ML092590298
| ML092590298 | |
| Person / Time | |
|---|---|
| Site: | University of Missouri-Columbia |
| Issue date: | 09/14/2009 |
| From: | Rhonda Butler Univ of Missouri - Columbia |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| Download: ML092590298 (86) | |
Text
Research Park Research Reactor Center Center Columbia, MO 65211 WI University of Missouri-Columbia Missouri-Columbia PHONE (573)
(573) 882-4211 (573) 882-6360 FAX (573)
September 14, 2009 U.S.
u.S. Nuclear Nuclear Regulatory Commission Commission Attention: Document Control Desk Desk Station PP1-37 Mail Station 1-37 Washington, DC 20555-0001 _
Reference:
Reference:
Docket 50-186 University University of Missouri-Columbia Missouri-Columbia Research Research Reactor Reactor Amended Facility License R-103 University of Missouri-Columbia Enclosed will find the University Enclosed Missouri-Columbia Research Reactor's responses to the U.S. Nuclear Regulatory Commission's Commission's (NRC) request for additional additional information, information, dated July 10, 2009, regarding our renewal request for Amended Facility Operating Operating License License R-103, which was submitted submitted to the NRC on August August 31, 31, 2006, as supplemented.
If you have any questions, please contact Leslie P. Foyto, the facility Reactor Manager, at (573) 882-5276.
(573)
Sincerely,
~_;4~
Ralph A. Butler, P .E.
P.E.
Director Director -"
RAB/djr RAB/djr Enclosures Enclosures
_P:N or**.
ox" PIZ MARGEE P. STOUT MyMARGEE
¢*missi Fvip*
My ~Ission Expinls March 24,2012 Man:h 24, 2012
.siMon omSEAm Montgomery County 14 Commission #08,51143 Commission #08511436 Aoao AN AN EQUAL OPPORTUNITY/ADA INSTITUfION EQUAL OPPORTUNTIY/ADA INSTITUTION W~
Research Reactor Research Reactor Center Center Research Park Research Columbia, MO 65211 Columbia, 65211 University of Missouri-Columbia University Missouri-Columbia PHONE PHONE 882-4211 (573) 882-4211 (573)
FAX (573)
FAX 882-6360 882-6360 September 14, 2009 u.s. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Attention: Document Control Attention: Control Desk Mail Station PI-37 P1-37 Washington, DC 20555-0001
REFERENCE:
Docket 50-186 Docket 50-186 University of Missouri - Columbia University Columbia Research Research Reactor Reactor Amended Facility Amended Facility License R-103 R-I03
SUBJECT:
Written communication as specified by 10 CFR 50.4(b)(1)
Written regarding the response to the 50.4(b)(1) regarding "University of Missouri at Columbia "University Columbia - Request for Additional Information Re: License Renewal (TAC No. ME1580),"
Renewal ME1580)," dated July 10, 10, 2009 On August 31, University of Missouri-Columbia Research Reactor 31, 2006, the University Reactor (MURR)
(MURR) submitted request to submitted a request the U.S. Nuclear Regulatory Regulatory Commission (NRC) (NRC) to renew Amended Amended Facility Operating Operating License License R-103.
R-I03.
On July 10,2009, 10, 2009, the NRC requested requested additional information and clarification clarification regarding the renewal request in in the form of four (4) questions. Those questions, questions, and the MURR's MURR's responses to those questions, are attached.
If there are questions regarding regarding this response, please contact me at (573)
(573) 882-5276.
882-5276. I declare under penalty of penalty of perjury that the foregoing is true and correct.
ENDORSEMENT:
Sincerely, Reviewed and Approved,
~:'-vt-eslie PFoyto Reactor Manager Reactor Manager (
Ralph A. Butler, P.E.
Director Enclosed: Uni~ersity of Missouri 2008 Financial University Financial Report Statement of Intent, dated August 17, 2009 17,2009 Letter Letter from the Office Office of General Counsel, University of Missouri, dated September September 1, 20092009 Section 70.010, "General Execution of Corporate or Board 70.010, "General Board Instruments,"
Instruments," University University of Missouri Collected Collected Rules and Regulations P04" MARGEE P.STOUT NW March 24,2D12 xc: Reactor Advisory Committee Committee .. SEALon~n MmrCourdy Reactor Safety Subcommittee ýO,,FCommisson #08511438 Dr. Robert Robert Duncan, Vice Chancellor for Research Research Mr. Craig Basset, U.S. NRC Mr. Alexander Alexander Adams, U.S. NRC AN AN EQUAL OPPORTUNITY/ADA OPPORTUN1TY/ADA INSTITUflON INSTITUTION
1.
- 1. The Us.U.S. Nuclear Nuclear Regulatory Regulatory Commission Commission (NRC)
(NRC) staff will analyze analyze the the financial financialstatements statementsforfor the currentyear, current year, which which are are required requiredby 10 CFR CFR 50.71 (b), to 50.71(b), determine if the to determine the applicant applicant is financially financially qualified to qualified to operate operate the MURR.
MURR. Since Since MU'sfinancial MU's financialstatements statements included included with the application applicationare are date, please out of date, pleaseprovide provide a copy copy of the the latest latestfinancial financialstatements statementsforfor the NRC NRC staff's staff's review.
review.
Enclosed you will find the most recent financial report for the University of Missouri, which provides an overview of the financial position and activities of the University for the fiscal years that ended June 30, 2008 and 2007.
This report includes five financial statements:
- The three financial statements for the University of Missouri System and its Aggregate Aggregate Discretely Presented Component Unit(s) include the Statement of Net Assets, the Statement of Revenues, Expenses, and Changes in Net Assets, and the Statement Statement of Cash Flows.
- The two financial statements for the University'sUniversity's fiduciary funds, which include the Retirement and the Other Post-Employment Post-Employment Benefits Trust Funds, are the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets.
The University's financial statements are prepared in accordance accordance with U.S. generally generally accepted accounting principles as prescribed prescribed by the Governmental Accounting AQcounting Standards Board (GASB),
which establishes financial reporting reporting standards for public colleges and universities.
- 2. Pursuant Pursuant to 10 CFR CFR 50.33(/)(2),
50.33(9(2), "[tihe
"[tJhe applicant shall submit estimates applicant shall estimates for total total annual annual operating operating costs for each of thefirstfive for each the first five years operationsof the facility.
years of operations facility."" Since the information information included included in applicationis now out of date, the application date, please provide the following additional please provide additionalinformation:
information.-
(a) Projected Projected operating operating costs of the MURR MURRfor for each of the years years FY11 FYll thru FY15 (the firstfirst five year year period after period after the projected projected license renewal).
renewal). .
TABLE 1 FISCAL YEAR 2011-20152011-2015 PROJECTED EXPENDITURES EXPENDITURES (in thousands thousands of dollars)
FY2011 FY 2011 FY 2012 FY2013 FY 2013 FY 2014 2014 FY 2015 2015 Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Salaries/Wages Salaries/Wages & Benefits 8,901 9,168 9,443 9,727 10,018 10,018 Supplies/Services/Equipment Supplies/Services/Equipment < $5K 2,651 2,651 2,731 2,731 2,813 2,813 2,897 2,984 2,984 Debt Debt Service Service 934 934 934 934 934 934 Reserves Reserves 690 711 732 754 777 777 Grants Grants 2,800 2,800 2,884 2,884 2,971 2,971 3,060 3,151 Other Other 948 976 1,005 1,005 1,035 1,035 1 067 1,067 TOTAL TOTAL EXPENDITURES EXPENDITURES $$16,924 16,924 $17,404
$17,404 $17,898
$ 17,898 $18,407
$18,407 $18,931
$ 18,931 Note:
Note: The The University University of Missouri fiscal yearyear (FY (FY XXXX)
XXXX) begins July July 1 and ends June June 30.
Page 22 of of99
(b)
(b) MU's source(s)
MU's source(s) of offunding funding to cover the operating operatingcosts for the above fiscal fiscal years.
years.
TABLE 2 FISCAL YEAR 2011-2015201i-2015 PROJECTED REVENUES REVENUES (in thousands (in thousands of dollars)
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 2015 Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Campus Allocation Campus Allocation 3,507 3,612 3,721 3,721 3,832 3,832 3,947 Service Operations Operations 8,526 8,782 9,046 9,317 9,596 Partnerships Partnerships 52 53 55 56 58 58 Grants Grants 2,800 2,884 2,971 2,971 3,060 3,151 Other 1,303 1303 1,342 1,382 1,382 1,424 1,466 1,466 TOTAL REVENUES REVENUES $ 16,188 $ 16,674
$16,674 $17,174
$17,174 17,689
$$17,689 18,220
$$18,220 "Campus Allocation" "Campus Allocation" represents an annual allocation of the State of Missouri Missouri funds for the University. "Service "Service Operations" Operations" is primarily based on the sale of irradiation, processing primarily based processing and analytical analytical services. Revenue is subject to market fluctuations, however however many of the MURR'sMURR's major customers customers have been clients for several years and the MURR MURR continues to develop develop significant new customers each year. "Grants""Grants" are a revenue revenue source received received from non-University non-University sources.
All projected revenues expenditures reflect revenues and expenditures 3% increase per year except for Debt Service.
reflect a 3%
MURR MURR reserves will be used to cover cover fiscal year end deficits deficits as needed.
- 3. application references The application references a decommissioning decommissioning cost estimateestimate for for the MURR that was developed using NUREG/CR-1 756, using NUREGICR-1756, Technology,Technoloy, Safety and Costs of Decommissioning and Costs o(Decommissioning Reference Research Research and and Test Reactors.
Reactors. The application states application states that that the decommissioning decommissioning cost estimate estimate was $40 million in 2005 dollars, includingsafe storage dollars, including storage (SAFSTOR) costs, and a 25 percent costs, and percent contingencyfactor.
factor. The NRC staff needs the following additional additional information information to complete its review of the MURR decommissioning decommissioningcost estimate:
estimate:
(a) A current decommissioning A current decommissioning cost estimate estimate in 2010 2010 dollars dollars for the MURR to meet the NRC's radiological release criteria for decommissioning radiological release criteria for decommissioning the facility facility for unrestricted unrestricteduse, pursuant to use, pursuant 10 CFR 50. 75(d)(2).
75(d) (2). Accordingly, describe the basis Accordingly, describe basisfor for how the cost estimate estimate was developed (i/NUREGICR-1756 (ifNUREG/CR-1 756 is still the basis for the decommissioning basisfor decommissioning cost estimate, please so state).
estimate, please state).
The current current decommissioning decommissioning cost estimate is $47.3 million in 2009 dollars. The original original decommissioning cost estimate was developed decommissioning developed using the methodology methodology proposed proposed in NUREG/CR-NUREG/CR-1756, Technology, Technology, Safety Safety and Costs of Decommissioning Decommissioning Reference Reference Research and Test Reactors, Reactors, for a reference reference test reactor using the passive passive safe storage (SAFSTOR) option for a period of 30 30 years. The reference approach was used because reference test reactor approach because this was thought to more closely represent the represent the decommissioning efforts that would be needed for the MURR. The original decommissioning estimate decommissioning estimate was transmitted to the NRC in a letter dated June 29, 1990. In this letter, the MURR committed committed to adjusting our estimate at five year year intervals using the decommissioning inflation formula provided decommissioning provided in 10 CFR 50.75(c)(2).
Page 3 of of99
r-Our initial decommissioning decommissioning cost estimate was $9.0 million, which which included included a 25% contingency. In 1995 this estimate was revised 1995 annuity method of determining the present revised to delete the 30-year annuity values of the annual costs associated with SAFSTOR. This revision to the original estimate, which which changed the cost estimate to $11.8$11.8 million (1989 $), was made to assure that this aspect of the decommissioning decommissioning cost would not introduce introduce significant under-estimation under-estimation of the annual costs.
The current decommissioning cost estimate was developed using the inflation current decommissioning inflation formula provided in information from the most recently 10 CFR 50.75(c)(2). The use of this formula requires information recently published published NUREG-1307, Report on Waste Burial Charges; NUREG-1307, Charges; in this case Revision Revision 13 dated November 2008.
2008.
The calculation calculation also requires requires information form Bureau of Labor Statistics (BLS) data for Employment Employment Cost Index (ECl) (ECI) to develop Lx L, and for Producer Price Price Index (PPI) to develop Ex for datasets currently only contain data for January the' formula. These BLS datasets January 2009, hence the inflation-calculation can only be provided calculation provided in 2009 dollars.
(b) A summary of total decommissioning A decommissioning costs by labor, labor, waste disposal, disposal, other items (such (such as energy, energy, equipment, supplies) in current equipment, and supplies) current dollars, and a 25 percent dollars, and percent contingency factor.
contingencyfactor.
The following Table Table 3, an update of Table 17-217-2 found in Chapter Chapter 17 of the Safety Safety Analysis Report submitted as part of the MURR's (SAR) that was submitted MURR's renewal summary of the renewal application, provides a summary current dollars. This table contains the categories the MURR breakdown of categories in current MURR used to develop our initial decommissioning decommissioning estimate using the guidance guidance of NUREG/CR-1756 that was NIUREG/CR-1756
,submitted submitted to the NRC by letter letter dated June 29, 1990.
TABLE 3
SUMMARY
OF COST
SUMMARY
COST (in millions of dollars)
Category Cost (1989 (1989 $) Cost (2009 $)
Labor 4.9 19.6 19.6 Equipment Equipment 0.27 1.08 1.08 Radioactive Radioactive Shipments 0.6 2.40 Termination Termination Survey 0.06 0.24 Annual Storage Storage Cost 3.6 14.40 14.40 Subtotal Subtotal $ 9.43 $ 37.72 Contingency Contingency (25%) $ 2.36 $ 9.44 9.44 Total $11.8
$11.8 $$47.3 47.3 (c) Provide a more detailed Provide detailed breakout breakout of the total total and and annual annual MURR SAFSTOR costs shown in in "Annual Cost During Table 17-1 "Annual current dollars SAFSTOR" to current During SAFST(i)R" as well as dollars as as the supporting supporting bases for the costs associated basesfor associated with the SAFSTOR option. please provide a numerical option. Also, please numerical example showing how the SAFSTOR,costs SAFSTOR costs will be escalated year.
escalatedeach year.
The following Table 4, an update of Table Table 17-1 found in Chapter 17 of the SAR, indicates indicates the estimates from the original cost estimate as revised in 1995 as well as these same annual cost estimates escalated using the cost inflation formula of 10 CFR 50.75(c)(2).
annual costs in current dollars as escalated Page 4 of9of 9
Below Table 4 is an example of the items in each category of the table. These examples examples are taken NUREG/CR-1756, Volume 22 of2, from NUREG/CR-1756, of 2, page J-79.
J In a letter dated June 29, 1990, the MURR committed to escalating escalating the decommissioning decommissioning cost estimates at five year intervals using the methodology methodology proposed in 10 CFR 50.75(c)(2).
50.75(c)(2). There isis no regulatory requirement to escalate these costs on a yearly regulatory yearly basis. With the 25% contingency 25% contingency included in the estimate, because because of the uncertainty uncertainty of an estimate, an annual escalation exercise exercise would provide little benefit.
The supporting supporting bases for the annual costs associated with the SAFSTOR SAFSTOR option were the categories categories specified NUREG/CR-1 756, adjusted to our judgment in 1990 where the reference specified in NUREG/CR-1756, reference test reactor reactor estimates estimates could be revised. One example example was the.
the, cost for security decided the security systems. MURR decid,ed current system we have in use would provide mote than adequate security for the safe storage storage period so that category category estimate was reduced. '
TABLE 4 ANNUAL COST DURING ANNUAL DURING SAFSTOR SAFSTOR (in (in thousands of dollars)
SAFSTOR SAFSTOR Categories Categories Cost (1989 (1989 $)$) Cost (2009 $)
Security Security 15.0 60.0 60.0 Minor Maintenance Maintenance and Repair 10.0 40.0 Major Repair 10.0 40.0 Offsite Laboratory Work and Equipment Repair 6.0 24.0 Reactor Facility Services Reactor Services 50.0 200.0 200.0 Laboratory Laboratory Samples, EPA
'EPA Reports, Reports, and Surveillance Surveillance 30.0 120.0 120.0 Total $121.0
$121;0 $ 484.0a 484.Oa aThe summation "The summation of the estimated estimated annual cost during SAFSTORSAFSTOR IS is $14.5
$14.5 million dollars
($484,000/year
($484,000/year x 30 years).
years).
Examples of Items in Each SAFSTOR Category Examples-of Category of Table 4 Security Security Maintenance and Repair Minor Maintenance Repair
- Maintenance Maintenance of existing security system security system
- Custodial
- Monitoring, supervision and security security patrols ** Grounds and yard Offsite Laboratory Work and Equipment Repairs Laboratory Samples, Laboratory Samples. EPA Reports, and Surveillance
- " Sample analysis ** Surveys
- " Contamination Contamination counter counter repairs "* Regulatory Regulatory reports reports Reactor Facility Services Maj Majoror Repair Repair
- " Electrical "* Roof Roof repairs
- " Water Water ** Ventilation Ventilation system repairs
- " Sewer Sewer Page 5 of of99
(d) Provide Provide a numerical numerical example showing how the 2010 cost estimate estimate will be updated periodically periodically in the future.
future.
Future Future cost estimates will be performed performed using the same methodology methodology that was used for the most described below.
recent 2009 estimate, as described Adjustment factor factor The adjustment factor was designed for updating reference Pressurized Pressurized Water Water Reactor (PWR) and Boiling Boiling Water Reactor (BWR) decommissioning decommissioning estimates, serves as a convenient ~ethod estimates, but serves method to adjust MURR decommissioning decommissioning cost estimates estimates over time. Whenever Whenever a calculation is specified for a PWR or BWR, an averageaverage of the PWR and BWR factors is used.
The decommissioning decommissioning cost inflation equation of 10 inflation equation 10 CFR 50.75(c)(2) 50.75(c)(2) is divided into three general general categories categories that tend to escalate similarly: (1) labor, materials and services, (2)
(2) energy energy and waste transportation, and (3)(3) radioactive radioactive waste burial/treatment; burial/treatment: A relatively simple equation equation is used to update update the estimate of cost by multiplying the revised original original cost estimate estimate (in our case, $11.8
$11.8 million in 1989 $) by a factor developed categories described developed using the three categories described above. The equation equation is:
Estimated .cost Cost (2009):
= [Cost in in1989$]x[ALx+BEx+CB 1Q89 $] x [ALx+ B Ex+ C B]; B x];
estimated decommissioning
= estimated decommissioning costs in 2009 dollars; where:
[Cost in 1989 $]
= revised original decommissioning decommissioning cost estimate ($11.8M ($11.8M in 1989 1989 $);
A = fraction of the [Cost in 19891989 $] attributable attributable to labor, materials materials and services; B = fraction of the [Cost in 1989 1989 $] attributable attributable to energy and transportation;
ýC
'C = fraction of the [Cost in 1989 $] attributable attributable totowaste burial/treatment; waste burial/treatment; L,
Lx = labor, materials, and service service cost adjustment, January 1989 to January January 1989 January 2009; E,.
Ex = energy & waste waste transportation transportation cost adjustment, January 1989 1989 to January 2009; and Bx = LLW burial/treatment burial/treatment cost adjustment, JanuaryJanuary 1989 1989 to January January 2009.
The coefficients coefficients in the adjustment adjustment factor of 10 CFR 50.75(c)(2) 50.75(c)(2) are established established as A =
0.65, B =
0.13, 0.13, and C == 0.22. The escalation formula then becomes:
Estimated Estimated Cost (2009)
= [Cost in 1989 1989 $] X x [0.65 Lx+0.13 Lx + 0.13 ExEx++ 0.22 Bx]
Determination of Lx&.
Determination Lx. E*, and BxB.
These ratios are determined using the information information supplied in the most ,recently recently published published NUREG-NUREG-
- 1307, q07, Report Report on Waste Burial Charges, Charges, Revision Revision 13, 13, November November 2008 and by using the most recent U.S. Department Department of Labor-Bureau Labor-Bureau of Labor Statistics Statistics (BLS) data.
Page 6 of of99
Labor Adjustment Factor Factor The Employment Cost Index (ECI) is taken from Table 6 of current current BLS data entitled "Employment "Employment Cost Index Index for total compensation compensation for private private 'industry workers, by bargaining status, industry workers, census region and metropolitan status." The Base L, metropolitan area status." Lx is taken taken from Table Table 3.2, Regional Factors for Labor Cost Adjustment Adjustment in NUREG-1307 NUREG-1307 referenced above.
Lx = [(ECI, January 2009) x (Base Lx)] / 100 100
= [(107.9) x (2.08)]
(2.08)] //100 100
= 2.24 2.24 Energy Adjustment Factor Adjustment Factor This adjustment adjustment factor for energy, Ex, is a weighted average of two components, components, namely, industrial electrical power, Px, electrical P x, and light fuel oil, F,.
Fx.
For the reference reference PWR: Ex(PWR) =
ExCPWR) 0.58 P + 0.42 F, P,x + Fx For the reference reference BWR: Ex(BWR)
ExCBWR) = 0.54 P + 0.46 F, P,x + Fx P
P,x and F, Fx are the ratios of the current Producer Price Price Indexes (PPI) divided by the corresponding corresponding indexes for January indexes January 1986.
1986.
Px =
P, 190.3 (January 2009 value 190.3 (January value for code 0543) 0543) //114.2 114.2 (January 1986 value value for code 0543) 0543)
= 1.67 1.67 F,
Fx = 159.8 (January 159.8 (January 2009 value for code 0573) 0573) //82.0 82.0 (January 1986 value for code 0573) code 0573)
= 1.95 1.95 Therefore:
Ex(BWR)
(
(0.58 1.67) + (0.42 x 1.95) x 1.67) 1.95) 1.67) + (0.46 x 1.95)
= (0.54 x 1.67) 1.95)
= 1.788 = 1.799 1.799 E,
Ex for MURR is calculated calculated as an average average of ExCPWR)
EX(BWR), therefore:
Ex(average)
ExCaverage)
(1.788 + 1.799)
= (1.788 1.799)/2/ 2
= 1.794 1.794 Waste Waste Burial Adjustment Factor Factor The adjustment factor for waste burial/treatment, burial/treatment, B,,
B x, is taken directly from Table 2.1 of NUREG-NUREG-1307, !!x B_, Values for Generic Generic LLW LLW Disposal Sites, Direct Disposal with Vendor. For facilities that have have no disposal site available for LLW, the NUREG NUREG assumes the cost of disposal is the same as that provided for the Atlantic Compact, for lack of a better alternative at this time.
BxCBWR) = 11.198 11.198 B,
Bx for MURR is calculated calculated as an average of B,(PWR)
BxCPWR) and BxCBWR),
B,(BWR), therefore:
of 9 Page 7 0[9
B,(average)
Bx( average)
(9.872++ 11.198)
= (9.872 11.198)/2/ 2
= 10.535 Adjusted Decommissioning Cost Estimate Adjusted Decommissioning Estimated Estimated Cost (in 2009 $)
= [Cost in 1989 $] xx [AL.+B [A Lx + B ExE,++ C CBj]
Bx]
= [$11.8Million]
[$11.8Million] [(0.65 [(0.65 x 2.24) + (0.13 x 1.794) + (0.22 x 10.535)]
10.535)]
= [$11.8 Million] [4.007]
= $47.3 Million Million (this includes the 25% 25% contingency)
- 4. The application applicationindicates indicates that MU plans plans to use a statement of intent (SOl) (SOI) as as the method to provide provide decommissioning decommissioning funding assurance, as provided funding assurance, provided for by 10 CFR 50. 50.75(e)(1)(iv).
75(e)(1)(iv). Where the applicant applicant intends intends to use a SOL S01, the NRC staff must find that that the applicant applicant "is a Federal, State, or Federal, State, or local government local government licensee."
licensee." To make th'is this finding, finding, the applicant applicant must state state that that it is a State State government organization government organization and and that that the decommissioning funding obligations decommissioning funding obligations of the applicant applicant are are backed by the State government, and State government, corroborating documentation.
and also provide corroborating documentation. Further, Further, the applicant must provide applicant provide documentation documentation verifYing verifying that the signator signator of the SOI SOl is authorized authorized to execute said said document that that binds the University.
University. This document may be be a governing governing body resolution, management directives, resolution, management directives, or otherform that or otherform equivalent level of assurance.
provides an equivalent thatprovides assurance. AsAs the application applicationdoes not include include all of the above information, information, please please submit the following:
following:
(a) An updated updated SOISOl which includes includes the current (2010 dollars) current (2010 dollars) cost estimate for decommissioning, for decommissioning, a statement statement thatthat funds funds for decommissioning will be obtained for decommissioning obtained when necessary, necessary, and and the signator's signator'soathoath or affirmation attestingto the information.
affirmation attesting information.
Enclosed you will find the most recent Statement Statement of Intent, signed by Jacquelyn K. Jones, Vice Chancellor of Administrative Services Services of the University of Missouri, Missouri, which provides provides assurance that funding will be requested requested from the Board of Curators of the University University of Missouri if if decommissioning activities are commenced decommissioning commenced at the MURR.
(b) Documentation that Documentation that corroborates corroborates the statement in the application applicationthat that MU is a State agency agency and a State State ofMissouri Missouri government licensee licensee under under 10 CFR 50. 50.75(e)(2)(iv).
Enclosed you will find a letter from Kelly Mescher, Office Office of the General General Counsel, University of University of Missouri, which states that The Curators of the University University of Missouri Missouri is a state university university which created by the Missouri was created Missouri Constitution in Article IX Section 9(a).
(c)
(c) AA statement statement as as to whether whether the decommissioningfunding decommissioningfunding obligations obligationsfor for the MURR are are backed by the State State of Missouri government.
Missouri government. The application application must also present documentation that also present documentation corroboratesthis statement.
corroborates statement. For For example, the documentation documentation may be a copy of or or complete citation to a state citation statute that state statute that expressly provides that that the obligations, obligations, or at at least least the decommissioningfunding decommissioning obligations, of the applicant funding obligations, applicant are are backed or or supported supported by the full full faith faith and credit credit of the State of Missouri, Missouri, or an opinion opinion of the applicant's General Counsel applicant's General citations to statutes, with citations statutes, regulations, and/or case regulations, and/or case law that that the obligations, obligations, or at least those with respect respect to the decommissioning decommissioning funding funding of the applicant are obligations applicant are obligations back or or supported supported by the fullfaith and credit full faith and credit of the State ofMissouri.
Page 8 of of9 9
Enclosed you will find a letter letter from Kelly Mescher, Office Office of the General General Counsel, University ofof constitutionally required to provide Missouri, which states that the state is constitutionally provide funding to the University.
