direct support organizations and component units · course offerings unique to camls and developed...

DIRECT SUPPORT ORGANIZATIONS AND COMPONENT UNITS

ANNUAL FINANCIAL PLANS

FISCAL YEAR 2016

May 27, 2015

DSO Annual Financial Plans for FY 2016

INDEX USF Health Professions Conferencing Corporation .................................................. 3-5

University Medical Services Association, Inc. .......................................................... 6-9

Medical Services Support Corporation, Inc. .............................................................. 10-12

Sun Dome Inc. ............................................................................................................ 13-15

USF Alumni Association, Inc. ................................................................................... 16-18

USF Financing Corporation and USF Property Corporation ..................................... 19-21

USF Research Foundation, Inc. .................................................................................. 22-24

USF Foundation, Inc. ................................................................................................. 25-28

[ 2 ]

USF Health Professions Conferencing Corporation

State the DSO's Statutory Mission which Supports the Goals of the University

USF Health Professions Conferencing Corporation (HPCC) trains students and healthcare professionals in the development and maintenance of professional excellence through the ethical, innovative and efficient dissemination of knowledge and enhancement of skills required for clinical practice, research and education.

List Key Drivers for Improvements in the 2016 Financial Plan Over 2015 - Focus on Cash Flows and Reserves

Course offerings unique to CAMLS and developed at CAMLS will drive growth in regional hospital, healthcare and international healthcare provider competency based trainings.

The private/public partnerships and client relationships HPCC has developed to train health care professionals, assess technical and teamwork competence and develop course content unique to CAMLS is laying the foundation to replace outdated healthcare methodologies. Partnering with regional hospitals to develop proven trainings and therefore better methodologies that increase hospital quality and reduce malpractice rates will create a competitive advantage regionally which can then be delivered nationally and internationally.

International relationships are being actively developed and contracted in Panama, Mexico, US Virgin Islands and Brazil for hands on training at CAMLS, simulation center consultation and train the trainer events.

The CAMLS Innovation Center will generate a growing stream of revenue from medical device research, development, testing and evaluation projects. Utilizing the Surgical & Interventional Training Center and Virtual Patient Care Center within CAMLS is a key factor in the CAMLS Innovation Center success story.

CAMLS capabilities create unique opportunities to win research grants from state and federal government as well as foundations. HPCC's new grants writer in concert with medical directors is actively writing and submitting grant applications to entities such as the Agency for Healthcare Research Quality.

Equipment that is currently rented as needed for programs will be purchased with a 100% payback within three years.

Identify Key Risks That Might Affect the 2016 Financial Plan

Although HPCC has a diverse customer base, changing regulatory standards, economic conditions and corporate strategies could have a positive and or negative effects on the FY16 Plan.

State government funding of hospitals.

Fully utilizing CAMLS during non-peak hours, such as evenings, spreads fixed costs among more customers and increases operating earnings.

Expand the CAMLS developed curriculum along with the regional and international customers seeking the CAMLS training certificate.

HPCC has developed a philanthropy strategy to offset some of the expenses at CAMLS. As the strategy is unveiled in FY16 contributions will be routed through the USF Foundation.

Annual Financial Plan for FY 2016

FINANCIAL PLAN STATEMENT

Describe Material Capital Expenditures in the 2016 Financial Plan - Provide Details and ROI Expectations

List Major DSO Initiatives that will Drive Improvements in Operating Earnings for 2017 and 2018

[ 3 ]

(In thousands) FY 2016 FY 2015 FY 2015 FY 2014FINANCIAL FORECAST FINANCIAL ACTUAL

PLAN (as of 3/31/15) $ % PLAN RESULTS

REVENUES Continuing Professional Development $6,600 $7,800 $(1,200) (15)% $6,300 $5,920

CAMLS - USF Health Programming 2,918 4,718 (1,800) (38)% 4,518 3,883

CAMLS - Industry, Societies, Healthcare 10,750 7,225 3,525 49 % 8,500 7,059

Other HPCC Divisions 1,790 1,855 (65) (4)% 1,730 2,298

In Kind Donations 500 500 0 0 % 500 1,696

Rents, Parking, Rebates, Interest 300 300 0 0 % 200 300

Total Revenues $22,858 $22,398 $460 2 % $21,748 $21,156

EXPENSESWages and Benefits $4,086 $2,786 $1,300 47 % $4,141 $3,455

Rents, Utilities, Leases, Maint. & Supplies 4,053 3,793 260 7 % 3,635 3,691

Direct Program Expense 10,678 10,483 195 2 % 10,356 9,457

Interest 790 803 (13) (2)% 800 900

In Kind Expense 500 524 (24) (5)% 500 1,431

Depreciation-Purchased & Donated Assets 2,400 3,100 (700) (23)% 4,400 4,263

Total Expenses $22,507 $21,489 $1,018 5 % $23,832 $23,197

OPERATING PROFIT BEFORE NON-CASH CHANGES $351 $909 $(558) (61)% $(2,084) $(2,041)

Unrealized Investment Gains (Losses) 0 0 0 % 0 0

Change in Fair Value of Swaps 0 0 0 % 0 0

Total Non-Cash Changes $0 $0 $0 % $0 $0

NET OPERATING PROFIT $351 $909 $(558) (61)% $(2,084) $(2,041)

USF Health Professions Conferencing CorporationAnnual Financial Plan for FY 2016

INCOME STATEMENT

Variance

[ 4 ]



OPERATING ACTIVITIES

Net Operating Profit $351 $909 $(558) (61)% $(2,084) $(2,041)

Adjustments for Non-Cash Activities:

Decrease in Accounts Rec. and Prepaid 0 0 0 % 0 (20)

Increase (Decrease) in Accounts Payable 0 (1,050) 1,050 100 % 0 93

Increase in Deferred Revenue 0 1,000 (1,000) (100)% 0 231

Non cash Donation 0 0 % 0 (51)

Depreciation 2,400 3,100 (700) (23)% 4,400 4,263

Total Cash From Operating Activities $2,751 $3,959 $(1,208) (31)% $2,316 $2,475

INVESTING ACTIVITIES

Capital Expenditures $(500) $(100) $(400) (400)% $(100) $(138)

Net (Purchases) Sales of Investments 0 0 0 % 0 0

Total Cash From Investing Activities $(500) $(100) $(400) (400)% $(100) $(138)

FINANCING ACTIVITIES

Repayment of Long-Term Debt $0 $(1,500) $1,500 100 % $0 $0

Principal Paid on Debt (2,200) (2,100) (100) (5)% (1,979) (2,206)

Total Cash From Financing Activities $(2,200) $(3,600) $1,400 39 % $(1,979) $(2,206)

CHANGE IN CASH 51 259 (208) (80)% 237 131

Cash, Beginning of Year 1,338 1,079 259 24 % 1,079 948

Cash, End of Year $1,389 $1,338 $51 4 % $1,316 $1,079

USF Health Professions Conferencing CorporationAnnual Financial Plan for FY 2016

STATEMENT OF CASH FLOWS

Variance

[ 5 ]


University Medical Services Association is a not-for-profit entity organized to operate exclusively for scientific and educational purposes for the support of the objectives of USF's College of Medicine in accordance with the College Faculty Practice Plan. It's ongoing goal is programmatic development of business lines that support the education of medical students and residents, promote research in the clinical environment, and provide focused healthcare to the community.


Improvements to Patient Access and Ambulatory Operations:

a) Physician schedules and Central Scheduling will be redesigned to remove barriers that negatively impact patient access. New templates go live 8/1/2015. Assumption is a 2% volume increase in the first half of the year and a 5% volume increase in the second half.b) Improve operational capacity and clinic room utilization to more efficiently match demand and supply.c) Care teams and clinical space will be redesigned to improve efficiency and patient experience. Customer service training will occur in an effort to improve patient satisfaction.d) Implementation of the Avaya Telecommunication System has been completed. Management is setting operational targets/standards. Call Center will expand and templates will be optimized to improve patient experience.

Improvements to Ancillary Operations: a) Add a clinical lab to our current dermpath/surgical lab.b) Move Phlebotomy to first floor of Morsani & STC.c) Grow volume & Improve nursing skill level in infusion suite.d) Increase volume in ASC.

Primary Care: Expansion of primary care through affiliation of hospital partnerships to drive downstream revenue

Performance Management and Efficiencya) Implement patient satisfaction tracking system and hire a CMO to implement a robust quality improvement and patient safety programb) Improve coding, managed care, and revenue cycle operations.c) Enhance provider & staff productivity.

Improving partnership efforts with area hospitals.

Disciplined Cash Investment strategies to continue generating non-operating income/return. Oversight provided by the USFPG Investment Committee.

Continued Clinical Department accountability based on Approved and Recognized Budgets and industry standards.

Transition to EPIC EMR. This is a $7M investment in the future of the practice plan which will be funded out of cash reserves. There will be capital investments of $3M in year one and $4M in training and staffing in years one and two. Break even will occur in year 3. Estimated financial impact by year is:

Year 1: ($7.002M)Year 2: ($1.839M)Year 3: $28kYear 4: $1.829M

University Medical Service Association, Inc.Annual Financial Plan for FY 2016



[ 6 ]


Clinical IT Initiatives related to ICD-10 and CMS's Clinical Quality Measures Reporting : a) ICD-10 Implementation, Training & Readiness (deadline postponed to Oct 1, 2015); b) Meaningful Use Stage 2 Readiness & Quality Reporting Capability. These changes will alter current business processes and could impact cash flows industry wide.

EHR transition will have negative impact of Physician productivity.

UPL program ending 6/30/2015, could result in loss of $6M in annual revenues.

Conversion to EPIC medical record will have initial costs of approximately $7M in capital, training and staffing. Long-Term, EPIC will reduce operating costs. In addition, the EPIC conversion will result in significant increases in revenue through better patient scheduling, coding and charge capture.

Patient access improvements will produce volume and revenue growth into the future.


[ 7 ]



REVENUES Net Patient Service 144,439$ 138,880$ 5,560$ 4 % 141,100$ 130,083$

Grants, Contracts & Awards 56,652 51,758 4,894 9 % 50,334 48,350

UPL/PCIP 6,810 7,180 (369) (5)% 5,588 6,096

Meaningful Use - 920 (920) (100)% - 1,008

Other Revenues 25,809 24,275 1,534 6 % 26,674 25,953

Total Revenues 233,710 223,013 10,698 5% 223,696 211,490

EXPENSESFaculty Support 112,669 109,388 3,282 3 % 105,220 98,051

Housestaff Support 10,995 10,675 320 3 % 11,041 11,543

Other Staff Support 70,916 63,025 7,891 13 % 59,625 57,180

Other Expenses 46,057 42,746 3,311 8 % 46,674 41,827

Depreciation/Amortization 1,584 1,343 240 18 % 1,901 1,397

Total Expenses 242,220 227,176 15,044 0 224,461 209,998

OPERATING PROFIT BEFORE NON-CASH CHANGES (8,510) (4,164) (4,346) -104% (765) 1,492

Unrealized Investment Gains (Losses) 265 161 104 65 % 265 1,485

Gain/(Loss) on Sale/Transfer of Assets - - - % - (4,270)

