agenda for meeting of the u. t. system board of regents...health affairs and the vice chancellor and...
TRANSCRIPT
i
AGENDA for Meeting of the
U. T. System Board of Regents
July 8-9, 2009 Board Room, 9
th Floor, Ashbel Smith Hall
Austin, Texas
Wednesday, July 8, 2009
A. CONVENE BOARD OF REGENTS IN OPEN SESSION TO RECESS TO EXECUTIVE SESSION IN ACCORDANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551 (working lunch)
10:30 a.m.
1. Personnel Matters Relating to Appointment, Employment, Evaluation, Assignment, Duties, Discipline, or Dismissal of Officers or Employees – Section 551.074
a. U. T. System: Discussion of individual personnel matters relating to appointment, employment, evaluation, compensation, assignment, and duties of U. T. System and institutional employees including employees covered by Regents' Rules and Regulations, Rule 20204, regarding compensation for highly compensated employees
b. U. T. System: Discussion regarding individual personnel matters relating to appointment, employment, evaluation, compensation, assignment, and duties of presidents (academic and health institutions), U. T. System Administration officers (Executive Vice Chancellors and Vice Chancellors), other officers reporting directly to the Board (Chancellor, General Counsel to the Board, and Chief Audit Executive), and U. T. System and institutional employees and related personnel aspects of the operating budget for the fiscal year ending August 31, 2010
c. U. T. Pan American: Discussion of individual
personnel matters related to presidential search
Dr. Prior
2. Consultation with Attorney Regarding Legal Matters or Pending and/or Contemplated Litigation or Settlement Offers – Section 551.071
U. T. System Board of Regents: Discussion with Counsel on pending legal issues
ii
Wednesday, July 8, 2009 (continued) Page 3. Deliberations Regarding the Purchase, Exchange, Lease,
Sale, or Value of Real Property – Section 551.072
U. T. Dallas: Discussion and appropriate action regarding the authorization to purchase approximately 10 acres improved with an office building of approximately 93,060 square feet located at 17217 Waterview Parkway, Dallas, Dallas and Collin Counties, Texas, from T/E Waterview Ltd., a Texas limited partnership, for a purchase price not to exceed fair market value as determined by independent appraisals for use as office, educational, and surge space and future programmed campus expansion, and resolution regarding parity debt
President Daniel Ms. Mayne
4. Negotiated Contracts for Prospective Gifts or Donations – Section 551.073
B. RECONVENE IN OPEN SESSION FOR ACTION ON
EXECUTIVE SESSION ITEMS, IF ANY, AND CONSIDER AGENDA ITEMS
1:30 p.m.
1. U. T. System Board of Regents: Amend Regents’ Rules and Regulations, Rule 31007, Sections 1, 2, and 5.1(b) regarding tenure appointments at U. T. Health Science Center – Tyler
1:32 p.m. Action
President Calhoun Dr. Shine
1
2. U. T. System: Presentation on the U. T. Systemwide Endowment Compliance Program
1:35 p.m.
Report Dr. Safady
2
3. U. T. System: Report on highlights of the 81st Texas Legislature, Regular Session
1:50 p.m. Report Mr. McBee
21
4. U. T. Dallas: Authorization to establish M.S. and Ph.D. degree programs in Biomedical Engineering with U. T. Arlington and U. T. Southwestern Medical Center – Dallas
2:05 p.m. Action
President Daniel Dr. Prior
62
5. U. T. El Paso: Request for approval of parking permit fees effective Fall 2009
2:08 p.m. Action
President Natalicio Dr. Prior
65
6. U. T. Austin: Authorization to purchase two tracts of land located at 1601 East 20th Street and 1600, 1602, 1604, and 1606 East Martin Luther King, Jr. Boulevard, Austin, Travis County, Texas, and consisting of a total of approximately 51,327 square feet, from E-MLK Properties, LLC, a Texas limited liability company, for a purchase price of $1,662,995 for future programmed campus expansion
2:10 p.m. Action
President Powers Ms. Mayne
67
7. U. T. El Paso: Reauthorization to purchase real property and improvements located at 3401 North Mesa Street, El Paso, El Paso County, Texas, from Mr. Gene McIntyre, Mr. Tracy McIntyre, and Mr. Michael McIntyre for a purchase price of $1,197,000 for future programmed development of campus expansion; and resolution regarding parity debt
2:15 p.m. Action
President Natalicio Ms. Mayne
70
iii
Wednesday, July 8, 2009 (continued) Page 8. U. T. Health Science Center – Houston: Establishment of a
center for research in the field of Alzheimer's disease and other brain disorders and approval to name the center as The George and Cynthia Mitchell Center for Research in Alzheimer's Disease and Related Brain Disorders
2:20 p.m. Action
President Kaiser Dr. Safady
74
9. U. T. System: Status Report on the U. T. System Competitiveness Initiative
2:30 p.m.
Report Chancellor Cigarroa
75
C. RECESS
5:00 p.m.
iv
Thursday, July 9, 2009 Page D. CONVENE JOINT MEETING: BOARD OF REGENTS AND
THE UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT COMPANY (UTIMCO) BOARD OF DIRECTORS
8:30 a.m. Vice Chairman Foster Chairman Nye
1. Introductions UTIMCO Directors; U. T. System and UTIMCO Oversight Staff; External Advisors: Legal, Audit, Investments, Risk Management
8:35 a.m. Chairman Huffines Chairman Nye
76
2. Annual Briefing on Fiduciary Responsibilities of Directors including discussion of the Master Investment Management Services Agreement (IMSA), Board of Regents' Expectations of UTIMCO Directors, the Code of Ethics, and Bylaws
8:45 a.m. Report Mr. Burgdorf
77
3. Discussion of U. T. System Financial Resources and Assets Managed by UTIMCO
9:00 a.m. Report Dr. Kelley
83
4. Reports on UTIMCO Board Operations and Committees Board Officers, Key Employees, Delegation of Authority Standing Committee Reports:
Audit and Ethics Committee
Risk Committee
Policy Committee
Compensation Committee
9:15 a.m. Report Chairman Nye Chairman Foster Chairman Tate Chairman McHugh Chairman Ferguson
104
5. Report on Investment Objectives and Performance for UTIMCO Fund Investment Policies Overview: PUF, GEF, PHF, LTF, ITF, STF Performance, Objectives, Policy Portfolios, Benchmarks, Peers, Asset Class Definitions
9:45 a.m. Report Mr. Bruce Myers, Cambridge Associates Mr. Zimmerman
106
6. Update Regarding Centralization of Operating Funds 10:05 a.m. Report Dr. Kelley
129
7. Report on UTIMCO Organization and Activities Staffing; Key Investment and Risk Management Personnel; Asset Class Managers; Open Positions
10:15 a.m. Report Mr. Zimmerman
138
8. Report on UTIMCO FY 2010 Budget and Fees and U. T. System Office of Finance Review Budget Review; U. T. System Office of Finance Review
10:30 a.m. Report Dr. Kelley Mr. Zimmerman
146
E. BREAK 11:00 a.m.
v
Thursday, July 9, 2009 (continued) Page
9. Discussion of U. T. System Funds' Investment Strategy
Asset Allocation, Downside Risk, Liquidity (and Unfunded Commitments), Leverage, Use of Derivatives, Report on Proposed Changes to Delegation of Authority, Liquidity Policy, and Derivatives Policy
11:15 a.m. Report Mr. Zimmerman
166
F. ADJOURN JOINT MEETING 12:15 p.m.
1
1. U. T. System Board of Regents: Amend Regents' Rules and Regulations, Rule 31007, Sections 1, 2, and 5.1(b) regarding tenure appointments at U. T. Health Science Center – Tyler
RECOMMENDATION The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Health Affairs and the Vice Chancellor and General Counsel that the Regents' Rules and Regulations, Rule 31007, Sections 1, 2, and 5.1(b) regarding tenure, be amended as set forth below in congressional style to permit seven-year appointments at U. T. Health Science Center – Tyler: . . . Sec. 1 Granting of Tenure. Tenure denotes a status of continuing appointment as
a member of the faculty at an institution of The University of Texas System. Academic titles in which faculty members can hold tenure are listed in Rule 31001, Section 2.1 of the Regents’ Rules and Regulations. Tenure may be granted at the time of appointment to any of such academic ranks, or tenure may be withheld pending satisfactory completion of a probationary period of faculty service. Such tenure status shall not be applicable to the faculty of The University of Texas M. D. Anderson Cancer Center or The University of Texas Health Science Center at Tyler.
Sec. 2 Seven-Year Term Appointment. The University of Texas M. D. Anderson
Cancer Center isand The University of Texas Health Science Center at Tyler are authorized to award a seven-year term appointment that will denote a status of continuing appointment at that institution as a member of the faculty for a period of seven years. Only members of the faculty with academic titles of Professor, Associate Professor, or Assistant Professor may be granted a seven-year term appointment. A seven-year term appointment may be granted at the time of appointment to any of such academic rank or may be withheld pending satisfactory completion of a probationary period of faculty service. No institution may adopt or implement a seven-year term appoint-ment policy except The University of Texas M. D. Anderson Cancer Center and The University of Texas Health Science Center at Tyler.
. . . Sec. 5 Probationary Service.
. . . 5.1 Calculation of Service. For purposes of calculating the period of
probationary service, an “academic year” shall be the period from September 1 through the following August 31.
. . .
2
(b) Each institution with tenured faculty will establish and appropriately communicate a policy for the extension of the maximum probationary period and include the policy in the institutional Handbook of Operating Procedures following the standard review and approval process. In the case of tThe University of Texas M. D. Anderson Cancer Center or The University of Texas Health Science Center at Tyler, the institution may establish a policy that allows the extension of a term-tenure appointment consistent with these guidelines and the term-tenure policy. Institutional policies are to be consistent with the following guidelines:
. . . .
BACKGROUND INFORMATION The proposed amendments relating to tenure of faculty will permit U. T. Health Science Center – Tyler to award seven-year term appointments. Currently, U. T. M. D. Anderson Cancer Center is the only institution that is authorized to offer seven-year term appoint-ments. The option to award the term appointments will allow U. T. Health Science Center – Tyler to compete with other academic medical institutions to recruit highly skilled, experienced faculty members and will expand the institution's opportunities to retain the top scientific talent necessary to effectively consolidate its research enterprise. If approved, U. T. Health Science Center – Tyler will develop institutional policies regarding the award of the term appointment for inclusion in its Handbook of Operating Procedures. 2. U. T. System: Presentation on the U. T. Systemwide Endowment
Compliance Program
REPORT An executive summary of the Endowment Compliance Program activities and reporting for The University of Texas System for the fiscal year ended August 31, 2008, is set forth on Pages 3 - 20.
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14
No
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13
15
Unf
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ositi
ons
•Pe
rcen
t of u
nfille
d po
sitio
ns c
ontin
ues
to
decr
ease
each
year
decr
ease
eac
h ye
ar•
100%
of p
ositio
ns w
ere
revie
wed
this
repo
rting
pe
riod
(220
1)pe
riod
(2,2
01)
86%
wer
e fill
ed o
n 8/
31/0
814
%nf
illed
had
$22
4m
illion
inac
cm
latio
nson
14%
unf
illed
had
$22.
4 m
illion
in a
ccum
ulat
ions
on
8/31
/08
Aver
age
perio
dun
filled
30co
nsec
utive
mon
ths
Aver
age
perio
d un
filled
–30
con
secu
tive
mon
ths
Inst
itutio
ns a
re re
view
ing
and
impl
emen
ting
actio
n pl
ans
plan
s
14
16
Prog
ress
Sin
ce L
ast R
epor
t
•U
. T. S
yste
m c
ondu
cts
deta
iled
anal
ysis
of
inst
itutio
nre
ports
and
reco
mm
ends
actio
nsin
stitu
tion
repo
rts a
nd re
com
men
ds a
ctio
ns,
as n
eede
dM
ti
df
h•
Man
agem
ent r
espo
nse
requ
ired
of e
ach
inst
itutio
n•
U. T
. Sys
tem
mon
itors
impl
emen
tatio
n of
m
anag
emen
t res
pons
e
15
17
Fund
ing
for t
he P
rogr
am
•B
oard
of R
egen
ts a
llow
s ea
ch in
stitu
tion
to
take
anan
nual
fee
of0
08%
to0
2%of
the
take
an
annu
al fe
e of
0.0
8% to
0.2
% o
f the
m
arke
t val
ue o
f its
end
owm
ents
Tt
kth
008
%i
titti
t•
To ta
ke m
ore
than
0.0
8%, i
nstit
utio
ns m
ust
subm
it au
dite
d fe
e as
sess
men
ts a
nd c
ertif
y th
if
dit
thei
r fee
exp
endi
ture
s•
In F
Y 0
8, $
6.7
milli
on in
fees
was
dis
tribu
ted
to s
uppo
rt en
dow
men
t man
agem
ent a
nd
adm
inis
tratio
n
16
18
Plan
for C
ontin
uing
Impr
ovem
ent
•C
ontin
ue to
incr
ease
num
ber o
f end
owm
ents
re
view
ed•
Link
repo
rt da
ta to
ana
lysi
s•
Furth
erde
fine
unifo
rmst
anda
rds
for
Furth
er d
efin
e un
iform
sta
ndar
ds fo
r m
easu
rem
ent
•C
ontin
ueto
impr
ove
track
ing
ofpr
ogre
ssat
•C
ontin
ue to
impr
ove
track
ing
of p
rogr
ess
at
inst
itutio
nsE
hd
tb
tfi
tid
•E
nhan
ce d
atab
ase
to re
fine
repo
rting
and
an
alys
is c
apab
ilitie
s
17
19
Con
clus
ions
•P
rogr
am is
wor
king
--ris
ks a
re b
eing
id
entif
ied
and
corre
cted
•In
stitu
tions
are
dilig
ently
mon
itorin
g en
dow
men
tsen
dow
men
ts•
Add
ition
al b
asel
ine
data
will
allo
w u
s to
de
term
ine
spec
ific
trend
sde
term
ine
spec
ific
trend
s•
Ana
lysi
s pr
ovid
es a
bilit
y to
pre
empt
and
f
tti
td
reve
rse
any
futu
re n
egat
ive
trend
s
Que
stio
ns?
•Q
uest
ions
?18
20
21
3. U. T. System: Report on highlights of the 81st Texas Legislature, Regular Session
REPORT Vice Chancellor McBee will report on highlights of the 81st Texas Legislature, Regular Session. The highlights are set forth on Pages 22 – 61.
81st
Reg
ular
Ses
sion
Hi
hli
htH
ighl
ight
s
Vice
Cha
ncel
lor B
arry
McB
ee
July
2009
Boa
rd o
f Reg
ents
July
200
9
Mee
ting
July
8, 2
009
22
Maj
or S
tate
Issu
es a
s th
e 81
stR
egul
arSe
ssio
nB
egan
81st
Reg
ular
Ses
sion
Beg
an
•P
rope
rtyTa
xR
elie
fand
Ref
orm
Pro
perty
Tax
Rel
ief a
nd R
efor
m•
Pub
lic E
duca
tion
Bi
Mi
TC
h•
Bus
ines
s M
argi
ns T
ax C
hang
es•
Tran
spor
tatio
n•
Insu
ranc
e•
Crim
inal
Just
ice
Crim
inal
Jus
tice
•C
ondi
tion
of S
tate
Ret
irem
ent S
yste
ms
Ii
tid
Bd
I•
Imm
igra
tion
and
Bor
der I
ssue
s2
23
The
81st
Reg
ular
Ses
sion
O
vera
llO
vera
ll
•7,
609
Bills
Intro
duce
d,
•1,
459
Bills
Pas
sed
36 b
ills
veto
ed•
Maj
or A
ccom
plis
hmen
ts:
Pub
lic e
duca
tion
refo
rms
Initi
ativ
efo
rmor
ena
tiona
lres
earc
hun
iver
sitie
sIn
itiat
ive
for m
ore
natio
nal r
esea
rch
univ
ersi
ties
Sta
te S
choo
l ref
orm
sW
inds
torm
insu
ranc
e re
form
sM
argi
ns ta
x ex
empt
ion
for s
mal
l bus
ines
sE
min
ent d
omai
n co
nstit
utio
nal a
men
dmen
tP
hysi
cian
stud
entl
oan
repa
ymen
tpro
gram
Phy
sici
an s
tude
nt lo
an re
paym
ent p
rogr
am
3
24
The
81st
Reg
ular
Ses
sion
O
vera
llO
vera
ll
•U
nres
olve
dIs
sues
Unr
esol
ved
Issu
esS
unse
t bill
for T
exas
Dep
artm
ents
of
Tran
spor
tatio
nan
dIn
sura
nce
and
Texa
sR
acin
gTr
ansp
orta
tion
and
Insu
ranc
e an
d Te
xas
Rac
ing
Com
mis
sion
Bon
dsfo
rhig
hway
cons
truct
ion
Bon
ds fo
r hig
hway
con
stru
ctio
nV
oter
ID le
gisl
atio
nC
HIP
expa
nsio
nC
HIP
exp
ansi
on
4
25
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•Tu
ition
Fle
xibi
lity
Rem
ains
Inta
ctN
o bi
ll pa
ssed
–S
B 1
443
by Z
affir
ini p
asse
d S
enat
e bu
t not
Hou
seH
CR
288
–
Ado
pted
on
final
day
–O
nly
expr
esse
s in
tent
of t
he H
ouse
–Ac
cept
s au
thor
ized
tuiti
on in
crea
ses
for 2
009-
2010
End
orse
sca
pof
345
%or
$280
pery
eari
ncre
ase
for2
010
11th
roug
h–
End
orse
s ca
p of
3.4
5% o
r $28
0 pe
r yea
r inc
reas
e fo
r 201
0-11
thro
ugh
2013
-14
•To
p 10
% L
aw R
efor
med
by
SB
175
(Sha
piro
)75
%ca
pon
adm
issi
ons
begi
nnin
gin
fall
2011
75%
cap
on
adm
issi
ons
begi
nnin
g in
fall
2011
10%
cap
on
out-o
f-sta
te a
nd in
tern
atio
nal u
nder
grad
uate
st
uden
tsA
utom
atic
adm
issi
onfo
rtop
10%
stud
ents
who
late
rtra
nsfe
rA
utom
atic
adm
issi
on fo
r top
10%
stu
dent
s w
ho la
ter t
rans
fer
5
26
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•M
ore
Nat
iona
l Res
earc
h U
nive
rsiti
es S
timul
ated
(HB
(
51 b
y B
ranc
h an
d H
JR 1
4 by
Cor
te)
Texa
s R
esea
rch
Ince
ntiv
e P
rogr
am to
pro
vide
$50
milli
on
in s
tate
mat
chin
g fu
nds
for r
esea
rch
focu
sed
phila
nthr
opy
gp
pyN
atio
nal R
esea
rch
Uni
vers
ity F
und
to s
usta
in e
mer
ging
re
sear
ch u
nive
rsiti
es th
at m
eet e
stab
lishe
d cr
iteria
(s
ubje
ct to
vot
er a
ppro
val i
n N
ovem
ber)
$80
milli
on in
per
form
ance
ince
ntiv
e fu
ndin
g fo
r aca
dem
ic
inst
itutio
ns fo
r gra
duat
es, e
spec
ially
for a
t-ris
k st
uden
ts
and
thos
e in
crit
ical
fiel
dsC
oord
inat
ing
Boa
rd to
dev
elop
pro
gram
for f
undi
ng
exce
llenc
e pr
ogra
ms
at o
ther
26
inst
itutio
nsR
esea
rch
Uni
vers
ity D
evel
opm
ent F
und
to fo
rmal
ize
yp
Texa
s C
ompe
titiv
e K
now
ledg
e Fu
nd6
27
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•To
ols
toG
row
Texa
sH
ealth
care
Wor
kfor
ceTo
ols
to G
row
Tex
as H
ealth
care
Wor
kfor
ce
Exp
ande
d$1
63
mill
ion
inad
ditio
nalf
undi
ngfo
rGra
duat
e$1
6.3
mill
ion
in a
dditi
onal
fund
ing
for G
radu
ate
Med
ical
Edu
catio
nN
ursi
ngS
horta
geR
educ
tion
Pro
gram
upda
ted
Nur
sing
Sho
rtage
Red
uctio
n P
rogr
am u
pdat
ed
(HB
447
1 by
Kol
khor
st)
–$3
0 m
illion
for i
ncre
ases
in n
ursi
ng fa
culty
$g
yJo
int A
dmis
sion
Med
ical
Pro
gram
exp
ande
d (S
B
1728
by
Wes
t)–
Full
fund
ing
of $
10.6
milli
on fo
r pro
gram
, a 1
00%
in
crea
se7
28
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•H
urric
ane
Ike
Rel
ieff
orU
TMB
Obt
aine
dH
urric
ane
Ike
Rel
ief f
or U
TMB
Obt
aine
d$1
50 m
illio
n in
sta
te fu
nds
to m
atch
FE
MA
fede
ral
fund
ing
forr
econ
stru
ctio
nfu
ndin
g fo
r rec
onst
ruct
ion
$150
mill
ion
in T
uitio
n R
even
ue B
onds
aut
horiz
ed
forc
onst
ruct
ion
ofne
who
spita
lfo
r con
stru
ctio
n of
new
hos
pita
l$9
7 m
illio
n m
ore
in G
ener
al R
even
ue (G
R) f
or
o per
atio
ns in
201
0-11
p $50
mill
ion
in S
ocia
l Ser
vice
Blo
ck G
rant
fund
ing
for c
onst
ruct
ion
8
29
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•Te
xas
Com
petit
ive
Know
ledg
eFu
ndfo
rUT
Texa
s C
ompe
titiv
e K
now
ledg
e Fu
nd fo
r UT
Aus
tin B
olst
ered
$33
mill
ion
mor
e in
fund
ing
•B
onds
for C
ance
r Pre
vent
ion
and
Res
earc
h In
stitu
te o
f Tex
as A
utho
rized
$450
mill
ion
in b
onds
fund
ed•
Fina
ncia
l Aid
Incr
ease
d$1
859
illi
fTE
XA
SG
t$1
85.9
milli
on m
ore
for T
EX
AS
Gra
nts
$10
mill
ion
mor
e fo
r Tex
as E
duca
tiona
l Opp
ortu
nity
G
rant
sfo
rcom
mun
ityco
llege
stud
ents
Gra
nts
for c
omm
unity
col
lege
stu
dent
s
9
30
How
UT
Syst
em P
riorit
ies
Fare
dFa
red
•In
sura
nce
Cov
erag
efo
rClin
ical
Tria
lsE
nhan
ced
Insu
ranc
e C
over
age
for C
linic
al T
rials
Enh
ance
dIn
sura
nce
will
now
cov
er ro
utin
e pa
tient
car
e ex
pens
es fo
r clin
ical
tria
l par
ticip
ants
(SB
39
by
Zffi
ii)
Zaffi
rini)
•E
mer
ging
Tec
hnol
ogy
Fund
(ETF
) Con
tinue
d$9
4m
illio
nm
ore
forE
TFan
dca
rryo
vero
fmor
eth
an$9
4 m
illion
mor
e fo
r ETF
and
car
ryov
er o
f mor
e th
an
$100
mill
ion
in c
urre
nt fu
ndin
g•
Ince
ntiv
esfo
rAca
dem
icIn
stitu
tions
Mai
ntai
ned
Ince
ntiv
es fo
r Aca
dem
ic In
stitu
tions
Mai
ntai
ned
$80
mill
ion
appr
opria
ted
for g
ener
al a
cade
mic
in
stitu
tions
’ inc
entiv
es, w
ith c
riter
ia in
HB
51
10
31
UT
Syst
em P
riorit
ies
That
Fa
iled
toPa
ssFa
iled
to P
ass
•N
ewTu
ition
Rev
enue
Bon
dsor
stat
efu
ndin
gN
ew T
uitio
n R
even
ue B
onds
or s
tate
fund
ing
for c
apita
l con
stru
ctio
n•
Ded
icat
ion
ofD
SH
orU
PL
fund
sfo
rUTM
B•
Ded
icat
ion
of D
SH
or U
PL
fund
s fo
r UTM
B•
Effo
rts to
rest
ore
Med
icai
d fu
ndin
g fo
r G
dt
Mdi
lEd
tid
td
Gra
duat
e M
edic
al E
duca
tion
and
to e
xpan
d re
side
ncie
s•
Hea
lth in
sura
nce
for g
radu
ate
stud
ents
and
fe
llow
s (fa
iled
with
