The Board of Visitors Finance Committee met Friday to discuss a proposed research data center, approve the transfer of ownership of the Virginia Guesthouse to the University of Virginia Foundation and review financial planning for various capital projects and high-value contracts. The Committee also received updates on the University’s endowment performance and state funding allocations from the Virginia General Assembly.

The Finance Committee reviews and approves the annual budget, setting of tuition rates and the investment of the endowment. It is also responsible for overseeing funding of research programs and strategic partnerships for the University. 

During the meeting, the Committee reviewed plans for a new University research data center, which would provide additional computing capacity for faculty and researchers. Kelly Doney, University vice president and chief information officer, said that the current data center on Emmet Street is near maximum capacity, which has resulted in delays for faculty.

“We can already see that our researchers are experiencing significant delays in their ability to access the computational resources, and this is a big factor in terms of faculty recruiting and retention. We want to be competitive with other schools,” Doney said.

The proposed $72 million facility, to be located at Fontaine Research Park, would have an initial 4 megawatt capacity to meet immediate energy needs, and could be expanded to 16 megawatts in the future — the University’s current data center has a capacity of approximately 1.5 megawatts. The facility would be designed for long-term scalability and energy efficiency, leveraging geothermal heating and cooling, which uses underground temperatures to help regulate temperature, from the adjacent Fontaine Energy Plant. 

Josh Baller, associate vice president for research computing, explained that alternative options were evaluated but found to be significantly more expensive. Alternative options that were reviewed included leasing commercial data center space or using cloud computing —the delivery of computing services such as storage, processing power and software — over the internet instead of using local servers or personal computers.

“A co-location facility would result in substantially higher costs over time,” Baller said. “On an apples-to-apples comparison between the orange line [cloud cost per year] on the top and the gray line [University cost per year] on the bottom, there’s a five times difference on the annual cost of this hardware to do it in the cloud versus do it on-premise.”

The Committee has not yet approved this project — according to Baller, the previous data center should still be able to operate for another two years. 

The Committee approved the transfer of ownership of the Virginia Guesthouse to the U.Va. Foundation, which handles long-term real estate and financial planning for the University. The 223,000-square-foot hotel and conference center, located in the Ivy Corridor, is expected to open in late 2025. The University will continue to own the land, while a taxable subsidiary — a separate, for-profit entity owned by the U.Va. Foundation — will manage the hotel and conference operations.

According to Jennifer Wagner Davis, executive vice president and chief operating officer, this move would increase financial and operational efficiency.

“As you’ve been able to observe it as you’re driving down Ivy Road, it is nearing completion. We are slated to open this facility in late 2025,” Davis said. “…it is our belief that this is not one of our core competencies, and as such, we’re recommending the University of Virginia Foundation oversees the Virginia Guest House management and operations.”

According to Davis, UVAF will assume financial responsibility for the Guesthouse’s operational costs and potential profits, while maintaining a joint arrangement with the University.

In addition to this approval, the Committee reviewed plans for the Mail Order & Specialty Pharmacy Expansion, which will allow UVA Health’s pharmacy to expand its mail order and specialty medication services. The $5.9 million project, fully funded by Medical Center operating funds, will renovate an existing space at North Fork Research Park to accommodate increased demand for specialty medication services such as medications that require special handling or administration.

Davis said the pharmacy expansion would be immediately profitable for U.Va. Health.

“The pharmacy programs make millions of dollars each year for U.Va. Health,” Davis said. “Incrementally…it will allow us to expand operations.”

The Committee also approved the University’s entrance into multiple high-value contracts, all of which needed formal approval due to each exceeding $5 million annually. Among these were contracts with Ernst & Young for strategic consulting, a care benefits provider for University childcare services and a system implementation firm to streamline and unify technology systems used across the University’s academic, medical and community health divisions.

Additionally, the Committee approved two Medical Center contracts — one with CareFusion Solutions, LLC for IV pump system remediation, which involves repairing or upgrading equipment to meet safety and performance standards, and another with Siemens Medical Solutions USA, Inc. for MRI equipment replacement and radiology improvements.

The meeting concluded with a biannual report on the University’s endowment, presented by Robert Durden, chief executive officer and chief investment officer of UVIMCO, a separate entity that manages the University’s endowment fund. The Long-Term Investment Pool, a portion of the endowment fund invested for long-term financial growth, increased by $1.4 billion in 2024, reaching $14.7 billion by year-end.

Durden explained that the University’s endowment performance was driven by multiple investment strategies, mostly composed of assets that can be easily converted into cash, and that the fund as a whole saw growth over the previous year.

“Liquid equities are a point of emphasis for our team right now,” Durden said. “Assets under management [were] a little under $15 billion last year, [and] the long-term pool for the calendar year 2024 was up 10 percent, generating just under $1.4 billion of investment gains.”

The investment portfolio remains heavily weighted toward private investments — holdings in privately owned companies, real estate or other assets not traded on public stock markets — which make up approximately 45 percent of the total fund. Over the past two decades, the Long-Term Pool has consistently outperformed benchmarks that measure the broader performance of the market as a whole. According to Durden, $1 invested twenty years ago in the fund is now worth $6.42, compared to $4.17 in a passive portfolio following market trends.

Durden also provided insights into the University’s asset allocation strategy and risk management approach.

“Our core mission is to be the best possible financial partner to U.Va.,” Durden said. “90 percent of the time, [that] takes the form of generating great returns and being responsible stewards of the endowment.”

The Committee also received an update on the Virginia General Assembly budget outcomes, which included funding for the Commonwealth BioAccelerator, a state-funded biotech initiative developed through a partnership between U.Va. and CvilleBioHub to support early-stage life sciences companies. They also discussed the impacts of additional financial aid but limited new operating support.

One key financial challenge highlighted for the University budget was a 3 percent salary increase and 1.5 percent bonus for University employees proposed by the General Assembly, which would require the University to cover 84 percent of the cost, with only 16 percent funded by the Commonwealth. These salary increases would rely on University income from tuition fees — Davis said that following the Assembly’s proposal would be a challenge for the budget as the University moves into the next fiscal year. 

“Most notably, the largest lever [financial tool to manage the budget] is tuition, both for in-state and out-of-state, [which] has historically been approved by the members of the General Assembly,” Davis said. “This is obviously a fairly sizable cost driver in the [fiscal year 2026] budget that we are grappling with as we speak.”

Additionally, the Committee approved funding for the Center for the Arts project, pending the Governor’s final budget signature. The Center for the Arts is a planned facility in the Emmet-Ivy Corridor that will integrate the Performing Arts Center, Fralin and Kluge-Ruhe museums, music department, and Dance Program into a unified space for artistic collaboration and public engagement. Funded in part by a $50 million gift, the project aims to provide state-of-the-art performance, exhibition and educational spaces in line with the University 2030 Plan initiatives to enhance creativity and community connection.

The Finance Committee will reconvene in June, where it is expected to make further decisions regarding the data center project and other initiatives related to the University’s budget and financial initiatives.