Change in Fair Value of Swaps - - - % - -

Total Non-Cash Changes 265 161 104 65% 265 (2,785)

NET OPERATING PROFIT $(8,245) $(4,003) $(4,242) (106)% $(500) $(1,293)


INCOME STATEMENT

Variance

[ 8 ]




Net Operating Profit $(8,245) $(4,003) $(4,242) (106)% $(500) $(1,293)

Changes in operating assets and liabilities 4,000 4,000 0 0 % 4,725 (11,074)


Unrealized Gains (265) (129) (136) (106)% (265) 2,785

Depreciation 1,584 1,343 240 18 % 1,901 1,397

Total Cash From Operating Activities (2,926) 1,212 (4,138) (3) 5,861 (8,185)


Capital Expenditures (2,000) (4,500) 2,500 56 % (1,500) (2,079)

Net (Purchases) Sales of Investments 5,000 3,000 2,000 67 % 0 (1,049)

Total Cash From Investing Activities 3,000 (1,500) 4,500 3 (1,500) (3,128)


Proceeds of Long-Term Debt $0 $0 $0 % $0 $0

Principal Paid on Debt 0 0 0 % 0 0

Total Cash From Financing Activities $0 $0 $0 % $0 $0

CHANGE IN OPERATING CASH 74 (288) 362 126 % 4,361 (11,313)

Cash, Beginning of Year 10,327 10,615 (288) (3)% 10,615 21,929

Operating Cash, End of Year 10,401 10,327 74 1 % 14,976 10,615Invested Cash 32,023 36,758 (4,735) (13)% 39,629 39,629

Total Cash 42,423$ 47,085$ (4,661)$ (10)% 54,605$ 50,244$

Days Total Cash on Hand 64



Variance

[ 9 ]


Medical Services Support Corporation is a not-for-profit entity organized to operate exclusively for scientific and educational purposes or the support of the objectives of USF's College of Medicine in accordance with the College Faculty Practice Plan. It serves as a clinical support organization to the USF Faculty Practice Plan.


Tied directly to the support of the Faculty Practice Plan and UMSA.

N/A


N/A

As MSSC is primarily structured to be a break-even organization, all payroll and operating expenses are funded by UMSA in the form of services revenue.


USF Medical Support Services CorporationAnnual Financial Plan for FY 2016



[ 10 ]



REVENUES Operating/payroll expenses funded by UMSA $62,335 $61,168 $1,167 2 % $59,971 $58,847

Other Revenues 3,500 3,467 33 1 % 3,000 7,809

Total Revenues $65,835 $64,635 $1,200 2 % $62,971 $66,655

EXPENSESFaculty support $150 $142 $8 5 % $180 $152

Housestaff support 50 45 5 11 % 50 50

Staff support 39,251 39,251 0 0 % 37,800 36,664

Medical Materials/Supplies 11,049 10,833 217 2 % 10,250 10,100

Interest Paid on Debt 2,500 2,532 (32) (1)% 2,600 2,624

Other Expenses 9,000 8,750 250 3 % 9,500 13,376Depreciation/Amortization 3,200 3,061 139 5 % 3,200 3,592

Total Expenses $65,200 $64,615 $586 1 % $63,580 $66,558

OPERATING PROFIT BEFORE NON-CASH CHANGES $635 $20 $615 3,073 % $(609) $98

Unrealized Gains/Losses 0 0 0 % 0 474

Gain/(Loss) on Sale/Transfer of Assets 0 0 0 % 0 0

Change in Fair Value of Swaps 0 1,000 (1,000) (100)% 0 1,491

Total Non-Cash Changes $0 $1,000 $(1,000) (100)% $0 $1,965

NET OPERATING PROFIT $635 $1,020 $(385) (38)% $(609) $2,062


INCOME STATEMENT

Variance

[ 11 ]




Net Operating Profit $635 $1,020 $(385) (38)% $(609) $2,062

Changes in operating assets and liabilities 0 0 0 % 2,700 $(4,580)


Unrealized (Gains)/Losses 0 0 0 % 0 0

Depreciation 3,200 3,061 139 5 % 3,200 3,592

Total Cash From Operating Activities $3,835 $4,081 $(246) (6)% $5,291 $1,075


Capital Expenditures $(1,500) $(1,000) $(500) (50)% $(1,500) 57


Total Cash From Investing Activities $(1,500) $(1,000) $(500) (50)% $(1,500) $57



Principal Paid on Debt (2,000) (1,824) (176) (10)% (1,760) (1,974)

Total Cash From Financing Activities $(2,000) $(1,824) $(176) (10)% $(1,760) $(1,974)

CHANGE IN CASH 335 1,257 (922) (73)% 2,031 (843)

Cash, Beginning of Year 2,326 1,069 1,257 118 % 523 1,913

Cash, End of Year $2,661 $2,326 $335 14 % $2,554 $1,069



Variance

[ 12 ]


Sun Dome, Inc. (SDI) manages and operates a multi-purpose facility known as the Sun Dome Arena on behalf of the University of South Florida (University) to provide the students, faculty, and staff of the University, as well as, the general public an array of cultural, athletic, and educational events. Sun Dome, Inc. also provides ownership and operational support for a University aircraft.


Sun Dome, Inc has implemented a premium parking option that can be purchased online. This new revenue driver also includes convenience fees as well and improves the operational nature of parking as patron already has ticket in hand.