dea
th o
f SB
42
on fi
nal d
ay
of S
essi
on)
11
32
UT
Syst
em P
riorit
ies
That
Fa
iled
toPa
ssFa
iled
to P
ass
•P
arity
forf
undi
ngof
Sys
tem
empl
oyee
heal
thP
arity
for f
undi
ng o
f Sys
tem
em
ploy
ee h
ealth
in
sura
nce
cost
s•
Elim
inat
ion
ofdu
plic
ativ
eor
inef
fect
ive
high
er•
Elim
inat
ion
of d
uplic
ativ
e or
inef
fect
ive
high
er
educ
atio
n re
porti
ng re
quire
men
tsL
il
tit
di
dti
lit
t•
Legi
slat
ion
to m
oder
nize
and
ratio
naliz
e st
ate
law
s go
vern
ing
rege
nts’
con
flict
s of
inte
rest
12
33
Oth
er Is
sues
that
Em
erge
dg
•Li
mita
tions
onan
dIn
crea
sed
Ove
rsig
htof
Lim
itatio
ns o
n an
d In
crea
sed
Ove
rsig
ht o
f U
TIM
CO
Pro
pose
d ne
w P
ensi
on a
nd In
vest
men
t Rev
iew
B
oard
(SB
154
8 by
Ogd
en)
–N
o fin
al a
ctio
nP
ropo
sed
reco
nstit
utio
nof
UTI
MC
OB
oard
(SB
2348
Pro
pose
d re
cons
titut
ion
of U
TIM
CO
Boa
rd (S
B 2
348
by O
gden
)–
No
final
act
ion
Pro
pose
d di
vest
men
t fro
m c
ompa
nies
doi
ng b
usin
ess
in th
e S
udan
(HB
801
by
Gui
llen)
–N
ofin
alac
tion
No
final
act
ion
13
34
Oth
er Is
sues
that
Em
erge
dg
•R
estri
ctio
ns o
n B
iom
edic
al R
esea
rch
Pd
hibi
tif
tt
fd
fd
tti
fhb
Pro
pose
d pr
ohib
ition
on
use
of s
tate
fund
s fo
r des
truct
ion
of h
uman
em
bryo
s –
Not
ado
pted
as
part
of s
tate
bud
get
Pro
pose
d pr
ohib
ition
on
use
of s
tate
fund
s or
faci
litie
s ow
ned,
leas
ed o
r m
anag
ed b
y a
stat
e ag
ency
for d
estru
ctio
n of
hum
an e
mbr
yos
(SB
169
5 by
O
gden
)O
gden
)–
No
final
act
ion
Pro
pose
d cr
eatio
n of
an
annu
al re
port
by a
ny s
tate
age
ncy
that
fund
s,
supp
orts
, or c
ondu
cts
biom
edic
al re
sear
ch (S
B 2
573
by O
gden
)N
ofin
alac
tion
–N
o fin
al a
ctio
nP
ropo
sed
proh
ibiti
on o
n fu
nds
awar
ded
by C
ance
r Pre
vent
ion
and
Res
earc
h In
stitu
te o
f Tex
as fo
r use
on
embr
yoni
c or
feta
l ste
m c
ell r
esea
rch
(SB
170
0 by
Lau
benb
erg)
No
final
actio
n–
No
final
act
ion
Inte
rim s
tudy
on
deve
lopm
ent o
f res
earc
h da
taba
se, t
o in
clud
e st
em c
ell
rese
arch
, fou
nd in
HB
51
–U
T w
ill h
ave
sign
ifica
nt re
pres
enta
tion
in s
tudy
14
35
Oth
er Is
sues
that
Em
erge
dg
•A
llow
ing
Con
ceal
edH
andg
uns
onC
ampu
sA
llow
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andg
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o fin
al a
ctio
n on
pro
pose
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lls (H
B 1
893
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Driv
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B11
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twor
th)
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er a
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B 1
164
by W
entw
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)•
Cha
nges
to S
tude
nt H
ealth
Cen
ters
Le
gisl
atio
nto
man
date
billi
ngof
insu
rers
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103
Legi
slat
ion
to m
anda
te b
illin
g of
insu
rers
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103
by
Fre
d B
row
n) a
dopt
ed b
ut v
etoe
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Gov
erno
rH
ealth
Ben
efits
forD
omes
ticP
artn
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•H
ealth
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efits
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omes
tic P
artn
ers
No
final
act
ion
on p
ropo
sed
bills
(HB
353
by
Rod
rigue
zan
dH
B86
1by
Nai
shta
t)R
odrig
uez
and
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861
by
Nai
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t)15
36
Gen
eral
App
ropr
iatio
ns A
ct(S
B1
byO
gden
)(S
B 1
by
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823
Billi
onS
tate
Bud
get
$182
.3 B
illion
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te B
udge
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incr
ease
from
08-
09 b
ienn
ium
$8
71
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onin
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eral
Rev
enue
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)$8
7.1
billi
on in
Gen
eral
Rev
enue
(GR
)$1
2.1
billi
on in
fede
ral s
timul
us fu
nds
thro
ugh
Am
eric
anR
ecov
ery
and
Rei
nves
tmen
tAct
Am
eric
an R
ecov
ery
and
Rei
nves
tmen
t Act
•$6
.7 B
illion
in R
ainy
Day
Fun
d (c
urre
nt
bala
nce)
bala
nce)
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bill
ion
by e
nd o
f FY
2011
16
37
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
•$1
2.3
Billi
onfo
rAll
Texa
sH
ighe
rEdu
catio
n$1
2.3
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on fo
r All
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s H
ighe
r Edu
catio
n$1
.3 b
illio
n, o
r 11%
, inc
reas
e fro
m 0
8-09
•$4
.9 B
illio
n fo
r Aca
dem
ic In
stitu
tions
$$3
36.5
mill
ion,
or 7
.3%
, inc
reas
e fro
m 0
8-09
$107
mill
ion,
or 7
.2%
, inc
reas
e fo
r UT
Sys
tem
i
ii
inst
itutio
ns•
$2.6
Billi
on fo
r Hea
lth-R
elat
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stitu
tions
$365
2ill
i16
%i
f08
09$3
65.2
milli
on, o
r 16%
, inc
reas
e fro
m 0
8-09
$225
mill
ion,
or 1
3.2%
, inc
reas
e fo
r UT
Sys
tem
in
stitu
tions
inst
itutio
ns
17
38
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
•Fi
nanc
ial A
id$1
85.9
mill
ion
in a
dditi
onal
fund
ing
for T
EX
AS
Gra
nts
$10
mill
ion
mor
e fo
r Tex
as E
duca
tiona
l Opp
ortu
nity
Gra
nts
for
com
mun
ity c
olle
ge s
tude
nts
$54
mill
ion
for T
op 1
0% s
tude
nt s
chol
arsh
ips
•R
esea
rch
$33
mill
ion
in a
dditi
onal
fund
ing
for T
exas
Com
petit
ive
gp
Kno
wle
dge
Fund
$94
mill
ion
in n
ew fu
ndin
g fo
r Em
ergi
ng T
echn
olog
y Fu
nd, i
n ad
ditio
n to
ext
ensi
on o
f ove
r $10
0 m
illio
n in
cur
rent
fund
ing
$50
illi
fT
Rh
Iiti
tiP
(TR
IP)
$50
mill
ion
for T
exas
Res
earc
h In
itiat
ive
Pro
gram
(TR
IP)
Shi
ft of
$47
0 m
illio
n fro
m H
ighe
r Edu
catio
n Fu
nd in
to n
ew
Nat
iona
l Res
earc
h U
nive
rsity
Fun
d, s
ubje
ct to
vot
er a
ppro
val o
f H
JR14
inN
ovem
ber
HJR
14
in N
ovem
ber
18
39
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
•H
urric
ane
Rel
ief F
undi
nggU
TMB
–$1
50 m
illion
in s
tate
fund
s to
mat
ch F
EM
A fu
ndin
g–
$150
mill
ion
in T
RB
s fo
r con
stru
ctio
n of
a n
ew h
ospi
tal,
pend
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pp
gin
crea
sed
loca
l con
tribu
tions
for u
ncom
pens
ated
car
e–
$97
milli
on m
ore
in G
R fo
r ope
ratio
ns in
201
0-11
–$5
0 m
illio
n in
Soc
ial S
ervi
ce B
lock
Gra
nt fu
ndin
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m th
e Te
xas
Hea
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uman
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omm
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ruct
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Hea
lth a
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uman
Ser
vice
s C
omm
issi
on fo
r rec
onst
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$8 m
illio
n in
sup
plem
enta
l app
ropr
iatio
ns fo
r un
com
pens
ated
car
e re
late
d to
Hur
rican
e Ik
e at
UT
HS
C-
Hou
ston
and
MD
And
erso
nC
ance
rCen
ter
Hou
ston
and
MD
And
erso
n C
ance
r Cen
ter
$5.6
milli
on fo
r hur
rican
e re
late
d co
sts
at U
T B
row
nsvi
lle,
UT
Pan
Am
eric
an, U
T H
SC
Tyl
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T H
SC
Hou
ston
, and
M
DA
nder
son
Can
cerC
ente
rM
D A
nder
son
Can
cer C
ente
r
19
40
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
•H
ealth
Car
e W
orkf
orce
Dev
elop
men
tJo
int A
dmis
sion
Med
ical
Pro
gram
–
$5 m
illio
n in
add
ition
al fu
ndin
gG
radu
ate
Med
ical
Edu
catio
n–
Rat
e in
crea
se fr
om $
5,63
4 to
$6,
653
per r
esid
ent
–$1
6.3
milli
on in
new
fund
ing,
$10
.1 m
illion
to U
T S
yste
m in
stitu
tions
$30
mill
ion
to in
crea
se n
ursi
ng fa
culty
$5
illi
fU
TA
lit
’S
il
tiL
iF
ilit
f$5
mill
ion
for U
T A
rling
ton’
s S
imul
atio
n Le
arni
ng F
acili
ty fo
r nu
rsin
g ed
ucat
ion
•$1
71.9
mill
ion
mor
e fo
r Hig
her E
duca
tion
Gro
up H
ealth
In
sura
nce
Insu
ranc
e$4
4 m
illio
n m
ore
for U
T S
yste
m e
mpl
oyee
hea
lth in
sura
nce
20
41
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
•$1
235
milli
onin
addi
tiona
lfun
dsfo
rCor
rect
iona
l$1
23.5
mill
ion
in a
dditi
onal
fund
s fo
r Cor
rect
iona
l M
anag
ed C
are
at U
TMB
•
$450
milli
onin
bond
sau
thor
ized
forC
ance
r•
$450
milli
on in
bon
ds a
utho
rized
for C
ance
r R
esea
rch
and
Pre
vent
ion
Inst
itute
of T
exas
$391
mill
ion
dedi
cate
dto
canc
erre
sear
chgr
ants
$391
milli
on d
edic
ated
to c
ance
r res
earc
h gr
ants
$43.
5 m
illio
n de
dica
ted
to c
ance
r pre
vent
ion
gran
ts$3
55
mill
ion
inde
btse
rvic
efo
rbon
ds$3
5.5
milli
on in
deb
t ser
vice
for b
onds
•$1
5.5
milli
on in
mis
sion
-spe
cific
form
ula
fund
ing
forU
TH
SC
Tyle
r&M
DAn
ders
onC
ance
rCen
ter
for U
T H
SC
Tyl
er &
MD
And
erso
n C
ance
r Cen
ter 21
42
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
Gen
eral
Aca
dem
ic In
stitu
tions
2008
-09
Bien
nium
Artic
le X
II Bi
enni
al C
hang
e20
10-1
1 Bi
enni
um
2010
-11
Gen
eral
Rev
enue
App
ropr
iatio
ns (E
xclu
ding
Tui
tion
Rev
enue
Bon
d G
R D
ebt S
ervi
ce)
(Doe
s N
ot In
clud
e H
ighe
r Edu
catio
n G
roup
Insu
ranc
e C
ontri
butio
ns)
Inst
itutio
n
GR
Approp
riatio
ns
(less TRB
)G
R Ap
prop
riatio
ns*
Fede
ral
Stim
ulus
Sp
ecia
l Ite
ms
GR
Appr
opria
tions
(le
ss T
RB)
$ In
crea
se
(Dec
reas
e)%
Incr
ease
(D
ecre
ase)
HB 4
586
Supp
lem
enta
l Ap
prop
riatio
nsUn
ivers
ity o
f Tex
as S
yste
m1,
327,
106,
915
1,58
1,40
6,54
4
16,3
82,5
00
1,44
0,24
8,42
2
113,
141,
507
8.
53%
12,5
04,8
88
Te
xas
A&M
Uni
vers
ity S
yste
m98
1,63
2,24
7
1,19
2,22
0,23
17,
000,
000
1,
079,
272,
011
97,6
39,7
64
9.95
%8,
688,
864
Unive
rsity
of H
oust
on S
yste
m40
9,34
8,37
3
493,
436,
989
3,25
0,00
0
446,
203,
840
36,8
55,4
67
9.00
%4,
245,
244
Mid
west
ern
Stat
e Un
ivers
ity33
,584
,234
39
,861
,421
220,
000
35,7
78,4
36
2,
194,
202
6.53
%-
Unive
rsity
of N
orth
Tex
as19
1,61
8,24
6
217,
871,
278
2,15
0,00
0
200,
222,
802
8,60
4,55
6
4.
49%
-
St
e phe
n F.
Aus
tin U
nive
rsity
78,4
20,3
26
91,3
60,9
35
-
81,8
67,7
73
3,
447,
447
4.
40%
-
py
,,
,,
,,
,,
Texa
s So
uthe
rn U
nive
rsity
105,
505,
844
12
2,17
7,62
5
-
10
0,92
2,01
2
(4
,583
,832
)
-4
.34%
15,9
50,0
00
Te
xas
Tech
Uni
vers
ity S
yste
m
295,
970,
589
33
3,76
5,17
6
6,
000,
000
31
0,75
2,53
4
14
,781
,945
4.
99%
-
Te
xas
Wom
an's
Unive
rsity
102,
897,
811
11
0,63
7,94
5
-
10
1,78
9,26
0
(1
,108
,551
)
-1
.08%
-
Te
xas
Stat
e Un
ivers
ity S
yste
m33
1,42
4,39
9
404,
874,
825
7,50
0,00
0
372,
528,
927
41,1
04,5
28
12.4
0%3,
420,
785
385
750
898
44
587
612
969
4250
250
04
169
586
017
312
077
033
809
%44
809
781
22
3,85
7,50
8,98
4
4,
587,
612,
969
42,5
02,5
004,
169,
586,
017
312,
077,
033
8.09
%44
,809
,781
* GR
Appr
opria
tions
incl
ude
fund
s fro
m th
e Am
eric
an R
ecov
ery
and
Rein
vest
men
t Act
for f
orm
ula
fund
ing.
43
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
Stat
e of
Tex
as G
ener
al A
cade
mic
Inst
itutio
nsHB
4586
Sl
tlG
lRA
iti
Insti
tutio
nGR
Ap
prop
riatio
ns
Com
men
tsTh
e Un
ivers
ity o
f Tex
as a
t Aus
tin9,
902,
630
08-0
9 ho
ld h
arm
less
($70
0,00
0 m
ust b
e us
ed fo
r Mar
ine
Scie
nce
Inst
itute
Nat
iona
l
HB 4
586
Supp
lem
enta
l Gen
eral
Rev
enue
App
ropr
iatio
ns
Estu
aria
n Re
sear
ch R
eser
ve)
The
Unive
rsity
of T
exas
- Pa
n Am
eric
an10
2,25
8Da
mag
es o
r dis
rupt
ions
cau
sed
by n
atur
al d
isas
ters
dur
ing
the
08-0
9 bi
enni
umTh
e Un
ivers
ity o
f Tex
as a
t Bro
wnsv
ille1,
200,
000
Dam
ages
or d
isru
ptio
ns c
ause
d by
nat
ural
dis
aste
rs d
urin
g th
e 08
-09
bien
nium
The
Unive
rsity
of T
exas
at T
yler
1,30
0,00
0Fa
culty
sal
arie
s an
d op
erat
ions
at t
he P
ales
tine
cam
pus
Texa
s A&
M U
nive
rsit y
at G
alve
ston
6,20
0,00
0Da
mag
es o
r dis
rupt
ions
cau
sed
by n
atur
al d
isas
ters
dur
ing
the
08-0
9 bi
enni
umy
,,
gp
yg
Prai
rie V
iew
A&M
Uni
vers
ity48
8,86
4Da
mag
es o
r dis
rupt
ions
cau
sed
by n
atur
al d
isas
ters
dur
ing
the
08-0
9 bi
enni
umTe
xas
A&M
Inte
rnat
iona
l Uni
vers
ity2,
000,
000
Out
reac
h an
d En
rollm
ent
Unive
rsity
of H
oust
on4,
245,
244
Natio
nal L
arge
Win
d Tu
rbin
e Re
sear
ch &
Tes
ting
Faci
lity
Texa
s So
uthe
rn U
nive
rsity
3,72
9,80
8TR
B ap
prop
riatio
n re
duce
d fro
m 0
8-09
and
reap
prop
riate
d fo
r dam
ages
cau
sed
by
tld
it
natu
ral d
isas
ters
Texa
s So
uthe
rn U
nive
rsity
2,35
0,00
0Ad
min
istra
tive
oper
atio
n ex
pens
esTe
xas
Sout
hern
Uni
vers
ity9,
720,
192
Dam
ages
or d
isru
ptio
ns c
ause
d by
nat
ural
dis
aste
rs d
urin
g th
e 08
-09
bien
nium
Texa
s So
uthe
rn U
nive
rsity
150,
000
Mic
key
Lela
nd a
nd B
arba
ra J
orda
n pa
pers
pre
serva
tion
and
disp
lay
Lam
ar U
nive
rsity
2,80
3,56
1Da
mag
es o
r dis
rupt
ions
cau
sed
by n
atur
al d
isas
ters
dur
ing
the
08-0
9 bi
enni
um
23
Texa
s St
ate
Unive
rsity
- Sa
n M
arco
s61
7,22
4Te
xas
Scho
ol S
afet
y Ce
nter
44
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
Uni
vers
ityof
Texa
sSy
stem
Gen
eral
Acad
emic
Inst
itutio
nsU
nive
rsity
of T
exas
Sys
tem
Gen
eral
Aca
dem
ic In
stitu
tions
Gen
eral
App
ropr
iatio
ns A
ct A
rticl
e XI
IFe
dera
l Stim
ulus
Spe
cial
Item
s
Inst
itutio
nAp
prop
riatio
nC
omm
ents
Unive
rsity
of T
exas
at A
ustin
$420
,000
Law
Sch
ool C
linic
al P
rogr
amUn
ivers
ity o
f Tex
as a
t Dal
las
$6,0
00,0
00M
iddl
e Sc
hool
Bra
in Y
ears
Ui
itfT
tDll
$462
500
Ad
iB
idP
Unive
rsity
of T
exas
at D
alla
s$4
62,5
00Ac
adem
ic B
ridge
Pro
gram
Unive
rsity
of T
exas
at D
alla
s$5
,000
,000
Cen
ter f
or V
alue
s in
Med
icin
e, S
cien
ce, a
nd
Tech
nolo
gyUn
ivers
ity o
f Tex
as a
t San
Ant
onio
$4,0
00,0
00Li
fe S
cien
ces
Inst
itute
Unive
rsity
of T
exas
at S
an A
nton
io$5
00,0
00P-
16 C
ounc
il
24
45
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
Hea
lth R
elat
ed In
stitu
tions
2008
-09
Bien
nium
2010
-11
Bien
nium
Bien
nial
Cha
nge
2010
-11
Gene
ral R
even
ue A
ppro
pria
tions
(Exc
ludi
ng T
uitio
n Re
venu
e Bo
nd G
R De
bt S
ervi
ce)
(Doe
s No
t Inc
lude
Hig
her E
duca
tion
Grou
p In
sura
nce
Cont
ribut
ions
)
Inst
itutio
n
GR
Approp
riations
(le
ss TRB
)
GR
Appr
opria
tions
*
Artic
le X
II Fe
dera
l St
imul
us
Spec
ial I
tem
s
GR
Appr
opria
tions
(le
ss T
RB)
$ In
crea
se
(Dec
reas
e)%
Incr
ease
(D
ecre
ase)
HB 4
586
Supp
lem
enta
l Ap
prop
riatio
nsTh
e Un
ivers
ity o
f Tex
as
Syst
em1,
594,
834,
862
1,
894,
945,
176
33
,000
,000
1,
824,
574,
621
229,
739,
759
14.4
1%15
6,18
7,55
2
TAM
U Sy
stem
Hea
lth S
cien
ce
Cent
er17
4,66
5,95
5
21
5,68
3,00
3
9,00
0,00
0
21
3,76
1,38
4
39
,095
,429
22
.38%
-
UNT
Heal
th S
cien
ce C
ente
r at
Fort
Wor
th96
393
142
125,
104,
975
-
10
8,72
5,70
9
12
,332
,567
12
.79%
2,00
0,00
0
Fort
Wor
th96
,393
,142
Texa
s Te
ch U
niv H
ealth
Sc
ienc
e Ce
nter
260,
629,
243
325,
746,
161
4,
000,
000
303,
374,
345
42,7
45,1
02
16.4
0%-
2,12
6,52
3,20
2
2,56
1,47
9,31
5
46
,000
,000
2,
450,
436,
059
32
3,91
2,85
7
15.2
3%15
8,18
7,55
2
25
* GR
Appr
opria
tions
incl
ude
fund
s fro
m th
e Am
eric
an R
ecov
ery
and
Rein
vest
men
t Act
for f
orm
ula
fund
ing.
46
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
HB45
86Su
pplem
ental
Gene
ralR
even
ueAp
prop
riatio
ns
Insti
tutio
nGR
Ap
prop
riatio
ns
Com
men
tsUT
Med
icalB
ranc
hatG
alves
ton
150,
000,
000
Mat
ching
Fund
sfor
FEM
Aqu
alifyi
ngpro
jects
(balan
cem
aybe
expe
nded
HB 45
86 S
upple
ment
al Ge
nera
l Rev
enue
Appr
opria
tions
UT M
edica
l Bra
nch a
t Galv
esto
n15
0,00
0,00
0
M
atch
ing F
unds
for F
EMA
quali
fying
proje
cts
(balan
ce m
ay be
expe
nded
wi
th pr
ior L
BB ap
prova
l)
UT H
ealth
Scie
nce C
ente
r at H
ousto
n1,
000,
000
Dam
ages
and
disr
uptio
ns c
ause
d by
natur
al dis
aster
s occ
uring
durin
g th
e 08
-09 b
ienniu
mUT
MD
Ande
rsonC
ance
rCen
ter1
725
995
Dam
ages
and
disrup
tions
caus
edby
natur
aldis
aster
socc
uring
durin
gUT
M.D
. And
erso
n Can
cer C
enter
1,72
5,99
5
Da
mag
es a
nd di
srup
tions
cau
sed
by na
tural
disas
ters o
ccur
ing du
ring
the
08-0
9 bien
nium
UT M
.D. A
nder
son C
ance
r Cen
ter2,
000,
000
Unco
mpe
nsat
ed c
are f
or H
urrica
ne Ik
e pati
ents
UT H
ealth
Scie
nce C
ente
r at T
yler
1,46
1,55
7
Da
mag
es a
nd di
srup
tions
cau
sed
by na
tural
disas
ters o
ccur
ing du
ring
the
08-0
9bien
nium
the
08-0
9 bien
nium
UNT
Healt
h Sc
ience
Cen
ter a
t For
t Wor
th2,
000,
000
Unco
mpe
nsat
ed c
are
UTM
Bals
orec
eived
anap
prop
riatio
nof
$500
000
forgro
upins
uran
cein
HB45
86for
thet
woye
arpe
riodf
romth
eeffe
ctive
date
ofth
eact
26
UTM
B als
o rec
eived
an
appr
opria
tion
of $5
00,0
00 fo
r gro
up in
suran
ce in
HB
4586
for t
he tw
o ye
ar pe
riod f
rom th
e effe
ctive
date
of th
e act.
Th
is fun
ding w
as re
duce
d fro
m Te
xas
Tech
HSC
's 20
09 g
roup i
nsur
ance
app
ropria
tion.
47
App
ropr
iatio
ns fo
r Hig
her
Educ
atio
nEd
ucat
ion
Uni
vers
ity o
f Tex
as H
ealth
Rel
ated
Inst
itutio
ns
Inst
itutio
nAp
prop
riatio
nC
omm
ents
Gen
eral
App
ropr
iatio
ns A
ct A
rticl
e XI
IFe
dera
l Stim
ulus
Spe
cial
Item
s
Inst
itutio
nAp
prop
riatio
nC
omm
ents
Univ
ersi
ty o
f Tex
as H
ealth
Sci
ence
C
ente
r-Ho
usto
n$5
,000
,000
Hea
rt In
stitu
te -
Adul
t Ste
m C
ell
Pro
gram
Univ
ersi
ty o
f Tex
as H
ealth
Sci
ence
C
$9,5
00,0
00S
choo
l of P
ublic
Hea
lth E
xpan
sion
Cen
ter-
Hous
ton
Univ
ersi
ty o
f Tex
as H
ealth
Sci
ence
C
ente
r-Sa
n An
toni
o$4
,000
,000
Life
Sci
ence
s In
stitu
te
Univ
ersi
ty o
f Tex
as H
ealth
Sci
ence
$6
,500
,000
Reg
iona
l Aca
dmic
Hea
lth C
ente
rC
ente
r-Sa
n An
toni
oUn
iver
sity
of T
exas
Sou
thw
este
rn
Med
ical
Cen
ter
$8,0
00,0
00In
stitu
te fo
r Gen
etic
& M
olec
ular
D
isea
se
27
48
UT
Syst
em A
ppro
pria
tions
ypp
p
2010
11G
lRA
iti
(El
diT
itiR
Bd
GR
Dbt
Si
)
UT
Syst
em A
cade
mic
Inst
itutio
ns
2008
-09
Bie
nniu
m20
10-1
1 B
ienn
ium
Bie
nnia
l Cha
nge
2010
-11
Gen
eral
Rev
enue
App
ropr
iatio
ns (E
xclu
ding
Tui
tion
Rev
enue
Bon
d G
R D
ebt S
ervi
ce)
(Doe
s N
ot In
clud
e H
ighe
r Edu
catio
n G
roup
Insu
ranc
e C
ontr
ibut
ions
)
Institution
GR
App
ropr
iatio
ns
(less
TR
B)
GR
Appropriations*
Article XII
Federal
Stim
ulus
Special Items
GR
Appropriations
(less TRB)
$ Increase
(Decrease)
% Increase
(Decrease)
HB 4586
Supplemental
Appropriations
UT‐Arlington**
164,
076,
944
189,
860,
102
-
17
0,43
0,24
3
6,
353,
299
3.
87%
-
UT‐Austin
509
043
431
571
661
017
420
000
542
475
208
3343
177
76
57%
990
263
0UT‐Austin
509,
043,
431
571,
661,
017
420,
000
54
2,47
5,20
8
33,4
31,7
77
6.
57%
9,90
2,63
0
UT‐Dallas
129,
959,
180
155,
146,
155
11,4
62,5
00
15
9,02
2,70
6
29
,063
,526
22
.36%
-
UT‐El Paso
130,
022,
575
159,
244,
244
-
14
2,18
9,97
3
12
,167
,398
9.
36%
-
UT‐Pan
American
107,
317,
741
129,
006,
898
-
11
3,84
0,96
6
6,
523,
225
6.
08%
102,
258
UT‐Brownsville
38,3
54,2
7054
,922
,857
-
41
,830
,614
3,
476,
344
9.
06%
1,20
0,00
0
UT‐Perm
ian Basin
36,1
91,8
9356
,394
,193
-
37
,320
,008
1,
128,
115
3.
12%
-
UT‐San Antonio
164,
383,
441
203,
817,
067
4,50
0,00
0
183,
352,
109
18,9
68,6
68
11.5
4%-
UT‐Tyler
47,7
57,4
4061
,354
,011
-
49
,786
,595
2,
029,
155
4.
25%
1,30
0,00
0
* GR Appropriations include funds from the American Recovery and Reinvestment Act for form
ula funding.
** UT Arlington's appropriation does not include $5 million to be transferred from THECB for the Regional
NursingEducationCenter
28
Nursing Education Center.
49
UT
Syst
em A
ppro
pria
tions
ypp
p
UT
Syst
em H
ealth
Inst
itutio
ns
2008
-09 B
ienn
ium
Artic
leXII
(Doe
s Not
Inclu
de H
ighe
r Edu
catio
n Gr
oup
Insu
ranc
e Con
tribu
tions
)
2010
-11 B
ienn
ium
Bien
nial
Cha
nge
2010
-11 G
ener
al Re
venu
e App
ropr
iatio
ns (E
xclu
ding
Tui
tion
Reve
nue B
ond
GR D
ebt S
ervic
e)
Instit
ution
GR
Appr
opria
tions
(le
ss T
RB)
GR
Appr
opria
tions
*
Artic
le XII
Fe
dera
l St
imulu
s Sp
ecial
Item
s
GR
Appr
opria
tions
(le
ss T
RB)
$ Inc
reas
e (D
ecre
ase)
% In
crea
se
(Dec
reas
e)
HB 4
586
Supp
lemen
tal
Appr
opria
tions
UT S
outh
west
ern
Med
ical C
ente
r at D
allas
271,
639,
320
304,
340,
633
8,00
0,00
028
7,45
9,92
6
15
,820
,606
5.