(d) Documentation verifying that Documentation that the signator signator of the SOISal is authorized authorized to execute such a that binds the applicant document that financially. For applicant financially. For example, example, provide a copy of MU's governing governing board board or that shows that resolution that or equivalent resolution signator of the Sal that the signator SOI has has been authorized by MU to bind MU financially, authorized financially, at least with respect at least respect to funding funding the decommissioning of decommissioning of the MURR, or provide provide a copy of an official MU delegation delegation of authority authority showing that signa tor of the Sal that the signator SOI is authorized authorized to bind financially, at bind MU financially, at least with respect to funding respect funding the decommissioning decommissioning of the MURR.
Enclosed Enclosed is a copy of Section 70.010, "General Execution of Corporate or Board Instruments,"
70.010, "General Instruments,"
from the University of Missouri Missouri Collected Rules and Regulations, which authorizes Jacquelyn K.
authorizes Jacquelyn Jones, Vice Chancellor Chancellor of Administrative Administrative Services Services of the University of Missouri, to execute the Statement of Intent regarding decommissioning decommissioning costs for the MURR.
of 9 Page 9 of9
Office of the Vice Chancellor Chancellor 319 Jesse Hall Columbia, MO MO 65211-1250 65211-1250 for Administrative Administrative Services PHoNE PHONE 573-882-4097 573-882-4097 University of Missouri-Columbia University Missouri-Columbia FAX FAX 573-884-4847 To: Director of Nuclear Reactor Regulation Reactor Regulation U.S. Nuclear Commission Nuclear Regulatory Commission Washington, DC 20555-0001 STATEMENT OF INTENT STATEMENT INTENT As Vice Chancellor of AdministrativeAdministrative Services of the UniversityUniversity of Missouri Columbia, I exercise exercise express authority and responsibility responsibility to request from the Board Board of Curators of the University University of Missouri funds for SAFESTOR SAFESTOR decommissioning decommissioning activities associated with operations operations authorized authorized by the U.S. Nuclear RegulatoryRegulatory Commission Commission Amended Amended Facility Operating Operating License License No. R- 103. This authority is established R-103. established by the Collected Rules andand Regulations Regulations ofthe of the University of Missouri. Within this authority, I intend to request that funds be made available available as necessary for the SAFESTORSAFESTOR decommissioning decommissioning of the properties owned by the University of Missouri. The current estimate of total decommissioning decommissioning costs over the 30 year SAFESTOR SAFESTOR period is $47.3 million. I intend to request and obtain these funds over this period sufficiently sufficiently in advance of required required activities to assure timely funding of required activities.
A copy of the University of Missouri Collected Rules and Regulations Regulations Section 70.010 is attached as evidence that I am authorized authorized to represent the University of Missouri Missouri in this transaction.
-, ... ~-~-~'-.-" .. .... ...
'-' ~~"-.
Cr-Jacque1yn
?/facqu
~
yn K. Jones Vice ChancellorChancellor for Administrative Administrative Services Services August 17,2(J09.: 17, 20091 APPR~OVED
Attachment:
Attachment:
As Stated Stated THEREu's ONLY THERE'S ONLY ONE~ MIzzou ONE Mizzou
UNIVERSITY OF MISSOURI UNIVERSITY COLUMBIA.
COLUMBIA
- KANSAS CITY.CITY
- ROLLA.
ROLLA
- ST. LOUIS ST. LOUIS OFFICE OF THE GENERAL GENERAL COUNSEL COUNSEL 227 227 UNIVERSITY UNIVERSITY HALL HALL 65211 COLUMBIA, MO 65211 COLUMBIA, TELEPHONE: (573) 882-3211 882-3211 NUMBER: (573) 882-0050 FAX NUMBER: 882-0050 Stephen Stephen J. Owens, Owens, General General counsel counsel Phillip J. Hoskins, Counsel Counsel William F.
F. Arnet, Amet, Counsel Paul R. Maguffee, Counsel Katharine S. Bunn, Bunn, Counsel Counsel . Kathleen Murphy Kathleen Murphy Markie, Counsel Nancie D. Hawke, Nancie Counsel Hawke, Counsel. Kelly Mescher, Counsel September 1 2009 1,,2009 Director of Nuclear Nuclear Reactor Regulation Reactor Regulation U.S. Nuclear Regulatory Commission Nuclear Regulatory Washington, DC 20555-0001 As a member of the Office Office of the General Counsel for the University of Missouri Missouri and the the attorney attorney who represents the Missouri University Research Research Reactor (MURR) I am able to to state that The Curators of the University University of Missouri Missouri is a state university university which was was created by created by the Missouri Missouri Constitution Constitution inin Article IXIXSection 9(a):
Section 9 (a). The government government of the state university university shall be vested in in a board of curators consisting of nine members appointed by the governor, by' by and with the the advice and consent of the senate.
And enabled in in Section 172.010 172.010 R'SMo RSMo 2008:
172.010. A 172.010. A university is hereby hereby instituted in in this this.. state, the government government whereof shall be vested in in a board of curators.
The state is constitutionally constitutionally required to provide funding to the University University inin Article IXIX Section 9(b):
Section Section 9(b). The general general assembly shall adequately adequately maintain the state university and such other educational educational institutions institutions as itit may deem necessary.
Section Section 172.020 RSMo 2008 establishes that the University University has all the necessary powers to operate as a state entity:
172.020. Pursuant to sections sections 9(a) and 9(b) of article IX IXof the Missouri Constitution, the state university university is hereby hereby incorporated incorporated and created as a body politic and shall be be known by the name of "The Curators of the University University of Missouri",
Missouri", and by that name name shall have perpetual perpetual succession, power to sue and be sued, complain complain and defend defend in in all courts; to make and use a common common seal, and to alter the same at pleasure; pleasure; to
to -
September 1 September 1,, 2009 Page 2 purchase and to sell, convey and otherwise dispose of lands and chattels, take, purchase except that the curators curators shall not have the power to subdivide, sell or convey title to any land contained within a university campus campus or to subdivide, subdivide, sell or convey title to any portion of any parcel parcel of land containing in excess of twenty-five twenty-five hundred contiguous acres unless such transaction transaction is approved approved by the general assembly assembly by passage of a concurrent concurrent resolution signed by the governor. The curators shall not sell, trade or otherwise conveyconveyor or permit the severance of timber, minerals minerals or other other natural natural resources, unless the curators comply with bidding procedures procedures established established by rule that mandate mandate notice transaction be provided in a manner notice of the transaction manner reasonably reasonably calculated to apprise prospective calculated prospective purchasers. Such rule or rules must at a minimum minimum require require at least one notice of the transaction transaction be published published in a newspaper newspaper of general circulation where the resources resources are located. The curators may act as trustee in all cases in which there be a gift of propertyproperty or property property left by will to the university or for its benefit or for the benefit of students of the university; university; to condemn condemn an appropriate rea!
appropriate real estate or other property, or any interest therein, for any public public purpose within the scope of its organization, organization, in the same manner and with like effect effect as is provided provided in chapter chapter 523, RSMo, relating to the appropriation appropriation and valuation of lands taken for telegraph, telephone, telephone, gravel and plank or or railroad purposes; provided, that ifif the curators so elect, no assessment damages or compensation assessment of damages under under this law shall be payable and no execution execution shall issue before before the expiration of sixty days after the adjournment Sixty adjournment of the next legislature held next regular session of the legislature held after such assessment assessment is made, but the same shall bear interest interest at the rate of six six percent per annum from its date until paid; and provided percent provided further, that the curators curators may, at any time, elect to abandonabandon the proposed appropriation of property by an proposed appropriation instrument of writing to that effect, to be filed with the clerk of the court and entered instrument on the minutes of the court, and as to so much as is thus abandoned, the the assessment of damages assessment damages or compensation compensation shall be void.
The federal courts have recognized recognized that the University is an arm of state government.
government.
The Court in Sherman v. v. The Curators of the University University of Missouri, 871 F.Supp. 344 (W.D.Mo. 1994),
(W.O.Mo. 1994), held the University is an alter ego or instrumentality instrumentality of the State, because the University University does not enjoy a significant level of autonomy from the State, and any judgment University would ultimately judgment against the University ultimately be derived from the state treasury treasury. Id. id.,
It is my opinion opinion that the language of the Missouri Constitution, Constitution, statutes statutes and relevant relevant case law make clear that there is an obligation obligation for the State of Missouri to provide provide support to the University in its obligations, financial support.to obligations, should decommissioning decommissioning of the the properties properties owned by the UniversityUniversity of Missouri take place.
place.
?0.010 General Execution 70.010 Execution of Corporate Corporate or Board Instruments I Chapter 70: Execution oflnstruments of Instruments ... Page 1 of 1 Columbia I Kansas City IIRolla I St. Louis Columbia Louis COllected Rules and Regmations Collected Regulations Business ManagementManagement Chapter 70: Execution Execution of Instruments 70.010 General 70.olo General Execution Execution of Corporate Corporate or Board Instruments 172*390, R.S.Mo. 1959; Bd. Min. 4-11-58, 172.39o, 4-11-58, p. p. 12,512; Amended 5-20-77, p. 37,690 37,690 and 3-28-80, 3-28-80, p. 38,ioo; 38,100; Revised Bd.,Min. 6-14-85; 1 Bd .. Min. 6-14-85; 1 98, Revised Bd. Min. 5-5-o6. 5-5-06.
A. All Instruments Instruments -- All instruments instruments affecting The Curators of the University of Missouri, the Board of Curators Curators of the University University of of Missouri, or the University generally generally shall be executedexecuted on behalf thereof as provided in this section unless unless execution execution thereof shall have otherwise been been specifically specifically provided provided for and directed by the Board.
B. Real Estate i.
- 1. Any of the lands donated by the Atlantic & & Pacific Pacific Railroad Railroad Company to the State of Missouri Missouri by deed dated the sixteenth day of February, February, 1871, 1871, and all other lands conveyed conveyed by corporations corporations or individuals to the StateState of of Missouri Missouri for sale sale in aid of the state university, may be sold and conveyed by the board board of curators, and deeds of conveyance conveyance to same shall be executed executed by the president of the board, signed by him, with the seal of the corporation corporation attached thereto, and and attested attested by the secretary of the board; board; and provided further, that any conveyances conveyances of such lands heretofore heretofore made made by said board in accordance accordance with the provisions provisions of this section shall shall divest the State State of of Missouri of all title title to the same and vest said title in the grantees, their heirs and assigns forever.
2.
- 2. Instruments conveying title to real eitate owned by The Curators of the University of real eState of Missouri Missouri shall, shall, upon approval approval of same same by the Board Board of Curators or University University President as delegated delegated by the Board, be executed executed in the name of The Curators Curators of the University University of Missouri and signed signed by the President President of the University University or his/her his/her designee, designee, with the corporate seal affixed, attested attested by the Secretary.
Secretary.
C. All Contracts, Contracts, Other Instruments Instruments and Agreements Agreements -- All contracts contracts and other instruments and agreements of The Curators of of the University of MissouriMissouri shall be executed executed in the name of The Curators of the University University of Missouri Missouri and signedsigned by the President President thereof, the President thereof, President of the University, the Vice President President for Finance Finance and Administration, Administration, or such other officer as may be specifically designated by the Board, and the corporate corporate seal may be affixed, attested by the Secretary. The named officers may, by written authorization, delegate special special authority authority to sign specific instruments on their behalf to the Chancellor of each campus. The The named officers officers and the Chancellors Chancellors receiving receiving delegation delegation from such officers may, by specific specific written written authorization, authorization, delegate to one or or more designees all or partial partial authority authority to sign instruments instruments on their their behalf, such written authorization authorization to be filed with the President, Vice President President for Finance and Administration,Administration, and Secretary Secretary of The Board of Curators.
D. Agreements Agreements Binding on Board 1.
- 1. Any instrument heretofore or hereafter hereafter executed executed in conformity with this Section 70.010 shall have the same force and validity as if executed by the President Section 70.010 President of the Board; 2.
- 2. No contract contract or other instrument instrument or agreement agreement which has not been duly authorized by by The Board of of Curators and executed executed in the manner herein provided or in a manner manner specifically provided and directed specifically directed by the Board Board shall be binding upon The Curators of the University of Missouri.
CopyrIght Copyright ©0 2003-2009 The CuratorsCurators of the the University of Missouri. All rights reserved.
DMCA and other copyright information I Accessibility copyright information Accessibility I An equal opportunity/affirmative opportunity/affirmative action institution http ://www.umsystem.edu/ums/departments/gc/rules/business/70/010.
http://www .umsystem.edulumsldepartmentsl gc/rules/businessl7 01010. shtml 9/10/2009 9110/2009
200 UNIVERSITY OF MISSOURI
GOVERNING BOARD AND GOVERNING ADMINISTRATIVE STAFF AND ADMINISTRATIVE STAFF ...........................................
........................................... 11 MANAGEMENT'S DISCUSSION MANAGEMENT'S DISCUSSION AND AND ANALYSIS ANALYSIS ....................................................
................................................. .22 INDEPENDENT AUDITORS' INDEPENDENT AUDITORS' REPORT REPORT .........................................................................
................................................................... 16 BASIC FINANCIAL STATEMENTS:
BASIC FINANCIAL STATEMENTS:
Statement Statem ent of N Net et Assets A ssets .............................................................................................
........................................................................................ 18 Statement of Revenues, Expenses Statement Expenses and Changes in Net Assets .................................
............................. .20 20 Statem ent of Cash Statement C ash Flows Flow s ......................................................................................
........................................................................................... 22 Statement Statem ent of Plan Net Assets N et A ............. ;...................................................................... .24 ssets .............................................................................. 24 Statement of Changes in Plan Net Assets .................................................................
Statement ............................................................. 24
.24 N otes to Financial Notes Financial Statem Statementsents ...............................................................................
.................................................................................... 25 REQUIRED SUPPLEMENTARY SUPPLEMENTARY INFORMATION INFORMATION .................................................
...................................................... 66 66 2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT UNIT OF THE STATE OF OF MISSOURI MISSOURI
This page is intentionally intentionally left blank.
2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT COMPONENT UNIT UNIT OF THE STATE MISSOURI STATE OF MISSOURI
UNIVERSITY OF MISSOURI UNIVERSITY BOARD BOARD OF CURATORS Cheryl D. S. Walker, President Buford Buford M. (Bo) Fraser, Vice President Marion H. Cairns John M. Carnahan Carnahan III Warren K.K. Erdman Judith G. Haggard Haggard Doug Russell Don Walsworth Walsworth David G. Wasinger Wasinger Anton H. Luetkemeyer, Luetkemeyer, Student Representative Representative GENERAL OFFICERS GENERAL Gary D. Forsee, President Gordon H.
H. Lamb, Executive Executive Vice President President Stephen J. Owens, Stephen Owens, General General Counsel Steven W. Graham, Interim Vice President President for Academic Affairs Gary K. Allen, Vice President Information Technology President for Information Technology Elizabeth Rodriquez, Vice President President for Human Resources Stephen Stephen C. Knorr, Vice President for Government Relations Natalie Natalie Krawitz, Vice President for Finance and Administration Michael Michael F. Nichols, Vice President for Research Research and Economic Development James H. Ross, Chief Executive Executive Officer Officer of University of Missouri Health Care Brady 1.J. Deaton, Chancellor, University of Missouri - Columbia Leo E. Morton, Interim Chancellor, University of Missouri - Kansas City John F. Carney III, Chancellor, Chancellor, Missouri University of Science Science and Technology Technology George, Chancellor, University Thomas F. George, University of Missouri - St Louis FINANCE STAFF FINANCE STAFF Natalie Natalie Krawitz, Administration Krawitz, Vice President for Finance and Administration Jane E. Closterman, Closterman, Controller Controller Shirley S. DeJarnette, Dejarnette, Treasurer Treasurer Cuba Plain, Assistant Vice President Budget Planning and Development Development FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI OF MISSOURI A COMPONENT A COMPONENT UNIT OF THE UNIT OF THE STATE STATE OF OF MISSOURI MISSOURI 1I
~wd~j~and~~ ~ FOR TH THE E YEARS Y E ARS ENDED ENDED JUN JUNEE 30, 2008 2008 AND 2007 AND 2007 Management's Management's Discussion and Analysis provides an overview overview of the financial position and activities of the "University") for the fiscal years ended June 30, University of Missouri (the "University") 30, 2008, and 2007, 2007, and should be read in conjunction conjunction with the financial statements statements and notes.
notes. The University University is a component component unit of the State of Missouri and an integral part of the state's Comprehensive Comprehensive Annual Financial Financial Report.
UNIVERSITY ACCOUNTING UNIVERSITY ACCOUNTING AND AND FINANCIAL FINANCIAL REPORTING REPORTING This report includes five financial statements:
- " The three three financial statements for the University of Missouri System and its Aggregate Aggregate Discretely Discretely Presented Presented Component Unit(s) Unites) include the Statement Statement of Net Assets, the Statement of Revenues, Revenues, Expenses, Expenses, and Changes in Net Assets, Assets, and the Statement Statement of Cash Flows.
- The two financial statements statements for the University's University' S fiduciary fiduciary funds funds,, which which include the Retirement Retirement and the Other Post-Employment Benefits Trust Funds, are the Statement Other Post-Employment Statement of Plan Net Assets and the Statement Statement of of Changes Changes in Plan Net Assets.
The University's University'S financial statements statements are prepared in accordance accordance with U.S U.S.. generally accepted accounting generally accepted principles principles as prescribed prescribed by the Governmental Governmental Accounting Accounting Standards Standards Board (GAS (GASB), B), which establishes financial reporting standards standards for public colleges and universities. universities. The University' University'sS significant accounting accounting policies are summarized summarized in Note 1 I to the financial statements of this report, including report, including further information on the financial reporting entity.
reporting entity. In addition, addition, a more detailed unaudited unaudited financial report that includes campus-level campus-level financial statements is available at the University Missouri, 118 University Hall University of Missouri, Hall,, Columbia, MO 65211 65211, , and at at www.umsystem.edu www.umsystem.edu through the Finance Finance and Administration Administration page.
FINANCIAL HIGHLIGHTS FINANCIAL IDGHLIGHTS At June June 30, 30, 2008, 2008, the University' University'sS financial position continued to strengthen, strengthen, with Total Assets of almost $5.0 billion.
billion . Net Assets, which represent represent the residual residual value of the University'S University's assets after after deducting deducting liabilities, totaled
$3.4 billion. When operating, operating, non-operating, non-operating, and other changes are included, Net Assets increased increased by by approximately $127.2 approximately $127 .2 million in fiscal year 2008, including a $19.9
$19.9 million cumulative cumulative effect of a change change in accounting accounting principle. The following charts compare compare Total Assets,Assets, Liabilities, Liabilities, and Net Assets at June 30, 2008, and 30, 2008, and 2007, 2007, and the major components of changes in Net Assets for the years ended June 30, 2008, 2008, and 2007.
2007.
Statement of Net Assets Sttmn of Ne Asset
$6,000
$6,000
$5,000
$5,000 $4,967
$4,000
~
"C $3,303 *E Total Total Assets Assets
=
eo:!
$3,000
$3 ,000 = ** Net Net Assets
~
=
Q
.c Assets E-- $2,000
$2,000 Total Liabilities S$1,537 $ 11,260
$1,000
$1 ,000
$0
$0 2008 2007 2008 FINANCIAL 2008 FINAN C IAL REPORT: R E PORT: UNIV UNIVERSITY E RSI T Y OF OF MISSOURI MJSSO U RI 2 A COMPONENT A COMIONENT1 UN TNIIT
'I O OF1 FTE STATE F TH I STATE FOF 01:
) MISISOURI M I SSOUR I
~
v5,,ýý
ý e / QL1:~ cwd~ U:~ddal) Q',M/
e.
FOR TI FOR T HIEE YYEARS EARS ENDED ENDED JJUNE UNE 30, 30, 2008 AND AND 2007 StatementJ ofsI Reeus Ex:p en.~4ses, a nd4I i
I~ ~ Chne S inNtAst
- 6 Operating Revenues Operating Revenues
- - OOperating perating Expenses Expenses
- m Nonope Nonoperating Re venues, Net **
rating Revenues, -* Increase Increase in Net Assets
- MCapital Capital Contributions, Contribution s, Endowments Endowments & & Extraordinary Extraordinary Items Items
$2 ,500
$2,500 ,111II I
~ $2,000
$2,000 c
ell
'"U.
=
o
.c
~ $1,500
$1 ,500
$$1,000 1,000 --
$500
$500 2008 2007
- includes includ es State State Appropriations Appr opria ti ons & Cumul Cumulative a tive Effect of Cha Change nge in Accounting Acco unting Principle Principle During fiscal year 2008, 2008, the most significantsignificant growth growth in Total Assets was from capital asset expansion expansion and gains in in non-endowment non-endowment investments. Issuance Issuance of new System Facilities Revenue Bonds Bonds increased Total Liabilities; Liabilities; the the University typically issues new bonds every University every 2 to 3 years to finance developmentdevelopment or improvement improvement of capital assets.
The fiscal year 2008 increase increase in total Net Assets primarily reflects growth in Invested Invested in Capital Assets net of Debt and Unrestricted Unrestricted Net Assets.
CONDENSED STATEMENT CONDENSED STATEMENT OF NET ASSETS ASSETS The Statement of Net Assets presents the University's University's financial position at the end of the fiscal year, including all assets and liabilities of the University and segregating segregating them into current and noncurrent components. components. Assets and and liabilities are generally generally measured using current values with certain exceptions, exceptions, such as capital assets which are stated at cost cost less accumulated accumulated depreciation, depreciation, and long-term long-term debt which is stated at cost.
2008 FINANCIAL 2008 FINAN IA L REPORT:
R E PORT : UNIV UNIVERSITY MISSOURI E R S ITY OF MISSOURI COMPONENT A COM P ONENT UNIT UN IT (0ri OF T THE H E SSTATE T ATE OFOF MISSIOUIRI MI SSOU RI 3
FOR FOR THETHE YEARS YEARS ENDED JUNE 30, ENDED JUNE 30, 2008 2008 AND AND 2007 2007 The following table summarizes the University's assets, liabilities and net assets at June 30, 2008, 2007, and 2006:
The following table summarizes the University's assets, liabilities and net assets at June 30, 2008, 2007, and 2006:
Assets, Liabilities, and Net Assets Assets (in thousands of dollars) r-- -- ~-----------1 iSFiscal Fiscal Year Year : Fiscal Year FisCal YVeal LAssets: _________________ I - 2008
-.... YY __ .. 207200....
....... 200 (1
~ .-.---~
Current Assets ,$$ 930,882 - 971,247 $
I Long-Term Investments Long-Term Investments -
Quasi-Endowed Investments Endowed and Quasi-Endowed Endowed 944,492 880,884 4 Other Investments 785,527 593,781 Capital Assets, Net 2,227,427 2,039,069 2,039,069 Other Noncurrent.Assets NoncurrentAssets* 78,442 77,765 77 765 Total Total Assets $ 4,966,770 1$$ 4,562,746 I $ 4,13 Liabilities: _________________
Current Liabilities Liabilities 1$$ 629,224 S 553,956 Noncurrent Noncurrent Liabilities Liabilities iI 907,104 705,584 Total Total Liabilities 1,536,328 I 1,259,540 I 2 ,
Net Assets: ____________.........______......__
Invested in Capital Assets, Net of Related Debt i 1,439,753 I 1,439,753 1,379,098 [ 2 i
Restricted -
Nonexpendable N onexpendable 718,314 !
718,314 738,153 _'4X8I Expendable Expendable 367,519 i 367,519 370,616 Unrestricted Unrestricted 904,856 904,856 ! 815,339 I
Total Net Assets i 3,430,442 !
3,430,442 3,303,206 Total Liabilities Liabilities and Net Assets 1 1$ $ 4,966,770 4,966,770 : $ 4,562,746 41-, 1 11 ASSETS ASSETS Total Assets increased increased by $404.0 million, or 8.9%, to almost $5.0 billion as of June 30, 2008, compared to the prior year. From fiscal year 2006 to 2007, Total Assets increased increased by 8.3%. 8.3%. This continued growth reflects the University's efforts to strengthen strengthen its capital capital position, primarily through increasing increasing Long-Term Investments and Long-Term Investments expanding expanding Capital Assets Assets across all of its campuses to meet housing, educational, educational, and student recreational needs.
At June 30, 2008, 2008, the University's working capital, which is current assets less current liabilities, was $301.7 $301.7 million, a decrease of $115.6$115.6 million from the previous year. With Current Assets at almost 1.5 times Current Liabilities, Liabilities, the University University has adequate adequate working capital reserves. At June June 30, 2007, working capital totaled totaled $417.3 million, an increase of $155.7 million of$155.7 million over June 30, 2006.
At June 30, 30, 2008, the University University held $273.4 million in Cash and Cash Equivalents, Equivalents, a decrease of $134.3 $134.3 million from June 30, 2007. The June June 30, 2007 cash balances balances of $407.7 million were $140.7
$140.7 million higher than fiscal year 2006's $267.0 million. The lower balance at the current current fiscal year end relates to several factors, including including moving cash into longer term investments to achieve better returns returns in the current market market and using cash to establish establish the University's new Other Postemployment Postemployment Benefits (OPEB) Trust Trust Fund as discussed in Note 16.
2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITYUNIVERSITY OF MISSOURI MISSOURI 4 A COMPONENT COMPONENT UNIT UNIT OF THE THE STATE STATE OF MISSOURI MISSOURI
- . FOR THE YEARS FOR ENDED JUNE YEARS ENDED JUNE 30,30, 2008 AND 2007 2008 AND 2007 Long-Term and Short-Term Long-Term Short-Term Investments Investments totaled billion as of June totaled $2.0 billion 30, 2008, June 30, representing an 2008, representing increase of an increase of 15.7% over 15.7% over the the prior prior year. This This compares compares to aa 4.4% 4.4% increase increase from fiscal fiscal year year end 2006 2006 to 2007. The The higher higher June 30, 2008 30, 2008 investment investment balance balance reflected reflected aa shiftshift from from cash cash equivalents, equivalents, which which decreased decreased by $126.4
$126.4 million million from the the previous previous year end, into into U.S. government government obligations obligations with 6-year 6-year or or longer longer maturities, which which increased increased by $204.9
$204.9 market conditions million. Due to market conditions during fiscal year 2008 and resulting unrealized year 2008 unrealized losses, investment and losses, investment endowment income endowment income of $39.7$39.7 million declined declined by 80.4% 80.4% compared compared to fiscal year year 2007's $202.6 $202.6 million. The University's endowment University's endowment funds, comprised comprised primarily Balanced and Fixed primarily of the Balanced Fixed Income Pools, declineddeclined by 7.8%
7.8% in fiscal year 2008 due to the the performance performance of the U.S. and and international international equity equity markets.
markets. However, endowment endowment gifts increased by $5.1 increased $5.1 million, million, or or 18.2%,
18.2%, over fiscal year year 2007. Returns of the the University's investment pools University's various investment pools for the year ended June 30, 2008, 2008, compared compared to benchmark benchmark indices indices were were as follows:
Long-Term and Short-Term Investments I (in thousands of dollars) I
.~-----
.. .. ...B enehm arkl-
- Bencillnark I Asset Asset Total Total Index Index Distribution Distribution Return Return Return Return General Pool 1$$ 906,997 906,997 6.5%
6.5% 6.3%
6.3%
Balanced Balanced Pool Pool I i 921,507 -4.8%
-4.8% -3.6%
-3.6%
Fixed Income Pool Fixed Income Pool 65,594 -6.1%
- 6.1% 7.3%
7.3%
Other Investments Investments 100,015 N/A N/A N/A returns are Benchmark index returns are calculated independent investment consultants calculated by independent consultants based returns ofsimilar basedon returns por!folios.
security portfolios.