Increased rent will improve revenue performance while also focusing on booking more events in the Corral (boxing, mma, meeting space). There is a market for smaller events in the Corral that can drive additional rental revenue but also ticketing, parking and concessions.

Additional collaborative efforts through marketing and communications in place to increase sponsorship revenue and attract interest in a naming rights partner. Adjusted prices for premium seating areas will make loge seating more attractive particularly to existing and new corporate partners.

There are no material capital expenditures currently planned for the fiscal year 2016

Global Spectrum produces an annual capital expenditures report with a prioritized list of suggested/possible items.


SDI operates in a highly competitive environment for booking and hosting external events, as well as, attracting patrons and disposable income. SDI's market conditions make it susceptible to the conditions at competing facilities (hosted events, consumer amenities, facility investment) and the attractiveness/success of SDI's hosted events. Furthermore, SDI's industry can be highly cyclical and variable including the number of touring artists, new and emerging event types, and maturing and/or declining event types.

SDI acknowledges that the Arena is a large complex, multi-purpose facility, therefore the on-going need of maintenance and major repairs are expected to happen over time. Currently, there are various pieces of equipment and machinery that may need repair in the future that will be without warranty, but through partnership with the University solutions will be determined.

SDI/Global Spectrum continues to develop industry relationships (primarily key event promoters) through attending and participating in national conferences and seminars, and also working with local Chamber of Commerce members to promote and attract events to the Arena. Furthermore, SDI is making a concerted effort in generating multi-year event contracts with current and more profitable events (e.g. American Cheer Power, Harlem Globetrotters, Bellator, etc.) and is focused on obtaining new long-term event partnerships.

SDI/Global Spectrum is ensuring the proper long-term care and quality of the University's newly renovated Sun Dome asset by entering into cost effective vendor maintenance and service agreements. This upfront initiative will maintain the facility's competiveness in the marketplace and negate major deferred maintenance needs in the future. Furthermore, SDI staff are properly and consistently monitoring facility systems and equipment by updating electronic record-keeping systems and documenting/addressing needs as issues are identified.

SDI/Global Spectrum are focused on enhancing current revenue streams while also driving additional revenue through diversified event bookings, corporate partnerships and enhanced sales and marketing plans.



Sun Dome, Inc.Annual Financial Plan for FY 2016


[ 13 ]



REVENUES Rent Income $503 $515 $(12) (2)% $465 $202

Service Income 205 229 (24) (10)% 189 214

Premium Seating 100 73 27 37 % 166 79

Facility Fee 307 260 47 18 % 262 274

Sponsorship, Commissions & Royalties 667 589 78 13 % 687 725

Parking 307 275 32 12 % 400 276

Other Revenues 234 275 (41) (15)% 278 109

Total Revenues $2,323 $2,216 $107 5 % $2,447 $1,879

EXPENSESSalaries & Wages $678 $680 $(2) (0)% $684 $651

Payroll Taxes & Benefits 211 203 8 4 % 205 183

Repairs, Maintenance and Utilities 363 342 21 6 % 361 329

Operating & Administrative 273 190 83 44 % 258 194

Management Fees 161 208 (47) (23)% 174 220

Depreciation 236 236 0 0 % 237 237

Total Expenses $1,922 $1,859 $63 3 % $1,919 $1,814

OPERATING PROFIT BEFORE NON-CASH CHANGES $401 $357 $44 12 % $528 $65

Unrealized Investment Gains (Losses) 0 0 0 % 0 0


Total Non-Cash Changes $0 $0 $0 % $0 $0

NET OPERATING PROFIT $401 $357 $44 12 % $528 $65


INCOME STATEMENT

Variance

[ 14 ]




Net Operating Profit $401 $357 $44 12 % $528 $65


Depreciation / Amortization 236 236 0 0 % 238 237

Net Adjustments to Assets 0 0 0 % 0 (283)

Net Adjustments to Liabilities 0 0 0 % 0 (77)

Customer Deposits & Deferred Revenue 0 0 0 % 0 (374)

Total Cash From Operating Activities $637 $593 $44 7 % $766 $(432)


Capital Expenditures $0 $0 $0 % $0 $0


Total Cash From Investing Activities $0 $0 $0 % $0 $0



Principal Paid on Debt (100) (100) 0 0 % (150) 0

Interest Paid (10) (10) 0 0 % (10) (10)

Net transfers to USF - arena debt service (411) (411) 0 0 % (411) (300)

Total Cash From Financing Activities $(521) $(521) $0 0 % $(571) $(310)

CHANGE IN CASH 116 72 44 61 % 195 (742)

Cash, Beginning of Year 810 738 72 10 % 738 1,480

Cash, End of Year $926 $810 $116 14 % $933 $738



Variance

[ 15 ]


The mission of the USF Alumni Association is to foster a mutually beneficial, lifelong relationship between the University and its alumni; to inspire loyalty and pride among current and future alumni; and to advocate for excellence in teaching, research and public service.


The Association Board has approved an increase to membership dues for the first time in 10 years. Membership is increasing $10 for an annual membership and $100 for a life membership. These dues increases will be implemented in the second half of the fiscal year and are expected to increase total membership revenue $49k in FY '16.

Growth in sponsorship revenue by securing sponsors for 2015 homecoming and implementing a second general "official sponsor of USF Alumni Association" program. This initiative is expected to generate a $59k (62%) increase in sponsorship revenue over 2015 forecast.

Recent focus on life membership program is anticipated to lead to approx $20k increase in revenue from operating dues, dividends, and donations in FY '16 as compared to FY '15. Circle of Excellence giving under the life membership program has had a 2x increase in the number of donors over the past fiscal year.

The Alumni Association has no anticipated capital expenditures during FY 2016.


