.221.1958 [email protected]

UW Academic Advisors and Financial Aid Counselors Focus Groups

Develop and compose ﬁnal project recommendations

OCT. NOV. FEB. FEB. APR. MAY MAY JUNE JULY JULY 28 12 10 25 29 12 18 9 18 21

CCEI Launch meeting CCEI presentation to Feb. 10: UW Regents/Seattle Colleges Trustees Reception Transfer Advisors May 12: CCEI Update CCEI presentation July 18: CCEI Final Report to with CC Partners Seattle Colleges Trustees Feb. 25: CTC Presidents host President Cauce in Olympia Conference to UW Regents to Seattle Colleges UW Regents Trustees May 18: July 21: President Cauce hosts Presentation to CTC Presidents at Hill-Crest A–2.3/205-16 Board of Deans APRIL 2016 ATTACHMENT 3 5/12/16 AUTUMN QUARTER 2015 NEW UNDERGRADUATE STUDENT PROFILE

FRESHMEN

FRESHMAN APPLICATIONS FRESHMAN TEST SCORES 2011–2015 36,840 (Middle 50%) 6,792 2015 TOTAL 31,611 SAT Composite 30,200 (CR + M + WR) 1670–1980 FRESHMAN CLASS 26,138 16,638 Critical Reading 540–660 24,540 11,887 13,520 Math 570–690 4 YEARS 9,595 Writing 530–650 9,160 AVERAGE TIME TO GRADUATE 8,927 ACT Composite 7,397 7,632 25–30 (academic year 4,933 6,602 High School GPA 3.67–3.94 2013–14) 10,447 9,941 10,916 10,459 11,275 27% OF ALL FRESHMEN WILL BE THE FIRST 2011 2012 2013 2014 2015 IN THEIR FAMILIES TO GRADUATE FROM COLLEGE

WA RESIDENT INTERNATIONAL U.S. NON-RES FRESHMAN ENROLLMENT 2011–2015 FRESHMAN 6,792 STUDENT BODY 6,255 6,361 2015 FRESHMAN 6,049 5,793 1,393 ADMIT RATES 1,070 1,176 African American 216 982 WA RESIDENT: 66% 961 American Indian/ 1,116 974 910 INTERNATIONAL: 39% Alaska Native 63 1,023 1,036 U.S. NON-RESIDENT: 53% Asian American 2020 Caucasian 2756 Hispanic/Lantino 502 3,796 4,044 4,211 4,275 4,283 Native Hawaiian/ 94% Pacific Islander 76 OF FRESHMEN International 1116 RETURN FOR THEIR Not Indicated 43 SOPHOMORE YEAR 2011 2012 2013 2014 2015 (academic year 2013–14) 53.5% WOMEN 46.5% MEN WA RESIDENT INTERNATIONAL U.S. NON-RES

A–2.4/205-16 5/12/16 ATTACHMENT 4 The UW enrolled freshmen from TRANSFER STUDENTS 45 STATES, including Washington TRANSFER APPLICATIONS and the District of Columbia, and 2011–2015 1,443 50 COUNTRIES including the U.S. 2015 TOTAL 5,811 5,742 TRANSFER CLASS THE MOST FRESHMEN 5,324 COME TO UW FROM: 2015 TRANSFER 2,428 2,530 2,201 ADMIT RATES STATES WA 2-YEAR COMMUNITY 1. Washington 6. Colorado COLLEGES: 51% 2. California 7. Nevada ALL OTHER 2-YEAR & 3. Oregon 8. Pennsylvania 4-YEAR SCHOOLS: 17% 3,317 3,281 4. Hawaii 9. Idaho 3,123 5. Texas 10. Arizona 86% OF ADMITTED COUNTRIES TRANSFER STUDENTS 1. United States 6. Malaysia 2013 2014 2015 WERE FROM WASHINGTON 2. China 7. Thailand ALL OTHER 2-YEAR & 4-YEAR SCHOOLS COMMUNITY COLLEGES 3. South Korea 8. Indonesia WA 2-YEAR COMMUNITY COLLEGES 4. India 9. Saudia Arabia 5. Taiwan 10. Canada TRANSFER TRANSFER ENROLLMENT STUDENT BODY 2011–2015 African American 63 WASHINGTON 1,529 1,551 HIGH SCHOOLS American Indian/ 20 1,443 Alaska Native 194 210 1. Skyline 6. Mercer Island 206 Asian American 289 2. Inglemoor 7. Kamiak Caucasian 722 3. Newport 8. Redmond Hispanic/Lantino 117 4. Bellevue 9. Cleveland 1,335 1,341 1,237 Native Hawaiian/ 14 5. Interlake 10. Franklin Pacific Islander International 199 NON-WASHINGTON Not Indicated 31 HIGH SCHOOLS 55.3% WOMEN 44.7% MEN 1. Monta Vista (CA) 2013 2014 2015 2. Northwood (CA) 3.26–3.81 ALL OTHER 2-YEAR & 4-YEAR SCHOOLS TRANSFER GPA, MIDDLE 50% 3. Mira Costa (CA) WA 2-YEAR COMMUNITY COLLEGES 4. Campolindo (CA) 5. Dougherty Valley (CA) 6. Renmin University High (China) 7. Miramonte (CA) 8. University High (CA) 9. Chengdu Number 7 (China) Beijing Normal University Experimental High (China) Mission San Jose (CA) Beijing Normal University Second High (China)

A–2.4/205-16 Page 2 of 2 5/12/16 BE BOUNDLESS UW Office of Admissions / October 2015 ADMIT.UW.EDU

UNIVERSITY OF WASHINGTON

October 21, 2015

Paul Rucker Associate Vice President Alumni and Constituent Relations Box 359508 Seattle, WA 98195-9508

Paul,

As a part of our ongoing work to define, enhance, and improve the Husky Experience, we believe that the transfer student experience and our relationship and engagement with the community college system warrant specific, proactive attention. Our objective is a cross-campus initiative to review and assess the UW-CTC transfer student landscape, identify respective strengths, weaknesses, challenges and opportunities, and make recommendations to UW and CTC leadership on future directions. An initial nine month “exploratory phase” would focus on Seattle and Spokane Colleges, with the opportunity, if successful, for scaling and expansion statewide.

We are pleased to appoint you Special Assistant to the President and Provost for Community College Engagement to provide leadership on this initiative. Your background in CTC administration and integrated responsibilities across the UW make you ideally suited for this work. The initial project appointment is for a term of one year, with the possibility to extend and/or enhance the role pending the outcome and recommendations from this initial pilot phase. The Provost will provide resources for project management and support.

Thank you for your leadership on this important initiative. We look forward to the outcome of your work.

Warmest regards,

Ana Mari Cauce Gerald Baldasty President Interim Provost, Executive Vice President

301 Gerberding Hall Box 351237 Seattle, Washington 98195-1237 206-543-7632 FAX: 206-685-3218

A–2.5/205-16 ATTACHMENT 5 Page 1 of 1 5/12/16 A–3 STANDING COMMITTEES

Academic and Student Affairs Committee

Student Governance and Engagement in UW Decision-making Processes

INFORMATION

This item is being presented for information only.

BACKGROUND

This presentation will be divided into two portions:

1. The Presidents of ASUW, ASUWT, ASUWB, and GPSS will share insights about the state of student government on our three campuses and how that affects students’ ability to engage within university decision making processes. They will also address best practices for administrative consultation with student government about new initiatives and financial or policy decisions that will affect students.

2. Regent Vanessa Kritzer will be joined by the chair of the Provost Advisory Committee for Students (PACS) and the chair of the Arts and Sciences Advisory Committee for Students (ASACS) to discuss the development of student councils that advise deans on their budgetary decisions. Regent Kritzer will present a preliminary proposal that provides recommendations to improve the budget process based on qualitative surveys and interviews conducted with Deans, Chancellors, students, and Provost Baldasty.

Attachment Best Practices for Improving Engagement of Students in the UW Budget Process

A–3/205-16 5/12/16

Best Practices for Improving Engagement of Students in the UW Budget Process

In recent years, UW’s student leaders and administration have been working together to increase student input into the university’s budget development process. This was formalized four years ago by the recommendation that every school or college create a student council that would advise the Dean or Chancellor on the annual budget request to the Provost. However, the level of engagement with students has varied significantly between units. To improve this process, we recommend that UW:

1. Define a common set of budget conversation topics that will guide the discussions between Deans, Chancellors and students each year. 2. Choose student committee members during the previous year or build in a staggered leadership structure so students can take part in the full budget process. 3. Create a central Budget 101 training for student leaders on Activity Based Budgeting (ABB) and the general university budget process.

Background

There are two main mechanisms for student input within the budget process: the student advisory councils at the school or college level and the Provost’s Advisory Committee for Students (PACS). While PACS reviews the budget requests from all schools and colleges, the process works best when students who attend each of those units can give substantive feedback to their Deans or Chancellors before they submit the budget request to the Provost. Recognizing that importance, this year, Provost Baldasty added a stipulation to the budget request form that requires Deans and Chancellors to “sign off” that they have received input from students and faculty within their school or college.

This led to conversations between PACS, the Student Regent, and the Provost about what consultation on the budget means in practice. We found that there was no single definition. Therefore, we decided to investigate the current state of these budget conversations and develop a central set of best practices that every unit could use to ensure that students can provide Deans or Chancellors with informed, effective feedback. To accomplish this, we conducted qualitative surveys and interviews with current student advisory councils, Deans, and Chancellors.

Findings on Current Budget Conversations with Students

Varying levels of engagement and focus on budget – In most units surveyed, students meet with the Dean, Chancellor, or an associate Dean who is designated to work with students, but not all talk specifically about the budget. Instead, many units focus more on curriculum or student life issues. In some units, there is a specific student advisory group on the budget and in others there is one student council that covers all topics. The units that have a specific budget advisory group tend to have more robust conversations about financial decisions and priorities. Where students are consulted in more detail, they often become advocates for the Dean or Chancellor’s plans and help increase transparency by sharing the administration’s reasons for specific decisions with the broader student body.

Need for resources and training – Many student groups say that a roadblock to substantive budget conversations is their knowledge of budgeting and the university’s complex ABB system. Some say it can be hard to even know where to start or what questions to ask, but all of them think it is important to gain those skills and ensure there is student input on the budget. Similarly, Deans are concerned that if

A–3.1/205-16 ATTACHMENT Page 1 of 2 5/12/16 students do not have enough knowledge of the university budget process, they may misinterpret information, so Deans often keep the information provided on budgets very general. In the units where the consultation is most robust, administration provides students with a “Budget 101” presentation and then are able to dive deeply into conversations about financial and strategic decisions for the school.

Group formation and timing challenges – A major challenge both Deans and students identified was synching the timing of student group formation with the budget development timeline. Most units form their student groups in the Fall so new students can join, but that often means they only have time for one initial meeting with the Dean before budget requests are due. Most Deans start their work on the next year’s budget in the winter or spring of the previous year, and often make the biggest decisions over the summer. This is likely why we found that the most successful advisory councils have student leaders who serve for multiple years and form their upcoming membership no later than spring.

Recommendations

Recommendation #1 – Define a common set of budget conversation topics Based on feedback from Deans, Chancellors, and students, we recommend that the following topics be used as a minimum baseline for budget conversations:

1. Tuition Levels and Course Fees – How tuition is set for all levels, reasons for any increases at the graduate level, an explanation for differences between fee-based and tuition-based programs, and an evaluation of course fees based on expected extra costs of resources for those courses. 2. Allocation of Tuition Dollars – How funds are allocated to different departments and utilized (excluding faculty compensation), the previous year’s revenue and expenditure totals, significant changes in allocations, and the unit’s budget process timeline. 3. Use of Special Funds – A discussion of uses, or requests being considered, for special funding from the Provost’s Reinvestment Fund or extra funds within the unit. 4. Capital Projects – Plans and requests for major capital projects (especially those using tuition dollars) and facilities maintenance. 5. Strategic Priorities – An outline of the Dean or Chancellor’s priorities for the next several years and an explanation of why they are important to the success of the unit (including sharing priorities identified by faculty and staff) and an opportunity for students to share their priorities.

Recommendation #2 – Choose student committee members during the previous year In every unit, we should encourage student budgetary councils to choose their leadership by spring of every academic year so they can work through the summer and fall on the entire budget process. To ensure that first year students can participate, these councils can leave spots open. This will give students time to learn about the budget process and give feedback early enough so it can be incorporated into the budget requests.

Recommendation #3 – Create a central Budget 101 training for student leaders To ensure that students have the information necessary to engage in conversations and not place an undue burden on the schools and colleges, we should establish a regular Budget 101 training for all student council leaders that happens in the spring or early fall. This could best be accomplished by formalizing the ad-hoc training planned in recent years by PACS, the Student Regent, and OPB into a regular event. This would cover the basics of ABB, the university budget process, and how undergraduate tuition levels are set, but leave the explanation of the school and college specifics to be shared by Deans and Chancellors during their budget conversations. This could also include a training about how to talk about the topics listed in Recommendation #1.

A–3.1/205-16 Page 2 of 2 5/12/16 Presenters’ Biographical Information Student Governance and Engagement in UW Decision-making Processes

Alex Bolton GPSS President, 2015-2016

Alex Bolton is the Graduate and Professional Student Senate (GPSS) President and third year law student. Last year, Alex served as the GPSS Vice President where he spent the legislative session in Olympia lobbying in support of UW funding and protecting the WWAMI program in Spokane.

Alex also holds a BA from UW in Economics and Political Science with a minor in Speech Communication, as well as an MPA from the Evans School. While at the Evans School, Alex served as the Student Regent. As an undergraduate, Alex was very involved in the Associated Students of the University of Washington (ASUW), where he held various roles including serving on the Board of Directors where he led the Student Radio Station Task Force, which led to Rainy Dawg Radio. After graduated from the Evans School, Alex worked for former Governor and US Senator Daniel J. Evans assisting him with his work on an autobiography, as well as his efforts in chairing the Husky Stadium Renovation Committee. Before attending the UW School of Law, Alex worked in the Faculty Senate office where he advised faculty, managed adjudications, and supported faculty governance.

Tyler Wu ASUW President, 2015-2016

Tyler Wu is a senior at the UW Seattle campus majoring in Psychology with a minor in Education. Throughout his time at the UW, he has been involved through being on the Interfraternity Council, a UW Orientation Leader, the ASUW Director of Community Relations, and currently as the ASUW President. After graduating, Tyler will be attending the George Washington University to pursue a Master's in Higher Education Administration with an emphasis in Student Affairs and Higher Education Policy. Tyler hopes to one day return to Seattle and become an employee at the University of Washington. His passions include serving his community through advocacy, community, and empowerment.

ATTACHMENT 2 A–3.2/205-16 Page 1 of 3 5/12/16

Sophie Nop ASUW Tacoma President, 2015-2016

Sophie Nop is a senior pursuing her Bachelors of Science in Computer Science and Systems. As a UW Tacoma student she taught Cybersecurity with the Math Science Leadership program, co-founded the User Experience Group, allocated hundreds of thousands of student dollars as a member of the Student Technology Fee Committee, and founded a technology conference - UW Tacoma Dreams Big. This conference not only inspires traditionally underrepresented communities to pursue technology but demonstrates to community members how to develop technology – robotics, coding, design, and cybersecurity. Equally passionate about social justice, Sophie is committed to empowering all students by creating transparency and bringing student voices to the table where decisions are made. She has a background in nonprofit and is focused on guiding the ASUWT Board of Directors and other student organizations to professionally take part in shared governance while also fostering autonomous student decisions.

Dominick Juarez ASUW Bothell President, 2015-2016

I chose UW, as the place to pursue my education because I felt that the community would be diverse, which is conducive to my learning. I was in my 3rd year of Biology until I decided to apply to Mechanical Engineering this spring quarter. I suffered a complex laceration across my face in my first two weeks attending UW Bothell, but I didn’t let that hold me back from achieving my goals. I established the Black Student Union at UW Bothell upon arrival to the institution, in which I became the president of. The second goal was to create a Diversity Center on this campus, and the only way I felt this would be accomplished was if I became president. We, UW Bothell, will have an interim center this following autumn quarter.

A–3.2/205-16 Page 2 of 3 5/12/16

Karan Grewal Chair of the Arts and Sciences Advisory Council for Students

Karan Grewal is a senior at UW, graduating this spring with a double degree in Comparative History of Ideas and Molecular Biology. His thesis in CHID is focused on Sikh identity during the Singh Sabha Movement in India during the early 1900’s. Following graduation this June, Karan plans on pursuing a masters in jurisprudence with a focus on health law and accessibility. Over the past four years Karan has also perfected the recipe for masala chai and loves every opportunity to share it with others!

Alice Popejoy Chair of Provost Advisory Committee for Students (PACS), 2015-2016

Alice B. Popejoy is Chair of the Provost Advisory Committee for Students (PACS) and a fourth-year PhD Candidate in Public Health Genetics with a Certificate in Statistical Genetics at the University of Washington, Seattle. She has formerly served as President of the Graduate and Professional Student Senate (GPSS), GPSS Executive Senator, Executive Liaison to the Faculty Senate Council on Research, and Chair of the GPSS Science Policy Committee. Alice received her Bachelor of Arts from Hamilton College in 2009 with a double major in Biology and French, and spent one year living in Paris. Alice has worked in the California State Senate, the U.S. House of Representatives, and the Association for Women in Science (AWIS). Her academic and professional interests lie in the intersection of biological light receptors, genomic research, bioethics and public health initiatives combined with a passion for science communication and effective advocacy. In her spare time, Alice teaches parkour in Seattle, spends time exploring the outdoors, and enjoys visiting her friends and family in her home state of California.

A–3.2/205-16 Page 3 of 3 5/12/16 Student Engagement in UW Decision- making Processes

A–3.3/205-16 ATTACHMENT 3 Page 1 of 40 5/12/16 A–3.3/205-16 Page 2 of 40 5/12/16 What is ASUW?

The Associated Students of the University of Washington is the democratic voice of students that engages the campus community through programming, services and advocacy. The ASUW strives to enrich student life and develop future leaders.

A–3.3/205-16 Page 3 of 40 5/12/16 A–3.3/205-16 Page 4 of 40 5/12/16 A–3.3/205-16 Page 5 of 40 5/12/16 A–3.3/205-16 Page 6 of 40 5/12/16 Stakeholders at UW Seattle

• Provost Advisory Committee for Students (PACS) • College Councils • OMAD Student Advisory Board (SAB) • Residential Community Student Association (RCSA) • Interfraternity Council (IFC) • Panhellenic Association • United Greek Council (UGC) • Graduate and Professional Student Senate (GPSS)

A–3.3/205-16 Page 7 of 40 5/12/16 How do you gauge student opinion at the Seattle campus?

• Meeting more groups = better consultation process • ASUW Seattle is a connector • Our job in ASUW is to not only be an advocate for students, but to BRIDGE the connection amongst administration and students

A–3.3/205-16 Page 8 of 40 5/12/16 “Cultivate an inclusive ASUW environment to empower and serve students”

A–3.3/205-16 Page 9 of 40 5/12/16 A–3.3/205-16 Page 10 of 40 5/12/16 GPSS Structure

• The Senate is main governing body of GPSS • The Senate is composed of 2 Senators from each program, elected by their own program’s rules • Senate elects the Executive Committee . 5 Officers, 5 Executive Senators

A–3.3/205-16 Page 11 of 40 5/12/16 A–3.3/205-16 Page 12 of 40 5/12/16 President

• Responsibilities . Serves as the official spokesperson for GPSS . Chairs Executive Committee and Senate meetings •Staff . University Affairs Director . Special Assistant • Committees . Provost Advisory Committee for Students . Faculty Council on Planning & Budgeting . Board of Regents . Select Search Committees . Faculty Senate

A–3.3/205-16 Page 13 of 40 5/12/16 VP of External Affairs

• Responsibilities . Primary representative of GPSS to the state and federal governments . Registered lobbyist for higher education during the legislative session . Develops legislative agenda affecting graduate students •Staff . Policy Analyst • Committees . UW Office of External Affairs . Washington Student Association . Student Advocates for Graduate Education

A–3.3/205-16 Page 14 of 40 5/12/16 VP of Internal Affairs

• Responsibilities . Deputy to the President . Plans and implements of all GPSS events and summits . Coordinates student feedback surveys for all Graduate School program reviews •Staff . Graduate Partnerships Director . Events Coordinator • Committees . Core Programs Advisory Board . Graduate School Executive Staff . Graduate School Council

A–3.3/205-16 Page 15 of 40 5/12/16 Treasurer

• Responsibilities . Administers all funding and transfer requests . Manages GPSS endowment . Monitors applications for special, departmental, and travel funds . Drafts proposed budgets and facilitates their approval •Staff . Budget Specialist • Committees . Student Activities Fee . Finance & Budgeting . Travel Grants . Student Tech Fee

A–3.3/205-16 Page 16 of 40 5/12/16 Secretary • Responsibilities . Regulate the GPSS Senate membership and maintain GPSS records . Facilitate communication between GPSS, Senators, and their constituents . Chief Diversity Officer for GPSS •Staff . Office Manager . Creative Director . Senate Clerk . Web Manager • Committees . Diversity Committee . Judicial Committee

A–3.3/205-16 Page 17 of 40 5/12/16 Executive Senators

• 5 Senators are elected to serve on the Executive Committee with the 5 Officers •Duties: . Provide insights from the Senator’s perspective . Create a link between the Senate and the Executive Committee

A–3.3/205-16 Page 18 of 40 5/12/16 A–3.3/205-16 Page 19 of 40 5/12/16 A–3.3/205-16 Page 20 of 40 5/12/16 Composition

A–3.3/205-16 Page 21 of 40 5/12/16 Board of Directors and Senate

• Director of Business Operation • Advisors(4) • Director of Government Relations Director of Student • Director of Public Relations Affairs • Director of Student Advocacy Dean of Student •Graduate Senator (1) Affairs •Senior Senator (2) Associate Dean of •Junior Senator (2) Student Affairs Assistant Vice •Sophomore Senator (2) Chancellor for •First‐Year Senator (2) Government and Community Relations

A–3.3/205-16 Page 22 of 40 5/12/16 Purpose

ASUWB advocates for student voices to be included in the decisions that impact this campus by: – Serving as the liaisons between Students, Staff, Faculty, and Administration. – Enhancing the student experience with your feedback. – Drafting policies that promote students’ welfare, interests, and engagement.

A–3.3/205-16 Page 23 of 40 5/12/16 Executive Board

President Vice‐President

Dominick Juarez Zynia Chapman

Dir. of Student Advocacy Director of Business Operations

Aretha Basu Jesse Trinh

A–3.3/205-16 Page 24 of 40 5/12/16 ASUWB Directors

Director of Government Relations Director of Public Relations

Evan Michael Gilbert Umar Shah

Graduate Senator Lakim Washington

A–3.3/205-16 Page 25 of 40 5/12/16 Senators

Senior Senator Senior Senator Dario Bosiljkic

Daniel Schmidt

Junior Senator Junior Senator Meskerem Ayale

Dain Williams

A–3.3/205-16 Page 26 of 40 5/12/16 Senators

Sophomore Senator Sophomore Senator

Crhistian Cuellar Dion Thompson

First‐Year Senator First‐Year Senator

Anchala Krishnan Leah Shin

A–3.3/205-16 Page 27 of 40 5/12/16 ASUWB Committees

• Alumni Council • Diversity Council •Art Advisory Cmte • Downtown Bothell Action Cmte •Board of Regents • eLearning Steerirng Cmte •Campus Garden Cmte • Elections Committee • Commencement Speaker (Juniors) • Enrollment Management Cmte • Chancellor’s Advisory Cmte on • Faculty Council on Student Environmental Sustainability Affairs (CACES) • Future Dining Services TF • Chancellor’s Cabinet • General Faculty Org. • Chancellor’s Leadership Council • General Staff Org. • City of Bothell •GPSS •Club Council • Health & Safety Cmte • Community Engagement Council •King County Alt. Service TF • Commuter Services TF •Provost Advisory Cmte •Race & Equity Initiative

A–3.3/205-16 Page 28 of 40 5/12/16 • Residential Hall Association • Student Activities Fee • Student Conduct Code • Student Diversity Council • Student Facilities Advisory Committee •34 Committees • Student Technology Fee •15 ASUWB Members •Space Utilization Provisional Group • Technology Advisory Committee • UW Bothell Intiatives group •UWB Phase 4 • Washington Students Association

A–3.3/205-16 Page 29 of 40 5/12/16 Sophie Nop, ASUWT President

A–3.3/205-16 Page 30 of 40 5/12/16 ASUWT’s New Structure

• Prior to 2015, ASUWT operated as a senate model • Under the new model . Executive board provides day to day operational control . Senate provides oversight and guidance

• Benefits of having both an executive board and senate . Better defined roles = organizational efficiency . Senators for each school/department = better representation

A–3.3/205-16 Page 31 of 40 5/12/16 ASUWT Positions

EXECUTIVE BOARD SENATE STAFF

President Interdisciplinary Arts & Administrative Assistant Sciences Director of Finance Multimedia Expert Healthcare Director of Outreach Leadership/Nursing Legislative Liaison *Director Internal Affairs Institute of Technology Elections Chair *Director of University Affairs Urban Studies Director of Legislative Affairs Social Work Director of Student Technology Undeclared Education Business

Graduate (2017)

A–3.3/205-16 Page 32 of 40 5/12/16 Student Representation Shift

• New tone for student government focused on: . Shared governance . Open discourse . Transparency • Increasing engagement with administration and participation in campus committees • Defining process for consultation • Exploring enhancements to organizational structure

A–3.3/205-16 Page 33 of 40 5/12/16 Questions?

A–3.3/205-16 Page 34 of 40 5/12/16 Budget Process Recommendations

A–3.3/205-16 Page 35 of 40 5/12/16 Recommendation #1

Define a common set of budget conversation topics that will guide the discussions between Deans, Chancellors and students each year.

A–3.3/205-16 Page 36 of 40 5/12/16 Proposed Conversation Topics

• Tuition Levels and Course Fees • Allocation of Tuition Dollars • Use of Special Funds • Capital Projects • Strategic Priorities

A–3.3/205-16 Page 37 of 40 5/12/16 Recommendation #2

Choose student committee members during the previous year or build in a staggered leadership structure so students can take part in the full budget process.

A–3.3/205-16 Page 38 of 40 5/12/16 Recommendation #3

Create a central Budget 101 training for student leaders on Activity Based Budgeting (ABB) and the general university budget process.

A–3.3/205-16 Page 39 of 40 5/12/16 Questions?

A–3.3/205-16 Page 40 of 40 5/12/16 F–1 STANDING COMMITTEES

Finance and Asset Management Committee

Actions Taken Under Delegated Authority ($5-15M)

INFORMATION ITEM

This item is being presented for information only.

BACKGROUND

Pursuant of the Standing Orders of the Board of Regents delegation of authority, and to the delegation of authority from the President of the University to the Senior Vice President for Planning & Management, to take action for projects or contracts that exceed $5,000,000 in value or cost but are less than $15,000,000, the Administration may approve and execute all instruments and report such actions to the Board quarterly.

Attachment Actions Taken Under Delegated Authority, Quarter ended 3/31/2016

F–1/205-16 5/12/16 Actions Taken Under Delegated Authority Quarter ended 3/31/2016

General Delegated Authority - Capital Project Budgets MAX CONTRACT VALUE over 4 yrs 1 ITEM DESCRIPTION (millions) ADDITIONAL INFO TERM Master Term Agreement Architectural Services Contract $15 Located in Seattle, WA 2+2 Ankrom Moisan for projects valued less than $5M 300 employees in two offices year located in Portland and Seattle. Specializing in housing, healthcare, offices, hospitality and retail

1 2+2 year term: first two years is based on negotiated rates and terms of the original contract with negotiations occurring for another two year term for four years total.

General Delegated Authority - Real Estate COST2 ITEM DESCRIPTION (millions) ADDITIONAL INFO TERM Sublease Agreement Global Innovation Exchange (GIX) $34 Located in Bellevue, WA 10 years Microsoft Corporation Sublease for partnership with 96,231 SF facility China's Tsinghua University

2 Estimated UW obligation; to be finalized prior to UW assumption of the lease.

F–1.1/205-16 ATTACHMENT Page 1 of 1 5/12/16 F–2 STANDING COMMITTEES

Finance and Asset Management Committee

UW One Capital Plan

INFORMATION ITEM

This item is being presented for information only.

BACKGROUND

This is a standing agenda item.