In fiscal year 2008, Accounts Receivable Receivable increased by $13.7 $13.7 million, or 5.8% 5.8% over June 30, 2007. While the related contracts and grants, student tuition, State appropriations, and patient services revenue increased State appropriations, increased by 6.16.1%
overall, timelier collection of amounts earned kept the increase in receivables receivables lower.
declined by 14.0%, from $36.0 Receivable declined 2008, Pledges Receivable In fiscal year 2008, $36.0 million to $30.9 million. The most notable decrease occurred with Current Pledges Pledges (those receivable receivable in the coming year) decreasing decreasing from $13.0 $13.0 million to $9.8
$9.8 million, or 24.5%,
24.5%, while Long-Term Long-Term Pledges decreased decreased from $23.0 million to $21.1 million, or 8.1%. Only the Missouri University of Science Technology (Missouri S&T) recognized Science and Technology recognized an increase of Pledges Receivable Receivable for the year.
During fiscal year 2008, the University's investment in Capital Assets totaled $2.2 billion compared to fiscal year 2007's $2.0 billion. The University added $314.4 million in capital assets during fiscal year 2008, net of of retirements, offset by depreciation of $126.0 $126.0 million for the year. Fiscal year 2007 capital asset additions $231.2 additions of $231.2 million, net of retirements, were offset by $119.1 $119.1 million in depreciation. Note 7 presents additional information on changes by asset classification, but major additions to Capital Assets during fiscal year 2008 are shown in the changes following table.
2008 2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI AA COMPONENT UNIT OF COMPONENT UNIT STATE OF OF THE STATE MISSOURI OF MISSOURI 5
Jbj ~4/
C-' 6-'
FOR THE YEARS ENDED JUNE 30,2008 AND 2007 Major Expenditures Related to Capital Asset Additions Mao ExediueDuring Fiscal Year Ended Reae June 30, 2008 to: CaiaIse diin Campus Expenditures Source Sou~ce Funding of Funding Columbia:
Mid-Campus Housing $$ 23,713,000 Bond Proceeds Schurz/Bingham Halls 18,824,000 18,824,000 Bond Proceeds Journalism Renovation 11,667,000 11,667,000 Gift Gift Kansas City:
Performance Contract Central Utilities Performance Contract $ 21,394,000 Bond Proceeds & PlantPlant Missouri S&T:
Mechanical Engineering Building 19,553,000
$ 19,553,000 Appropriations, Gifts, & Other State Appropriations, Other Thomas Jefferson North Renovation 8,060,000 Bond Bond Proceeds St Louis:
South Campus Garage South $ 3,916,000 Plant LIABILITIES increased $276.8 million as of June 30, 2008 Total Liabilities increased 2008overover June 30, 2007 and $41.3 million in fiscal year 2007 over June 30, 2006. Issuance of new bonds, discussed below, represented the largest factor in increased Significant changes in fiscal year 2008 year-end Current Liabilities include a $31.
liabilities. Significant $31.77 million decrease in Collateral for Securities on Loan as a result of lower demand from borrowers; borrowers; a $95.6 million increase in Investment Settlements Payable for purchases of investments Investment Settlements investments occurring on or before before June 30, 30, but settling after after June 30; and a $3.5 million increase increase in Deferred Deferred Revenue related to the timing of grants and tuition activity.
The The University $365.2 million of System Facilities University issued $365.2 Facilities Revenue Bonds at the beginning of fiscal year 2008, with
$102.3 million used primarily to defease
$102.3 defease existing debt and $262.9 million to fund new projects. Bonds Bonds were last issued in fiscal year 2006 with $108.9 $108.9 million for new projects projects and $191.8 $191.8 million to defease existing debt. Bonds Payable, Payable, net of premium/discount premium/discount and deferreddeferred losses on defeasance, defeasance, increased increased by $215.4 million in fiscal year 2008, while decreasing decreasing by $14.7
$14.7 million in fiscal year 2007. .
The following summary of long-term following is a summary long-term debt by type of debt instrument, including including the current current and noncurrent noncurrent portions:
Long-Term LongTer Debt Summary Deb Sumar (in thousands of dollars)
Fiscal Year Fiscale r;fYear Year I Fiscal ear Fiscal Year 2008 2007 2006 2006 System System Facilities Facilities Revenue Unamortized Revenue Bonds Unamortized Premium/Discount Bonds Premium/Discount and and Loss Loss i5iJ~~l $
857,105 $ 645'825'~
645,825- $ 660,585 660,585 r on Defeasance Defeasance 11,102 11,102 6,960 6,960 6,869 6,869 868,207 868,207 652,785 652,785 667,454 667,454 Notes Payable Payable 2,460 2,460 i
Capital Capital Lease Lease Obligations Obligations I 8,892 8,892 9,354 9,779 9,779
$ 879,559 879,559 1$ $ 662,139 662,13911 $ 677,233 677,233 1I 2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 6 A A COMPONENT COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI
OJ//l
~:d/~wnc/~~...
/-;)(I a'" . .
FOR THE YEARS FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007 NET ASSETS ASSETS Net Assets represent represent the value of the University's assets after liabilities liabilities are deducted. The University's total Net Assets increased by $127.2 Assets'increased $127.2 million in fiscal year 2008, including including $19.9
$19.9 million for a change in accounting principle, and $308.2 million in fiscal year 2007. These increases increases in total Net Assets are reflected in the four component categories as follows:
component
- Invested in Capital Assets, Net of Related Related Debt, represents represents the University's investment in capital assets, net of accumulated accumulated depreciation depreciation and outstanding debt related to acquisition, construction construction or or improvement of those assets. This category increased by $60.7 million to $1.4 improvement $1.4 billion in fiscal year 2008 and $115.9
$115.9 million to $104
$1.4 billion in fiscal year 2007 due to issuance of additional revenue revenue bonds in fiscal years 2008 and 2006 and related investment in buildings, equipment, equipment, and infrastructure.
infrastructure. To the the extent that debt has been issued but bilt not yet expended expended for capital assets, the amounts are not reflected reflected in these totals.
- Restricted Restricted Nonexpendable Nonexpendable Net Assets include endowment and similar assets that are subject to externally externally imposed stipulations for the principal to be maintained in perpetuity perpetuity by the University. This category category represents the historical value (corpus) of gifts to the University'sUniversity's permanent permanent endowment.
Unrealized Unrealized market market losses contributed contributed to a 2.7% 2.7% decrease, decrease, or $19.8
$19.8 million, in Restricted Nonexpendable Nonexpendable Net Assets during fiscal year 2008, while additional additional gifts and market gains increased increased the value by 18.1 18.1%, $113.3 million, during fiscal year 2007.
%, or $113.3
- " Restricted Expendable Net Assets are resources that are subject to externally Restricted Expendable externally imposed imposed stipulations regarding their use, but are not required required to be maintained maintained in perpetuity. During fiscal year 2008, this category also recognized recognized a decrease decrease of $3.1 million, or 0.8%, and in fiscal year 2007 realized an increase of $4.6 million, or 1.3%. As of June 30, 2008, this category category includes:
- $262.3 million of net assets restricted for operations and endowment purposes compared to $270.2 million at June 30, 2007;
- $77.6 million for student student loan programs compared to $75.8 million; million; and
- $27.6 million
$27.6 million for facilities compared to $24.6 million.
- Unrestricted Unrestricted Net Assets are not subject subject to externally externally imposed stipulations although these resources may be designated designated for specific purposes by the University's management management or Board of Curators.
Curators. This category increased by $89.5 million, or 11.0%, in fiscal year 2008 and by $74.4 category $74.4 million, or-10%,
or* 10%, in fiscal year 2007 over the prior years. As of June 30, 2008, and 2007, capital project-designated project-designated funds
$145.9 inillion totaled $145.9 million and $72.0
$72.0 million, respectively; student loan program-designated program-designated funds totaled $5.6 million and $4.9 million, respectively; and unrestricted unrestricted funds functioning as endow-ments totaled $111.5$111.5 million and $157.6
$157.6 million respectively.
respectively.* The remaining Unrestricted Unrestricted Net Assets which are not designated and are availableavailable for the University's University's instructional instructional and public service missions and its general operations operations totaled $641.8 million and $580.9 million at June 30, 2008, and 2007, respectively.
respectively.
2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE MISSOURI STATE OF MISSOURI 7
~~anr/~~&4 FOR THE YEARS FOR YEARS ENDED ENDED JUNE JUNE 30, 2008 AND 2007 AND 2007 The distribution of the Net Asset balances, balances, including including additional details on unrestricted net assets by fund type, as of of June 30, 30, 2008, 2008, are as follows:
I Total Toa . Net Ne Assets $3.
Aset $3.4 billion bilo0 Restricted Restricted Nonexpendable Nonexpendable 20.9%
20.9%
Unrestricted
_26.4%
Current Operating Current Operating 71.0%
University Loans Loans Invested in Capital 0.6%
0.6%
Assets, Net Net of Plant Funds Plant Funds Related Debt 16.1%
16.1%
42.0%
42.0% vP Quasi Endowment Endowment 12.3%
12.3%
Restricted I Expendable Expendable 10.7%
10.7%
2008 FINANCIAL 2008 FINANCIAL REPORT: UNIV E RSITY OF MISSOURI UNIVERSITY MISSOURI 8 A C COMPONENT OMPO NEN T UUNIT OF NIT O F THE STATE MISSOURI S TAT E OF MI ~S O U RI
~~juw<wd~~ddx/)
. FOR FOR THE YEARS ENDED ENDED JUNE 30, 2008 2008 AND 2007 2007 STATEMENT OF REVENUES, STATEMENT REVENUES, EXPENSES, EXPENSES, AND AND CHANGES CHANGES IN NET ASSETS The Statement Statement of Revenues, Revenues, Expenses, and Changes in Net Assets presents the University's results of operations.
The Statement distinguishes revenues and expenses between between operating nonoperating categories, operating and nonoperating categories, and provides provides a view of ofthe University's operating margin.
the University's I
Condensed Condensed StatementStatement of Revenues, Expenses, Expenses, and Changes Changes in Net ' et Assets N Assets (in thousands of dollars) II Fiscal Year F Net Tuition and Fees $ 417,205 417,205 Grants Grants and Contracts
- 326,380 :
326,380 288,443 Patient Patient Medical Services, Services, Net Net 681,312 681,312 648,802 Auxiliary Enterprises Other Auxiliary Enterprises 301,156 301,156 258,790 Other Operating Revenues 81,200 94,951 Total Operating Revenues 1,807,253 S_
Salaries, Wages Wages and Benefits 1,464,051 1,374,7903 Supplies, Services Services and Other Operating Operating Expenses 662,331 608.134 17 Other Operating Operating Expenses 165,481 157,671 4M,7O Expenses Total Operating Expenses 2,291,863 2,291,863 1 2,140,59,5I1 'IL1E Operating Loss Operating (484,610)
(484,610) (448,305) Q 168)
State Appropriations Appropriations 462,281 -440,855 4,893 Loss after State Appropriations, beforel ,?*
Loss after State Appropriations, before Nonoperating Revenues (Expenses) (22,329), 1 .4150) 1 Nonoperating Revenues (Expenses)
Investment and Endowment Income, Investment and Endowment Income, Net Net 39,673 202,3 11 Private Gifts 51,680 553,:2 6:8-Private Gifts Nonoperating Revenues Other Nonoperating Revenues (Expenses)
(Expenses) (27,572) 1.8,',539) (19,331)
Nonoperating Revenues Net Nonoperating Revenues 63,781 237,36 2 15 6,8,27 Income before before Capital Capital Contributions, Additions to Permanent Endowments and Extraordinary Extraordinary Item 41,452 . ,229,912 169,55)2 State Appropriations State Capital Appropriations 15,532 15,532 18,138 8,50,3 Capital Capital Gifts and Grants 17,341 17,341 12,941 16,,Z8,5 Private Private Gifts for Endowment Endowment Purposes 32,995 32,995 127,917 296,6 Extraordinary Extraordinary Item ___19,317 Increase Increase in Net Assets 107,320 107,320 : 308,225 9,9 Net Assets, Beginning of Year Year 3,303,206 3,303,206 2,994,981 Cumulative Cumulative Effect of Change in Accounting Accounting Principle 19,916 19,916 . .......................
Net Assets, Beginning of Year, as Adjusted Adjusted 3,323,122 I 2,994,9891*:9 E84i, =@484,]03 Net Assets, End of Year : $ 3,430,442 3,430,442 S5* 3,303,206, 1$F2,9I48119 REVENUES Operating Revenues Operating Revenues represent represent resources generated generated by the University in fulfilling its instruction, research, and public service service missions. Total Operating Revenues Revenues increased increased by almost almost $115.0
$115.0 million, or 6.8% 6.8% in fiscal year 2008, and by $92.7
$92.7 million, or 5.8% in fiscal year 2007. Grants and Contracts and Other Other Auxiliary Auxiliary Enterprises 2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURIMISSOURI COMPONENT UNIT OF THE STATE OF MISSOURI A COMPONENT MISSOURI 9
~~wnand~~
Ia~6?99~6flY ~
67 a~<V 67/
FOR THE YEARS FOR YEARS ENDED ENDED JUNE 30, 2008 AND 30, AND 2007 contributed most significantly to the operating operating revenue revenue gain in fiscal year year 2008 while tuition, Patient Medical Services, and other miscellaneous operating revenues had the largest gains in the previous year. Nonoperating Revenues are those not generated Revenues generated by the University's University's core missions and include such funding sources as State and Federal Appropriations Federal Appropriations and Gift and Investment Investment Income. Investment and endowment endowment income income and gift income income are the largest variable variable factors in this category.
The following are graphic graphic illustrations of revenuesrevenues by source, including both operating operating and nonoperating nonoperating revenue streams for fiscal year 2008.
Total Operating T o a RevenuesO $1.8 p r t billion n
- 1 Other Auxiliary Other Auxiliary Net Tu Tuition ition and //Enterprises Fees Fees 16.7%
23.1%
23.1%
Grants and Contracts -,,
18.1%
- 18. 1%
"Patient Medical atient Med ical Other Operating- - Services 4.5%
4.5% 37.7%
37.7%
Total Nonoperating Toa Nonpertin Revenues Reene $567.9
$579milo million P'rivate Private Gifts 9.1%
9.1%
Investment Investment Income Income 7.0%
5 Federal Federal and and State Appropriations Appropriations 83.9%
FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 10 10 A COMPONENT C OMPO NENT UN UNITIT OF THE STATE STATE OF MISSOURI MISSOURI
Operating Revenues Operating Revenues Tuition and Fees, Allowances, increased by $15.9 Scholarship Allowances, Fees, net of Scholarship $15.9 million, or 4.0%4.0% in -fiscal fiscal year 2008 and by
$26.4
$26.4 million, or 7.0% in fiscal year 2007. The increases increases in both both fiscal year year 2008 2008 and 2007 Board-approved reflect Board-approved enrollment fees of 3.8% and 5.0%,
increases in tuition and related enrollment increases respectively, and increases 5.0%, respectively, student increases in student enrollments.
enrollments.
As a research institution, the University receives amount of funding through receives a substantial amount Federal, State and through Federal, Private Grants and Contracts. Overall, increased by $37.9 million, or 13.2% in fiscal year Overall, sponsored funding increased 2008 compared to a 0.5% 0.5% increase in fiscal year 2007. The University's programs, with increased University's research programs, increased funding funding from all sources, represented most of the fiscal year 2008 increase sources, represented sponsored funding. In addition, total federal increase in sponsored grants contracts increased grants and contracts million over the prior year. In fiscal year 2007, increased by $24.5 million 2007, decreases decreases in Federal Federal grant funding were largely offset by increases in State grant funding and private private grants andand contracts.
The University's auxiliary enterprises University's auxiliary University Health System, Housing enterprises include the University Housing and Dining Dining Services, Services, campus campus Bookstores, supplemental activities. In fiscal year 2008, Bookstores, and other such supplemental Auxiliary Enterprises contributed 2008, Other Auxiliary contributed increase in Operating to a $42.4 million, or 16.4%, increase Revenues over the prior year. Patient Medical Operating Revenues Services, which Medical Services, which services includes fees for services provided by the University Hospitals and Clinics and the University University Physicians Practice Practice Plan, increased $32.5 million, or 5.0%,
increased by $32.5 5.0%, in fiscal year 2008.
Revenues Nonoperating Revenues increased by $21.4 million, or 4.9%, in fiscal year 2008, and by $12.0 State Appropriations increased $12.0 million, or 2.8%,
2.8%, in fiscal year 2007. As one of the more variable variable nonoperating revenues, Investment nonoperating revenues, Endowment Income Investment and Endowment Income includes interest and dividend income realized and unrealized income as well as realized unrealized gains and losses. Unrealized market value Unrealized market losses and other activity affecting Investment Investment and Endowment Income contributed Endowment Income contributed to a $163.0
$163.0 million, million, or 80.4%,
80.4%,
decrease in fiscal year 2008, while in fiscal year 2007, unrealized 2007, unrealized market gains contributed contributed to a $91.0 million, or 81.4%, increase 81.4%, increase in value.
income is reflected in three Gift income three categories: Gifts, Capital Gifts and Grants (which are restricted for categories: Private Gifts, improving capital assets) and Private Gifts for Endowments adding or improving Endowments (which are restricted for establishing establishing endowments). significantly from year to year due Private Gifts and Grants can fluctuate significantly endowments). Private due to the voluntary voluntary nature of of donors' gifts. In fiscal year 2008, the University donors' University received totaling $102.0 received gifts totaling compared
$102.0 million, compared to fiscal year
$94.1 million and fiscal year 2006's $107.2 2007's $94.1 $107.2 million. .
In fiscal year 2008, State Capital Appropriations of represented a decrease
$15.5 million represented of $15.5 $2.6 million from decrease of $2.6 2007's $18.1 fiscal year 2007's $18.1 million. Fiscal yearyear 2008 state appropriations include state capital appropriations include $15 Mechanical
$15 million for a Mechanical Engineering Building on the University's Missouri S&T Engineering campus, of which $10.5 S&T campus, $10.5 million was spent during the fiscal year, and $28.5
$28.5 million for Benton and StadlerStadler Halls on the St. Louis campus,'of campus; of which about $200,000 was spent.
In addition, state capital appropriations funded several smaller capital appropriations smaller projects, such as $5 $5 million for a plant plant science science research facility in Mexico, Missouri. Almost Almost all of fiscal year 2007's 2007's state state capital appropriations, $18.1 million, appropriations, $18.1 million, Center on the Kansas City campus.
Sciences Center funded the Health Sciences In fiscal year 2007, the University University received received net proceeds $19.3 million resulting from the sale of Missouri proceeds of $19.3 Missouri Care, L.c.,
L.C., a discretely presented component transaction was component unit of the University. The transaction recorded as an Extraordinary was recorded Extraordinary Changes in Net Assets for the year ended Expenses and Changes Statement of Revenues, Expenses Item in the Statement ended June 30,30, 2007. Refer to Note 19 for additional additional information.
infonmation.
2008 FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL MISSOURI UNIVERSITY OF MISSOURI A COMPONENT COMP'ONENT UNIT UNIT OF STATE OF MISSOURI OF THE STATE MISSOURI 1 11
~ ~J~and' ~ ~RSENDEDJUNE30,2008 FOR THE YEARS ENDED JUNE 30, 2008 ANt) AND 2007 2007 OPERATING OPERATING EXPENSES EXPENSES Total Operating Operating Expenses increased by $$151.3 151.3 million, or 7.1 7.1%,%, in fisca fiscall year 2008 compared compared to an increase of of
$94.8 million or 4.6%
4.6% in fiscal year 2007. The following graph illustrates the University's University's operating expenses by by classification for fiscal year 2008:
natural classification 2008 :
Operating Expenses by Natural Classification -
Operating~~~~~~
Exessb0aualCasfcto
$2.3 billion Supplies, Supplies, Services and Scholarships and Scholarships Other Fe llowships Fellowships 28.9%
28.9% 1.7%
1.7%
Depreciation
.,..-_ _ Depreciati on 5.5%
5.5 %
Benefits -
Benefits _ _ ----'
13.6%
_ _ _ Salaries and and Wages 50.3%
50.3%
During fiscal years 2008 and 2007, Salaries Salaries and Wages increased approximately 4.7% and 5.5%,
increased approximately 5.5%, respectively, respectively, over the prior fiscal year primarily due to Board-approved Board-approved employee merit increases and additional full-time equivalent employees. At the same time, time, Benefits increasedincreased by 13.7%,13.7%, in fiscal year 2008,2008 , and 9.7%, in fiscal year year 2007. In fiscal year 2008, the University contributed contributed an initial $37 $37 million to establish a trust fund for its other post-employment benefits as a new GASB standard requiring governments governments to recognize recognize liabilities liabilities associated associated with future benefits became became effective. The University Universi ty contributed an additional $16.5 $16.5 million in pay-as-you-go pay-as-you-go costs for these other post-employment benefits. Fiscal year 2007's increased benefits costs related to University post-employment benefits. University contributions contributions for medical, dental and life premiums, as well as contributions to the Retirement medical, Retirement Trust Fund.
fiscall year 2008, In fisca University's 2008, the University ' s Supplies, Supplies, Services, Services, and Other Other Operating Operating expenses expenses of $662 $662.3.3 million increased by 8.9%
8.9% over fiscal year 2007's 2007's $608 $608.1.1 million. In contrast, Supplies, Services, Services, and Other Operating Operating expenses increased by $1.5 $1.5 million, or 0.3%,0.3%, in fiscal year 2007 compared to fiscal year 2006. In fiscal year 2008, 2008, the cost of goods sold, which directly directly relates to additional auxiliary enterprise revenues, additional auxi liary enterprise revenues, increased increased by $7.9
$7 .9 million, 7.7%.
or 7.7%.
The core missions of instruction, instruction, research, research, and public service account account for the largest proportion of Operating Expenses at 38.9% for fiscal year 2008. 2008 . The University University of Missouri Health System constitutes the next highest highest proportion at 28.2%
28.2% of expenses for fiscal year 2008. Further, these functions represent approximately approximately the same percentages of operating percentages operating expenses as in fiscal year year 2007. Institutional support, which represents the core administrative operations of the University, University, was only 4 to 5 cents of each dollar during this 5-year period. period.
2008 2 00 8 FINANCIAL F I N A NC IA L R REPORT:
E POR T: UN UNIVERSITY IV E RSITY OF O F MISSOURI MISSO U RI 12 12 A COM (OMPONENT P ONENT UNIT UNIT OF T THE STATE H E STAT E OF MMISSOURI I SSOUR I
~~a=/~~ ai~/
FOR THE Y EARS ENDED JUNE 30, YEARS 2008 ANDAND 2007 2007 The fol lowing graph following graph illustrates the University's operating expenses University's operating expenses by fu nction for the five years function years ended June 30, 2008:
Operating O p ra i n Expenses E x e n e b y Function by F u ct o I 100%
100% T-
"* Instruction Jnstruction 90% t-
- Research Research 80% "* Public Service Service 70%
- Academic Academic Support 60% +-----
- Student Services
- Student Services 50%
50% -* Institutional Institutional Support Support 40% -t-- - U* Operation Operation & Maintenance of Plant 30% - Health System System 30%
20% ** Other Auxiliary Enterprises Enterpri ses 20% -
Scholarships & Fellowships Scholarships 10% 4--
10%
I m I m D
- i Depreciation 0%/
0%
2008 2008 2007 2007 2006 2005 2004 2004 STATEMENT STATEMENT OF CASH CASH FLOWS Statement of Cash Flows provides information The Statement information about the University's sources and uses of cash and cash equivalents during the fiscal year. The following summarizes sources and uses of cash and cash equivalents equivalents for the three years ended June 30, 30, 2008:
Statement Sttmn of of Cash Flows Cas Flw (in (ithousands of dollars) l thuad of dolas)
Fiscal Year Fiscal Yea Yearr Fiscal Year 2008 2008 2007 2006 I
Net Cash Cash Used in Operating Activities in Operating $ (344,399)
(344,399) $ (386,301)
(386,301) $ (287,403)
Cash Provided by Noncapital Financing Activities Net Cash Activities 556,155 567,782 567,782 537,497 Cash Used in Capital and Re Net Cash lated Financing Activities Related (110,046)
(110,046) (244,755) (149,628)
Cash Provided by (Used in) Investing Net Cash Activities Investing Activ ities (236,064)
(236,064) 203,998 {174, 466 l Increase (Decrease)
Net Increase (Decrease) in Cash and Cash Equivalents Equivalents (134,354)
(134,354) 140,724 140,724 (74,000)
Equivalents, Beginning of Year Cash and Cash Equivalents, Year 407,723 407,723 266,999 340,999 Cash Equivalents, Cash and Cash Equivalents, End of Year $ 273,369 $ 407,723 $ 266,999 20 08 FINANC[AL 2008 FINANCIAL R EPORT: UNIVERSITY REPORT: UN IV ERS I TY OF OF MISSOURI MISSOURI A OMPON E NT UNIT COMPONNENT A C UN IT OF OF THE STATE-THE STAT OF MI E OF MISSOUtRI SS O U RI 13
(7 FOR THE YEARS ENDED JUNE 30, 2008 AND 2007
. FOR THE YEARS ENDED JUNE 30, 2008 AND 2007 Net Cash Used in Operating Operating Activities reflects the continued need for funding from the State of Missouri, as funding received from tuition and fees and related sales and services of auxiliary auxiliary and educational educational activities are not sufficient to cover operational needs. In fiscal year 2008, $41.9 million less cash was used in operating activities compared compared to fiscal year 2007 due to increasedincreased cash inflows from tuition and fees; federal, state, and private grant
. revenues; revenues; and patient revenues, as well as decreased cash outflows due to higher year-end payables for salaries, staff benefits, and vendor payments. In fiscal year 2007, cash used in operating activities increased increased by $98.9
$98.9 million million over fiscal year 2006 due to lower lower inflows of cash from operating activities and higher outflows for salaries, benefits, benefits, and vendor payments.
The University's most significant significant source of cash, Net Cash Provided Provided by Noncapital Noncapital Financing Financing Activities, includes funding from State State and Federal appropriations appropriations and noncapital private gifts. Cash from these sources totaling totaling $556.2
$556.2 million million in fiscal year 2008, $567.8 million million in fiscal year2007, year 2007, and $537.5 million in fiscal year 2006 directly directly offset the additional cash needs resulting from operations.