82%
-
UT
Med
icalB
ranc
hat
Galve
ston
444
675
130
566
532
697
554
162
359
109
487
229
2462
%15
000
000
0UT
Med
ical B
ranc
h at
Galv
esto
n44
4,67
5,13
056
6,53
2,69
7-
55
4,16
2,35
9
10
9,48
7,22
924
.62%
150,
000,
000
UT
Hea
lth S
cienc
e Ce
nter
at H
oust
on**
261,
735,
581
310,
694,
866
14,5
00,0
0029
7,80
5,59
7
36
,070
,016
13
.78%
1,00
0,00
0
UT H
ealth
Scie
nce
Cent
er a
t San
Ant
onio
260,
006,
702
308,
824,
503
10,5
00,0
0029
8,68
9,33
4
38
,682
,632
14
.88%
-
UT
M.D
. And
erso
n Ca
ncer
Cen
ter
292,
396,
379
329,
830,
055
-
31
7,15
7,17
1
24
,760
,792
8.
47%
3,72
5,99
5
UT H
ealth
Scie
nce
Cent
er a
t Tyle
r64
,381
,750
74,7
22,4
22-
69
,300
,234
4,
918,
484
7.
64%
1,46
1,55
7
y
,,
,,
,,
,,
,,
* GR
Appr
opria
tions
inclu
de fu
nds
from
the
Amer
ican
Reco
very
and
Rein
vest
men
t Act
for f
orm
ula fu
nding
.**
UTH
SC H
oust
on w
as a
lso a
ppro
priat
ed $
6 m
illion
thro
ugh
HB 4
586
for u
ncom
pens
ated
car
e for
the
two
year
per
iod
from
the
effec
tive
date
of H
B 45
86.
29
50
Oth
er A
cade
mic
Affa
irs
Legi
slat
ion
Legi
slat
ion
•C
reat
ion
ofO
nlin
eU
nive
rsity
Res
umes
(SB
174
Cre
atio
n of
Onl
ine
Uni
vers
ity R
esum
es (S
B 1
74
by S
hapi
ro)
Dire
cts
Coo
rdin
atin
g B
oard
to c
reat
e an
d m
aint
ain
a w
ebsi
te d
etai
ling
cost
s, fi
nanc
ial a
id, d
egre
es
awar
ded,
cla
ss s
izes
, cou
rse
eval
uatio
ns, a
nd
adm
issi
ons
for a
ll Te
xas
publ
ic u
nive
rsiti
esp
•R
efor
ms
in F
orm
ula
Fund
ing
for C
redi
t Hou
rs n
ot
Tow
ard
a D
egre
e (H
B 1
01 b
y Fr
ed B
row
n)P
rohi
bits
any
cre
dit h
ours
ear
ned
prio
r to
grad
uatin
g hi
gh s
choo
l bei
ng c
ount
ed fo
r pur
pose
s of
the
cap
on
hour
sto
befu
nded
hour
s to
be
fund
ed
30
51
Oth
er A
cade
mic
Affa
irs
Legi
slat
ion
Legi
slat
ion
•Fi
nanc
ialA
idFi
nanc
ial A
idR
equi
res
a st
uden
t be
enro
lled
in ¾
of a
full
time
cour
selo
adan
dm
ake
satis
fact
ory
prog
ress
tobe
cour
se lo
ad a
nd m
ake
satis
fact
ory
prog
ress
to b
e el
igib
le fo
r the
Tui
tion
Equ
aliz
atio
n G
rant
Pro
gram
(H
B 4
476
by C
ohen
)(
y)
Dis
tribu
tion
of in
form
atio
n re
gard
ing
cost
of
atte
ndin
g un
iver
sitie
s an
d av
aila
bilit
y of
fina
ncia
l ai
d (S
B 1
764
by W
atso
n)
31
52
Oth
er A
cade
mic
Affa
irs
Legi
slat
ion
Legi
slat
ion
•Tu
ition
Exe
mpt
ions
Tuiti
on E
xem
ptio
nsE
xem
ptio
n fo
r vol
unte
er fi
refig
hter
s en
rolle
d in
fire
sci
ence
co
urse
s (H
B 2
013
by K
effe
r) E
tif
ffill
di
ii
ljti
Exe
mpt
ion
for p
eace
offi
cers
enr
olle
d in
crim
inal
just
ice
or
law
enf
orce
men
t cou
rse
wor
k (H
B 2
347
by T
hiba
ut)
Exe
mpt
ion
for s
tude
nts
who
hav
e be
en u
nder
the
pco
nser
vato
rshi
p of
the
Dep
artm
ent o
f Fam
ily a
nd
Pro
tect
ive
Ser
vice
s (S
B 4
3 by
Zaf
firin
i) E
xem
ptio
nfo
rstu
dent
sen
rolle
din
inte
r-in
stitu
tiona
lE
xem
ptio
n fo
r stu
dent
s en
rolle
d in
inte
rins
titut
iona
l ac
adem
ic p
rogr
ams
(SB
45
by Z
affir
ini)
Exe
mpt
ion
for m
ilitar
y pe
rson
nel a
nd th
eir d
epen
dent
s or
sp
ouse
(SB
93by
Van
deP
utte
)sp
ouse
(SB
93
by V
an d
e P
utte
)
32
53
Oth
er A
cade
mic
Affa
irs
Legi
slat
ion
Legi
slat
ion
•U
nifo
rm S
tand
ards
for P
ublis
hing
on
the
Inte
rnet
Cos
t of
Att
dI
fti
CE
lti
dO
thI
fti
Atte
ndan
ce In
form
atio
n, C
ours
e E
valu
atio
ns, a
nd O
ther
Info
rmat
ion
(HB
250
4 by
Kol
khor
st)
•C
oord
inat
ing
Boa
rd S
tudy
of C
ost S
avin
gs M
easu
res
and
the
Use
of
Ele
ctro
nic
Text
book
sat
Uni
vers
ities
(HB
4149
byR
ose)
of E
lect
roni
c Te
xtbo
oks
at U
nive
rsiti
es (H
B 4
149
by R
ose)
Cos
t sav
ings
repo
rt du
e by
Jan
uary
31,
201
1E
lect
roni
c te
xtbo
ok re
port
due
by D
ecem
ber 1
, 201
0•
Not
ice
toS
tude
nts
ofA
mou
ntof
Tuiti
onS
etA
side
forF
inan
cial
Aid
Not
ice
to S
tude
nts
of A
mou
nt o
f Tui
tion
Set
Asi
de fo
r Fin
anci
al A
id
(SB
130
4 by
Dan
Pat
rick)
•C
onfid
entia
lity
of P
erso
ns F
iling
a C
ompl
ianc
e R
epor
t, an
E
xem
ptio
n fro
m D
iscl
osur
e fo
r Inf
orm
atio
n C
ompi
led
in a
C
liI
titi
dM
dt
dM
iiti
Vi
tiC
ompl
ianc
e In
vest
igat
ion,
and
Man
date
d M
enin
gitis
Vac
cina
tions
of
Stu
dent
s at
Uni
vers
ities
(HB
418
9 by
Ros
e)
33
54
Oth
er H
ealth
Affa
irs
Legi
slat
ion
Legi
slat
ion
•M
odifi
catio
n of
Pee
r Rev
iew
Pro
cess
for C
ance
r R
esea
rch
and
Pre
vent
ion
Inst
itute
of T
exas
(HB
13
58 b
y K
effe
r)•
Ref
orm
sto
Nur
sing
Wor
kpla
ceS
taffi
ngan
d•
Ref
orm
s to
Nur
sing
Wor
kpla
ce, S
taffi
ng, a
nd
Ove
rtim
e R
equi
rem
ents
(SB
476
by
Nel
son)
•Le
gisl
ativ
eA
utho
rity
forR
egen
tsto
Cre
ate
aU
TLe
gisl
ativ
e A
utho
rity
for R
egen
ts to
Cre
ate
a U
T H
ealth
Sci
ence
Cen
ter-
Sou
th T
exas
(SB
98
by
Luci
o)T
Eti
fL
dL
db
UT
HS
C•
Tax
Exe
mpt
ion
for L
and
Leas
ed b
y U
T H
SC
H
oust
on fr
om M
emor
ial H
erm
ann
Hos
pita
l (S
B
2442
by
Ure
sti)
y)
34
55
Oth
er H
ealth
Affa
irs
Legi
slat
ion
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62
4. U. T. Dallas: Authorization to establish M.S. and Ph.D. degree programs in Biomedical Engineering with U. T. Arlington and U. T. Southwestern Medical Center – Dallas
RECOMMENDATION The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Academic Affairs and President Daniel that authorization, pursuant to the Regents' Rules and Regulations, Rule 40307, related to academic program approval standards, be granted to a. establish M.S. and Ph.D. degree programs in Biomedical Engineering
at U. T. Dallas to be offered jointly with U. T. Arlington and U. T. Southwestern Medical Center – Dallas;
b. submit the proposal to the Texas Higher Education Coordinating Board for
review and appropriate action; and c. authorize the Executive Vice Chancellor for Academic Affairs to certify on
behalf of the Board of Regents that relevant Coordinating Board criteria for approval by the Commissioner of Higher Education have been met.
BACKGROUND INFORMATION Program Description The U. T. Dallas Erik Jonsson School of Engineering and Computer Science seeks approval to supplement the existing Biomedical Engineering M.S. and Ph.D. degree programs currently offered by U. T. Southwestern Medical Center – Dallas and U. T. Arlington. For three decades, U. T. Southwestern and U. T. Arlington have offered joint M.S. and Ph.D. degrees in biomedical engineering. Current enrollment is approximately 150 graduate students, with 90 students in the M.S. program and 60 in the Ph.D. program. The two institutions have proposed that U. T. Dallas join this group and that the degree become a three-way joint graduate degree program in biomedical engineering. This approach is designed to support and encourage interinstitutional cooperation and collaboration. With the introduction of U. T. Dallas into the joint biomedical engineering degree program, the size of the program will increase significantly especially among students who are seeking the Ph.D. degree. U. T. Dallas, with its strong engineering programs, tradition of graduate education and innovative research, and a long history of collaboration with U. T. Southwestern, is uniquely qualified to build a world-class biomedical engineering graduate program.
63
The Ph.D. program consists of a minimum of 58 credit hours of course work, plus a minimum of 30 research hours beyond the bachelor's degree level. The total number of credit hours required for the M.S. degree (thesis option) will be 31. Remaining credit hours would be taken from a list of specialized courses either at U. T. Dallas, U. T. Arlington, or U. T. Southwestern. Need and Student Demand The past two decades have witnessed rapid expansion of new bioengineering and biomedical engineering programs around the nation. Biomedical engineering is by far the most rapidly growing engineering discipline in terms of student enrollment and degrees granted. For example, from 1999 to 2007 the number of master's degrees granted in biomedical engineering grew by a factor of 2.70, for a nine-year compound annual growth rate of 11.67%. North Texas is home to five Nobel Laureates and 16 National Academy of Sciences members. High-quality academic institutions are generating new discoveries, inventions, patents, and spin-off companies from internationally acclaimed institutions. The combined effect of these area resources and infrastructure will no doubt be a strong magnet to attract graduate students and enhance employment capabilities. Current industry in the biotechnology and biomedical engineering sectors in North Texas is significant. Local manufacturers of medical devices account for approximately 4,000 local employees. Further, the North Texas area has a growing population base driven by the expansion of high technology businesses within the region. The healthcare-related industries are one of the fastest growing business segments in the region. Service to that segment by institutions of higher education is critical to the continued successful expansion of this new Texas high technology base. Further, the Texas Workforce Commission projects the demand for biomedical engineers to increase by 31% within the next year and average 15% through 2020. U. T. Dallas has conducted surveys of current students and approximately 28 have expressed a serious intent to enter a biomedical engineering program if offered. Program Quality Doctoral enrollment and graduation in the Erik Jonsson School has increased dramatically over the past 10 years. In 2006, the school conferred 55 doctoral degrees. The placement rate for Ph.D. students is 100% for both Electrical Engineering and Computer Science. The M.S. and Ph.D. programs requested would significantly enrich the educational opportunities for the Erik Jonsson School of Engineering and Computer Science students at all levels in part by providing a broader, multidisciplinary experience. The envisioned emphasis on modern biotechnologies emphasized in the proposed biomedical engineering programs will complement and build on the strength in these areas in the existing graduate programs in electrical engineering, mechanical engineering, computer science, chemistry, and physics. The addition of biomedical
64
faculty with expertise in computational modeling will create synergy with the Computer Science Department, in accordance with the recommendations made by a distinguished review panel in a 2007 study of the graduate programs in Computer Science and Software Engineering at U. T. Dallas. The proposal to join this collaborative program is fully aligned with the recommen-dations made by the Washington Advisory Group in 2004. In FY 2007, the Erik Jonsson School of Engineering and Computer Science received over $17 million in external funding, or approximately $170,000 per tenured or tenure-track faculty member. In the same time period, the existing Electrical Engineering and Computer Science faculty published 125 journal articles, or an average of approximately two journal articles per year per tenured or tenure-track faculty member. It is expected that the average productivity of new tenure-track faculty members will adhere to or exceed these norms. Cost The five-year expenditures of the program are anticipated to be $15,625,000. This includes new costs of $2,140,000 for five faculty positions over the first five years, $1,450,000 for 70 teaching/research assistant positions, and $315,000 for additional staff. Additional costs for equipment, facilities, library and information technology resources, and reallocation expenses of existing administration and faculty equals $11,720,000. These costs will be met from credit hour formula funding and reallocation of university resources, including formula-generated excellence funds. Other existing resources will be used to fully fund the program. In addition to the $1,629,000 in-hand grants, it is anticipated that external funds will cover an increasing portion of the program's cost after the initial development period.
65
5. U. T. El Paso: Request for approval of parking permit fees effective Fall 2009
RECOMMENDATION The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Academic Affairs, the Vice Chancellor and General Counsel, and President Natalicio that parking permit fees ranging from $80 to $700 as set forth on Page 66 for students, faculty, and staff at U. T. El Paso be approved effective Fall 2009.
BACKGROUND INFORMATION The proposed parking permit fees are within the range authorized by law and are consistent with the statutory requirements under Section 54.505 of the Texas Education Code.
66
U. T. EL PASO
FEES AND MISCELLANEOUS CHARGES
PARKING PERMIT FEES
Approval is recommended for the following parking permit fees to be effective beginning with the Fall Semester 2009. The proposed fees are consistent with the applicable statutory requirements under Section 54.505 of the Texas Education Code and have been administratively approved by the Executive Vice Chancellor for Academic Affairs. Following Regental approval, the appropriate institutional catalog will be amended to reflect these fees. Current Proposed Percent Rates $ Rates $ Increase Annual fees: Student Permit Classifications Residence Halls 75 80 6.67 Perimeter 130 135 3.85 Perimeter Premium 180 185 2.78 Remote 80 85 6.25 Garage – Nest 205 210 2.44 Garage – Premium 255 260 1.96 Motorcycle Perimeter 75 80 6.67 Faculty/Staff Classifications Reserved – Campus 650 700 7.69 Inner Campus Orange 310 320 3.23 Inner Campus Red 360 370 2.78 Perimeter 175 185 5.71 Remote 110 120 9.09 Garage – Nest 310 320 3.23 Garage – Premium 360 370 2.78 Motorcycle 75 85 13.33 Prepared by: U. T. El Paso July 8, 2009
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6. U. T. Austin: Authorization to purchase two tracts of land located at 1601 East 20th Street and 1600, 1602, 1604, and 1606 East Martin Luther King, Jr. Boulevard, Austin, Travis County, Texas, and consisting of a total of approximately 51,327 square feet, from E-MLK Properties, LLC, a Texas limited liability company, for a purchase price of $1,662,995, for future programmed campus expansion
RECOMMENDATION The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Business Affairs, the Executive Vice Chancellor for Academic Affairs, and President Powers that authorization be granted by the U. T. System Board of Regents, on behalf of U. T. Austin, to a. purchase two tracts of land located at 1601 East 20th Street and
1600, 1602, 1604, and 1606 East Martin Luther King, Jr. Boulevard, Austin, Travis County, Texas, and consisting of a total of approximately 51,327 square feet, from E-MLK Properties, LLC, a Texas limited liability company, for a purchase price of $1,662,995, plus all due diligence expenses, closing costs, and other costs and expenses to complete the acquisition of the property as deemed necessary or advisable by the Executive Director of Real Estate, for future programmed campus expansion; and
b. authorize the Executive Director of Real Estate to execute all documents,
instruments, and other agreements, subject to approval of all such documents as to legal form by the Office of General Counsel, and to take all further actions deemed necessary or advisable to carry out the purpose and intent of the foregoing recommendation.
BACKGROUND INFORMATION The subject property consists of approximately 51,327 square feet of unimproved land consisting of four contiguous lots at the northwest corner of East Martin Luther King, Jr. Boulevard and Leona Street, and a portion of an adjacent lot located at the intersection of Concho Street and East 20th Street. This property is located within part of the Blackland area east of IH-35 approved for acquisition by the Board of Regents on December 11, 1981, and is also within the Campus Master Plan approved by the Board of Regents on February 10, 2000. Both the lots on East Martin Luther King, Jr. Boulevard and the lot on East 20th Street adjoin portions of U. T. Austin's campus.
68
The purchase price of $1,662,995 was calculated based on a unit price of $32.40 per square foot of actual area of the property as determined by a survey. The property will be used for future programmed development of campus expansion. Unexpended Plant Funds will be used to fund the purchase, the terms and conditions of which are reflected in the summary of the transaction below:
Transaction Summary Institution: U. T. Austin Type of Transaction: Purchase Total Area: Approximately 51,327 square feet Improvements: None Location: 1601 East 20th Street and 1600, 1602, 1604, and 1606 East
Martin Luther King, Jr. Boulevard, Austin, Travis County Texas; see map on the following page
Seller: E-MLK Properties, LLC, a Texas limited liability company Purchase Price: $1,662,995 ($32.40 per square foot of property as
determined by survey) Appraised Value: $1,640,000 ($32.75 per square foot, based on assumed area
of 50,094 square feet) (John M. Coleman, MAI, SRA, The Aegis Group, Inc., May 14, 2009); $1,750,000 (approximately $34.00 per square foot) (Walter W. Jenkins, MAI, Integra Realty Resources, May 30, 2009)
Source of Funds: Unexpended Plant Funds Intended Use: Future programmed development of campus expansion
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7. U. T. El Paso: Reauthorization to purchase real property and improvements located at 3401 North Mesa Street, El Paso, El Paso County, Texas, from Mr. Gene McIntyre, Mr. Tracy McIntyre, and Mr. Michael McIntyre for a purchase price of $1,197,000 for future programmed development of campus expansion; and resolution regarding parity debt
RECOMMENDATION The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Business Affairs, the Executive Vice Chancellor for Academic Affairs, and President Natalicio that authorization be granted by the U. T. System Board of Regents, on behalf of U. T. El Paso, to a. purchase real property and improvements located at 3401 North Mesa
Street, El Paso, El Paso County, Texas, from Mr. Gene McIntyre, Mr. Tracy McIntyre, and Mr. Michael McIntyre for a purchase price of $1,197,000, plus all due diligence expenses, closing costs, and other costs and expenses to complete the acquisition of the property as deemed necessary or advisable by the Executive Director of Real Estate, for future programmed development of campus expansion;
b. authorize the Executive Director of Real Estate to execute all documents,
instruments, and other agreements, subject to approval of all such documents as to legal form by the Office of General Counsel, and to take all further actions deemed necessary or advisable to carry out the purpose and intent of the foregoing recommendation; and
c. resolve in accordance with Section 5 of the Amended and Restated
Master Resolution Establishing The University of Texas System Revenue Financing System (the RFS Master Resolution) that:
parity debt shall be issued to pay the project's costs, including any
costs prior to issuance of such parity debt;
sufficient funds will be available to meet the financial obligations of the U. T. System, including sufficient Pledged Revenues (as defined in the RFS Master Resolution) to satisfy the Annual Debt Service Requirements of the Financing System (as defined in the RFS Master Resolution), and to meet all financial obligations of the U. T. System Board of Regents relating to the Financing System;
U. T. El Paso, which is a "Member" as such term is used in the
RFS Master Resolution, possesses the financial capacity to satisfy its direct obligation (as defined in the RFS Master Resolution) relating to
71
the issuance by the U. T. System Board of Regents of parity RFS debt in the aggregate amount not to exceed the purchase price, plus all due diligence expenses and closing costs of the subject property; and
this action satisfies the official intent requirements set forth in Section
1.150-2 of the Code of Federal Regulations that evidences the Board's intention to reimburse project expenditures with bond proceeds.
BACKGROUND INFORMATION
U. T. El Paso desires to purchase the subject property and improvements, consisting of an 8,536 square foot one-story commercial building on 57,080 square feet of land for a negotiated purchase price of $1,197,000. The property is ideally located between North Mesa Street and Sunbowl Drive and is immediately adjacent to U. T. El Paso's campus. It is across the street from the Swimming and Fitness Center and the Helen of Troy Softball Field. The site was listed for potential campus expansion in U. T. El Paso's 2002 Campus Master Plan prepared by Ellerbe Becket. U. T. El Paso is landlocked with few opportunities for property acquisition for future campus expansion. This acquisition was approved by the Board of Regents on November 16, 2006, and included the use of Permanent University Fund (PUF) debt to fund the acquisition. Subsequent to such approval, one of the sellers opted not to proceed with the transaction. All of the sellers now indicate their willingness to proceed with the transaction. U. T. El Paso is seeking reauthorization of the purchase because it now proposes to fund the purchase with the use of U. T. System RFS debt, rather than PUF debt as proposed in 2006. The RFS debt will be repaid from institutional funds. Debt service is estimated at approximately $105,000 annually. The institution's debt service coverage ratio is expected to be at least 1.5 times, and to average 2.5 times during the period from FY 2009 through FY 2014. The terms and conditions of the proposed purchase are specified in the transaction summary below:
Transaction Summary
Institution: U. T. El Paso Type of Transaction: Purchase Total Area: Approximately 1.31 acres (57,080 square feet) Improvements: One-story building containing approximately 8,536 square
feet
Location: 3401 North Mesa Street, El Paso, El Paso County, Texas; see map on Page 73
72
Seller: Messrs. Gene, Tracy, and Michael McIntyre Purchase Price: $1,197,000 Appraised Value: $1,197,000 (Pete Sellers, MAI, Ralph Sellers & Associates,
January 6, 2009); Appraisal from Wilkinson, Pendergrass & Beard, L.P. is pending, with an estimated completion date of June 24, 2009
Source of Funds: Revenue Financing System debt, not to exceed the
purchase price and all due diligence and closing costs, to be repaid from institutional funds
Intended Use: Future programmed development of campus expansion
74
8. U. T. Health Science Center - Houston: Establishment of a center for research in the field of Alzheimer's Disease and other brain disorders and approval to name the center as The George and Cynthia Mitchell Center for Research in Alzheimer's Disease and Related Brain Disorders
RECOMMENDATION
The Chancellor concurs in the recommendation of the Executive Vice Chancellor for Health Affairs, the Vice Chancellor for External Relations, and President Kaiser that the U. T. System Board of Regents approve the establishment and naming of the Center for Research in the field of Alzheimer's Disease and other brain disorders as the George and Cynthia Mitchell Center for Research in Alzheimer's Disease and Related Brain Disorders.
BACKGROUND INFORMATION
On May 8, 2009, Mr. George P. Mitchell made a commitment of resources totaling $2,575,239.50 to U. T. Health Science Center – Houston for the establishment of a center at the Medical School that would provide resources and support researchers in the field of Alzheimer's disease and other brain disorders. The work to be conducted at this newly established center is expected to be transformational and applicable to many disciplines in the area of brain disorder research, impacting the way brain diseases are identified, diagnosed, and treated.
To recognize the importance of this commitment of resources and to honor the generosity of Mr. Mitchell's contribution to U. T. Health Science Center – Houston, the institution is requesting approval to name the center as The George and Cynthia Mitchell Center for Research in Alzheimer's Disease and Related Brain Disorders.
Mr. and Mrs. Mitchell have consistently supported U. T. Health Science Center – Houston since 1994, making gifts to the Medical School, the School of Public Health, the Graduate School of Biomedical Sciences, and the School of Nursing. In addition, the Cynthia and George Mitchell Foundation made a $1 million gift in 2003 to establish a distinguished chair in Neurosciences. The newly established center will offer the opportunity for collaboration with other healthcare institutions in the Texas Medical Center on research projects in the field of brain disorders.
75
9. U. T. System: Status Report on the U. T. System Competitiveness Initiative
REPORT
Chancellor Cigarroa will make a presentation on the U. T. System competitiveness initiative.
BACKGROUND INFORMATION
The U. T. System Competitiveness Initiative was endorsed by the Board of Regents on August 10, 2006, to significantly enhance global competitiveness in science, technology, engineering, and health. The Initiative was a response to the National Academies' call for action in the report Rising Above the Gathering Storm and included the approval of $2.56 billion for recruitment of world-class faculty, construction of 22 new buildings, and renovations to existing research facilities. The presentation and report will provide indicators of the leadership role that U. T. System has taken to maintain a competitive advantage in science and technology innovation.
76
July 9, 2009 -- 8:30 a.m. – noon
CONVENE JOINT MEETING
THE UNIVERSITY OF TEXAS SYSTEM BOARD OF REGENTS AND
THE UNIVERSITY OF TEXAS INVESTMENT MANAGEMENT COMPANY (UTIMCO) BOARD OF DIRECTORS
1. U. T. System Board of Regents: Introductions
U. T. System Board Vice Chairman Foster and UTIMCO Board Chairman Nye will introduce: UTIMCO Directors Chairman Erle Nye Vice Chairman J. Philip Ferguson Vice Chairman for Policy, Chancellor Francisco Cigarroa Mr. Clint D. Carlson Mr. Paul Foster Ms. Janiece Longoria Ms. Colleen McHugh Mr. Ardon E. Moore Mr. Charles W. Tate Staff and consultants invited to attend include:
U. T. System Mr. Philip Aldridge, Vice Chancellor for Finance and Business Development Mr. William Huang, Treasury Manager Mr. Barry Burgdorf, Vice Chancellor and General Counsel Mr. James Phillips, Senior Attorney, Office of General Counsel Ms. Francie Frederick, General Counsel to the Board of Regents Ms. Karen Rabon, Assistant General Counsel to the Board of Regents Mr. Charles Chaffin, Chief Audit Executive Ms. Moshmee Kalamkar, Audit Supervisor Mr. Anthony de Bruyn, Director of Public Affairs
Texas A&M University System Mr. Gregory R. Anderson, Associate Vice Chancellor and Treasurer (not expected to attend)
UTIMCO Mr. Bruce Zimmerman, Chief Executive Officer and Chief Investment Officer Ms. Cathy Iberg, President and Deputy Chief Investment Officer Ms. Cecilia Gonzalez, General Counsel and Chief Compliance Officer
77
Mr. Lindel Eakman, Managing Director - Private Markets Investments Mr. Bill Edwards, Managing Director - Information Technology Ms. Joan Moeller, Managing Director - Accounting, Finance, and Administration Mr. Ryan Ruebsahm, Director - Marketable Alternative Investments Mr. Robert Schau, Director - Real Estate Investments Mr. Mark Shoberg, Director - Private Markets Investments Mr. Mark Warner, Director - Natural Resources Investments Mr. Uzi Yoeli, Director - Portfolio Risk Management UTIMCO Board Advisors and Consultants Dr. Keith Brown, Advisor to the Chairman, Fayez Sarofim Fellow and Professor of
Finance, Red McCombs School of Business, U. T. Austin Mr. Jerry Turner, Counsel, Andrews Kurth LLP Mr. Bruce Myers, Investment Consultant, Cambridge Associates LLC
2. U. T. System Board of Regents: Annual Briefing on Fiduciary Responsibilities of Directors including discussion of the Master Investment Management Services Agreement (IMSA), Board of Regents' Expectations of UTIMCO Directors, Code of Ethics, and Bylaws
REPORT
Vice Chancellor and General Counsel Barry Burgdorf will provide the annual briefing on fiduciary responsibilities of directors including discussion of the Master Investment Management Services Agreement (IMSA), Board of Regents' Expectations of UTIMCO Directors, the Code of Ethics, and the Bylaws. The Board of Regents' Expectations of UTIMCO Directors follows on Pages 78 - 82 as background information for this discussion.