Attachments 1. One Capital Plan Process 2. Prioritized 6-Year Capital Plan 3. Major Capital Assets Summary Scorecard (As of March 31, 2016)

F–2/205-16 5/12/16 One Capital Plan Process

Planning Cycle

The Prioritized One Capital Plan captures three bienniums of planned projects with overall targets established for each fund source. The Plan will be re-evaluated on a two-year cycle corresponding with the State Capital Budget Request and modified depending on the State's actions and newly emerging priorities.

Call for Project Proposals Capital Plan serves as January Requests are prepared working implementation plan into next with CPD, utilizing planning (even years) cycle metrics

6 Year Prioritized Plan / BY Budget Analyze & Prioritize June May/June BOR review (odd years) (even years)

Legislative consideration and State Capital Budget Request Budget request vetted with approval modifies approach to September Senior Administration and Board capital plan of Regents (even years)

Funding Targets by Source

Planning targets are set by examining historical funding trends for both total value and the intended use to ensure the feasibility of each planning target. The Capital Plan can be adjusted based on these targets. Note funding shown below is based on the approval date by the Regents.

F–2.1/205-16 ATTACHMENT 1 Page 1 of 3 5/12/16 One Capital Plan Process

Campus Planning Assumptions

 Student enrollment in Seattle (46,000 FTE) will remain flat for the next few years, then grow 1.5% annually - 48,000 FTE by 2023  Faculty and staff growth in Seattle (20,200 FTE) will follow a similar trend - roughly 21,000 FTE by 2023  Research expenditures to remain flat for the next two years, then grow at 2.5% annually  Percentage of students housed on campus will remain constant (currently ~18%)  Student enrollment at Bothell (4,900 FTE) is expected to grow to 6,100 FTE by 2020  Student enrollment at Tacoma (4,600 FTE) is expected to grow to 6,000 FTE by 2023  Current Replacement Value (CRV) of campus buildings ($6.4 billion) will grow by roughly 3% per year, plus new buildings

Campus Planning Targets

 Total square footage in Seattle should grow by roughly 1 million GSF by 2023 (not including housing, athletics, or partners)  Total square footage in Bothell (currently 700,000 GSF) should grow by roughly 200,000 GSF by 2020 at 150 sf/student  Total square footage in Tacoma (currently 735,000 GSF) should grow by roughly 225,000 GSF by 2023 at 160 sf/student  Additional 400 beds will be needed in Seattle to maintain current on-campus percentage  Capital reinvestment in existing facilities should be between 1.5-2.5% of the CRV - $100-160M per year in Seattle  Deferred maintenance backlog should be reduced in part by removing poorly utilized buildings - target 150-200,000 GSF

Overall Capital Plan Goals

In addition to helping achieve the planning targets listed above, individual projects can be linked to larger Strategic Initiatives with corresponding Goals and Implementation Strategies, which create a framework for the individual projects. This ensures alignment with the Campus Master Plan, Academic Facilities Planning, and the Capital Campaign.

Strategic Initiatives Capital Plan Goals Implementation Strategy 1. Student Experience - Provide quality student housing - Proforma driven projects with increasing equity - Improve learning environments - Focus local/minor capital on classroom improvements - Accommodate areas of growth - Create new flexible spaces, considered as shell/fit out 2. Innovation Mindset - Develop an Innovation District in - Combine University investments with private West Campus development to attract research partners 3. Public as a Philosophy - Improve public realm west of 15th - Attach development of open spaces to major projects Ave. and along waterfront and private development 4. Transforming Administration - Consolidate non-core functions in - Develop tower above Sound Transit for office and other U District to decant other sectors uses - flexible space designed for churn - Address infrastructure & renewal - Leverage new and existing funding sources

F–2.1/205-16 Page 2 of 3 5/12/16 One Capital Plan Process

Strategic Alignment

The draft One Capital Plan (see following page) can be checked against initial planning targets by aligning projects with Strategic Initiatives and funding targets. Diagrams below show the current draft plan with heavy investments in the student experience. The bar chart shows the current draft One Capital Plan compared to established funding targets.

State Debt Dono Local

Deferred Maintenance Needs

Based on a total replacement value of $6.4 billion for the campus buildings and grounds, the University should reinvest $100-160 million per year (1.5-2.5% CRV) in its existing facilities - including capital projects, minor modifications and preventative maintenance. The chart below illustrates the amount of spending projected in the draft One Capital Plan (see following page) relative to these targets. Any annual shortfall results in increased levels of deferred maintenance in the future.

F–2.1/205-16 Page 3 of 3 5/12/16 Prioritized 6-Year Capital Plan

Prior 2017-2023 Totals Funding in $ Millions GSF Total Cost Fund'g State Debt Donor Local Student Experience (37% of total) UW Bothell - Phase 4 - Academic STEM 105,000 60 1 59 - - - Health Sciences Education - Interprofessional Education (IPE)/Nursing - T Wing Renovation/Addition 282,400 203 1 182 - 20 - Foster School of Business - MacKenzie Hall Replacement 90,000 65 - - 65 - Evans School - Parrington Hall Remodel 59,000 20 10 - 10 - College of Arts & Sciences - Lewis Hall Renovation 23,220 16 16 - - - College of the Environment - Anderson Hall Renovation 35,900 23 23 - - - College of Engineering - Classroom & Research Building Renovation 26,800 13 13 - - - School of Dentistry - Dental School Building 163,500 156 31 31 94 - Student Housing - North Campus - Phase 4b 293,000 140 - 105 - 35 UW Bothell - Student Housing & Dining Phase 2 140,000 50 - 40 - 10 UW Tacoma - Student Housing Development 125,000 20 - 16 - 4 subtotals: $ 766 $ 2 $ 334 $ 192 $ 189 $ 49

Innovation Mindset (27% of total) Center for Advanced Materials and Clean Energy Technologies 220,000 179 9 60 50 60 - College of Arts & Sciences - Kincaid Hall Renovation 85,000 49 49 - - - School of Medicine - South Lake Union Phase 3.3 262,000 197 - 182 - 15 School of Medicine - Core Research Facilities 11,000 12 - - - 12 School of Medicine - South Lake Union Rosen Remodel 60,375 6 - - - 6 subtotals: $ 443 $ 9 $ 109 $ 232 $ 60 $ 33

Public as a Philosophy (8% of total) Burke Museum 110,000 83 30 24 - 20 9 UW Medicine - Northwest Hospital Expansion 150,000 85 - 85 - - UW Tacoma - Soil Remediation - 6 6 - - - University District Station - Transit Oriented Development 200,000 100 - 100 - - subtotals: $ 274 $ 30 $ 30 $ 185 $ 20 $ 9

Transforming Administration (28% of total) Capital Repair - Preservation - 90 90 - - Minor Capital Repair - Preservation and Program Renewal - 207 - - - 207 Enterprise Information Systems - 100 - 50 - 50 UW Medicine - Information Technology Core Applications and Infrastructure - 74 - - - 74 subtotals: $ 471 -$ $ 90 $ 50 -$ $ 331 Totals: 1,953$ 563$ 659$ 269$ 422$ Targets: $ 1,850 300$ 650$ 450$ 450$

F–2.2/205-16 ATTACHMENT 2 Page 1 of 1 5/12/16 Major Capital Assets Summary Scorecard (As of March 31, 2016) Project Target Phase Bldg. Gross Cost ($M) Scheduled Use Date Selections Business Equity Cost Est. Type Square BoR Current Cost to Appr'vd Forecast 2 A/E Contractor % Award in ($M) Footage Approved Forecast 1 Date Utilization $M

Major Construction Projects Animal Research and Care Facility $ 123.5 Const. Research 83,000 $ 123.5 $ 134.3 $ 55.0 4/17 4/17 ZGF Skanska 2.1% $ 1.0 Burke-Gilman Trail Phase 1 & Phase 2 Design 6.1 Const. Infrastruct. n/a 6.1 6.2 2.1 3/16 6/16 KPFF CA Carey Corp 10.1% 0.9 Computer Science and Engineering Exp. 104.6 Planning Research 130,000 9.0 104.6 2.7 - 11/18 LMN Mortenson X X Denny Hall Renovation * 56.9 Const. Classroom 86,400 52.9 49.8 24.4 12/16 8/16 THA BNBuilders 10.0% 1.8 Fluke Hall Renovation * 28.5 Design Research n/a 37.0 36.6 5.6 12/16 8/17 HDR Hoffman X X GIX Tenant Improvements * 19.6 Design Classroom 99,900 19.6 23.4 1.0 9/17 9/17 Bora Skanska X X Life Sciences Building 164.8 Design Classroom 189,000 164.8 164.3 7.9 7/18 7/18 Perkins+Will Skanska X X NanoEngineering and Sciences Building * 58.9 Const. Research 78,000 87.8 84.9 27.0 7/16 4/17 ZGF Hoffman 8.1% 1.9 New Burke Museum 79.0 Design Other 110,000 79.0 79.0 6.5 8/17 4/18 Olson Kundig Skanska X X North Campus Housing Replacement 240.0 Design Housing n/a 240.0 240.0 7.9 6/18 6/18 Kieran Timberlake WG Clark X X Police Department Facility 19.5 Const. Other 29,000 19.5 19.5 17.0 6/16 6/16 Miller Hull BNBuilders 9.3% 1.3 UW Medicine South Lake Union 3.2 143.0 Design Research 180,886 143.0 150.4 7.5 9/17 7/18 Perkins + Will Sellen X X Tacoma Urban Solutions Center 28.0 Bidding Student 43,600 28.0 27.5 4.0 9/17 8/17 Miller Hull Mortenson X X UWMC Expansion Phase II * 186.3 Const. Medical 244,000 186.3 189.6 103.5 4/17 10/17 NBBJ Mortenson 27.9% 22.2 West Campus Utility Plant 30.5 Const. Infrastruct. 17,000 44.2 38.2 12.5 1/17 1/17 Miller Hull Mortenson 7.9% 0.7 Other Capital Projects $ 29.8 HR Payroll Modernization $ 68.1 IT n/a n/a $ 70.0 $ 68.1 $ 39.2 2/14 6/16 Totals $ 1,357 1,290,786 $ 1,311 $ 1,416 $ 324 Legend 1. Forecast to Budget Variance: On Budget = Green; 1-10% Over Budget = Yellow; >10% Over Budget = Red 2. Schedule Variance: On Schedule = Green; Within One Month = Yellow; > One Month = Red X = Selection of the design firm for this project was made prior to Capital Planning & Development's enhanced focus on business equity. Additional data will be available when construction commences. * forecasts that have changed since previous meeting

Closed out projects moved out of chart - Bothell Activities and Recreation Center

F–2.3/205-16 ATTACHMENT 3 5/12/16 Page 1 of 1 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.75% Weighted Average Cost of Capital: 3.55% Monthly Debt Report As of 3/31/2016

Recent Events

. Long-term tax-exempt interest rates remain low, with the current 30-year fixed borrowing cost estimated to be 3.53%

. While short-term rates remain extremely low, recent increases have occurred due to liquidation of some money market funds and money market reform. The University re-priced commercial paper with a 2-month term at 0.21% on March 21st (up from 0.04%)

Estimated Project Capacity

FY 2016-2020 (in millions) . Project capacity will be updated in May based on 2015 audited Total Debt Capacity $ 1,300 financial statements and projections. The June Monthly Debt Report will include this update Plus: Remaining CAP(1) 100 . Figures represent how much additional debt the University can 1,400 issue over the next five years while aligning with peer minimum Less: Authorized Projects(2) (757) ratios

Remaining Project Capacity $ 643 . $643 million of debt funded project capacity is available External Debt Portfolio - $2,356 Million

. The external portfolio as of 2/29/2016 was $2,357 million. This report is $500k lower, which is a result of $500k in principal payments Non-ILP Debt, 32% . Weighted average cost of capital: 3.55% ILP Debt, . Portfolio Composition: 98% fixed rate; 2% variable rate 68%

. $123 million in internal funding provided by the CAP is excluded from the external debt portfolio

Annual Debt Service

$210 Maximum Annual Debt Service $204M

$180 Millions

$150

$120

$90

$60

$30

General Revenue Bonds State Issued Bonds, Payable by UW Lease Revenue Bonds Other CP (3) NWH Valley (4)

(1) 10% of the Invested Funds (IF), less previously allocated Capital Assets Pool (CAP) dollars (2) Includes $118 million for South Lake Union 3.2, $121 million for Life Sciences, $238 million for Housing Phase 4a and $280 million for other authorized projects. Some of this debt has already been issued, leaving approximately $430 million of debt to be issued for authorized projects after the September 2015 General Revenue Bonds issue (3) Excludes principal payments on Commercial Paper (4) Excludes Valley Limited Tax General Obligation Bonds

F–2.4/205-16 ATTACHMENT 4 Page 1 of 2 5/12/16 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.75% Weighted Average Cost of Capital: 3.55% Monthly Debt Report As of 3/31/2016

Outstanding External Debt (in millions) Project Purpose Balance(1) Final Maturity % by Purpose Molecular Engineering Building Instruction and Research 70.8 2043 Dempsey Hall Instruction and Research 39.6 2041 Instruction Foege Building Instruction and Research 31.8 2031 and Research, UW Bothell Phase 3 Instruction and Research 25.5 2043 13% William H. Gates Law School Instruction and Research 23.8 2028 AAALAC Instruction and Research 23.2 2035 Ben Hall Instruction and Research 19.6 2037 Animal Research and Care Facilities Instruction and Research 16.7 2047 Denny Hall Instruction and Research 15.0 2046 Ocean Sciences Instruction and Research 13.4 2024 Physics-Astronomy Instruction and Research 8.4 2023 Other Instruction and Research Instruction and Research 28.7 various

Subtotal Instruction and Research 316.6 UW Medicine, South Lake Union (Ph I, II, 3.1, & 3.2) UW Medicine 408.2 2048 35% UWMC Expansion UW Medicine 186.0 2046 Valley Medical Center UW Medicine 79.0 2040 NW Hospital UW Medicine 79.0 2033 UWMC Surgery Pavilion UW Medicine 47.0 2028 Other UW Medicine UW Medicine 30.5 various Subtotal UW Medicine 829.7 Housing Expansion Student Life 383.1 2045 Husky Union Building Student Life 106.6 2043 IMA Building Student Life 33.1 2030 Radford Court Apartments Student Life 32.9 2032 Nordheim Court Student Life 21.6 2033 Bothell Student Center Student Life 17.6 2046 Student Life Ethnic Cultural Center Student Life 13.2 2043 Facilities, 28% UW Tacoma YMCA Student Life 12.1 2046 Other Student Life Facilities Student Life 30.1 various Subtotal Student Life 650.3 UW Tower Academic Support 109.8 2037 Cobb Building Academic Support 32.9 2045 HR Payroll Modernization Academic Support 25.0 n/a

4225 Roosevelt Academic Support 17.2 2029 Academic 4545 Building Academic Support 15.8 2024 Support, 10% Other Academic Support Academic Support 38.7 various Subtotal Academic Support 239.4 Husky Stadium Athletics 231.3 2045 Husky Ballpark Athletics 11.8 2045 Athletics, 11% Other Athletics Athletics 7.5 various Subtotal Athletics 250.7 Unallocated, 3% Available Proceeds Unallocated 69.9 Total University Outstanding Debt $2,356 100% (1) Will not exactly match ILP balances due to bond premiums and use of the CAP.

F–2.4/205-16 Page 2 of 2 5/12/16 F–3 STANDING COMMITTEES

Finance and Asset Management Committee

Debt Management Annual Report

INFORMATION

The Board of Regents is charged with adopting the University’s Debt Management Policy, establishing the University’s credit standards, adopting the Annual Bond Resolution allowing for issuance of external debt, establishing the Internal Lending Rate, and approving the use of the Internal Lending Program to fund capital projects.

In addition, the Board is responsible for oversight of University debt outstanding, credit ratings, and compliance with bond covenants and IRS regulations. The Debt Management Annual Report provides the Board with a broad overview of the debt portfolio, the macro challenges, capital needs and interest rate environment that could affect the University’s credit rating, a summary of the Internal Lending Program, and recent accomplishments and future plans.

The Debt Management Annual Report does not require Regental action and is presented to provide the Board with information and context to allow the Board to make informed decisions about the University’s debt and internal lending activities.

Attachment Debt Management Annual Report

F–3/205-16 5/12/16 UNIVERSITY OF WASHINGTON Debt Management Annual Report

Board of Regents Finance and Asset Management Committee

May 12, 2016

ATTACHMENT F–3.1/205-16 5/12/16 AGENDA

1. Portfolio Overview Debt Management Annual Report Annual Debt Management 2. Institutional Risk 3. ILP Rate Recommendation 4. Project Capacity 5. Accomplishments

F–3.1/205-16 5/12/16 2 BOARD OF REGENTS ROLE IN DEBT MANAGEMENT

The Debt Management Annual Report informs the Board in its oversight role The Board of Regents are responsible for the following: Board Oversight > Guide University credit standards > Oversee debt outstanding, credit ratings, and compliance with bond covenants and IRS regulations Portfolio Overview > Review portfolio performance, semi-annual activity, and use of the Capital Assets Pool (CAP) Board Action > Adopt the debt policy > Adopt bond resolutions to allow for issuance of external debt and use of CAP > Approve Internal Lending Program (ILP) Loans > Establish ILP interest rate and rate stabilization account distributions POLICY PORTFOLIO PROJECT

Service Board Strategic Portfolio Servicing Debt Issuance Analyze Fund Internal Oversight Planning Structure External Debt Loans

Review Board Review Debt Project Due Portfolio Review SABRe Capacity Information Performance Diligence

Approve Adopt Debt Approve ILP Authorize Debt Approve ILP Financial Board Action Policies Rate Issuance Loans Stability Plans

F–3.1/205-16 5/12/16 3 ISSUANCE HISTORY

Fixed and variable interest rates remain near historic lows Portfolio Overview

> The University’s borrowing rate is impacted by a variety of factors including term, debt type, tax status, couponing, etc. > While short-term rates remain extremely low, recent increases have occurred due to liquidation of some money market funds and money market reform > The University issued $327 million in FY 2016 and had another $430 million of debt funded projects approved by the Board of Regents

F–3.1/205-16 5/12/16 4 EXTERNAL DEBT PORTFOLIO Outstanding Debt by Type Total Debt: $2,356 The University has a large and conservative debt portfolio (In millions as of March 31st, 2016) NWH, $12, 1% > The debt portfolio consists primarily of fixed rate debt ($50 million of variable rate debt) Valley, $79, 3% CP, $50, 2%

> Average borrowing rate for portfolio is 3.55% Other, $21, 1% > There is approximately $430 million in authorized debt remaining to be issued over the next four years

> Approximately $80-$100 million of principal is repaid annually Lease Revenue Portfolio Overview Bonds, $408, 17% > More than 70% of debt has been issued as General Revenue Bonds

General Revenue 210 Maximum annual debt service: State Issued Bonds, $1,638, $204m in FY18 Bonds, Payable by 70% UW, $147, 7% 180 Millions 150

120

General Revenue Bonds State Issued Bonds, Payable by UW Lease Revenue Bonds Other CP (1) NWH Valley (2)

(1) Excludes principal payments on Commercial Paper (2) Excludes Valley Medical Center Limited Tax General Obligation Bonds

F–3.1/205-16 5/12/16 5 CREDIT OVERVIEW

The University’s ratings remain stable at Aaa/AA+ (Moody's/S&P). Increased borrowing and declining metrics will put downward pressure on the University’s ratings

Credit Strengths Credit Weaknesses > Strong market position > Increasing leverage, debt issuance outpacing growth of financial

> Significant national research profile, good student demand, major resources and revenues Portfolio Overview clinical care provider for the Pacific Northwest > Slowing growth in net tuition revenues with the state reassuming full > Good financial flexibility with $1.6 billion of unrestricted financial tuition setting authority for in-state undergraduate tuition resources > Increasingly competitive research funding environment > Consistently favorable operations > Significant healthcare exposure with lower margins and liquidity > Integrated planning, active debt and project management, and very good disclosure

Macro challenges > Uncertainty in health care presents challenges to universities with academic medical centers > Budget challenges at the State level could pose financial risk > Increasingly competitive research funding environment

Interest rates remain attractive for high grade issuers, however short-term rates are beginning to rise > Recent increases have occurred due to liquidation of some money market funds and money market reform

F–3.1/205-16 5/12/16 6 INSTITUTIONAL RISK

Each project creates institutional credit risk > Central administration guarantees all loans > Each borrower has a different risk profile > Borrowers benefit from the ILP through lower borrowing cost Less Risky More Risky Institutional Risk Institutional > Demonstrated demand for the project > Demand is based on projections, growth, and/or assumed behavior

> Pre-determined and reliable revenue stream (i.e. student fees) > Variable or uncertain revenues

> Diverse revenue stream > Singular revenue stream

> Predictable and controllable expenses > Variable or unknown expenses

> Control over major revenues and expenses > Regulations or changing business landscape that impacts financial performance

> Strong financial metrics aided by project equity > Weak financial metrics with little or no equity

> Ability to withstand financial stress > Inability to withstand financial stress

F–3.1/205-16 5/12/16 7 DUE DILIGENCE PROCESS

The current process focuses on affordability and ongoing disclosure Initial financial due diligence > Develop financial strategy with borrowers > Identify and stress potential risks > Establish financial covenants (i.e. reserve levels and debt service coverage) Institutional Risk Institutional

Ongoing continuing disclosure > Financial audits required for borrowers > Semi-Annual Borrower Reports provide financial health updates

Financial Stability Plans (FSP) > Board policy requires that each borrower bring a FSP if financial covenants are not met > Treasury and Planning and Management work with the borrower to identify and communicate financial solutions > FSP approval resets the financial proforma

F–3.1/205-16 5/12/16 8 DUE DILIGENCE PROCESS

New risk mitigation strategies are being implemented as part of continuing policy and program refinement

On an institutional level > Pledging general revenues lowers external borrowing cost but transfers risk to central administration

> A portion of the ILP rate (0.15%) partially compensates central administration for the additional risk Risk Institutional

On a unit level > Project equity reduces financial risk and helps align stakeholders > Provide a minimum of 25% equity > Financial proformas need to be able to withstand unexpected variances in revenues and/or expenses

F–3.1/205-16 5/12/16 9 CURRENT ILP DIAGRAM

Internal Lending Program

10% target Capital Assets CAP funding in/CAP Invested allocation Pool (CAP) return out Internal Debt Funds ILP Rate Recommendation External Debt Portfolio Bond Proceeds in/Debt Portfolio Service out

Rate Stabilization External Debt Capital Internal Loan Internal Debt Account/ Service Funding Service Program Costs

External Debt UW Internal Market Borrower

F–3.1/205-16 5/12/16 10 ILP DIAGRAM – A NEW LOOK Internal Lending Program Campus Borrowers

Interest Payments Principal Payments

Program Support ILP Rate ILP Rate Recommendation Allocation

General Revenue Support Allocation

Program Fund(2)

(1) Rate Stabilization Account Rebalance(3) Residual Account

Bond Proceeds Debt Service Payments CAP Funding

External Lenders and Capital Assets Pool (4)

(1) The Rate Stabilization Account (RSA) is used to maintain a stable internal rate with the reserve balance buffering the internal rate when external rates rise. The difference between external and internal rates stays in the RSA (2) The Program Fund is one account that enables the ILP to meet its obligations including operating costs, debt management expenses, external debt service payments, unspent bond proceeds and rate stabilization. Funds can also be spent on approved capital projects (3) Arises from non-amortizing debt, original issue premium and savings from debt refundings (4) The Invested Funds (IF) is an investment pool consisting of the University s operating funds. The Capital Assets Pool (CAP) is sized to 10% of the IF and is used to fund capital projects.

F–3.1/205-16 5/12/16 11 ILP REBALANCE

Treasury analyzes the Program Fund each year and rebalances as necessary

> The Program Fund is composed of the RSA and Residual Account (includes unspent bond proceeds, interest earnings, debt service timing differences and Original Issue Premium)

> Any funds not needed to make current and future debt service payments or fund projects can be used for rate stabilization ILP Rate Recommendation > As part of this year’s rebalancing, Treasury will allocate $30 million to the RSA (as a result of non-amortizing debt, original issue premium and savings from debt refundings) from the Residual Account > After this allocation, the RSA is projected to be $80 million at the end of FY2016

Program Fund Residual Account RSA ~$80m Rebalance ~$170m

F–3.1/205-16 5/12/16 12 ORIGINAL ISSUE PREMIUM EXAMPLE

A hypothetical Original Issue Premium example demonstrates the rationale for rebalancing

UW borrows $100m in par value of bonds ILP Rate Recommendation

4% Market Rate

5% Issue Rate The ILP lends ILP collects $110m UW repays $100m from campus $110m to the external borrowers market

$10m of original issue at the ILP rate premium

$10m flows into the Residual Account over time Total proceeds = $110m

˃ The market determines external ˃ This payment means that the ILP ˃ Treasury reviews the interest rates (e.g. 4% market rate) receives more money from internal Program Fund ˃ Under certain market conditions borrowers than it owes to investors annually investors are willing to pay up-front ˃ This creates an imbalance between for a higher return over time (e.g. the RSA and Residual Account over 5% issue rate) time

F–3.1/205-16 5/12/16 13 RATE RECOMMENDATION

Treasury recommends lowering the ILP rate from 4.75% to 4.50% ALM reviews account balances and projections annually as part of its ILP rate setting recommendation to the Board > The ILP rate was established in 2008 at 5.50%. It was chosen based on a long term (100 year) average of interest rates, plus 50 basis points (0.50%) to allow for future rate increases. A sustained period of borrowing at low interest rates enabled a reduction to the ILP rate ILP Rate ILP Rate Recommendation to 4.75% in 2015 > Sufficiency is the amount needed in the RSA today to hold the internal rate stable for a period of time. The RSA is sufficient for 8 years with the new internal rate > Each year RSA sufficiency and allocation is assessed based on interest rate scenarios and borrowing plans > Recent low interest rates have contributed to the RSA balance, but the need for debt funding in a rising rate environment would put pressure on the RSA

Stress Case at 4.50% Lending (8 years sufficiency) 2016-2021 2022-2030 2031-2046 Borrowing Rate and Amount Borrowing Rates: 4.38%-6.48% Borrowing Rates: 6.10%-5.33% Borrowing Rate: 5.33% Assumptions for Stress Case Additional Borrowing: $760m Additional Borrowing: $900m Additional Borrowing: $1,600m Current Balance After Transfer = $80m Length of Stable ILP Rate Today 2020 2025 2046

Underfunded Sufficiency Range Overfunded Sufficiency Balance Required Today $0 $18 $106 $706 (millions)

F–3.1/205-16 5/12/16 14 ILP OVERVIEW – FUTURE STATE Internal Lending Program Campus Borrowers

Interest Payments, 4.50% Principal Payments

Program Support ILP Rate Recommendation Allocation, 0.10%

General Revenue Support Allocation, 0.15%

Program Fund(2) Rate Stabilization Account(1) Residual Account Rebalance(3) ~$80m ~$170m

Bond Proceeds Debt Service Payments, 3.60% CAP Funding

External Lenders and Capital Assets Pool (4)

F–3.1/205-16 5/12/16 15 INSTITUTIONAL PROJECT CAPACITY

The University takes a comprehensive and analytical approach in assessing its ability to finance projects > Annually the University projects revenues and expenses over a five year period and derives institutional debt capacity > Debt capacity (which excludes CAP) measures how much debt the University can issue while staying at or above peer minimums in three ratios. The three ratios are: > Debt Service Coverage Project Capacity Project > Debt to Operating Revenue > Expendable Financial Resources to Debt* > Institutional project capacity is calculated by adding together debt capacity and available CAP > The peer group was put together based on several criteria: > All public schools, Aa2 and higher > Schools generating $1B+ in revenue > Schools with more than 10% of their revenues generated from health care > Excludes ‘state-wide’ systems The University’s peer group is currently comprised of 13 institutions Ohio State University University of Michigan Pennsylvania State University University of Nebraska University of Iowa University of New Mexico University of Alabama at Birmingham University of North Carolina at Chapel Hill University of Arkansas University of Utah University of Colorado University of Virginia University of Kentucky University of Washington *Moody’s modifying ratio calculation

F–3.1/205-16 5/12/16 16 INSTITUTIONAL PROJECT CAPACITY

Many factors influence institutional project capacity Within the University’s influence > Principal repayment: In FY 2017, the University will pay $83 million in principal. Repaying debt increases institutional project capacity > Project approval: Approving projects decreases institutional project capacity. The Board approved $470 million of projects in FY 2016 Capacity Project > Growth: Growth in net operating income improves financial ratios and increases institutional project capacity. The University’s operating income was relatively flat in 2015 as compared to 2014 > Use of institutional funds: CAP allows projects to be funded without external borrowing. The CAP limit is 10% of the Invested Funds (IF), which changes as the value of the IF changes. The IF value has decreased this year which has decreased institutional project capacity

Outside the University’s influence > Changes in peer behavior: The University estimates institutional project capacity based on peer medians. Peer behavior can either increase or decrease institutional project capacity. Over the last year, the peer minimum for debt service coverage declined by roughly 5%. This change had a positive effect on debt capacity > Interest rates: Future increases in interest rates decrease institutional project capacity. Long-term rates in 2016 remained low, however recently there has been a small uptick in short term rates

F–3.1/205-16 5/12/16 17 INSTITUTIONAL PROJECT CAPACITY

~$425 million of non-cash funded projects can be approved in the next 5 years

5 Year Project Capacity: 2017-2021 (in millions) Total Debt Capacity(1) $ 755

Plus: Remaining CAP(2) 100 Capacity Project Total Institutional Project Capacity 855 Less: Authorized Projects(3) (430)

Remaining Project Capacity $ 425

(1) Not inclusive of current outstanding debt. Figures represent how much additional debt the University can issue over the next five years (2) 10% of the Invested Funds (IF) less previously allocated CAP dollars. Based on current IF value (3) Includes Life Sciences, Housing Phase 4a and other authorized projects. Approximately $430 million of debt needs to be issued for authorized projects after the September 2015 General Revenue Bonds issue

F–3.1/205-16 5/12/16 18 ACCOMPLISHMENTS

Campus partnerships > Financial Forecasting Refinement: Collaboration between units led to a more robust planning tool > Debt capacity and One Capital Plan integration: Worked with Capital Planning and Development to link capital planning with debt capacity > Financial Stability Plan: Provide financial expertise, consistent communication and solutions for borrowers not meeting covenants Accomplishments Student engagement > Junior Analyst program: New program hires recent University graduates > Direct student interactions: Examples include guest lecturing in classes and groups, student board presentations, and working with student fee committees

Program development > Financing Assets in the Short Term (FAST) implementation: Demand for FAST product currently exceeds capacity > Compliance enhancement: Improved policies and procedures help ensure post-issuance compliance and measurement of private business use

F–3.1/205-16 5/12/16 19 F–4 STANDING COMMITTEES

Finance and Asset Management Committee

Approval of a Reduction in the Internal Lending Program (ILP) Interest Rate

RECOMMENDED ACTION

It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents reduce the Internal Lending Program (ILP) interest rate 25 basis points, from 4.75% to 4.50%, effective July 1, 2016.