In fiscal year 2008, the University issued revenue bonds to finance capital expansions, expansions, therefore, Net Cash Used in Capital Capital and Related Financing Activities decreased by $134.7 $134.7 million compared compared to fiscal year 2007. Similar Similar results were seen in fiscal year 2006 when the previous revenue bonds were issued, thus decreasing the net cash outflows outflows from fro'm capital activities. In contrast, during during the fiscal year 2007 the University used the previous year's year's bond-generated bond-generated cash for capital expansion across all campuses.
Net Cash Provided by Investing reflected outflows of $236.1 million in fiscal year 2008, Investing Activities reflected 2008, compared compared to the cash inflows of $204.0 million in fiscal year 2007. Due to difficult market market conditions in the current year, the University's University's investment pool experienced losses on sales and maturities of investments investments that were not fully offset by by interest interest and dividend income, compared compared to significant gains during fiscal year 2007. In fiscal year 2006, cash outflows outflows of $174.5$174.5 million included losses on sales and maturities maturities of investments during the year exceeding exceeding gains from interest interest and dividend income.
ECONOMIC OUTLOOK OUTLOOK The University of Missouri continues continues to provide quality service to students, students, patients and citizens across the state of of Missouri and to strengthen strengthen its financial position through positive operating results. The University University received received aa 4.3%
4.3%
increase increase in state appropriations for operations operations for fiscal year 2008 and a 4.8%
4.8% increase for FY 2009. Given turmoil in the financial financial markets, the University is closely monitoring the State's ability to continue to provide increased increased funding in the future.
.fifth year in a row, gross tuition and fees continued For the .fifth continued to surpass State appropriations as the largest source of of non-healthcare operating non-healthcare operating revenues. This is projected to continue continue in fiscal year 2009. Tuition rates increased 3.8% 3.8%
in fiscal year 2008 and 4.1% 4.1 % in FY 2009. Coupled with continued enrollment enrollment growth growth on all four campuses; campuses, tuition and fee increases increases ensure the University's ability to maintain positive operating results. Both headcount~and headcount.,and full-time equivalent enrollment continuecontinue to reach historic highs. From fall 2000 to fall 2007, the University of Missouri full-time equivalent equivalent enrollments grew 19.7% 19.7% and accounted accounted for 72%
72% of the increase increase in enrollments enrollments at the State's State's four-year higher education institutions. Enrollments are projected to be up significantlysignificantly in the Fall 2008 as well based on preliminary preliminary enrollment enrollment numbers. In 2007, the University granted nearly 14,000 degrees degrees contributing contributing significantly significantly to supporting supporting an educated workforce workforce in Missouri. This is a 32% 10-year period. The 32% increase over a lO-year University of Missouri, as the State's research and land-grant institution of higher education, education, enrolls the state's top students.
FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI 14 A A COMPONENT COMPONENT UNITUNIT OF THE STATE OF THE STATE OF OF MISSOURI MISSOURI
~~and~~~ FOR THE YEARS FOR YEARS ENDED ENDED JUNE 30, 2008 ANDAND 2007 2007 The University University faces increases unavoidable costs, such as utilities, insurance, the cost of opening new buildings, increases in unavoidable and increases increases in the cost of ongoing operations, such as travel due to increased energy' costs, information increased* energy' information technology including security, licenses technology licenses and maintenance, maintenance, increased costs of compliance compliance and training, libraries, and and additional additional required maintenance maintenance and repair expenditures.
expenditures. Increasing Increasing costs, in conjunction with rising enrollments enrollments and the need to maintain affordability, affordability, pose a budgetary budgetary challenge for the University.
Cognizant Cognizant of the many demands on the State's State's limited resources, the University University of Missouri Missouri has worked worked to reduce expenditures expenditures through administrative administrative efficiencies efficiencies and increased revenues revenues from other sources. For example, in fiscal performed a comprehensive year 2007, the University performed comprehensive review of university administration administration with a goal of reducing expenses expenses by 10 percent percent or $12.4
$12.4 million. By the end of the review process the University University had identified $20 identified $20 administrative reductions million in administrative reductions for reinvestment reinvestment in academic and strategicstrategic priorities. In fiscal year 2008, the Board of Curators requested a review of academic programs programs and processes which generatedgenerated efficiencies equal to 1 percent of the operations approximately $9 operations budget, approximately $9 million, to fund the University's University'S highest strategic priorities.
priorities.
For fiscal year 2009, the University University will use a combination combination of internal reallocations and efficiencies efficiencies to fund $8.1
$8.1 million in cost increases and strategic investments.
Senate Senate Bill 389 passed by the General General Assembly in June 2007 has had and will continue to have an impact impact on on education in Missouri in the coming years. The Legislation includes higher education includes additional authority for the Department Department of Higher Education, Education, limits on increases increases in tuition unless a waiver is granted, additional reporting reporting requirements, requirements, and and additional funding for student aid for Missouri Missouri students.
The University of Missouri Health System continues continues to improve its operating operating revenues and financial position position in fiscal year 2008. As in prior years, the Health System System is committed to improving patient care and has increased increased its focus on improvements in customercustomer service service and quality and growth in clinical clinical areas. State funding for operations operations and facilities has helped in providing for uncompensated uncompensated care care and graduate graduate medical education.
education. An overall fee increase implemented in fiscal year 2008 and pricing increase of 5% was implemented pricing revisions revisions continue as needed. For the future, the Health System continues to focus on its physician recruitment physician recruitment plans, patient satisfaction, satisfaction, and efforts to reduce the cost of operations. In addition, the Health System is beginning strategic capital improvements, which include constructing constructing a $48.0 million Orthopedic Institute and replacing replacing the Ellis Fischel Cancer Center using $31.2 million in State capital capital funding appropriated appropriated in 2008.
The University continues to strengthen diversify its funding sources through effective endowment strengthen and diversifY endowment management, management, increased increased private giving, and additional additional Federal research funding. During fiscal year 2008, private giving across the University University increased, but fiscal year 2009 will be challengingchallenging due to the current economic and and financial uncertainties. The University's Columbia financial Columbia campus concluding a $1.0 campus is concluding $1.0 billion capital campaign in December 2008, while Missouri S&T is in the midst of a $200 million capital campaign slated to finish in 20 December 2010.
I O.
Coupled with its growth in Federal grant funding, the University University also has been recovering more of the facilities and administrative administrative costs associated associated with sponsored sponsored research through negotiating negotiating an increased increased cost recovery recovery rate for fiscal years 2007 through 2009. The University is currently currently in the process of negotiating its cost recovery recovery rate for fiscal years 2010 through 2012 and is seeking further increases increases to more fully cover those costs for future research.
With the addition of economic economic development as its fourth mission, the University University accelerated accelerated its partnerships partnerships with
. the state of Missouri Missouri and the private private sector in support of economic initiatives initiatives that build on the University's University'S research strength. Included Included are the new researchresearch park, Discovery newly-opened Life Sciences Discovery Ridge, and newly-opened Sciences Business Incubator Incubator at the University University of Missouri-Columbia Missouri-Columbia campus, and the new business technology technology park at the University of Missouri-St Louis campus. Anchor tenants from the private sector are operating at both parks. The University'S University's technology transfer operation has been reorganized technology reorganized and strengthened to ensure that the breakthroughs breakthroughs that are achieved achieved in the laboratory laboratory benefit benefit the citizenry citizenry as rapidly as possible.
The The national national and state economic downturn will likely pose budgetary budgetary challenges challenges for the University in the immediate future. However, immediate future. However, strong demand demonstrated demonstrated by growing growing enrollments, enrollments, highly successful successful capital campaigns, and robust research funding are all factors in the positive outlook for the University of Missouri.
2008 2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNITUNIT OF THE STATE OF THE STATE OF OF MISSOURI MISSOURI 15 15
KPMG KPMG LLPLLP Suite 900 900 10 10 South Broadway Broadway St. Louis, MO SI. MO 63102-1761 Independent Independent Auditors' Auditors' Report Report The Board of Curators University of Missouri: '.
We have audited the accompanying accompanying financial statements of the business-type activities, actIVItIes, the aggregate discretely presented component component units, and the aggregate aggregate remaining fund information of the University of of Missouri, Missouri, a component component unit of the State of Missouri, as of and for the years ended June 30, 2008 arid and 2007, which collectively comprise the University University of Missouri's basic financial statements as listed in the table of of contents. These contents, These financial statements statements are the responsibility responsibility of the University University of Missouri's management.
Our responsibility is to express express opinions opinions on these financial statements statements based on our audits.
We conducted our audits in accordance accordance with auditing standards generally accepted accepted in the United States of of America and the standards applicable applicable to financial audits contained in Government Auditing Standards, Standards, issued by the Comptroller Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable reasonable assurance about whether whether the financial statements statements are free of material material misstatement. An audit includes consideration consideration of internal control control over financial reporting as a basis for designing audit procedures that are appropriate appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness effectiveness of the University of Missouri's internal internal control over over financial reporting.
Accordingly, we express express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, statements, assessing the accounting accounting principles used and significant estimates estimates made management, as well as evaluating made by management, evaluating the overall financial statement statement presentation. We believe believe that our audits provideprovide a reasonable reasonable basis for our opinions.
In our opinion, the financial statements statements referred to above present present fairly, in all material material respects, the respective financial position of the business-type business-type activities, the aggregate aggregate discretely presented presented component component units, and the aggregate remaining fund information information of the University of Missouri as of June 30, 2008 and and 2007, and the respective respective changes in financial position, and where applicable, cash flows thereof for the years conformity with U.S. generally years then ended in conformity generally accepted accounting principles.
Effective Effective July I, 1, 2007, 2007, the University of Missouri implemented implemented Governmental Governmental Accounting Accounting Standards Board Statement Statement No. 45,45, Accounting and and Financial Financial Reporting Reporting by Employers for for Postemployment Postemployment Benefits Other Than Pensions.
Other Pensions, and effective effective June 19, 19, 2008, the University of Missouri implemented implemented Governmental Governmental Accounting Standards Standards Board Statement No. 43, Financial Board Statement Financial Reporting Reporting for for Postemployment Postemployment Benefit PlansPlans Other Than Other Than Pension Pension Plans.
Plans.
In accordance Government Auditing Standards, accordance with Government Standards, we have also issued our report dated October October 31, 31, 2008 on our consideration consideration of the University of Missouri's internal control over financial reporting and on on our tests of its compliance compliance with certain provisions provisions of laws, regulations, contracts, and grant agreements agreements and other matters. The purpose of that report is to describe describe the scope of our testing of internal control control over over financial reporting and compliance compliance and the results of that testing, and not to provide an opinion on the internal control control over financial reporting or on compliance. compliance. That report is an integral part of an audit audit performed performed in accordance accordance with Government Government Auditing Standards Standards and should be considered in assessing the results of our audit.
KPMG LLP, aa u.s.
KPMG LLP, U.S. limited limited liability partnership, is liability partnership, the U.S.
is the U.S.
member firm of KPMG KPMG International, a Swiss cooperative.
2008 FINANCIALFINANCIAL REPORT: UNIVERSITY OF REPORT: UNIVERSITY MISSOURI OF MISSOURI 16 16 A COMPONENT COMPONENT UNIT UNIT OF THE STATE STATE OF MISSOURI MISSOURI
The management's discussion and analysis on pages 2 through through 15, 15, the schedules of employer contributions contributions and the schedules of funding progress on pages pages 66 and 67 are not a required part of the basic financial statements but are supplementary required by u.s.
supplementary information required U.S. generally generally accepted accounting principles.
principles.
We have applied certain limited procedures, procedures, which consisted principally of inquiries of management management regarding regarding the methods of measurement and presentation presentation of the required supplementary supplementary information.
However, we did not audit the information information and express no opinion opinion on it.
SMG L CP St. Louis, Missouri October 31, 31, 2008 2008 FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT UNIT OF OF THE STATE OF THE STATE OF MISSOURI MISSOURI 17
STATEMENT OF NET ASSETS STTMNTO E ASST June 30, AsAsof Jun 2008 and 2007 30:, 208ad20 (in thousands of dollars)
Discretely Presented Discretely Presented University University Component Component Unit(s)
Unites) 2008 i 2008 20072008 2008 2007 IAssets, >27,`
Current Assets:
Current Assets:
Cash and Cash Equivalents $ S 57,987 $ S 137,640 137,640 $ $ 5,054 $ $ 2,358 2,358 Restricted Cash and Cash Equivalents Restricted 215,382 215,382 270,083 Short-Termn Investments Short-Tenn Investments 172,294 172,294 131,311 131,311 Restricted Short-Tenn Restricted Short-Term Investments Investments 91,800 91,800 117,735 117,735 Receivable, Net Accounts Receivable, Net 249,654 249,654. 235,975 235,975 18,719 18,719 19,262 19,262 Receivable, Net Pledges Receivable, 9,796 9,796 12,980 12,980 Investment Settlements Settlements Receivable Receivable 72,878 72,878 : 3,617 3,617 Notes Receivable, Receivable, Net 13,747 13,747 . 14,599 Due From (To)
(To) Component Component Units and Retirement Retirement' (4,355)
(4,355). (4,062) 4,355 4,109 Inventories 33,063 .
33,063 33,121 33,121 2,690 2,331 Prepaid Expenses Expenses and Other Other Current Current Assets 18,636 .
18,636 118,248 1,2 19 1,219 2,137 Current Assets Total Current 930,882 930,882 971,247 32,037 32,037 30,197 Assets:
Noncurrent Assets:
Restricted Restricted Cash and Cash Equivalents Equivalents 4,301 ; 4,213 4,213 Pledges Receivable, Receivable, Net 21,147 21,147 : 23,000 23,000 Notes Receivable, Receivable, Net Net 46,898 ;
46,898 45,425 Deferred Charges and Other Deferred Other Assets Assets 10,397 10,397 . 9,340 9,340 1,384 1,384 1,377 1,377 Restricted Other Restricted Other Assets 2,963 4,904 4,904 Long-Term Investments Long-Term Investments 810,655 810,655 : 707,333 707,333 25,367 21,957 21,957 Restricted Restricted Long-Term Long-Tenn Investments Investments 919,364 919,364 767,332 767,332 Capital Assets, Net Net 2,227,427 '
2,227,427 2,039,069 75,159 75,159 75,614 Total Noncurrent AssetsAssets 4,035,888 4,035,888 3,_59_1,499 109,174 108,065 Assets Total Assets $ 4,966,770 i$ 4,966,770 I $ 4,562,746 $ 141,211 141,211 $ 138,262 HLIM iiisC,> *1 Current Liabilities:
Current Accounts Accounts Payable $ S 105,024 105,024 ' $ $ 101,330 101,330 $ $ 4,120 $ 4,134 4,134 Accrued Liabilities Accrued Liabilities 120,967 120,967 114,976 114,976 9,895 8,874 8,874 Deferred Revenue Deferred Revenue 67,821 67,821 64,030 64,030 Funds Held for Others 70,744 70,744 77,148 77,148 Investment Settlements Payable Investment Settlements Payable 136,606 136,606 41,021 41,021 Collateral Securities on Loan Collateral for Securities 106,360 106,360. 138,014 138,014 Capital Lease Obligations Capital Lease 501 501 462 27 30 30 Bonds Bonds and Notes Payable 21,201 16,975 970 970 935 Total Current Liabilities Total Current Liabilities 629,224 629,224 553,956 15,012 15,012 13,973 Noncurrent Liabilities:
Capital Lease Lease Obligations 8,391 i 8,892 8,892 44 71 71 Bonds and Notes Payable Payable 849,466 849,466 I 635,810 635,810 36,090 36,090 37,060 37,060 Deferred Revenue Deferred Revenue 1,876 1,876 i 2,162 2,162 Noncurrent Liabilities Other Noncurrent 47,371 : 558,720 720 703 635 Total Noncurrent Liabilities 907,104 907,104 i 705,584 I 36,837 , 37,766 Total Liabilities Liabilities *1,536,328 1,536,328 ; 1,259,540 I 51,849 51,739 (continued)
(continued) 2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY OF REPORT: UNIVERSITY MISSOURI OF MISSOURI 18 COMPONENT UNIT A COMPONENT UNIT OF THE THE STATE STATE OF MISSOURI MISSOURI
STAEMET O STATEMENT OF NE NET ASET ASSETS I' As ofAso ue3,20 30, 2008 June a n and 2007 2007 (in thousands of dollars)
Discretely DiscretelyPresented Presented University University Component Component Unit(s)
Unit(s) 2166k08 k~20 >t 0-08 --- .17-Fi~--2008-- 0 Invested Invested in inCapital Capital Assets, Assets, Net Netof ofRelated Related Debt Debt 1,439,753 38,463 38,463 Restricted:
Restricted:
Nonexpendable Nonexpendable--
Endowment Endowment 718,314 I
Expendable Expendable --
I Scholarships, Research, Instruction Scholarships, Research, Instruction and and Other Other 262,266 262,266 i 2,963 2,963 II Loans Loans 77,656 77,656 ! i I
Capital CapitalProjects Projects 27,597 27,597 I I Unrestricted Unrestricted 904,856 904,856 I 47,936 47,936 i Total TotalNet Net Assets Assets 3,430,442 3,430,442 : 89,362 89,362 i I : i Total Total Liabilities Liabilities and'Net and Net Assets Assets 1 $$ 4,966,770 4,966,770 I : $$ 141,211 141,211 I See Seenotes notestoto the thefinancial financial statements.
statements.
2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI COMPONENT UNIT AA COMPONENT OF THE STATE OF MISSOURI UNIT OF THE STATE OF MISSOURI 19 19
STATEMENT SATMN OF REVENUES, EXPENSES, OFRVNE, XESS AND AN CHANGES IN CHNE INNE NET ASSETS ASST For the Years Ended June 30, 2008 and 2007 (in thousands of dollars)
Discretely Presented Discretely University Component Unit(s) Unites) 2008 2008' ,: I 2~~7~J 2007 _ 1~_,~-2008-~--'
2008 "7'7 r-s" 2007
-~:=-:-':-:-,,--;-1~1R;;i"""'~~
I Operating Revenues:
[2perating Revenues:
Tuition Tuition and Fees Fees (Net of Provision Provision for Doubtful Accounts of $5,674 $5,674 in 2008 and $4,810 in 2007) $$ 557,085 557,085 $ 537,832 537,832 1$
i$ $$
Scholarship Allowances Less: Scholarship Allowances 139,880 139,880 136,527 136,527 I Net Tuition and Fees Fees 417,205 ' 401,305 1 Federal Federal Grants Grants and Contracts 211,648 ! 187,130 187,130 State and Local Grants and Contracts State 54;414 54,414 i 47,045 Private Private Grants and Contracts 60,318 60,318 54,268 54,268 Sales and Services of Educational Sales Educational Activities 19,569 , 22,346 22,346 Auxiliary Auxiliary Enterprises -
Patient Medical Services,Services, Net 681,312 681,312 ' 648,802 648,802 147,932 147,932 , 217,796 217,796 Housing and Dining Services (Net of ScholarshipScholarship Allowance Allowance of $502 $502 in 2008 and $490 in 2007) 72,503 I 66,828 66,828 Bookstores Bookstores 61,423 i 56,930 56,930 Other Auxiliary Auxiliary Enterprises Enterprises (Net of Scholarship Scholarship Allowance Allowance of$6,351 of $6,351 in 2008 and $6,343 in 2007) 167,230 167,230 135,032 135,032 Notes Receivable Receivable Interest Interest Income, Income, Net of Fees Fees 566 'I 566 378 378 Other Operating Other Operating Revenues Revenues 61,065 : 72,226 72,226 Total Operating Operating Revenues 1,807,253 1,807,253 1,692,290 1,692,290 1 147,932
- 217,7961 217,796
_ __ '-----J U§p~liatifig;E:xp:-.:e",n_s_-e-,-s:_-
6pperatifigExpenrs'es:' _ _ _ _ _ _ _ _ _ _ _ _--,- ?~--;*~1~,~W;:!t~~
~-.----~---.~,-~~'
Salaries and Wages 1,153,676 1,153,676: 1,101,867 1,101,867 -57,-984 57,984 / 551,911I 51,911 Benefits Benefits 310,375 i 310,375 272,923 272,923 12,589 i 12,589 11,450 11,450 Supplies, Services and Other Operating Operating Expenses 662,331 ! 608,134 608,134 64,878 64,878 i 144,449 Scholarships and Fellowships Fellowships 39,485 i 39,485 38,602 38,602 i Depreciation Depreciation 125,996 125,996: 119,069 119,069 10,061 I 10,132 10,132 Total Operating Operating Expenses Expenses 2,291,863 i 2,140,595 I 145,512 !
145,512 .2!7,942 217,9421 Ii Operating Income (Loss)
Operating (Loss) (484,610):
484,610)1 (448,305)
(448,305) 2,420 :
2,420 (146)
(146)
State Appropriations Appropriations 462,281 462,281 I 440,855 I _ , _
Income Income (Loss) (Loss) after after State State Appropriations, before Appropriations, before I I I I Nonoperating Nonoperating Revenues (Expenses) (22,329)1 (22,329)1 1 (7,450)
(7,450 I 2 2,420 , 4 2 0 ( 1 4( 6 )
46)
~..---,_~_ _ _ _ _ _J:::-:-:--:~;::-'--:-::-~_~ .'-~;'-r~c~*ry-*;~;-;,;;}_: i;~.-~:-~:;-,~ll';;.~.:'-,w.; m'l'i H~lon:QP~fating,:lie~enu~~(E*tienses): ..\.' '., - ",,1 ., ,.I:;i~~~...t.fmuft ~
n.
oioperqain- Revenues (ExPenses): .
14,277 14,105 [
Federal Appropriations Appropriations 14,277 I 39,673 14,105 202,633 I 1,844 i 1,500 Investment and Investment and Endowment Income, Net of Fees Fees 39,673 I 202,633 1,844 i 1,500 51,6801 53,268 15 I Private Private Gifts 51,680 : 53,268 15 : I Interest Expense Expense (37,099):
(37,099)1 (29,497)
(29,497) (1,760)1 (1,760y)i (1,813)
(1,813)
Other Nonoperating Nonoperating Revenues (Expenses)(Expenses) (4,750)i (4,750)1 (3,147)
(3,147) 320 i 1,378 1,378 Net Nonoperating Nonoperating RevenuesRevenues 63,781 ,
63,781 1 237,3621 237,362 1 419 iI 1 1,0651 1,0651 (continued)
(continued) 2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 20 20 A COMPONENT COMPONENT UNIT UNIT OF THE STATE STATE OF MISSOURIMISSOURI
I STATEMENT STTMN OF OF REVENUES, EXPENSES, AND CHANGES ININ NET RVNEEPNEADCNGS NESST ASSETS ,
For Fo the Years Ended the Years Ende June 30, Jun 30, 2008 2008 and an20 2007 I :
(in thousands of dollars) I Discretely Presented Presented University Component Component Unit(s) r--------,
2008 2007 2008 2007 77 -2 Income before Capital Contributions, Contributions, Additions to Permanent Endowments Permanent Endowments and Extraordinary Extraordinary Items , 41,452 ' 2~29,912 2,839 2,839 :
Appropriations State Capital Appropriations 15,532 15,532 ' 18,1~38.
I Capital Gifts Gifts and Grants 17,341 I 12,941 Private Gifts for Endowment Endowment Purposes 32,995 !
32,995 27,9 17 Extraordinary Items:
Extraordinary Net Proceeds from Sale of Missouri Care 193 17~
i 9L)2 Gain Gain from Sale of Missouri Care Increase (Decrease)
Increase (Decrease) in Net Assets 107,320 107,320 I I ~30J8,225 2,8391 2,839 Net Assets, Beginning of Year Year 3,303,206 3,303,206 ;
I 2,994,981 86,523 86,523 i Cumulative Effect of Change in Accounting Cumulative Accounting Principle Principle 19,916 19,916 Net Assets, Beginning of Year, as Adjusted Adjusted 3,323,122 3,323,122 2i,9947'81 86,523 !
86,523 Net Assets, Assets, End of Year Year $ 3,430,442 3,430,442 S 3133,206 $ 89,362 : 86S,523 See notes to the financial financial statements.
statements.
2008 FINANCIAL 2008 FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI OF MISSOURI A COMPONENT A COMPONENT UNIT UNIT OF OF THE STATE MISSOURI STATE OF MISSOURI 21 21
STATEMENT STTEENO OF CASH CAS FLOWS FOS For the Years Ended June 30, 2008 and 2007 (in thousands of dollars) 2008 2007 Tuition and Fees Tuition $ 417,719 I, $ *385,288 Federal, State and Federal, and Private Grants Grants and Contracts 336,045 : 274,;560
'<274;560 Activities and Sales and Services of Educational Activities and i I
Other Auxiliaries 181,217 181,217 : .160,880 160,880 Revenues Patient Care Revenues 671,091 ' 641,648 641;648 Student Housing Housing Fees 74,452 I1 65,917 6:S,917 Bookstore Collections 61,769 : .:;'(j;7:
56,764'64 Payments to Suppliers (650,475)
(650,475): (635,227)
Payments to to Employees Employees (1,147,430)
(1,147,430)1' (1,096,086)
Payments for Benefits (310,375) (272,923)
Payments for Scholarships and Fellowships (39,485)1 (39,485), (38,602)
Student Loans Issued (12,071)
(12,071)1 (12,291)
Student Loans Collected 10,987 987 11,102 10, 1' Student Loan Interest and Fees 1,092 443 Receipts, Net Other Receipts, 61,065 61,0651 72,226 Net Cash Net Cash Used Used in in Operating Operating Activities (3 4 4,3 9 9)) L (38,301)j State Appropriations State Appropriations 462,281 440,855 Federal Appropriations Federal Appropriations 12,810 13,554 Private Gifts 56,717 58,287 Endowment and Similar Funds Gifts 32,995 i 27,917 Other Receipts (Payments)
(Payments) (2,244)
(2,244): 17,!861 Deposits of Affiliates (6,404)
(6,404)' 9,308 Net Cash Provided Provided by Noncapital Financing Activities Noncapital Financing Activities 556,155 556,155 I 567,782 1~~ ~~ :118ig;798 iie Capital Capital State Appropriations 10,452 18798 Capital Capital Gifts and Grants 17,341 i 17,341 12,941 Proceeds Proceeds From Sales of Capital Capital Assets 1,083 I 1,649 Purchase Purchase of of Capital Capital Assets Assets (317,944)
(317,944)1 (234,'535)
Proceeds Proceeds from Issuance Issuance of Capital Capital Debt, Net 376,452 376,452 :
Principal Principal Payments on Capital Debt Debt (56,975)
(56,975)i (14,760)
Proceeds Proceeds from Capital Capital Project Notes 158,800 158,800 I 115,900 Payments Payments on on Capital Capital Project Project Notes Notes (160,000)l (160,000)1 (11500)
Payments Payments on Capital Capital Lease Lease (462)1 (462)1 (425)
Escrow Deposit on Escrow on Defeasance (96,965)
Loss Defeasance (96,965)' ,
Loss onon Defeasance Defeasance (3,844)1 (3,844)1 Payments Payments on on Cost Cost of of Debt Issuance Debt Issuance (2,282)!