October 1, 2007
Editorial Amendments June 2009 Office of the Board of Regents
78
U. T. System Board of Regents
Expectations for Appointees to the
UTIMCO BOARD OF DIRECTORS
Overview of UTIMCO The University of Texas Investment Management Company (“UTIMCO”), a Texas nonprofit
corporation qualified as a tax-exempt entity under Section 501(c)(3) of the Internal Revenue
Code, was created for the sole purpose of managing the investment of funds under the control
and management of the Board of Regents of The University of Texas System pursuant to
authorization provided in Section 66.08 of the Texas Education Code (the “UTIMCO statute”).
The corporate activities of UTIMCO are managed by its Board of Directors (the “UTIMCO
Board”), subject to the Master Investment Management Services Agreement (“IMSA”) between
UTIMCO and the Board of Regents, the applicable provisions of the Board of Regents’ Rules
and Regulations, the UTIMCO statute, UTIMCO’s Articles of Incorporation and Bylaws, and
other applicable law.
The Chancellor of the U. T. System serves as the Vice Chairman for Policy.
The Chancellor is charged by the UTIMCO Bylaws with coordination of responsibilities,
including the appropriate resolution of policy issues, assigned to UTIMCO and to the U. T.
System by the Regents' Rules to ensure implementation of UTIMCO's performance of core
investment duties.
The IMSA between the U. T. System Board of Regents and UTIMCO provides that unless
otherwise provided in writing by the U. T. Board, “UTIMCO shall look to the Chancellor to
provide primary oversight and management concerning relations with the media, legal issues
that implicate policies of the U. T. Board other than the Investment Policies, public
disclosure of information and intergovernmental relations. Except for the foregoing matters,
the UTIMCO Board of Directors and the CEO of UTIMCO shall be responsible for making
all decisions necessary to implement the Investment Policies. The CEO of UTIMCO shall
confer with the Chancellor on the above-mentioned matters where the Chancellor has
primary oversight and management and on other matters that may implicate broader policies
of the U. T. Board.”
The Regents' Rules, Rule 20101 and Rule 70401 provide additional detail on these duties.
Qualifications and Terms Pursuant to the UTIMCO statute, the UTIMCO Board consists of nine (9) members. The
Chancellor of the U. T. System serves as a Director. The other members of the UTIMCO Board
are appointed by the Board of Regents and must include at least three (3) current members of the
Board of Regents and at least one person selected by the Board of Regents from a list of
candidates with substantial expertise in investments submitted by the Board of Regents of The
Texas A&M University System. Pursuant to the UTIMCO bylaws approved by the Board of
Regents, the three (3) Regental Directors serve two-year terms that expire on the first day of
April of each odd-numbered year, and the external Directors serve three-year staggered terms
that expire on the first day of April of the appropriate year. No external Director, other than the
October 1, 2007
Editorial Amendments June 2009 Office of the Board of Regents
79
Director recommended by The Texas A&M University System Board of Regents, may serve
more than three (3) full three-year terms. Any UTIMCO Director may be removed as a Director
by the Board of Regents with or without cause and at any time.
Operations and Resources The UTIMCO Board has delegated primary responsibility for certain functions to key chartered
Board Committees:
1. Audit and Ethics Committee (Appointments approved by the Board of Regents)
2. Compensation Committee
3. Policy Committee
4. Risk Committee
U. T. System Administration staff provide oversight through the Office of Business Affairs,
including the Office of Finance; the Office of General Counsel; Internal Audit; the Systemwide
Compliance Officer; and the General Counsel to the Board of Regents. UTIMCO Directors also
have the benefit of professional independent consultants, including:
1. Investment consultants (Cambridge Associates);
2. Outside legal counsel (Andrews Kurth, LLP);
3. Compensation consultants (Mercer);
4. External auditors (Deloitte & Touche LLP);
5. Dr. Keith Brown, Professor of Finance at U. T. Austin, Advisor to the Chairman of the
UTIMCO Board.
Duties and Responsibilities By statute and charter, as a fiduciary under the IMSA, UTIMCO is dedicated to the sole purpose
of investing funds under the management and control of the Board of Regents. In practice, the
fiduciary duties of UTIMCO Directors are focused on the fulfillment of the Board of Regents’
investment policy directives. As Directors of a nonprofit corporation, UTIMCO Directors’
fiduciary duties also include:
1. Duty of care in prudently managing the corporation’s investment management and other
affairs;
2. Duty of loyalty, requiring the avoidance of conflicts of interest; and
3. Duty to avoid conduct that exceeds the chartered powers of the corporation.
Investment Management Responsibilities: The Board of Regents is the ultimate fiduciary
responsible for all matters relating to the investment of the funds under its control, in accordance
with the “prudent investor” standard of care established by the Texas Constitution, Texas
Education Code, and other applicable law. This standard provides that the Board of Regents, in
making investments, may acquire, exchange, sell, supervise, manage, or retain, through
procedures and subject to restrictions it establishes and in amounts it considers appropriate, any
kind of investment that prudent investors, exercising reasonable care, skill, and caution, would
acquire or retain in light of the purposes, terms, distribution requirements, and other
circumstances of the fund then prevailing, taking into consideration the investment of all the
assets of the fund rather than a single investment.
October 1, 2007
Editorial Amendments June 2009 Office of the Board of Regents
80
The Board of Regents delegates to UTIMCO as its fiduciary, under the management of the
UTIMCO Board, authority to act for the Board of Regents in the investment of those funds,
subject to limitations and restrictions articulated through the IMSA; the Board of Regents’
investment policies; and other applicable laws, rules, and agreements. The UTIMCO Board’s
investment management authority, thus derived, includes the following investment management
responsibilities:
Review of the U. T. Board's current Investment Policies for each Fund at least annually. Such
review shall include distribution (spending) guidelines, long-term investment return
expectations and expected risk levels, Asset Class and Investment Type allocation targets and
ranges, expected returns for each Asset Class and Investment Type and fund, designated
performance benchmarks for each Asset Class and Investment Type and such other matters
as the U. T. Board or its staff designees may request.
After UTIMCO completes its assessment, UTIMCO must forward any recommended
changes to U. T. System staff for review and appropriate action.
Oversee the investment management process pursuant to the Investment Policies. Such
oversight shall include without limitation the development of an investment outlook based on
global economic and capital market forecasts, the rebalancing of allocations to each Asset
Class and Investment Type within ranges in response to changes in the investment outlook,
and the selection of a combination of portfolio managers to construct portfolios designed to
generate the expected returns of each Asset Class and Investment Type.
Monitor and report on investment performance for each of the Funds. With respect to all
Funds other than the Separately Invested Funds (“SIFs”), such responsibilities shall include
the calculation and evaluation of investment returns for each Asset Class and Investment
Type and individual Fund portfolio against approved benchmarks over various periods of
time, and the periodic review of performance benchmarks. With respect to all Funds, such
responsibilities shall also include the reporting of investment performance of such specific
Funds as may be requested by the U. T. Board, and the reporting to regulatory agencies and
others regarding investments under management to the extent required by applicable law.
Develop and implement a risk management system to measure and monitor overall portfolio
derivative exposure, risk levels, liquidity, and leverage.
Monitor and enforce compliance with all investment and other policies and applicable law.
Monitor termination of external managers in accordance with Delegation of Authority Policy
and investment policies.
Some investment management responsibilities delegated to UTIMCO, including but not limited
to the following, are expressly subject to Board of Regents approval:
Analyze and recommend investment strategies for U. T. System funds managed by
UTIMCO, including Asset Class and Investment Type allocation targets, ranges, and
performance benchmarks for each Asset Class and Investment Type (Exhibit A of the Fund
Investment Policy Statements).
Consider and recommend investments not covered by investment policy statements.
Select one or more Custodians, each of which shall be approved by the U. T. Board, which
shall also enter into or approve each agreement with the Custodian(s).
Select, engage, and evaluate External Auditor(s) for the funds.
October 1, 2007
Editorial Amendments June 2009 Office of the Board of Regents
81
Review and propose amendments to Board of Regents’ policies related to the investment
management of the U. T. System funds, including (not limited to):
1. Investment Policy Statements for all U. T. System funds.
2. Distribution (spending) guidelines, rates, and amounts as required.
3. Liquidity Policy.
4. Derivative Policy.
Corporate Governance Responsibilities: The UTIMCO Board manages the activities of the
corporation, providing the primary governance and oversight of the CEO and Chief Investment
Officer, other professionals employed by UTIMCO, and outside investment managers with
whom funds have been invested. Management oversight responsibilities of the UTIMCO Board
or UTIMCO Board Committees include the following:
Monitor actual staffing, operating, and capital expenditures relative to approved budgets.
Monitor compliance with the Delegation of Authority policy.
Consider and approve actions outside the authority delegated to the CEO as required.
Select, engage, and evaluate UTIMCO’s outside counsel, custodian(s), external auditor(s) for
the corporation, investment consultant(s) and risk consultant(s).
Ensure compliance with UTIMCO’s Code of Ethics, including conflict of interest policies
and applicable law.
Develop and administer a compensation plan, consistent with current regulations for
determining reasonable compensation, to attract and retain high caliber investment
professionals and support staff. With the exception of changes to the appendices, the
Compensation Plan is subject to approval by the Board of Regents.
Appoint, supervise, evaluate and compensate UTIMCO’s CEO.
Evaluate investment results against incentive compensation plan performance objectives;
approve and recommend incentive compensation for UTIMCO’s officers and other
compensation plan participants.
Review and approve committee charters.
Assure establishment and implementation of legally compliant and administratively effective
personnel policies.
Oversee implementation of accounting principles, policies, internal financial controls, and
reporting in the spirit of the Sarbanes-Oxley Act.
Oversee implementation of public disclosures in compliance with the Texas Public
Information Act and other applicable law, in collaboration with the Chancellor/Vice
Chairman for Policy.
Some corporate management responsibilities of the UTIMCO Board, including but not limited to
the following, are expressly subject to approval by the Board of Regents:
Review and approve the proposed annual UTIMCO operating and capital budgets, including
incentive compensation, capital expenditures, and management fee allocations.
Review, approve, and recommend key governance documents such as the Articles of
Incorporation, Bylaws, and Code of Ethics.
Approval of Performance Incentive Awards that will result in an increase of 5% or more of
the total performance incentive awards calculated to the approved Performance Incentive
Plan contained in the UTIMCO Compensation Program.
October 1, 2007
Editorial Amendments June 2009 Office of the Board of Regents
82
Prohibited Transactions -- Conflicts of Interest The UTIMCO Code of Ethics (“Code”) details, among other things, prohibitions on transactions
between UTIMCO and entities controlled by UTIMCO Directors, as required by the UTIMCO
statute and supplementing the general requirements under the Texas Non-Profit Corporation Act.
Amendments to the Code are expressly subject to Board of Regents’ approval.
The Code prohibits any transaction or agreement between UTIMCO and any investment fund or
account managed by a UTIMCO Director as a fiduciary or agent for compensation. The Code
prohibits agreements or transactions between UTIMCO and a business entity controlled by a
UTIMCO Director or in which a UTIMCO Director owns five percent or more of the fair market
value of the assets or of the voting stock or from which the UTIMCO Director received more
than five percent of his or her gross income for the preceding calendar year.
The Code prohibits a UTIMCO Director from investing in the private investments of a business
entity in which UTIMCO contemporaneously owns a private investment if after the investment
the UTIMCO Director’s investment constitutes a pecuniary interest (i.e., ownership of five
percent or more of the fair market value of the assets or of the voting stock or from which the
UTIMCO Director received more than five percent of his or her gross income for the preceding
calendar year). The Code also prohibits UTIMCO from investing in the private investments of a
business entity in which a UTIMCO Director contemporaneously owns a private investment if
the UTIMCO Director’s interest constitutes a pecuniary interest. For this purpose, “private
investment” means any debt or equity interest that is not publicly traded, including a private
investment in a public company.
Application of the Texas Public Information Act UTIMCO and its officers, directors and employees are subject to the provisions of the Texas
Public Information Act. Corporate documents, correspondence, and emails are subject to public
inspection and duplication, unless specifically excepted from disclosure under the Act.
Meeting Requirements UTIMCO Directors are expected to attend all regularly scheduled Board meetings which are
typically held approximately every three months. In addition, special Board meetings may be
scheduled from time to time with prior notice. The Texas Open Meetings Act applies to the
UTIMCO Board, requiring that all deliberations of a quorum of the Board take place in open
meetings after advance notice of the meeting is posted as required by the Act. Committee
meetings are held as needed to address specific items within the Committee charters.
83
3. U. T. System Board of Regents: Discussion of U. T. System financial resources and assets managed by The University of Texas Investment Management Company (UTIMCO)
REPORT
Dr. Scott C. Kelley, Executive Vice Chancellor for Business Affairs, will discuss the importance of investment assets in the context of the U. T. System's overall financial resources. The presentation, set forth on Pages 84 - 103, provides an overview of the U. T. System's assets, liabilities, revenues, and expenditures, and the role that UTIMCO-managed assets play in supporting the financial condition of the U. T. System.
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Fi
Vl
fIt
t
$3.0
$3.6
$3
.3
$23
$3.5
25
3.5
4.5
Con
solid
ated
Net
Inve
stm
ent I
ncom
e an
d C
hang
es in
Fai
r Val
ue o
f Inv
estm
ents
$1.8
$1
.9
$1.8
$2
.3
05
1.5
2.5
($0.
7)($
0.2)
(15)
(0.5
)
0.5
10
(1.5
)20
0420
0520
0620
0720
08
Fisc
al Y
ear
93
Inve
stm
ent I
ncom
e is
6.5
% o
f a
Hig
hly
Div
ersi
fied
Rev
enue
Bas
eH
ighl
y D
iver
sifie
d R
even
ue B
ase
$11.
7 bi
llion
FY
2009
Bud
gete
d R
even
ue S
trea
m
Fede
ral,
Sta
te, L
ocal
&
Priv
ate
Spo
nsor
ed
Tuiti
on &
Fee
s9.
3%&
Priv
ate
Spo
nsor
ed
Pro
gram
s21
.7%
Inve
stm
ent
Inco
me
6.5%
Auxi
liary
Ent
erpr
ises
3.3%
Sta
te A
ppro
pria
tions
(G
R)
Gift
s &
Oth
er3.
6%
Edu
catio
nal A
ctiv
ities
2.6%
(GR
)16
.6%
Hos
pita
ls&
Clin
ics
Pro
fess
iona
l Fee
s8.
5%
11
Hos
pita
ls &
Clin
ics
27.9
%
94
UTI
MC
O’s
Rel
atio
nshi
p to
U
TSy
stem
Deb
tPro
gram
sU
. T. S
yste
m D
ebt P
rogr
ams
1Li
quid
ity1.
Liqu
idity
Ena
bles
use
of v
aria
ble
rate
deb
t and
use
of s
ynth
etic
fixe
d ra
te d
ebt
2I
tt
fDbt
Pd
2.In
vest
men
t of D
ebt P
roce
eds
Inst
itutio
ns b
enef
it fro
m lo
wer
net
deb
t ser
vice
pay
men
ts
3.P
UF
Deb
t Cap
acity
Allo
ws
for c
apita
l fun
ding
pro
gram
uni
que
to U
. T. S
yste
m
Ben
efits
inst
itutio
ns, e
spec
ially
thos
e w
ith le
ss fi
nanc
ial f
lexi
bilit
y
12
95
Sum
mar
y of
Var
iabl
e R
ate
Deb
t
Program
Outstan
ding
Daily
Weekly
Notice
Program
Autho
rization
At6
/17/09
Maxim
umPu
tMaxim
umPu
tPe
riod
Program
Autho
rization
At 6
/17/09
Maxim
umPu
tMaxim
um Put
Period
RFS CP, Series A&B*
$1,250
.0
$861.6
$100.0
$500
.0
<4 hou
rs
PUF CP, Series A&B*
500.0
0.0
100.0
500.0
<4 hou
rs
RFS Bo
nds, Series 2001A
20.0
20.0
‐20.0
7 days
RFS Bo
nds, Series 2007B
337.8
337.8
‐337.8
7 days
RFS Bo
nds, Series 2008B
685.5
685.5
‐685.5
7 days
PUF Bo
nds, Series 2008A
400.9
400.9
‐400.9
7 days
$3,194
.2
$2,305.8
$200.0
$2,444.2
13
*Max
CP
put
is $
50 m
m d
aily
($25
0 m
m w
eekl
y) p
er d
eale
r; S
yste
m c
urre
ntly
has
two
RFS
CP
dea
lers
and
two
PU
F C
P d
eale
rs.
96
Rat
ing
Age
ncy
View
“Th
eS
yste
m's
sam
e-da
yliq
uidi
tyto
tale
dov
er…
The
Sys
tem
ssa
me
day
liqui
dity
tota
led
over
$4.4
billi
onas
ofAu
gust
31,
2008
,of
whi
ch77
%re
pres
ents
inve
stm
ents
inth
eD
reyf
usIn
stitu
tiona
lPr
efer
red
Mon
eyM
arke
tFu
nd(ra
ted
Aaa)
that
are
held
bym
ultip
lefu
nds
with
the
rem
aind
erco
mpr
ised
fU
ST
id
At
dA
it
fof
US
Trea
surie
san
dAa
a-ra
ted
Agen
cies
net
ofse
curit
ies
onlo
anth
atca
nbe
liqui
date
don
asa
me-
day
basi
s.M
oody
'svi
ews
the
conc
entra
tion
ofsh
ort-
term
inve
stm
ents
asa
vuln
erab
ility
fort
heSy
stem
.”
14
97
Liqu
idity
Con
cern
sq
y
The
UT
Sys
tem
man
ages
varia
ble
rate
debt
prog
ram
sba
sed
The
U. T
. Sys
tem
man
ages
var
iabl
e ra
te d
ebt p
rogr
ams
base
d on
the
amou
nt o
f int
erna
l liq
uidi
ty a
vaila
ble,
not
vic
e ve
rsa.
The
vast
maj
ority
ofsa
me
day
liqui
dity
isin
vest
edw
ithon
efu
ndTh
e va
st m
ajor
ity o
f sam
e-da
y liq
uidi
ty is
inve
sted
with
one
fund
m
anag
er (D
reyf
us).
UTI
MC
O’
tid
fiiti
fli
idit
idi
fftt
hth
UTI
MC
O’s
oper
atin
g de
finiti
on o
f liq
uidi
ty is
diff
eren
t tha
n th
e cr
edit
mar
kets
.
Unt
imel
y ca
pita
l cal
ls a
nd c
olla
tera
l pos
tings
will
hap
pen.
Lock
-ups
, sid
e po
cket
s an
d se
ttlem
ent-i
n-ki
nd p
rovi
sion
s er
ode
15
actu
al l
iqui
dity
.
98
Inve
stm
ent o
f Deb
t Pro
ceed
s
All
UT
St
hd
lld
btd
All
U. T
. Sys
tem
cas
h re
serv
es a
nd a
ll de
bt p
roce
eds
are
curr
ently
inve
sted
in th
e D
reyf
us In
stitu
tiona
l Pre
ferr
ed M
oney
M
arke
t Fun
d “D
reyf
us.”
Thi
s in
vest
men
t poo
l is
refe
rred
to a
s y
pth
e S
hort
Term
Fun
d.
Idd
itill
UTI
MC
Oh
tli
td
iIn
add
ition
, all
UTI
MC
O c
ash
rese
rves
are
cur
rent
ly in
vest
ed in
D
reyf
us.
16
99
The
Syst
em E
arns
a P
ositi
ve
Spre
adon
itsD
ebtP
roce
eds
Spre
ad o
n its
Deb
t Pro
ceed
s
Spr
ead
1.80
%
2.00
%6.
00%
Spr
ead
(STF
Yie
ld –
RFS
CP
Yiel
d)
Sho
rt Te
rm F
und
(STF
) Yie
ld
1.00
%
1.20
%
1.40
%
1.60
%
4.00
%
5.00
%
Ave
rage
Spr
ead
020
%
0.40
%
0.60
%
0.80
%
1.00
%
2.00
%
3.00
%
-0.2
0%
0.00
%
0.20
%
0.00
%
1.00
%
p-03
c-03
pr-04
g-04
c-04
pr-05
g-05
c-05
pr-06
g-06
c-06
pr-07
g-07
c-07
pr-08
g-08
c-08
pr-09
17
Sep
Dec
Ap
Aug
Dec
Ap
Aug
Dec
Ap
Aug
Dec
Ap
Aug
Dec
Ap
Aug
Dec
Ap
Sho
rt Te
rm F
und
Yiel
dS
prea
dAv
erag
e S
prea
d
100
Perm
anen
t Uni
vers
ity F
und
Deb
tCap
acity
Deb
t Cap
acity
The
amou
ntof
PU
Fde
btth
atca
nbe
issu
edby
the
UT
Sys
tem
The
amou
nt o
f PU
F de
bt th
at c
an b
e is
sued
by
the
U. T
. Sys
tem
is
lim
ited
by th
e Te
xas
Con
stitu
tion
to 2
0% o
f the
boo
k va
lue
of
the
PU
F, o
r app
roxi
mat
ely
$1.9
bill
ion
as o
f 3/3
1/09
.
The
amou
nt o
f PU
F de
bt th
at c
an b
e is
sued
by
The
Texa
s A
&M
U
nive
rsity
Sys
tem
islim
ited
to10
%of
the
book
valu
eof
the
PU
FU
nive
rsity
Sys
tem
is li
mite
d to
10%
of t
he b
ook
valu
e of
the
PU
F.
The
amou
nt o
f tax
-exe
mpt
PU
F de
bt th
at c
an b
e is
sued
co
llect
ivel
y by
the
U. T
. Sys
tem
and
The
Tex
as A
&M
Uni
vers
ity
Sys
tem
is li
mite
d to
20%
of t
he c
ost v
alue
of t
he P
UF.
18
101
Rec
ent E
vent
s H
ave
Red
uced
PU
FD
ebtC
apac
ityPU
F D
ebt C
apac
ity
Cha
lleng
ing
capi
talm
arke
tsha
vele
dto
low
erP
UF
mar
ketv
alue
Cha
lleng
ing
capi
tal m
arke
ts h
ave
led
to lo
wer
PU
F m
arke
t val
ue
with
act
ual r
etur
ns b
elow
exp
ecte
d re
turn
s
Fore
cast
ed P
UF
roya
lty in
com
e is
redu
ced
due
to lo
wer
co
mm
odity
pric
es
Dec
linin
g P
UF
book
val
ue lo
wer
s C
onst
itutio
nal P
UF
debt
ca
paci
ty a
nd li
mits
the
amou
nt o
f PU
F de
bt th
at c
an b
e is
sued
on
ata
xex
empt
basi
sdu
eto
low
erP
UF
arbi
trage
exem
ptio
non
a ta
x-ex
empt
bas
is d
ue to
low
er P
UF
arbi
trage
exe
mpt
ion
19
102
PUF
Con
stitu
tiona
l Deb
t C
apac
ity
Art.
VII,
Sec
. 18
of th
e Te
xas
Con
stitu
tion
limits
the
amou
nt o
f
Cap
acity
PU
F de
bt th
at c
an b
e is
sued
by
the
U. T
. Boa
rd o
f Reg
ents
to
an a
ggre
gate
am
ount
not
to e
xcee
d 20
% o
f the
cos
t val
ue o
f P
UF
inve
stm
ents
(exc
lusi
veof
real
esta
te)
PU
F B
ook
Val
ue a
s of
Mar
ch 3
1, 2
009
9,45
1,89
1,17
4$
PU
F in
vest
men
ts (e
xclu
sive
of r
eal e
stat
e)
U. T
. Con
stitu
tiona
l Deb
t Lim
it (2
0% o
f PU
F B
ook
Val
ue)
1,89
0,37
8,23
5
U. T
. PU
F D
ebt O
utst
andi
ng a
s of
Mar
ch 3
1, 2
009
(1,3
19,8
85,0
00)
Less
:U
TP
UF
Deb
tApp
rove
dbu
tUni
ssue
d(5
5068
046
4)Le
ss:
U. T
. PU
F D
ebt A
ppro
ved
but U
niss
ued
(550
,680
,464
)
Rem
aini
ng C
onst
itutio
nal U
. T. P
UF
Deb
t Cap
acity
19
,812
,770
$
20
103
104
4. U. T. System Board of Regents: Reports on The University of Texas Investment Management Company (UTIMCO) Board operations and committees
University of Texas Investment Management Company (UTIMCO or Corporation) Chairman Nye will outline the UTIMCO Board Committee structure. Four Board committees assume primary responsibility for overseeing certain aspects of UTIMCO operations. The chairs of the UTIMCO Board committees will describe the roles of their committees as follows:
Audit and Ethics Committee: Chairman Paul Foster Risk Committee: Chairman Charles W. Tate Policy Committee: Chairman Colleen McHugh Compensation Committee: Chairman J. Phillip Ferguson
REPORT
The purposes of these four committees, as set forth in their respective charters, are outlined below.
Audit and Ethics Committee Charter Purpose: The primary purpose of the Committee is to assist the UTIMCO Board in monitoring the financial and compliance functions of the Corporation and the investment funds managed on behalf of The University of Texas System Board of Regents (the U. T. Board) to assure the balance, transparency, and integrity of published financial information. Specifically, the Committee is to assist the UTIMCO Board in monitoring:
- The integrity of the financial reporting process, the system of internal controls,
the audit process, and the process for monitoring compliance with laws and regulations;
- The independence and performance of the Corporation's Chief Compliance
Officer; - The independence and performance of the Corporation's independent auditors; - The independence and performance of the independent auditors selected by the
U. T. Board to audit the investment funds managed by UTIMCO on their behalf; - Internal audit functions performed by the U. T. System Audit Office; - The Corporation's audit policies, ethics programs, and adherence to regulatory
requirements; and - The Corporation's enterprise risk management.