BACKGROUND

The primary mission of the ILP is to offer a stable and predictable interest rate to borrowers and to allow for capital funding in a rising rate environment. The lower the ILP rate today, the greater the risk of having to increase it in the future.

In 2008, the ILP rate was established by the Regents at 5.5%. At that time, the Regents also reserved the right to approve any increase or decrease in the rate. The initial ILP rate of 5.5% was recommended based on a long term (100 year) average of interest rates, plus 50 basis points to allow for future rate increases. In 2008, looking back 30 years, the average rate was higher, at 6.5%.

External rates have been favorable since the inception of the ILP and are currently around 4.0%. The University has taken advantage of these lower rates; the $1.6 billion of debt in the ILP has an average rate of 3.3%.

In January 2015, the Board of Regents approved a decrease in the ILP interest rate to 4.75%.

RATE STABILIZATION ACCOUNT (RSA)

The RSA was created to maintain a stable internal borrowing rate when external rates rise. Treasury measures sufficiency by evaluating how the RSA would be impacted by future borrowings at higher than current interest rates (or “stress case” rates). These rates are shown in the following table:

F–4/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approval of a Reduction in the Internal Lending Program (ILP) Interest Rate (continued p. 2)

Current Balance After Transfer = $80m Length of Stable ILP Rate Today 2020 2025 2046

Underfunded Sufficiency Range Overfunded Sufficiency Balance Required Today $0 $18 $106 $706 (millions)

The balance in the RSA is projected to be $80 million at the end of FY16. This balance implies eight years of sufficiency in the RSA, meaning that the RSA balance would be negative in year nine should borrowing occur at the stress case interest rates. Sufficiency is evaluated annually.

The sufficiency of the RSA and the long term stability of the ILP rate will be impacted by a rate reduction. However, recent historically low rates and a growing reserve balance will help provide near-term stability in a rising rate environment.

GENERAL REVENUE SUPPORT

The ILP is comprised of 73 loans with an outstanding balance of $1.60 billion.1 All of these loans add additional risk to the portfolio, with Central Administration guaranteeing all ILP debt. Beginning in 2017, Treasury will allocate a portion of the ILP rate charged to borrowers to compensate Central Administration for incurring incremental risk and providing credit support. General Revenue Support is included in the 4.50% ILP rate and will initially be set at 0.15%.

IMPACT ON BORROWER ANNUAL DEBT SERVICE PAYMENTS

Lowering the ILP rate will have a direct benefit on existing borrowers and reduce debt service by about $2.2 million annually. It will particularly benefit borrowers with constrained debt capacity and future borrowing plans.

1 As of 12/31/2015

F–4/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approval of a Reduction in the Internal Lending Program (ILP) Interest Rate (continued p. 3)

Below is a summary of annual unit debt service at the current and proposed ILP rates:

Borrower 4.75% ILP Rate 4.50% ILP Rate Annual Savings Athletics 16,242,082 15,798,012 444,070 Central 17,466,639 17,111,891 354,748 H&D 31,024,612 30,274,598 750,014 Global Health 742,221 741,227 994 UWMC 13,528,624 13,220,873 307,750

NWH 6,026,178 5,918,285 107,894 Student Fees 7,439,215 7,246,124 193,091 Pediatric Dentistry 716,473 698,384 18,089 Tacoma 1,172,798 1,140,561 32,237 Bothell 2,129,280 2,074,561 54,718 96,488,122 94,224,517 2,263,604

REVIEW AND APPROVALS

This item has been reviewed and approved by the Interim Provost and Executive Vice President, the Interim Vice President for Finance and Facilities, the Senior Vice President for Planning and Management, and the Associate Vice President for Treasury.

F–4/205-16 5/12/16 F–5 STANDING COMMITTEES

Finance and Asset Management Committee

UW Tacoma Court 17 Apartments: Approve Acquisition, Budget and Financing

RECOMMENDED ACTION

It is the recommendation of the Administration and the Finance and Asset Management Committee that the Board of Regents: 1. Approve the acquisition of UW Tacoma Court 17 Apartments. 2. Approve the project budget and financing for UW Tacoma Court 17 Apartments. 3. Delegate to the President the authority to execute all documents related to this transaction.

BACKGROUND

See Attachment 2.

Attachments 1. Project Summary 2. UW Tacoma Court 17 Apartments Project Background 3. UW Tacoma Housing Proforma and Stress Tests

F–5/205-16 5/12/16 Project Summary Regent Actions Procurement Options Review Stage 1 Prior Demand Study/Analysis Actions: Financial Due Diligence April 2016 Letter Of Intent Approve the acquisition contingent upon an agreed Purchase and Sale Agreement Stage 2 Actions: Approve Project Budget - up to $24,000,000 May 2016 Approve Financing - (Internal Loan Program up to $19,000,000) Delegate to the President the authority to execute all documents related to this transaction Objective Continue to expand upon and provide safe, affordable, quality student housing to encourage on-campus residency. The acquisition of Court 17 Apartments at UW Tacoma will provide an urban market-style living residency that will foster a secure, diverse, and engaging residential environment for both undergraduate and graduate students. Residents will live in an intentional campus community where young scholars are immersed in a programmed living and learning environment that enhances intellectual exchange and broadens personal development in pursuit of their education.

Court 17 sustainability goals and efforts will be developed by students through intentional programming to help create a community that is environmentally aware, socially conscious, and fiscally responsible. Students have been engaged with the intent to expand on-campus housing opportunities from the beginning of this project. In November, 4,600 UW Tacoma students were asked to indicate their level of support for a range of contemporary student housing. The survey resulted in a robust analysis with 1,310 or 28% campus response rate. During this time, focus groups were also organized with current Court 17 residents, student leadership and the general student population. The Chancellor, Vice Chancellor for Finance and Administration and Director for Campus Planning and Real Estate also met and consulted with the ASUWT President and Director of Finance to discuss Court 17. Both student leadership representatives agreed with the action to move forward with this Property Description The property, located at 1717 Market Street, Tacoma, WA 98402 (Tax Parcel Number 9006000010) within the UW Tacoma Campus, was constructed in 2006 under an air rights lease, over the University-owned Court 17 Parking garage. The building consists of 5 floors with 128 units at approximately 107,163 GSF (50-Studios, 39-1 bedroom and 39-2 bedroom units). In addition, there are a series of ground floor offices and community spaces along with 305 University-owned parking spaces below the building. The physical property is 37,360 SF (.86 acres) and located inside the north end of campus and zoned for residence halls, student housing, multi-family, etc. Financials Proposed Budget Proposed Funding Asset Purchase Price $ 20,000,000 86% ILP Debt Funds $ 18,992,264 82% Capitalized Equipment $ 1,319,002 6% Equity Contribution $ 4,263,800 18% Defeasance Fee* $ 1,456,480 6% Total Funds $ 23,256,064 100% Due Diligence/Title/Escrow/RE Fees $ 351,000 2% Total Project Cost $ 23,126,482 100% Annual Debt Service @ 30 years $ 1,154,772 Financing Cost $ 129,582 Total Use of Funds $ 23,256,064 Repayment Source: Housing Revenues *Subject to final market rates at time of purchase close. Should the University be able to assume loan with current underwriter, fee will be eliminated and a 1% Loan Assumption Fee will be applied (estimated at $101,573). Benchmarks

Costs escalated to 2017 (project costs) College Planning and Management (May 2015): Median Public Residence Hall - Public University ($93,723/bed) UW Seattle - Maple and Terry Halls, no dining facility ($122,000/ bed) University of Oregon: 530 beds, no dining facility, estimated GSF 277/bed (project cost $90,000/bed) Metrics & Indicators

Current Targets Current Targets Number of Beds 128 290 Project Cost / Bed $80,193 Gross SF 42,865 107,163 Project Cost / GSF $217 GSF/Bed 335 370 Schedule

Feasibility Demand Study/Analysis/Due Diligence Letter Of Intent/Purchase Sale Agreement Closing Occupy. Aug-15 Mar-16 May-16 Jul-16 Sep-16

F–5.1/205-16 ATTACHMENT 1 Page 1 of 1 5/12/16

UW Tacoma Court 17 Apartments

Project Background Purpose and Benefit The University of Washington Tacoma launched a student housing program in 2007 by master leasing 7 on-campus units on the 3rd floor of Court 17 Apartments. The current master lease is for 2 floors (52 units/128 beds) with the remaining 3 floors open to the public. Student housing demand has continued to grow and to meet this demand UW Tacoma proposes to acquire the Court 17 Apartment building, an existing air-rights lease on top of the University owned land and 305 stall parking garage. The acquisition of Court 17 Apartments will provide approximately 290 student housing beds and be available for Fall 2016 occupancy allowing the campus to maintain momentum in the housing program development. Court 17 Apartments is a strategic acquisition that will provide student-centered housing in support of UW Tacoma’s goals with recruitment and retention efforts while contributing toward a student experience that also aligns with the campus master plan.

Student Demand & Analysis In 2008, UW Tacoma (UWT) and Brailsford & Dunlavey (B&D) completed a Campus Life Facilities Master Plan. The 2008 Master Plan found a demand for student housing (252 beds) was 100 beds below the recommended minimum demand for the campus.

• Master plan recommended the campus to engage in a flexible residence facility rather than a stand-alone product until the student enrollment population reached a critical mass of approximately a 4,000 headcount. • Master leasing Court 17 has allowed the campus to incrementally address on-campus housing needs for students while also promoting the benefits of residence life and the student experience.

In September 2015, UWT engaged with B&D again to complete a student housing demand study. UWT’s student enrollment was now above 4,600 students and growing with roughly 120 students living in the University-leased floors at Court 17 Apartments.

• The purpose of the review was to understand overall housing demand for UWT and aimed to review specific housing needs from the state-wide recruitment efforts of lower division students while also addressing needs for upper and graduate level divisions. • Using both qualitative and quantitative data gathered by B&D consultants, the current total housing demand for the UWT campus is 1,058 beds. The current 128 bed count leaves a net demand of 930 beds.

In conjunction with B&D’s study, a geographical information system (GIS) project analyzed the living transition students make from the time of application to enrollment. The analysis showed 1,356 students moved in proximity of campus upon enrollment. On average, 945 WA residents

F–5.2/205-16 ATTACHMENT 2 Page 1 of 5 5/12/16

UW Tacoma Court 17 Apartments

moved an average of 33 miles to obtain their education at UWT. This data supported and aligned with the separate B&D housing demand study.

• 290 International Students • 121 Out-of-State Students • 945 WA Resident Students (not including students identified as Military)

Site and Property Description The property, located at 1717 Market Street, Tacoma, WA 98402 (Tax Parcel Number 9006000010) within the UWT Campus, was constructed in 2006 under an air rights lease, over the University- owned Court 17 Parking garage. The building consists of 5 floors with 128 units at approximately 107,163 GSF (50-Studios, 39-1 bedroom and 39-2 bedroom units). In addition, there are a series of ground floor offices and community spaces along with 305 University-owned parking spaces below the building. The physical property is 37,360 SF (.86 acres) and located inside the north end of campus and zoned for dormitories, student housing, multi-family, etc.

F–5.2/205-16 Page 2 of 5 5/12/16

UW Tacoma Court 17 Apartments

Property Management A third-party property manager will coordinate all lease terminations and minor renovation work in preparation for conversion of the property to complete student housing use for Fall quarter 2016. Interim management is planned to be in place through October 2016, after which time UWT will manage the property internally.

Purchase of Real Estate The Letter of Intent for Court 17 Apartments contains the following terms:

1. Seller: COURT 17 LLC, a Washington limited liability company 2. Purchase Price: $20,000,000 + University to pay Seller’s prepayment penalty estimated at $1,456,480, half or 50% of escrow, excise taxes and any other applicable transfer fees for a total purchase price. 3. Closing Date: On or before August 1, 2016 4. Contingencies: a. Mutually acceptable Purchase and Sale Agreement date of May 1, 2016. b. UW approval of property condition – Phase 1 environmental assessment has not been completed. A building condition assessment is pending and will review wear and tear. c. UW approval of title report – In progress d. Regents approval – Seeking approval upon successful completion of an acceptable Purchase and Sale Agreement, Phase I environmental assessment, asset audit/condition assessment, and title clearance.

Financing Plan and Credit Analysis UW Tacoma worked closely with the Treasury Office to perform a credit analysis to assess the financial viability of the project. As the first component of the UWT’s Housing program, the financial analysis was performed on the project level. Project debt will first be repaid from housing system revenues, followed by other revenues of UWT.

Proposed Budget Proposed Funding Asset Sale Price 20,000,000 86% ILP Debt Funds 18,992,264 82% Capitalized Equipment 1,319,002 6% Equity Contribution 4,263,800 18% Defeasance Fee 1,456,480 6% Total Funds 23,256,064 100% Other Fees 351,000 2% Annual Debt Service 1,154,772 Total Project Cost 23,126,482 100% Financing Cost 129,582 - Source Housing Revenues Total Uses of Funds 23,256,064 -

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UW Tacoma Court 17 Apartments

Key Assumptions - Occupancy: 95% per year - Revenue: 2% rental rate increase per year - Operating Expense: 2% increase per year - $4.3 million funded from equity (18.3%)

Base Case Proforma (see attached)

• Debt service is projected to be $1.16 million per year • Coverage exceeds 1.25x minimum in all years, with a low of 1.75x in 2018 • Cash flow is positive in every year, averaging $750K /year after debt service and capital expenditure • System reserves meet minimum requirements (one-year debt service) by end of 2018

Stress Tests (see attached)

• Three stress tests were performed - System occupancy starts at 80%, slowly returning to projected occupancy - An increase in operating/staffing costs by ~$90K/yr - Combined stress case (both conditions described above) • In each stress test scenario, debt service coverage exceeded the minimum requirements and cash flow remained positive.

Please note that the building is already occupied and constructed, mitigating some risk.

Mitigation Plan

• Mitigation includes reduction in capital expenditures and strategic program reductions • Rental units could be made available to the general public

Project Timeline Feasibility Study/Financial Options Review – August 2015 (complete) Demand Study – January 2016 (complete) UW/Treasury Due Diligence – March 2016 (complete) Letter of Intent – April 7th 2016 (fully executed) Purchase Sale Agreement – May 1st 2016 (pending) Due Diligence Period – June 30th, 2016 (or up to 60 days from PSA) Closing – July 29th, 2016

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UW Tacoma Court 17 Apartments

Court 17 from Market Street

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UW Tacoma Court 17 Apartments

UW Tacoma Housing Base Case Proforma (Court 17 Apartments) Lease: Aqusition / Floors 2 & 3 only Complete Building CAGR (1) FISCAL YEAR 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (2017-2026)

Beginning Balances 0 127,846 923,382 1,667,659 2,445,294 3,256,757 4,102,922 4,385,101 4,689,930 5,643,747 6,634,375

REVENUE Residential Hall Rent Income 1,069,309 2,734,667 2,706,055 2,760,383 2,815,646 2,872,309 2,929,859 2,988,317 3,048,995 3,109,863 3,171,571 1.7% Other Revenue (application/security deposit) 9,125 156,000 159,000 162,060 165,181 168,365 171,612 174,924 178,303 181,749 185,264 1.9% Total Revenue 1,078,434 2,890,667 2,865,055 2,922,443 2,980,828 3,040,673 3,101,471 3,163,241 3,227,298 3,291,612 3,356,835 1.7%

EXPENSES Personnel Expenses 61,260 181,917 187,375 192,996 198,786 204,749 210,892 217,218 223,735 230,447 237,360 3.0% Operating Expenses 872,328 506,210 517,084 528,199 539,558 551,169 563,037 575,167 587,566 600,239 613,194 2.2% Programming Expenses 17,000 127,572 141,857 144,705 147,600 150,543 153,560 156,627 159,769 162,963 166,211 3.0% Total Expenses 950,588 815,699 846,316 865,899 885,944 906,462 927,488 949,012 971,070 993,650 1,016,766 2.5%

NET OPERATING REVENUE 127,846 2,074,967 2,018,739 2,056,543 2,094,884 2,134,212 2,173,983 2,214,229 2,256,229 2,297,962 2,340,069 1.3%

ILP Debt Service 0 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 TOTAL DEBT SERVICE 0 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772

Subtotal: Net Operating Cash Flow 127,846 920,195 863,966 901,771 940,112 979,440 1,019,211 1,059,457 1,101,456 1,143,190 1,185,297 Capital Reserve (10% of Net Op Cash Flow) 0 92,020 86,397 90,177 94,011 97,944 101,921 105,946 110,146 114,319 118,530 Capital Expenditures 0 32,640 33,293 33,959 34,638 35,331 635,111 648,683 37,493 38,243 39,008 Cash Flow 127,846 795,536 744,277 777,636 811,463 846,165 282,179 304,829 953,818 990,628 1,027,760

Ending Balance 127,846 923,382 1,667,659 2,445,294 3,256,757 4,102,922 4,385,101 4,689,930 5,643,747 6,634,375 7,662,135

Net Revenue % change 168.0% -0.9% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Operating Expenses % change -14.2% 3.8% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% Net Operating Cash Flow % change 619.8% -6.1% 4.4% 4.3% 4.2% 4.1% 3.9% 4.0% 3.8% 3.7%

Coverage (Net Operating Revenue / Debt Service) 1.80 1.75 1.78 1.81 1.85 1.88 1.92 1.95 1.99 2.03 Coverage w/CapX(Net Operating Revenue / (Debt Service+CapX)) 1.69 1.64 1.67 1.70 1.73 1.24 1.26 1.83 1.86 1.89 Reserve Requirement 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Capital Reserve Ending Balance 92,020 178,416 268,593 362,604 460,548 562,470 668,415 778,561 892,880 1,011,410 UW Tacoma Headcount 4,600 4,738 4,880 5,026 5,177 5,332 5,492 5,657 5,827 6,002 6,182

NOTES (1) CAGR = Compound Annual Growth Rate (2) Minimum reserves set at one year's debt service

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UW Tacoma Court 17 Apartments

Stress Tests

Base Case - Court 17 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 Net Operating Income Before Debt Service & Capital 2,074,967 2,018,739 2,056,543 2,094,884 2,134,212 2,173,983 2,214,229 2,256,229 2,297,962 2,340,069 Total Debt Service 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Debt Service Coverage 1.80 1.75 1.78 1.81 1.85 1.88 1.92 1.95 1.99 2.03 Income After Debt Service & Capital 795,536 744,277 777,636 811,463 846,165 282,179 304,829 953,818 990,628 1,027,760 Ending Reserve Balance 923,382 1,667,659 2,445,294 3,256,757 4,102,922 4,385,101 4,689,930 5,643,747 6,634,375 7,662,135 Occupancy 95% 95% 95% 95% 95% 95% 95% 95% 95% 95%

Stress Case - Court 17 - Rental Rates FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 Net Operating Income Before Debt Service & Capital 2,074,967 1,974,250 1,966,920 1,959,407 1,951,549 1,943,488 1,935,183 1,926,652 1,917,855 1,908,714 Total Debt Service 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Debt Service Coverage 1.80 1.71 1.70 1.70 1.69 1.68 1.68 1.67 1.66 1.65 Income After Debt Service & Capital 795,536 704,238 696,975 689,534 681,769 74,733 53,687 657,199 648,532 639,540 Ending Reserve Balance 923,382 1,627,619 2,324,594 3,014,127 3,695,896 3,770,629 3,824,317 4,481,515 5,130,047 5,769,587 Occupancy 95% 95% 95% 95% 95% 95% 95% 95% 95% 95%

Stress Case - Court 17 - Occupancy FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 Net Operating Income Before Debt Service & Capital 1,696,026 1,645,378 1,802,639 1,965,390 2,134,212 2,173,983 2,214,229 2,256,229 2,297,962 2,340,069 Total Debt Service 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Debt Service Coverage 1.47 1.42 1.56 1.70 1.85 1.88 1.92 1.95 1.99 2.03 Income After Debt Service & Capital 454,489 408,253 549,121 694,918 846,165 282,179 304,829 953,818 990,628 1,027,760 Ending Reserve Balance 582,335 990,588 1,539,709 2,234,627 3,080,792 3,362,971 3,667,800 4,621,618 5,612,245 6,640,005 Occupancy 80% 80% 85% 90% 95% 95% 95% 95% 95% 95%

Stress Case - Court 17 - Staffing FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 Net Operating Income Before Debt Service & Capital 1,983,617 1,924,648 1,959,630 1,995,063 2,031,397 2,068,083 2,105,152 2,143,880 2,182,242 2,220,878 Total Debt Service 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Debt Service Coverage 1.72 1.67 1.70 1.73 1.76 1.79 1.82 1.86 1.89 1.92 Income After Debt Service & Capital 713,321 736,583 770,899 805,653 841,294 278,200 301,698 951,614 989,227 1,027,098 Ending Reserve Balance 841,167 1,577,750 2,348,649 3,154,302 3,995,596 4,273,797 4,575,494 5,527,109 6,516,336 7,543,434 Occupancy 95% 95% 95% 95% 95% 95% 95% 95% 95% 95%

Stress Case - Court 17 - Combined Scenario FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 Net Operating Income Before Debt Service & Capital 1,604,676 1,513,220 1,624,727 1,736,611 1,848,734 1,837,588 1,826,106 1,814,303 1,802,135 1,789,523 Total Debt Service 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Debt Service Coverage 1.39 1.31 1.41 1.50 1.60 1.59 1.58 1.57 1.56 1.55 Income After Debt Service & Capital 372,274 289,311 389,001 489,017 589,235 (20,577) (44,482) 556,085 544,384 532,268 Ending Reserve Balance 500,120 789,431 1,178,431 1,667,449 2,256,684 2,236,107 2,191,625 2,747,710 3,292,094 3,824,362 Occupancy 80% 80% 85% 90% 95% 95% 95% 95% 95% 95%

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UW Tacoma Court 17 Apartments

UW Tacoma Housing Occupancy Stress Case Proforma (Court 17 Apartments) Lease: Aqusition / Floors 2 & 3 only Complete Building CAGR (1) FISCAL YEAR 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (2019-2026)

Beginning Balances 0 127,846 582,335 990,588 1,539,709 2,234,627 3,080,792 3,362,971 3,667,800 4,621,618 5,612,245

REVENUE Residential Hall Rent Income 1,069,309 2,342,766 2,319,476 2,497,489 2,681,568 2,872,309 2,929,859 2,988,317 3,048,995 3,109,863 3,171,571 3.4% Other Revenue (application/security deposit) 9,125 156,000 159,000 162,060 165,181 168,365 171,612 174,924 178,303 181,749 185,264 1.9% Total Revenue 1,078,434 2,498,766 2,478,476 2,659,549 2,846,749 3,040,673 3,101,471 3,163,241 3,227,298 3,291,612 3,356,835 3.3%

EXPENSES Personnel Expenses 61,260 181,917 187,375 192,996 198,786 204,749 210,892 217,218 223,735 230,447 237,360 3.0% Operating Expenses 872,328 493,250 503,865 519,210 534,974 551,169 563,037 575,167 587,566 600,239 613,194 2.4% Programming Expenses 17,000 127,572 141,857 144,705 147,600 150,543 153,560 156,627 159,769 162,963 166,211 3.0% Total Expenses 950,588 802,739 833,097 856,910 881,360 906,462 927,488 949,012 971,070 993,650 1,016,766 2.7%

NET OPERATING REVENUE 127,846 1,696,026 1,645,378 1,802,639 1,965,390 2,134,212 2,173,983 2,214,229 2,256,229 2,297,962 2,340,069 3.6%

Subtotal: Net Operating Cash Flow 127,846 541,254 490,606 647,867 810,618 979,440 1,019,211 1,059,457 1,101,456 1,143,190 1,185,297 Capital Reserve (10% of Net Op Cash Flow) 0 54,125 49,061 64,787 81,062 97,944 101,921 105,946 110,146 114,319 118,530 Capital Expenditures 0 32,640 33,293 33,959 34,638 35,331 635,111 648,683 37,493 38,243 39,008 Cash Flow 127,846 454,489 408,253 549,121 694,918 846,165 282,179 304,829 953,818 990,628 1,027,760

Ending Balance 127,846 582,335 990,588 1,539,709 2,234,627 3,080,792 3,362,971 3,667,800 4,621,618 5,612,245 6,640,005

Net Revenue % change 131.7% -0.8% 7.3% 7.0% 6.8% 2.0% 2.0% 2.0% 2.0% 2.0% Operating Expenses % change -15.6% 3.8% 2.9% 2.9% 2.8% 2.3% 2.3% 2.3% 2.3% 2.3% Net Operating Cash Flow % change 323.4% -9.4% 32.1% 25.1% 20.8% 4.1% 3.9% 4.0% 3.8% 3.7%

Coverage (Net Operating Revenue / Debt Service) 1.47 1.42 1.56 1.70 1.85 1.88 1.92 1.95 1.99 2.03 Coverage w/CapX(Net Operating Revenue / (Debt Service+CapX)) 1.39 1.35 1.48 1.60 1.73 1.24 1.26 1.83 1.86 1.89 Reserve Requirement 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Capital Reserve Ending Balance 54,125 103,186 167,973 249,035 346,978 448,900 554,845 664,991 779,310 897,840 UW Tacoma Headcount 4,600 4,738 4,880 5,026 5,177 5,332 5,492 5,657 5,827 6,002 6,182

NOTES (1) CAGR = Compound Annual Growth Rate (2) Minimum reserves set at one year's debt service

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UW Tacoma Court 17 Apartments

UW Tacoma Housing Staffing Stress Case Proforma (Court 17 Apartments) Lease: Aqusition / Floors 2 & 3 only Complete Building CAGR (1) FISCAL YEAR 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (2019-2026)

Beginning Balances 0 127,846 841,167 1,500,762 2,191,176 2,912,800 3,666,431 3,853,301 4,059,960 4,912,664 5,799,144