Increase in membership dues causes a greater then anticipated decrease in membership renewals.

The projected increase in sponsorship revenue doesn't materialize.

Continued focus on life membership and the associated recurring revenue from the life member endowment distribution, as well as the benefit of decreased membership renewal expenses. The Association currently has 3,850 life members and is working to a goal of 7,500 life members by 2020.

Increasing the percentage of alumni members from the current 9.5% to 12% of the living alumni base.

Improve alumni engagement and participation at the chapter level by implementing an improvement program that provides for relevant "connection" activities. Further, establish a culture of giving through scholarships benefiting a local USF student with 20% of chapters and societies having established scholarship endowments.

Identify new sponsorships that will produce increased income.

USF Alumni Association, Inc.Annual Financial Plan for FY 2016




[ 16 ]



REVENUES Program Revenue-Membership $530 $481 $49 10 % $495 $456

Program Revenue 151 123 28 23 % 155 156

License Plate Revenue 401 398 3 1 % 414 394

Gifts & Donations 274 238 36 15 % 232 306

Investment Income (Loss) 195 174 21 12 % 170 153

Other: Foundation Support 675 717 (42) (6)% 727 714

Other: Royalties 480 430 50 12 % 431 423

Total Revenues $2,706 $2,561 $145 6 % $2,624 $2,602

EXPENSESSalaries & Benefits $1,475 $1,394 $81 6 % $1,452 $1,372

Scholarships & Fellowships 53 84 (31) (37)% 40 54

Contractual Services 31 27 4 15 % 137 24

Materials & Supplies 3 19 (16) (84)% 6 8

Program Services 929 841 88 10 % 778 834

Utilities/Repairs/Maintenance 5 5 0 0 % 5 5

Total Expenses $2,496 $2,370 $126 5 % $2,418 $2,297

OPERATING PROFIT BEFORE NON-CASH CHANGES $210 $191 $19 10 % $206 $305

Unrealized Investment Gains (Losses) 386 97 290 300 % 401 562


Total Non-Cash Changes $386 $97 $290 300 % $401 $562

NET OPERATING PROFIT $596 $288 $309 107 % $607 $867


INCOME STATEMENT

Variance

[ 17 ]




Net Operating Profit $596 $288 $309 107 % $607 $867


Unrealized Gain on Investments (386) (97) (290) (300)% (401) (562)

Change in operating assets/liabilities 104 154 (50) (32)% 161 (47)

Total Cash From Operating Activities $314 $345 $(31) (9)% $367 $258


Net (Purchases) Sales of Investments (309) (337) 28 8 % (365) (266)

Total Cash From Investing Activities $(309) $(337) $28 8 % $(365) $(266)



Principal Paid on Debt 0 0 0 % 0 0

Total Cash From Financing Activities $0 $0 $0 % $0 $0

CHANGE IN CASH 5 8 (3) (37)% 2 (8)

Cash, Beginning of Year 12 4 8 200 % 13 12

Cash, End of Year $17 $12 $5 42 % $15 $4



Variance

[ 18 ]


The Financing Corporation is the University's financing arm and is expected to provide low cost, low risk, long-term financing for the University's major capital projects.

List Key Drivers for the 2016 Financial Plan Over 2015 - Focus on Cash Flows and Adequacy of Reserves

The Financing Corporation is a conduit financing entity, which issues debt on behalf of the University, and which receives pledged revenues or lease payments from the University's major business units to pay debt service on their capital projects.

The $152 M refunding of the Financing Corporation's Series 2005A, 2005C and 2012A bonds produced a net present value debt service savings of $9 M over the remaining life of the bonds, and a reduction in risk for the Series 2012A bonds. The refunding resulted in lower debt service costs for fiscal year 2016.

The Corporation is not anticipating capital expenditures in 2016, but will continue to be responsive to the University's needs for attractive long-term capital financing.


Expectation for rising interest rates could affect the Corporation's anticipated refunding transactions in 2017.

The Corporation will continue to be responsive to the University's interest in pursuing alternative financing for capital projects. Alternative financing transactions could have an effect, positive or negative, on the University's credit ratings.

USF's tax-exempt borrowing rates could also be affected by proposed changes in the Federal Tax Code.

Maturities of the Health Series 2013A and 2013B privately placed bank loans were matched to expirations of interest rate swaps, creating an opportunity to convert $61 M of additional variable rate bonds to fixed rate debt in fiscal year 2017. The Corporation will likely issue an Invitation to Negotiate for refinancing terms from underwriters in 2016.

The Corporation is enhancing its processes to comply with the Dodd-Frank Act.

List Major DSO Initiatives that will Drive Operating Earnings for 2017 and 2018


USF Financing Corporation and USF Property CorporationAnnual Financial Plan for FY 2016


[ 19 ]



REVENUES USF housing system gross revenues $41,873 $41,454 $419 1 % $38,952 $38,752

USF Marshall Center lease revenue 2,449 2,663 (214) (8)% 2,663 2,661

USF athletics system lease revenue 1,940 1,949 (9) (0)% 1,948 1,957

Arena revenue 1,011 1,005 6 1 % 915 960

MSSC lease revenue 4,629 4,600 29 1 % 4,605 4,761

HPCC (CAMLS) lease revenue 1,858 1,856 2 0 % 1,859 1,857

Total Revenues $53,760 $53,527 $233 0 % $50,942 $50,948

EXPENSESUSF housing system operating expenses $20,928 $21,208 $(280) (1)% $19,298 $19,739