105
The Committee is responsible for maintaining free and open communication as well as effective working relationships among the Committee members, the Chief Compliance Officer, independent external auditors, U. T. System's internal auditors, and management of the Corporation. To perform his or her role effectively, each Committee member will need to develop and maintain his or her skills and knowledge, including an understanding of the Committee's responsibilities and of the Corporation's activities, operations, and risks.
The Committee will take all appropriate actions to set the overall tone at the Corporation for quality financial reporting, sound risk practices, and ethical behavior.
Risk Committee Charter Purpose: The primary purpose of the Committee is to provide oversight and monitor:
- Investment risk management and compliance; - The integrity of risk management procedures and controls; - The integrity of risk models and modeling processes; and - Liquidity of the Permanent University Fund (PUF), the General Endowment
Fund (GEF), and the Intermediate Term Fund (ITF).
Policy Committee Charter Purpose: The primary purpose of the Committee is to provide oversight and to monitor:
- The development and amendment of UTIMCO Board Policies and Corporate
Documents; - Recommendations concerning the development and amendment of investment-
related policies of the U. T. Board related to the management of funds under the control and management of the U. T. Board; and
- Recommendations concerning the amendment of the Master Investment
Management Services Agreement (IMSA), Code of Ethics, and Bylaws.
Compensation Committee Charter Purpose: The primary purpose of the Committee is to provide oversight of the compensation system for officers and employees of the Corporation. The Committee has the following duties and responsibilities:
- Recommend to the UTIMCO Board the base salary and performance
compensation award of the CEO;
- Approve base salaries of all officers (except the CEO) of the Corporation;
106
- Recommend to the UTIMCO Board the Performance Compensation Plan and any amendments thereto and the eligible employees; and
- Approve the Performance Compensation Plan awards for eligible employees
except the CEO.
5. U. T. System Board of Regents: Report on Investment Objectives and Performance for The University of Texas Investment Management Company (UTIMCO)
REPORT
Mr. Bruce Myers, Cambridge Associates, will report on the investment objectives and performance of funds managed by The University of Texas Investment Management Company (UTIMCO) including objectives, performance, policy portfolios, benchmark and asset allocation, using materials presented at the meeting. His PowerPoint presentation is set forth on Pages 107 – 123. Mr. Bruce Zimmerman will report on current UTIMCO performance through the fiscal quarter ending May 31, 2009 using materials on Pages 124 - 128.
Dis
cuss
ion
on In
vest
men
t Obj
ectiv
es
and
Perf
orm
ance
and
Perf
orm
ance
June
200
9
1
107
Def
initi
ons
•PU
F:Th
e Pe
rman
ent U
nive
rsity
Fun
d es
tabl
ishe
d by
the
Texa
s Sta
te
C
onst
itutio
n fo
r the
ben
efit
of th
e U
nive
rsity
of T
exas
and
Tex
as A
&M
•G
EF:T
he G
ener
al E
ndow
men
t Fun
d w
hich
is c
ompo
sed
of:
LTF:
The
Lon
g Te
rm F
und,
the
perm
anen
t end
owm
ent o
f th
e U
nive
rsity
of T
exas
PHF:
The
Per
man
ent H
ealth
Fun
d
•ST
F:Th
e Sh
ort T
erm
Fun
d, a
mon
ey m
arke
t fun
d m
anag
ed fo
r pr
eser
vatio
n of
prin
cipa
l and
liqu
idity
•IT
F: T
he In
term
edia
te T
erm
Fun
d, a
bro
adly
div
ersi
fied
portf
olio
des
igne
d to
pro
duce
a re
turn
of a
t lea
st 3
% p
lus t
he ra
te o
f inf
latio
n (C
PI-U
)
2
108
Cur
rent
Inve
stm
ent O
bjec
tives
•“T
he p
rimar
y ob
ject
ive
for e
ach
fund
[the
PU
F an
d th
e G
EF] s
hall
be to
pre
serv
e th
e pu
rcha
sing
pow
er o
f fun
d as
sets
and
ann
ual
dist
ribut
ions
by
earn
ing
an a
vera
ge re
al re
turn
ove
r ten
-yea
r per
iods
or
long
er a
t lea
st e
qual
to th
e ta
rget
dis
tribu
tion
rate
of s
uch
fund
s l
thl
td
”pl
us th
e an
nual
exp
ecte
d ex
pens
e.”
•“T
he se
cond
ary
fund
obj
ectiv
e is
to g
ener
ate
a fu
nd re
turn
in e
xces
s of
the
Polic
y Po
rtfol
io b
ench
mar
k an
d th
e m
edia
n re
turn
of t
he
univ
erse
of t
he c
olle
ge a
nd u
nive
rsity
end
owm
ents
with
ass
ets
grea
ter t
han
$2.5
bill
ion
as re
porte
d by
Cam
brid
ge A
ssoc
iate
s.”
[Am
ende
d in
200
8. P
rior t
o 20
08, t
he b
ench
mar
k w
as in
stitu
tions
w
ith a
sset
s gre
ater
than
$2.
5 bi
llion
]
3
109
PUF
Tar
gets
, Ran
ges,
and
Perf
orm
ance
Obj
ectiv
esA
sofM
ay31
2009
As o
f May
31,
200
9
AC
TU
AL
Min
Tar
get
Max
154%
56%
84%
156%
70%
Ass
et C
lass
Inve
stm
entG
rade
Fixe
dIn
com
e
May
31,
200
9M
ay 3
1, 2
009
vs. T
arge
t
15.4
%5.
6%8.
4%15
.6%
7.0%
15.2
%7.
5%11
.4%
20.0
%3.
8%5.
6%4.
5%7.
1%13
.5%
-1.5
%6.
7%4.
8%8.
4%14
.3%
-1.7
%43
.7%
41.9
%48
.6%
55.0
%-4
.9%
Nat
ural
Res
ourc
esD
evel
oped
Cou
ntry
Equ
ity
Inve
stm
ent G
rade
Fix
ed In
com
eC
redi
t-Rel
ated
Fix
ed In
com
eR
eal E
stat
e
13.4
%11
.9%
16.1
%21
.9%
-2.7
%T
OT
AL
100.
0%10
0.0%
0.0%
47.1
%40
.0%
46.7
%52
.5%
0.4%
30.9
%27
.5%
33.0
%37
.5%
-2.1
%Le
ss C
orre
late
d &
Con
stra
ined
Emer
ging
Mar
kets
Equ
ity
Inve
stm
ent T
ypes
Mor
e C
orre
late
d &
Con
stra
ined
22.0
%15
.9%
20.3
%26
.0%
1.7%
TO
TA
L10
0.0%
100.
0%0.
0%Pr
ivat
e In
vest
men
ts
4
110
GE
F T
arge
ts, R
ange
s, an
d Pe
rfor
man
ce O
bjec
tives
Aso
fMay
3120
09A
s of M
ay 3
1, 2
009
AC
TU
AL
Min
Tar
get
Max
13.6
%5.
6%8.
4%15
.6%
5.2%
155%
75%
114%
200%
41%
Ass
et C
lass
Inve
stm
ent G
rade
Fix
ed In
com
eC
diR
ld
Fid
I
May
31,
200
9M
ay 3
1, 2
009
vs. T
arge
t
15.5
%7.
5%11
.4%
20.0
%4.
1%5.
9%4.
5%7.
1%13
.5%
-1.2
%6.
7%4.
8%8.
4%14
.3%
-1.7
%44
.6%
41.9
%48
.6%
55.0
%-4
.0%
13.7
%11
.9%
16.1
%21
.9%
-2.4
%Em
ergi
ng M
arke
ts E
quity
Nat
ural
Res
ourc
esD
evel
oped
Cou
ntry
Equ
ity
Cre
dit-R
elat
ed F
ixed
Inco
me
Rea
l Est
ate
TO
TA
L10
0.0%
100.
0%0.
0%
46.1
%40
.0%
46.7
%52
.5%
-0.6
%31
.5%
27.5
%33
.0%
37.5
%-1
.5%
224%
159%
203%
260%
21%
Less
Cor
rela
ted
& C
onst
rain
edPr
ivat
eIn
vest
men
ts
Inve
stm
ent T
ypes
Mor
e C
orre
late
d &
Con
stra
ined
22.4
%15
.9%
20.3
%26
.0%
2.1%
TO
TA
L10
0.0%
100.
0%0.
0%Pr
ivat
e In
vest
men
ts
5
111
Perf
orm
ance
Sum
mar
y: P
UF
& G
EF
•Th
e dr
amat
ic d
ownt
urn
in 2
008
subs
tant
ially
ero
ded
the
enha
nced
pur
chas
ing
pow
erth
atha
dbe
enac
cum
ulat
ing
inbo
thth
ePU
Fan
dth
eG
EFsi
nce
2002
Aso
fpo
wer
that
had
bee
n ac
cum
ulat
ing
in b
oth
the
PUF
and
the
GEF
sinc
e 20
02.
As o
f M
ay 3
1, 2
009,
the
annu
aliz
ed re
turn
in th
e PU
F ha
d dr
oppe
d be
low
the
min
imum
ac
cept
able
retu
rn, w
hile
the
retu
rn o
f the
GEF
was
still
som
ewha
t hig
her.
•Th
e ne
arly
15-
year
per
form
ance
of t
he P
UF
cont
inue
s to
trails
its P
olic
y Po
rtfol
io,
but c
ontin
ues t
he c
lose
the
gap
with
113
bas
is p
oint
s of o
ut-p
erfo
rman
ce v
ersu
s B
ench
mar
k ov
er th
e tw
elve
-mon
th p
erio
d en
ding
May
31,
200
9.
The
nea
rly 1
5-ye
arpe
rfor
man
ceof
the
GEF
pulle
dah
ead
ofits
Polic
yPo
rtfol
ioB
ench
mar
kin
year
per
form
ance
of t
he G
EF p
ulle
d ah
ead
of it
s Pol
icy
Portf
olio
Ben
chm
ark
in
2008
and
has
add
ed a
noth
er 9
1 ba
sis p
oint
s of o
ut-p
erfo
rman
ce in
the
mos
t rec
ent
fisca
l yea
r.
•Pe
rfor
man
ce(m
easu
red
ona
rolli
ngfiv
e-ye
arba
sis)
rela
tive
toco
llege
and
•Pe
rfor
man
ce (m
easu
red
on a
rolli
ng fi
ve-y
ear b
asis
) rel
ativ
e to
col
lege
and
un
iver
sity
pee
rs la
gs th
e pe
er u
nive
rse
prio
r to
2005
. Fo
r rol
ling
five
year
per
iods
en
ding
in 2
005,
200
6 an
d 20
07 th
e PU
F an
d G
EF m
odes
tly o
utpe
rfor
med
. Ret
urns
fo
r the
five
yea
r per
iod
endi
ng in
200
8 on
ce a
gain
lagg
ed th
e pe
er u
nive
rse,
and
co
ntin
ues t
o do
so fo
r the
par
tial 4
.25
year
per
iod
endi
ng M
arch
31,
200
9.
6
112
Perf
orm
ance
Rel
ativ
e to
Min
imum
Acc
epta
ble
Ret
urn¹
Gro
wth
of $
1
$5.0
Ann
ualiz
ed14
yrs
. 9 m
os.
$3.2
0
$282
$2.9
8$2
5$3
.0$3
.5$4
.0$4
.5PU
F7.
70G
EF8.
20M
AR
7.70
$2.8
2
$0.5
$1.0
$1.5
$2.0
$2.5
$0.0
Sep-94
Jun-95
Mar-96
Dec-96
Sep-97
Jun-98
Mar-99
Dec-99
Sep-00
Jun-01
Mar-02
Dec-02
Sep-03
Jun-04
Mar-05
Dec-05
Sep-06
Jun-07
Mar-08
Dec-08
GEF
PUF
MA
R
Obj
ectiv
e:Pr
eser
ve th
e pu
rcha
sing
pow
er o
f fun
d as
sets
and
ann
ual d
istri
butio
ns b
y ea
rnin
g an
av
erag
e an
nual
retu
rn o
ver r
ollin
g te
n-ye
ar p
erio
ds o
r lon
ger a
t lea
st e
qual
to th
e ta
rget
di
strib
utio
n ra
te o
f suc
h fu
nds p
lus t
he a
nnua
l exp
ecte
d ex
pens
e.
¹ The
“M
AR
” as
def
ined
by
the
Uni
vers
ity o
f Tex
as S
yste
m In
vest
men
t Pol
icy
Stat
emen
t is 5
.1%
plu
s an
assu
med
rate
of i
nfla
tion
of 3
.0%
, for
a
tota
l of 8
.1%
. Th
is ta
rget
was
der
ived
by
addi
ng th
e cu
rren
t tar
get d
istri
butio
n ra
te fo
r the
end
owm
ent (
4.75
%) t
o th
e an
nual
exp
ecte
d ex
pens
e (0
.35%
). 5
.1%
repr
esen
ts a
real
ann
ual r
etur
n ta
rget
; thi
s rep
ort d
e-an
nual
izes
that
num
ber t
o a
mon
thly
bas
is a
nd a
dds m
onth
lyC
PI-U
dat
a to
ac
coun
t for
infla
tion.
7
113
Perf
orm
ance
Rel
ativ
e to
Pol
icy
Port
folio
Ben
chm
ark²
Gro
wth
of $
1
$4.5
$5.0
$2.5
$3.0
$3.5
$4.0
$3.2
0$3
.08
$3.0
6$2
.99
$1.0
$1.5
$2.0
$0.0
$0.5
Sep-94
Jun-95
Mar-96
Dec-96
Sep-97
Jun-98
Mar-99
Dec-99
Sep-00
Jun-01
Mar-02
Dec-02
Sep-03
Jun-04
Mar-05
Dec-05
Sep-06
Jun-07
Mar-08
Dec-08
Obj
ectiv
e:G
ener
ate
a fu
nd re
turn
in e
xces
s of t
he P
olic
y Po
rtfol
io b
ench
mar
k ov
er ro
lling
five
yea
r per
iods
or
long
er.
²Th
“Pli
Pf
liB
hk
”h
iif
li
hll
ii
lih
di
ih
GEF
PUF
PUF
Polic
y B
ench
mar
kG
EF P
olic
y B
ench
mar
k
8
² Th
e “P
olic
y Po
rtfol
io B
ench
mar
ks”
are
the
com
posi
tion
of a
sset
cla
ss ta
rget
s in
the
asse
t allo
catio
n in
vest
men
t pol
icy
stat
emen
t, ch
ange
d ov
er ti
me
with
ap
prov
al o
f the
BO
R.
Polic
y Po
rtfol
io p
erfo
rman
ce is
the
com
posi
te p
erfo
rman
ce o
f ben
chm
arks
for t
he a
sset
cla
ss ta
rget
s. In
Janu
ary
of 2
004,
UTI
MC
O
rest
ated
his
toric
al p
olic
y re
turn
s bas
ed o
n ne
wly
app
rove
d po
licy
targ
ets.
The
Pol
icy
Portf
olio
pre
sent
ed in
the
repo
rt re
flect
s thi
s res
tate
men
t .
114
Five
-Yea
r R
ollin
g PU
F/G
EF
AA
CR
Per
form
ance
Rel
ativ
e to
Cam
brid
ge F
ive-
Yea
rR
ollin
gA
AC
RPe
rfor
man
cefo
rU
nive
rsity
End
owm
ents
>$2
5B
illio
n³Y
ear
Rol
ling
AA
CR
Per
form
ance
for
Uni
vers
ity E
ndow
men
ts >
$2.
5 B
illio
n
PUF/
GEF
rolli
ng 5
-yr.
perf
orm
ance
rela
tive
to th
e B
ench
mar
k (5
-yr.
rolli
ng A
AC
R fo
r CA
Uni
vers
ity E
ndow
men
ts >
$1B
) w
hich
is h
eld
stat
ic a
t 0.0
%, 1
997
–2Q
200
8. B
egin
ning
3Q
200
8, th
e B
ench
mar
k ch
ange
d to
CA
Uni
vers
ity E
ndow
men
ts >
$2
.5B
. Yea
r 200
9 is
onl
y a
parti
al p
erio
d th
roug
h 3/
31/2
009.
40
1.11
1.43
2.92
2.65
1.93
2.05
0.0
2.0
4.0
tial
-2.2
9-2
.27
-0.6
0
-2.2
3
-4.0
-2.0
Return Different
-7.2
1
-5.9
5-5
.61
-6.7
0
-5.8
9
-6.7
5-6
.76
-6.0
6
-10.
0
-8.0
-6.0
%
³ The
5-y
r. Av
erag
e Ann
ual C
ompo
und
Ret
urn
“AA
CR
” is
cal
cula
ted
by fi
rst a
sses
sing
CA
Col
lege
and
Uni
vers
ity E
ndow
men
ts o
ver $
1Bat
the
end
of e
ach
year
199
7-20
07 a
ndfo
r the
six
mon
th p
erio
d 1/
1/20
08-6
/30/
2008
. B
egin
ning
7/1
/200
9, th
e pe
er u
nive
rse
chan
ged
to C
A C
olle
ge a
nd
1997
-200
119
98-2
002
1999
-200
320
00-2
004
2001
-200
520
02-2
006
2003
-200
720
04-2
008
2005
-200
9
PUF
GEF
9
yp
gg
,p
gg
Uni
vers
ity E
ndow
men
ts o
ver $
2.5B
and
was
use
d fo
r the
seco
nd si
x m
onth
per
iod
7/1/
2008
-12/
31/2
008,
as w
ell a
s for
the
thre
e m
onth
per
iod
1/1/
2009
-3/3
1/20
09. T
he m
ean
retu
rn fo
r eac
h ye
arly
uni
vers
e is
then
cal
cula
ted.
Ins
titut
ions
that
did
not
repo
rt pe
rfor
man
ce, e
ven
if th
ey a
re
over
$1B
at t
hat t
ime,
are
not
incl
uded
. Th
e m
ean
retu
rns f
or e
ach
year
ly u
nive
rse
are
then
use
d to
cal
cula
te ro
lling
5-y
r. Av
erag
e Ann
ual
Com
poun
d R
etur
ns.
Med
ians
are
not
use
d du
e to
repo
rting
com
plic
atio
ns a
nd n
on-s
tatic
uni
vers
es.
115
Five
-Yea
r R
ollin
g PU
F/G
EF
AA
CR
Per
form
ance
Com
pare
d to
Cam
brid
ge F
ive-
Yea
rR
ollin
gA
AC
RPe
rfor
man
cefo
rU
nive
rsity
End
owm
ents
>$2
5B
illio
n4Y
ear
Rol
ling
AA
CR
Per
form
ance
for
Uni
vers
ity E
ndow
men
ts >
$2.
5 B
illio
n4
PUF/
GEF
rolli
ng 5
-yr.
perf
orm
ance
com
pare
d to
the
Ben
chm
ark
(5-y
r. ro
lling
AA
CR
for C
A U
nive
rsity
End
owm
ents
> $
2.5B
), 3Q
200
8 -
pres
ent.
Prio
r to
3Q 2
008,
the
Ben
chm
ark
cons
iste
d of
CA
Uni
vers
ity E
ndow
men
ts >
$1B
.
10.0
15.0
20.0
AACR (%)
-5.00.0
5.0
5-yr. Rolling
1997
1998
1999
2000
2001
2002
2003
2004
2005
PUF
8.32
2.64
4.57
5.41
6.72
10.7
715
.38
3.67
-0.1
6
GEF
9.46
3.78
6.26
5.45
7.03
10.8
915
.66
3.72
-0.1
0
CAU
nive
rse
15.0
79.
856.
867.
675.
608.
8412
.73
10.4
25.
79
1997
-20
0119
98-
2002
1999
-20
0320
00-
2004
2001
-20
0520
02-
2006
2003
-20
0720
04-
2008
2005
-20
09
4Th
e 5-
yr. A
vera
ge A
nnua
l Com
poun
d R
etur
n “A
AC
R”
is c
alcu
late
d by
firs
t ass
essi
ng C
A C
olle
ge a
nd U
nive
rsity
End
owm
ents
ove
r $1B
at t
he
end
of e
ach
year
199
7-20
07 a
ndfo
r the
six
mon
th p
erio
d 1/
1/20
08-6
/30/
2008
. B
egin
ning
7/1
/200
9, th
e pe
er u
nive
rse
chan
ged
to C
A C
olle
ge a
nd
Uni
vers
ityEn
dow
men
tsov
er$2
5Ban
dw
asus
edfo
rthe
seco
ndsi
xm
onth
perio
d7/
1/20
08-1
2/31
/200
8as
wel
lasf
orth
eth
ree
mon
thpe
riod
PUF
GEF
CA U
nive
rse
CA U
nive
rse
5.07
9.85
6.86
7.67
5.60
8.8
.73
0.5.
79
10
Uni
vers
ity E
ndow
men
ts o
ver $
2.5B
and
was
use
d fo
r the
seco
nd si
x m
onth
per
iod
7/1/
2008
12/3
1/20
08, a
s wel
l as f
or th
e th
ree
mon
th p
erio
d 1/
1/20
09-3
/31/
2009
. The
mea
n re
turn
for e
ach
year
ly u
nive
rse
is th
en c
alcu
late
d. I
nstit
utio
ns th
at d
id n
ot re
port
perf
orm
ance
, eve
n if
they
are
ov
er $
1B a
t tha
t tim
e, a
re n
ot in
clud
ed.
The
mea
n re
turn
s for
eac
h ye
arly
uni
vers
e ar
e th
en u
sed
to c
alcu
late
rolli
ng 5
-yr.
Aver
age A
nnua
l C
ompo
und
Ret
urns
. M
edia
ns a
re n
ot u
sed
due
to re
porti
ng c
ompl
icat
ions
and
non
-sta
tic u
nive
rses
.
116
Perf
orm
ance
Sum
mar
y: S
TF
and
SIT
F/IT
Fy
•Pe
rfor
man
ce fo
r the
STF
has
mod
estly
exc
eede
d its
y
benc
hmar
k.
•Si
nce
itsin
cept
ion
in20
06th
eIT
Fha
smet
itsse
cond
ary
•Si
nce
its in
cept
ion
in 2
006,
the
ITF
has m
et it
s sec
onda
ry
obje
ctiv
e of
out
perf
orm
ing
its P
olic
y B
ench
mar
k. N
egat
ive
retu
rns f
or 2
008
caus
ed it
to n
ot m
eet i
ts p
rimar
y ob
ject
ive
of
earn
ing
CPI
Upl
us3%
fort
heon
eye
aran
dsi
nce
ince
ptio
nea
rnin
g C
PI-U
plu
s 3%
for t
he o
ne-y
ear a
nd si
nce
ince
ptio
n pe
riods
.
•In
the
mos
t rec
ent q
uarte
r and
cal
enda
r yea
r-to
-dat
e, th
e IT
F ha
s onc
e ag
ain
been
out
perf
orm
ing
the
prim
ary
obje
ctiv
e of
ea
rnin
g C
PI-U
plu
s 3%
.
11
gp
117
STF
Perf
orm
ance
Rel
ativ
e to
Ben
chm
ark
$1.8
3$1
8$1
.9G
row
th o
f $1
Ann
ualiz
edA
nnua
lized
5yr
s.14
yrs.
9m
os.
$1.8
3$1
.77
$15
$1.6
$1.7
$1.8
5 yr
s.14
yrs
. 9 m
os.
STF
3.56
4.17
ML
T-B
ill3.
183.
94
$1.2
$1.3
$1.4
$1.5
$1.0
$1.1
$
p-94n-95r-96c-96p-97n-98r-99c-99p-00n-01r-02c-02p-03n-04r-05c-05p-06n-07r-08c-08
SepJunMarDecSepJunMarDecSepJunMarDecSepJunMarDecSepJunMarDec
STF
ML
91-d
ay T
-Bill
Obj
ectiv
e:M
axim
ize
curr
enti
ncom
eco
nsis
tent
with
the
abso
lute
pres
erva
tion
ofca
pita
land
12
Obj
ectiv
e:M
axim
ize
curr
ent i
ncom
e co
nsis
tent
with
the
abso
lute
pre
serv
atio
n of
cap
ital a
nd
mai
nten
ance
of a
dequ
ate
STF
liqui
dity
. Th
e ST
F sh
all s
eek
to m
aint
ain
a ne
w a
sset
val
ue o
f $1.
00.
118
ITF
Tar
gets
, Ran
ges,
and
Perf
orm
ance
Obj
ectiv
esA
sofM
ay31
2009
As o
f May
31,
200
9
AC
TU
AL
Min
Tar
get
Max
41.5
%20
.0%
37.2
%55
.0%
4.3%
71%
00%
49%
88%
22%
vs. T
arge
tA
sset
Cla
ssM
ay 3
1, 2
009
Cdi
Rl
dFi
dI
May
31,
200
9
Inve
stm
ent G
rade
Fix
ed In
com
e7.
1%0.
0%4.
9%8.
8%2.
2%8.
8%5.
0%10
.3%
15.0
%-1
.5%
4.9%
0.0%
7.0%
10.0
%-2
.1%
29.8
%20
.0%
30.6
%46
.3%
-0.8
%7.
9%0.
0%10
.0%
15.0
%-2
.1%
Cre
dit-R
elat
ed F
ixed
Inco
me
Rea
l Est
ate
Nat
ural
Res
ourc
es
Emer
ging
Mar
kets
Equ
ityD
evel
oped
Cou
ntry
Equ
ity7.
9%0.
0%0.
0%5.
0%.
%T
OT
AL
100.
0%10
0.0%
0.0%
75.3
%70
.0%
75.0
%80
.0%
0.3%
24.7
%20
.0%
25.0
%30
.0%
-0.3
%Le
ss C
orre
late
d &
Con
stra
ined
eg
ga
ets
quty
Mor
e C
orre
late
d &
Con
stra
ined
Inve
stm
ent T
ypes
TO
TA
L10
0.0%
100.
0%0.
0%
13
119
ITF
Perf
orm
ance
Rel
ativ
e to
ITF
Ben
chm
ark5
Gro
wth
of $
1
$20
$2.2
$1.7
2$1
.64
$1.4
$1.6
$1.8
$2.0
$0.6
$0.8
$1.0
$1.2
Ann
ualiz
edA
nnua
lized
5 yr
s.14
yrs
. 9 m
os.
ITF
0.51
3.75
ITF
Ben
chm
ark
-1.0
13.