REVENUE Residential Hall Rent Income 1,069,309 2,734,667 2,706,055 2,760,383 2,815,646 2,872,309 2,929,859 2,988,317 3,048,995 3,109,863 3,171,571 1.5% Other Revenue (application/security deposit) 9,125 156,000 159,000 162,060 165,181 168,365 171,612 174,924 178,303 181,749 185,264 1.7% Total Revenue 1,078,434 2,890,667 2,865,055 2,922,443 2,980,828 3,040,673 3,101,471 3,163,241 3,227,298 3,291,612 3,356,835 1.5%

EXPENSES Personnel Expenses 61,260 273,267 281,465 289,909 298,606 307,564 316,791 326,295 336,084 346,166 356,551 2.1% Operating Expenses 872,328 506,210 517,084 528,199 539,558 551,169 563,037 575,167 587,566 600,239 613,194 1.5% Programming Expenses 17,000 127,572 141,857 144,705 147,600 150,543 153,560 156,627 159,769 162,963 166,211 1.4% Total Expenses 950,588 907,049 940,407 962,813 985,765 1,009,277 1,033,388 1,058,089 1,083,419 1,109,369 1,135,957 1.7%

NET OPERATING REVENUE 127,846 1,983,617 1,924,648 1,959,630 1,995,063 2,031,397 2,068,083 2,105,152 2,143,880 2,182,242 2,220,878 1.3%

Subtotal: Net Operating Cash Flow 127,846 828,845 769,876 804,858 840,291 876,624 913,311 950,380 989,107 1,027,470 1,066,106 Capital Reserve (10% of Net Op Cash Flow) 0 82,885 76,988 80,486 84,029 87,662 91,331 95,038 98,911 102,747 106,611 Capital Expenditures 0 32,640 33,293 33,959 34,638 35,331 635,111 648,683 37,493 38,243 39,008 Cash Flow 127,846 713,321 659,596 690,414 721,624 753,631 186,869 206,660 852,704 886,480 920,488

Ending Balance 127,846 841,167 1,500,762 2,191,176 2,912,800 3,666,431 3,853,301 4,059,960 4,912,664 5,799,144 6,719,632

Net Revenue % change 168.0% -0.9% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Operating Expenses % change -4.6% 3.7% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% Net Operating Cash Flow % change 548.3% -7.1% 4.5% 4.4% 4.3% 4.2% 4.1% 4.1% 3.9% 3.8%

Coverage (Net Operating Revenue / Debt Service) 1.72 1.67 1.70 1.73 1.76 1.79 1.82 1.86 1.89 1.92 Coverage w/CapX(Net Operating Revenue / (Debt Service+CapX)) 1.62 1.57 1.60 1.62 1.65 1.16 1.18 1.74 1.77 1.80 Reserve Requirement 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Capital Reserve Ending Balance 82,885 159,872 240,358 324,387 412,049 503,381 598,419 697,329 800,076 906,687 UW Tacoma Headcount 4,600 4,738 4,880 5,026 5,177 5,332 5,492 5,657 5,827 6,002 6,182

NOTES (1) CAGR = Compound Annual Growth Rate (2) Minimum reserves set at one year's debt service

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UW Tacoma Court 17 Apartments

UW Tacoma Housing Combined Stress Case Proforma (Court 17 Apartments) Lease: Aqusition / Floors 2 & 3 only Complete Building CAGR (1) FISCAL YEAR 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (2019-2026)

Beginning Balances 0 127,846 500,120 823,691 1,285,591 1,890,670 2,644,302 2,831,171 3,037,831 3,890,534 4,777,015

REVENUE Residential Hall Rent Income 1,069,309 2,342,766 2,319,476 2,497,489 2,681,568 2,872,309 2,929,859 2,988,317 3,048,995 3,109,863 3,171,571 3.1% Other Revenue (application/security deposit) 9,125 156,000 159,000 162,060 165,181 168,365 171,612 174,924 178,303 181,749 185,264 1.7% Total Revenue 1,078,434 2,498,766 2,478,476 2,659,549 2,846,749 3,040,673 3,101,471 3,163,241 3,227,298 3,291,612 3,356,835 3.0%

EXPENSES Personnel Expenses 61,260 273,267 281,465 289,909 298,606 307,564 316,791 326,295 336,084 346,166 356,551 2.1% Operating Expenses 872,328 493,250 503,865 519,210 534,974 551,169 563,037 575,167 587,566 600,239 613,194 1.7% Programming Expenses 17,000 127,572 141,857 144,705 147,600 150,543 153,560 156,627 159,769 162,963 166,211 1.4% Total Expenses 950,588 894,089 927,188 953,824 981,180 1,009,277 1,033,388 1,058,089 1,083,419 1,109,369 1,135,957 1.8%

NET OPERATING REVENUE 127,846 1,604,676 1,551,288 1,705,726 1,865,569 2,031,397 2,068,083 2,105,152 2,143,880 2,182,242 2,220,878 2.7%

Subtotal: Net Operating Cash Flow 127,846 449,904 396,516 550,954 710,797 876,624 913,311 950,380 989,107 1,027,470 1,066,106 Capital Reserve (10% of Net Op Cash Flow) 0 44,990 39,652 55,095 71,080 87,662 91,331 95,038 98,911 102,747 106,611 Capital Expenditures 0 32,640 33,293 33,959 34,638 35,331 635,111 648,683 37,493 38,243 39,008 Cash Flow 127,846 372,274 323,571 461,900 605,079 753,631 186,869 206,660 852,704 886,480 920,488

Ending Balance 127,846 500,120 823,691 1,285,591 1,890,670 2,644,302 2,831,171 3,037,831 3,890,534 4,777,015 5,697,502

Net Revenue % change 131.7% -0.8% 7.3% 7.0% 6.8% 2.0% 2.0% 2.0% 2.0% 2.0% Operating Expenses % change -5.9% 3.7% 2.9% 2.9% 2.9% 2.4% 2.4% 2.4% 2.4% 2.4% Net Operating Cash Flow % change 251.9% -11.9% 38.9% 29.0% 23.3% 4.2% 4.1% 4.1% 3.9% 3.8%

Coverage (Net Operating Revenue / Debt Service) 1.39 1.34 1.48 1.62 1.76 1.79 1.82 1.86 1.89 1.92 Coverage w/CapX(Net Operating Revenue / (Debt Service+CapX)) 1.32 1.28 1.40 1.52 1.65 1.16 1.18 1.74 1.77 1.80 Reserve Requirement 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 1,154,772 Capital Reserve Ending Balance 44,990 84,642 139,737 210,817 298,480 389,811 484,849 583,759 686,506 793,117 UW Tacoma Headcount 4,600 4,738 4,880 5,026 5,177 5,332 5,492 5,657 5,827 6,002 6,182

NOTES (1) CAGR = Compound Annual Growth Rate (2) Minimum reserves set at one year's debt service

F–5.3/205-16 Page 5 of 5 5/12/16 F–6 STANDING COMMITTEES

Finance and Asset Management Committee

Investment Program Annual Update

This item is for information only.

Attachment Investment Program Update, Report to the Board of Regents, May 12, 2016

F–6/205-16 5/12/16 Investment Program Update Report to the Board of Regents

May 12, 2016 University of Washington Investment Management Company

F–6.1/205-16 ATTACHMENT 5/12/16 Table of Contents

Executive Summary……………………………...... 3-4 Governance Key Roles and Responsibilities ……………………..…………………………………... 5 Social Investment Activities …………………………………………………………….. 6 Capital Markets and Asset Allocation Historical 10-Year Treasury Yields………………………………...... 7 Global Capital Market Composition……………………………………………………. 8 2016 Capital Market Projections and Return/Risk Analysis ..……………………..... 9 CEF Proposed Asset Allocation and Projected Impact……………………………….. 10 CEF Spending and Inflation……………………………..…...... 11 Consolidated Endowment Fund Profile, Asset Allocation, Exposure……………………………………………………. 12 Returns and Risk…………………….…………………...... 13 Annual Returns by CEF Asset Class………………………………………...... 14 Contributors of Endowment Growth…………………………………..……………….. 15 Endowment Value Creation……………………………………………………………... 16 Invested Funds Profile, Asset Allocation, Mix of Investments, Risk and Returns……...... 17 Deferred Gift Assets Program Profile, Portfolio Types, Additions & Terminations, Returns………..………………. 18 Appendices………………………………………………………………………………………... 19-26

F–6.1/205-16 5/12/16 Executive Summary CEF Asset Allocation - $2.9 Billion As of December 31, 2015 Overview The Consolidated Endowment Fund (CEF) and Invested Funds (IF) are reviewed annually with the Board of Regents. Historically, changes to the asset allocation have been proposed every ~3 years and reflect the capital markets evolution. Relative to both peer institutions and global market indices, the distinguishing characteristics of the CEF continue to be greater emerging markets exposure and fewer private investments. Proposed Asset Allocation

The proposed changes (in red) to the CEF policy Proposed CEF Policy Asset Allocation asset allocation are presented. No changes are recommended to the IF. Market Outlook Over the next 5–7 years, UWINCO Board, the UW investment team and other market participants anticipate a low return environment. Their forecasts, of 6.5% to 7.0% on average for a diversified fund with the CEF’s asset allocation, are in line with the endowment spending requirement of 5.0% plus current nominal (1%- 2%) inflation.

F–6.1/205-16 5/12/16 Executive Summary

CEF Performance Performance As of December 31, 2015 The CEF and IF returned 1.2% and 0.7% respectively, for calendar year 2015. The 10-year performance has been stronger with the two portfolios returning 5.9% and 3.6%, respectively. CEF performance (at right) relative to peers and a passive 70/30 benchmark has been solid. Campus Support The CEF and IF have been important contributors to campus funding as detailed at right. Social Investing UW investment portfolio ranked top quartile in STARS 2015 survey in which the UW achieved a gold rating. UWINCO staff Campus Support from Investments continues to research and implement various ESG considerations. $ = Millions 1 Year 5 Year 10 Year 20 Year Regents’ Perspective Requested CEF Distributions to Unit Holders $109 $468 $849 $1,250

. Proposed CEF policy asset allocation Advancement Support from CEF 22 94 168 211

. CEF tactical positioning – leaning into Invested Funds Distributions 34 194 419 891 value relative to policy targets Total Campus Support $165 $756 $1,436 $2,353

F–6.1/205-16 5/12/16 CEF Governance

Key Roles and Responsibilities

Board of Regents UWINCO Board Chief Investment Officer (CIO)

Sets investment policy Advises the CIO Implements investment program • Spending rate • Investment planning • Day-to-day management • Strategic asset allocation • Asset allocation • Tactical asset allocation • Delegations • Manager identification • Manager appointments • Market trends • Manager terminations Appoints investment officers/ • Risk management advisors Advises Board of Regents/ • Research • Chief Investment Officer President • UWINCO Board Members • Investment program oversight Monitors results • Investment consultants • CIO oversight • Performance reporting

Reviews program • Program oversight / accountability

Governance of the investment program is defined around clearly established roles and responsibilities.

F–6.1/205-16 5/12/16 CEF Governance

Social Investment Activities . Engage with UW community. Research issue and evaluate impact. Board of Regents approve actions. . Divestment cost is cumulative. . New tools, new indexes, new investor resources are frequently announced. older Social issues over time newer

Burma Tobacco Climate Prisons Next Issue • Impact assessment • Impact • Prudent first • MBA Independent Study assessment step is to start projects • Student ESG here • Student ESG Research Research Assistant* Assistant* Research • Conferences, calls, meetings • Reading, calls, meetings • Vote proxies • Divested from • Divested from coal reflecting related to tobacco given environmental concerns human rights health and • Numerous memberships**

Current statusCurrent status • Co-sponsored economic • ESG focused investment* considerations shareholder • Proactive proxy voting* resolutions • Engagement with managers* • ESG investment risk Implementation evaluations*

* Part of the UW Treasury’s Global Climate Change Initiatives (see Appendix item 7) ** Memberships include CERES, US SIF, University Consortium on Investor Responsibility, plus CDP signatory. UWINCO and Treasury dedicate significant resources to thoughtfully balance CEF objectives, including ESG. 6

F–6.1/205-16 5/12/16 Capital Markets and Asset Allocation

Historical 10-Year Treasury Yields January 1871 through March 2016

16%

14%

12% 10yr Treasury Yield Period Average 10%

6% 4.6% 4%

0% Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

Source: Goldman Sachs & JP Morgan

Historically low interest rates present risk of owning longer maturity U.S. Treasuries. Rates have been below their long-term average since the financial crisis.

F–6.1/205-16 5/12/16 Capital Markets and Asset Allocation

For periods ending December 31, 2015

Share of GDP Share of Capital Markets

Sources: Factset, IMF, World Bank, World Federation of Exchange, Goldman Sachs, Global ECS Research Estimates

Emerging markets’ share of global capital markets is anticipated to rise substantially over the next two decades. 8

F–6.1/205-16 5/12/16 Capital Markets and Asset Allocation

2016 Capital Market Projections and Return / Risk Analysis

Return / Risk Analysis Mean Return vs. Volatility Efficient Frontier

UW expects emerging markets (EM) to be the highest returning asset class over the long term. UW’s projected risk-adjusted returns are in-line with peers who hold less EM and more private equity (PE).

F–6.1/205-16 5/12/16 Capital Markets and Asset Allocation

CEF Proposed Asset Allocation and Projected Impact Proposed Policy Target

The proposed CEF policy portfolio balances a slightly higher projected return and short-term volatility, while managing downside risk longer term. 10

F–6.1/205-16 5/12/16 Capital Markets and Asset Allocation

Spending and Inflation Total Nominal Return* Required to Meet the Long-Term Spending Target

Endowment Distributions 4.0% Long-Term Policy Rate Advancement Office 0.8% } Internal Services Investment Office 0.2% Expected Inflation 3.0% Consumer Price Index Total Return Required 8.0%

* Return is assumed net of internal services (manager, consulting, custodial and legal) of approximately 50 basis points.

Required Nominal Return Matrix

Distribution Rate plus Administrative Fees 3.0% 4.0% 5.0% 6.0% 7.0% 1.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2.0% 5.0% 6.0% 7.0% 8.0% 9.0% 3.0% 6.0% 7.0% 8.0% 9.0% 10.0% 4.0% 7.0% 8.0% 9.0% 10.0% 11.0% 5.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Inflation 6.0% 9.0% 10.0% 11.0% 12.0% 13.0% 7.0% 10.0% 11.0% 12.0% 13.0% 14.0% 8.0% 11.0% 12.0% 13.0% 14.0% 15.0%

Long-term spending plus inflation rate estimate

Program distributions, internal services and inflation are critical factors in defining a sustainable level of program support. Given the lower return environment, spending will be monitored but no changes to policy are recommended at this time. 11

F–6.1/205-16 5/12/16 Consolidated Endowment Fund (CEF) As of December 31, 2015 Profile Asset Allocation

Description: A permanent fund established through private gift funds to support the program specified by the donor.

Composition: 4,512 individual endowments which are commingled for investment purposes similar to a mutual fund.

Primary Objective: To preserve the purchasing power of each endowed gift over time. This objective drives the discussion on spending policy, return requirements, long-term asset allocation and risk tolerance.

Secondary Objective: To provide a steady stream of income to support individual programs. This objective influences the spending formula used in calculating the income distribution.

Geographic Exposure Equity Sector Exposure

F–6.1/205-16 5/12/16 CEF Performance Returns and Risk As of December 31, 2015

1 Year 3 Year 10 Year 20 Year

Total CEF Return 1.2% 8.0% 5.9% 8.6%

Policy Benchmark¹ 0.7% 7.5% 6.5% 8.3%

RETURN 70/30 Market Benchmark² -0.9% 6.2% 5.3% 6.3%

Peer Quartile Ranking³ 1st 1st 1st 1st

Return Contribution ($M)⁴ $32 $587 $1,243 $2,191

CEF Sharpe Ratio⁵ 0.2 1.5 0.6 0.7 RISK Policy Benchmark Sharpe⁵ 0.1 1.4 0.6 0.6 Ratio

¹ Policy Benchmark is a blend of market indices weighted to reflect the strategic asset allocation of the CEF. ² 70% MSCI ACWI and 30% BC Government Bonds. ³ Cambridge Associates Public Colleges and Universities reporting with endowments between $1 billion and $5 billion. ⁴ Represents the cumulative dollars generated by CEF investment returns. ⁵ The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance. The Sharpe ratio is calculated using standard deviation and excess return over the risk-free rate to determine reward per unit of risk.

The CEF performance has been solid on an absolute and relative basis. UW is a top quartile performer relative to public peers. 13

F–6.1/205-16 5/12/16 CEF Performance

Annual Returns by CEF Asset Class For the calendar years ending December 31

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10 Years (Annualized) Emerging Emerging Emerging Emerging Emerging Developed Fixed Income Real Assets Real Assets Private Equity Private Equity Best Absolute Equity Equity Equity Equity Equity Equity Performance 36.0% 57.4% -2.9% 71.4% 26.6% 10.7% 21.1% 29.0% 20.7% 14.0% 10.7% Developed Developed * * * Private Equity Private Equity Private Equity Private Equity Private Equity Emerging Equity Equity Equity Opportunistic Opportunistic Opportunistic 17.4% 28.8% -4.4% 25.9% 12.9% 9.4% 18.9% 25.7% 15.7% 6.0% 9.7% Developed ** Absolute ** Absolute Developed * ** Absolute ** Absolute Real Assets Real Assets Fixed Income Real Assets Equity Return Return Equity Opportunistic Return Return 16.0% 16.2% -22.9% 24.2% 10.7% 1.6% 16.1% 15.0% 8.9% 2.6% 6.2% ** Absolute ** Absolute ** Absolute ** Absolute Developed Developed Fixed Income Private Equity Private Equity Private Equity Fixed Income Return Return Return Return Equity Equity 15.2% 15.3% -23.0% 2.2% 10.1% 1.5% 15.9% 12.1% 6.6% 1.0% 5.3% Developed Developed * ** Absolute ** Absolute Emerging Developed Real Assets Private Equity Fixed Income Real Assets Equity Equity Opportunistic Return Return Equity Equity 14.9% 9.0% -38.3% -7.2% 2.5% -0.6% 6.8% 9.5% 6.3% -0.9% 3.1% Emerging Developed Emerging ** Absolute Emerging Fixed Income Fixed Income Real Assets Real Assets Real Assets Fixed Income Equity Equity Equity Return Equity 5.8% 9.0% -52.0% -13.2% 0.1% -4.6% 4.9% 5.2% 6.3% -1.0% 2.4% Emerging NM -Opportunistic * Opportunistic investment strategy added 7/1/2010 Fixed Income Fixed Income Fixed Income Real Assets Worst Absolute Equity investment Performance ** Prior to 6/30/2008 absolute return included long / short equity strategy added investments -15.3% 1.4% 1.0% 2.7% -6.2% 7/1/2010

CEF 16.8% 18.8% ‐27.5% 14.0% 11.8% ‐1.5% 12.2% 14.9% 8.3% 1.2% 5.9%

Private Equity and Emerging Markets strategies drove CEF performance over the past 10 years.

F–6.1/205-16 5/12/16 CEF Performance

Campus Distributions & Contributors of Endowment Growth over Last 20 Years As of December 31, 2015 Billions

$5.0

$4.5

$4.0

Distributed +$1.5 $3.5 Investment Returns $3.0

Reinvested $2.5 Investment +$0.9 Returns $2.0

$1.5 Endowment +$0.9 Gifts

$1.0

$0.5 Baseline +$1.1

$0.0

Successful fundraising and investment management efforts have resulted in significant growth in the CEF to $2.9 billion, even after distributing $1.5 billion of investment returns per the spending policy. Consistent with other endowments, the CEF’s equity orientation drives long-term growth despite periods of short-term volatility. 15

F–6.1/205-16 5/12/16 CEF Performance

Endowment Value Creation – 20 Years As of December 31, 2015

Internal Services $27,680

Distributions $136,599

3.4x multiple on initial gift (net of internal services); value added $240,029

Market Value $203,429

Initial Gift $100,000

A hypothetical endowed gift of $100,000 invested 20 years ago demonstrates the power of compounding. The gift would have distributed 1.4x its original value and still have a market value of over $200,000 (net of internal services).

F–6.1/205-16 5/12/16 Invested Funds (IF)

As of December 31, 2015 Profile Fund Allocation By Pool ($ = Millions) Description: Locally generated operating and capital reserves of the University. Composition: Institutional funds (40%) and funds on deposit by campus departments (60%), as of 6/30/2015. Financial Objective: To meet the day-to-day financial obligations of the University as they come due. Access to funds on demand under normal conditions. Investment Objectives: To achieve investment returns above those of money market instruments. Liquidity Objective: Continue strong liquidity levels to maintain flexibility and permit cost effective issuance of debt.

Mix of Investments Risk and Return

F–6.1/205-16 5/12/16 Deferred Gift Assets Program

As of December 31, 2015 Profile Portfolio Type Description: UW planned giving and outside endowment portfolios managed by Kaspick & Co, a leading provider in gift administration and asset management. Composition: 105 separately managed donor portfolios totaling $82 million. Six types of investment allocations balance growth and income. Primary Objective: To meet the payout requirements of the gift instrument. Secondary Objective: To maximize the expected real value of the residual trust to benefit the University with an appropriate level of risk given the primary objective. Investment Objective: To achieve competitive risk-adjusted returns as measured against both multi-asset and traditional benchmarks.

Additions and Matured Gifts ($ = Millions) Deferred Gift Assets Returns

F–6.1/205-16 5/12/16 Appendices

F–6.1/205-16 5/12/16 Appendix 1

Endowment Overview from the FY 2015 CEF Annual Report

Endowment Support Endowment Support by Unit and Purpose by Purpose

* A portion of the University’s operating funds are invested in the CEF. Distributions benefit campus-wide programs.

The CEF supports students and their colleges, schools, faculty and operating units.

F–6.1/205-16 5/12/16 Appendix 2

CEF Activity and Campus Support CEF Activity

($ = Millions) FISCAL YEARS ROLLING YEARS AS OF DECEMBER 31, 2015 FYTD 3 5 10 20 2015 2014 2016 Year Year Year Year Beginning Balance $3,076 $2,833 $2,347 $2,226 $2,088 $1,538 $496 Gifts 275271 179 309 715 1,103 Transfers 3 8 7 22 34 80 163 Operating Funds Purchases 0 121 146 278 281 401 487 Total Additions $30 $181 $224 $479 $623 $1,196 $1,754 Net Investment Return (118) 194 379 587 792 1,243 2,191 Distributions to Unit Holders (56) (105) (94) (299) (468) (849) (1,250) Internal Services Advancement Support (11) (21) (19) (60) (94) (168) (211) Investment Support (3) (5) (5) (15) (23) (42) (60) Ending Balance $2,918 $3,076 $2,833 $2,918 $2,918 $2,918 $2,918

Campus Support From Investments

CEF Distributions to Unit Holders 56 105 94 299 468 849 1,250 Advancement Support from CEF 11 21 19 60 94 168 211 Invested Funds Distributions* 0 34 36 108 194 419 891 Total Campus Support $67 $160 $148 $467 $756 $1,436 $2,353

*Invested Funds Distributions are made annually in June. 21

F–6.1/205-16 5/12/16 Appendix 3

Spending and Impairment Risk

Spending Level Impairment Risk 6.5% 62% 6.0% 51% The spending Impairment level includes 5.5% 40% risk is the distributions probability of to endowed 5.0% 30% a real drop in programs and endowment administrative 4.5% 21% value over a fees. 4.0% 14% fifty-year period. 3.5% 9% 3.0% 6%

An endowed institution balances the competing demands of current and future generations. 2010 policy changes to spending and asset allocation reduced the probability of impairment risk by nearly half.

F–6.1/205-16 5/12/16 Appendix 4 CEF Spending Update ($ = Thousands) FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Beginning Market Value 1,649,159 1,829,868 2,154,494 2,111,334 2,346,693 2,832,753 Distributions to Unit Holders¹ 59,015 75,688 85,104 87,492 93,778 105,274 Distributions as a % of UW Revenues² 2.0% 2.3% 2.9% 2.5% 2.5% 2.9%

Effective Spending Rate excluding fees 3.6% 4.1% 4.0% 4.1% 4.0% 3.7% Internal Services³ 17,908 19,703 21,276 21,873 23,444 26,320 UW Effective Spending Rate including Fees 4.7% 5.2% 4.9% 5.2% 5.0% 4.6% Peer Effective Spending Rate including Fees⁴ 5.6% 5.1% 4.5% 4.9% 4.7% 4.4% Total CEF Return 12.5% 16.0% -0.9% 13.5% 15.8% 6.8%

Fiscal Year Additions Per Unit Distributions Additions as a % of % Change Additions excluding Period Beginning Market Period Annual Payout from Prior DIP Purchases Value Year FY2010 48,120 2.9% FY2010 $2.35 -25% FY2011 68,028 3.7% FY2011 $2.85 21% FY2012 82,408 3.8% FY2012 $3.07 8% FY2013 53,929 2.6% FY2013 $3.06 0% FY2014 78,721 3.4% FY2014 $3.12 2% FY2015 67,393 2.4% FY2015 $3.21 3%

1 - Actual distributions are administered on a quarterly basis and per unit basis. New gifts are added quarterly and receive payouts at the next distribution date. 2 - UW Revenues excludes net patient service revenues. 3 – Internal service fees support Advancement (80 bps) and Investments (20 bps). 4 - Data collected by Cambridge Associates represents the median of the CA Colleges & Universities as of 6/30/2015.

CEF distributions have been steadily increasing with overall spending comparable to peers. 23

F–6.1/205-16 5/12/16 Appendix 5

Historical CEF Policy Asset Allocation 100% Fixed Income 90%

80% Absolute Return

70% Opportunistic 60%

50% Real Assets

40% Emerging 30% Markets

20% Private Equity

10%

Developed 0% Markets Equity 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Proposed Over the past quarter century, the CEF grew significantly in size and complexity. While diversifying the portfolio, 30% of the CEF is held in uncorrelated strategies (Absolute Return and Fixed Income). 24

F–6.1/205-16 5/12/16 Appendix 6

History of Social Investing at UW DATE APPROVED BY BOARD OF ACTION BY BOARD OF ISSUE IMPLEMENTATION REGENTS REGENTS Resolution to divest direct thermal coal holdings and prohibit future UW restriction applies to companies whose principal business is the mining of coal for Fossil Fuel Approved May 2015 direct investment. In thermal coal energy generation. companies. With Board Approval for shareholder engagement, the Treasury begins implementation of the Global Climate Change Initiatives: Investment Policy amended to allow 1. Create new research assistant position to focus on alternative energy and “ESG” (environment, social action as appropriate in support of and governance) investment opportunities. Fossil Fuel Approved November 2013 shareholder resolutions and 2. Increase alternative energy investments by committing up to an additional $25 million. initiating letters of engagement related to Climate change. 3. Incorporate ESG factors into the investment analysis and decision making process. 4. Explore opportunities for shareholder advocacy on climate change (e.g. voting shareholder proxies, co- sponsoring shareholder resolutions, letter writing and joining national organizations). Resolution to divest direct holdings UW provides investment managers with quarterly lists of prohibited companies from MSCI’s in companies doing business in Sudan Targeted List.* The list is targeted on companies whose business activities support Sudan Approved June 2006 Sudan and prohibit future direct the Sudanese government in its continuing sponsorship of genocidal actions and human investment. rights violations in Darfur. Investment policy amended to allow action as appropriate in support of UW hires student from campus divestment campaign for assistance with research and Sudan Approved June 2005 shareholder resolutions and letters of engagement. initiating letters of engagement related to human rights in Sudan. Investment policy amended to allow UW notifies investment managers to vote proxies in favor of shareholder resolutions action as appropriate in support of supporting attention to human rights violations in Burma. The University co-sponsors Burma Approved March 1995 shareholder resolutions related to shareholder resolutions, where appropriate related to human rights violations in Burma. No human rights in Burma. UW activity in this area since the late 1990’s. UW restriction applies to companies which manufacture consumer tobacco products and/or involved in the leaf tobacco industry. Definition and tobacco company research Resolution to divest direct tobacco initially provided by the IRRC and is today provided by another third party provider, MSCI. Tobacco holdings and prohibit future direct Approved January 2000 Restriction limited to companies whose tobacco revenues represent a simple majority of investments in tobacco companies. total firm revenues. The University provides investment managers with quarterly lists of prohibited tobacco stocks. Resolution to divest and prohibit UW provided investment managers with lists of prohibited companies researched by the Approved 1986, restriction South Africa future investment in companies Investor Responsibility Resource Center (IRRC), a third party provider of information on Restriction lifted October 1993 operating in South Africa. corporate governance and social responsibility issues.