(2,282)i Interest Payments on Interest Payments on Capital Debt Capital Debt (35,702)1 (29,323)
Net Cash Used in Capital and and Related Related Financing Financing Activities Activities (110,046)1 - (244,755)1 Interest Interest and and Dividends Dividends on Investments Investments 99,815 99,815 I 72,469 Purchase Purchase of Investments, Investments, Net Net of Sales Sales and Maturities Maturities (336,172)! 131,443 Other Other Investing Investing Activities Activities 293 i 86 Net Net Cash Cash Provided Provided byby (Used (Used in) Investing Activities Activities (236,064)
(236,064)' 1 2103,998 I I
Net Increase Increase (Decrease)
(Decrease) in Cash Cash and Cash Cash Equivalents Equivalents (134,354)! 140,724 Cash Cash and and Cash Cash Equivalents, Equivalents, Beginning Beginning ofof Year Year 407,723 407,723 266,999 I
Cash Cash and and Cash Cash Equivalents, Equivalents, End End of Year 1$$ 273,369 273,369 I $ 407,723 (continued)
(continued)
. 2008 2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 22 22 A A COMPONENT COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI
STATEMENT OF CASH FLOWS STATEMENT FLOWS I For the Years Years Ended June 30, 2008 and ý007 2007 (in thousands of dollars) I 2008 , 2007 Recocilatin o opratng ossUse iniýeperaing Vctivities:`,
Operating Loss $ (484,610)1 S (:48,305)
Adjustments to Net Cash Used in Operating Activities -
Adjustments I
Depreciation Depreciation Expense 125,996 125,996 ! 119,069 Changes in Assets and Liabilities:
Accounts Receivable, Net Accounts Receivable, (7,132)i (7,132)!
I (37;998)
(37,998)
Inventory, Inventory, Prepaid Expenses Expenses and Other Assets (330)1 (330)1 : (6,170)
(6,170)
Notes Receivable Receivable (621)! "0,124) i Accounts Accounts Payable 4,894 i (13,87 2 )
(13,872)
Accrued Accrued Liabilities 13,601 : 1,270)
Deferred Revenue Revenue *3,803 3,803 ! 33,69 Net Cash Used in Operating Activities $ (3344,399)7 : ( 386,301)I
",I IemntIal
- IIDi'Ch.scli("osur ofoncas h ActIiv itIies
Net Increase (Decrease) in Fair Value of Investments $ (121,677)! I 78,363l03 Noncash Gifts Gifts $ 13,427 $ 18,929 See notes to the financial financial statements.
statements.
2008 2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT UNIT A COMPONENT UNIT OF OF THE STATE OF THE STATE MISSOURI OF MISSOURI 23 23
STATEMENT STAEMNTOFPLN OF PLAN NET ASSETS ETASET AsAs of June.
June 30 30, 2008 00 and 2007 nd20 (in thousands of dollars) 2008 20077 Cash Cash and Cash Equivalents Collateral Collateral for Securities LendingLending
$ 129,860 294,781 I s79,714 382,023 Due to the University University of Missouri System (46) 23,659 Investment Investment Settlements Settlements Receivable 181,062 Investments:
Government Obligations Government 640,544 400,416 Corporate Bonds and Notes 281,693 182,837 Corporate Stocks 1,699,133 2,269,794 Other 220,180 -104,832 Total Assets 3,447,253 3,443,229
-L~ia hbiliti-es ----- ------- ------
Accounts Accounts Payable and Accrued Liabilities Accrued Liabilities 2,429 2,850 Collateral for Securities Lending Lending 294,781 382,023 Investment Settlements Settlements Payable 400,142 127,322 Total Liabilities 697,352 512',195 Net Assets Held in Trust for Pension and OPEB ** $ 2,749,901 S2,1931,03434 STATEMENT STTMN OF O
CHANGES HNE IN PLAN NET IN PLAN NE ASSETS ASET For the Years Ended June 30, 2008 and 2007 (in thousands of dollars)
F 2008 2008 I 2007
!Net Rev enues and Other Additionsk Investment Investment IncomeIncome (Loss):
Interest and Dividend Income, Net of Fees $ 77,376 $ 62,749
- . Net Appreciation (Depreciation) in Fair Value ofInvestments Appreciation (Depreciation) of Investments (243,951)1 415,263 Net Investment Income Income (Loss) (166,575)i 4748,012 Contributions:
- University University 125,745 74,736 Members 12,231 Other Other 2,503
- Total Contributions 140,479 74,736 I S552,748 Total Total Net Revenues Revenues and Other Additions (26,096)!
--Expenses and Other Deductions ~
Administrative Administrative Expenses 2,173 2,043 Payments Payments to Retirees Retirees and Beneficiaries Beneficiaries 152,864 Total Expenses and Other Other Deductions Deductions i 155,037 155,037 116,4155,1 Increase (Decrease) in Net Assets Held in Trust for Pension and OPEB I (181,133)1 (181,133)! 436,293, Net Assets Held in Trust for Pension Pension and OPEB, OPEB, Beginning Year Beginning of Year I 2,931,034 I1 2,494,741 Net Assets Held in Trust for Pension Pension and OPEB, OPEB, End of Year Year I$ 2,749,901 1 15$
2,749,901! 2,931,034 See notes to the financial statements.
financial statements.
- OPEB represents
- OPEB represents Other Postemployment Benefits Other Postemployment Benefits 2008 FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI 24 24 A COMPONENT COMPONENT UNIT OF THE STATE OF MISSOURI UNIT OF MISSOURI
FOR THE YEARS ENDED FOR ENDED JUNE 30,2008 30, 2008 AND 20072007
- 1. ORGANIZATION ORGANIZATION AND AND
SUMMARY
SUMMARY
OF SIGNIFICANTSIGNIFICANT ACCOUNTING ACCOUNTING POLICIES UNIVERSITY OF UNIVERSITY OF MiSSOURI MISSOURI Organization - The University Organization University of Missouri Missouri (the "University"),
"University"), a Federal Federal land grant institution, institution, conducts education, research, public service, and related activities, which include the University University of Missouri Hospitals and Clinics and related related health care facilities, principally principally at its four campuses in Columbia, Columbia, Kansas City, Rolla and St. Louis. The University also administersadministers a statewide statewide cooperative cooperative extension service service with centers located in each county county in the State. The University is a component component unit of the State of Missouri (the "State")
"State") and is governed governed by a nine-member nine-member Board of Curators appointed appointed by the state's state's Governor.
Reporting Entity -As -As defined by generally acceptedaccepted accounting established by the accounting principles established Governmental Governmental Accounting Accounting Standards Board ("GASB"),
("GASB"), the financial reporting entity entity consists of the primary government and its component units. Component units are legally separate organizations for separate organizations which the primary government primary government is financially accountable accountable or the nature and significance significance of their their relationships with the primary primary government are such that exclusion wouldwould cause the primary government's government's financial statements to be misleading misleading or incomplete.
The following entities are considered component units of considered component the University according ofthe according to the criteria in GASB Statement No. 14, The Financial Financial Reporting Reporting Entity, and are discretely presented in the University's University'S financial statements.
- " The University University of Missouri-Columbia Missouri-Columbia Medical Medical Alliance (the "Medical "Medical Alliance"), a not-for-profit not-for-profit corporation, provides an integrated integrated health care delivery system for mid-Missouri by establishing affiliations with various medical medical facilities. The purpose of the Medical Alliance is to develop develop aa network of health care providers to support the missions of the University of Missouri Missouri Healthcare.
Healthcare.
The Capital Region Region Medical Medical Center ("CRMC") in Jefferson Jefferson City, Missouri, Missouri, operates operates as an affiliate of affiliate of the Medical Medical Alliance Alliance and provides inpatient, outpatient, and emergencyemergency care services services to thethe surrounding community. CRMC, a not-for-profit not-for-profit organization that follows generally accepted accepted accounting principles principles under the Financial Financial Accounting Accounting Standards Board ("F ("FASB"),
ASB"), is a discretely presented component unit of the Medical Medical Alliance. The University University appoints the Board of Directors of of the Medical Medical Alliance and can impose its will on the organization. Financial Financial statements for the Medical Alliance are not available.
- Missouri Care L.C., a not-for-profit maintenance organization, not-for-profit health maintenance organization, provided services services to patients in Department of Social Services.
Central Missouri under certification from the Missouri Department Services. Missouri Care L.C., organized organized exclusively for charitable charitable purposes to benefit its sole member, the CuratorsCurators of the University of Missouri, contracted contracted with the University of Missouri Healthcare Healthcare System to provide health care care services to its members. The University appointed appointed Missouri Care L.C.'s Board of of Directors and could impose its will on the organization. Refer to Note 19 for information regarding regarding the January 2007 sale of Missouri Missouri Care L.C.
L.c.
The University operates operates the University University of Missouri Retirement, Retirement, Disability, and Death Benefit Plan and University of Missouri Other Postemployment the University Postemployment Benefits Plan, which are single employer, defined defined benefit plans. The assets of each Plan are held in trust and are restricted for use to only pay the benefits and expenses expenses of the respective Plans. The Plans are reported as fiduciary funds of the University.
Combining financial statements are presented in Note 20.
FINANCIAL REPORT:
2008 FINANCIAL UNIVERSITY OF REPORT: UNIVERSITY MISSOURI OF MISSOURI AA COMPONENT COMPONENT UNIT OF THE UNIT OF STATE OF THE STATE OF MISSOURI MISSOURI 25 25
FOR THE YEARS FOR YEARS ENDED JUNE JUNE 30, 2008 AND 2008 AND 2007 2007 Statement Presentation Financial Statement Presentation - In accordance accordance with GASB Statement No. 20, Accounting and Financial Financial Reporting Reporting for Proprietary Proprietary Funds Funds andand Other Other Governmental Governmental Entities Entities That Use Proprietary ProprietaryFund Accounting, Accounting, the University follows all applicable GASB pronouncements. In addition, the University applies all applicable F FASB ASB Statements and Interpretations, Interpretations, Accounting Accounting Principles Board OpinionsOpinions* and Accounting Accounting Research Bulletins issued on or before November 30, 1989, except except those that conflict with a GASB pronouncement. The University University has elected elected not to apply FASB FASB pronouncements pronouncements issued*issued'after after November November 30, 1989.
Pursuant to GASB Statement No. 35, 35, Basic Financial Financial Statement-and Management's Discussion Statement-and Management's Discussion and Analysis-for Public Colleges and Universities, Public Colleges and Universities, the University's University's activities are considered considered to be a single business-type business-type activity activity and accordingly, are reported reported in a single column in the financial statement.
Business-type activities are those that are financed in whole or part by funds received received by external external parties for goods or services.
Basis of Accounting - The University's financial statements statements have been prepared prepared using the economic economic resource measurement focus and the accrual basis of accounting. accounting. Under the accrual basis, revenues~are revenues,are recognized recognized when earned and expenses are recorded when an obligation has been incurred, regardless of of the timing of cash flows.
On the Statement Statement of Revenues, ExpensesExpenses and Changes Changes in Net Assets, the University University defines operating activities as those generally resulting from an exchange transaction. Nearly Nearly all of the University's University's expenses are from exchange exchange transactions, which involve the exchange exchange of equivalent equivalent values such as payments payments for goods or services. Nonoperating revenues revenues or expenses expenses are those in which the University receives or gives value without directly giving giying or receiving equal value, such as State and Federal appropriations and investment investment income.
The University of Missouri Retirement Trust is a pension trust fund which accounts for the activity activity of the University University of Missouri Retirement, Disability, Disability, and Death Benefit Plan. The University University Missouri OPEB of Missouri Trust is a trust fund which accounts accounts for the activity of the University University of Missouri Other Postemployment Postemployment Benefits Plan. The financial statements for these fiduciary funds have been prepared using the accrual basis of accounting.
accounting. Benefits Benefits and refunds are recognized recognized when due and payable. Investments are reported reported at fair value. Combining Combining financial statements for these funds are presented in Note 20.
Cash, Cash Equivalents Equivalents and Investments - Cash and cash equivalents equivalents consist of the University's bank deposits and investments investments with original maturities of three months or less. Investment assets are carried at fair value based primarily on market quotations. Purchases Purchases and sales of investments are accounted for on the trade date basis. Investment settlements receivable and investment settlements payable payable represent represent investment transactions transactions occurring on or before June 30, which settle after that date. Investment income is recorded recorded on the accrual accrual basis. Net unrealized unrealized gains (losses) are included in investment investment and endowment endowment income in the Statement Statement of Revenues, Expenses Expenses and Changes in Net Assets. Derivative Derivative instruments such as forward foreign currency currency contracts contracts are recorded at fair value. The University University enters enters into forward fo'rward foreign foreign currency contracts to reduce the foreign exchange currency contracts exchange rate of its international international investments. These These contracts contracts are marked to market, with the changes in market value being reported in investment investment and endowment endowment income on the Statement of Revenues, Expenses, Expenses, and Changes in Net Assets.
Pledges Receivable Receivable - The University University receives unconditional promises to give through private donations receives unconditional (pledges) from corporations, corporations, alumni and various other supporters supporters of the University. Revenue Revenue is recognized recognized when a pledge is received received and all eligibility requirements, including including time requirements, are met. These pledges pledges have been recorded been recorded as pledges receivable pledges receivable on the Statement of Net Assets and as private or capital gift revenues Statement of Revenues, Expenses, and Changes revenues on the Statement Changes in Net Assets, at the present value of the estimated future cash flows. An allowance of $4,805,000 and $4,038,000 $4,038,000 as of of June 30, 2008, and 2007, respectively, has been made for uncollectibleuncollectible pledges based upon management's management's expectations regarding the collection expectations collection of the pledges and the University's historical collection experience. experience.
2008 FINANCIAL FINANCIAL REPORT: UNIVERSITYUNIVERSITY OF MISSOURI MISSOURI 26 A A COMPONENT COMPONENT UNITUNIT OF OF THE STATE STATE OF MISSOURI MISSOURI
FOR THE THE YEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007 Inventories - These assets are stated at the lower of cost or market. Cost is determined on an average cost basis except for University Hospitals Hospitals and Clinics' Clinics' inventories, for which cost is determined determined using the first-in, first-out method.
Capital Assets - If purchased, these assets are carried carried at cost or, if donated, at fair value at the date of of gift. Depreciation expense is computed Depreciation expense computed using the straight-line straight-line method over the assets' assets' estimated estimated useful lives - generally generally ten to forty years for buildings and improvements, improvements, eight to twenty-five twenty-five years for infrastructure, infrastructure, three to fifteen years for equipment equipment and twenty years years for library materials. Net interest expense expense incurred during the construction construction of debt-financed facilities is included when capitalizing resulting assets. The University capitalizes capitalizes works of art as these collections collections generally generally consist of historical historical artifacts and artworks, they are considered considered inexhaustible inexhaustible and not subject subject to depreciation.
depreciation. The University does not capitalize capitalize collections of historical historical treasures held for public exhibition, education, education, research, and public service. These collections collections are not disposed disposed of for financial gain and, accordingly, are not capitalized capitalized for financial statement statement purposes. Proceeds from the sale, exchange, or other disposal of such items must be used to acquire additional items for the same collection. Land is considered considered inexhaustible inexhaustible and is not subject subject to depreciation.
Deferred Deferred Revenue Revenue - Deferred revenues revenues are recognized recognized for amounts received received prior to the end of the fiscal year but related to the subsequent subsequent period, including including certain tuition, fees, and auxiliary auxiliary revenues. Deferred Deferred revenues revenues also include grant and contract amounts that have been received but not been received not yet earned.
Net Assets - The University's University's net assets are classified classified as follows:
- " Invested Invested in capital assets, net of related debt: This component component represents capital assets, net of of accumulated depreciation accumulated depreciation and outstanding principal principal debt balances balances related to the acquisition, construction or improvement of those assets.
- " Restricted:
Nonexpendable - These net assets subject to externally imposed Nonexpendable imposed stipulations stipulations that the principal be maintained maintained in perpetuity, perpetuity, such as the University'S University's permanent endowment funds. The University's University'S policy permits any realized realized and unrealized unrealized appreciation appreciation to remain with t!1ese these endowments endowments after the spending distribution discussed discussed in Note 3.
Expendable - These net assets are subject Expendable subject to externally imposed stipulations on on the University's University's use of the resources.
- Unrestricted: These net assets are not subject Unrestricted: subject to externally imposed stipulations, but may be designated for specific purposes by the University's University'S management management or the Board of Curators.
Unrestricted Unrestricted net assets are derived from tuition and fees, sales *and and services, unrestricted unrestricted gifts, investment income, and other such sources, and are used for academics and the general operation of of the University.
University. When both restricted and unrestricted unrestricted resources are available available for expenditure, expenditure, the University'S University's policy is to first apply restricted resources, and then the unrestricted resources.
Tuition and Fees, Net of Scholarship Scholarship Allowances Allowances - Student tuition and fees, housing, dining, and other similar auxiliary revenues are reported reported net of any related scholarships scholarships and fellowships applied to student accounts. However, scholarships accounts. scholarships and fellowships paid directly to students are separately separately reported reported as scholarship and fellowship expenses.
scholarship expenses.
Patient Medical Services, Services, Net - Patient medical services revenues revenues are reported net of contractual contractual allowances and bad debt allowances. Patient medical services are primarily provided through University of Missouri Hospitals and Clinics, Ellis Fischel Cancer Research.Research Center, Columbia Regional Hospital, Missouri Rehabilitation Center and University University Physicians (collectively, (collectively, the "University of Missouri Healthcare").
FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURIMISSOURI A COMPONENT UNIT A COMPONENT UNIT OF THE THE STATE STATE OF MISSOURI MISSOURI 27 27
FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND 2007 2008 AND 2007 The University of Missouri Healthcare Healthcare has agreements agreements with third-party payors that provide for payments that differ from the entity's established established rates. Payment Payment arrangements arrangements include prospectively determined rates per discharge, discharge, reimbursed reimbursed costs, discount charges, and per diem payments. Patient medical services revenue is reported revenue reported at net amounts estimated estimated to be realizable realizable from patients, third-party payors, and others.
These These estimated amounts include retroactive retroactive adjustments for reimbursement reimbursement agreements with third-party third-party payors. Retroactive Retroactive adjustments are estimated and accrued accrued in the period that related services are provided, and then adjusted in future periods periods as estimates estimates are refined refined and final settlements settlements are determined.
determined.
Amounts Amounts receivable receivable under Medicare Medicare and Medicaid Medicaid reimbursements agreements are subject to examination examination and certain retroactive adjustments by the related programs. These These adjustments decreased net patient services revenue revenue by $3,019,000
$3,019,000 for the year year ended ended June June 30, 2008, and increased increased net patient services revenue by $4,907,000 for the year revenue year ended June June 30, 2007.
For the years ended June 30, 30, 2008, and 2007, University of Missouri Healthcare's 2007, the University Healthcare's percentage percentage of gross receivable classified by major payor is as follows:
patient accounts receivable classified Percentage Perenag of Gross of Grs Patient ain Accounts consRcial Receivable (by Major Payor) r---------'
2008 20~8_ t
.J______ 2~~~_____
2007 L Medicare Medicare Commercial Insurance Insurance 30%
30%
8%
-T 29%
29%
9%
9%
Medicaid Medicaid 19%
19% 18%
18%
Self Pay and Other 17%
17% I 20%
20%
Managed Managed Care Agreements Agreements 26% I 24%
24%
100%
100% IIi 100%
100%
The Statement of Revenues, Revenues, Expenses and Changes Changes in Net Assets reflectsreflects the gross to net patient medical services services revenue revenue as follows:
Gross to Net Gro1~Uss to Patient
[et Pat ien[tfUL~ ~s Medical Medica Services Sricesd [ Revenue ReU venue (in thousands of (i tosad dollars) of dollars) 1- - 2008
- - - - U_ 20_07
-- 2007. -- - 1 Patient Medical Services Revenue, Gross Medical Services Less Deductions Deductions for Contractuals Contractuals 1$$ 1,443,517 1,443,5l7 (711,031)
(711,031)
$ 1,320,091 (618,699)
(618,699)
Less Bad Debt Deductions Deductions I (51,174)
(51,174) (52,590)
(52,590)
I Patient Patient Medical Services Revenue, Revenue, Net 1$$ 681,312.
681,31211 $ 648,802 648,8021 Interest Rate Rate Swap Swap Agreements Agreements - The University enters into interest interest rate swap agreements to modify modify interest rates on outstanding outstanding debt. Other Other than the net payments resulting from those agreements, no amounts related to the interest interest rate swaps are recorded recorded in the financial statements.
statements.
New Accounting Accounting Pronouncements Pronouncements - Effective Effective for fiscal year 2008, the University University adopted GASB GASB Statements Statements No. 43 and No. 45, which establish requirements for financial reporting financial reporting for postemployment postemployment benefits other other than pension pension plans. GASB Statement Statement No. 45 requires the University to recognize actuarially actuarially estimated costs of its postemployment postemployment benefit plan plan and provide provide certain related disclosures. As University established the University irrevocable trust fund to manage its postemployment established an irrevocable postemployment benefit benefit costs in June 2008, Statement No. 43 is also applicable.
applicable. GASB Statement Statement No. 43 requires financial reporting and 2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 28 A COMPONENT COMPONENT UNIT UNIT OF THE STATE OF MISSOURI MISSOURI
FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007 disclosures for postemployment postemployment benefit plans. In adopting these standards, the University University recognized recognized the effect of a change in accounting accounting principle, principle, which increased net assets by $19,916,000
$19,916,000 as a result of of writing off previously established benefit reserves reserves that were were not in accordance accordance with the new requirements.
requirements.
In addition to these standards, standards, the University University also adopted adopted GASB Statements Statements No. 48, Sales and Pledges of andPledges of Receivables and Future Receivables and Future Revenues and Intra Intra Entity Transfers Transfers of Assets and Future Future Revenues, and No. 50, Pension Disclosures Pension Disclosures - an amendment of GASB Statements Statements No.
No. 25 and No. 27. Certain Certain additional disclosures were were required, but no financial financial statement balances balances were restated for these new standards.
standards. .-
The GASB issued Statement No. 49, Accounting and Financial Reporting for Financial Reporting for Pollution Remediation Pollution Remediation Obligations, Obligations, effective effective for fiscal years years beginning beginning after December 15, 15, 2007. The statement addresses accounting and financial reporting standards for pollution remediation obligations, which are obligations to address current and potential effects effects of existing pollution through through pollution pollution remediation remediation activities such as site assessments assessments and cleanups. The statement requires requires disclosures about the nature of the remediation, size of the obligation, and the methods and assumptions used in evaluating evaluating the potential obligation. The University University does not anticipate any material material effect effect on its financial statements statements with the adoption ofofGASB Statement No. 49.
GASB Statement The GASB issued Statement No. 51, 51, Accounting and Financial Financial Reporting Reportingfor effective Intangible Assets, effective for Intangible beginning after June 15, for fiscal years beginning 15, 2009. The statement statement requires all intangible assets not specifically specifically excluded by its scope provisions be classified classified as capital capital assets. The statement also requires that an intangible intangible asset be recognized in the statement statement of net assets only if it is considered considered identifiable.
identifiable. The University University has not yet determined determined the effect that adoption of GASB Statement No. 51 may have on its financial statements.
statements.
The GASB issued Statement Statement No. 52, Land and Other Other Real Estate Estate Held as Investments by Endowments, effective for fiscal years effective years beginning beginning after June 15, 15, 2008. The statement statement establishes establishes accounting and financial reporting standards for land and other other real estate held as investments investments by endowments. These These assets are to be reported at fair value at the reporting date, with changes changes in fair value value being reported reported as investment investment income. The University has not yet determineddetermined the effect effect that adoption of GASB Statement No. 52 may have on its financial statements.
The GASB issued Statement No. 53, Accounting and and Financial FinancialReporting Reporting for Derivative Instruments, for Derivative Instruments, effective for fiscal years beginning effective beginning after June 15, 15, 2009. The statement requires requires derivative derivative instruments to be measured at fair value at the reporting date, with changes in fair value generally being reported as investment gains or losses. However, changes derivative instruments changes in fair value of hedging derivative instruments would be be deferred until the related instrument ends or ceases to significantly reduce reduce risk. The University has not yet yet determined the effect determined effect that adoption of GASB Statement adoption ofGASB Statement No. 53 may have on its financial statements.
Reclassifications - Certain Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. As of June 30, 2007, the University University presented presented certain investments as cash and cash equivalents within the basic financial statements equivalents statements based on the investments' investments' current current maturities rather than their original maturities. The University University has reclassified these amounts as short-term short-term investments in the accompanying Statement accompanying Statement of Net Assets and Statement of Plan Net Assets and as investing activities in the Statement Statement of Cash Flows.
Use of Estimates Estimates - The preparation of financial statements, in conformity conformity with U.S. generally accepted accepted accounting principles, accounting principles, requires management to make estimates and assumptions that affect the reported reported amounts of assets and liabilities and disclosure of contingent assets and liabilities liabilities at the date of the financial statements, statements, and the reported amounts of revenuesrevenues and expenses expenses during the reporting reporting period.
Actual results could differ from those estimates.
2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNITUNIT OF OF THE THE STATE OF MISSOURI STATE OF MISSOURI 29 29
FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND 2007 AND 2007 PRESENTED COMPONENT DISCRETELY PRESENTED COMPONENT UNIT UNIT-- MEDICAL ALLIANCE ALLIANCE Nature of Operations - The Curators of the University of Missouri, for and on behalf Nature behalf of the University of Missouri Healthcare, Healthcare, and the Capital Capital Region Medical Medical Center (CRMC) entered into an Affiliation Affiliation Agreement dated August 5, 1997. 1997. Pursuant to the Affiliation Affiliation Agreement, the University University created the Medical Alliance.
Alliance. The Medical Alliance then became became the sole member of CRMC. The Medical Alliance's purpose is to develop a network of healthcare healthcare providers to support support the missions of the University of Missouri Healthcare.
University Healthcare.
CRMC operates as a two-hospital two-hospital system, which consists of the Southwest Campus and Madison Madison Campus Campus complemented by community medical complemented medical clinics. CRMCCRMC primarily earns revenues by providing providing inpatient, outpatient, and emergency care services services to patients patients in Jefferson Jefferson City, Missouri. It also operates medical surrounding communities. The operating clinics in the surrounding clinics operating results of the facilities and clinics are included in these financial statements.
statements. CRMC is served by a group of admitting physicians account for a physicians that account significant CRMC's net revenues. Additionally, significant portion of CRMC's Additionally, CRMC is also associated associated with the Capital Medical Foundation, which is intended to support the interest of CRMC Region Medical CRMC through its fundraising activities.