41
$0.0
$0.2
$0.4
ep-94
un-95
Mar-96
Dec-96
ep-97
un-98
Mar-99
Dec-99
ep-00
un-01
Mar-02
Dec-02
ep-03
un-04
Mar-05
Dec-05
ep-06
un-07
Mar-08
Dec-08
ITF
Prim
ary
Obj
ectiv
e: P
rese
rve
the
purc
hasi
ng p
ower
of I
TF a
sset
s by
earn
ing
a co
mpo
und
annu
aliz
ed re
turn
ove
r rol
ling
thre
e-ye
ar p
erio
ds, n
et o
f all
dire
ct a
nd a
lloca
ted
expe
nses
, of a
t lea
st
ifl
tid
bth
CP
iI
d(C
PIU
)l
3%
S
Ju
M
D
S
Ju
M
D
S
Ju
M
D
S
Ju
M
D
S
Ju
M
D
ITF
ITF
Benc
hmar
k
14
infla
tion
as m
easu
red
by th
e C
onsu
mer
Pric
e In
dex
(CPI
-U) p
lus 3
%.
5Th
e SI
TF e
nded
1/3
1/20
06, a
nd th
e IT
F be
gan
2/1/
2006
.
120
ITF
Perf
orm
ance
Rel
ativ
e to
ITF
His
tori
cal P
olic
y6e
oce
eve
os
oc
ocy
Cal
enda
r Yea
rSi
nce
Thre
e M
onth
sTo
Dat
eO
ne Y
ear
Ince
ptio
nIn
term
edia
teTe
rmFu
nd15
487
1918
960
46In
term
edia
te T
erm
Fun
d15
.48
7.19
-18.
96-0
.46
ITF
Polic
y Po
rtfol
io17
.87
6.87
-19.
81-2
.38
CPI
-U +
3%
1.51
2.94
1.73
5.30
ITF
Prim
ary
Obj
ectiv
e: P
rese
rve
the
purc
hasi
ng p
ower
of I
TF a
sset
s by
earn
ing
a co
mpo
und
annu
aliz
ed re
turn
ove
r rol
ling
thre
e-ye
ar p
erio
ds, n
et o
f all
dire
ct a
nd a
lloca
ted
expe
nses
, of a
t le
ast i
nfla
tion
as m
easu
red
b y th
e C
onsu
mer
Pric
e In
dex
(CPI
-U) p
lus 3
%.
y(
)p
ITF
Seco
ndar
y O
bjec
tive:
Gen
erat
e a
retu
rn, n
et o
f all
dire
ct a
nd a
lloca
ted
expe
nses
, in
exce
ss
of th
e a p
prov
ed P
olic
y Po
rtfol
io b
ench
mar
k ov
er ro
lling
thre
e-ye
ar p
erio
ds.
15
ppy
gy
p
6 Th
e IT
F re
plac
ed th
e SI
TF a
s of 2
/01/
2006
. .
121
Con
clus
ions
Abo
ut P
ast P
erfo
rman
ce
•Sy
stem
fund
s sus
tain
ed a
dra
mat
ic d
ownt
urn
in th
e y mos
t rec
ent f
isca
l yea
r, w
ith th
e ac
cum
ulat
ed
purc
hasi
ng p
ower
of b
oth
the
PUF
and
the
GEF
be
ing
erod
edB
oth
the
PUF
and
the
GEF
have
bein
g er
oded
. B
oth
the
PUF
and
the
GEF
hav
e pa
rtici
pate
d m
eani
ngfu
lly in
the
mar
ket r
ecov
ery
that
beg
an in
Mar
ch o
f thi
s yea
r.
•B
oth
the
PUF
and
the
GEF
con
tinue
d to
out
-pe
rfor
mth
ePo
licy
Portf
olio
benc
hmar
k,w
hile
the
perf
orm
the
Polic
y Po
rtfol
io b
ench
mar
k, w
hile
the
univ
erse
of l
arge
edu
catio
nal e
ndow
men
ts re
mai
ns
a ch
alle
ngin
g be
nchm
ark.
16
122
UT
IMC
O P
erfo
rman
ce S
umm
ary
May
31,
200
9
Pe
riod
s End
ed M
ay 3
1, 2
009
Net
(Ret
urns
for
Peri
ods L
onge
r T
han
One
Yea
r ar
e A
nnua
lized
)A
sset
Val
ue5/
31/2
009
EN
DO
WM
EN
TFU
ND
S(in
Mill
ions
)1
Mo
3M
osC
alen
dar
Fisc
al1
Yr
3Y
rs5
Yrs
10Y
rsSh
ort T
erm
Yea
r to
Dat
eH
isto
ric
Ret
urns
EN
DO
WM
EN
T F
UN
DS
(in M
illio
ns)
1 M
o3
Mos
Cal
enda
rFi
scal
1 Y
r3
Yrs
5 Y
rs10
Yrs
Perm
anen
t Uni
vers
ity F
und
$ 9,
144
5.80
11.4
94.
17(1
8.54
)(2
4.75
)(2
.40)
3.86
4.39
Gen
eral
End
owm
ent F
und
6,83
1
5.78
11.4
24.
08(1
8.78
)(2
4.97
)(2
.26)
3.92
N/A
Perm
anen
t Hea
lth F
und
799
5.78
11.4
04.
09(1
8.75
)(2
4.92
)(2
.30)
3.87
N/A
Long
Ter
m F
und
4,26
7
5.78
11.4
04.
09(1
8.75
)(2
4.92
)(2
.30)
3.87
5.08
Sepa
rate
ly In
vest
ed F
unds
104
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Tot
al E
ndow
men
t Fun
ds14
,314
OPE
RA
TIN
G F
UN
DS
Shor
t Ter
m F
und
1,49
80.
050.
150.
341.
101.
783.
923.
563.
50In
term
edia
te T
erm
Fun
d3,
365
6.96
15.4
87.
19(1
3.31
)(1
8.96
)(0
.70)
N/A
N/A
Tot
al O
pera
ting
Fund
s4,
863
Tot
alIn
vest
men
ts$
1917
7T
otal
Inve
stm
ents
$ 19
,177
VA
LU
E A
DD
ED
Perm
anen
t Uni
vers
ity F
und
0.67
(1.6
9)(0
.09)
0.73
1.13
1.35
1.22
0.85
Gen
eral
End
owm
ent F
und
0.65
(1.7
6)(0
.18)
0.49
0.91
1.49
1.28
N/A
Shor
t Ter
m F
und
0.04
0.07
0.25
0.49
0.66
0.55
0.37
0.22
Inte
rmed
iate
Ter
m F
und
0.21
(2.3
9)0.
320.
580.
851.
19N
/AN
/A
VA
LU
E A
DD
ED
($ IN
MIL
LIO
NS)
Perm
anen
t Uni
vers
ity F
und
58(1
37)
(6)
8313
837
653
5N
/AG
ener
al E
ndow
men
t Fun
d32
(81)
(9)
3164
233
309
N/A
Inte
rmed
iate
Ter
m F
und
7(7
0)10
2234
192
N/A
N/A
Tota
l Val
ue A
dded
97(2
88)
(5)
136
236
801
844
N/A
17N
ote:
Sou
rced
from
UTI
MC
O
Foot
note
s ava
ilabl
e up
on re
ques
t.
123
UT
IMC
O P
erfo
rman
ce S
umm
ary
May
31,
200
9
Pe
riod
s End
ed M
ay 3
1, 2
009
Net
(Ret
urns
for
Peri
ods L
onge
r T
han
One
Yea
r ar
e A
nnua
lized
)A
sset
Val
ue5/
31/2
009
EN
DO
WM
EN
T F
UN
DS
(in M
illio
ns)
1 M
o3
Mos
Cal
enda
rFi
scal
1 Y
r3
Yrs
5 Y
rs10
Yrs
Perm
anen
t Uni
vers
ity F
und
$ 9,
144
5.80
11.4
94.
17(1
8.54
)(2
4.75
)(2
.40)
3.86
4.39
Gen
eral
End
owm
ent F
und
5,06
6
5.78
11.4
24.
08(1
8.78
)(2
4.97
)(2
.26)
3.92
N/A
Perm
anen
t Hea
lth F
und
799
5.78
11.4
04.
09(1
8.75
)(2
4.92
)(2
.30)
3.87
N/A
Long
Ter
m F
und
4,26
7
5.78
11.4
04.
09(1
8.75
)(2
4.92
)(2
.30)
3.87
5.08
Sepa
rate
ly In
vest
ed F
unds
104
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Tot
al E
ndow
men
t Fun
ds14
,314
O
PER
AT
ING
FU
ND
SSh
ort T
erm
Fun
d1,
498
0.05
0.15
0.34
1.10
1.78
3.92
3.56
3.50
Inte
rmed
iate
Ter
m F
und
3,36
56.
9615
.48
7.19
(13.
31)
(18.
96)
(0.7
0)N
/AN
/AT
otal
Ope
ratin
g Fu
nds
4,86
3T
otal
Inve
stm
ents
$ 19
,177
VA
LU
E A
DD
ED
Perm
anen
t Uni
vers
ity F
und
0.67
(1.6
9)(0
.09)
0.73
1.13
1.35
1.22
0.85
Gen
eral
End
owm
ent F
und
0.65
(1.7
6)(0
.18)
0.49
0.91
1.49
1.28
N/A
Shor
t Ter
m F
und
0.04
0.07
0.25
0.49
0.66
0.55
0.37
0.22
Inte
rmed
iate
Ter
m F
und
0.21
(2.3
9)0.
320.
580.
851.
99N
/AN
/A
VA
LU
E A
DD
ED
($ IN
MIL
LIO
NS)
Perm
anen
t Uni
vers
ity F
und
58(1
37)
(6)
8313
837
653
5N
/AG
ener
al E
ndow
men
t Fun
d32
(81)
(9)
3164
233
309
N/A
Inte
rmed
iate
Ter
m F
und
7(7
0)10
2234
192
N/A
N/A
Tota
l Val
ue A
dded
97(2
88)
(5)
136
236
801
844
N/A
UTI
MC
O 6
/22/
2009
Shor
t Ter
mY
ear
to D
ate
His
tori
c R
etur
ns
124
I. P
ERM
AN
ENT
UN
IVER
SITY
FU
ND
Inve
stm
ent R
epor
ts fo
r Per
iods
End
ed M
ay 3
1, 2
009
Prep
ared
in a
ccor
danc
e w
ith T
exas
Edu
catio
n C
ode
Sec.
51.
0032
Sum
mar
y of
Cap
ital F
low
s
($ m
illio
ns)
Fisc
al Y
ear
Ende
d A
ugus
t 31,
200
8Q
uart
er E
nded
May
31,
200
9Fi
scal
Yea
r End
ed
Aug
ust 3
1, 2
009
Por
tfolio
P
olic
y B
ench
mar
k F
rom
Ass
et
Allo
catio
n F
rom
Sec
urity
Se
lect
ion
Tot
al
Mor
e C
orre
late
d an
d C
onst
rain
ed:
Beg
inni
ng N
et A
sset
s
11,7
42.8
$
8,
286.
9$
11
,359
.5$
Inv
estm
ent G
rade
0.13
%3.
91%
0.54
%-0
.26%
0.28
% C
redi
t-Rel
ated
-8.4
2%-4
.75%
-0.2
1%0.
02%
-0.1
9%
PU
F La
nds
Rec
eipt
s45
7.7
50.5
28
5.6
Rea
l Est
ate
-31.
52%
-35.
03%
-0.1
6%0.
27%
0.11
% N
atur
al R
esou
rces
-34.
94%
-30.
66%
-0.0
3%-0
.21%
-0.2
4%
Inve
stm
ent R
etur
n
(339
.5)
944.
4
(2,0
82.7
)
Dev
elop
ed C
ount
ry-2
8.46
%-2
6.37
%0.
47%
-0.5
1%-0
.04%
Em
ergi
ng M
arke
ts-2
5.66
%-1
7.65
%0.
14%
-0.9
0%-0
.76%
E
xpen
ses
(5
2.6)
(5
.3)
(2
0.4)
To
tal M
ore
Cor
rela
ted
and
Con
stra
ined
-22.
29%
-20.
19%
0.75
%-1
.59%
-0.8
4%
D
istri
butio
ns to
AU
F
(448
.9)
(132
.7)
(398
.2)
Less
Cor
rela
ted
and
Con
stra
ined
-11.
22%
-16.
07%
-0.0
3%1.
51%
1.48
%
End
ing
Net
Ass
ets
11
,359
.5$
9,14
3.8
$
9,14
3.8
$
Pr
ivat
e In
vest
men
ts-1
9.95
%-1
9.34
%-0
.08%
0.17
%0.
09%
Tota
l-1
8.54
%-1
9.27
%0.
64%
0.09
%0.
73%
-- A
ll In
vest
men
t Typ
es
-- M
ore C
orre
lated
and C
onstr
ained
UTI
MC
O 6
/22/
2009
Ret
urns
Fi
scal
Yea
r to
Dat
e V
alue
Add
ed
0.4
(2.1
)
1.7
0.0
(15.0)
(10.0)(5.0)0.0
5.0
10.0
15.0
20.0
25.0
More
Co
rrelat
ed a
nd
Cons
traine
d
Less
Co
rrelat
ed a
nd
Cons
traine
d
Priva
te Inv
estm
ents
Total
Deviations From Policy Targets (%)De
viatio
ns F
rom
Inves
tmen
t Typ
e Poli
cy T
arge
ts W
ithin
Tacti
cal P
olicy
Ran
ges
for P
UF
< Po
licy
Targ
et
47.1
30.9
22.0
100.0
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
% of Portfolio Illiquid
Perm
anen
t University Fund
Actua
l Illiqu
idity vs. Trigger Zon
es
Maxim
um
Actu
al
Min
imum
1 Y
ear
7.0
3.8
(1.5
)(1
.7)
(4.9
)
(2.7
)
7.6
0.1
-0.8
-1.3
-4.2
-1
(15.0)
(10.0)(5.0)0.0
5.0
10.0
15.0
20.0
25.0
Inve
stm
ent G
rade
Fi
xed I
ncom
eCr
edit R
elate
d Fi
xed
Inco
me
Real
Esta
teNa
tura
l Res
ourc
esDe
velo
ped C
ount
ry
Equi
tyEm
ergi
ng M
arke
ts
Deviations From Policy Targets (%)
Devia
tions
Fro
m As
set C
lass P
olicy
Tar
gets
With
in Ta
ctica
l Poli
cy R
ange
s for
PUF
< Pol
icy
Targ
et
5.6
6.7
15.4
15.2
13.4
43.7
125
II. G
ENER
AL
END
OW
MEN
T FU
ND
Inve
stm
ent R
epor
ts fo
r Per
iods
End
ed M
ay 3
1, 2
009
Prep
ared
in a
ccor
danc
e w
ith T
exas
Edu
catio
n C
ode
Sec.
51.
0032
Sum
mar
y of
Cap
ital F
low
s
($ m
illio
ns)
Fisc
al Y
ear E
nded
A
ugus
t 31,
200
8Q
uart
er E
nded
May
31,
200
9Fi
scal
Yea
r End
ed
Aug
ust 3
1, 2
009
Por
tfolio
P
olic
y B
ench
mar
k F
rom
Ass
et
Allo
catio
n F
rom
Sec
urity
Se
lect
ion
Tot
al
Beg
inni
ng N
et A
sset
s
6,43
3.1
$
4,
557.
1$
6,
310.
4$
Mor
e C
orre
late
d an
d C
onst
rain
ed:
Inv
estm
ent G
rade
0.12
%3.
91%
0.41
%-0
.26%
0.15
%
Con
tribu
tions
358.
6
56
.6
161.
4
C
redi
t-Rel
ated
-8.5
7%-4
.75%
-0.2
0%0.
02%
-0.1
8% R
eal E
stat
e-3
1.65
%-3
5.03
%-0
.17%
0.24
%0.
07%
W
ithdr
awal
s
(20.
2)
(4.1
)
(6.3
)
Nat
ural
Res
ourc
es-3
4.15
%-3
0.66
%-0
.03%
-0.1
6%-0
.19%
Dev
elop
ed C
ount
ry-2
8.87
%-2
6.37
%0.
44%
-0.5
9%-0
.15%
D
istri
butio
ns(2
59.0
)
(7
0.4)
(2
08.7
)
E
mer
ging
Mar
kets
-25.
67%
-17.
65%
0.13
%-0
.90%
-0.7
7%To
tal M
ore
Cor
rela
ted
and
Con
stra
ined
-22.
96%
-20.
19%
0.58
%-1
.65%
-1.0
7%
Inve
stm
ent R
etur
n
(180
.8)
527.
4
(1,1
85.9
)
Less
Cor
rela
ted
and
Con
stra
ined
-11.
22%
-16.
07%
-0.0
2%1.
50%
1.48
%
Exp
ense
s
(21.
3)
(0.4
)
(4.7
)
Priv
ate
Inve
stm
ents
-19.
92%
-19.
34%
-0.1
1%0.
19%
0.08
% E
ndin
g N
et A
sset
s
6,31
0.4
$
5,
066.
2$
5,
066.
2$
Tota
l-1
8.78
%-1
9.27
%0.
45%
0.04
%0.
49%
UTI
MC
O 6
/22/
2009
Ret
urns
Fi
scal
Yea
r to
Dat
e V
alue
Add
ed
-- A
ll In
vest
men
t Typ
es
--
Mor
e C
orre
late
d an
d C
onst
rain
ed
<Po
licy
Targ
et
5.2
4.
1
(1.2
)(1
.7)
(4.0
)
(2.4
)
5.8
0.2
(0.5
)(1
.3)
(3.9
)
(0.9
)
(15.
0)
(10.
0)
(5.0
)
0.0
5.0
10.0
15.0
20.0
25.0
Inve
stm
ent
Grad
e Fi
xed
Inco
me
Cre
dit R
elat
ed
Fixe
d In
com
eR
eal E
stat
eN
atur
al
Reso
urce
sDe
velo
ped
Coun
try E
quity
Em
ergi
ng
Mar
kets
Deviations From Policy Targets (%)
Dev
iatio
ns F
rom
Ass
et C
lass
Pol
icy
Targ
ets
With
in T
actic
al P
olic
y Ra
nges
for G
EF5.9
6.7
13.6
15.5
13.7
44.6
(0.6
)(1
.5)
2.1
(0.0
)
(15.
0)
(10.
0)
(5.0
)
0.0
5.0
10.0
15.0
20.0
25.0
Mor
e Co
rrel
ated
an
d C
onst
rain
ed
Less
Co
rrela
ted
and
Cons
trai
ned
Priv
ate
Inve
stm
ents
Tota
l
Deviations From Policy Targets (%)De
viat
ions
Fro
m In
vest
men
t Typ
e Po
licy
Targ
ets W
ithin
Tac
tical
Pol
icy
Ran
ges
for G
EF
< Po
licy
Targ
et
46.1
31.5
22.4
100.0
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
% of Portfolio Illiquid
Gen
eral End
owmen
t Fun
dAc
tual Illiq
uidity vs. Trigger Zon
es
Max
imum
Actu
alM
inim
um1 Y
ear
126
III.
INTE
RM
EDIA
TE T
ERM
FU
ND
Inve
stm
ent R
epor
ts fo
r Per
iods
End
ed M
ay 3
1, 2
009
Prep
ared
in a
ccor
danc
e w
ith T
exas
Edu
catio
n C
ode
Sec.
51.
0032
Sum
mar
y of
Cap
ital F
low
s
($ m
illio
ns)
Fisc
al Y
ear E
nded
A
ugus
t 31,
200
8Q
uart
er E
nded
May
31,
200
9Fi
scal
Yea
r End
ed
Aug
ust 3
1, 2
009
Por
tfolio
P
olic
y B
ench
mar
k F
rom
Ass
et
Allo
catio
n F
rom
Sec
urity
Se
lect
ion
Tot
al
Beg
inni
ng N
et A
sset
s
3,72
0.6
$
2,
927.
0$
3,
874.
8$
Mor
e C
orre
late
d an
d C
onst
rain
ed:
Inv
estm
ent G
rade
1.49
%3.
91%
0.33
%-0
.79%
-0.4
6% C
ontri
butio
ns1,
639.
1
22.4
23
8.0
Cre
dit-R
elat
ed-1
0.14
%-4
.75%
-0.2
4%-0
.06%
-0.3
0% R
eal E
stat
e-3
1.51
%-3
5.03
%-0
.35%
0.48
%0.
13%
W
ithdr
awal
s(1
,335
.3)
(1
3.9)
(1
58.7
)
N
atur
al R
esou
rces
-31.
60%
-30.
66%
0.01
%-0
.02%
-0.0
1% D
evel
oped
Cou
ntry
-24.
66%
-26.
37%
-0.0
1%0.
35%
0.34
%
Dis
tribu
tions
(1
18.6
)
(2
2.8)
(7
2.4)
E
mer
ging
Mar
kets
-25.
84%
-17.
65%
0.17
%-0
.47%
-0.3
0%To
tal M
ore
Cor
rela
ted
and
Con
stra
ined
-14.
11%
-13.
45%
-0.0
9%-0
.51%
-0.6
0%
Inve
stm
ent R
etur
n(7
.5)
45
4.7
(5
07.6
)
Le
ss C
orre
late
d an
d C
onst
rain
ed-1
1.26
%-1
6.07
%-0
.27%
1.45
%1.
18%
E
xpen
ses
(23.
5)
(2.2
)
(8.9
)
End
ing
Net
Ass
ets
3,
874.
8$
3,36
5.2
$
3,36
5.2
$
Pr
ivat
e In
vest
men
ts0.
00%
0.00
%0.
00%
0.00
%0.
00%
Tota
l-1
3.31
%-1
3.89
%-0
.36%
0.94
%0.
58%
UTI
MC
O 6
/22/
2009
Ret
urns
Fi
scal
Yea
r to
Dat
e V
alue
Add
ed
-- A
ll Inv
estm
ent T
ypes
-- M
ore
Corre
late
d an
d C
onst
rain
ed
4.3
2.2
(1.5
)(2
.1)
(0.8
)(2
.1)
7.3
(0.7
)(1
.5)
(0.7
)
(4.9
)
0.8
(20.0)
(15.0)
(10.0)(5.0)0.0
5.0
10.0
15.0
20.0
25.0
Inves
tmen
t Gra
de
Fixed
Inco
meCr
edit
Relat
ed
Fixed
Inco
meRe
al Es
tate
Natu
ral R
esou
rces
Deve
loped
Cou
ntry
Eq
uity
Emer
ging
Mark
ets
Deviations From Policy Targets (%)
Devia
tions
Fro
m A
sset
Clas
s Pol
icy T
arge
ts W
ithin
Tac
tical
Polic
y Ran
ges f
or IT
F
8.8
4.9
41.5
7.1
7.9
29.8
< Pol
icy
Targ
et0.
3 (0
.3)
(20.0)
(15.0)
(10.0)(5.0)0.0
5.0
10.0
15.0
20.0
25.0
More
Cor
relat
ed a
nd
Cons
traine
dLe
ss C
orre
lated
and
Co
nstra
ined
Deviations From Policy Targets (%)De
viatio
ns F
rom
Inve
stmen
t Typ
e Pol
icy T
arge
ts W
ithin
Tacti
cal P
olicy
Ran
ges f
or IT
F
< Pol
icy
Targ
et
75.3
24.7
0%5%10%
15%
20%
25%
30%
35%
40%
45%
50%
% of Portfolio Illiquid
Interm
ediate Te
rm Fun
dActua
l Illiqu
idity vs. Trigger Zon
es
Ma
xim
um
Ac
tua
lM
inim
um
1 Y
ea
r
127
IV.
SEPA
RA
TELY
INVE
STED
ASS
ETS
Sum
mar
y In
vest
men
t Rep
ort a
t May
31,
200
9R
epor
t pre
pare
d in
acc
orda
nce
with
Tex
as E
duca
tion
Cod
e S
ec. 5
1.00
32
($ th
ousa
nds) FU
ND
TYP
EC
UR
REN
T PU
RPO
SEEN
DO
WM
ENT
&A
NN
UIT
Y &
LIF
ETO
TAL
EXC
LUD
ING
OPE
RA
TIN
G F
UN
DS
DES
IGN
ATE
DR
ESTR
ICTE
DSI
MIL
AR
FU
ND
SIN
CO
ME
FUN
DS
AG
ENC
Y FU
ND
SO
PER
ATI
NG
FU
ND
S(S
HO
RT
TER
M F
UN
D)
TOTA
LA
SSET
TYP
ESC
ash
& E
quiv
alen
ts:
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
BO
OK
MA
RK
ET
Beg
inni
ng v
alue
02/
28/0
96
6
2,
111
2,
111
54
,677
54,6
77
1,
853
1,
853
5,
843
5,
843
64
,490
64,4
90
1,60
7,63
8
1,
607,
638
1,67
2,12
8
1,
672,
128
Incr
ease
/(Dec
reas
e)5
5
(3
48)
(3
48)
(2
9,76
3)
(2
9,76
3)
(6
12)
(612
)
(3
,547
)
(3
,547
)
(34,
265)
(34,
265)
(110
,056
)
(1
10,0
56)
(144
,321
)
(1
44,3
21)
End
ing
valu
e 05
/31/
0911
11
1,
763
1,
763
24
,914
24,9
14
1,
241
1,
241
2,
296
2,
296
30
,225
30,2
25
1,49
7,58
2
1,
497,
582
1,52
7,80
7
1,
527,
807
Deb
t Sec
uriti
es:
Beg
inni
ng v
alue
02/
28/0
9-
-
26
5
26
9
11
,356
11,9
47
15
,824
15,1
02
-
-
27
,445
27,3
18
-
-
27,4
45
27
,318
Incr
ease
/(Dec
reas
e)-
-
-
(8)
1,
064
1,
286
(1
8)
54
4
-
-
1,
046
1,
822
-
-
1,
046
1,82
2
E
ndin
g va
lue
05/3
1/09
-
-
265
261
12,4
20
13
,233
15,8
06
15
,646
-
-
28,4
91
29
,140
-
-
28
,491
29,1
40
Equi
ty S
ecur
ities
: B
egin
ning
val
ue 0
2/28
/09
17
3,48
8
463
418
28,2
60
18
,241
19,0
09
10
,467
-
-
47,7
49
32
,614
-
-
47
,749
32,6
14
In
crea
se/(D
ecre
ase)
-
(516
)
1,
036
1,
064
(1
,792
)
3,41
5
(130
)
3,
906
-
-
(8
86)
7,
869
-
-
(8
86)
7,
869
End
ing
valu
e 05
/31/
0917
2,
972
1,
499
1,
482
26
,468
21,6
56
18
,879
14,3
73
-
-
46
,863
40,4
83
-
-
46,8
63
40
,483
Oth
er:
Beg
inni
ng v
alue
02/
28/0
9-
-
37
0
37
0
8
8
33
7
13
4
43
7
43
7
1,
152
94
9
-
-
1,
152
949
In
crea
se/(D
ecre
ase)
-
-
(192
)
(192
)
1,64
7
1,64
7
-
-
1,57
3
1,57
3
3,02
8
3,02
8
-
-
3,02
8
3,
028
End
ing
valu
e 05
/31/
09-
-
17
8
17
8
1,
655
1,
655
33
7
13
4
2,
010
2,
010
4,
180
3,
977
-
-
4,
180
3,97
7
Tota
l Ass
ets:
Beg
inni
ng v
alue
02/
28/0
923
3,
494
3,
209
3,
168
94
,301
84,8
73
37
,023
27,5
56
6,
280
6,
280
14
0,83
6
125,
371
1,60
7,63
8
1,
607,
638
1,74
8,47
4
1,
733,
009
Incr
ease
/(Dec
reas
e)5
(511
)
49
6
51
6
(2
8,84
4)
(2
3,41
5)
(7
60)
3,83
8
(1,9
74)
(1,9
74)
(3
1,07
7)
(2
1,54
6)
(1
10,0
56)
(110
,056
)
(1
41,1
33)
(131
,602
)
E
ndin
g va
lue
05/3
1/09
28
2,98
3
3,70
5
3,68
4
65,4
57
61
,458
36,2
63
31
,394
4,30
6
4,30
6
109,
759
10
3,82
5
1,
497,
582
1,49
7,58
2
1,
607,
341
1,60
1,40
7
Det
ails
of i
ndiv
idua
l ass
ets
by a
ccou
nt fu
rnis
hed
upon
requ
est.