UW has been actively engaged in social investment issues for over three decades. 25

F–6.1/205-16 5/12/16 Appendix 7 Treasury Office Global Climate Change Initiatives Regent approved Initiative (Nov 2013) Status as of April 2016 1 Create a research assistant position focusing on Completed: alternative energy and “ESG” (environmental,  Hired January 2014. Worked with four students to date. social, and governmental) investment opportunities) 2 Increase alternative energy investments. In Process:  230 funds screened At 6/30/2013, approximately $12 million of the CEF  Given the limited opportunity of profitable investable alternative fuel was invested in alternative energy related investments, the investment team expands their search to include ESG investments. related investments  10 Introductory meetings with ESG-related managers The UW will commit up to an additional $25 million  Conversations with Cambridge Associates in alternative energy related investments.  Calls and meetings with data providers and peer institutions  January 2015, UW invests $10 million in a global environmental opportunities fund. 3 Incorporate ESG factors into the investment analysis In Process: and decision making process.  Investment Manager Questionnaire includes questions regarding incorporation of ESG in the investment process  Investment Office increasing internal discussions and meetings on various ESG topics

4 Explore opportunities for shareholder advocacy on Completed: climate change (e.g. voting shareholder proxies, co-  Voting Shareholder Proxies sponsoring shareholder resolutions, letter writing  Staff attending CERES and US SIF Sustainable Investment Forum and joining national organizations). conferences  Joined US Sustainable Investment Forum  Joined CERES’ Investor Network on Climate Risk  UW is a signatory on to CDP Climate, Water and Forest Initiatives In Process:  Students and Treasury Office drafting a corporate engagement regarding carbon asset risk 5 Establish a framework for future engagement with Completed: students.  Three Divest UW Students have helped with communications between the Treasury Office and the student group, and assist with shareholder engagement  Monthly meetings student group and Treasury staff

Substantial progress has been made by Treasury and UWINCO offices on the climate change initiatives. 26

F–6.1/205-16 5/12/16 F–7 STANDING COMMITTEES

Finance and Asset Management Committee

Comparative Performance, Asset Allocation, Investment Cost, and Effective Spending Rate

This item is for information only.

Attachment Comparative Performance, Asset Allocation, Investment Cost, and Effective Spending Rate; University of Washington – Board of Regents, May 12, 2016

F–7/205-16 5/12/16

May 12, 2016

F–7.1/205-16 ATTACHMENT 5/12/16 Endowment Performance vs. Policy and Peers

University of Washington Consolidated Endowment Fund (CEF) Annual Performance For the Period Ending December 31, 2015

1 Year 3 Year 5 Year 10 Year CEF Total Return 1.2% 8.0% 6.8% 5.9%

CEF Policy Benchmark1 0.7% 7.5% 7.0% 6.5%

70% ACWI / 30% BC Gov't Bond2 -0.8% 6.2% 5.7% 5.3%

Peer Comparisons from Cambridge Associates

$1 - $5 Billion Public School Median3 -0.9% 6.6% 6.1% 5.5% UW Quartile 1st 1st 2nd 1st

Top 50 College & University Median4 0.1% 7.5% 7.3% 6.2% UW Quartile 2nd 2nd 3rd 3rd

Recent performance has been strong against benchmarks. Performance vs. public peers with $1 - $5 Billion in assets has been healthy. Performance has been more middle of the pack within the Top 50 peers.

1Policy benchmark subject to change until HFRI indices are finalized. 2MSCI All Country World Index (Gross) & Barclays Government Bond Index. 3Reporting: 19 public schools with assets between $1 Billion to $5 Billion. 4Reporting: 41 of the top 50 public and private colleges & universities based on asset market values. | 2 F–7.1/205-16 5/12/16 Endowment Asset Allocation Trends

Public Colleges & Universities Between $1 -$5 Billion Endowment

100% 100% 90% 90%

Bonds & Cash 80% 80% 70% 70% Real Assets 60% 60% 50% 50% Private Equity 40% 40% Hedge Funds 30% 30% 20% 20% Global Equity 10% 10% 0% 0%

Hedge funds, private investments, and real assets make up almost 50% of a typical endowment portfolio. The major shift in asset allocation was completed by 2008; more recent trends have been further reductions in bonds and increases in private investments. In comparison, the University’s endowment holds more in traditional public equity.

Note: Allocations are as of December 31, 2015. Hedge Funds include Long-Short Hedge Funds, Absolute Return, and Distressed Securities. Private Investments include Venture Capital, Non-Venture Private Equity, and Other Private Investments. Real Assets include Public Real Estate, Private Real Estate, Commodities, Inflation-Linked Bonds (TIPS), Private Oil & Gas/Natural Resources, Timber, and Public Energy/Natural Resources. Bonds include U.S. Bonds, Global ex U.S. Bonds, and High-Yield Bonds. | 3 F–7.1/205-16 5/12/16 Investment Oversight Costs vs. Peers for All AUM & Endowment AUM

Investment Oversight Costs in Basis Points 50.0 For the Fiscal Year Ending June 30, 2015 40.0 Public & Private Schools with $1 - $5 Billion in Assets 30.0 Max 25% Median 75% Min Mean UW's bps 1 20.0 All AUM Cost 26.9 23.0 16.6 14.3 7.5 17.8 12.1

Endowment 10.0 41.0 24.9 19.8 17.2 9.6 20.9 20.0 AUM Cost2 0.0 1Based on all assets managed by institutional investment office as of 06/30/2015. Includes Endowment, Retirement/Pension, All AUM Endowment Operating, and Other funds. Reporting: 23 schools with all AUM between $1 - $5 Billion. 2Based on endowment asset managed by institutional investment office as of 06/30/2015. Reporting: 26 schools with endowment *Red bar represents UW's cost on box plot. AUM between $1 - $5 Billion.

For all AUM, the Investment Office’s cost of 12.1 bps falls in the 1st quartile range. As of 6/30/15, all AUM for the University totals $4.602B, which includes the Consolidated Endowment Fund (CEF) of $3.076B and the Invested Funds (IF) of $1.526B.

For endowment AUM, the Investment Office’s cost of 20.0 bps falls near the median. For the last calendar year, the University produced 1st quartile endowment investment result with endowment investment cost that was in the 3rd quartile.

Investment cost basis comparison across institutions may be limited in comparative ability due to the various methods institutions structure and finance certain services and expenses for their investment offices. | 4 F–7.1/205-16 5/12/16

Effective Spending Rate vs. Peers

Effective Spending Rate For the Fiscal Year Ending June 30, 2015

$1 - $5 Billion Public School1 Top 50 College & University2

6 20 5 17

4 4 15 4 12 # of 10 Institutions # of 8 2 2 7 2 Institutions 1 5 4 1 0 0 3.00 - 3.49 3.50 - 3.99 4.00 - 4.49 4.50 - 4.99 5.00 - 5.49 5.50 - 5.99 3.00 - 3.49 3.50 - 3.99 4.00 - 4.49 4.50 - 4.99 5.00 - 5.49 5.50 - 5.99 Spending as % of Market Value Spending as % of Market Value *Column colored red is where the University's spending rate falls. 1Reporting: 18 out of the 19 public schools with assets between $1 Billion to $5 Billion. 2Reporting: 49 out of the top 50 public and private colleges & universities based on asset market values. Note: Effective spending rate is the dollar amount of spending from the long-term investment portfolio for a fiscal year as a percentage of the beginning market value of the long-term investment portfolio. Effective spending rates are not the same as spending policy target rates in that the effective spending rate should reflect the amount actually spent during the fiscal year. The University’s effective spending rate of 4.65% places it in the 4.50 – 4.99 category, indicating that its effective spending rate is consistent with the norm in both of its peer groups. For $1-$5 Billion institutions, the University’s category ties for the second most frequent rate range and is only one peer less than the top rate range. For the more numerous Top 50 institutions, the University’s category is decisively the second most frequent effective spending rate range. | 5 F–7.1/205-16 5/12/16

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F–7.1/205-16 5/12/16 F–8 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Amendment to the Statement of Investment Objectives and Policy for the Consolidated Endowment Fund

RECOMMENDED ACTION

It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents adopt the amended “Statement of Investment Objectives and Policy for the Consolidated Endowment Fund.”

BACKGROUND

In 1988, the Board of Regents adopted investment policies for the Consolidated Endowment Fund and the Invested Funds of the University of Washington. These were followed in 1992 with the investment policy for Deferred and Other Gift Assets. Investment policies are reviewed on a continuing basis with periodic revisions reflecting the changing nature of the investment programs of the University. While no changes are proposed for the Invested Funds and Deferred and Other Gift Assets policies, the recommended action to amend the Consolidated Endowment Fund (CEF) policy reflects market conditions.

HIGHLIGHTS OF PROPOSED CHANGES

The proposed asset allocation offers a modest improvement to the risk/return and liquidity profile of the CEF. The proposed asset class targets differ from the current policy as follows:

2013 Policy 2016 Proposed Target Policy Target Change Emerging Markets Equity 17% 17% 0% Developed Markets Public Equity 28% 30% +2% Private Equity 15% 15% 0% Real Assets 7% 5% -2% Opportunistic 3% 3% 0% Capital Appreciation 70% 70% 0% Range: 55% - 85%

Absolute Return 19% 19% 0% Fixed Income 11% 11% 0% Capital Preservation 30% 30% 0% Range: 15% - 45%

Total Consolidated Endowment Fund 100% 100%

F–8/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Amendment to the Statement of Investment Objectives and Policy for the Consolidated Endowment Fund (continued p. 2)

An administrative or “housekeeping” change is also proposed to remove the peer benchmark comparison from the CEF policy, consistent with practices by peer institutions. Peer comparisons will continue to be presented in regular governance reporting. The investment policy changes are further highlighted in the attached annotated CEF investment policy.

PROCESS AND REVIEW

The CEF policy recommendation was developed by the Chief Investment Officer, in consultation with the University of Washington Investment Management Company Board (UWINCO Board) and Cambridge Associates, the University’s investment consultant.

Revisions to policy, including the overall asset allocation, require the full endorsement of the Board of Regents. Proposed changes will be effective July 1, 2016.

Attachments 1) Summary Consolidated Endowment Fund Investment Policy 2) Statement of Investment Objectives and Policy for the Consolidated Endowment Fund (ANNOTATED) 3) Cambridge Associates Memorandum: “Proposals to Revise Equity and Fixed Income Benchmarks”

F–8/205-16 5/12/16 Summary Consolidated Endowment Fund (CEF) Investment Policy Last amended September 2015

Financial Objective: To provide permanent funding for endowed programs.

Spending Policy • Program Distributions: Distributions to endowed programs will be 4% of the market value of the CEF for the previous five years. • Administrative Fee: Spending includes an additional 1% administrative fee.

Investment Objectives • Spending Requirement: To attain an average annual real total return of at least 5% over the long term. The 5% target provides for a 4% distribution to endowed programs and a 1% administrative fee. The nominal (inflation-adjusted) return requirement is 8.0% assuming the historical average inflation rate of 3.0%. • Policy Benchmark: To outperform an investable blend of market indices.

Prohibited Investments: Direct investments in tobacco companies (since 2000); direct investments in companies doing business in Sudan (since 2006); and direct investment in thermal coal companies (since 2015).

Investment Philosophy: Long-term focus; diversification; active management; global perspective.

2013 Strategic Asset Allocation

Investment Strategy Long-term Target Policy Range

Emerging Markets Equity 17%

Developed Markets Equity 28%

Private Equity 15% 55% - 85%

Real Assets 7%

Opportunistic 3%

70% CAPITAL APPRECIATION FUND

Absolute Return 19%

15% - 45% Fixed Income 11%

CAPITAL PRESERVATION FUND 30%

ATTACHMENT 1 F–8.1/205-16 CEF Policy Summary – Page 1 5/12/16 Summary (continued) Consolidated Endowment Fund (CEF) Investment Policy

Risk Guidelines: • Review: Monitored quarterly. Exception reporting provided in Board quarterly investment performance report.

• Concentration: Maximum portfolio weights. 15% in single manager (except fixed income); 25% in individual countries outside the U.S.; 30% in one market sector.

• Liquidity: One quarter (25%) of the CEF convertible to cash in one month or less; Unfunded capital commitments plus current exposure to private investments limited to one half (50%) of the CEF.

Capital Appreciation Fund: • Description: An integrated blend of global developed and emerging markets equity, real assets and opportunistic investments such as credit. Includes both public and private investments.

• Role: To provide the capital growth that will enable the CEF to meet its spending requirements, while at the same time preserving the purchasing power of the CEF for future generations.

Capital Preservation Fund: • Description: Absolute return investments and high quality fixed income.

• Role: To provide liquidity in support of spending and capital commitments, a deflation hedge and to reduce the overall volatility of the CEF.

Delegations: • Board of Regents : 1. Sets investment policy: Spending rate; Strategic asset allocation; Delegations 2. Appoints investment officers/advisors: Chief Investment Officer; UWINCO Board members; Investment consultants (FAM) 3. Reviews results: Investment program oversight / accountability

• University of Washington Investment Management Company Board (UWINCO Board) : 1. Advises the CIO: Investment planning; Asset allocation; Manager identification; Market trends 2. Advises the Board of Regents and President: Investment program and administrative oversight

• Chief Investment Officer: 1. Implements the investment program: Day to day investment program management; Tactical asset allocation; Manager appointments / terminations; Rebalancing; Risk management; Research 2. Monitors results: Performance measurement, Attribution, Evaluation

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UNIVERSITY OF WASHINGTON

STATEMENT OF INVESTMENT OBJECTIVES AND POLICY FOR THE CONSOLIDATED ENDOWMENT FUND

Approved by Board of Regents April 15, 1988

Amended December 15, 1989; February 16, 1990; September 17, 1993; October 22, 1993; September 20, 1996; September 19, 1997; September 18, 1998; November 19, 1999; January 21, 2000; November 17, 2000; May 18, 2001; June 14, 2002; November 21, 2003; January 16, 2004; June 11, 2004; July 16, 2004; May 19, 2005; June 9, 2005; June 8, 2006; May 15, 2008; March 19, 2009; September 17, 2009; May 13, 2010; October 21, 2010; May 9, 2013; November 14, 2013; May 14, 2015; September 10, 2015; and May 12, 2016

INTRODUCTION

The Board of Regents of the University of Washington is vested by statute with responsibility for the management of the properties of the University, including the Consolidated Endowment Fund and other University funds. This statement of investment objectives and policies governs the investment management of the Consolidated Endowment Fund (CEF). This statement is effective until modified by the Board of Regents.

The Board has delegated to its Finance and Asset Management Committee (FAM) the responsibility for overseeing the investment program within the general principles enumerated herein. In 2001, the Board approved the establishment of an advisory committee, the University of Washington Investment Committee (UWINCO), consisting of both Board of Regents’ members and external investment professionals. In 2004, the Board approved the appointment of the University’s first Chief Investment Officer (CIO) to manage the day to day activities of the investment portfolios. In 2015, 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”).

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A. FINANCIAL OBJECTIVES

1. To provide permanent funding for endowed programs. This objective addresses No changes the need to ensure intergenerational equity by providing the same level of program support in the future as it provides today.

2. To maintain the purchasing power of the CEF after spending and inflation. The objective of preserving purchasing power emphasizes the need to take a long-term perspective in formulating spending and investment policies.

3. To provide a predictable and stable source of income for endowed programs. This objective is achieved through the spending policy.

4. To provide a maximum level of return consistent with prudent risk levels. This objective assumes the construction of a global, equity-oriented, diversified portfolio coupled with active risk management.

B. SPENDING POLICY

1. Program Distributions: Distributions to endowed programs will be 4% of the No changes average market value of the CEF for the previous five years. In this way, the CEF’s distributed income is expected to keep up with inflation and its capital value will be preserved over time.

2. Administrative Fee: Spending includes an additional 1% administrative fee bringing the long term spending requirement to 5% per annum.

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C. INVESTMENT OBJECTIVES

1. Spending Requirement: Based upon the long-term spending policy, the CEF must attain an average annual real total return of 5.0% over the long term. The 5.0% target provides for a 4.0% distribution to endowed programs and a 1.0% administrative fee. Real total return is adjusted for inflation by the Consumer Price Index. Using the historical average inflation rate of 3.0% implies a nominal total return hurdle of 8.0% in order to meet the spending requirement.

2. Policy Benchmark: The investment performance of the CEF will also be

evaluated, on a risk-adjusted basis, against an investable blend of market indices. Over the long term the CEF’s diversification is expected to generate risk-adjusted returns that meet or exceed those of blended market indices. This comparison is useful in evaluating how successfully the underlying strategies have been implemented and the effectiveness of tactical departures from the strategic asset allocation.

3. The investment performance of the CEF will also be evaluated against a secondary policy benchmark consisting of a 70% equity and 30% bond blend of market indices. This comparison is useful in evaluating the effectiveness of an active

management program versus a passive management approach. Peer comparison to 4. Peer Comparison: Over the long term the CEF is expected to achieve returns be handled which are at least comparable to the median return of the largest 50 colleges and outside the universities in the Cambridge Associates Universe. investment policy, 5. It is recognized that the investment objectives stated above may be difficult to consistent attain over every five-year period, but should be attainable over a series of five and with the ten year periods. practices of peer institutions.

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D. ETHICAL CONSIDERATIONS

1. While fiscal goals are of central importance, due consideration shall be given to No changes the degree of corporate responsibility exercised by the companies in which investments are made.

2. Direct investment in companies doing business in Sudan whose business activities support the Sudanese government in its continuing sponsorship of genocidal actions and human rights violations in Darfur is prohibited.

3. Direct investment in tobacco companies is prohibited.

4. Direct investment in coal companies whose principal business is the mining of coal for energy is prohibited.

E. INVESTMENT PHILOSOPHY

The investment of the CEF is based on a set of beliefs and practices: No changes 1. Invest for the long term a. Preserve capital for use by future generations b. Focus on asset allocation as the primary determinant of return c. Avoid short-term speculative activity d. Accept illiquidity if justified by higher alpha

2. Build a well-diversified portfolio a. Limit risk by combining uncorrelated strategies b. Maintain meaningful exposure to major capital markets c. Build concentrated positions where conviction is high d. Tilt towards value strategies e. Employ fundamental research-driven and bottom-up strategies

3. Take advantage of global market inefficiencies

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a. Invest primarily with active managers b. Use indexed and enhanced indexed strategies where appropriate c. Incorporate investment ideas sourced through internal proprietary research d. Focus resources on inefficient markets (e.g., venture capital, hedge funds, emerging markets) e. Manage portfolio exposures actively in response to changing market conditions

F. INVESTMENT MANAGEMENT STRUCTURE

1. The CEF is invested primarily by external investment managers. External No changes investment management firms are selected on the basis of factors including, but not limited to the following: a. Experience of key personnel and succession plan where appropriate b. Consistency in investment approach c. Effectiveness of decision making process d. Assets under management and plans for managing future capacity e. Organizational structure including administration, back office support, risk management and reporting f. Performance record g. Fees h. Firm’s ethical and financial viability i. Structural fit within the CEF

2. The CEF may also be invested internally in public equities and bonds through cash market securities or derivative instruments.

3. Equities, (including public and private global equity) real assets, absolute return and bonds will primarily be managed separately. In the interest of diversification, the equity portion of the portfolio will be placed with managers who have distinct and different investment philosophies. The investment managers have the discretion to manage the assets in their individual portfolios to best achieve the investment objectives and requirements set forth in this policy statement and in their individual investment guidelines.

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G. PORTFOLIO COMPOSITION AND ASSET ALLOCATION

1. To achieve its investment objective, the CEF will be divided into two distinct No changes Funds: a “Capital Appreciation Fund” and a “Capital Preservation Fund.” Sub-categories of these Funds each with its own target are also specified. The purpose of dividing the Portfolio in this manner is to ensure that the overall asset allocation among and within the two Funds remains under the regular scrutiny of the Finance and Asset Management Committee and the UWINCO Board. Over the long run, the allocation between and within the Funds may be the single most important determinant of the CEF’s

investment performance.

2. Role - Capital Appreciation Fund: The purpose of the Capital Appreciation Fund is to provide the capital growth that will enable the CEF to meet its spending requirements, while at the same time preserving the purchasing power of the CEF for future generations. The Fund itself is an integrated blend of global developed and emerging markets equity, real assets and opportunistic investments such as credit. It is recognized that the Capital Appreciation Fund entails the assumption of greater market variability and risk.

3. Role - Capital Preservation Fund: The purpose of the Capital Preservation Fund is to provide liquidity in support of spending and capital commitments; a deflation hedge; and to reduce the overall volatility of the CEF. Two broad strategies are employed in the Capital Preservation Fund – absolute return and fixed income investments.

4. The policy portfolio is structured using long-term targets and ranges. The target asset allocation reflects the long-term risk and return objective of the CEF and establishes a normative allocation against which shorter-term asset

allocation decisions can be gauged. Ranges allow for tactical shifts among asset classes in response to the changing dynamics in capital markets. Wider ranges facilitate rebalancing and the active management of risk at the total portfolio level.

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STRATEGIC ASSET ALLOCATION

Investment Strategy Long-term Policy Range Public and Private Target Current | Proposed

Emerging Markets Equity 17% 17%

Developed Markets Equity 28% 30% Shifts in target asset allocation 15% 15% Private Equity reflect market realities and opportunities. Real Assets 7% 5%

Opportunistic 3% 3%

CAPITAL APPRECIATION FUND 70% 55% - 85%

Absolute Return 19% 19%

Fixed Income 11% 11%

CAPITAL PRESERVATION FUND 30% 15% - 45%

H. RISK MANAGEMENT 1. Risk is managed primarily through diversification. The CEF will be diversified No changes both by asset class (e.g., developed and emerging markets equities, real assets, opportunistic investments, absolute return, bonds and cash equivalents) and within asset classes (e.g., within equities by country, economic sector, industry, quality, and size). The purpose of diversification is to provide reasonable assurance that no single security or class of securities will have a disproportionate impact on the CEF.

2. Derivatives may be used to adjust exposures within or across the portfolio in order to improve the risk / return profile of the CEF.

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3. Aggregate portfolio risk is managed to minimize uncompensated, unanticipated and inappropriate risks. Both quantitative measures and qualitative judgment will be used in assessing and managing risk.

I. RISK GUIDELINES

1. The CEF will be monitored quarterly for adherence to the following risk guidelines. No changes A breach in a guideline triggers a written notification from the Chief Investment Officer to the Chair of the UWINCO Board. It is recognized that market conditions and / or illiquidity of the underlying securities may preclude an immediate rebalancing of the portfolio. Risk control exception reporting will be provided to the Board of Regents as part of its quarterly investment performance report which specifies the actions, if any, needed to bring the CEF into compliance.

2. Concentration: Maximum portfolio weights: a. 15% in single manager (excluding fixed income) b. 25% in individual countries outside the U.S. c. 30% in one market sector

3. Liquidity: a. One quarter (25%) of the CEF convertible to cash in one month or less b. Unfunded capital commitments plus current exposure to private investments limited to one half (50%) of the CEF

J. GUIDELINES FOR THE CAPITAL APPRECIATION FUND

1. The Capital Appreciation Fund includes the growth-oriented strategies within the No changes portfolio which are managed in an integrated manner in order to meet the long- term spending objectives of the CEF and sustain the portfolio in perpetuity.

2. The objective for the Capital Appreciation Fund is to outperform, net of commissions and fees, a representative risk-adjusted blend of market indices which reflect the strategic asset allocation of the Capital Appreciation Fund. In addition, performance on each sub-category of the Capital Appreciation Fund will be monitored against the average return of a universe of active managers and/or fund of funds. Performance will be monitored on a regular basis and evaluated over running five and ten year periods.

3. In recognition of the increasing correlation among asset classes, the Capital Appreciation Fund represents a market oriented mix of global developed and emerging markets equity, real estate, commodities, venture capital, private equity and opportunistic investments such as credit securities.

4. The Capital Appreciation Fund will be broadly diversified by country, economic sector, industry, number of holdings, number of managers, and other investment

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characteristics. To achieve its investment objective, the Capital Appreciation Fund may contain a mix of actively and passively managed strategies. Direct and derivative investments, commingled funds, private limited partnerships and fund of funds may be used.

5. The real estate portion of the Capital Appreciation Fund will be diversified by property type and geography. The University will invest in public and private real estate vehicles both domestically and internationally. Emphasis will be placed on investments in private real estate partnerships employing value-added and opportunistic strategies. Implementation may also include direct investment in real estate. Investments in publicly traded Real Estate Investment Trusts (REITS) will be made primarily to achieve exposure to core real estate.

6. Decisions as to individual country and security selection, security size and quality, number of industries and holdings, current income levels, turnover and the other tools employed by active managers are left to broad manager discretion. The usual standards of fiduciary prudence set forth in this policy statement and in individual investment management agreements and guidelines apply.

7. If allowed under their individual investment guidelines, managers may at their discretion hold investment reserves of either cash equivalents or bonds. Derivatives may be used to manage certain exposures such as currency or market risk if so specified under individual investment manager guidelines.

K. GUIDELINES FOR THE CAPITAL PRESERVATION FUND

1. The Capital Preservation Fund includes portfolio strategies which provide liquidity No changes to meet current spending needs and stability to protect capital in down markets.

2. The objective for the Capital Preservation Fund is to outperform, net of commissions and fees, a blend of market indices which reflect the strategic asset allocation of the Fund. Performance will be monitored on a regular basis and evaluated over running five and ten-year periods.

3. The absolute return strategy will favor investments with a low correlation to broad equity markets. Implementation will be made through direct investments, limited partnerships, or fund-of-funds.

4. The fixed income strategy may contain money market instruments, domestic and foreign government bonds and other high quality investment vehicles with risk / return characteristics consistent with the investment objectives of the Capital Preservation Fund. Derivatives may be used to manage certain exposures if so specified under individual investment manager guidelines.

5. Fixed income managers are expected to employ active management techniques, including maturity, sector and quality considerations. Implementation may also be achieved through passive indices, commingled funds, limited partnerships and fund-of-funds.

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L. GUIDELINES FOR TRANSACTIONS

As a general guideline that should apply to all assets managed, transactions should be No changes entered into on the basis of best execution, which is interpreted normally to mean best realized price. Commissions may be designated for payment of services rendered to the University in connection with investment management.

M. MONITORING OF OBJECTIVES AND RESULTS No changes

1. All objectives and policies are in effect until modified. The Finance and Asset Management Committee with advice from the Treasurer of the Board of Regents, Chief Investment Officer and the UWINCO Board will review these periodically for their continued appropriateness. It is anticipated that changes to the asset allocation targets and ranges will be made infrequently.

2. The CEF portfolios will be monitored on a continual basis for consistency in investment philosophy; return relative to objectives; and investment risk as

measured by asset concentrations; exposure to extreme economic conditions; and market volatility. Performance will be reviewed at least annually by the Finance and Asset Management Committee and with the UWINCO Board on a quarterly basis. Results will be evaluated over longer time frames including the inception period, running five- and ten-year periods, and complete market cycles.

3. The Chief Investment Officer will review individual managers as needed in order to confirm that performance expectations remain in place. In addition, portfolio activity will be reported on a regular basis to the UWINCO Board and the Chair of the Finance and Asset Management Committee.

4. A statement of investment objectives and guidelines will be maintained for each public investment manager where the University’s assets are managed in a separate account.

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N. DELEGATIONS

Delegations related to the management of the University’s investment portfolios No changes are as follows:

1. Board of Regents: a. Approve investment policies which guide the management of the University’s investment portfolios. This includes but is not limited to the strategic asset allocation, performance goals, spending and delegations.

b. Approve appointment and reappointment of Regent and non-Regent UWINCO board members.

c. Approve the Board of Regents Governance, Standing Orders, Chapter 10 which addresses the advisory and administrative functioning of the UWINCO Board.

d. Approve appointment of the Chief Investment Officer.

e. Approve appointment of the Treasurer of the Board of Regents.

f. Liquidate quasi-endowments. These funds represent assets donated to the University which have been accepted by the Board of Regents or its administrative designee as “quasi-endowments.” The decision to place the assets in a quasi-endowment is based on administrative recommendation and can therefore be reversed. Full or partial liquidation of quasi-endowments valued at $1 million or higher requires action by the full Board of Regents. Full or partial liquidation of quasi-endowments valued at less than $1 million is delegated to the Finance and Asset Management Committee of the Board of Regents. Endowments governed by an agreement that allows withdrawals

under specific terms and conditions are exempt from this requirement.

