University of Louisville Foundation President’s Report Dr. James R. Ramsey University of Louisville December 19, 2011

2011 Is Almost Over!

Expectations for good growth Things we were not thinking about last year at this time –Earthquakes/floods –Fukushima Daiichi Plant –European implosion –US downgrade –Gadhafi, Mubarak & Berlusconi gone 2011 (D ID N OT E XACTLY G O A CCORDING TO P LAN )

Long term unemployed (up to 39.4 weeks mean) Watching events in southern Europe Youth unemployment Underwater homeowners/current on mortgage Stagnant incomes Seniors living on savings Policy uncertainty –Businesses cash Healthcare Immigration Environment Other regulation S HOULD W E S TILL B E W ORRIED ?

W E K NOW T HAT N ATIONALLY T IMES H AVE B EEN U NPRECEDENTED US GDP

US E MPLOYMENT -

K ENTUCKY HAS NOT BEEN IMMUNE TO THOSE IMPACTS Nonfarm employment in thousands Notes – 1 – Most people employed since January – Still 74,000 fewer people working today

State General Fund Revenue (funds higher education – or is supposed to S TATE P OLICY D ISCUSSION FY08FY09FY10FY11FY12FY13FY14 General Fund 1.1 a-2.7 a-2.4 a6.5% a2.8% e1.8% e2.4% e %

Expenditures —Some History % —Structural Imbalance still exists 2% cut FY12 S TATE P OLICY D ISCUSSION FY Medicaid32.1% Health Insurance Schools33.1% State Government14.6% KTRS40.9% KERS75.0% Debt Service14.5% Corrections13.0% Student Financial Aid14.6% “Higher Ed”-4.8%

Tough session/budget UofL supports CPE request –M&O –Research money –“Bucks” –Performance –Funding 6 year capital plan M ESSAGES

U OF L I T HAS BEEN TOUGH – REAL TOUGH B UT MOVING FORWARD

S OLID R ESULTS – O VER A D ECADE OF P ROGRESS * 1998 Reporting Year 2002 Reporting Year 2011 Reporting Year Average ACT score of all entering freshmen (fall semester) ‐ year graduation rate 30.1%33.0%50.8% Undergraduate degrees awarded 1,7341,8492,618 Number of students living on campus (fall semester) 1,7252,3635,100 *2011 data are considered preliminary pending final audit and reconciliation10/11/2011

S OLID R ESULTS – O VER A D ECADE OF P ROGRESS * 1998 Reporting Year 2002 Reporting Year 2011 Reporting Year Doctoral degrees awarded Startup companies (cumulative) 1636 Patents (cumulative) Applications filed ,203 Formal patents issued *2011 data are considered preliminary pending final audit and reconciliation10/11/2011

S OLID R ESULTS – O VER A D ECADE OF P ROGRESS * 1998 Reporting Year 2002 Reporting Year 2011 Reporting Year License option agreements (cumulative) Research expenditures $39.1M$80.9M$195.5M Endowed chairs and professorships Endowment $317.0M$478.9M$773.3M *2011 data are considered preliminary pending final audit and reconciliation10/11/2011

1.Continuing re-engineering of processes and expense management —Enter consortium with other institutions to achieve greater leverage & efficiencies for prescription drug services —Reduce paper use, leverage technology —Energy management —Self insurance —Wash windows every other year S EVEN S TRATEGIES FOR S UCCESS

2.Aggressively improving balance sheet management, with an emphasis on converting underperforming assets S EVEN S TRATEGIES FOR S UCCESS Churchill Downs Inc. to be first ShelbyHurst office tenant

3.Increasing clinical income to support education and research i.e. The Merger S EVEN S TRATEGIES FOR S UCCESS

4.Increasing contract research and commercialization income - Also license income other intellectual property S EVEN S TRATEGIES FOR S UCCESS Total Research Expenditures 1998$39.1M 2011$195M

5.Creating private sector partnerships S EVEN S TRATEGIES FOR S UCCESS Cardinal Towne

6.Enhanced fund raising S EVEN S TRATEGIES FOR S UCCESS

7.Being creative in expanding the research mission through innovative financing tools like the tax increment financing plan S EVEN S TRATEGIES FOR S UCCESS 1.HSC TIF 2.Belknap TIF

R OLE OF ULF Shelby Campus KY Trailer Nucleus –TIF (1) –TIF (2) –TIF (3) Discretionary $ (LOC) Change payout These are just a few

We have more to do! Thank you!