UTI
MC
O 6
/22/
2009
128
129
6. U. T. System: Update regarding centralization of operating funds
REPORT
Dr. Scott C. Kelley, Executive Vice Chancellor for Business Affairs, will provide an update on the centralization of U. T. System operating funds, which was implemented on February 1, 2006. The presentation, as set forth on Pages 130 - 137, will provide a brief overview of centralization and detail the value added from centralization through May 31, 2009.
Upd
ate
on C
entr
aliz
atio
n of
U
TS
tO
tiF
dU
. T. S
yste
m O
pera
ting
Fund
s
Join
t Mee
ting
of
Boa
rdof
Reg
ents
&B
oard
of R
egen
ts &
U
TIM
CO
Boa
rdD
r. S
cott
Kel
ley
July
9, 2
009
130
Cen
tral
izat
ion
of U
. T. S
yste
m
Ope
ratin
gFu
nds
Ope
ratin
g Fu
nds
The
cent
raliz
atio
nof
oper
atin
gfu
nds
was
appr
oved
byth
eTh
e ce
ntra
lizat
ion
of o
pera
ting
fund
s w
as a
ppro
ved
by th
e U
. T. S
yste
m B
oard
of R
egen
ts o
n Ju
ly 8
, 200
5.
On
Febr
uary
1, 2
006,
all
U. T
. Sys
tem
ope
ratin
g fu
nds
wer
e co
nsol
idat
ed
into
the
Sho
rt Te
rm F
und
(STF
) and
the
new
ly c
reat
ed In
term
edia
te T
erm
Fu
nd (I
TF).
By
UT
Sys
tem
polic
yU
Tin
stitu
tions
wer
ere
quire
dto
inve
st15
%in
the
By
U. T
. Sys
tem
pol
icy,
U. T
. ins
titut
ions
wer
e re
quire
d to
inve
st 1
5% in
the
STF
and
85%
in th
e IT
F as
a ta
rget
allo
catio
n. E
ffect
ive
Sep
tem
ber 1
, 200
7,
the
polic
y w
as c
hang
ed to
requ
ire a
targ
et a
lloca
tion
of 1
0% in
the
STF
and
90
% in
the
ITF.
An
inve
stm
ent a
dvis
ory
grou
p, c
onsi
stin
g of
sel
ecte
d ca
mpu
s C
hief
Bus
ines
s O
ffice
rs, t
he E
VC
for B
usin
ess
Affa
irs, t
he U
TIM
CO
CE
O a
nd U
T S
yste
m
Offi
ce o
f Fin
ance
sta
ff w
as fo
rmed
and
mee
ts p
erio
dica
lly to
revi
ew
2
py
inve
stm
ent o
bjec
tives
and
sug
gest
pol
icy
revi
sion
s.
131
Cen
tral
izat
ion
of U
. T. S
yste
m
Ope
ratin
gFu
nds
Ope
ratin
g Fu
nds
The
purp
ose
ofC
entra
lizat
ion
isto
prov
ide
ford
aily
inst
itutio
nal
The
purp
ose
of C
entra
lizat
ion
is to
pro
vide
for d
aily
inst
itutio
nal
liqui
dity
nee
ds in
a m
oney
mar
ket f
und
(STF
) and
to p
ool t
he
rem
aini
ng a
sset
s in
to a
div
ersi
fied
inve
stm
ent f
und
(ITF)
with
a lo
nger
tim
eho
rizon
and
the
pote
ntia
lfor
incr
ease
din
vest
men
tret
urns
.tim
e ho
rizon
and
the
pote
ntia
l for
incr
ease
d in
vest
men
t ret
urns
.
Cen
traliz
atio
n al
so p
rovi
des
an a
ggre
gate
d S
TF a
ccou
nt fo
r the
ent
ire
UT
Sys
tem
redu
cing
the
cash
flow
impa
ctof
asi
ngle
inst
itutio
nU
. T. S
yste
m re
duci
ng th
e ca
sh fl
ow im
pact
of a
sin
gle
inst
itutio
n.
The
targ
et a
lloca
tion
to th
e S
TF a
nd IT
F w
as d
eter
min
ed u
sing
act
ual
hit
ild
td
ii
di
dill
tl
liid
ithi
stor
ical
dat
a an
d is
revi
ewed
per
iodi
cally
to e
nsur
e am
ple
liqui
dity
.
It w
as a
ntic
ipat
ed th
at th
e IT
F w
ould
incu
r gre
ater
vol
atili
ty th
an a
3
bond
fund
. The
ITF
has
fixed
inco
me,
real
est
ate,
nat
ural
reso
urce
s,
equi
ty a
nd h
edge
fund
inve
stm
ents
.
132
U. T
. Sys
tem
Ope
ratin
g Fu
nds
have
incr
ease
d 91
% fr
om
Aug
ust 1
999
to M
ay 2
009
U. T
. Sys
tem
Mon
thly
Ope
ratin
g B
alan
ces
by F
unds
6,00
0
7,00
0
Inst
itutio
nal I
ndex
Fun
ds
Inte
rmed
iate
Ter
m F
und
Sho
rt-In
term
edia
teTe
rmFu
nd
4,00
0
5,00
0
lions
Sho
rt-In
term
edia
te T
erm
Fun
d
Sho
rt Te
rm F
und
2,00
0
3,00
0
$ mill
0
1,00
0
4P
repa
red
by th
e U
. T. S
yste
m O
ffice
of F
inan
ce
Aug
-99
Aug
-00
Aug
-01
Aug
-02
Aug
-03
Aug
-04
Aug
-05
Aug
-06
Aug
-07
Aug
-08
133
Shor
t Ter
m F
und
Liqu
idity
Ana
lysi
s Fe
brua
ry20
06to
May
2009
Febr
uary
200
6 to
May
200
9
Inst
itutio
n ($
mill
ions
)U
TA
lit
211
$13
%(8
3)$
5%69
6$
34%
Ave
rage
STF
Bal
ance
L
owST
F B
alan
ce
Hig
hST
F B
alan
ce
U. T
. Arli
ngto
n21
.1$
13%
(8.3
)$
-5%
69.6
$
34
%U
. T. A
ustin
168.
4
17%
61.2
7%
365.
0
30%
U. T
. Bro
wns
ville
7.3
26%
(2.2
)
-7
%30
.1
82%
U. T
. Dal
las
16.1
13
%2.
2
2%
38.8
27
%U
. T. E
l Pas
o13
.0
17%
(0.6
)
-1
%47
.2
53%
UT
PA
i9
918
%0
82%
338
42%
U. T
. Pan
Am
eric
an9.
9
18%
0.8
2%33
.8
42%
U. T
. Per
mia
n B
asin
5.1
43%
(1.8
)
-8
%13
.8
79%
U. T
. San
Ant
onio
24.9
14
%(1
.5)
-1%
80.0
45
%U
. T. T
yler
5.5
18%
0.2
1%16
.1
39%
U. T
. Sou
thw
este
rn M
edic
al C
ente
r - D
alla
s91
.8
14%
12.9
2%
167.
1
25%
UT
Mdi
lBh
Gl
t96
531
%(4
08)
23%
257
372
%U
. T. M
edic
al B
ranc
h - G
alve
ston
96.5
31
%(4
0.8)
-2
3%25
7.3
72%
U. T
. Hea
lth S
cien
ce C
ente
r - H
oust
on40
.2
15%
6.4
2%86
.8
34%
U. T
. Hea
lth S
cien
ce C
ente
r - S
an A
nton
io24
.2
12%
4.1
2%55
.4
24%
U. T
. M. D
. And
erso
n C
ance
r Cen
ter
123.
1
15%
(47.
1)
-7%
255.
0
28%
U. T
. Hea
lth S
cien
ce C
ente
r - T
yler
9.2
47%
0.1
0%20
.6
100%
U. T
. Sys
tem
(Agg
rega
te) (1
)1,
263.
9$
27
%84
8.1
$
20
%1,
752.
6$
36
%
U. T
. Sys
tem
(exc
ludi
ng d
ebt r
elat
ed fu
nds)
(2)
693.
7$
17%
287.
9$
7%1,
077.
8$
24
%
5(2
) Al
l deb
t pro
ceed
s an
d ot
her d
ebt-r
elat
ed a
ccou
nts
mus
t be
inve
sted
in th
e ST
F pu
rsua
nt to
Boa
rd p
olic
y.
(1)
Inst
itutio
ns m
ust m
aint
ain
a m
inim
um o
f $5
milli
on in
the
STF
at th
e be
ginn
ing
of e
ach
mon
th a
nd h
ave
a cu
rren
t fin
anci
al c
ondi
tion
ratin
g of
"Wat
ch" o
r bet
ter t
o in
vest
in th
e IT
F.
134
Ope
ratin
g Fu
nds
Perf
orm
ance
Thro
ugh
May
2009
Thro
ugh
May
200
9
FY 2
009
YTD
(1)
(9M
onth
s)Si
nce
ITF
Ince
ptio
n (1
)
(40
Mon
ths)
(9 M
onth
s)(4
0 M
onth
s)
Ope
ratin
g Fu
nds
Sho
rt Te
rm F
und
1.10
%4.
00%
Inte
rmed
iate
Ter
m F
und
-13.
31%
-0.4
6%
Ben
chm
arks
Ben
chm
arks
Sho
rt Te
rm F
und:
90
Day
Tre
asur
y B
ills
Ave
rage
Yie
ld0.
61%
3.49
%In
term
edia
te T
erm
Fun
d: P
olic
y P
ortfo
lio-1
3.84
%-2
.37%
Net
Ret
urn
Abov
e B
ench
mar
k (2
)
Sho
rtTe
rmFu
nd0
49%
055
%S
hort
Term
Fun
d0.
49%
0.55
%In
term
edia
te T
erm
Fun
d0.
53%
1.81
%
(1) R
etur
ns fo
r FY2
009
YTD
(9 m
onth
s) a
re n
ot a
nnua
lized
. Ret
urns
sin
ce IT
F in
cept
ion
(40
mon
ths)
are
ann
ualiz
ed.
(2) N
et R
etur
n A
bove
Ben
chm
ark
is a
mea
sure
of t
he d
iffer
ence
bet
wee
n ac
tual
retu
rns
and
benc
hmar
k or
pol
icy
portf
olio
retu
rns
fore
ach
perio
dsh
own
portf
olio
retu
rns
for e
ach
perio
d sh
own.
6
135
ITF
Net
Ass
et V
alue
(NA
Vpe
r Uni
t) an
d IT
F C
umul
ativ
e R
etur
n Th
roug
h M
ay 2
009
$125
$110
$115
$120
$100
$105
$110
$85
$90
$95
ITF
Cum
ulat
ive
Ret
urn
$75
$80
$85
ITF
Cum
ulat
ive
Ret
urn
ITF
NA
V
7P
repa
red
by th
e U
. T. S
yste
m O
ffice
of F
inan
ce
Feb-
06A
ug-0
6Fe
b-07
Aug
-07
Feb-
08A
ug-0
8Fe
b-09
136
Valu
e A
dded
from
Cen
tral
izat
ion
Thro
ugh
May
2009
Thro
ugh
May
200
9
FY 2
009
YTD
Sinc
e IT
F In
cept
ion
Inst
itutio
n(9
Mon
ths)
(40
Mon
ths)
U. T
. Arli
ngto
n(2
3,79
2,56
0)$
(22,
588,
219)
$
U
. T. A
ustin
(143
,586
,176
)
(142
,522
,583
)
U
. T. B
row
nsvi
lle(4
,444
,856
)
(3
,764
,873
)
U
. T. D
alla
s(2
0,45
9,19
4)
(22,
861,
121)
U
. T. E
l Pas
o(8
,281
,636
)
(9
,511
,310
)
U
TPa
nAm
eric
an(6
791
529)
(701
868
7)U
. T. P
an A
mer
ican
(6,7
91,5
29)
(7,0
18,6
87)
U. T
. Per
mia
n B
asin
(399
,426
)
(520
,630
)
U. T
. San
Ant
onio
(30,
363,
168)
(3
1,23
0,61
7)
U. T
. Tyl
e r(4
,833
,960
)
(4
,887
,458
)
U
. T. S
outh
wes
tern
Med
ical
Cen
ter -
Dal
las
(81,
682,
378)
(9
1,73
4,63
7)
U.T
.Med
ical
Bra
nch
-Gal
vest
on(3
4,21
1,64
0)(3
7,53
0,59
1)U
. T. M
edic
al B
ranc
h G
alve
ston
(34,
211,
640)
(3
7,53
0,59
1)
U. T
. Hea
lth S
cien
ce C
ente
r - H
oust
on(4
5,10
4,05
6)
(50,
288,
861)
U
. T. H
ealth
Sci
ence
Cen
ter -
San
Ant
onio
(35,
110,
684)
(3
8,09
1,18
3)
U. T
. M. D
. And
erso
n C
ance
r Cen
ter
(57,
153,
113)
(4
1,16
4,96
5)
U. T
. Hea
lth S
cien
ce C
ente
r - T
yle r
(3,6
14,3
08)
(4,8
48,5
02)
Subt
otal
Val
ue A
dded
- U
.T. S
yste
m In
stitu
tions
(499
,828
,684
)$
(508
,564
,237
)$
y(
,,
)(
,,
)
Val
ue A
dded
U. T
. Sys
tem
Adm
inis
tratio
n(3
5,40
6,92
9)
(3
0,30
8,06
7)
To
tal V
alue
Add
ed (1
)(5
35,2
35,6
13)
$
(5
38,8
72,3
04)
$
(1
) Val
ue a
dded
is th
e ac
tual
dol
lar r
etur
n fo
r the
ope
ratin
g fu
nds
in e
xces
s of
the
prox
y re
turn
s th
at w
ould
hav
e be
en
8
earn
ed b
ased
on
allo
catio
ns a
s of
Aug
ust 3
1, 2
005.
137
138
7. U. T. System Board of Regents: Report on The University of Texas Investment Management Company (UTIMCO) organization and activities
REPORT
Mr. Bruce Zimmerman, Chief Executive Officer and Chief Investment Officer of The University of Texas Investment Management Company (UTIMCO), will report on the UTIMCO organization, investments, control and support and Fiscal Year 2010 priorities using the PowerPoint presentation set forth on Pages 139 - 145.
UTIM
CO U
PDAT
EJo
int M
eetin
g of
The U
nive
rsity
of T
exas
Sys
tem
Boa
rd o
f Re
gent
s and
UTIM
CO B
oard
of D
irect
ors
July
9 20
09Ju
ly 9,
2009
139
Orga
niza
tiona
l Cha
rt
Begin
ning
Staff
57
New
Staff
1
Pub
lic M
arke
ts Di
recto
rDe
parte
d Staf
f
-
2 PM
Ana
lyst, I
T Pr
ogra
mmer
2
Endin
g Staf
f
56
140
Expe
nses
FY
09
FY 2
009
FY 2
009
Favo
rabl
e/
(Unf
avor
able
)(in
thou
sand
s)Fo
reca
stB
udge
t$
%
SUM
MA
RY
UTIM
CO P
erso
nnel
$11,
594
$12,
489
$895
7%UT
IMCO
Oth
379
14
055
264
7%
()
UTIM
CO O
ther
3,79
14,
055
264
7%
Tot
al U
TIM
CO
15,3
8516
,544
1,15
97%
Oth
er, N
on-In
vest
men
t Man
ager
4,99
76,
042
1,04
517
%
$$
$%
Tota
l Non
-Inve
stm
ent M
anag
er$2
0,38
2$2
2,58
6$2
,204
10%
Inve
stm
ent M
anag
er -
Invo
iced
19,1
5644
,203
25,0
4757
%
Tota
l$3
9,53
8$6
6,78
9$2
7,25
141
%
3
141
Inve
stm
ent A
ctivi
ty S
umm
ary (
1)
Mit
i M
ti/C
ll
977
•Mo
nitor
ing M
eetin
gs/C
alls
977
•Pr
ospe
ctive
Man
ager
Mee
tings
1,310
•Ma
nage
r Due
Dilig
ence
Initia
l49
3Se
rious
111
Inves
tmen
ts/Co
mmitm
ents
# of M
anag
ers
Amou
nt(b
illion
s)
Rede
mptio
ns
# of M
anag
ers
Amou
nt(b
illion
s)
()
New
29$2
.2 Ex
isting
20$1
.3 Fu
ll31
$2.6
Partia
l14
$1.5
4
(1) T
welve
mon
ths en
ding
May 3
1, 20
09
142
Inve
stm
ent P
roce
ss
•Inv
estm
ent C
ommi
ttee
It
t Bt P
ti•
Inves
tmen
t Bes
t Pra
ctice
s–
Due D
iligen
ce Q
uesti
onna
ireInv
estm
ent M
emor
andu
ms–
Inves
tmen
t Mem
oran
dums
–Ba
ckgr
ound
Che
cks
–Te
rms T
empla
tep
–Si
de Le
tter
•Ma
nage
r Mon
itorin
g and
Pipe
line S
ystem
•Ma
rketab
le Al
terna
tive R
epor
ting
•Fa
ctor A
nalys
is: In
flatio
n and
Gro
wth
5
143
Supp
ort a
nd C
ontro
ls•
Audit
s–
Deloi
tte &
Tou
cheL
LP:
Fund
s and
UTI
MCO
–UT
Sys
tem•
Inter
nal F
ixed I
ncom
e an
d Der
ivativ
es•
PUF
Contr
ols•
CEO
–St
ate:
Code
of E
thics
•UT
Sys
tem C
ompli
ance
–IT
Sec
urity
–Ins
titutio
nal C
ompli
ance
•Te
chno
logy P
eer R
eview
•Ma
nage
r Bac
k Offic
e Due
Dilig
ence
•Ot
her I
nitiat
ives
–IS
DAs
–De
rivati
ve P
roce
dure
s
6
–Ca
sh R
eser
ve
144
FY10
Prio
rities
•De
velop
UTI
MCO
Stra
tegic
Plan
Deve
lop U
TIMC
O St
rateg
ic Pl
an
•Ma
intain
/Enh
ance
Stro
ng R
elatio
ns w
ith C
onsti
tuents
g
•Ta
ctica
l Allo
catio
n Dec
ision
ingan
d “Ta
il Risk
” Man
agem
ent
•St
aff D
evelo
pmen
t, Exp
ense
Man
agem
ent a
nd C
ontro
ls
•Ma
ke G
reat
Inves
tmen
ts
7
145
146
8. U. T. System Board of Regents: Report on The University of Texas Investment Management Company (UTIMCO) Fiscal Year 2010 budget and fees, and U. T. System Office of Finance review
REPORT Mr. Bruce Zimmerman, Chief Executive Officer and Chief Investment Officer of The University of Texas Investment Management Company (UTIMCO), will discuss the preliminary UTIMCO Annual Budget for Fiscal Year 2010 using the materials on Pages 147 - 153. Dr. Scott C. Kelley, Executive Vice Chancellor for Business Affairs, will provide a review of the UTIMCO budget including an analysis of budget trends on Pages 154 - 165. The UTIMCO Board will seek approval of the budget at the U. T. System Board of Regents' August 2009 meeting.
Budg
et R
eview
Join
t Mee
ting
ofTh
e Uni
vers
ity o
f Tex
as S
yste
m B
oard
of
Rege
nts a
ndUT
IMCO
Boa
rd o
f Dire
ctor
sJu
ly 9
2009
July
9, 20
09
147
UTIM
CO B
udge
t Sum
mar
y
FY10
Bud
getv
FY 2
009
FY 2
009
FY 2
010
(in th
ousa
nds)
Budg
etFo
reca
stBu
dget
$%
SUM
MAR
YUT
IMCO
Per
sonn
el$1
2,48
9$1
1,59
4$1
2,01
8$4
244%
UTIM
CO O
ther
4,05
53,
791
3,95
916
84%
FY10
Bud
get v
FY09
For
ecas
t
,,
,%
T
otal
UTI
MC
O16
,544
15,3
8515
,977
592
4%
Oth
er, N
on-In
vest
men
t Man
ager
6,04
24,
997
5,43
744
09%
Tota
l Non
-Inve
stm
ent M
anag
er$2
2,58
6$2
0,38
2$2
1,41
4$1
,032
5%
Inve
stm
ent M
anag
er -
Invo
iced
44,2
0319
,156
28,7
479,
591
50%
Tota
l$6
6,78
9$3
9,53
8$5
0,16
1$1
0,62
327
%
2
148
Salar
ies
FY09
For
ecas
t$6
,322
Incr
ease
from
rais
es (1
.2%
)73
Incr
ease
from
pro
mot
ions
22
Incr
ease
from
ope
n po
sitio
ns (3
Ana
lyst
s, 1
Pro
gram
mer
)23
5
Dec
reas
e fro
m e
limin
ated
/vac
ated
pos
ition
s, n
et(2
9)p
()
FY10
Bud
get
$6,6
23
3
149
Othe
r Exp
ense
Hig
hlig
hts
FY 2
007
FY 2
008
FY 2
009
FY 2
010
(ith
d)
At
lA
tl
Ft
Bd
tFY
10
Budg
et v
FY09
Ft
(in th
ousa
nds)
Actu
alAc
tual
Fore
cast
Budg
et
$
%
Trav
el$1
77$5
15$3
91$5
94$2
0352
%Co
rpor
ate
Lega
l56
722
528
215
0(1
32)
-47%
FY 0
9 Fo
reca
st
Onl
ine
Dat
a Se
rvic
es61
066
071
580
085
12%
All O
ther
UTI
MC
O-O
ther
2,10
4
2,
547
2,40
3
2,
415
120%
T
otal
$3,4
58$3
,947
$3,7
91$3
,959
$168
4%
Inve
stm
ent-R
elat
ed L
egal
826
1,34
9
49
867
818
036
%Co
nsul
tant
s1,
289
737
567
745
178
31%
Cust
odia
n1,
532
1,77
1
1,
848
2,00
9
16
19%
Prin
ting
178
15
3
133
-
(1
33)
-100
%Al
l Oth
er N
on-In
vest
men
t Man
ager
1,81
0
2,
202
1,95
1
2,
005
543%
T
otal
$5,6
35$6
,212
$4,9
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153
Fiscal Year 2010
UTIMCO Budget Review
The University of Texas System Office of Finance
Prepared by:
William Huang – Treasury Manager
Philip Aldridge – Vice Chancellor for Finance and Business Development
June 25, 2009
Draft
Based on information provided by UTIMCO staff through June 23, 2009.
154
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
Fiscal Year 2010
UTIMCO BUDGET REVIEW
Table of Contents
Page
I. Executive Summary 1
II. Total Investment Costs 2
III. UTIMCO Budget Analysis and Trends 3
IV. UTIMCO Services 4
V. UTIMCO Capital Expenditures 6
VI. Direct Costs to Funds 7
Tables:
Table 1 – Total Investment Costs Trend FY04-FY09 2
Table 2 – UTIMCO Budget Trends FY05-FY10 3
Table 3 – UTIMCO FY09 Forecast and FY10 Budget Overview 4
Table 4 – UTIMCO Compensation and Headcount FY05-FY10 5
Table 5 – UTIMCO Lease Expenses 6
Table 6 – UTIMCO Capital Expenditures 6
Exhibits:
A UTIMCO Operating Expenses/Budgets FY09-FY10 8
B UTIMCO Operating Expenses/Budgets FY05-FY10 9
C UTIMCO Reserve Analysis for August 31, 2009 10
155
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
1
Fiscal Year 2010 UTIMCO BUDGET REVIEW
I. Executive Summary This report supports the U. T. System Board of Regents’ efforts to determine whether investment
management costs for funds under its control are “reasonable and appropriate,” as required by the Texas
Uniform Prudent Management of Investment Funds Act (UPMIFA).
The report reviews UTIMCO’s proposed $50.2 million FY10 budget. The UTIMCO budget consists of
UTIMCO Services (corporate) and Direct Costs to (U. T. System) Funds (third party management and
performance fees paid directly by UTIMCO and costs related to custody, consulting, corporate legal,
audit, and risk measurement).
The report also reviews the FY10 budget in the context of Total Investment Costs, which includes
external management fees that are paid by the funds and netted from asset values but not included in the
UTIMCO budget. The Total Investment Costs for FY09 are projected to be $324.5 million, inclusive of
the UTIMCO Services costs and Direct Costs to Funds.
Highlights:
Total Investment Costs FY04-FY09: Total costs, dominated by external management and
performance fees, have increased significantly as a percentage of average assets under management
(AUM) from 1.01% in FY04 to 1.53% in FY09 (projected).
UTIMCO Budget for FY10: The FY10 budget is $50.2 million, a 27% increase from the current
projection for FY09 and a 25% decrease from the FY09 budget.
Compensation: Salaries for FY10 are budgeted to increase $301k (5%) from FY09 projections.
About two-thirds of the increase reflects four budgeted open positions for FY10; the balance
represents an overall 1.5% average salary increase for existing staff (including promotions). Bonuses
for FY10 are budgeted to increase $31k (1%) from FY09 projections.
Travel: Travel expenses for FY10 are budgeted at $594k, a 52% increase over FY09 projections but
a 26% decrease when compared to the original FY09 budget.
Lease Expenses: Lease expenses have stabilized in recent years and are budgeted at $979k, a 2%
increase from FY09 projections.
Audit and Legal: Audit fees have also stabilized since the change in audit firms in FY08 and are
budgeted at $735k, relatively unchanged from FY09 projections. Direct legal fees are budgeted at
$678k for FY10, an increase of $180k (36%) over FY09 projections.
UTIMCO Reserves: UTIMCO staff projects UTIMCO’s available cash reserves to be $5.0 million at
fiscal year-end 2009. We concur with UTIMCO staff in recommending that $5.0 million in reserves
be distributed back to the funds at this time.