2. Chair of the Board of Regents:

a. Recommend members of the UWINCO Board for formal approval by the Board of Regents. Recommendations will be made in consultation with the Chair of the UWINCO Board and the President of the University (and/or his designee).

b. Designate the Chair of the UWINCO Board.

c. Approve investment manager appointments and direct investments in situations when the Chief Investment Officer is unavailable or unable to do so. .

3. Finance and Asset Management Committee of the Board of Regents:

a. Oversee the University’s investment programs within the broad guidelines established by the investment policies.

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b. Appoint the University’s investment consultant(s).

c. Recommend endowment spending policy changes to the Board of Regents for approval. It is anticipated that such changes will be infrequent.

d. Review the asset allocation and strategy recommendations of the Chief Investment Officer and the UWINCO Board. Recommend policy changes as appropriate to the Board of Regents.

4. University of Washington Investment Management Company (UWINCO) Board, an internal advisory board:

a. Advise the Finance and Asset Management Committee and the Chief Investment Officer on matters relating to the management of the University’s investment portfolios. This includes, but is not limited to, advice on overall

asset allocation, performance goals, portfolio risk, new investment strategies, strategy implementation, manager identification, due diligence.

b. Advise the President of the University on the compensation of senior professional investment staff and other administrative matters.

c. Adhere to the Board of Regents Governance, Standing Orders, Chapter 10 pertaining to the UWINCO Board.

5. President of the University:

a. Provide broad administrative oversight of the investment program with advice provided by the UWINCO Board and the University’s investment consultant. This includes but is not limited to the following:

i. Approve the compensation of senior professional investment staff.

ii. Administer internal fees for management and administrative activities related to the endowment.

iii. Approve use of professional staff bonus pool.

b. Assume supervisory responsibility for the Chief Investment Officer position. Appoint interim Chief Investment Officer when the position is vacant.

6. Treasurer of the Board of Regents:

a. Approve investment custodian appointment (s).

b. Execute securities transactions in conjunction with the day-to-day management of the investment program.

c. Execute investment management agreements, limited partnership agreements, custody agreements and other investment related documents upon satisfactory

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completion of reviews as appropriate by the state Attorney General, outside legal counsel and the University’s investment consultant.

7. Chief Investment Officer:

a. Manage the day-to-day activities of the University’s investment portfolios within the broad guidelines established by the investment policies.

b. Approve tactical moves relative to long-term policy targets when warranted by market conditions or risk considerations. The deliberate decision to overweight or underweight a strategy relative to its policy target is made in consultation with the UWINCO Board and the University’s investment consultant(s).

c. Seek the advice of the University’s investment consultant(s) and members of the UWINCO Board on issues related to the management of the investment portfolios. Incorporate such advice in the implementation of the investment program.

d. Appoint new investment managers, follow-on investments with existing managers and approve direct investments. Approved investments shall fall within the policy guidelines adopted by the Board of Regents.

e. Approve the dollar value of assets allocated to new and existing investment managers and reallocate assets among managers in accordance with long-term strategic targets.

f. Approve individual investment manager guidelines.

g. Monitor individual investment managers on a regular basis to ensure that performance and compliance expectation are met.

h. Monitor aggregate portfolio risk regularly to insure that the long-term purchasing power of the CEF is preserved.

i. Approve use of derivatives to manage the aggregate portfolio risk/return profile. This includes the use of swaps, options, futures and other derivative products to adjust exposures, to equitize cash, or to rebalance across asset classes.

j. Approve appropriate usage and timing of leveraged strategies within the CEF.

k. Terminate investment managers, including the authority to liquidate limited partnership interests or to reduce strategy exposures through other means. This authority is typically exercised due to performance concerns, organizational changes, or structural considerations within the UW investment portfolio.

l. Take action as appropriate in support of shareholder resolutions related to human rights violations in Burma.

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m. Engage in shareholder activism as appropriate on issues related to global climate change.

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February 24, 2016

To: UWINCO Board, UWINCO Investment Staff

From: Max Senter

Subject: Proposals to Revise Equity and Fixed Income Benchmarks

Investment Staff and Cambridge recommend two modest revisions to the Public Equity benchmark and the Fixed Income benchmark.

Public Equity

The current benchmark for the Developed, Emerging Market, and Opportunistic Equity segments of Capital Appreciation is the MSCI All Country World Index (ACWI). The MSCI methodology reinvests dividends paid without consideration of taxes withheld. For U.S. non-profits, this methodology overstates actual return as taxes on dividends are indeed withheld but without offsetting U.S. tax credits (as is the case for U.S. taxpayers).

MSCI also calculates its Indexes net of withholding taxes on dividends, and typically these are designated as ‘Net’ after the Index name, such as ‘MSCI ACWI (Net).’ The Net methodology more accurately reflects the total return that a U.S. non-profit would receive from investing passively in the international benchmarks. (Confusingly, MSCI’s older Developed Market Indexes such as EAFE are reported net of dividend withholding without the ‘Net’ designation, while others such as World, ACWI, and EM are not.) Netting dividend withholding does have the effect of lowering the benchmark return as shown in this table of annual returns for each of the past ten years.

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ACWI (Net) 20.95 11.66 -42.20 34.63 12.67 -7.35 16.13 22.80 4.16 -2.36 ACWI 21.53 12.18 -41.85 35.41 13.21 -6.86 16.80 23.44 4.71 -1.84 Difference -0.57 -0.52 -0.35 -0.78 -0.54 -0.48 -0.67 -0.64 -0.54 -0.52 ARLINGTON We observe that the norm in the industry for institutions is to use ‘Net’ Indexes, and BEIJING we recommend a transition to MSCI ACWI (Net). BOSTON Fixed Income DALLAS The current benchmark for fixed income is the Barclays Capital Government Bond LONDON Index (Government). This index includes U.S. Treasury and Agency debt with

MENLO PARK maturities from 1 to 30 years. The target allocation to Fixed Income is currently 11% of the total CEF. The Government is liquid, non-callable, and risk-free. While it SINGAPORE

SYDNEY ATTACHMENT 3

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changes with interest rates and issuance, the modified duration of Index is about 6 years.

The recommendation is to transition the Fixed Income benchmark to the BC Intermediate Government Index (Intermediate). This Index is the same as the Government except that it contains only maturities out to 10 years. Because issuance is dominated by short and intermediate maturities (which is subject to change with U.S. Treasury debt policy), the Intermediate makes up more than 80% of the $7+ trillion Government as measured by market value. The Intermediate’s modified duration is about 3.9 years, which is different from the Government’s duration. The annual return of the two benchmarks for each of the past ten years is shown in the following table.

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BC Government 3.46 8.67 12.38 -2.19 5.53 9.01 2.01 -2.61 4.93 0.84 BC Intermediate Government 3.84 8.47 10.43 -0.32 4.98 6.08 1.73 -1.25 2.52 1.18

Given the a primary use of fixed income today as a liquidity buffer and risk reducer and the staff’s implementation that reflects a short duration position (much less than 6 years), we recommend a transition to the Intermediate Index.

The attached Exhibit shows the current CEF Policy Benchmark and the proposed Policy Benchmark reflecting the MSCI ACWI (Net) and the BC Intermediate Government Bond Index.

2 | Page F–8.3/205-16 5/12/16 3

Page Proposed Benchmark Policy MSCI ACWI Index (Net) Index ACWI MSCI 50% NCREIF 50% Resources Natural CA 50% 70%CA Private Equity 30%CA VentureCapital MSCI ACWI Index (Net) Index ACWI MSCI MSCI ACWI Index (Net) Index ACWI MSCI Current Policy Benchmark Policy Current Proposed PolicyBenchmark Barclays Government Bond IndexBond BarclaysGovernment IndexBond Government BarclaysIntermediate HFRI Fundof Conservative Funds Index HFRI Fundof Conservative Funds Index MSCI ACWI Index ACWI MSCI 50% NCREIF 50% 50% CA Natural Resources Natural CA 50% 70%CA PrivateEquity 30%CA VentureCapital MSCI ACWI Index ACWI MSCI MSCI ACWI Index ACWI MSCI 3% 5% 11% 19% 15% 30% 17% Target Proposed Long-Term Long-Term Investment Strategy Fixed Income Fixed Absolute Return Opportunistic Real Assets PrivateEquity DevelopedMarkets Equity EmergingMarkets Equity

F–8.3/205-16 5/12/16 F–9 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program

RECOMMENDED ACTION

It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve the revised timeline and budget for the HR/Payroll Modernization Program.

BACKGROUND

The Human Resources/Payroll (HR/P) Modernization program is the largest administrative transformation effort in the University’s history. It is a multi-year initiative to replace the University’s 34-year-old legacy payroll system with a modern, integrated system to manage human resources and payroll functions; this is essential to supporting the UW’s large and diverse workforce.

The program was approved by the Board of Regents in February 2014, and the University selected Workday as its new HR/P system. The new system will transform the University’s human resources and payroll operations, significantly improve compliance, reduce risk, provide better data for decision making and increase efficiencies across the institution. This program is the first step in a larger strategy to modernize the University’s administrative infrastructure.

WHY THE UNIVERSITY IS MAKING THIS INVESTMENT

The University’s legacy payroll system is becoming increasingly difficult to support and is not keeping pace with our business needs. The current system dates back to 1982, when the University’s operating environment was substantially less complex. Since that time, the University added two campuses, experienced tremendous growth in its research enterprise, and saw an exponential rise in demand for its medical services. The University's workforce has doubled to more than 40,000 faculty and staff.

While the University’s scope and scale have expanded dramatically, the underlying technology for the legacy payroll system has not changed. The current system lacks essential tools and functionality to help staff do their work, resulting in operational inefficiencies that impact people at every level of the institution. Additionally, the system is missing basic, enterprise-wide human resources capabilities to support the University’s large and diverse workforce.

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 2)

Several other factors are driving the HR/Payroll system replacement. Units across the University have created side systems at considerable cost and effort to compensate for missing functionality. In addition, the system is based on a fragile technology platform that only a handful of staff now understands. Finally, the University has an increasing need to manage information security risks inherent with technology, and to keep pace with ever-changing regulatory requirements.

HR/P MODERNIZATION PROGRAM – SIGNIFICANT CHANGES

Since its launch in May 2014, the program has undergone several significant changes. In March 2015, the HR/P Executive Sponsors reached a decision not to proceed with initial plans to implement a biweekly pay cycle as part of the system implementation. This move was necessary because of the many complexities of the UW’s pay practices, along with difficulties in reporting employee compensation on a monthly basis to the State of Washington retirement systems. The change resulted in a six-month delay in the planned launch of the new Workday system.

In July 2015, the program’s lead Executive Sponsor, Senior Vice President V’Ella Warren, retired, and Kelli Trosvig, Vice President for UW Information Technology (UW-IT) and CIO, was named the new Lead Executive Sponsor. In addition, several new Executive Sponsors were added to the program. The program’s Executive Sponsors now include: • Dave Anderson, Executive Director for the Health Sciences Administration, who also has a reporting relationship with Finance & Facilities • Cheryl Cameron, Vice Provost for Academic Personnel • Paul Jenny, Senior Vice President for UW Planning & Management and Lead Executive Sponsor on the Finance Business Transformation project. • Mindy Kornberg, Vice President, Human Resources • Ruth Mahan, Chief Business Officer, UW Medicine and Vice President for Medical Affairs

As part of the transition, the University engaged North Highland, an expert Enterprise Resource Planning consulting firm, to evaluate the program. The findings revealed several significant challenges, including: • Lack of visibility across the seven interrelated projects crucial for go-live (Human Resources Information Systems, HR/P Modernization, HR/P Intersections, Academic Personnel, Medical Centers, School of Medicine and the Operating Model)

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 3)

• Inadequate coordination between those projects and insufficient resourcing across the overall effort

Based upon these findings, it was clear that the projects were not making the progress necessary to support a June 2016 go-live, and the project status was moved to red.

In response, several major mitigation measures were taken. In the fall of 2015, the seven HR/P Modernization projects were unified into a single program under a Program Management Office (PMO) to support cross-project coordination, collaboration and communication. To ensure appropriate support for the program, substantial resources were deployed from other University units, including UW- IT and UW Organizational Excellence. In late November 2015, the program hired a new Executive Program Director, Aubrey Fulmer, who has extensive experience in HR/Payroll transformations and in implementing Workday in higher education environments.

Throughout the fall and winter, and in the midst of these changes, the program was also conducting End-to-End testing. This testing revealed significant gaps in design, policies and strategies, including: • Lack of a cohesive design and key foundational strategies, such as reporting, document management and retention, and security • Incomplete or missing documentation of the future state design; no clear picture of how the new system, business processes and policies will function when operational • Input from UW Medicine indicated that substantial aspects of the initial design would not meet their needs • Inability to move forward with change management activities across campus due to unresolved design issues • Lack of an integrated approach to customer service and support that would meet the needs of faculty and staff after the system is operational

Results from the End-to-End testing demonstrated that the system was not ready for a June 2016 go-live. Based on these results, as well as thoughtful consideration of the options, the program’s leadership recommended a program reset. The University’s IT Strategy Board endorsed this recommendation, and the President and Interim Provost agreed that the program should not move forward with a system that was not complete; it was important to take the time to ensure that the University has a comprehensive, workable design.

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 4)

AN EXTENSIVE NEW DESIGN REVIEW

As part of the program reset, we are conducting an extensive design review phase to resolve outstanding issues, program gaps, and to validate the integrity of our design work. We began with a comprehensive bottom-up review of the original design to ensure a clear understanding of all outstanding issues and determine the best path forward.

Beginning in February 2016, and building upon existing work, a small team from the program performed an intensive examination of the system’s foundational key concepts, such as supervisory organizations, change job, and compensation. Each concept provides a definition, benefits and challenges, policy implications, and other details related to implementation. The group evaluated best practices for developing a future state design from higher education institutions around the country. This phase was completed late March, and provided us with a much stronger vision of our future state design and a clearer path towards successful deployment of the Workday system.

As part of this design review phase, we are also addressing important business process development work that is necessary for realizing administrative improvements. Ideally, this work should have happened prior to system implementation, but it was delayed to support a June go-live deadline. The program reset allows us to conduct this business process work prior to implementation.

The next phases of the review will involve subject matter experts across the University to validate our system design, including our recent business process work. This effort will start with small groups, and then progressively broaden in scope to include representative groups across all three campuses. Once business and key campus partners have completed this review, the rest of the University community will be engaged through a comprehensive change management process. This will ensure readiness for implementation of the new Workday system.

AN INTEGRATED SERVICE CENTER

Recommendations from evaluators, as well as best practices among other Workday higher education customers, highlighted the need to look at business processes and service delivery simultaneously. As a result, the program is now developing a new Integrated Service Center (ISC) to provide support to the UW

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 5)

community when the new Workday system goes live. The new service center will bring together functions from Academic Personnel, Human Resources, Payroll and UW Information Technology. This marks a change from our initial direction, which would have kept transactions and their associate support in separate units.

The ISC will deliver a high level of customer service by enabling effective collaboration with stakeholders across campus, and facilitating Human Resources (HR), Academic Personnel and Payroll inquiries and transactions in an efficient, accurate and compliant manner. This approach will ensure the system works across business processes.

Benefits of the ISC include:

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 6)

• Enhanced Customer Service o A single point of contact, eliminating unnecessary hand-offs o A unified approach to support, training, communication and ongoing updates o Development of a comprehensive knowledge base that will expand the level of accessible, accurate information o Insight into end-to-end processes across HR, Academic Personnel, Benefits, and Payroll domains

• Optimized Operations o Ensure the right people/areas are engaged in the right steps to improve operations and maintain compliance

• Continuous Improvement o Develop competencies to address existing and emerging requirements

• Consistent Use of Technology o Leverage UW Connect (ServiceNow) service and knowledge management capabilities

This winter, an information-gathering phase of the ISC was led by the Transforming Administration Program (TAP), which focuses on efficiency and effectiveness across the UW. The TAP ISC Planning Team held a series of meetings with key constituencies to gather feedback on initial ideas for ISC services and processes. They met with more than 450 campus stakeholders and gathered more than 1,100 comments. The team also met with business owner groups, including 175 additional individuals, and gathered nearly 300 more comments. Findings will be used to inform the ISC design and operations.

REVIEW AND EVALUATION

The HR/P Modernization program has undergone extensive analysis and evaluation in recent months by the following internal and external groups: • The University’s IT Strategy Board, which makes recommendations on University-wide IT strategies, investments, projects and initiatives, as well as providing oversight on major University IT projects. The IT Strategy Board is made up of UW faculty and administrators who broadly

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 7)

represent the University’s key missions of education, research, healthcare and service, as well as the University’s administrative operations. • The State of Washington’s Technology Services Board, which provides information technology strategic vision and planning, enterprise architecture, policy and standards, and major project oversight. Members include legislators, business leaders, agency directors and a union representative. • Bluecrane, Inc., an external consulting company providing independent quality assurance support for the program. They are responsible for identifying risks and making recommendations for mitigations.

These groups have reviewed and validated the new direction of the program, including the most recent design review phase and the addition of an Integrated Service Center.

NEW TIMELINE AND BUDGET

Based on the work needed to complete the implementation of Workday, we are now planning for a summer 2017 go-live. To meet this extended timeline, we are requesting budget authority for an additional $7,820,436 over the original approved budget, which includes $4,000,000 of contingency funding. This budget request is based on a June 2017 go-live date. Each additional month past this date will cost approximately $1M. Costs for stabilization during a post go-live period will be incorporated into the ongoing operating model.

The increase in budget will be funded through the allocation of temporary central resources, which comes from a reallocation of existing dollars for administration. There will be no additional request for state funding, tuition revenue, additional debt capacity, or student fees, nor will it be passed along to Academic units.

The chart below shows the original approved budget, and the budget forecast for the extended timeline, based upon a June 2017 go-live date.

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 8)

HR/Payroll Modernization Program Revised Budget

BoR Expenses Revised Budget* Approved as of Remaining June 2017 Budget March 2016 Balance Go-Live Implementation Costs Vendor Implementation 27,879,264 21,098,843 6,780,421 33,728,789 Project Team Implementation 21,903,082 13,579,707 8,323,375 27,371,412 Contracted Services 7,682,127 4,515,377 3,166,750 10,184,708 Implementation SubTotal 57,464,473 39,193,927 18,270,546 71,284,909

Contingency 10,000,000 10,000,000 4,000,000

Total Implementation 67,464,473 39,193,927 28,270,546 75,284,909

Cost of Issuance 610,669 610,669

Grand Total 68,075,142 39,193,927 28,270,546 75,895,578

Increase to Original Budget 7,820,436

*Costs for stabilization during a post go-live period are incorporated in the operating model.

The following chart shows the extended timeline, including the major phases needed to implement the new Workday system.

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 9)

PROGRESS IN 2016

The HR/P Modernization program has made significant progress in 2016: • Intensive work produced new foundational key concepts, strategies, and future state business process designs, which forms the basis for subsequent design work • The first cycle of parallel payroll testing is complete; setting the foundation for subsequent and repeated testing, which will ensure payroll is accurate • An organizational restructure in March expanded on the program’s successful use of agile processes, enabling better collaboration and information-sharing

F–9/205-16 5/12/16 STANDING COMMITTEES

Finance and Asset Management Committee

Approve Revised Timeline and Budget for HR/Payroll Modernization Program (continued p. 10)

• An initial detailed design for the Integrated Service Center is complete and has been reviewed and approved by all business owners in the program • The program provided an in-depth cross-functional orientation on the program’s key concepts, strategies, and Integrated Service Center design to more than 130 program staff, business owners and stakeholders; this foundation enables this group to validate the design • Completion of our rigorous key concepts review session put us on track to begin validating our system design

The HR/Payroll Modernization effort was initially approached as a technical implementation, but is now being managed as a business transformation program. Today the program includes individuals with extensive experience in integrated change management, and national experts on Workday implementations. While the complexity has proven greater than expected, we now have the right team in place to manage the program. The HR/P Modernization Executive Sponsors are maintaining close oversight of the program and are committed to its success.

AN INVESTMENT IN UW’S WORKFORCE

The new Workday system will enable people across the University to work better and smarter by having consistent, streamlined, modern HR and payroll practices, as well as user-friendly and intuitive online resources. The new system offers modern capabilities that will enable the UW to attract and retain the best people. It marks a major step in a larger effort to transform the UW’s administrative infrastructure to better support the University into the future.

The HR/Payroll Modernization program is an investment in the University’s workforce. While it is a tremendous undertaking and challenges may lie ahead, the benefits of this program are far-reaching. Ultimately, the University’s success lies in the talent of its people – we need systems that will help us compete for the best faculty, staff and students across the world.

F–9/205-16 5/12/16 F–10 STANDING COMMITTEES

Finance and Asset Management Committee

UW Medicine Board Update

INFORMATION

This item is 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 Board of Regents representatives serving on the UW Medicine Board an opportunity to update the Finance and Asset Management committee about current UW Medicine Board activities, discussions and actions.

UW Regents currently serving on the UW Medicine Board: Kristianne Blake Rogelio Riojas

F–10/205-16 5/12/16 B–1 BOARD OF REGENTS MEETING

Safety Update

This report is 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.

Due to the timing of monthly data availability, this report will be distributed at the meeting.

B–1/205-16 5/12/16 SAFETY STATISTICS

Report to the Board of Regents May 12, 2016

% Change from Type March 2016 April 2016 Prior Month Increase/(decrease) Reports of student behavior involving harm or threat of 5 2 (60%) harm to another Students seeking advocacy 17 25 47% services for the first time Safe Campus Reports1 53 50 (6%) Accident reports received2 258 353 37% Workers’ Compensation time 9 11 22% loss claims received Central line infections in 3 3* 0 patients

*27% reduction from same period last year3/5

1 SafeCampus acts as the central point of communication and the coordinating unit for violence mitigation activities across the UW. The Violence Prevention and Response Program is a partnership of key players in campus safety and violence prevention, including Student Life, Human Resources, the Bothell and Tacoma campuses, UW and Harborview Medical centers, the UW Police Department, Academic Human Resources, and the Graduate School. Detailed information is included in the attached report. 2 An on-the job accident is a reported event sent to Environmental Health and Safety through an online accident reporting system from all employees at all campuses and from the clinic-based systems at the medical centers.

B–1.1/205-16 ATTACHMENT 1 Page 1 of 1 5/12/16 April 2016 Report

SafeCampus Incidents and Assessments /VPATs 1.1.15—3.31..15 New Incidents Reported Assessments/VPATs 60 6 50 5 50 5

40 35 4 32 3 3 30 3

20 2

10 1

0 0 April 2014 April 2015 April 2016 April 2014 April 2015 April 2016

New Incidents Reported: This count is new incidents that were reported during the month. This count does not include ongoing case management on reports that came in previous months.

Assessments/Violence Prevention Assessment Team Meeting (VPAT): A formal meeting organized by SafeCampus that involves campus partners and appropriate UW departments to create a coordinated response plan to a reported incident. Level 1 Immediate Notification: (2) April 2016 Counts By Incident Respose Pertinent campus partners and departments are alerted immediately, VPAT is immediately convened when Level 4 Level 1 appropriate, and an action plan is produced Level 2 2 2 2 Level 2 Standard Notification: (2)

Pertinent campus partners and departments are alerted within 1 business day, VPAT in scheduled within 2 business days when appropriate, and an action plan is created

Level 3 Primary Responsibility of SafeCampus or Partner: (44)

Level 3 The level of concern is sufficiently low that a VPAT is not 44 needed; situation is responded to by SafeCampus or partner agency

Level 4 Information or Material Provided: (2)

B–1.2/205-16 ATTACHMENT 2 Page 1 of 3 5/12/16 April 2016 Report

SafeCampus Incidents Count by Incident Type Total 50 Incidents 1.1.15—3.31..15

Incidents involving Violence-Actual: Violence - Actual 6  (4) Personal Relationship Violence - Concerns 8  (2) Unwanted contact non- relationship Suicide - Concerns 4

Behaviors of Concern 30

Information 2

0 5 10 15 20 25 30

Behaviors of Concern Breakout Behaviors of concern is used to categorize a range of behaviors that, while Total 30 Incidents not violent, are disruptive to the workplace or campus community. This graph shows the detailed behaviors within this category.

Workplace Conduct 2

Unwanted Contact (Non Relationship) 4

Suspicious Activity 2 Stalking-Like Behavior 3 Stress in Personal/Academic Life 5 Personal Relationship 1 Overreaction to Situations 0 Decline Performance/Attendance 0 Interpersonal Conflict (Non-Relationship) 0 Cogntion or Reality Perception Concerns 3 Blaming Others 0 Belligerence, Intimidation, Conflicts 4 Academic Conduct 5 Other* 1

0 1 2 3 4 5

*Other: Student reported missing

B–1.2/205-16 Page 2 of 3 5/12/16 April 2016 Report

SafeCampus Incidents - Suicide Reports 6 1.1.15—3.31..155 5 In 2015 SafeCampus became 4 4 the UW’s designated central 3 reporting point for concerns 2 about suicide-related behavior 1 0 0 2014 2015 2016

SafeCampus Incidents – UW Affiliation

UW Affiliation Reporting FOCUS: PIQ: Person of SafeCampus Incidents Individual or Person Causing Department Experiencing Concern Unknown Identity 0 Concern0 0 Public 0 1 6 Public (patient) 0 0 1 Public (Personal Relationship) 0 1 5 Public (Previous UW Affiliation) 0 0 3 UW Faculty - Non Supervisor 3 1 0 UW Faculty - Supervisor 3 2 0 UW Graduate Student 0 1 1

UW Graduate Student Employee 3 4 4 UW Staff - Non Supervisor 18 11 7 UW Staff - Supervisor 13 2 1 UW Undergraduate Student 1 6 13 UW Undergraduate Student 1 2 2 Employee VPRP Partner 8 0 0 Other 1 0 0

B–1.2/205-16 Page 3 of 3 5/12/16 B–2 BOARD OF REGENTS MEETING

Preliminary FY 2017 Operating Budget and FY 2017 Tuition Rates

INFORMATION ITEM

It is the recommendation of the administration that the Board of Regents, pursuant to its authority under RCW 28B.20.130, the Bylaws of the Board of Regents, and the Board of Regents Standing Order No. 1, consider as preliminary the Fiscal Year 2017 operating budget and tuition rates for the University of Washington that are presented in the following text and tables. In this information item, the Board of Regents, in its sole and independent discretion:

1. Reviews the Fiscal Year 2017 Operating Budget; 2. Considers tuition rates for all tuition categories for the 2016-17 academic year; 3. Affirms selected fees for Fiscal Year 2017; 4. Specifies that academic fee increases that are implemented under authority that the Board of Regents has delegated to the President and Provost that are consistent with the limitations the Board has specified are reasonable and necessary; and, 5. Contemplates changes to the tuition and fees in the context of a revised Cost of Attendance appendix item.

BACKGROUND

The University’s operating budget for the period July 1, 2016 through June 30, 2017 is presented in this information item. The FY17 operating budget, including proposed tuition rates, is presented in one comprehensive draft.

• The first section of this item contains information about the primary drivers of the FY17 preliminary operating budget, including a summary of all projected revenues and expenditures for the upcoming fiscal year. This section details the administration’s proposed use of General Operating Funds and Designated Operating Funds, known together as ‘University Operating Resources.’ This section also includes projections of revenue for all major University enterprises, including auxiliary, self-sustaining, health system entities and restricted funds.

• The second section of this item, ‘Tuition Rates and Financial Aid,’ provides a detailed summary of proposed tuition rates, peer tuition comparisons, financial aid funding, and is followed by a revised Cost of Attendance estimate.