Management fee 526 540 (14) (3)% 540 532

Interest expense 15,124 16,051 (927) (6)% 15,224 15,312

Amortization of deferred charges 92 83 9 11 % 82 82

Write-off due to refunding of debt 0 118 (118) (100)% 0 338

Depreciation 9,396 9,387 9 0 % 9,383 9,380

General and administrative expenses 584 563 21 4 % 627 621

Total Expenses $46,650 $47,950 $(1,300) (3)% $45,154 $46,004

OTHER REVENUES (EXPENSES)Transfers (to) from DSOs/auxiliaries $(7,114) $(5,581) $(1,533) (27)% $(5,793) $(4,948)

Interest income 4 4 0 0 % 5 4

Total Other Revenues (Expenses) $(7,110) $(5,577) $(1,533) (27)% $(5,788) $(4,944)

OPERATING PROFIT BEFORE NON-CASH CHANGES $0 $0 $0 % $0 $0

INTO USF investment - unrealized gain 1,489 1,405 84 6 % 1,242 41

Change in fair value of swaps 0 1,657 (1,657) (100)% 0 3,413

Transfers (to) from affiliates to offset swaps 0 (1,657) 1,657 100 % 0 (3,413)

Total Non-Cash Changes $1,489 $1,405 $84 6 % $1,242 $41

NET OPERATING PROFIT $1,489 $1,405 $84 6 % $1,242 $41

Variance


INCOME STATEMENT

[ 20 ]




Net Operating Profit $1,489 $1,405 $84 6 % $1,242 $41


Amortization of Deferred Charges 92 83 9 11 % 82 82

Write-Off Due to Refunding of Debt 0 118 (118) (100)% 0 338

Depreciation 9,396 9,387 9 0 % 9,383 9,380

Net Amortization of Premiums / Discounts (103) (85) (18) (21)% (102) (102)

Change in Fair Value of Swap 0 (1,657) 1,657 100 % 0 (3,412)

Change in Fair Value of Equity Investment (1,489) (1,405) (84) (6)% (1,242) (41)

Adjustments for Changes in

Operating Assets and Liabilities 12,545 25,819 (13,274) (51)% 18,445 20,274

Total Cash From Operating Activities $21,930 $33,665 $(11,735) (35)% $27,808 $26,560


Capital Expenditures $0 $(260) $260 100 % $0 $(450)

Debt Proceeds - Reimbursement to USF 0 0 0 % 0 (20,000)

Net (Purchases) Sales of Investments (1,728) 1,532 (3,260) (213)% (1,515) (1,997)

Total Cash From Investing Activities $(1,728) $1,272 $(3,000) (236)% $(1,515) $(22,447)


Proceeds of Long-Term Debt $0 $0 $0 % $0 $20,000

Debt Proceeds - Refunding 0 149,822 (149,822) (100)% 0 62,505

Principal Payments - Refunding 0 (151,955) 151,955 100 % 0 (62,505)

Deferred Charges on Issuance of Debt 0 (939) 939 100 % 0 (193)

Security Pledged to Counterparty 0 (3,020) 3,020 100 % 0 1,330

Principal Payments (7,040) (10,815) 3,775 35 % (10,815) (9,801)

Interest Payments (13,162) (18,030) 4,868 27 % (15,478) (15,449)

Total Cash From Financing Activities $(20,202) $(34,937) $14,735 42 % $(26,293) $(4,113)

CHANGE IN CASH 0 0 0 % 0 0

Cash, Beginning of Year 3 3 0 0 % 3 3

Cash, End of Year $3 $3 $0 0 % $3 $3

Variance



[ 21 ]


The University of South Florida Research Foundation was established to promote, encourage, and enhance the research activities of University of South Florida faculty, staff and students. The Research Foundation provides a mechanism for the funding of licensed research and development activities. As a DSO, the Research Foundation provides broad and flexible financial mechanisms to administer private contracts and grants, including corporate and private foundation-sponsored programs. The Research Foundation assists the University in the commercialization of University inventions including license agreements, and receipt and distribution of royalties related to intellectual property. Net proceeds are used to further research and other endeavors at the University.


Increase in tenant occupancy within the Research Park and rent escalations per lease agreements will improve Rent Revenue by 4.7%

Expansion of the Incubator program facilities and services, has driven growth in the Incubator Program revenue in 2015 and FY2016 is projected to further increase by 3.1%. The number of participating companies is presently at 61 with additional forecasted growth of 10%.

Focus on positive cash flow generated by operations to insure we maintain adequate reserve funds to meet debt liquidity requirements, and funding for further expansion of the Research Park.

$758 thousand of tenant improvements may be expended to generate additional rent revenues if needed. If the leases are not awarded or the improvements are not required for lease incentive, these improvements will not be made.

$429 thousand of capital expenditures are included in the 2016 Plan for maintaining functionality of the property and buildings. These include projects designed to reduce operating utility costs, and preserving the research buildings within the Research Park, as Class A properties.


Market risk to forecasted Investment Returns could affect non cash Investment Gains.

Exiting of Draper Laboratory from USF Connect building.

Continued development of the Research Park remains a primary goal of the Research Foundation. Initiatives to market the Research Park and development of a speculative office and research mixed-used building with goal of generating future property rents and corporate research tenants are in the planning stage.

Continued program review to ensure the value provided to clients and the community is maximized. Renew and strengthen business partnerships.

Continued diligence in maintaining occupancy in existing Research Park buildings including renovation to accommodate the needs of new tenants.