Net Assets - The Medical Alliance's Alliance's net assets are classified classified for financial reporting in the following net net categories:
asset categories:
- Invested in capital assets, net of related debt: This component component represents represents capital capital assets net ofof accumulated depreciation accumulated depreciation and outstanding principal debt balances related to the acquisition, outstanding principal construction, improvement of those assets.
construction, or improvement
- Restricted Restricted expendable:
expendable: These are assets subject subject to externally externally imposed stipulations stipulations on the Medical Alliance's use of the resources.
- " Unrestricted:
Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted Unrestricted net assets specific purposes by management may be designated for specific management or the Board of Directors. When an expense expense is incurred that can be paid using either restricted or unrestricted unrestricted resources, the Medical Alliance's Medical Alliance's policy unrestricted resources.
policy is to first apply restricted resources, and then unrestricted Capital Assets - Capital Assets are recorded at cost and depreciated depreciated on a straight-line straight-line basis over the estimated each asset following guidelines estimated useful life of each guidelines of the American American Hospital Association. Equipment under capital lease obligations is amortized amortized on the straight-line straight-line basis over the shorter shorter period of the lease term or the estimated useful life of the equipment. Interest Interest cost incurred incurred on borrowed borrowed funds during the construction of capital assets is capitalized period of construction capitalized as a cost of acquiring those assets.
Net Patient Medical Revenue - Net patient medical service revenue Medical Service Revenue revenue is reported at the net third-party payers, and others for services rendered, including realized from patients, third-party amounts to be realized estimated estimated retroactive adjustments reimbursement agreements with third-party adjustments for reimbursement third-party payers. Retroactive Retroactive adjustments are estimated and accrued adjustments accrued in the period the related services services are provided, provided, and these amounts are adjusted in future periods as final settlements settlements are determined.
determined.
FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 30 A COMPONENT COMPONENT UNIT OF THE UNIT OF STATE OF MISSOURI THE STATE MISSOURI
FOR FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND 2007 2008 AND 2007
- 2. CASH AND AND CASH EQUIVALENTS CASH EQUIVALENTS Cash & & Cash Equivalents University - The University's cash and cash equivalents Equivalents - University equivalents include include bank deposits, repurchase repurchase agreements, and investments investments with original original maturities maturities of three months or less.
ofthree Custodial Credit Risk - Deposits - University - The custodial credit risk for deposits is the risk that in the event event of bank failure, the University's deposits may not be recovered. recovered. State law requires insurance, bonds and other obligations collateralization of all deposits with federal depository insurance, collateralization obligations of the U.S.
instrumentalities of the state of Missouri; bonds of any city, county, school Treasury, U.S. Agencies and instrumentalities district or special road district of the state of Missouri; bonds of any state; or a surety bond having having an equal to the amount of the deposits.
aggregate value at least equal University's cash deposits of $167,280,000 The University's $167,280,000 and $175,272,000
$175,272,000 as of June 30, 30, 2008, 2008, and 2007, respectively, were fully insured and collateralized collateralized and not exposed exposed to custodial custodial credit risk.
Custodial Credit Risk - Deposits - University Missouri Fiduciary University of Missouri Fiduciary Funds - The University University ofof Missouri Retirement and OPEB Trust Funds held deposits totaling $399,211,000 $399,211,000 and $440,332,000 as of of June 30, 2008, and 2007, respectively.
respectively. These balances were balances were fully insured and collateralized collateralized and not exposed to custodial credit risk.
- 3. INVESTMENTS INVESTMENTS UNIVERSITY OF UNIVERSITY OF MISSOURI The University's established by its governing board, the Board of Curators. The University's investment policies are established policies are established to ensure that University funds are managed managed in accordance accordance with Section 105.688 105.688 Revised Statutes of Missouri and prudent investment. The University is authorized to use outside of the Revised managers for its investments and may pool funds for investment purposes. Further, the policy provides short-term funds may be invested in the following instruments: repurchase that the University's short-term repurchase agreements collateralized agreements Government and U.S. Government Agency issues; U.S. Government collateralized by U.S. Government Government principal or interest securities (including principal interest payments that have been "stripped" "stripped" from U.S. Treasury Government Agency instruments), U.S. Government securities, and U.S. Government Agency securities, guaranteed securities, including Government guaranteed obligations of the U.S. Government, Federal Farm Credit Banks, Federal but not limited to direct obligations Federal Home Loan Banks, Federal National Association, Federal Home Loan Mortgage National Mortgage Association, Mortgage Corporation, Corporation, Corporation and Student Loan Marketing Resolution Funding Corporation Association; investment Marketing Association; investment grade (A or better) corporate bonds; variable corporate variable rate securities securities of authorized collateralized certificates authorized investment instruments; collateralized of deposit at banks with which the University has a depository agreement; commercial paper with credit credit ratings of A-l+ or A-I A-1 by Standard Standard & & Poor's Ratings Group and P-1 P-1by by Moody's Investors Service; bankers' acceptances; bankers' acceptances; and other similar short-term investment instruments of like or better quality.
The University's investments investments are managed in two major categories:
Pooled General Investments general investment pools managed Investments - The general managed by the University University averaged total returns of 6.48% and 6.04%, including 6.04%, including unrealized gains and losses, for the years ended ended June 30, 2008, and 2007, respectively.
Endowment Investments - When appropriate and permissible, endowment and similar funds are Pooled Endowment pooled for investment purposes, with the objective of achieving long-term long-term returns sufficient to preserve preserve protecting against inflation and to meet endowment spending principal by protecting spending targets. There are two separate endowment pools that are managed endowment managed by outside investment investment managers. These include include a balanced balanced pool and a fixed income pool, which earnedearned total returns of (4.8)% and 6.1%, including unrealized 6.1 %, respectively, including unrealized gains and losses, for the year ended June 30, 2008, and 18.0% 18.0% and 5.9%, respectively, respectively, for the year ended ended June 30, 2007.
2008 2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY MISSOURI UNIVERSITY OF MISSOURI A COMPONENT COMPONENT UNIT UNIT OF THE STATE STATE OF MISSOURI MISSOURI 31 31
FOR FOR THE THE YEARS YEARS ENDED ENDED JUNE JUNE 30, 30, 2008 2008 AND AND 2007 2007 If a donor provided specific donor has not provided specific restrictions, restrictions, state law permits the Board law permits Board of Curators Curators to appropriate appropriate an an amount amount of of the endowment investment's net endowment investment's net appreciation, appreciation, realized realized and unrealized, as the and unrealized, the Board Board considers considers to be be prudent. In In establishing establishing this this amount, the Board isis required the Board required to consider consider the the University's University's long- long- and short-term short-term needs, needs, present and anticipated present and anticipated financial requirements, requirements, expected expected total return on on investments, investments, price price level trends, and general level trends, economic conditions. Further, any expenditure general economic expenditure of of net appreciation appreciation is required required to be for the purposes purposes for whichthe endowment which -the endowment was was established. In In fiscal year 2008, 2008, donor-restricted restricted endowments depreciated by approximately endowments depreciated $49,169,000, which primarily approximately $49,169,000, primarily consisted consisted of of unrealized losses unrealized losses on investment.
The Board of Curators The Board Curators has adopted adopted the total return concept (yield return concept (yield plus appreciation) appreciation) in determining determining the spendable endowments and similar funds. Annually, spendable return for endowments Annually, the spending spending formula distributes 5% of of a trailing 12-quarter average of trailing 12-quarter of the endowment's endowment's total market value, value, with the understanding understanding that this spending rate over the long term will not spending rate not exceed exceed the total total realreal return (net inflation). However, (net of inflation). However, to achieve achieve uniformity uniformity from year year to year, the actual actual amount made available available in any given year will be not less less than 96%
96% or more than 106% year's expenditure.
106% of the prior year's expenditure.
At June 30, 2008, and 2007, the University University held held the following types of investments:
Investments by Type Inetet by Typ (in (ithousands thuad of dollars) of dolas I0 Carrying Value as of Carrying of June 30, 30, 2008 -
___ .*200~:- ..---Jj ___ 2007 2007 L Obligations Government Obligations Government S$ 916,106; $$ .-710'81~
916,106 710,818 Corporate Bonds Bonds and Notes 336,726 336,726 : 211,230 211,230 Corporate Stocks Stocks 646,801 646,801 : 734,390 Commercial Paper 3,140 -
Other Other 94,480 ;
94,480 64,134 64,134 Total Short-Term Short-Term and Long-Term Long-Term Investments ,-~--1-,9....;..9....;..4,:...;.1~13~!
1,994,113 I 1,723,712 I 1,723,712 Government Obligations Government Obligations 200 200 Commercial Paper Commercial Paper 104,433 I 104,433 232,090 Repurchase Agreements Repurchase ~:______~1,~65~6~!~------~16~0~
1,656 160 Total Cash Equivalents Equivalents 106,089 232,450 106,089 j 1;...--_..::.c23'-"'2..:....,4..:....50'-----i1 Total Investments Investments $ 2,100,202 : I $ 1,956,162 1,956,1621
==
Interest Rate Risk - Interest rate risk is the risk that changes in interest rates over time will adversely affect the fair value of an investment. The University'sUniversity'S Pooled General Investments consist primarily of of securities, with a specific limitation that no more than 15%
fixed income securities, 15% of the pool consists of variable variable rate securities. As a means of preserving the Pooled Endowment Investments' Investments' principal, the University's University's investment policy requires this pool to have a diversified investment investment portfolio.
FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 32 32 A COMPONENT A COMPONENT UNIT UNIT OFOF THE THE STATE OF OF MISSOURI MISSOURI
Jb FOR THE YEARS YEARS ENDED JUNE JUNE 30, 2008 AND AND 2007 2007 At June 30, 30, 2008, and 2007, the University's University's investments mature as follows:
Investments by Typeanso~ and Maturity I Invetmens byTyp rt (in thousands of dollars)
I As of June 30, 2008 2008
- ---~---~.-~-~.-------.------------ ---------_._.._-- --~-------~----.--"--.~---~-
- Less Less than More than Carrying 1 Year 1-5 Years 6-10 Years 10 Years Value Value
._---......- , '~". * ,""",,::? ,;1!ji> , ."' -'Y'? :.-@ "'4;;:; tk'"~ ",.I .,- '
U.S.
U.S. Agency Obligations Obligations $ 115,614 115,614 $ 371,629 371,629 $ 95,336 $ 49,813 $ 632,392 ,
632,392
, I U.S. Treasury Treasury Obligations Obligations 9,103 39,064 39,064 54,017 91,705 193,889 193,889 :
Foreign Foreign Government Obligations 3,497 25,298 25,298 38,824 22,206 89,825 ~
U.S.
U.S. Corporate Corporate Bonds & & Notes 59,991 140,713 87,833 24,842 313,379 313,379.
i Foreign Foreign Corporate Bonds Bonds & & Notes 612 8,326 5,207 9,202 23,347 :
Total Total $ 188,817 188,817 $ 585,030 $ 281,217 $ 197,768 197,768 $ 1,252,832 1,252,832 As of June 30, 30, 2007 2007 Less than Mondhan More than Carrying 1 Year 1-5 Years 6-1 0 Years 6"10 10 Years Value Value
- -*:-:-.,:--:,~~.7;o:;"'"-:r,r..,...,:.;;;_~.!. ;..:.-; ,;,t;.. '?;J?!~"'~!f;:1'1 ,*:'£tJ~r~:rr~fy~e~_,~nM~.F>~;rn ,-
U.S. Agency Obligations $ 149,651 149,651 $S 342,038 342,038 $ 26,723 $ 33,713 $ 552,125 552,125 U.S. Treasury Treasury Obligations Obligations 16,050 16,050 18,589 16,163 16,163 9,392 60,194 60,194 Foreign Foreign Government Obligations 2,649 35,165 35,165 29,329 31,356 98,499 U.S. Corporate Corporate Bonds & & Notes 30,684 133,900 133,900 11,088 11,088 22,178 197,850 197,850 Foreign Foreign Corporate Bonds & & Notes 703 703 2,1 11 2,111 2,194 8,372 13,380 13,380 Total 1$$ 199,737 199,737 $ 531,803 531,803 $ 85,497 85,497 $ 105,011 105,011 $ 922,048 922,0481 Credit Risk - An investment's investment's credit credit risk is the risk that the issuer or other other counterparty counterparty will not meet its obligations. For investments investments in debt securities, this credit credit risk is typically measured by the credit quality quality ratings provided provided by a nationally-recognized nationally-recognized statistical statistical rating organization organization such as Standard & Poor's
& Poor's Ratings Group and Moody's Investors Moody's Investors Service. For Endowment Endowment Fund investments, the University's University's policy policy specifies specifies that corporate corporate bonds and other other fixed income securities securities must have a Standard & & Poor's Poor's rating of A or better.
In the following table, the University University has elected elected to use Moody's investment investment ratings. Securities Securities within the Endowment Investment category Pooled Endowment category have have Moody's ratings of Baa and Standard & Poor's ratings ratings in the A range (A- to A+), which places places those bonds within the parameters parameters specified specified in the University's University's policy.
FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNIT OF THE UNIT OF THE STATE STATE OFOF MISSOURI MISSOURI 33 33
9-,ýc FOR T=E THE YEARS ENDED JUNE JUNE 30, 2008 2008 AND AND 2007 2007 Based on Moody's Based Moody's investment ratings, the University's University's credit credit risk exposure as of June 30, 2008, and 2007, is as follows:
2007, Investments Invest~iAments1 by Type by' TypeI~and and Credit Credit~ Rating Rat~ ing (in (in~~
thousands thuad of dollars) ofdolas As of June 30, 2008 2008 Aaa Aaa Aa Aa A Baa Unrated Total Total
'- ... - . ~-- -- - ,;.;:-_. ~
U.S. Agency Obligations 5$ 470,034 470,034 $ 3,111 3,111 $ 392 $ - $ 158,855 $ 632,392' 632,392 U.S. Treasury Obligations Obligations 193,889 193,889 193,889 193,889 Foreign Government Foreign Government Obligations 55,497 55,497 668 668 31,309 944 1,407 1,407 89,825 U.S, Corporate Bonds & Notes U.S. Notes 53,500 53,500 109,514 109,514 137,050 137,050 7,574 7,574 5,741 313,379 313,379 Foreign Corporate Foreign Corporate Bonds && Notes 11,035 4,896 5,217 737 737 1,462 1,462 23,347 '
Total $ 783,955 783,955 $ 118,189 $ 173,968 $ 9,255 $ 167,465 167,465 $ 1,252,832 1,252,832 As of June 30, 2007 2007 Total I I Aaa Aaa Aa A Baa Unrated Total
~. r *. L U.S. Agency Obligations $ 515,129 515,129 $ 125 $$ - $ - $ 36,871 36,871 $ 552,125 U.S. Treasury Obligations Obligations 60,194 60,194 60,194 Foreign Government Foreign Government Obligations 64,071 64,071 136 23,813 1,748 8,731 8,731 98,499 U.S. Corporate Bonds & Notes 30,313 30,313 87,262 65,998 3,877 10,400 10,400 197,850 197,850 Foreign Corporate Corporate Bonds && Notes 2,725 2,725 832 3,223 368 6,232 6,232 13,380 13,380 Total 1$$ 672,432 672,432 $ 88,355 $ 93,034 $ 5,993 $ 62,234 62,234 $ 922,048 922,0481 Custodial Credit Risk - For investments, custodial credit risk is the risk that in the event of failure ofthe of the counterparty to a transaction, the UniversityUniversity will not be able to recover the value value of the investments' held by an outside party. In accordanceaccordance with its policy, the University University minimizes custodial credit risk by by establishing limitations on the types of instruments instruments held with qualifying qualifying institutions. Repurchase Repurchase agreements must be collateralized collateralized by U.S. Government Government issues and/or U.S. Government Government Agency issues.
Certificates of deposit must be collateralizedcollateralized and held at a bank with which the University has a depository agreement. At June 30, 2008, and 2007, the University's uninsured and uncollateralized uncollateralized consisted of commercial investments consisted commercial paper $104,433,000 and $235,230,000, respectively.
paper totaling $104,433,000 respectively. The University's investment in repurchase agreements University's agreements held by the investment's investment's counterparty counterparty and not in the name name of the University totaled $1,656,000
$1,656,000 and $160,000
$160,000 at June 30, 2008, and 2007, respectively. All remaining remaining University investments are insured insured or registered and are held by the University or an agent in its name.
2008 FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI 34 A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE STATE OFOF MISSOURI MISSOURI
FOR THE YEARS FOR YEARS ENDED JUNE 30, JUNE 30, 2008 AND 2007 Concentration of Credit Risk - The risk of loss attributed to the magnitude of investments in a single Concentration issuer. is known as the concentration issuer concentration' of credit risk. Investments issued or guaranteedguaranteed by the U.S.
government, investments in mutual funds, or external external investment pools are excluded excluded from this category.
category.
For University funds invested in the Pooled General General Investments category, category, the following restrictions apply:*
apply>: 1) Corporate Corporate Bonds should not exceed 20%
exceed 20% of the portfolio; 2)Variable portfolio; 2) securities should not Variable Rate securities 15% of exceed 15% the portfolio; and 3) ofthe 3) Investments Investments in obligations of the U.S. Government, U.S. Government Government Agency Agency issues or U.S. Government Government guaranteed securities are unlimited. On December guaranteed securities December 15,15, 2006, the Board of Curators amended the investmentinvestment policy for short-term funds to permit permit the following new new investment categories: the University's Balanced Pool and absolute absolute return funds.
For University University funds invested in the Pooled Endowment Endowment Investments category, category, target asset mixes are evaluated to ensure ensure appropriate appropriate diversification. The investment consisting of no investment policy allows a portfolio consisting more than 37%37% U.S. equity, 24% international 12.5% emerging international equity, 12.5% emerging markets equity, 10% private 10% private 10% absolute return funds, 12.5%
equity, 10% estate, 22%
12.5% real estate, 22% global fixed income, and 12% 12% Treasury Inflation-Protected Securities (TIPS). However, within the Pooled Endowment Inflation-Protected Endowment Investments category, due to donor restrictions certain monies monies can only be invested in fixed income securities. The Fixed Income portfolio for these monies consists of U.S. Government, U.S. Government Pool portfolio Government Agency Agency issues, corporate fixed income, commercial paper and repurchase agreements.
income, commercial As ofJune of June 30, 2008, of the University's University's total cash and investments, investments, 14.1%
14.1 % are issues of the Federal Home Loan Bank (FHLB), 6.1 6.1%
% are issues of the Federal Home Loan Mortgage Mortgage Corporation (FHLMC), and 5.6% are issues of Federal National Mortgage Association (FNMA).
5.6% (FNMA).
As of June 30, 2007, of the University's total cash and investments, 16.1% are issues of the FHLB and investments, 16.1%
7.5% are issues ofthe 7.5% of the FNMA.
Foreign Currency Currency Risk -The -The risk that changes changes in exchange exchange rates will adversely affect the fair value of a foreign investment is referred referred to as foreign currency risk. University University policy policy allows 15 to 25%25% of the the investment portfolio inveshnent portfolio to be invested in international international investments; 13.8%
13.8% and 14.8%
14.8% were denominated denominated in foreign currency in fiscal years 2008, 2008, and 2007, 2007, respectively.
respectively. To reduce reduce its foreign currency risk, thethe University University has entered into forward foreign currency throughout the year. As of June 30, 2008, currency contracts throughout and 2007, 6.0%
6.0% and 5.1%, respectively, of the University's University's total investment portfolio portfolio was invested in forward foreign currency currency contracts, totaling $115,688,000 contracts, totaling $115,688,000 and $84,367,000, respectively.
$84,367,000, respectively. These contracts contracts are marked to market market and the changes in their market value are recorded recorded in investment endowment investment and endowment Statement of Revenues, income on the Statement Revenues, Expenses, and Changes in Net Assets.
2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURIMISSOURI A COMPONENT A COMPONENT UNITUNIT OF OF THE STATE OF THE STATE OF MISSOURI MISSOURI 35 35
(t__~
k FOR FOR THE THE YEARSYEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007 The University's University's exposure to foreign currencycurrency risk as of June 30, 2008, and 2007, was as follows:
Foreign Foeg Currency Risk CrecyRs International ~kIInv st~1ment Seuit*ies Internaion~U[sal~ Investment Securities 41 at Fair at Fair I Value Valu (in (intosns thousands of dolas dollars)
Sof i ... .-.. - -. - .. - .. -----.- . . - ... - -.. --- - ....-..- ..- . . .- - ,r------,
Foreign Foreign Cash Cash and Foreign Foreign Corporate Corporate I I Cash Government Bonds and Corporate Corporate 2008 2008 . 2007 2007 Currency Currency ~qu~valents _Obligations Equivalents Obligations Notes Stocks Stocks Total_
Total: TotalI Total I=============~ - ._____ . _-.: :. ___ ._'-.-.-:. . .-. . : :_..
_Notes
_-=-:....:- "::_:-..:' _= :_-='_ .--=-_." _' -= II :. _ _ _ . .- : : . ' ~ ** :-":::'~
Australian Dollar Dollar : $ 95 $ 2,162 2,162 $ 921 $ $ 3,723 $ $ 6,901 $ 6,635 6,635 Brazilian R Brazilian Real e a l ! 78 79 157 157 :
Sterling British Pound Sterling (6,781)
(6,781) 7,637 116 116 21,821 22,793 22,793 40,447 Canadian Canadian Dollar Dollar 8,214 2,541 494 494 1,419 1,419 12,668 12,668 I 10,470 10,470 Chilean Peso 34 34 34 34 I 35 35 Chinese Yan Renminbi 2,160 2,160 2,160 2,160 : 3,327 3,327 Danish Krone 10 10 560 560 254 254 824 824 i 811 811 Euro 10,638 10,638 35,807 17,113 17,113 50,595 50,595 114,153 114,153 i 105,431 105,431 Hong Kong Kong Dollar 80 80 3,362 3,442 3,442 I 5,971 Hungarian Forint Hungarian 1,180 1,180 Israeli Shekel 1,172 (396) 776 !
776 1,798 1,798 Japanese Yen Japanese Yen 1 27,371 3,373 3,373 12,723 12,723 43,468 I 55,621 55,621 Malaysian Ringgit Malaysian Ringgit 2,421 1,729 1,729 4,150 I 1,920 1,920 Mexican New Mexican Peso New Peso 46 945 227 227 1,218 1,218 1,822 1,822 Taiwan Dollar New Taiwan 199 199 199 199 ' 183 183 New Zealand Dollar Dollar 28 (495) (467):
(467), (3,318)
(3,318)
Norwegian Norwegian Krone 97 448 3,660 3,660 4,205 4,205 1,040 1,040 Polish Zloty 28 2,631 2,631 (253)
(253) 2,406 2,406 ! 2,211 2,211 Russian Rubel 99 99 99 !
99 African Comm Rand I South African 247 247 247 ' 405 Singapore Dollar Singapore I 17 17 3,836 3,836 1,375 1,375 5,228 I 4,162 4,162 South Korean Won 731 731 (135)
(135) 596 596 ' 1,666 1,666 Swedish Krona Swedish Krona 73 2,123 2,123 692 2,808 2,808 5,696 :
5,696 6,274 6,274 Swiss Franc 94 14,512 14,512 14,606 :
14,606 17,821 UAE Dirham 329 329 329 329
- ..--------i Total $ 12,640 12,640 $ 89,825 89,825 $ 23,347 23,347 $ 120,076 120,076 $ 245,888 245,888 i 1
- ",;$==",,;2;,;6~5 I$ 265,912,;,,91;;2~1 Securities Securities Lending Transactions -- The University Lending Transactions participates in an external University participates investment pool securities external investment securities lending program to augment income. The program program is administered administered by the University's custodial agent University's custodial which lends equity, government, bank, which government, and corporate corporate securities for a predetermined predetermined period period of time to an an independent broker/dealer (borrower) independent broker/dealer (borrower) in exchangeexchange for collateral. Collateral Collateral may be cash, U.S. u.s.
Government securities, Government securities, defined letters of credit or defined letters or other collateral collateral approved approved by by the University.
University. Loaned Loaned domestic securities domestic securities are initially collateralized collateralized at 102% 102% of their fair value, value, while loaned international while loaned international securities securities are collateralized collateralized at 105% of fair value. The University University has minimized minimized its exposureexposure to credit credit risk from borrower borrower default default by having the custodial custodial agent agent bank determine daily bank determine daily that that required required collateral collateral meets a minimum of 100% of the fair value of loaned loaned domestic securities securities and 105% for loaned international securities.
international securities. The fair valuevalue of collateral collateral held for securities securities on loan loan totaled $106,360,000 and totaled $106,360,000
$138,014,000 at June 30, 2008,
$138,014,000 2008, and 2007, 2007, respectively.
2008 FINANCIAL 2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 36 36 A COMPONENT COMPONENT UNIT UNIT OF THE STATESTATE OF OF MISSOURI MISSOURI
FOR THE YEARS ENDED FOR ENDED JUNE 30, 2008 AND AND 2007 2007 The University University continues to receive receive interest and dividends during the loan period, as well as a fee from the borrower. In addition, addition, the maturities of the investments made with the cash collateral generally match match maturities of the securities the maturities securities lent. At June 30, 30,2008, 2008, and 2007, the University University has no credit risk risk exposure since the collateral held exceeds exceeds the value of the securities securities lent. The University is fully indemnified by its custodial bank against any losses incurred as a result of borrower default.
indemnified In addition, addition, at June 30, 2008 and 2007, 2007, letters of credit and security collateral not meeting the criteria for inclusion inclusion in the Statement Statement of Net Assets totaled $15,238,000
$15,238,000 and $11,607,000,
$11,607,000, respectively. At June 30, 2008 and 2007, the aggregate fair value of the securities securities lent and related collateral collateral received was
$113,629,000
$113,629,000 and $144,351,000,
$144,351,000, respectively.
DISCRETELY PRESENTED PRESENTED COMPONENT COMPONENT UNIT UNIT-- MEDICAL ALLIANCE ALLIANCE Investments - The investment policies of Medical Alliance Investments Alliance are established by its board of directors. The policies are established to ensure that Medical Alliance funds are managed managed in accordance accordance with the "Prudent Man Rule."
"Prudent At June 30, 2008, 2008, and 2007, 2007, Medical Alliance Alliance held the following investments:
Medical Alliance Investments I (in thousands of dollars) i r---__2008 2~08-_--J
.. 2007 L Internally Designated for Capital Improvements:
Mortgage-backed securities Mortgage-backed securities 1$ 5,695 i $ $ 5,690 5,690 Money Money Market Accounts I
I 5,721 : 8,804 8,804 Interest Receivable Receivable 65 . 77 77 U.S. Treasury Treasury Obligations Obligations iI 74 i 741 74 I
Certificates Certificates of Deposit 15,105 15,105 : 8,577 I
Subtotal Subtotal I
, 26,660 I 23,222 23,222 Held by Trustee Under Indenture Agreement: I Money Money Market Accounts I 4,299 !