B–2/205-16 5/12/16 BOARD OF REGENTS MEETING

Preliminary FY 2017 Operating Budget and FY 2017 Tuition Rates (continued p. 2)

Attachments 1. FY 2017 Draft Operating Budget & 2016-17 Tuition Recommendations (PowerPoint presentation) 2. FY 2017 Draft Operating Budget and 2016-17 Tuition Rates 3. Cost of Attendance for First-Year UW Undergraduates

B–2/205-16 5/12/16 FY 2017 DRAFT OPERATING BUDGET & 2016-17 TUITION RECOMMENDATIONS

Gerald J. Baldasty, Interim Provost & Executive Vice President Sarah Norris Hall, Associate Vice Provost, Planning & Budgeting

B–2.1/205-16 ATTACHMENT 1 Page 1 of 24 5/12/16 AGENDA

FY2017 Preliminary Operating Budget Information > FY 2017 OPERATING REVENUES > 2016-17 TUITION AND FINANCIAL AID PROPOSAL

B–2.1/205-16 Page 2 of 24 5/12/16 BUDGET OVERVIEW

The UW budget item is a record of allocations, or a spending plan, resulting from a collaborative process. This includes detailed planning and analysis on both a centralized and de-centralized basis as budgets are developed throughout the University’s colleges, schools, divisions and auxiliaries. The UW budget process provides Regents opportunities to . Alter tuition rates and tuition-based financial aid funding . Change allocations . Prioritize central efforts and allocations

B–2.1/205-16 Page 3 of 24 5/12/16 BUDGET OVERVIEW

B–2.1/205-16 Page 4 of 24 5/12/16 FY2017 Preliminary Operating Budget

B–2.1/205-16 Page 5 of 24 5/12/16 UW BUDGET – ALL SOURCES

University Operating Resources  General Operating Funds  Designated Operating Funds Research Enterprise Restricted Funds  Gift Income and Endowment Distributions  Restricted Appropriations from the state of Washington UW Medicine Health System Auxiliary/Self-Sustaining Activities  Auxiliary unit budget projections  UW Tacoma and UW Bothell self-sustaining revenue projections  Academic and academic support unit self-sustaining revenue projections

B–2.1/205-16 Page 6 of 24 5/12/16 KEY REVENUE ASSUMPTIONS: General Operating Funds

General Operating Funds • State Appropriations • Tuition Revenue Compromise Supplemental Operating Budget FY 16 FY17 Total 2015‐17 Biennial Budget Total Funding 291,886 327,686 619,572 Supplemental Funding Changes 1,047 4,657 5,704 Supplemental Maintenance Changes (29) (45) (74) Tuition Backfill 411 3,102 3,513 OFM Central Service Charges* 622 622 1,244 Moore v. HCA settlement costs* 90 90 Mental Health Task Force 25 25 50 Telemedicine 18 18 36 Workers' Compensation Changes 979 979

Comp PEBB Funding Rate Reduction (134) (134) Total 2015‐17 Funding: 292,933 332,343 625,276 *These amounts do not represent additional funding.

B–2.1/205-16 Page 7 of 24 5/12/16 KEY REVENUE ASSUMPTIONS: General Operating Funds

General Operating Funds Additional tuition and financial aid detail will follow this section • State Appropriations • Tuition Revenue

Net Tuition (Op Fee Projection) FY17 Proposed FY16 (w/o true‐up) Seattle 518,646,190 529,490,768 Bothell 49,117,961 52,122,697 Tacoma 42,231,580 43,889,135 TOTAL 609,995,731 625,502,600

B–2.1/205-16 Page 8 of 24 5/12/16 KEY REVENUE ASSUMPTIONS: Designated Operating Funds

Designated Operating Funds • Indirect Cost Recovery (ICR) • Institutional Overhead • Summer Quarter • Investment Income • Other (Administrative Overhead, Misc. Fees)

DOF FY17 Proposed FY16 Adopted

ICR 247,000,000 238,000,000

Institutional OH 26,000,000 24,000,000

B–2.1/205-16 Page 9 of 24 5/12/16 KEY REVENUE ASSUMPTIONS: Designated Operating Funds

Designated Operating Funds • Indirect Cost Recovery • Institutional Overhead • Summer Quarter • Investment Income • Other (Administrative Overhead, Misc. Fees)

DOF FY17 Proposed FY16 Adopted Summer Quarter 55,136,345 53,199,945 Investment Income 12,961,404 13,650,000

B–2.1/205-16 Page 10 of 24 5/12/16 KEY REVENUE ASSUMPTIONS: Designated Operating Funds

Designated Operating Funds • Indirect Cost Recovery • Institutional Overhead • Summer Quarter • Investment Income • Other (Administrative Overhead, Misc. Fees)

DOF FY17 Proposed FY16 Adopted Administrative OH 8,619,272 8,103,601 Miscellaneous Fees 8,225,500 8,225,500

B–2.1/205-16 Page 11 of 24 5/12/16 FY 2017 University Resources

B–2.1/205-16 Page 12 of 24 5/12/16 FY 2017 UNIVERSITY REVENUES

Total - $7.066 billion

Auxiliary & Self‐ Sustaining University Activities Operating 12% Resources 19%

Research Enterprise 16%

UW Medicine Restricted Funds health system 4% 49%

B–2.1/205-16 Page 13 of 24 5/12/16 FY 2017 PROJECTED RESEARCH

Total - $7.066 billion

Research Enterprise 16%

B–2.1/205-16 Page 14 of 24 5/12/16 FY 2017 PROJECTED RESTRICTED

Total - $7.066 billion

Restricted Funds 4%

B–2.1/205-16 Page 15 of 24 5/12/16 FY 2017 PROJECTED HEALTH SYSTEM

Total - $7.066 billion

UW Medicine health system 49%

B–2.1/205-16 Page 16 of 24 5/12/16 FY 2017 PROJECTED AUXILIARY/SELF-SUSTAINING

Total - $7.066 billion

Auxiliary & Self‐ Sustaining Activities 12%

B–2.1/205-16 Page 17 of 24 5/12/16 2016-17 Proposed Tuition Rates & Financial Aid Support

B–2.1/205-16 Page 18 of 24 5/12/16 TUITION RATES AND FINANCIAL AID

See Table 6, pg. 16, for details General Operating Funds • Tuition Revenue • Financial Aid

Resident undergraduate rate reduced by additional 10.5% • Below mean and median peer rates Nonresident undergraduate rate would increase 2% • Currently below peer mean Resident (and nonresident) Tier 1 (PhD) rate would not increase • Continue UW’s place above peer mean and median Generally, grad/prof categories would change between ‐2% and 10%, but the weighted average of these increases is modest

B–2.1/205-16 Page 19 of 24 5/12/16 TUITION RATES AND FINANCIAL AID

General Operating Funds • Tuition Revenue • Financial Aid FY17 Grad/Prof Tuition Change Weighted Average Resident Nonres Total Seattle 2.4% 1.1% 1.6%

Bothell 0.0% 0.0% 0.0%

Tacoma 0.5% 2.6% 1.0%

TOTAL 2.1% 1.1% 1.5%

B–2.1/205-16 Page 20 of 24 5/12/16 TUITION RATES AND FINANCIAL AID

General Operating Funds Regents may amend tuition‐based allocations to aid at any time • Tuition Revenue • Financial Aid Three pools of tuition revenue contribute to aid: 1. 4% of total tuition revenue collected (state law) 2. 4% total resident portion (UG and GR) charged for waiver pool 3. Additional aid pool changes in value, depending on conditions: • Regents increased the pool as State Need Grant funding was cut (FY10) • Regents increased the pool during the years of dramatic tuition increases (FY10 through FY13) • Regents maintained the pool during the tuition freeze and decreased it slightly with last year’s 5% decrease • We propose that the pool be reduced, but that the overall amount not decrease at the same rate (‐10.5%) so that the amount of aid from resident undergraduates does not decrease more than the total COA

B–2.1/205-16 Page 21 of 24 5/12/16 TUITION RATES AND FINANCIAL AID

See Table 9, pg. 20, for General Operating Funds details • Tuition Revenue • Financial Aid

Undergrads contribute 75% of total net operating fee revenue (33% ‐ resident undergrads and 42% ‐ nonresident undergrads) • Nonresident undergraduates contribute $27.8 million to aid, but consume only $10.6 million • Resident undergraduates contribute $43.1 million to aid, but consume $60.4 million Graduate and professional students contribute $153.4 million of net operating fee, though the gross contributions total $248 million. The difference is largely attributed to tuition waivers.

B–2.1/205-16 Page 22 of 24 5/12/16 TUITION RATES AND FINANCIAL AID

Appendix 1: Cost of Attendance for First-Year UW Undergraduates (pg. 21)

Some 2016‐17 student fee rates are still being finalized. An updated version of this appendix item will be presented in June.

B–2.1/205-16 Page 23 of 24 5/12/16 Questions

B–2.1/205-16 Page 24 of 24 5/12/16 fCohen UNIVERSITY OF WASHINGTON

FY 2017 DRAFT OPERATING BUDGET

FY 2017 OPERATING BUDGET 2016-17 TUITION RATES

Prepared by the Office of Planning & Budgeting

B–2.2/205-16 ATTACHMENT 2 5/12/16 Board of Regents William S. Ayer Joel Benoliel Kristianne Blake Joanne R. Harrell Jeremy Jaech, Board Vice Chair Vanessa Kritzer, Student Regent Constance W. Rice Rogelio Riojas Patrick M. Shanahan, Board Chair Herb Simon

President’s Executive Committee Norman Arkans, Associate Vice President, Media Relations and Communications Gerald J. Baldasty, Interim Provost and Executive Vice President Ana Mari Cauce, President Jennifer Cohen, Interim Athletic Director Elizabeth Cherry, Interim Vice President, Finance and Facilities/ Treasurer Mary Gresch, Chief Marketing & Communications Officer Randy Hodgins, Vice President, External Affairs Paul Jenny, Senior Vice President, Planning & Management Rolf Johnson, Senior Advisor Paul Ramsey, CEO/Dean, UW Medicine Margaret Shepherd, Chief Strategy Officer

President’s Cabinet Sandy Archibald, Dean, Evans School of Public Policy & Governance (BoDC Chair) Norman Arkans, Associate Vice President, Media Relations and Communications Gerald J. Baldasty, Interim Provost and Executive Vice President Philip Ballinger, Associate Vice Provost, Enrollment and Undergraduate Admissions Norm Beauchamp, Chair, Faculty Senate Rovy Branon, Vice Provost, UW Professional and Continuing Education Cheryl Cameron, Vice Provost, Academic Personnel Ana Mari Cauce, President Elizabeth Cherry, Interim Vice President, Finance and Facilities/Treasurer Jennifer Cohen, Interim Athletic Director Gabriel Gallardo, Interim Vice President/Vice Provost, Minority Affairs Mary Gresch, Chief Marketing & Communications Officer Randy Hodgins, Vice President, External Affairs Vikram Jandhyala, Vice-Provost, Innovation, CoMotion Paul Jenny, Senior Vice President, Planning and Management Rolf Johnson, Senior Advisor, Office of the President Ruth Johnston, Associate Vice President & Chief of Staff, Planning & Management Mindy Kornberg, Vice President, Human Resources Connie Kravas, Vice President, UW Advancement Mary Lidstrom, Vice Provost, Research Karin Nyrop, Division Chief, Attorney General's Office, UW Division Mark Pagano, Chancellor, UW Tacoma Paul Ramsey, CEO/Dean, UW Medicine Margaret Shepherd, Chief Strategy Officer, Office of the President Bob Stacey, Dean, College of Arts and Sciences Denzil Suite, Vice President, Student Life Ed Taylor, Dean and Vice Provost, Undergraduate Academic Affairs Kelli Trosvig, Vice President and CIO, UW Information Technology Wolf Yeigh, Chancellor, UW Bothell

B–2.2/205-16 5/12/16 Board of Deans and Chancellors Sandra Archibald, Chair, BoDC; Dean, Evans School of Public Policy & Governance Robert C. Stacey, Dean, College of Arts & Sciences John E. Schaufelberger, Dean, College of Built Environments Joel H. Berg, Dean, School of Dentistry Mia Tuan, Dean, College of Education Michael B. Bragg, Dean, College of Engineering Lisa J. Graumlich, Dean, College of the Environment Rovy Branon, Vice Provost, Educational Outreach James Jiambalvo, Dean, Foster School of Business Dave L. Eaton, Vice Provost and Dean, Graduate School Harry Bruce, Dean, Information School Kellye Y. Testy, Dean, School of Law Lizabeth “Betsy” Wilson, Dean, University Libraries Paul G. Ramsey, Dean, School of Medicine Azita Emami, Dean, School of Nursing Sean Sullivan, Dean, School of Pharmacy Howard Frumkin, Dean, School of Public Health Edwina Uehara, Dean, School of Social Work Ed Taylor, Vice Provost and Dean, Undergraduate Academic Affairs Wolf Yeigh, Chancellor, UW Bothell Mark A. Pagano, Chancellor, UW Tacoma

Senate Committee on Planning and Budgeting Kate O’Neill, SCPB Chair Norm Beauchamp, Faculty Senate Chair Zoe Barsness, Faculty Senate Vice Chair JoAnn Taricani, Faculty Legislative Representative Marcia Killien, Secretary of the Faculty Mark Haselkorn, Faculty at Large Paul Hopkins, Faculty at Large Kurt Johnson, Faculty at Large Marjorie Olmstead, Faculty at Large Roy Taylor, ASUW/GPSS Joint Student Representative Tyler Wu, ASUW president Alex Bolton, GPSS President Gerald Baldasty, Interim Provost and Executive Vice President Paul E. Jenny, Senior Vice President, Planning & Management Sandra Archibald, Board of Deans and Chancellors Representative

Provost Advisory Committee for Students (PACS) Alice Popejoy, Chair Austin Wright-Pettibone, Vice Chair Tyler Wu, ASUW president Alex Bolton, GPSS President Dominick Juarez, ASUW Bothell President Sophie Nop, ASUW Tacoma President Brian Tracey Elizabeth Pring Elloise Kim Jack Blaising Josh MacKintosh Kaitlyn Zhou Kevin Celustka Roy Taylor Ryan Brill

B–2.2/205-16 5/12/16 TABLE OF CONTENTS

UW Mission & Sustainable Academic Business Plan ...... 5 2016 Key Facts ...... 6 Components of the FY17 Proposed Budget ...... 8 University Operating Resources ...... 10 General Operating Fund (GOF) ...... 10 State Subsidy ...... 10 Tuition Revenue ...... 11 Designated Operating Fund (DOF) ...... 11 Proposed Uses of GOF and DOF ...... 12 Budget Priorities ...... 12 University Operating Resources Budget ...... 12 University Revenues ...... 14 Research Enterprise ...... 14 Restricted Funds ...... 14 UW Medicine Health System ...... 14 Auxiliaries / Self-Sustaining Activities ...... 15 Tuition Rates and Financial Aid ...... 16 Tuition Recommendations ...... 16 Tuition and Fees Comparison ...... 18 Financial Aid ...... 19

B–2.2/205-16 5/12/16 UW Mission & Sustainable Academic Business Plan

The primary mission of the University of Washington is the preservation, advancement, and dissemination of knowledge. The University preserves knowledge through its libraries and collections, its courses, and the scholarship of its faculty. It advances new knowledge through many forms of research, inquiry, and discussion, and disseminates knowledge through the classroom and the laboratory, scholarly exchanges, creative practice, international education, and public service. As one of the nation's outstanding teaching and research institutions, the University is committed to maintaining an environment for objectivity and imaginative inquiry and for the original scholarship and research that ensure the production of new knowledge in the free exchange of facts, theories, and ideas.

UW Brand: Together undaunted for a world of good.

The UW must…

Sustain • Academic excellence and mission • Financial stability

Compete • Attract the best students, faculty, and staff • Increase and diversify funding

Transform • Embrace technology and interdisciplinary collaboration to meet the needs of a diverse and dispersed student body • Invest in people and infrastructure to meet 21st century challenges

By… • Increasing revenue • Decreasing costs • Investing in people • Investing in infrastructure • Increasing access

B–2.2/205-16 Page | 5 5/12/16 2016 Key Facts

PROFILE ENROLLMENT AND DEGREES

• The University of Washington has

three campuses that offer over 531

degree options across 294 programs

• The UW’s fiscal year 2016 (FY16)

budget totals $6.9 billion

• Tuition revenue comprises 68 percent of the UW’s general UW Educational Outreach educates more than 50,000 students annually operating fund resources (state through a variety of programs, including 200 credit and non-credit funds plus tuition revenue), up from certificate programs, 90 graduate degrees, UW summer quarter courses, 34 percent in 2004, primarily UW in the High School and UW International & English Language Programs. because the UW lost half of its state funding between FY09 and The UW has become increasingly competitive since the beginning of the FY12 recession (2007-08): • Seattle freshman applications increased by 122 percent • The Seattle freshman admission rate declined from 64 percent to 53 percent, the UW’s lowest admit rate ever • The average GPA of the Seattle entering class increased from 3.69 to 3.78 • The average SAT composite score for the Seattle entering class increased from 1782 to 1855 (out of 2400)

The UW’s average time to degree is 4.0 years, and 83 percent of entering freshmen graduate from the UW within six years, the highest percentage of any public university in the state. • Across all campuses, 74 percent of UW undergraduate students are residents of Washington

In fall 2015, 38.2 percent of UW students were pursuing at least one science, technology, engineering & mathematics (STEM) major and in 2014–15, the UW awarded 5,290 STEM degrees.

B–2.2/205-16 Page | 6 5/12/16

AFFORDABILITY AND ACCESS

• • In 2015-16, 30 percent (or about 9,500) of UW Since before the recession, the number and

undergraduate residents were eligible for Husky proportion of underrepresented minority students

1 at the UW has increased, comprising 18.1 percent Promise , which provides free tuition to students

of the 2015 incoming freshman class, compared to with financial need

10.5 percent in 2006

• In 2015-16, about 54 percent of UW undergraduates

• The UW’s 2015-16 resident undergraduate tuition are receiving some form of financial aid, totaling

and fee rate is $11,839, which is below the Global over $414 million

Challenge State peer mean and median

• Half of all UW undergraduates graduate with no

• In 2015-16, 29 percent of undergraduates are known debt, and those who borrow graduate with

eligible for Pell Grant funding, and 31 percent of less debt than the national average

all freshmen will be the first in their families to

attend college • In 2015-16, 2,650 UW students are recipients of the

College Bound Scholarship Program and 7,400 UW

• The UW has more Pell Grant recipients than all Ivy

students are projected to receive the Washington

League schools combined

state Need Grant

• In 2015-16, the UW is giving $105 million in

institutional grants and scholarships to Washington

residents

AWARDS AND HONORS RESEARCH AND SERVICE

• The UW is one of the best universities in the world, • The UW receives more federal research dollars than any

ranked No. 11 globally by U.S. News & World

other public university in the nation — in FY15, the UW

Report, No. 15 globally by the Academic Ranking of

received $1.3 billion in total research awards

World Universities and No. 7 nationally by

Washington Monthly

• The UW is one of the top five largest employers in

Washington, supporting 79,331 jobs across the state

• Kiplinger’s ranks the UW as the No. 9 best value in

the nation for in-state students, and Washington

• In FY15 CoMotion launched 15 new startups and the UW

Monthly ranks the UW campus in Seattle No. 1, UW

was rated the No. 1 most innovative public university in Bothell No. 13, and UW Tacoma No. 22 in its “Best

Bang for the Buck” rankings the world by Reuters, which measured patent applications

and impact

• The UW is home to six Nobel Prize winners, 15

MacArthur Fellows, over 240 members of the

• Over the last 10 years, the UW has produced more Peace

Institute of Medicine of the National Academies and

Corps volunteers than any other U.S. university

167 fellows in the American Association for the

Advancement of Science

• The UW’s annual economic impact on the state of

Washington is now $12.5 billion — up from $9.1 billion in

2009

1. Through a combination of state, federal and UW local funds

B–2.2/205-16 Page | 7 5/12/16 Components of the FY17 Proposed Budget

In the sections below, each major component of the FY17 operating budget is defined, and changes to the budgeted amounts for the coming fiscal year are explained. As a reminder, the primary sections of the Regents’ budget are as follows:

University Operating Resources • General Operating Funds • Designated Operating Funds

Research Enterprise

Restricted Funds • Gift income and endowment distributions • Restricted appropriations from the state of Washington

UW Medicine Health System

Auxiliary/Self-Sustaining Activities • Auxiliary unit budget projections • UW Tacoma and UW Bothell self-sustaining revenue projections • Academic and academic support unit self-sustaining revenue projections

Table 1, below, shows the total projected revenues and expenditures for FY17, even though the University operates on an incremental budget process.

B–2.2/205-16 Page | 8 5/12/16 Table 1. FY 2017 Proposed Budget - Revenues and Expenditures by Fund and Category Revenue and Expenditure by Fund FY17 Proposed FY16 Adopted Change FY16 to FY17 % Change

University Operating Resources General Operating Fund: State Appropriations 332,343,000 291,886,000 40,457,000 Tuition Operating Fee Revenue 609,996,000 625,502,600 (15,506,600) Designated Operating Fund: Indirect Cost Recovery 247,000,000 238,000,000 9,000,000 Institutional Overhead 26,000,000 24,000,000 2,000,000 Remaining DOF 85,143,000 83,379,046 1,763,954 Total Operating Revenue 1,300,482,000 1,262,767,646 37,714,354 3%

Total Operating Expenditures 1,300,482,000 1,262,767,646 37,714,354

Research Enterprise Total Research Enterprise Revenue 1,137,195,960 1,114,898,000 22,297,960 2%

Total Research Enterprise Expenditures 1,137,195,960 1,114,898,000 22,297,960

Restricted Funds Gift Income & Endowment Distributions 280,000,000 259,700,000 20,300,000

State Restricted Funds Biotoxin Acct (Shellfish Monitoring) 297,000 195,000 102,000 Aquatic Lands Enhancement Account 775,000 775,000 - Economic Development Strategic Reserve Acct 1,507,000 1,504,000 3,000 Dedicated Marijuana Acct-State 227,000 227,000 - Accident Account 3,649,000 3,480,000 169,000 Medical Aid Account 3,421,000 3,328,000 93,000 State Restricted Funds Total 9,876,000 9,509,000 367,000 4% Total Restricted Fund Revenue 289,876,000 269,209,000 20,667,000 8%

Total Restricted Fund Expenditures 289,876,000 269,209,000 20,667,000 UW Medicine Health System (Preliminary) UW Medical Center 1,160,000,000 1,118,088,000 41,912,000 Harborview Medical Center* 950,000,000 920,350,000 29,650,000 Valley Medical Center 568,000,000 546,172,000 21,828,000 NW Hospital 392,000,000 375,377,000 16,623,000 UW Physicians 304,000,000 311,690,000 (7,690,000) Airlift NW 48,000,000 48,891,000 (891,000) UW Neighborhood Clinics 49,000,000 42,647,000 6,353,000 Total UW Medicine Health System Revenue 3,471,000,000 3,363,215,000 107,785,000 3%

Total UW Medicine Health System Expenditures 3,471,000,000 3,363,215,000 107,785,000

Auxiliary/ Self-Sustaining Activities Housing and Dining (Seattle campus) 120,992,500 112,794,800 8,197,700 Intercollegiate Athletics 108,944,000 109,510,000 (566,000) Educational Outreach 111,098,000 107,209,000 3,889,000 Parking 40,418,000 39,782,000 636,000 UW Bothell & UW Tacoma 21,799,000 22,600,000 (801,000) Additional academic self-sustaining activities 329,416,000 326,250,000 3,166,000 Additional academic support self-sustaining activities 135,648,000 151,808,000 (16,160,000) Total Auxiliary/Self-Sustaining Revenue 868,315,500 869,953,800 (1,638,300) 0%

Total Auxiliary/Self-Sustaining Expenditures 868,315,500 869,953,800 (1,638,300)

Total University Revenue 7,066,869,460 6,880,043,446 186,826,014 3% Total University Expenditures 7,066,869,460 6,880,043,446 186,826,014 3% *HMC is managed by UWMC, but appears on King County's financial statement.

B–2.2/205-16 Page | 9 5/12/16 University Operating Resources

As a reminder, University Operating Resources are derived from state appropriations, net tuition revenue, indirect cost recovery from grants and contracts, institutional overhead charged to self-sustaining budgets and auxiliary units of the University, administrative overhead charged to Bothell and Tacoma, and summer quarter tuition revenue. These revenues are combined into two major budget categories: General Operating Funds and Designated Operating Funds. These budget categories fund our campuses, Seattle schools and colleges, and academic support units. Each of these primary revenue drivers is described below.

General Operating Fund (GOF)

GOF is made up of state appropriations and tuition operating fee revenue (net of financial aid).

State Subsidy

The 2015-17 biennial operating budget, which was enacted in the 2015 legislative session, appropriated incremental funds to support medical residencies, increase computer science enrollments, and continue operations of the UW’s WWAMI program in Spokane. The budget also provided limited funds for general wage increases and collective bargaining agreements for state-funded personnel. The 2016 supplemental operating budget made minor changes to the enacted biennial budget. The supplemental budget provided additional funds to “true-up” previous appropriations to backfill resident undergraduate tuition rate reductions, and it adjusted appropriations due to changes in workers’ compensation rates and employer contributions to employee health insurance. Table 2 provides an overview of supplemental changes to the University’s “Near General Fund-State”1 biennial appropriation.

Table 2: UW State Funding in the Final 2016 Supplemental Budget Near General Fund-State, detail by fiscal year (in $1,000s) Compromise Supplemental Operating Budget

FY 16 FY17 Total 2015-17 Biennial Budget Total Funding 291,886 327,686 619,572 Supplemental Funding Changes 1,047 4,657 5,704

Supplemental Maintenance Changes (29) (45) (74)

Tuition Backfill 411 3,102 3,513

OFM Central Service Charges* 622 622 1,244

Moore v. HCA settlement costs* 90 90

Mental Health Task Force 25 25 50

Telemedicine 18 18 36

Workers' Compensation Changes 979 979

Comp PEBB Funding Rate Reduction (134) (134) Total 2015-17 Funding: 292,933 332,343 625,276 *These amounts will be swept back by the state to cover their intended uses.

1 “Near General Fund-State” is the official fund title used by the state to describe the combination of appropriations from the general fund and the Education Legacy Trust Account.

B–2.2/205-16 Page | 10 5/12/16 Tuition Revenue

Recall that the enacted biennial budget assumed the provisions of the Second Engrossed Substitute SB 5954, which reduced the operating fee portion of resident undergraduate tuition at all public institutions. In 2015- 16, resident undergraduate operating fees were decreased to 5 percent below the 2014-15 rates. In 2016-17, resident undergraduate operating fees at the state universities (the UW and WSU) will be decreased to 15 percent below the 2014-15 rates. The incremental change between 2015-16 and 2016-17 is an effective decrease of 10.5 percent.

Tuition rates for nonresident undergraduates and all graduate and professional students remain firmly under the authority of the UW Board of Regents. Proposals for 2016-17 tuition rates are presented for review and consideration in Table 6, on page 16.

Projected tuition revenue—net of building fee, required financial aid set-aside, and, of course, waivers—is shown in Tables 1 and 3 as the “Tuition Operating Fee Revenue” total. Year over year, tuition revenue is decreasing. This decrease is largely driven by the reduction in resident undergraduate tuition rates. However, flattening enrollment growth and, in some cases, rate reductions in other tuition categories, factor into this change.

Designated Operating Fund (DOF)

Other, local sources of revenue that support operations for all University units are referred to collectively as the Designated Operating Fund (DOF). The largest of these local sources is UW’s receipt of indirect cost recovery (ICR) from grants and contracts. ICR provides reimbursement for prior institutional expenses associated with our research activity and contributes significantly to central funds. In the coming year, UW administration will budget $9 million in additional ICR over the FY16 value of $238 million. Through most of FY16, total awards remained relatively flat, though ICR generation increased. In line with the method employed by the administration to allocate 35 percent of ICR to units generating the research activity, we are budgeting the actual collections (ICR received) from the 12-month period ending March 31, 2016. In other words, UW administration is budgeting more ICR revenue to reflect the prior actuals in line with our distribution of these funds. The year-over-year increase displayed is not an indication of significant growth, but rather, of a more accurate budgeting protocol.

Table 3: FY 2017 University Operating Budget Revenue (Activity Based Budgeting rules apply) REVENUE FY17 Proposed Budget FY16 Adopted Budget General Operating Fund 942,338,731 917,388,600 State General Fund 332,343,000 291,886,000 Tuition Operating fee 609,995,731 625,502,600

Designated Operating Fund 358,142,521 345,379,046 Indirect Cost Recovery 247,000,000 238,000,000 Institutional Overhead 26,000,000 24,000,000 Administrative Overhead 8,619,272 8,103,601 Summer Quarter Tuition 55,136,345 53,199,945 Investment Income 12,961,404 13,650,000 Miscellaneous Fees 8,225,500 8,225,500 Other DOF 200,000 200,000 Total GOF/DOF Sources 1,300,481,252 1,262,767,646

Adjusted Base* 1,270,835,646 1,199,563,000 *Includes carryforward of $8,068,000 of benefit reimbursement from the State.