USF Research Foundation, Inc.Annual Financial Plan for FY 2016


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REVENUES Rental Revenue $8,018 $7,659 $359 5 % $7,698 $7,755

Intellectual Property (IP) Revenue 2,500 2,697 (197) (7)% 2,700 2,431

Less - IP Revenue (on behalf of USF) (600) (750) 150 20 % (750) (1,030)

Incubator Program Revenue 1,676 1,626 50 3 % 1,594 1,521

NMR License Revenue 244 244 - 0 % 244 390

Economic Development Grant - 120 (120) (100)% 128 262

Other Revenues 161 133 28 21 % 108 171

Total Revenues $11,998 $11,727 $271 2.3 % $11,722 $11,500

EXPENSESSalaries & Benefits $1,302 $1,161 $141 12 % $1,170 $1,044

Contractual Services 212 204 8 4 % 191 149

Program Exp-IP, Incubator & Univ Support 1,694 1,221 474 39 % 1,575 1,578

Operations-Utilities, Repairs & Maintenance 3,381 3,310 72 2 % 3,308 2,972

Other Operating Expenses 46 45 1 2 % 47 62

Interest Expense 1,733 1,832 (99) (5)% 1,811 1,887

Depreciation & Amortization 2,920 2,895 26 1 % 2,913 2,823

Total Expenses $11,288 $10,667 $622 6 % $11,015 $10,517

OPERATING PROFIT BEFORE NON-CASH CHANGES $710 $1,061 $(351) (33)% $707 $984

Unrealized Investment Gains (Losses) 1,842 499 1,343 269 % $1,902 $3,373

Other Non-Operating Income - - - % - 435

Total Non-Cash Changes $1,842 $499 $1,343 269 % $1,902 $3,808

NET OPERATING PROFIT $2,551 $1,560 $992 64 % $2,609 $4,792


Variance

INCOME STATEMENT

[ 23 ]




Net Income $2,551 $1,560 $992 64 % $2,609 $4,792

Adjustments to reconcile net income to net

cash provided by operating activities:

Adjustments for Non-Cash Revenue/Exp:

Depreciation / Amortization Expense $2,920 $2,895 $26 1 % $2,913 $2,823

Non Cash Expenses 158 163 (5) (3)% 13 401

Non Cash Investment Gain (1,842) (499) (1,343) (269)% (1,902) (3,373)

Non Cash Revenue (244) (244) - 0 % (244) (762)

Change in Assets and Liabilities (net) - - - 0 % - (668)

Cash Provided From Operating Activities $3,544 $3,874 $(330) (8.5)% $3,390 $3,212


Capital Expenditures $(1,202) $(820) $(382) (47)% $(820) $(1,159)

Net Sales (Purchases) of Investments - (500) 500 100 % - -

Transfer from Venture Investment Fund 300 300 - 0 % 500 420

Seed Capital Funding (300) (300) - 0 % (500) (420)

Total Cash Used for Investing Activities $(1,202) $(1,320) $118 9.0 % $(820) $(1,159)


Principal Paid on Debt $(1,680) $(1,630) $(50) (3)% $(1,630) $(1,580)

Total Cash From Financing Activities $(1,680) $(1,630) $(50) (3.1)% $(1,630) $(1,580)

CHANGE IN CASH 663 924 (262) (28)% 940 473

Cash, Beginning of Year 3,194 2,270 924 41 % 2,270 1,797

Cash, End of Year $3,857 $3,194 $663 21 % $3,210 $2,270


Variance


[ 24 ]


The University of South Florida Foundation aids and promotes excellence in the educational, research and service activities of USF by seeking, receiving and administering private gifts for the benefit of the University. We enhance resources that support the strategic objectives of the University of South Florida System within a culture of cooperation and collaboration.


The Foundation completed the first phase of a comprehensive campaign to raise funds for USF to attract world-class scholars and students, build state-of-the-art academic and athletic facilities, and support groundbreaking research activities exceeding the $600 million goal with over $621 million raised. The Foundation has entered into a second phase of this Campaign with a goal to bring the overall Campaign total to $1 billion. This phase of the Campaign will continue to focus on our students and faculty by strengthening the academic environment, supporting research, and making the dream of a college education more affordable. The Foundation has raised $856 million through the 3rd quarter of fiscal year 2015.

The Foundation's Investment Committee continues to actively monitor the performance and liquidity of our asset allocation and investment managers and take action when appropriate to enhance the growth and benefit of the endowment to USF over a long-term horizon. Our short-term and long-term returns are consistently in the top quartile amongst our peers. Our goal is to grow the endowment by 8% next year through continued solid investment returns and gifts.

The Foundation supports program activities of the University for USF faculty & staff, student scholarships, research initiatives, and capital projects according to donor restrictions. These expenses can be funded by current gifts estimated on the annual plan, existing balances in accounts from gifts and distributions received in prior years, or projected endowment distributions during the year of about $16 million. With the assistance of the Foundation, spending from these sources is directed by the colleges and units designated by our donors as the beneficiaries of their gifts.

The USF Foundation has facilitated the purchase, financing and lease of property adjacent to the campus of USF St Pete which will be used for research labs in the USF St Pete Biology program. In addition, the property will be used as a temporary staging area for contractors building the USFSP Kate Tiedemann College of Business and ultimately parking for the college.


The budget reductions experienced by the USF System have led to fluctuations in the utilization of Foundation funds. While Foundation sources of support like the endowment provide a small percentage of the System's overall budget, this source is critical for many University programs while providing a funding catalyst for others to achieve the University's goals and aspirations.

The Investment Committee prudently considers the risks associated with each asset class in addition to the return when conducting its annual review of the endowment asset allocation. The goal of this process is to minimize the volatility of the investment performance and provide a more consistent, reliable stream of income to the University.