156
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
2
UTIMCO
Services
5%
Direct Costs to
Funds
7%
External Fees
Netted from
Asset Values
64%
Performance
Fees Netted
from Asset
Values
20%
Misc. Other
Fees and
Expenses
4%
Total Investment Costs
$324.5 million in FY09 (Projected)
UTIMCO Budget 12%
II. Total Investment Costs
UTIMCO’s Total Investment Costs include all items in the UTIMCO budget plus external management
fees paid directly by the funds and netted from asset values.
Based on FY09 projections, the pie chart
shows that UTIMCO Services and
Direct Costs to Funds (i.e., UTIMCO’s
budget) represent only 12% of the
$324.5 million in Total Investment
Costs. External Fees and Performance
Fees that are netted from asset values for
partnerships, hedge funds and mutual
funds are not budgeted since they are
not paid directly by the funds. These
expenses for FY09 are projected to be
84% of total investment costs. Other
Fees and Expenses (4% of total costs)
include education, endowment
compliance and investment oversight
expenses.
Table 1 below shows the trend of Total
Investment Costs as a percentage of
average AUM from 1.01% in FY04 to
1.53% in FY09 (projected).
Table 1
Total Investment Costs Trend FY04-FY09 ($ millions)
* The FY09 value is based on average AUM at fiscal year-end 2008 and May 2009.
FY04 FY05 FY06 FY07 FY08
Projected
FY09
UTIMCO Services 8.6 10.2 11.3 12.1 13.9 15.4
Direct Costs to Funds 25.5 33.8 52.3 40.1 35.1 24.2
External Fees Netted from Asset Values 62.5 76.5 115.2 164.1 209.7 206.2
Performance Fees Netted from Asset Values 56.9 90.5 81.6 227.3 64.0 66.0
Miscellaneous Other Fees and Expenses 3.0 3.8 4.4 5.0 11.0 12.7
Total Investment Costs 156.6 214.8 264.7 448.4 333.6 324.5
Total % of Average Assets Under Management (AUM) * 1.01% 1.25% 1.37% 2.04% 1.43% 1.53%
157
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
3
Compensation
& Benefits
24%
General
Operating
4%
Professional
Fees &
Insurance
1%
Lease &
Depreciation
3%
External
Management
Fees
57%
Custodian &
Analytical
Costs
7%
Other Directs
Costs
4%
FY 2010 UTIMCO Budget Components
$50.2 million
Direct Costs to Funds 68% UTIMCO Services 32%
III. UTIMCO Budget Analysis and Trends
UTIMCO proposes a budget for FY10 of $50.2 million. Table 2 shows the trend of UTIMCO budgeted
costs (UTIMCO Services and Direct Costs to Funds) as a percent of average AUM since FY05, from
0.26% in FY05 to 0.24% in FY10 (budget).
Table 2
UTIMCO Budget Trends FY05-FY10 ($ millions)
* The FY09 and FY10 values are based on average AUM at fiscal year-end 2008 and May 2009.
The pie chart to the left shows the
breakdown of the UTIMCO budget.
UTIMCO Services fees represent
32% of the total budget, with
Compensation & Benefits being the
largest component. Direct Costs to
Funds include External Management
Fees (including performance fees)
paid directly, Custodian &
Analytical Costs and Other Direct
Costs. External Management Fees
represents the largest component of
the total budget at 57%. UTIMCO
retains external managers for 85% of
the $19.2 billion in operating and
endowment funds (as of May 31,
2009). UTIMCO staff manages the
remaining 15% of assets and an
internal derivatives portfolio.
FY05 FY06 FY07 FY08
Projected
FY09
Budget
FY10
Average Total Assets Under Management (AUM) * 17,245 19,372 21,965 23,359 21,190 21,190
% Change in AUM 11% 12% 13% 6% -9% 0%
UTIMCO Services 10.2 11.3 12.1 13.9 15.4 16.0
% Change in UTIMCO Services 16% 11% 7% 15% 11% 4%
UTIMCO Services % of AUM 0.06% 0.06% 0.05% 0.06% 0.07% 0.08%
Direct Costs to Funds 33.8 52.3 40.1 35.1 24.2 34.2
% Change in Direct Costs to Funds 33% 55% -23% -12% -31% 42%
Direct Costs to Funds % of AUM 0.20% 0.27% 0.18% 0.15% 0.11% 0.16%
Total Budgeted Costs 44.0 63.6 52.1 49.0 39.5 50.2
% Change in Total Budgeted Costs 28% 44% -18% -6% -19% 27%
Total Budgeted Costs % of AUM 0.26% 0.33% 0.24% 0.21% 0.19% 0.24%
158
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
4
Table 3 compares the UTIMCO budget for FY09 and FY10. Refer to Exhibits A and B for a detailed
budget comparison and budget trend for FY05-FY10.
Table 3
UTIMCO FY09 Forecast and FY10 Budget Overview
FY09 Forecast versus FY09 Budget: UTIMCO staff projects FY09 costs will be $39.5 million, $27.3
million (41%) below the FY09 budget of $66.8 million.
UTIMCO Services corporate expenses are projected to be under budget by $1.2 million (7%)
o Salaries, largely driven by unfilled open positions, are expected to be $534k under budget.
o Travel expenses are projected to be significantly ($410k or 51%) under budget as a result of
UTIMCO putting in cost controls and making fewer new investments during the fiscal year.
o Corporate legal expenses are expected to be significantly over budget, a result of additional legal
work related to the legislative session and increased discussions about the Compensation Plan.
Direct Costs to Funds overall are projected to be under budget by $26.1 million (35%).
o External management fees are estimated to be $8.5 million (35%) under budget and performance
fees are anticipated to be $16.6 million (82%) under budget in FY09, primarily due to the
negative investment performance experienced during the fiscal year.
o Consultant Fees are projected to be $383k (40%) below budget.
o Legal fees are projected to be $517k (51%) below budget due to fewer investments being made.
Capital Expenditures are forecasted at $244k, mainly for ongoing technology and software upgrades.
FY10 Proposed Budget: The proposed $50.2 million UTIMCO budget for FY10 is 27% higher than
FY09 projected expenses (25% lower than FY09 budget).
UTIMCO Services for FY10 at $16.0 million is an increase of 4% over FY09 projected costs,
primarily due to increases in personnel-related costs and travel expenses.
Direct Costs to Funds at $34.2 million are budgeted to increase 42% over projected costs for FY09,
mainly due to increases in external management and consultant fees.
Capital Expenditures are budgeted at $145k, primarily for ongoing technology and software upgrades.
IV. UTIMCO Services
For FY10, total personnel-related expenses including employee benefits account for 74% of the UTIMCO
Services budget (24% of the total UTIMCO budget). Trends in staffing and total compensation in relation
to assets are shown in Table 4 on the next page. Highlights from Table 4 include:
Staffing has grown 7% (annualized) from FY05 to FY09, while average AUM has increased 5%.
Staffing is projected at 57 employees for FY09 and budgeted at 60 employees for FY10.
Average AUM per employee decreased 2% (annualized) from FY05 to FY09.
Salaries are budgeted to increase 5% in FY10; bonuses increase 1%; and total compensation is
budgeted to increase 3%.
Total compensation has increased 12% (annualized) in aggregate since FY05.
Total compensation per employee has increased 4% (annualized) since FY05 to $173k in FY09.
$ Budget $ Projected
$ Change
vs FY09
Budget
% Change
vs FY09
Budget $ Budget
$ Change
vs FY09
Projected
% Change
vs FY09
Projected
% Change
vs FY09
Budget
UTIMCO Services 16,543,709 15,385,395 (1,158,314) -7.0% 15,977,125 591,730 3.8% -3.4%
Direct Costs to Funds 50,244,829 24,152,815 (26,092,014) -51.9% 34,184,174 10,031,359 41.5% -32.0%
Total Budget 66,788,538 39,538,210 (27,250,328) -40.8% 50,161,299 10,623,089 26.9% -24.9%
FY09 FY10
159
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
5
Table 4
UTIMCO Compensation and Headcount FY05-FY10
Staffing: In FY09 the budget was based on staffing of 63 employees; actual staffing is projected to be 57
employees at fiscal year-end 2009. The FY10 budget is based on filling certain open positions to bring
staffing to 60 employees by fiscal year-end.
Personnel-related Expenses:
Salaries and Wages are projected to be $6.4 million, $534k (8%) under budget, in FY09 because of
unfilled positions and will increase to $6.7 million in FY09. About two-thirds of the budgeted
increase in salaries of $301k (5%) reflects open positions; the remaining one-third is for salary
increases and promotions for existing staff. Raises for existing staff (including promotions) represent
a 1.5% overall salary increase.
Bonus Compensation for FY09 based on performance year-to-date (including deferred bonuses
earned in prior years and related income) is forecast at $3.5 million, 3% under budget. The FY10
budget of $3.5 million in bonus compensation is 1% higher than projected FY09 bonuses. The
proposed FY10 bonus compensation budget is based on Compensation Plan participants earning 70%
of the maximum incentive award. The FY10 budget also includes deferred bonuses earned by
employees in prior years and funds for a discretionary bonus pool of up to 15% of salaries for
employees who are not participants in the Compensation Plan. UTIMCO staff is recommending
certain changes to the Compensation Plan that, if approved, will affect the budgeted bonus
compensation for FY10 (e.g., thresholds for earning bonuses and the amount of bonus to be deferred).
Employee Benefits are expected to be under budget in FY09 by $178k (14%). Employee Benefits
costs are budgeted to increase 4% to $1.1 million in FY10, reflecting increased staffing.
General Operating Expenses are forecast to be 20% below budget for FY09 at $1.8 million, mainly
from a reduction in travel expenses due to UTIMCO putting in cost controls and making fewer new
investments during the fiscal year. General operating expenses for FY10 are budgeted to increase 18% to
$2.1 million, primarily due to increases in travel, on-line data and contract services. Travel is budgeted at
$594k, an increase of 52% over FY09 projections. The increase in travel expenses reflects a more
normalized level of investment due diligence by UTIMCO staff.
FY05 FY06 FY07 FY08
Projected
FY09
% Change
Since
FY05
(annualized)
Budget
FY10
% Change
From
FY09
Employees (as of year end) 43 46 47 58 57 7% 60 5%
Average Total AUM (millions) 17,245 19,372 21,965 23,359 21,190 5% 21,190 0%
Average AUM/Employee (millions) 401 421 467 403 372 -2% 353 -5%
Salaries and Wages 4,203,100 4,492,078 4,908,821 5,377,233 6,421,977 11% 6,722,802 5%
Bonus Compensation 2,094,447 2,164,963 2,082,700 3,016,393 3,451,346 13% 3,482,645 1%
Total Compensation 6,297,547 6,657,040 6,991,521 8,393,626 9,873,323 12% 10,205,447 3%
Total Compensation per Employee 146,455 144,718 148,756 144,718 173,216 4% 170,091 -2%
Bonus as % of Salaries and Wages 50% 48% 42% 56% 54% 52%
Bonus as % of Total Compensation 33% 33% 30% 36% 35% 34%
160
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
6
Lease Expenses: Table 5 shows that lease expenses have stabilized in recent years since UTIMCO’s
move in FY06 and addition of lease space in FY08. Operating Expenses (pass through expenses to
tenants) have increased significantly in recent years due to rising utilities expenses and ad valorem taxes,
and now exceed base rent.
Table 5
UTIMCO Lease Expenses
Professional Fees are expected to be $432k in FY09, 67% higher than budgeted. Increased legal
expenses and compensation consultant fees account for a majority of the variance due to the legislative
session and increased discussions about the Compensation Plan. Professional Fees for FY10 are budgeted
at $300k, a decrease of 31%. A chart in the Direct Costs to Funds section of this report shows the trend
for total legal expenses since FY05.
V. UTIMCO Capital Expenditures
The trend for Capital Expenditures for FY07-FY10 is summarized in Table 6. In FY09, total capital
expenditures are forecasted to be $244k, mainly for ongoing technology and software upgrades. A budget
of $145k is proposed for FY10. The majority of the FY10 budget is for ongoing technology and software
upgrades with the rest for ongoing office equipment and fixtures.
Table 6
UTIMCO Capital Expenditures
FY05 FY06 FY07 FY08
Projected
FY09
Budget
FY10
Property Lease 362,010 613,560 462,722 499,823 518,373 518,373
Operating Expenses 171,789 83,294 362,755 515,296 515,848 530,000
Parking Expenses 62,362 77,342 94,805 100,007 94,571 95,000
Other Expenses 4,432 5,166 5,671 10,473 5,205 5,700
Amortization (Deferred Rent Credit) 0 (124,076) (148,891) (150,679) (170,344) (170,344)
Total Lease Expenses (net) 600,593 655,286 777,062 974,920 963,652 978,729
FY07 FY08
Projected
FY09 Budget FY10
Ongoing: Technology and Software Upgrades 71,271 139,860 224,103 127,000
Ongoing: Office Equipment and Fixtures 11,599 18,498 20,170 17,500
Expansion: Technology and Software Upgrades 0 7,490 0 0
Expansion: Office Equipment and Fixtures 0 152,864 0 0
Expansion: Leasehold Improvements (net) 0 166,453 0 0
Total Capital Expenditures (net) 82,870 485,165 244,273 144,500
161
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
7
VI. Direct Costs to Funds
Direct Costs to Funds for FY09 are projected at $24.2 million or 52% below a budgeted $50.2 million.
The FY10 budget increases 42% to $34.2 million from projected FY09 costs.
External Management and Performance Fees paid to external managers continue to remain the highest
component of the overall budget. These fees, projected at $19.2 million in FY09 (57% below budget) and
budgeted at $28.7 million, represent 84% of Direct Costs to Funds budget in FY10 and 57% of total
UTIMCO budget. Although UTIMCO staff estimates external management and performance fees in
detail using each manager’s fee structure and current asset base, these fees are very difficult to forecast
and budget due to the uncertainty of individual manager performance.
Custodian and Analytical Costs: Custodian fees for FY09 are projected at $1.8 million, 7% over
budget. The FY10 budgeted amount for these expenses will increase 9% over FY09 levels. Performance
measurement expenses paid in FY09 are projected to be 13% below budget at $439k and are budgeted to
decrease 2% to $429k in FY10.
Risk Measurement: Risk measurement expenses charged to the funds are expected to be 13% under
budget at $422k for FY09 and budgeted to increase 2% to $432k in FY10.
Auditing expenses in FY09 of $733k funded external auditors and U. T. System Audit Office fees. Audit
expenses are budgeted at $735k for FY10 nearly unchanged from FY09. Audit expenses have increased
overall since FY08 due to a change in external auditors and additional time required to audit valuations of
alternative investments.
Legal: The chart below shows the trend in UTIMCO Services (corporate) legal fees and direct legal
expenses charged to the funds since FY05. Legal fees paid directly by the funds in FY09 are projected to
be $498k (51% under budget). Direct legal fees are budgeted for FY10 at $678k, a 36% decrease,
reflecting a more normalized level of new investments being made and associated legal review.
FY05 FY06 FY07 FY08Projected
FY09
Budget
FY10
UTIMCO Services $579,720 $362,045 $567,339 $225,172 $281,640 $150,000
Direct Costs to Funds $932,525 $761,764 $825,621 $1,348,784 $497,518 $677,500
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
UTIMCO Legal Expenses
162
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
8
EXHIBIT A
FY10
Change
from FY09
Budget
Budget Projected $ %
8/31/06
Budget $ % %
UTIMCO Services
Salaries and Wages + Vacation 6,956,036 6,421,977 (534,059) -7.7% 6,722,802 300,826 4.7% -3.4%
Bonus Compensation + Interest 3,566,110 3,451,346 (114,764) -3.2% 3,482,645 31,299 0.9% -2.3%
Total Compensation 10,522,146 9,873,323 (648,823) -6.2% 10,205,447 332,125 3.4% -3.0%
Total Payroll taxes 477,538 445,966 (31,572) -6.6% 470,116 24,150 5.4% -1.6%
403(b) Contributions 533,878 476,754 (57,124) -10.7% 493,704 16,950 3.6% -7.5%
Group Health, Dental, AD&D, Life, LTD 722,935 601,605 (121,330) -16.8% 632,241 30,636 5.1% -12.5%
Employee Benefits 1,256,813 1,078,359 (178,454) -14.2% 1,125,945 47,586 4.4% -10.4%
On-Line Data & Contract Services 858,446 936,440 77,994 9.1% 1,020,493 84,053 9.0% 18.9%
Recruiting and Relocation Expenses 50,000 16,865 (33,135) -66.3% 20,000 3,135 18.6% -60.0%
Travel 799,999 390,511 (409,488) -51.2% 593,586 203,075 52.0% -25.8%
Phone and Telecommunications 73,224 69,339 (3,885) -5.3% 77,540 8,201 11.8% 5.9%
Computer & Office Supplies 110,664 89,091 (21,573) -19.5% 81,960 (7,131) -8.0% -25.9%
Employee Education 25,200 24,316 (884) -3.5% 29,263 4,947 20.3% 16.1%
Repairs/Maintenance 189,000 184,996 (4,004) -2.1% 198,844 13,848 7.5% 5.2%
BOD Meetings 51,000 17,106 (33,894) -66.5% 18,000 894 5.2% -64.7%
Other Operating Expenses 40,030 29,113 (10,917) -27.3% 32,511 3,398 11.7% -18.8%
Total General Operating 2,197,563 1,757,776 (439,787) -20.0% 2,072,196 314,421 17.9% -5.7%
Total Lease Expense 982,869 963,652 (19,217) -2.0% 978,729 15,076 1.6% -0.4%
Invest., Hiring & Board Consultants 30,000 30,000 0 0.0% 30,000 0 0.0% 0.0%
Legal Expenses 150,000 281,640 131,640 87.8% 150,000 (131,640) -46.7% 0.0%
Compensation Consultant 12,500 78,900 66,400 531.2% 77,500 (1,400) -1.8% 520.0%
Accounting fees 66,000 41,205 (24,795) -37.6% 42,500 1,295 3.1% -35.6%
Total Professional Fees 258,500 431,745 173,245 67.0% 300,000 (131,745) -30.5% 16.1%
Property/Liability Package 12,240 12,265 25 0.2% 15,000 2,735 22.3% 22.5%
Umbrella Policy 4,500 4,454 (46) -1.0% 4,500 46 1.0% 0.0%
Workers Compensation 14,700 14,319 (381) -2.6% 15,000 681 4.8% 2.0%
Business Auto 840 836 (4) -0.5% 850 14 1.7% 1.2%
Commercial Bonding Policy 39,000 39,114 114 0.3% 35,000 (4,114) -10.5% -10.3%
Prof., D&O & Emp. Practices Liability 165,000 172,064 7,064 4.3% 180,000 7,936 4.6% 9.1%
Total Insurance 236,280 243,052 6,772 2.9% 250,350 7,298 3.0% 6.0%
Depreciation of Equipment 612,000 591,522 (20,478) -3.3% 574,341 (17,180) -2.9% -6.2%
Total UTIMCO Services 16,543,709 15,385,395 (1,158,314) -7.0% 15,977,125 591,730 3.8% -3.4%
Direct Costs to Funds
External Management Fees 23,897,322 15,440,317 (8,457,006) -35.4% 18,695,142 3,254,825 21.1% -21.8%
External Mgt. Fees-Performance Fees 20,305,482 3,715,734 (16,589,748) -81.7% 10,052,352 6,336,618 170.5% -50.5%
External Management Fees 44,202,805 19,156,051 (25,046,754) -56.7% 28,747,494 9,591,443 50.1% -35.0%
Custodian Fees and Other Direct Costs 1,725,261 1,847,677 122,416 7.1% 2,008,927 161,250 8.7% 16.4%
Performance Measurement 505,724 439,317 (66,407) -13.1% 429,374 (9,943) -2.3% -15.1%
Analytical Tools 337,860 339,651 1,791 0.5% 348,178 8,527 2.5% 3.1%
Risk Measurement 483,000 422,083 (60,917) -12.6% 432,000 9,917 2.3% -10.6%
Custodian and Analytical Costs 3,051,846 3,048,728 (3,118) -0.1% 3,218,480 169,752 5.6% 5.5%
Consultant Fees 950,500 567,123 (383,377) -40.3% 744,500 177,377 31.3% -21.7%
Auditing 776,000 733,097 (42,903) -5.5% 735,000 1,903 0.3% -5.3%
Controls Assessment (Sarbanes-Oxley) 0 0 0 N/A 0 0 N/A N/A
Printing 138,678 132,932 (5,746) -4.1% 0 (132,932) -100.0% -100.0%
Legal Fees 1,015,000 497,518 (517,482) -51.0% 677,500 179,982 36.2% -33.3%
Background Searches & Other 110,000 17,365 (92,635) -84.2% 61,200 43,835 252.4% -44.4%
Other Direct Costs Total 2,990,178 1,948,035 (1,042,143) -34.9% 2,218,200 270,165 13.9% -25.8%
Total Direct Costs to Funds 50,244,829 24,152,815 (26,092,014) -51.9% 34,184,174 10,031,359 41.5% -32.0%
Total Costs 66,788,538 39,538,210 (27,250,328) -40.8% 50,161,299 10,623,089 26.9% -24.9%
UTIMCO Operating Expenses/Budgets FY09-FY10
FY09
Change from
FY09 Projected
Change from
FY09 Budget
163
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
9
EXHIBIT B
FY10
Actual Actual Actual Actual Projected
8/31/06
Budget
UTIMCO Services
Salaries and Wages + Vacation 4,203,100 4,492,078 4,908,821 5,377,233 6,421,977 6,722,802
Bonus Compensation + Interest 2,094,447 2,164,963 2,082,700 3,016,393 3,451,346 3,482,645
Total Compensation 6,297,547 6,657,040 6,991,521 8,393,626 9,873,323 10,205,447
Total Payroll taxes 313,637 312,023 337,117 394,313 445,966 470,116
403(b) Contributions 304,359 327,724 329,083 404,671 476,754 493,704
Group Health, Dental, AD&D, Life, LTD 315,457 406,756 420,593 510,154 601,605 632,241
Employee Benefits 619,816 734,480 749,676 914,825 1,078,359 1,125,945
On-Line Data & Contract Services 677,346 811,883 840,578 851,499 936,440 1,020,493
Recruiting and Relocation Expenses 35,600 216,927 400,617 108,198 16,865 20,000
Travel 170,069 205,965 176,929 515,494 390,511 593,586
Phone Equipment and Charges 39,340 46,965 43,743 38,400 69,339 77,540
Computer & Office Supplies 68,431 143,372 67,733 140,512 89,091 81,960
Employee Education 21,814 13,728 16,817 20,311 24,316 29,263
Repairs/Maintenance 56,434 85,412 109,592 179,217 184,996 198,844
BOD Meetings 27,552 52,375 49,711 58,615 17,106 18,000
Other Operating Expenses 52,306 106,401 42,205 40,748 29,113 32,511
Total General Operating 1,148,892 1,683,029 1,747,924 1,952,993 1,757,776 2,072,196
Total Lease Expense 600,593 655,286 777,062 974,920 963,652 978,729
Invest., Hiring & Board Consultants 17,500 20,175 25,124 30,000 30,000 30,000
Legal Expenses 579,720 362,045 567,339 225,172 281,640 150,000
Compensation Consultant 33,650 95,920 13,100 146,455 78,900 77,500
Accounting fees 30,135 54,106 38,980 53,414 41,205 42,500
Total Professional Fees 661,005 532,246 644,542 455,041 431,745 300,000
Property/Liability Package 28,797 22,993 18,685 15,100 12,265 15,000
Umbrella Policy 6,720 5,500 5,500 4,977 4,454 4,500
Workers Compensation 17,419 13,109 20,132 17,315 14,319 15,000
Business Auto 469 756 779 811 836 850
Commercial Bonding Policy 28,849 27,752 40,900 39,785 39,114 35,000
Prof., D&O & Emp. Practices Liability 171,959 150,525 164,300 164,300 172,064 180,000
Total Insurance 254,213 220,634 250,295 242,288 243,052 250,350
Depreciation of Equipment 272,836 504,637 564,076 556,450 591,522 574,341
Total UTIMCO Services 10,168,539 11,299,376 12,062,213 13,884,456 15,385,395 15,977,125
Direct Costs to Funds
External Management Fees 14,217,736 17,815,353 16,413,106 20,767,775 15,440,317 18,695,142
External Mgt. Fees-Performance Fees 14,898,389 29,648,938 18,010,650 8,087,324 3,715,734 10,052,352
External Management Fees 29,116,125 47,464,291 34,423,756 28,855,099 19,156,051 28,747,494
Custodian Fees and Other Direct Costs 1,506,759 1,634,942 1,531,924 1,771,313 1,847,677 2,008,927
Performance Measurement 487,976 484,660 453,612 459,962 439,317 429,374
Analytical Tools 284,050 338,630 644,597 370,497 339,651 348,178
Risk Measurement 267,500 276,000 372,990 491,986 422,083 432,000
Custodian and Analytical Costs 2,546,285 2,734,232 3,003,123 3,093,758 3,048,728 3,218,480
Consultant Fees 900,000 852,000 1,289,394 736,654 567,123 744,500
Auditing 158,309 177,944 204,550 829,938 733,097 735,000
Controls Assessment (Sarbanes-Oxley) 0 97,110 109,750 0 0 0
Printing 132,196 163,790 178,155 152,719 132,932 0
Legal Fees 932,525 761,764 825,621 1,348,784 497,518 677,500
Background Searches & Other 50,805 59,147 24,747 50,512 17,365 61,200
Other Direct Costs Total 2,173,835 2,111,755 2,632,217 3,118,607 1,948,035 2,218,200
Total Direct Costs to Funds 33,836,245 52,310,278 40,059,096 35,067,464 24,152,815 34,184,174
Total Costs 44,004,784 63,609,654 52,121,309 48,951,920 39,538,210 50,161,299
FY06 FY07
UTIMCO Operating Expenses/Budgets FY05-FY10
FY09FY05 FY08
164
Fiscal Year 2010 UTIMCO Budget Review Prepared by the U. T. System Office of Finance June 25, 2009
10
EXHIBIT C
UTIMCO Reserve Analysis for August 31, 2009
Projected Cash Reserves at August 31, 2009
Cash 12,361,678
Prepaid Expenses 411,945
Less: Accounts Payable (3,620,261)
(Includes bonuses & earnings payable)
Expected Cash Reserves at August 31, 2009 9,153,361$
FY10 Proposed Operating Budget 15,977,125
Applicable Percentage 25% 3,994,281
FY10 Proposed Capital Expenditures 144,500 144,500
Required Cash Reserves at August 31, 2009 4,138,781$
Balance Available for Distribution 5,014,580$
Recommended Distribution 5,000,000$
165
166
9. U. T. System Board of Regents: Discussion of U. T. System Funds' Investment Strategy
REPORT
Mr. Bruce Zimmerman, Chief Executive Officer and Chief Investment Officer of The University of Texas Investment Management Company (UTIMCO), will report on the investment strategy with respect to asset allocation, downside risk, liquidity (and unfunded commitments), leverage, and use of derivatives, including proposed changes to Delegation of Authority, Liquidity Policy, and the Derivatives Policy.