B–2.2/205-16 Page | 11 5/12/16 Proposed Uses of GOF and DOF

Budget Priorities

Last fall, Interim Provost Baldasty initiated the Provost Budget Development cycle, which evolved into a rigorous budget review and consultation process involving students, faculty, staff, and executive leadership. Interim Provost Baldasty’s priorities for the coming fiscal year were shared by many, and identified as follows:

1. Provide competitive compensation 2. Transform administration 3. Fund areas of critical compliance 4. Invest in the student experience

University Operating Resources Budget

Table 3, above, highlights the sources of two primary funds, General Operating Funds and Designated Operating Funds. Our proposed uses for these funds are displayed in Table 4, below.

Pending action from the Regents, final Provost Reinvestment Fund decisions will be made and released to campus for information and local budget planning efforts.

Compensation As a reminder, the enacted 2015-17 state budget assumed that all employee salaries will increase by 1.8 percent in FY17 and allowed the University to increase compensation beyond levels specified in the budget. In total, state support of $27 million was provided over the biennium for higher education general wage increases. The amount provided in FY17 alone ($17.2 million) is insufficient to fund a 1.8 percent salary increase across all state-funded personnel categories. Importantly, we budget and distribute only the increment between the FY16 and FY17 allocations for compensation. The increment is being spread to all campuses, schools, colleges and administrative units on the basis of proportionate share of state and tuition-funded paid FTE.

The 2015-17 state budget deemed collective bargaining agreements (CBAs) with the Washington Federation of State Employees (WFSE) and Service Employees International Union 925 (SEIU 925) financially feasible and partially funded a 2 percent increase in FY17.

The budget also provided language to implement normally-recurring salary and merit increases with local funds.

The proposed FY17 operating budget provides for a four percent merit-based salary increase and associated benefits. State funds and Provost Reinvestment Funds will be distributed to campuses, schools, and colleges to cover the cost for the first 2 percent of these increases. Funding for associated benefits will be provided to units. For central administrative units, the Provost will cover 90 percent of the cost required to implement an average 4 percent salary increase. This approach will require that administrative units reduce expenses.

Employee Benefits The 2016 state supplemental budget funded FY17 Public Employee Benefits Board (PEBB) healthcare benefits at $888 per employee per month—a slight decrease from the 2015-17 enacted budget assumption of $894 per employee per month in FY17. The monthly employer funding rates will maintain PEBB healthcare benefits at their current cost-sharing split, with the employer covering 85 percent and the employee covering 15 percent.

B–2.2/205-16 Page | 12 5/12/16 The UW’s benefit load rates for faculty, classified staff, and professional staff will be adjusted to reflect these new employer health benefits contribution levels. The UW implemented significant increases in benefit load rates in FY16, which reflected an increase in the health care portion of total benefit expenses. As a result of the significant increase in FY16, the incremental change to benefit expenses for all personnel categories in FY17 is far less impactful. As a reminder, the Provost funds employee benefits for positions in central administrative units. Seattle schools and colleges, UW Bothell, UW Tacoma and all other University auxiliary units will fund incremental benefits costs locally after receiving a proportionate share of the benefits funding provided by the state.

Table 4: FY 2017 University Operating Budget Expenses EXPENSES Incremental Tuition Allocation to Schools/Colleges (12,253,495) Tuition Reduction Backfill 20,763,637 Provost Reinvestment Pool 6,050,303 Compensation Adjustments from State 7,712,000 Benefit Adjustments from State 2,058,000 24,330,445 Legislative Directives (Near General Fund State Only) Maintenance level central service changes 21,000 Revolving Funds (68,000) OFM Central Services 622,000 Moore vs HCA Settlement 90,000 Telemedicine 18,000 Mental Health Task Force 25,000 Computer Science 2,000,000 WWAMI Medical Education 1,800,000 4,508,000 Other Adjustments Increase in Summer Quarter Costs (UWB/UWT and UW Seattle) 753,261 Operations & Maintenance - Portage Bay Childcare - Central Cost 100,000 Sick Elder and Child Services/Priority Access - Central Cost 225,000 Energy Services Company - Central Savings (94,000) Transportation Subsidy - Central Savings (109,400) Retiree Parking - Central Savings (56,800) Reserve Parking - Central Savings (10,900) 807,161 Total Projected GOF/DOF Uses 1,300,481,252

B–2.2/205-16 Page | 13 5/12/16 University Revenues

Research Enterprise

Though awards in FY16 continue to trend better than expectations, subject matter experts in the UW administration believe that direct expenditures on grants and contracts in FY17 will remain relatively flat. This expectation is based on the fact that the federal budget environment remains tenuous this election year.

Restricted Funds

Expenditures for state restricted funds and nearly all gifts can only be used for the purposes specified by the Washington State Legislature or the granting agency or donor.

The FY17 operating budget does not provide a comprehensive view of endowment support in future years, as FY17 revenue only represents one year of endowment distribution activity. The policy approved by the Board of Regents allows 5 percent of the endowment’s average quarter market value to be distributed. Based on this policy, we are projecting an endowment distribution of $110 million, which includes the 1 percent set-aside to offset endowment-related expenses in Treasury and Advancement. Gift income represents anticipated expenditures against “current use” gifts. This year, we project $170 million in gift income.

The majority of the “state restricted funds” line item is composed of just over $7 million in Accident and Medical Aid account revenue, which will continue to benefit the School of Public Health for specific activities performed by the Department of Environmental Health in FY17. An appropriation of $1.5 million from the Economic Development Strategic Reserve account supports the Joint Center for Aerospace Innovation Technology. This category also includes $297,000 for shellfish biotoxin monitoring, $775,000 for ocean acidification work, and $227,000 of Dedicated Marijuana account funds for research and education on the effects of marijuana use, in accordance with the language of voter-approved Initiative 502.

UW Medicine Health System

The UW Medicine health system is composed of several partner entities, hospitals, and other, related, medical operations. Although these entities have different financial relationships with the UW, the sum of the proposed budgets for each of these entities is displayed for information purposes.

The production of this budget item requires that UW Medicine provide early projections of revenue, by entity, for the Board of Regents to adopt with all other University revenues. After the annual budget item is adopted, leadership from UW Medicine typically provides a separate annual report to Regents on the financial health of UW Medicine. This year, we provided data from the adopted FY16 budget as well as the subsequently reported revenue by entity for FY16 to provide Regents with additional detail about the evolution of revenue projections by entity. These data are displayed in Table 5, below.

B–2.2/205-16 Page | 14 5/12/16 Table 5: UW Medicine Health System Originally Adopted and Revised FY16 Budgets UW Medicine Health System FY16 Adopted FY16 UW FY17 Proposed (Preliminary) Subsequently Regents Adopted UW Medical Center 1,160,000,000 1,118,000,000 1,118,088,000 Harborview Medical Center 950,000,000 920,000,000 920,350,000 Valley Medical Center 568,000,000 546,000,000 546,172,000 Northwest Hospital 392,000,000 375,000,000 375,377,000 UW Physicians 304,000,000 282,000,000 311,690,000 Airlift NW 48,000,000 48,000,000 48,891,000 UW Neighborhood Clinics 49,000,000 43,000,000 42,647,000 UW Medicine System Total 3,471,000,000 3,332,000,000 3,363,215,000

Auxiliaries / Self-Sustaining Activities

The University’s large, self-sustaining auxiliary business enterprises include Educational Outreach, Housing and Food Services, Intercollegiate Athletics, and Parking and Transportation Services. In addition, UW Medicine health system is an auxiliary, but is identified in a separate category given its size.

In consultation with leadership in these entities, UW administration included revenue targets for each of these auxiliary enterprises. It is important to note that although total revenues may show modest growth, some units carry structural deficits when expenses are taken into account. For units that have not met debt covenants, a Financial Stability Plan is required and will be shared with the Board of Regents in accordance with policy. Units that carry a deficit, but no debt covenants, are under the jurisdiction of the Provost. These deficits are identified, monitored, and mitigated by the Office of Planning & Budgeting on behalf of the Provost. In addition, each of the University’s primary auxiliary units are audited annually.

Auxiliary/self-sustaining units are charged a tax, known in policy as institutional overhead, to recover the cost of central services.

In addition to the University’s auxiliary units, self-sustaining activities are operated by certain schools, colleges, and academic support units. Self-sustaining budgets, which are broadly defined as those funded by the sale of goods and services or by other revenue-generating activities, are charged overhead (in most cases) and are monitored monthly for deficits.

Over 380 departments operate self-sustaining activities. Educational Outreach is represented as only one department in this count, though it actually operates over 290 self-sustaining certificate and graduate degree programs.

B–2.2/205-16 Page | 15 5/12/16 Tuition Rates and Financial Aid

Tuition Recommendations

As noted previously, tuition rates for nonresident undergraduates and all graduate and professional students are under the authority of the UW Board of Regents. The recommendations below result from many months of collaboration between deans, faculty, students, and staff along with executive and academic leadership.

Table 6. Proposed FY17 (2016-17) Tuition Rates (operating fee + building fee) FY 2017 Unit Tuition Category FY 2016 Increase Tuition Resident $10,768 -9.97%2 $9,694 Undergraduate Non-Res $33,072 2.0% $33,732 Resident $15,207 0.0% $15,207 Graduate Tier I Non-Res $27,255 0.0% $27,255 n/a Resident $15,594 0.0% $15,594 Graduate Tiers II Non-Res $27,837 0.0% $27,837 Resident $16,425 3.0% $16,917 Graduate Tiers III Non-Res $29,274 3.0% $30,153 Masters - Construction Mgmt. Landscape Resident $15,954 0.0% $15,954 Built Architecture, Urban Design & Planning Non-Res $28,413 0.0% $28,413 Environments, Resident $16,875 0.0% $16,875 College of College of Built Environments Masters - March and MSRE (Real Estate) Non-Res $35,535 0.0% $35,535 Resident $42,423 8.0% $45,816 Dental Professional (DDS) Year 13 Non-Res $65,412 8.0% $70,644 Resident $42,423 8.0% $45,816 Dental Professional (DDS) Year 22 Non-Res $65,412 8.0% $70,644 Resident $42,417 8.0% $45,810 Dental Professional (DDS) Year 32 Dentistry, Non-Res $65,412 8.0% $70,644 School of 2 Resident $39,210 8.0% $42,348 Dental Professional (DDS) Year 4 Non-Res $65,412 8.0% $70,644

Resident $14,745 4.0% $15,336 Graduate Dental - Oral Biology Non-Res $28,476 4.0% $29,616 Graduate Dental - Oral Medicine, Pediatric Resident $16,377 4.0% $17,031 Dentistry, Periodontics, and Prosthodontics Non-Res $29,886 8.0% $32,277 Resident $18,012 4.0% $18,732 Graduate Dental - Endodontics Non-Res $29,886 8.0% $32,277 Resident $22,935 4.0% $23,853 Graduate Dental - Orthodontics Non-Res $29,886 8.0% $32,277 Resident $15,465 3.0% $15,930 Education, Master of Education and Master in Teaching Non-Res $28,671 3.0% $29,532 College of Resident $15,465 3.0% $15,930 Doctor of Education and Education PhD Non-Res $28,671 3.0% $29,532

2 This represents the combined effect of a 10.5% incremental operating fee reduction, plus no change to the building fee. 3 The DDS program has a cohort tuition structure. This means, for example, that a current Year-3 DDS resident student will not experience an 8% increase in FY17. Instead, the student’s tuition will decrease in FY17, as it will go from $42,417/year to $42,348/year.

B–2.2/205-16 Page | 16 5/12/16 FY 2017 Unit Tuition Category FY 2016 Increase Tuition Resident $20,520 3.0% $21,135 Master of Chemical Engineering Non-Res $32,352 3.0% $33,324 Engineering, Masters of Industrial and Systems Resident $20,520 3.0% $21,135 College of Engineering Non-Res $32,352 3.0% $33,324 Resident $20,520 3.0% $21,135 Master of Material Science and Engineering Non-Res $32,352 3.0% $33,324 Resident New category $30,000 Master of Applied Bioengineering Non-Res New category $36,000 College of the Environment Graduate Resident $15,594 0.0% $15,594 Environment, Programs Non-Res $27,837 0.0% $27,837 College of the MS in Earth and Space Sciences: Applied Resident $16,764 0.0% $16,764 Geosciences Non-Res $29,925 0.0% $29,925 Resident $19,815 3.0% $20,409 Evans School Master of Public Administration (MPA) Non-Res $35,565 3.0% $36,633 Resident $30,129 4.0% $31,335 MBA Incoming4 Non-Res $44,379 4.0% $46,155 Foster School Resident $29,250 3.0% $30,129 MBA Continuing2 Non-Res $43,086 3.0% $44,379 Resident $30,891 2.5% $31,662 Law (JD) – 1L (new split out of JD rate) Non-Res $43,053 0.0% $43,053 Resident $30,891 0.0% $30,891 Law (JD) – 2L, 3L (new split out of JD rate) Non-Res $43,053 -2.0% $42,192 Law, School of Resident $19,677 10.0% $21,645 Master of Laws (LLM) Non-Res $35,883 3.0% $36,960 Resident $18,426 3.0% $18,978 Law PhD Non-Res $35,883 3.0% $36,960 Medicine, Resident $32,688 3.0% $33,669 Medical Professional (MD) School of Non-Res $63,123 0.0% $63,123 Nursing, School Nursing Master and Doctor of Nursing Resident $25,461 0.0% $25,461 of Practice Non-Res $45,804 -15.0% $38,934 Resident $27,291 4.5% $28,518 Doctor of Pharmacy Pharmacy, Non-Res $49,215 0.0% $49,215 School of Resident New category $31,383 Doctor of Pharmacy/MBA with UW Bothell Non-Res New category $49,215 Resident $17,943 8.0% $19,377 Master of Public Health - 1st Year Non-Res $33,738 0.0% $33,738 Resident $17,445 8.0% $18,840 Master of Public Health - Continuing Public Health, Non-Res $33,738 0.0% $33,738 School of Resident $16,746 5.0% $17,583 Public Health PhD Programs Non-Res $29,274 3.0% $30,153 Public Health MS and other graduate Resident $16,746 5.0% $17,583 programs Non-Res $29,274 3.0% $30,153

4 The MBA programs have a cohort tuition structure. This means, for example, that a Seattle MBA resident who entered in Fall 2015 will not experience a 3% increase in FY17. Instead, the student’s tuition will stay steady at $30,129 per year in FY17.

B–2.2/205-16 Page | 17 5/12/16 FY 2017 Unit Tuition Category FY 2016 Increase Tuition Social Work, Resident $17,130 3.0% $17,643 Master of Social Work School of Non-Res $29,427 3.0% $30,309 Resident $15,594 0.0% $15,594 Bothell – Nursing Non-Res $27,837 0.0% $27,837 Resident $22,596 0.0% $22,596 UW Bothell Bothell - MBA Incoming4 Non-Res $28,329 0.0% $28,329 Resident $22,371 0.0% $22,371 Bothell - MBA Continuing4 Non-Res $28,329 0.0% $28,329 Resident $15,594 0.0% $15,594 Tacoma - Master of Nursing Non-Res $27,837 0.0% $27,837 Resident $20,325 0.0% $20,325 UW Tacoma Tacoma - MBA Incoming4 Non-Res $33,828 0.0% $33,828 Resident $20,124 1.0% $20,325 Tacoma - MBA Continuing4 Non-Res $33,492 1.0% $33,828 4 These MBA programs also have a cohort tuition structure.

These requests have been considered by many constituencies and have been evaluated by schools and colleges in terms of how they compare to peer programs at other universities and the revenue base they would support for normal, increasing expenses. During budget meetings with the Interim Provost, each dean or chancellor who proposed an increase was required to explain the need for the increase, put the increase in context with peer programs, and describe how incremental funds generated by the increase would be used.

Tuition and Fees Comparison

As Table 7 elucidates, the UW’s 2015-16 resident undergraduate tuition and fee rate is well below the peer mean. Since the 2015-17 state operating budget decreased the UW’s resident undergraduate operating fee by 5 percent in FY16, and by another 10.5 percent in FY17, the UW’s resident undergraduate operating fee rate will decrease further in FY17, from $10,203 to $9,129.

Table 7: Resident Undergraduate Tuition & Fees Peer Comparison Global Challenge State (GCS) Peer Universities 2014-15 2015-16 Change University of Virginia $13,208 $14,678 11.13% University of Massachusetts Amherst $13,258 $14,171 6.89% Rutgers, State University of New Jersey $13,813 $14,131 2.30% University of California Davis $13,896 $13,951 0.40% University of California San Diego $13,421 $13,530 0.81% University of Connecticut $12,700 $13,366 5.24% University of California Irvine $13,179 $13,253 0.56% University of California Los Angeles $12,701 $12,763 0.49% University of Washington Seattle $12,394 $11,839 -4.48% University of Colorado Boulder and Denver $10,789 $11,091 2.80% University of Maryland College Park and Baltimore $9,428 $9,996 6.02% GCS Group Average $12,639 $13,093 3.66% Note: The GCS group average does not include the UW’s rate.

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Though our resident undergraduate tuition rate is currently below that of our peers, Table 8 shows that the UW’s graduate Tier I tuition rate is higher than our peer average. We expect this status to evolve with a second year of static tuition rates.

Table 8: Tier 1 Resident Graduate Tuition & Fees Peer Comparison Global Challenge State (GCS) Peer Universities 2014-15 2015-16 Change Rutgers, State University of New Jersey $17,922 $18,346 2.37% University of Virginia $16,678 $17,094 2.49% University of Maryland College Park and Baltimore $15,938 $16,688 4.71% University of Washington Seattle $16,296 $16,278 -0.11% University of Connecticut $14,472 $15,296 5.69% University of Massachusetts Amherst $13,391 $14,094 5.25% University of California Davis $13,109 $13,164 0.42% University of California San Diego $12,929 $13,021 0.71% University of California Irvine $12,962 $13,010 0.37% University of California Los Angeles $12,571 $12,629 0.46% University of Colorado Boulder and Denver $11,974 $12,320 2.89% GCS Group Average $14,195 $14,566 2.54% Note: The GCS group average does not include the UW’s rate.

Financial Aid

There are a number of ways in which tuition policy is intertwined with financial aid policy. In the past, tuition increases were accompanied by increases in financial aid in order to support the University’s mission of providing student access. Given the decrease in tuition for resident undergraduates and the associated loss of tuition revenue, the amount of revenue used for aid may need to be recalibrated.

In response to previous Regental actions, there are three pools of tuition revenue that are used to provide student aid. The state of Washington requires that the UW put an amount equal to four percent of total collected tuition revenue toward financial aid. In addition to this state obligation, UW policy requires that an amount equal to four percent of the total resident portion of tuition charged to all students be used for tuition waivers. Three-fourths of these waivers are awarded on the basis of need and one-fourth on the basis of merit. Both of these aid pools decrease as tuition decreases.

When the University experienced four consecutive years of double-digit tuition increases, a portion of the incremental revenue generated was put into an “additional aid pool” to help ensure student access. This proposed budget recognizes that the loss of tuition revenue associated with state policy provides less net revenue to redistribute to aid. UW administration recommends that the additional aid pool not decrease by the full 10.5 percent of the tuition decrease, but that the cut to the pool be limited so that the decrease in University aid for undergraduate residents does not decrease at a faster rate than the decrease in the total student budget. This recommendation is reflected in the budget presented here and will be instituted should Regents take action on this budget proposal. Importantly, depending on the conditions imposed by the next state biennial operating budget, the UW may not be able to afford to continue this policy.

Moreover, a small percentage of the incremental revenue generated by recent tuition increases for domestic nonresidents has been used for a pilot program offering scholarships to domestic nonresidents. The decision to start this scholarship program was motivated by a desire to maintain our current level of nonresident

B–2.2/205-16 Page | 19 5/12/16 enrollments given that this population, in effect, subsidizes the financial aid and basic educational costs for resident students.

In addition, waivers that represent foregone tuition revenue help many students pay for tuition. The largest group of these waivers is automatically awarded to students with graduate student service appointments. Intercollegiate Athletics (ICA) will continue to fund half of the value of Title IX Gender Equity Waivers in FY17.

Given these policies, the decrease in undergraduate resident tuition, and the increases for all other categories, we expect the tuition revenue and financial aid allocations summarized in Table 9.

Table 9: 2016-17 Gross Tuition, Tuition-Based Aid, and Net Operating Fee Revenue Undergraduate Graduate/Professional 2016-17 Total Resident Nonresident Total Resident Nonresident Total FTE 26,453 8,934 35,387 5,954 6,154 12,108 47,494 Total Tuition Charged (Gross Tuition) 261,682,200 294,817,900 556,500,100 98,284,500 159,532,900 257,817,400 814,317,500 Less Building Fee 15,335,900 13,324,900 28,660,800 3,634,800 5,450,100 9,084,900 37,745,700 Op Fee Charged (Gross Op Fee Rev) 246,346,300 281,493,000 527,839,300 94,649,700 154,082,800 248,732,500 776,571,800 State-Mandated Return to Aid 9,462,500 11,166,800 20,629,300 3,307,900 3,212,300 6,520,200 27,149,500 University of Washington Aid 31,678,100 15,011,400 46,689,500 4,643,000 4,332,400 8,975,400 55,664,900 Waivers - Foregone Revenue1 1,992,300 1,639,400 3,631,700 8,888,200 70,974,700 79,862,900 83,494,600 Net Operating Fee Revenue 203,213,400 253,675,400 456,888,800 77,810,600 75,563,400 153,374,000 610,262,800 Total Aid from Group 43,132,900 27,817,600 70,950,500 16,839,100 78,519,400 95,358,500 166,309,000 Aid from Group as % of Gross 18% 10% 13% 18% 51% 38% 21% Total Aid to Group 60,402,100 10,639,400 71,041,500 24,292,700 70,974,700 95,267,400 166,308,900 Aid to Group as % of Gross 25% 4% 13% 26% 46% 38% 21%

1More than 75% of waivers representing foregone revenue are provided to graduate teaching and research assistants as function of their appointment.

Nonresident undergraduates continue to contribute considerably more to financial aid than is awarded to them; they generate $27.8 million in financial aid funds, but are awarded only $10.6 million. Overall, nonresident undergraduates have become an increasingly important source of revenue. Figure 1 shows the change in net revenue by student level and residency over the past several years.

Figure 1: Net Tuition Revenue by Student Level and Residency

750m

500m Nonres Grad/Prof

Res Grad/Prof

Nonres Undergrad

250m Res Undergrad

0m FY12 FY13 FY14 FY15 FY16 Projected FY17

B–2.2/205-16 Page | 20 5/12/16 Cost of Attendance for First-Year UW Undergraduates

PRELIMINARY 2016-17 INFORMATION

Some 2016-17 student fee rates are still being finalized. Rates identified with a ‡ symbol are subject to change.

PLEASE NOTE: After accounting for grant and scholarship aid, UW students (particularly resident undergraduates) often pay far less than the total expenses shown here. In 2014-15 (the most recent year for which net price data is available), the published price for resident undergraduates at Seattle was $27,112, whereas the net price for first- time, resident undergraduates at Seattle was $9,744.

Annual Student Budget Items Bothell Seattle Tacoma

Room and Board* (traditional undergraduates) $10,833 $11,691 $10,230

Books, Personal, Transportation* $4,614 $3,504 $4,614

Annual Student Fees – Total** $1,290 ‡ $1,393 ‡ $1,237 ‡

New Student Enrollment & Orientation Fee (NSEOF) – onetime fee $300 $310 $100

Student Tech Fee $126 ‡ $123 ‡ $120 ‡ Services and Activities Fee $267 ‡ $393 ‡ $477 ‡ Activities & Recreation Center 1 $441 ‡

Activities & Recreation Center 2 $66 ‡

Sports Field $90 ‡

Facilities Renovation Fee $219 ‡

Intramural Activities Building (IMA) $96 ‡

U Pass $252

YMCA $540 ‡

Resident Annual Tuition $9,694 $9,694 $9,694 Resident Annual Total $26,431 ‡ $26,282 ‡ $25,775 ‡

Non-Resident Annual Tuition $33,732 ‡ $33,732 ‡ $33,732 ‡ Non-Resident Annual Total $50,469 ‡ $50,320 ‡ $49,813 ‡

* The Office of Student Financial Aid calculates annual student budgets based on the federal "cost of attendance" definition, which is used to determine financial aid eligibility. https://www.washington.edu/financialaid/getting-started/student-budgets/

** Student-led committees approved all fees under this header, except the NSEOF (see below), and are responsible for recommending fee changes to the Board of Regents for approval. Student representatives provide support recommendations for the NSEOF and the administration recommends fee changes to the Board of Regents for approval. Please note that many students pay fees beyond the ones presented here, such as course fees (the cost of which varies by discipline), fees for student insurance, international program fees and fees for WashPIRG and WSA.

Page | 1 B–2.3/205-16 ATTACHMENT 3 5/12/16 COST OF ATTENDANCE TREND DATA BY CAMPUS

BOTHELL 2012-13 2013-14 2014-15 2015-16 2016-17 5yr Change

Room and Board * (traditional undergrads) $9,969 $10,752 $10,833 $10,833 $10,833 $864

Books, Personal, Transportation * $4,824 $4,995 $4,995 $4,995 $4,614 -$210

Annual Student Fees - Total ** $856 $856 $856 $1,240 $1,290 ‡ $434 ‡ NSEOF - onetime fee $250 $250 $250 $250 $300 $50

Student Tech Fee $126 $126 $126 $126 $126 ‡ $0 ‡ Services and Activities Fee $390 $390 $390 $267 $267 ‡ -$123 ‡ Activities & Recreation Center 1 $0 $0 $0 $441 $441 ‡ $441 ‡ Activities & Recreation Center 2 $0 $0 $0 $66 $66 ‡ $66 ‡ Sports Field $90 $90 $90 $90 $90 ‡ $0 ‡ Resident Annual Tuition $11,305 $11,305 $11,305 $10,768 $9,694 -$1,611 Resident Annual Total $26,954 $27,908 $27,989 $27,836 $26,431 ‡ -$523 ‡

Non-Resident Annual Tuition $28,860 $30,879 $32,424 $33,072 $33,732 ‡ $4,872 ‡ Non-Resident Annual Total $44,509 $47,482 $49,108 $50,140 $50,469 ‡ $5,960 ‡

SEATTLE 2012-13 2013-14 2014-15 2015-16 2016-17 5yr Change

Room and Board * (traditional undergrads) $9,969 $10,752 $10,833 $11,310 $11,691 $1,722

Books, Personal, Transportation * $3,714 $3,885 $3,885 $3,885 $3,504 -$210

Annual Student Fees - Total ** $1,350 $1,364 $1,389 $1,371 $1,393 ‡ $43 ‡ NSEOF - onetime fee $272 $272 $300 $300 $310 $38

Student Tech Fee $123 $123 $123 $123 $123 ‡ $0 ‡ Services and Activities Fee $360 $378 $390 $393 $393 ‡ $33 ‡ Facilities Renovation Fee $262 $267 $252 $219 $219 ‡ -$43 ‡ Intramural Activities Building (IMA) $105 $96 $96 $96 $96 ‡ -$9 ‡ U Pass $228 $228 $228 $240 $252 $24

Resident Annual Tuition $11,305 $11,305 $11,305 $10,768 $9,694 -$1,611 Resident Annual Total $26,338 $27,306 $27,412 $27,334 $26,282 ‡ -$56 ‡

Non-Resident Annual Tuition $28,860 $30,879 $32,424 $33,072 $33,732 ‡ $4,872 ‡ Non-Resident Annual Total $43,893 $46,880 $48,531 $49,638 $50,320 ‡ $6,427 ‡

TACOMA 2012-13 2013-14 2014-15 2015-16 2016-17 5yr Change

Room and Board * (traditional undergrads) $9,969 $10,752 $10,833 $10,833 $10,230 $261

Books, Personal, Transportation * $4,824 $4,995 $4,995 $4,995 $4,614 -$210

Annual Student Fees - Total ** $697 $697 $1,057 $1,237 $1,237 ‡ $540 ‡ NSEOF - onetime fee $100 $100 $100 $100 $100 $0

Student Tech Fee $120 $120 $120 $120 $120 ‡ $0 ‡ Services and Activities Fee $477 $477 $477 $477 $477 ‡ $0 ‡ ‡ ‡ YMCA (began in winter of 2015) $0 $0 $360 $540 $540 $540 Resident Annual Tuition $11,305 $11,305 $11,305 $10,768 $9,694 -$1,611 Resident Annual Total $26,795 $27,749 $28,190 $27,833 $25,775 ‡ -$1,020 ‡

Non-Resident Annual Tuition $28,860 $30,879 $32,424 $33,072 $33,732 ‡ $4,872 ‡ Non-Resident Annual Total $44,350 $47,323 $49,309 $50,137 $49,813 ‡ $5,463 ‡

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