I 4,209 Interest Receivable I 2; 4 Less Portion Required for Current Obligations Obligations II (1,293)
{I ,2932 i (1,264)
{1, 264 2 1$S 29,668 II $
29,6681I$ 26,171 I UNIVERSITY OF UNIVERSITY OFMISSOURI FIDUCIARY FUNDS FUNDS At June 30, 2008, the University'S University's newly-established newly-established OPEB Trust Fund held no investmentsinvestments as its balance was held in cash deposits. Disclosures for the University'S University's Retirement Trust Fund are as follows:
Investments Investments -The -The Board of Curators Curators of the University University of Missouri establishes the policy for Retirement Retirement Trust investments investments which emphasizes emphasizes diversification across asset classes, dominateddominated by equity securities to maximize maXImIze investment investment returns. While pursuing this investment objective, the Retirement Retirement Trust also also observes observes its fiduciary duties set forth in SectionSection 105.688 105.688 of the Revised Statutes of Missouri to act in the interest of the Retirement Retirement Plan's participants and beneficiaries. Retirement Trust investments beneficiaries. The Retirement earned investments earned a total return of (5.7) %, including unrealized unrealized gains and losses, for the year ended June 30, 2008, 2008, and 19.7%
19.7% for the year ended June 30, 2007.
2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURIMISSOURI A
A COMPONENT COMPONENT UNITUNIT OF THE STATE OF THE STATE OFOF MISSOURI MISSOURI 37 37
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007 FOR TIIE YEARS ENDED JUNE 30, 2008 AND 2007 At June 30, 2008, and 2007, 2007, the Retirement TrustTrust held the following types of investments:
Retirement Trust Investments By Type Reiemn Trst (in thousands Inetet of dollars) By Type Carrying Value as of June 30, 30,
' , - 2~08 2008___
J 2007 L Government Obligations Obligations ,$8$ 640,544 , $ 400,416 400,416 Corporate Bonds and Notes 281,693 182,837 182,837 Corporate Stocks 1,699,133 2,269,794 2,269,794 Commercial Paper 1,285 1,169 1,169 Other Other 218,894 103,663 Total Short-Term Short-Term and Long-Term Long-Term Investments 2,841,549 I 2,841,549 2,957,879 2,957,879 I J
Commercial Paper Commercial 25,431 1 21,404 21,4041 Total Cash Equivalents 25,431 I 21,404 I 21,404 Total Total Investments ..$$ 2,866,980 1$$ 2,979,283 2,979,28311 Interest Rate Risk - Interest Interest Interest rate risk is the risk that changes in interest interest rates will adversely affect the fair fair value of an investment. As a means of preserving preserving invested principal, principal, the Board of Curators' investment Curators' investment policy requires diversification diversification of the Retirement Retirement Trust investment portfolio.
At June 30, 2008, and 2007, the maturities of the Retirement Retirement Trust's investmentsinvestments are as follows:
Retirement Trust Investments by Type and Maturity (in thousands of dollars)
As of June 30, 2008 2008 Less than More More than Carrying Carrying J 1 Year 1-5 Years 6-10 6-10 Years 10 10 Years Value -
U.S. Agency U.S. Obligations Agency Obligations $ 1,433 $ 790 790 $ 6,570 $S 109,718 109,718 118,511
$ 118,511 U.S. Treasury Obligations Treasury Obligations 10,586 50,983 106,449 106,449 74,710 74,710 242,728 Foreign Government Government Obligations Obligations 7,497 63,028 131,864 131,864 76,916 76,916 279,305 U.S. Corporate Corporate Bonds & Notes 21,833 78,740 57,268 66,568 224,409 Foreign Corporate Corporate Bonds & Notes 1,422 23,377 14,603 17,882 17,882 57,284 57,284 I Total $ 42,771 $ 216,918 $ 316,754 345,794
$ 345,794 922,237 ,
$ 922,237 As of June June 30, 2007 30,2007 Less than More than Carrying 1 Year 1-5 Years 6-10 Years 10 Years Value U.S. Agency Agency Obligations $ 779 $ 6,984 $ 7,362 $ 92,336 $ 107,461 U.S. Treasury Obligations Treasury Obligations 13,190 5,399 15,853 12,258 46,700 46,700 Foreign Government Government Obligations Obligations 16,841 86,530 58,219 84,664 246,254 U.S. Corporate Corporate Bonds & Notes 10,307 10,307 43,477 17,672 75,001 146,457 146,457 Corporate Bonds & Notes Foreign Corporate 3,056 6,486 6,222 20,617 36,381 Total 1$$ 44,173 $ 148,876 $ 105,328 $ 284,876 583,253
$ 583,2531 2008 2008 FINANCIAL FINANCIAL REPORT: UNIVERSITY OF MISSOURI REPORT: UNIVERSITY MISSOURI 38 38 A COMPONENT COMPONENT UNIT OF THE STATE MISSOURI STATE OF MISSOURI
FOR THE YEARS FOR YEARS ENDED JUNE JUNE 30, 30, 2008 AND AND 2007 Credit Risk - An investment's investment's credit risk is the risk that the issuer or other counterparty will not not meet its obligations. For investments in debt securities, this this risk is measured by the credit quality quality ratings provided by aa nationally-recognized nationally-recognized statistical statistical ratin-grating organization, such as Standard & & Poor's and Moody's. The The Retirement Trust investment policy requires that corporate corporate bonq bond and other fixed fixed income securities must have a Standard & & Poor's rating of A or better.
The University has elected to use the Moody's investment ratings in the following table. Securities Securities Retirement Trust have Moody's ratings of Baa and Standard &
within the Retirement & Poor's ratings in the A range (A- to A+), which places those bonds within the parameters parameters specified by the Retirement Trust investment investment policy.
The Retirement The Retirement Trust's credit risk exposure based on Moody's investment ratings as of June 30, 2008, and 2007, is as follows:
Retirement Trust Investments by Type and Credit Ratihg Reiemn Trs Inetet (in thousands of by Typ dollars) and , CrdtR II As of June 30, 2008
- - - - - ~ --'- ---< -' 'I T
Aaa Aa A A Baa Unrated Total
,~ ~~~~,~~~ £ +'.$-'k"'.'~~_~ ___ ,~_,_,,,_ '.--' -
U.S. Agency Obligations :$$ 116,687 116,687 $S $ 1,824 $ -- $ -- $ 118,511 U.S. Treasury Obligations 242,728 . 242,728 :
Foreign Government Government Obligations 153,058 153,058 45,684 76,032 2,891 1,640 1,640 279,305 ~
U.S. Corporate Bonds & & Notes 81,383 69,296 52,488 12,629 8,613 224,409 I Foreign Corporate Corporate Bonds & & Notes 28,210 9,393 14,104 3,130 2,447 57,284 I 57,284 Total Total ;$$ 622,066 $S 124,373 $ 144,448 $ 18,650 18,650 $ 12,700 12,700 $ 922,237 i 922,237 As of June 30, 2007
','$~ifii1~"';" ~~;:~ ..,i'J~';;;""$' ~~;~:;:~. *¥';~I~l{
Aaa Aa A Baa Unrated Total U.S:
U.S: Agency Agency Obligations $ 107,087 $ 374 $ $ - S $ 107,461 U.S:
U.S: Treasury Obligations 46,700 46,700 Foreign Foreign Government Government Obligations 151,912 4,218 61,354 4,439 24,331 246,254 Ir U.S. Corporate Bonds & & Notes Notes 71,259 28,911 22,685 1,949 21,653 146,457 Foreign Foreign Corporate Corporate Bonds & & Notes 7,462
- --,.-_...;7-,-,4.;,,;6.=2_ 3,071 10,164 10,164 721 14,963 14,963 36,381 Total 1$$ 384,420 $5 36,574 36,574 5$ 94,203 94,203 5$ 7,109 $ 60,947 60,947 $ 583,253 583,253 J Custodial CreditCredit Risk - For investments, investments, custodial credit credit risk is the risk that in the event of failure of the counterparty counterparty to a transaction, transaction, thethe Retirement Trust will not be able able to recover recover the value of its investments investments held held by an outside party. At June 30, 2008, 2008, and 2007, 2007, the Retirement Trust's Retirement Trust's uninsured and uninsured and uncollateralized investments uncollateralized investments consisted consisted of commercial paper commercial paper totaling totaling $26,717,000
$26,717,000 and $22,573,000, respectively.
respectively. Remaining investments are insured or registered Remaining investments registered and are held by by the Retirement Retirement Trust Trust or or an agent agent in its name.
Concentration Concentration of Credit Risk - The risk of loss attributed attributed to the magnitude magnitude of investmentsinvestments in a single single issue is known as the concentration issue is known as the concentration of credit of credit risk. Investments Investments issued issued or guaranteed guaranteed by the U.S.
government, investments government, investments in mutual in mutual funds, or or external external investment investment pools pools areare excluded excluded from this category. category.
The The Retirement Retirement TrustTrust investment investment policy allows allows for aa portfolio portfolio consisting of no more more than 37% 37% U.S. U.S.
- equity, equity, 24% international international equity, equity, 12.5% 12.5% emerging markets equity, 10% 10% private equity, equity, 10% 10% absolute return return funds, funds, 12.5%
12.5% real estate, estate, 22%
22% global global fixed fixed income, and 12% TIPS.
and 12% TIPS. At June June 30, 30, 2008,2008, and 2007, the Retirement Trust the Retirement Trust portfolio portfolio did did not contain contain investments investments from any single single issuer issuer that exceeded exceeded 5% 5% of the total total portfolio.
2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT UNIT OFOF THE THE STATE STATE OFOF MISSOURI MISSOURI 39 39
FOR FOR THETHE YEARS ENDED JUNE 30, YEARS ENDED 30, 2008 2008 ANDAND 2007 2007 Foreign Currency Foreign Currency Risk Risk -The
-The risk that changes changes in exchange exchange rates adversely affect rates will adversely affect thethe fair fair value of of a foreign investment is referred foreign investment referred to as currency risk.
as foreign currency risk. The Retirement Trust The Retirement Trust portion of its significant portion invests a significant international investments; portfolio in international its portfolio investments; 26.3% 26.3% and 31.1 % were and 31.1% were denominated in foreign denominated currency in fiscal years foreign currency years 2008 2008 and 2007,2007, respectively. To reduce foreign foreign currency risk, the Retirement currency Retirement Trust entered into Trust entered foreign currency into forward foreign contracts throughout the currency contracts the year.
As of June June 30, 30, 2008, and and 2007, 10.7% and 9.4%
2007, 10)% respectively, of the Retirement 9.4% respectively, investment Retirement Trust's investment portfolio is investedinvested in forward forward foreign currency contracts, totaling currency contracts, $303,808,000 and $276,217,000.
totaling $303,808,000 $276,217,000.
These contracts are marked These contracts marked to market and the changes changes in their market market value are reported as net value are net (depreciation) in fair value of appreciation (depreciation) appreciation of investments Statement of Changes investments in the Statement Plan Net Changes in Plan Net Assets.
Assets.
As of June 30, 2008, 2007, the Retirement 2008, and 2007, currency risk was exposure to foreign currency Retirement Trust's exposure wasas as follows:
Retirement Trust Foreign Currency Risk International l Investment Securities Inturnatio~na[ tInvelst'~~4Ia]ment I4 Seuite [ at Fair at Value Fair Value (in thousands of of dollas dollars))
I Cash and (i tosad c:~-a~d------- :~reig~----~:~;:i;;e--------
Foreign Foreign Corporate
- - ------ ----I Cash Government Government Bonds and and Corporate Corporate 2008 I 2007 2007 Currency II Equivalents Equivalents Obligations Obligations Notes Notes Stocks Stocks Total I Total Total Australian Dollar =====~:-=$=-
I=A=u=st=ra=l=ia=n=D=o=-ll=a=r $ 254-254 --$----
$ 4:399---
4,399 $-----2,939--
$ 2,939 - $
$ ---- 11,735 11,735 $$ 19,327 19,327 $ 23,949 Brazilian Real Brazilian 294 245 245 539 539 British Pound Sterling Sterling (17,201)
(17,201) 17,240 662 61,520 62,221 122,460 122,460 Canadian Canadian DollarDollar 25,433 25,433 2,498 7,282 (713)
(713) 34,500 37,371 Chilean Chilean Peso 104 104 104 105 105 Chinese Yan Renminbi 5,770 5,770 9,790 Danish Krone 63 2,213 65 2,341 2,015 2,015 Euro 76,403 76,403 143,763 143,763 36,992 39,740 39,740 296,898 315,207 Hong Kong Dollar 150 150 9,196 9,346 15,581 Hungarian Hungarian Forint 2,812 2,812 Israeli Israeli Shekel Shekel 2,813 2,813 (845) 1,968 1,968 5,025 5,025 Japanese Japanese Yen Yen 5,534 5,534 73,064 73,064 4,826 4,826 32,203 115,627 115,627 153,632 153,632 Malaysian Malaysian Ringgit Ringgit 5,806 4,433 4,433 10,239 10,239 6,148 6,148 Mexican New Peso Mexican 144 144 2,893 747 3,784 3,784 4,627 4,627 New Taiwan Dollar 543 543 501 New Zealand Dollar 42 591 591 (1,879)
(1,879) (1,246)
(1,246) (9,842)
(9,842)
Norwegian Krone Norwegian 50 1,014 1,014 8,037 8,037 9,101 9,101 2,496 2,496 Polish Zloty I 120 120 7,238 (907) 6,451 6,451 5,507 5,507 Russian Rubel m 223 ml 223 African Comm Rand South African Rand 448 448 943 Singapore Dollar 1
45 9,618 2,905 12,568 11,310 E~2~;~::on ~: ~:!~: :::!: :~m 11,310 South Korean Won 2,125 11 2,136 5,018 5,018 Swedish Krona II 220 6,243 2,076 6,678 15,217 16,214 16,214 Swiss Franc 537 37,877 38,414 38,4141 45,889 UAE Dirham UAE 1------ 878 878
_ _ _ _ _ _ _ _ _ _ _ _ _ _. . . :;.;87,;. ;;8_ _ _ _..:..87,;..;;8,-; l - - - - ' - ;
Total I=======~===-~~~~-~====~===-"";;,,,,~~~-
$ 91,794 $ 279,305 $ 57,284 $ 219,014 647,397
$ 647,39711 776,758
$ 776,7581 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 40 40 A COMPONENT A COMPONENT UNIT UNIT OFOF THE STATE OF THE STATE OF MISSOURI MISSOURI
FOR ENDED JUNE 30, FOR THE YEARS ENDED 2008 AND 2007 30,2008 2007 Securities Securities Lending Transactions Transactions - The Retirement Retirement Trust participates participates in an external investment investment pool securities lending program to augment income. The program program is administered administered by the Retirement Trust's Trust's custodial custodial agent bank, which lends equity, government corporate securities government and corporate securities for a predetermined predetermined period of time to an independent broker/dealer exchange for collateral. Collateral broker/dealer (borrower) in exchange Collateral may be cash, U.S. Government Government securities, defined letters of credit or other other collateral approved by the Retirement collateral approved Retirement Trust.
Loaned Loaned domestic domestic securities are initially collateralized 102% of their fair value, while loaned collateralized at 102%
international international securities securities are collateralized collateralized at 105%
105% of fair value. The Retirement Retirement Trust has minimized minimized its exposure exposure to credit risk from borrower default by having having the custodial custodial agent bank determine determine daily that required required collateral meets a minimum minimum of 100%100% of the fair value of loaned domestic securities securities and 105%
105%
for loaned international international securities. The fair value of collateral held for securities on loan totaled
$294,781,000 and $382,023,000
$382,023,000 at June 30, 2008, and 2007, respectively.
respectively.
The Retirement Trust continues to receive receive interest and dividends dividends during during the loan period, as well as a fee from the borrower. In addition, the maturities of the investments investments made with the cash collateral collateral generally generally match the maturities maturities of the securities lent. At June 30, 2008, 2008, the Retirement Retirement Trust has no credit risk risk exposure exposure since the collateral held exceeds the value of the securities lent. The Retirement Trust is fully indemnified by its custodial custodial bank against any losses incurred as a result of borrower borrower default.
In addition, at June 30, 2008, 2008, and 2007, letters of credit and security security collateral, not meeting the criteria criteria for inclusion in the Statement of Plan Net Assets, totaled $20,336,000 and $38,795,000,
$38,795,000, respectively, for the Retirement Retirement Trust. At June 30, 2008, and 2007, the aggregate aggregate fair value of the securities securities lent and related related collateral collateral received received was $303,713,000
$303,713,000 and $404,849,000,
$404,849,000, respectively.
respectively.
- 4. FUNDS
- 4. FUNDS HELD IN TRUST BY OTHERS At June 30, 2008, and 2007, Funds Held in Trust by Others (principally endowment endowment funds) aggregated aggregated
$80,910,000 and $74,200,000,
$80,910,000 $74,200,000, respectively, respectively, at fair value. Due to time restrictions or a legal event that has not occurred, these funds are not available available to the University University and are not included in the accompanying accompanying Statement of Net Assets. Income earned and distributed to the University for the years ended June 30, 2008 and 2007, aggregated $1,115,000 and $2,807,000, aggregated $1,115,000 $2,807,000, respectively.
2008 FINANCIAL 2008 REPORT: UNIVERSITY FINANCIAL REPORT: UNIVERSITY OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT OF THE UNIT OF STATE OF THE STATE OF MISSOURI MISSOURI 41 41
FOR THE YEARS ENDED ENDED JUNE 30,2008 30, 2008 AND.2007 AND,2007
- 5. ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE receivable at June 30, 2008, and 2007, are summarized Accounts receivable summarized as follows:
Accounts Acout Receivable Receivable I~ ~ (in (i thousands ofdolas thuad of dollars) 2008
~ -.~.
IF -2007 2007 I
Grants and Contracts '$$ 68,613 $ 81,801 i
Federal Appropriations Federal Appropriations 2,018 2,018 551 State Appropriations Appropriations and State State Bond Funds 5,080 5,080 Student Fees and Other Academic Academic Charges Charges 84,007 73,422 University Hospitals and Clinics Patient Services, Net of University of Contractual Allowances 110,960 11 0,960 102,187 102,187 University Physicians Patient University Patient Services, Net of Contractual Contractual Allowances Allowances 18,758 18,038 18,038 Subtotal 289,436 I 275,999 I Less Provisions Provisions for Loss on Accounts Receivable:
Grants Grants and Contracts Allowance 622 1,000 1,000 Hospitals and Clinics Patient Services University Hospitals Services Allowances Allowances 26,779 28,286 University Physicians Physicians Patient Services Allowances Allowances 6,707 6,707 5,928 5,928 Student Fees and Other Other Academic Academic Charges 5,674 5,674 4,810 4,810 Subtotal 39,782 I 40,024 40,024 I Total $ 249,654 1$S 235,975 I
- 6. NOTES RECEIVABLE RECEIVABLE Notes receivable receivable consist of resources available for financial loans to students. These resources are provided through Federal loan programs and University loan programs generally funded by external sources. Notes receivable receivable at June 30, 2008, and 2007, are summarized summarized as follows:
". -' - .0.'
NotesNts Receivable Receivabl (in thousands of dollars) 2008 - ; I[
1---200S- 2007 2007 _J 1=================================-=:
Federal Health Health Profession Loans '$
$ 13,955--- -
13,955"]--l $ 14,321
-r Carl D. Perkins National Loans Loans '31,62231,622 ' 28,419 28,419 University Loan Programs University 18,296 ' :-_...;;2..,;;0..;,.,6;;,..0;,..4;....:
18,296 20,604 Subtotal 63,873 63,344 Subtotal 63,873 :.1 63, 344 1 Less Provision for Loss on Notes Receivable Receivable _____3-' 3,228 3,320
-,2_2_8-" :-_--=3..;,.,3..,;;2:.,,:0;....:
Total ,$$ 60,645' I 60,645 $ 60,024 I 2008 FINANCIAL 2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 42 A COMPONENT UNIT A COMPONENT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI
~~~/
FOR THE YEARS ENDED JUNE JUNE 30,2008 30, 2008 AND 2007 AND 2007
- 7. CAPITAL ASSETS ASSETS UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI Capital assets activity for the years ended June 30, 2008, and 2007, is summarized summarized as follows:
Capital Assets Caia Assets (in thousands of dollars) I I
! 2008 2008 ~
, : " 2008 I Beginning I ,:
Beginning i Additions/
Additions/ I ,
Ending ,
i Balance Balance 1._,_~'~""1",
I Transfers Transfers T';~2':;;7J:1T'o i I Retirements Retirements i !
tt Balance I
" >""':'" """,It" ", l: ,,";;-7"..i *i ''''-;-:z:::fI'olL\L;i/d,*c. .,':,: "::Lmt1t'w':: -: v-;-
j!
Capital Assets, Nondepreciable:
Nondepreciable: !
Land Land ! $ 66,040 66,040, ; $S 759; : $ 769 $ 66,030 66,030 Artwork Artwork and Historical Historical Artifacts , 11575, 11,575 ; 881 !
88i
, 11,663 11,663 Construction in Progress 102,600 I, I 77,7861 180,386' Construction 77, 786 1I 180,386' I
Total Capital Assets, Nondepreciable Nondepreciable 180,215
- 180,215' 78,633K 78,633: : 769 258,079 Capital Assets, Depreciable:
Depreciable: , ,: ,I
, I Buildings and Improvements Improvements I 2, 188,407 ~ :
2,188,407 148,016 i i 148,016! 14,397 :
14,397; 2,322,026 II Infrastructure Infrastructure ~ 217,483 i 217,483' 10,471< i 10,471; 202i :
2021 227,752:
Equipment ; 511,539 ;
511,539' ,
7141711 71,417, , 25,681 '
25,681 557,275 Library Library Materials Materials i 218,306 : 9,406H 9,406 ii ,' ,, 227,712 227,712, Total Capital Capital Assets, Depreciable Depreciable I
3,135,735 :
3,135,735 239,310' 239, 310 ii 40,2801 40,280:
3,334,765 :
I:
Less Accumulated Accumulated Depreciation: , ,I 1 ' I Buildings Buildings and Improvements Improvements 747082,1 747,082 61,309, 61,309!, I, 12,862 795,529 795,529 i ' "
Infrastructure Infrastructure I 83,808 ! 9,546 !
9,5461 183 183, ' 93,171 530 i i 1
Equipment Equipment I 316,286:
316,286 , 47,5301 47, 24,415:
24,415:, 339,401: :
339,401 Library Library Materials I, 129,705 ~ : 7,6111 !
7,611! II 137,316:
137,316 Total Accumulated Accumulated Depreciation Depreciation 1,276,881 1,276,881 ' I 125,996!
125,996! ! 37,460:
37,460W ' 1,365,417 1,365,417 '
!I , , ,
Total Capital Assets, Depreciable, Depreciable, Net 1,858,854:
1,858,854: i 113,3141 113,314'. 2,820r1 '
2,820 1,969,348 1,969,348 I ' 1 'I ' ,
Total Capital Assets, Net Net I $ 2,039,069 i I $ 191,947<
191,9 47 1 : $ 3,589>
3,589; i $ 2,227,427 2,227,427' 2007 2007 2007 2007 Beginning Beginning Additions/
Additions/ Ending Endirig Balance Balance* .1 j~a~sfhs" T ransfe rs,we-"
"0','0',' ,., i";' . 'd Reti re;m~'i1 is Retirements """~
Balance
" ' " ','
- I'ff' P ,'-
L Capital Assets, Nondepreciable: '.
Land Land $ 60,114 60,114 $ 6,018 6,018 $ 92 92 $ 66,040 66,040 Artwork Artwork and Historical Artifacts Artifacts 11,279 11,279 296 296 11,575 11,575 Construction in Progress Construction 96,757 5,843 102,600 Total Capital Assets, Nondepreciable Nondepreciable 168,150 168,150 12,157 12,157 92 180,215 180,215 Capital Assets, Depreciable:
Depreciable:
Buildings and Improvements Buildings 2,037,574 2,037,574 159,726 159,726 8,893 2,1.88,407 2,188,407 Infrastructure 206,681 10,820 10,820 ..,18
_18 217,483 Equipment Equipment 490,231 44,364 23,056 23,056 511,539 511,539 218,306 Library Library Materials Materials 210,838 7,468 218,306 Depreciable Total Capital Assets, Depreciable 2,945,324 2,945,324 222,378 31,967 3,135,735 3,135,735 Less Accumulated Accumulated Depreciation:
Buildings and Improvements Buildings Improvements 698,100 56,712 56,712 7,730 747,082 Infrastructure 74,925 8,890 8,890 7 83,808 Equipment Equipment 290,184 290,184 47,085 20,983 316,286 316,286 Library Materials Library Materials 123,323 123,32311 6,382 6,38211 I 129,705 129,7051 Accumulated Depreciation Total Accumulated 1,186,532 532 119,069 069 28,720 720 1,276,881 1,276; 881 1 1,186, 11 119, 1/ 28, 11 Total Capital Assets, Depreciable, Depreciable, Net I 1,758,792 1,758,792 103,309 3,247 3,247 1,858,854 1,858,854 Total Capital Assets, Net 11 $ 1,926,94211 1,926,94211 $ 115,46611 $$
115,4661/ 3,33911 $ 2,039,0691 3,33911 2,039,0691 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI COMPONENT UNIT OF THE STATE A COMPONENT MISSOURI STATE OF MISSOURI 43
JL__~
FOR FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007 The estimated cost to complete construction in progress at June 30, 2008, 2008, is $656,224,000
$656,224,000 of which
$154,133,000 is available from unrestricted
$154,133,000 unrestricted net assets. The remaining remaining costs are expected to be funded funded from $101,320,000
$101,320,000 of State appropriations, $57,065,000
$57,065,000 of gifts, $4,529,000
$4,529,000 of grants, and $339,177,000$339,177,000 of bond proceeds.
proceeds.
Capital assets include a building lease of $8,332,000 and related building facility under a capital lease related accumulated accumulated depreciation depreciation of $3,645,000 and $3,229,000
$3,229,000 at June 30, 2008, and 2007, respectively.