University support of the Foundation's operating budget is essential to continue the high level of fundraising demonstrated during the Unstoppable Campaign. Good financial stewardship of this support and other available resources is important to the Foundation's success. The Foundation's cost to raise a dollar remained low at 16 cents per dollar during the length of the Unstoppable Campaign. In other words, for every dollar invested in fundraising during the Campaign, the Foundation has raised over six dollars in return.



USF Foundation, Inc.Annual Financial Plan for FY 2016

[ 25 ]

State funding from the suspended Major Gifts matching program continues to remain unfunded by the legislature with more than $20 million in match funds to enhance the endowment once received.

The Foundation will continue to support the University's goal surrounding its Student Success initiative with fundraising for scholarships and fellowships. During the 2nd phase of the Campaign, the Foundation has secured several transformational gifts to the university including naming of the Muma College of Business, the Kate Tiedemann College of Business at USF St Pete, the Lynn Pippenger School of Accountancy and the Zimmerman School of Advertising and Mass Communications. These gifts will attract faculty and students globally and provide for greater learning and career opportunities for students.

Research and Innovation is continually supported through the Foundation's efforts in securing philanthropic, private research grants. During the Unstoppable Campaign approximately $38.8 million in philanthropic grants were received to support research efforts in areas such as Health, Engineering and Education. In addition, Endowed Chair and Professorship funds provide a predictable, steady stream of earnings to support the Chair or Professors' research efforts in perpetuity.

Cultivating university partnerships, both public and private, is a goal of the Foundation. The generosity of our donors ensures an environment rich in research, teaching, learning and discovery. Our partnership with the Tampa Bay Lightning has made the Sports and Entertainment Management Program possible. This program benefits graduate students who will become the future leaders of the sports management field. The Lightning have provided financial support, but also provide access to their executives for real-world learning, classroom space at their facility and paid internships for many of the students. Keysight Technologies' gift of software provides an advantage to our Engineering students by allowing them to learn to use industry-leading software while still in school.

The Foundation enhances the economic base for USF through the annual support generated from the Foundation's endowment. The endowment provides over $16 million each year to support USF faculty, students and programs. The endowment along with other gifts for current operations provides over $100 million in annual support to USF.


[ 26 ]



REVENUES Gifts & Donations $132,094 $128,106 $3,988 3 % $69,500 $138,756

Investment Income (Loss) 6,023 7,114 (1,091) (15)% 7,114 5,432Campaign Support 3,683 3,183 500 16 % 3,683 3,362

Other Revenues 2,110 2,424 (314) (13)% 2,183 2,404

Total Revenues 143,910 140,827 3,083 2 % 82,480 149,954

EXPENSES

Program Services

Salaries & Benefits $16,250 $15,777 $473 3 % $16,182 $17,936

Scholarship & Fellowships 6,694 6,499 195 3 % 6,671 7,020

Service & independent contractors 4,459 4,329 130 3 % 1,994 3,576

Supplies 3,015 2,927 88 3 % 2,985 4,002

Gift in kind transfers 85,012 85,012 - 0 % 29,228 113,426

Other Transfers & Expenses 10,572 7,677 2,895 38 % 10,572 24,473

Total Program Service Expense $126,002 $122,221 $3,781 3 % $67,632 $170,433

Fundraising & Operating Expenses

Salaries & Benefits $4,712 $4,575 $137 3 % $4,575 $3,426

Service & independent contractors 918 717 201 28 % 1,119 1,080

Other Transfers & Expenses 2,192 2,308 (116) (5)% 2,075 4,338

Total Fundraising & Operating Expenses 7,822 7,600 222 3 % 7,769 8,844

Total Expenses $133,824 $129,821 $4,003 3 % $75,401 $179,277OPERATING PROFIT BEFORE NON-CASH CHANGES $10,086 $11,006 $(920) (8)% $7,079 $(29,323)

Unrealized Gains (Losses) 36,081 9,020 27,061 300 % 37,445 69,522


Total Non-Cash Changes $36,081 $9,020 $27,061 300 % $37,445 $69,522

NET OPERATING PROFIT $46,167 $20,026 $26,141 131 % $44,524 $40,199


Variance

USF Foundation, Inc.Annual Financial Plan for FY 2016

[ 27 ]




Net Operating Profit $46,167 $20,026 $26,141 131 % $44,524 $40,199

Adjustments for Non-Cash Activities:Investment (gains) losses (36,081) (9,020) (27,061) (300)% (37,445) (69,518)

Change in assets & liabilities, net (15,967) (14,534) (1,433) (10)% (14,567) 4,834

Total Cash From Operating Activities $(5,881) $(3,528) $(2,353) (67)% $(7,488) $(24,485)


Capital Expenditures $0 $(6,200) $6,200 100 % $0 $0

Net (Purchases) Sales of Investments 14,261 14,061 200 1 % 14,761 26,369

Interest dividends reinvested (7,114) (8,839) 1,725 20 % (7,115) (6,313)

Total Cash From Investing Activities $7,147 $(978) $8,125 831 % $7,646 $20,056


Proceeds of Long-Term Debt $0 $6,200 $(6,200) (100)% $0 $2,460

Principal Paid on Debt (480) (80) (400) (500)% 0 0

Total Cash From Financing Activities $(480) $6,120 $(6,600) (108)% $0 $2,460

CHANGE IN CASH 786 1,614 (828) (51)% 158 (1,093)

Cash, Beginning of Year 2,085 471 1,614 343 % 1,875 1,564

Cash, End of Year $2,871 $2,085 $786 38 % $2,033 $471

USF Foundation, Inc.


Variance

Annual Financial Plan for FY 2016

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