A meeting of the Finance Committee of the Board of Trustees convened at 9:45 a.m. on Friday, December 3, 2021, in Room 326 of Stewart Center on the campus of Purdue University in West Lafayette, Indiana. Everyone in the room was wearing a mask amid the ongoing COVID-19 pandemic.
Committee members present were: Don Thompson, chair; Sonny Beck; Malcolm DeKryger; and Michael Klipsch. All other trustees were present: Michael Berghoff; JoAnn Brouillette; Vanessa Castagna; Theresa Carter; Mark Gee; and Gary Lehman.
Officers and administrators in attendance were: Mitch Daniels, president; Jay Akridge, provost and executive vice president for academic affairs and diversity; Chris Ruhl, chief financial officer and treasurer; Jim Almond, senior vice president, assistant treasurer, and assistant secretary; Steve Schultz, general counsel; Janice Indrutz, corporate secretary and senior executive assistant to the Board; Ron Elsenbaumer, chancellor of Purdue Fort Wayne; and Tom Keon, chancellor, Purdue Northwest.
I. APPROVAL OF MINUTES
Upon proper motion duly made and seconded, the Finance Committee voted unanimously to approve the minutes of its meeting convened on August 6, 2021.
II. FINANCIAL UPDATE FROM TREASURER RUHL
Treasurer Ruhl illustrated that, despite a decade-long trend of significantly rising institutional debt among all colleges and universities, Purdue’s institutional debt had actually decreased by 14% during that time. He also noted that Purdue was one of seven AAA-rated public universities. Mr. Ruhl was pleased to provide this example of the university’s strong fiscal position ahead of Ms. Kathy Thomason’s review of the FY21 audited financial statements during the meeting of the Audit and Enterprise Risk Committee which would follow this meeting. Mr. Ruhl informed the Committee that FY22 was shaping up to be a positive year fiscally, and he expressed his belief that this strong fiscal position should be taken advantage of for the benefit of students, faculty, and staff. He then recommended the following actions for the Committee’s approval, with subsequent full Board approval: $500 faculty and staff appreciation payment payable in December 2021; for FY23, a 4% merit raise pool for faculty and staff and an additional 1% salary pool to address workforce recruitment and retention in specific areas; for FY 23, no room and board rate increases for on-campus residence halls on the West Lafayette campus for the 10th consecutive year; and for FY24, extend the tuition and fee freeze on the West Lafayette campus for an 11th year.
All members of the Board joined the Committee in discussing Treasurer Ruhl’s recommendations. In response to questions from Vice Chairman Lehman and Trustee Klipsch, Mr. Ruhl said, ten years ago, Purdue had the highest housing rates in the Big Ten but they were now the lowest, and the merit pool recommendations were equal to or above those of Big Ten peers. Trustee DeKryger remarked that it was “very appropriate to take care of the people who take care of our business.” Vice Chairman Lehman expressed his belief that Purdue was the first university to look at the total cost of attendance and asked if peer institutions were also looking at total cost of attendance, to which President Daniels responded that they were careful about tuition increases but had not paid attention to fees and housing costs, which, he said, had risen faster than tuition itself. In response to a question from Chairman Berghoff, Mr. Ruhl said the value of the appreciation payment and merit pool was $50 million.
Trustee Thompson reviewed all the recommendations outlined by Mr. Ruhl. Upon proper motion duly made and seconded, the Finance Committee voted unanimously to recommend full Board approval of the recommendations. A copy of Mr. Ruhl’s presentation slides were filed with the minutes.
Trustee Thompson commended the deans, colleges, finance team, and administration for their successful efforts and said “it took everyone to be able to do this.” Trustee Klipsch added that it was phenomenal given the university was able to erect new buildings at the same time.
III. APPROVAL OF 2022-2023 STUDENT HOUSING RATES
Treasurer Ruhl took the opportunity to highlight the broader West Lafayette campus housing plans for Fall 2022 and reiterated the proposal for a 10th consecutive year of no room and board rate increases for on-campus residence halls on the West Lafayette campus. Brief discussion about this proposal was concluded by Mr. Ruhl saying that the university had successfully managed to the stated priority. Mr. Ruhl also informed the Committee that sufficient on-campus residence hall housing would be reserved to accommodate all first-year students who desired to live on campus, and additional housing capacity would be provided for through expanding the master lease program to lease apartments close to campus.
Assistant Treasurer Almond followed Treasurer Ruhl to summarize the proposed housing rates for the regional campuses. He reminded the Committee that, with regard to Purdue Northwest, housing was only available on the Hammond campus, with 744 beds provided in apartment-style configurations. Mr. Almond proposed a 2% rate increase for the Purdue Northwest Hammond campus and noted that Purdue Northwest had not had an average increase in housing rates in four years of the past seven-year period. Mr. Almond recognized Purdue Northwest for successfully balancing the revenues and expenses of its housing operations. With regard to Purdue Fort Wayne, Mr. Almond informed the Committee that PFW currently provided 1,204 beds in apartment-style configurations but was also planning to lease 144 beds in the community to meet demand. He said more undergraduates were full-time and looking for on-campus housing experience, and the campus had recruited students from a broader geographical area. Mr. Almond proposed a $200 per bed increase for the 2022-2023 and 2023-2024, which was an average increase of approximately 3.25% each year, saying the increased revenue would be targeted to ongoing repair and maintenance due to higher utilization and age of the facilities and enhanced student programing for residents. Mr. Almond pointed out that the Fort Wayne campus had not had an average increase in housing rates in five years of the past seven-year period. He concluded by also requesting flexibility with the rates to allow for demand uncertainties in temporary or permanent housing for 2022-23 for all campuses. Mr. Almond also introduced the Committee to Mr. Glen Nakata, vice chancellor for financial and administrative affairs at Purdue Fort Wayne, who, he said, had actively participated in preparing the proposal for the Fort Wayne campus.
Trustee Thompson affirmed Mr. Almond’s request for rate flexibility with the establishing rates to meet temporary or permanent housing demand if additional space is needed on each campus. Upon proper motion duly made and seconded, the Finance Committee voted unanimously to recommend full Board approval of the proposed 2022-2023 student housing rates. Supporting materials were filed with the minutes.
IV. ENDORSEMENT OF CHANGES TO INVESTMENT POLICY
Treasurer Ruhl respectfully requested the Committee’s endorsement of small changes to the university’s investment policy statement related to asset allocation. He pointed out that Mr. David Cooper, chief investment officer for the Purdue Research Foundation, was present. Mr. Ruhl said it was good practice to review the investment policy every three to five years, with changes last made in 2016, and he outlined the proposed changes to the current policy and the rationale for each. He informed the Committee that the proposed changes had been approved by the Investment Committee, the Purdue Research Foundation Audit and Finance Committee, and the full Purdue Research Foundation Board. Trustee Thompson concurred that it was important to review the policy periodically because the markets do change.
Upon proper motion duly made and seconded, the Finance Committee voted unanimously to recommend full Board endorsement of the proposed changes to the investment policy. Supporting materials were filed with the minutes.
V. ADJOURNMENT
By consent, the meeting adjourned at 10:11 a.m.