DISCRETEL Y PRESENTED DISCRETELY COMPONENT UNIT PRESENTED COMPONENT UNIT-- MEDICAL ALLIANCEALLIANCE Capital assets at June 30, 2008, 2008, and 2007 are summarized summarized as follows:
Medical Alliance - Capital Medical Alliance Capital Assets (in thousands of dollars)
Land and Improvements Buildings Improvements Movable Equipment Construction in Progress Construction
- $~~;~8~~n~
2008 102,071 6,109 65,570 4,922
'2007 6,605 98,934 60,359 4,296 178,672 178,672 .1 170,194 170, 194 1 Less Accumulated Depreciation Accumulated Depreciation 103,513 103,513 I 94,580 Total Capital Assets, Net i$ 75,159*1 $
75,159 75,614 75,6141 ACCRUED LIABILITIES
- 8. ACCRUED Accrued liabilities at June 30, 2008, and 2007, are summarized as follows:
Accrued Liabilities Accrued Liabilities (in thousands (in thousands of dollars) f - -- .-
I I
2008
-[ 2007 Salaries, Wages and Related Benefits Accrued Salaries, i$$ 44,454 $
44,4541 40,534 40,534 Accrued Vacation Vacation ,f 38,691 38,691 40,013 40,013 Accrued Self Insurance Claims I 32,503 ! 30,067 30,067 i!
Accrued Interest Payable 5,3191!
5,319 4,362 I
J$ 120,96711 1$ 120,9671 $ 114,9761 114,976 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURIMISSOURI 44 A COMPONENT COMPONENT UNIT UNIT OF THE STATE OF MISSOURI MISSOURI
0 f ý2 4,5r,ýýý-ý 04"e-ý ý FOR THE YEARS YEARS ENDED ENDED JUNE 30, 2008 AND AND 2007 2007
- 9. OTHER NONCURRENT OTHER NONCURRENT LIABILITIES Other noncurrent Other noncurrent liabilities at June 30, 2008, and 2007, 2007, are summarizedsummarized as follows:
Other Noncurrent Liabilities 'I (in thousands of dollars) I (i thusnd.o.dllrs Less Less Noncurrent, Noncurrent, SBeginning Total End Current End of I Beginning Total End Current End of I Fiscal Year Fiscal 2008 Year 2008 .ofof Year Year Additions Additions Payments Payments of Year of Year Portion Portion Year Year
'" ,,( ".",It;';i';IB'iJ'~:st't'W'§f",2~*::" ,,~C,,?<t<j<:J:,f..j~,. *'-~*~*i?,*,:.~Jt:""':,:.f::di::hi?:1n[j2}1":':*:"'~}~ol..:..:.1'.il>'l:ii'1,';!.J\hJcltt.~*,I;~!.*i.£...J:':P~'I. .
I Accrued Vacation !$$ 49,001 $ 36,639 (34,313)
$ (34,3l3) $ 51,327 (38,691)
$ (38,691) $ 12,636 12,636 Self-Accrued Se1f-Insurance Insurance Claims 79,799 136,343 (148,904)
(148,904) 67,238 (32,503)
(32,503) 34,735 34,735
,$$ 128,800 128,800 $ 172,982 $(183,217)
$(183,217) $. 118,565
$. $S (71,194)
(71,194) $ 47,371 Less Less. Noncurrent Noncurrent Beginning Beginning Total End Total Current Current End of of Fiscal Year 2007 of YearYear Additions Payments Payments of Year of Year Portion Year Year
~~~:!!~~~~::, 4~:::'~$';:::'~~':::::'"::':::un:, =:~:::: r Accrued Vacation Accrued Self-Insurance Claims 1$
$ 46,292 86,850',
$ 40,510 139,294 133,142 _$$ 179,804 _ $$(84)4'6)~
I $ 133,142
$ (37,801)
(146,345)
(184,146) *$128,800
$ 49,001 79,799
$ 128,800 _$'
$ (40,013)
(3'0,067)
- '$ (70,080)
(7();080) 8,988 49,732 58,720 58,720 I to. BONDS
- 10. BONDS AND AND NOTES PAYABLE PAYABLE UNIVERSITY OF UNIVERSITY OF MISSOURI MISSOURI As of June 30, 2008, and 2007, bonds and notes payable totaled $870,667,000 $870,667,000 and $652,785,000, $652,785,000, respectively. Of these amounts, $868,207,000 $868,207,000 and $652,785,000, respectively, respectively, were bonds outstanding, net of unamortized premium/discount and loss on defeasance unamortized premium/discount defeasance totaling $11,102,000 $11,102,000 and $6,960,000, respectively. The principal principal and interest interest of the bonds are payable payable from net income or designated designated revenues revenues from the related financed financed activities. Designated revenues for the bonds include include sales sales and services from the financed financed facilities, such as bookstore bookstore collections, collections, housing and dining charges, patient services, and parking parking collections, as well as certain certain assessed fees. For fiscal years years 2008 and 2007, available related
$848,025,000 and $792,555,000, revenues totaled $848,025,000 $792,555,000, respectively, while the annual debt service payments totaled $16,975,000
$16,975,000 and $14,760,000.
$14,760,000. This proportion proportion is expected expected to continue to be less than 3% 3% of of pledged revenues pledged revenues in the future. These bonds bear interest interest at fixed and variable variable rates ranging ranging from 2.0% to 5.8% per annum 5.8% annum and mature at various various dates through November 2037. Interest on the variable variable rate System Facilities Revenue Bonds is paid at the Bond Market Association' AssociationTM daily bond rate.
The outstanding outstanding notes totaling $2,460,000 as of June 30, 2008, consisted consisted of two loans from the state Department of Natural Resources Resources Energy Efficiency Efficiency Leveraged Leveraged Loan Program. Interest is payable payable semiannually and ranges from 3.0%
semiannually 3.0% to 3.2%. 3.2%. One of these loans matures in February 2012, while the second loan matures in February February 2016.
FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI A'COMPONENT UNIT A*COMPONENT UNIT OF THE STATE OF THE STATE OF MISSOURI MISSOURI 45
CL FOR THE YEARS ENDED JUNE 30, 2008 2008 AND AND 2007 2007 Bonds and Notes Payable Payable activity activity by issuance series for the years ended June June 30, 2008, and 2007, 2007, was as follows:
Bonds Bonds and an Notes Note Payable PayblAtiit Activity (in (ithuad thousands of of dollars) dolas
. ~.-.~-
--- -- - - . -- - +--" -".
2008 2008 2008 Beginning Ending
~ Balance Balance Issuance Payments Dct: 1111;;11" Defeasance Amortization Amortization Balance System Facilities Revenue Revenue Bonds:
1997 Series 1997 $ 1,135 1,135 $$ - $$ (1,135)
(1,135) $ - $$ -- $$ -
Series 1998 16,840 16,840 (1,815)
(1,815) 15,025 ;
15,025 Series 2000 63,425 63,425 (3,105)
(3, I 05) 60,320 60,320 Series 2001 I 80,760 (795)
(795) 79,965 ,
79,965 Series 2002 40,000 (40,000) - I Series 2003 147,280 147,280 (3,260) (96,965)
(96,965) 47,055 Series 2006 296,385 (6,865)
(6,865) 289,520 289,520 Series 2007 365,220 365,220 365,220 Less Unamortized Premium/Discount Premium/Discount I 17,004 17,004 8,772 (2,696) (1,037)
(1,037) 22,043 :
i Defeasance Less Loss on Defeasance (10,044)
(10,044) (1,610)
(1,610) 714 714 (10,941)
(10,941)
Notes Notes Payable I " 2,460 2,460 !
652,785 $ 376,452 . $ (56,975)
(56,975) $ (101,271)
(101,271) $ (323)
(323) 870,667 Less Current Portion ! (16,975)
(16,975) (21,201)'
(21,201)
, I
,$$ 635,810 635,810 -
S$ 849,466 849,466
- - - - - - - --- ~ - -
2007 2007 Beginning Beginning Ending Balance Balance Issuance Issuance Payments Defeasance Defeasance Amortization Amortization Balance
~ .. , " ,:~",:",,- '<-_""~'''~~';~i:';;_~'-i~""f- 0":_' ~'1f.'~' ,
System Facilities Facilities Revenue Revenue Bonds:
Series 1997 1997 $ 2,210 2,210 $ - $ (1,075)
(1,075) $ - $ - $ 1,135 1,135 Series 1998 19,335 (2,495)
(2,495) 16,840 16;840 Series 2000 66,410 (2,985)
(2,985) 63,425 2001 Series 2001 81,515 81,515 (755)
(755) 80"760 80;760 Series 2002
-Series 40,000 40,000 147,280 147,280 Series 2003 150,435 (3,155)
Series 2006 300,680 (4,295) 296,385 Less Unamortized Premium/Discount Premium/Discount 17,814 17,814 (810) 17,004 17,004 Less Loss on Defeasance Defeasance (10,945)
(10,945) 901 901 _,_ ,(10,044)
(10,044) 667,454 $ . - - $ (14,760); ,$
(14,760) 1$ ~-:t..: , i ~ ,,$Jd:.::,b '] t:9,~b 911 ~.-*:7:'~~; 652,785 652,785 1 (14,760) -. (16,975)
Less Current Portion 1 (14,760) '~:)\g,;f1 ~ ',,:' ">~,,. - (16,975) 652,694 $ 635,810 1$$ 652,694 $ 635,810 1 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITYUNIVERSITY OF MISSOURI MISSOURI 46 A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF MISSOURI MISSOUR.I
FOR THE YEARS ENDED JUNE 30, 2008 YEARS ENDED AND 2007 2008 AND 2007 As of June 30, 2008, principal and interest due on bonds and notes during the next five years and in subsequent five-year periods is as follows:
Future Debt Service Service (in thousands of dollars)
Net Payments (Funds Received) on Swap Swap Fiscal Year Principal Principal Interest Agreement Agreement 2009 $$ 21,201 21,201 $ 33,725 33,725 $ 3,127 2010 24,093 32,789 32,789 3,144 3,144 2011 24,295 31,735 31,735 3,084 3,084 2012 23,053 30,688 3,069 2013 2013 24,093 29,667 29,667 3,068 3,068 2014-2018 2014-2018 138,220 131,578 131,578 14,623 14,623 2019-2023 2019-2023 164,835 99,956 11,538 11,538 2024-2028 2024-2028 200,375 63,000 6,683 2029-2033 2029-2033 150,740 29,469 1,509 2034-2038 2034-2038 88,660 9,278 9,278 1 $ 859,565 859,565 $ 491,885 491,885 $ 49,845 49,8451 Future interest payment requirements for variable variable rate bond debt are determined determined using the rate in effect at June 30, 2008, ranging 2008, ranging from 1.47 to 2.05%. The above interest payments also include include estimated estimated payments on two interest interest rate swap agreements, agreements, as discussed below, at fixed rates of 3.95% 3.95% and 3.798%,
3.798%,
net of the funds received from the counterparty counterparty to the transaction transaction at a rate effective at June 30, 2008, of of 1.55% and 1.67%, respectively.
1.55%
On July 26, 2007, the University University issued $365,220,000 of System Facilities Facilities Revenue Bonds, Bonds, consisting of of
$262,970,000
$262,970,000 in Series 2007A 2007 A bonds at the interest cost of 4 to 5% and $102,250,000
$102,250,000 of Series 2007B bonds with variable rates. Proceeds Proceeds from the issuanceissuance of the Series 2007 A and B bonds were used to finance construction of new housing facilities on the Columbia and Missouri S&T campuses, various various.
other projects and the cost of issuance. Proceeds from issuance of the Series 2007B bond were used to advance refund and defease defease $96,965,000
$96,965,000 of the Series 2003A 2003A bonds.
The partial partial defeasance defeasance of the 2003A Series bonds resulted resulted in a $1,610,000
$1,610,000 loss that is included included as a reduction of debt outstanding outstanding and will be amortized over the remaining life of the bonds. The defeasance defeasance decreased aggregate decreased aggregate debt service service payments payments by $14,672,000
$14,672,000 resulting in an economic (difference economic gain (difference between the present values of the old and new debt service payments) to the University of $9,505,000.
The University University maintains a thirty-year thirty-year interest interest rate swap agreement on its variable rate System Facilities Facilities Revenue Bonds. The purpose of the interest Revenue interest rate swap agreement agreement is to convert convert variable variable rate debt to fixed rate debt. Based on the swap agreement, the University has two interest rate swaps. Through its first interest interest rate swap with a $40,000,000 notional amount, the University University pays interest interest calculated calculated at a fixed rate of 3.95%
3.95% to the swap's counterparty. In return, the counterparty counterparty owes the University interest based based on a variable rate set weekly. Through a second interest rate swap with a $102,250,000 $102,250,000 notional amount, the University pays interest calculated at a fixed rate of 3.798% 3.798% to the counterparty, while the counterparty counterparty pays the University University interest interest based on a variable rate that is set monthly. The $142,250,000 $142,250,000 in bond principal is not exchanged; it is only the basis on which the interest payments are calculated.
2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT UNIT A COMPONENT UNIT OF OF THE THE STATE OF MISSOURI STATE OF MISSOURI 47
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007 The University continues continues to pay interest to the bondholders bondholders at the variable rate provided provided by the bonds.
However, during the term of the interest rate swap agreement, the University effectively pays a fixed rate on the debt. The University University will revert to variable variable rates if the counterparty counterparty to the swap defaults or if the swap is terminated. A termination of the swap agreement may also result in the University making or or receiving a termination payment.
As of June 30, 2008, 2008, the two interest rate swaps had a fair value of ($12,596,000),
($12,596,000), which represents the cost to the University to terminate the swap. This fair value, developed developed using the zero coupon method and proprietary proprietary models, was prepared by the counterparty, counterparty, J.P. Morgan Chase Bank, a major U.S.
financial institution. The zero coupon coupon method calculates the future net settlement settlement payments required by the swap, assuming assuming that the current forward rates implied by the yield curve correctlycorrectly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each hypothetical zero-coupon each net settlement settlement of the swap.
As of June 30, 2008, the University University was not exposed exposed to credit risk on the termination payment because the interest rate swap had a negative fair value and the University would have owed the payment.
However, should interest interest rates change and the fair value of the swap become positive, the University would be exposed to credit risk. The swap counterparty counterparty was rated AA by Standard & & Poor's and Aaa by Moody's Investors Service as of June 30, 2008. In the event a ratings downgrade occurs, occurs, the counterparty*
counterparty.
may be required to provide collateral exposure exceeds collateral if the University's overall exposure exceeds predetermined predetermined levels.
Permitted Permitted collateral collateral investments include U.S. Treasuries, U.S. government agencies, agencies, cash and commercial Al/PI by Standard &
paper rated AliPl & Poor's and Moody's, respectively. Collateral may be held by the University or by a third party custodian custodian..
. The swap exposes the University to basis risk should the weeklyweekly BMABMA rate paid by the counterparty counterparty fall below the daily interest rate due on the bonds. This basis risk can be the result of a downgrade of the University's rating, daily rates becoming higher than weekly rates, or the pricing of the University's' University'S University's bonds by the remarketing remarketing agent at rates higher than the BMA index.
At June 30, 30, 2008, in-substance defeased 2008, and 2007, in-substance defeased bonds aggregating aggregating $147,935,000 $96,320,000,
$147,935,000 and $96,320,000, respectively, are outstanding.
2008 2008 FINANCIAL REPORT: UNIVERSITY FINANCIAL REPORT: UNIVERSITY OF OF MISSOURI MISSOURI 48 48 A COMPONENT UNIT OF THE STATE A COMPONENT MISSOURI STATE OF MISSOURI
Jb__~_~~~~
FOR THE YEARS YEARS ENDED JUNE JUNE 30,30, 2008 AND 2007 2007 DISCRETELY PRESENTED PRESENTED COMPONENT COMPONENT UNIT - MEDICAL ALLIANCE ALLIANCE Bonds payable payable activity by series series of issuance for the years ended ended June 30, 2008, and 2007, was as follows:
I I
Medical Meical Alliance- - Bod Allianc Bonds Paybl Payable (in (ithousands thuad of dolars of dollars) I 2008 2008 2008 Beginning Beginning Ending Balance Balance Issuance Issuance Payments Balance Balance
,- I -/""" "" ,. . , .', - 1'\{7"f7i#;f;~4 t@$\@fWikf$-j5'#ftt;:Pf FJ.ltF'¥t!&M?Wfl#a'1'"a 'tM1'M#!QJi;'h'f.OO~
Health Health Facilities Revenue Bonds Series 1998, dated December December 1, 1998 and maturing November 1, 1, 2028, payable in graduated installments installments from November 1, 1, 1999 1, 2028, bearing interest ranging 1999 to November 1,2028, 3.35% to 5.30%
from 3.35% ;$ 21,235 21,235 $ $ (550)
(550) $ 20,685 Health Health Facilities Facilities Revenue Bonds Series 2004, dated I June June 1, 2004 and maturing November 1,2004 November 1,2029,1, 2029, payable, payable in graduated graduated installments installments from November November 1, 2005 to November 1, 2029, bearing November 1,2029, bearing interest ranging from from 2.25% to 5:75%
2.25% 5:75% .ý 16,760 16,760 (385)
(385) 16,375 37,995 $ $ (935) 37,060
==
Less current current maturities (935) (970)
$ 37,060 37,060 $ 36,090 :
2007 2007 1 2007 2007 Beginning Beghming Ending Balance Bahince Issuance issuance Payments Payfuents' Balance Health Facilities Facilities Revenue Revenue Bonds Series 1998, dated dated December 1, 1, 1998 1998 and maturing maturing November November 1, 2028, payable in graduated graduated installments installments from November November 1, 1999 to November November 1, 2028, bearing bearing interest ranging 3.35% to 5.30%
from 3.35% 5.30% $ 21,760 21,760 $$ - $ (525)
(525) $ 21,235 Health Facilities Facilities Revenue Bonds SeriesSeries 2004, dated dated 1, 2004 and maturing June 1,2004 maturing November November 1, 2029, payable 1,2029, payable in graduated graduated installments from November November 1, 1,20052005 to November 1, 2029, bearing interest ranging from November 1,2029, 2.25% to 5.75%
2.25% 5.75% 17,135 17,135 (375)
(375) 16,760 1 38,895 $ $ (900) $ 37,995 37, ,9951 Less current maturities maturities (900) " (935)
(935)
$ 37,995 $ 37,060 I1 In June 2004, Medical Alliance issued $17,500,000 $17,500,000 of tax-exempt tax-exempt Health Facilities Revenue Revenue Bonds Series 2004 through the Health and Educational Educational Facilities Facilities Authority Authority of the State State of Missouri. The bonds proceeds are being used primarily to payor pay or reimbursereimburse the costs of acquiring, acquiring, constructing and equipping Medical Alliance certain health facilities of Medical Alliance and to fund the future debt service requirement fund for these 2004 bonds.
Series 2004 Similar Similar to the Series 1998 1998 bonds, the Series 2004 bonds were issued pursuant to the Master Master Trust Trust Indenture dated December December 1, 1, 1998, as supplemented supplemented on June 1,2004. 1, 2004. Under the terms of the Master Trust Trust Indenture (the "Master "Master Indenture"),
Indenture"), Medical Alliance is required to make make payments of principal, premium, if any, and interest on the bonds. The Series 1998 and 2004 bonds are secured by the unrestricted receivables unrestricted receivables of MedicalMedical Alliance. In addition, the Master Master IndentureIndenture contains certain certain restrictions on the operations and activities of Medical Medical Alliance, including, among other other things, covenants 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT OF THE STATE OF MISSOURI MISSOURI 49
FOR FOR THE THE YEARS ENDED JUNE YEARS ENDED 30, 2008 JUNE 30, AND 2007 2008 AND 2007 incurrence of restricting the incurrence restricting indebtedness and additional indebtedness of additional and the creationcreation of liens property, except as liens on property, as permitted permitted byby the Master Master Indenture.
Indenture.
The Master Indenture The Master has mandatory Indenture has sinking fund redemption mandatory sinking requirements in redemption requirements which funds are required in which required to be set aside to aside beginning beginning in 2014 and 2025 for the Series 1998 2014 and 1998 bonds and Series 2004 bonds, bonds, respectively.
respectively.
Interest expense Interest during the years incurred on the bonds during expense incurred ended June 30, 2008, years ended 2008, andand 2007 was $1,960,000
$1,960,000 and $1,999,000, respectively, of which $206,000 and $196,000
$1,999,000, respectively, $196,000 were capitalized during the years were capitalized years ended ended June 30, 2008 and 2007, respectively.
respectively.
principal and interest due on bonds during As of June 30, 2008, the total of principal As during thethe next five years and in five-year periods is as follows:
subsequent five-year subsequent Future Debt Service Future Service (in thousands (in thousands of dollars)
Year ending June 30: Principal Interest Interest 2009 $ 970 $ 1,917 1,917 2010 2010 1,010 1,874 1,874 2011 2011 1,055-1,055 1,828 1,828 2012 1,105, 1,105 1,779 1,779 2013 1,155 1,725
- 1,725 2014-2018 2014-2018 6,680 7,689 7;689 2019-2023 2019-2023 8,590 5,726 5,7.26 2024-2028 2024-2028 11,140 30093 3;093 2029-2030 2029-2030 5,355 3 09
~.09 1$$ 37,060 $
>$S <: 25,040
<:25,240 I
- 11. SHORT-TERM
- 11. SHORT-TERM BORROWINGS BORROWINGS During the years ended June 30, 2008, and 2007, the University sold $160,000,000 $115,000,000 of
$160,000,000 and $115,000,000 of capital project notes at an effective interest rate of3.7%. of 3.7%. The maximum amount of notes outstanding outstanding was
$115,000,000 and all were repaid in full by June 30, 2008, and 2007, respectively.
$160,000,000 and $115,000,000
$160,000,000 Proceeds from the issuance of the capital project notes were used to fund various construction projects.
Capital project note activity for the years ended June 30, 2008, and 2007 is as follows:
Capital Capta Project Prjc Notes Notes (in thousands tosns (in~~ of ofdlas)dollars)
Beginning End of of Fiscal Year of Year Issuance Payments Payments Year Year Series FY 2007-2008 2008 $. $ 160,000 . $ (160,000) $ -
Series FY 2006-2007 2007 115,000 (115,000)
(115,000)
Capital Projects Notes are secured by the University's unrestricted revenues (generally state appropriations for general operations, student fee revenue, and other operating revenues), revenues), plus unencumbered balances from prior fiscal years. These balances unencumbered balances totaled approximately $1,600,000,000$1,600,000,000 in in fiscal year 2008. Excluded are revenues from auxiliary enterprises (such as bookstore and housing FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL 2008 UNIVERSITY OF MISSOURI OF MISSOURI 50 COMPONENT UNIT A COMPONENT UNIT OF THE STATE OF THE STATE OF MISSOURI MISSOURI
FOR THETHE YEARS ENDED JUNE 30, 2008 AND AND 2007 operations), the Health System, and operations), and other such such facilities facilities pledged to to repay System System Facilities Revenue Revenue Bonds. Capital Project Notes areare expected to continue to 10% or less of available pledged balances.
to be 10%
12.
- 12. LEASE OBLIGATIONS OBLIGATIONS AND AND COMMITMENTS The University leases various facilities and equipment through operating and capital leases. Facilities The University leases various facilities and equipment through operating and capital leases. Facilities under capitalized leases are recorded at the present value of of future future minimum lease payments.
Capital lease obligations activity for the years ended June 30, 2008, and 2007, is as follows:
Capital Obligations Capital Lease Obligations I (in thousands of dollars)
(in I Fiscal Beginning End of Current Year Year of Year Additions Payments Year Portion
~
2008 :$$ 9,354 $. $ ((462) 4632 - $ 8,892 $ 501 2007 F 9,779 (425) 9,354 462 I The future minimum payments on all significant leases with initial or remaining terms of one year or more at June 30, 2008, are as follows:
Future Future Lease Payments Payments !
(in thousands of dollars) i Fiscal Year Fiscal Year Capital Operating 2009 2010 2010 2011 2012 2012 2013 2013 2014-2018 2014-2018 2019-2022 2019-2022 Total Future Future Minimum Payments Less: Amount Interest Amount Representing Interest Present Value of Future Minimum of Future Minimum Lease Payments Total rental expenditures expenditures for operating operating leases leases for the years ended June 30, 2008, 2008, and 2007, 2007, were were
$15,047,000
$15,047,000 and $16,724,000,
$16,724,000, respectively.
In addition addition to the above above lease obligations, obligations, the University University has has outstanding outstanding commitments commitments for the acquisition, acquisition, usage and ongoing ongoing support support of certain certain software software for its patient patient clinical clinical systems. As of June 30,30, 2008, these commitments commitments totaled totaled $8,296,000
$8,296,000 and will be paid paid in the following amounts:
amounts: $3,644,000
$3,644,000 in 2009, $3,708,000
$3,708,000 in 2010, and and $944,000
$944,000 in 2011.
2011.
2008 2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI A COMPONENT COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI 51 51
FOR FOR THE THE YEARS YEARS ENDED JUNE 30, ENDED JUNE 30, 2008 2008 AND AND 2007 2007 Description of Description ofSublease Arrangement Arrangement with Institute Institutefor Outpatient Surgery ("lOS')
for Outpatient Concurrent with
("lOS") -- Concurrent with the the of assets sale of sale assets to IOS lOS on July July 1, 2002, the University University entered entered into into an agreement agreement with with IOS lOS whereby whereby IOS lOS subleased certain subleased certain building building space space from from thethe University University for a period period of approximately approximately 17 17 years years at at current current market rates.
market rates. The The University University recorded recorded thethe transaction transaction as aa direct direct financing financing lease lease and recorded recorded a minimum minimum lease payment payment to be received received of $6,375,000,
$6,375,000, unearned unearned rental income of $3,233,000 rental Income $3,233,000 and and aa write-off write-off of of
$3,142,000
$3,142,000 of building building and improvements improvements related related to the sublease.
As of of June June 30, future minimum 30, 2008, the future minimum lease lease payments payments to to be received received under this this sublease sublease areare as follows:
lOS - Future Minimum Lease Payments (in thousands of dollars)
Amount Amount Total Total Minimum Minimum Lease Lease Payments Payments to be Received:
to be Received:
Current Current $ 418
- $ 418 i Noncurrent Noncurrent I, 4,285
Total Total 4,703 Less:
Less: Unearned Unearned Rental Income Income (2,162)i (2,162);
Value of Future Minimum Present Value Present Minimum Lease Lease Payments ReceivableReceivable ! $ 2,541 During fiscal years years 2008, and 2007, 2007, the University University received received $418,000
$418,000 of rental income from IOS lOS each each year.
DISCRETELY PRESENTED'COMPONENT PRESENTED COMPONENT UNIT - MEDICAL ALLIANCE ALLIANCE The Medical Alliance leases leases certain computer and medical equipment through operating operating and capital leases. Equipment under under capitalized capitalized leases is recorded recorded at the present present value of future minimum minimum lease lease payments.
Capital lease obligations obligations activity for the years ended June 30, 2008 and 2007, is as follows:
Medical Alliance - Capital Lease Obligations Meia Aliac - Caia (in thousands Les of dollars)
S Oe biaon Beginning Beginning End of of Current Current Year Fiscal Year of Year Additions Additions Payments Year Year Portion 2008 $ 1$
101 $$. __$ $
(30) $
71 $ - 27 27_7
. _ - - - ______ 1 2007 I 129 61 (89)
(89) 101 30 I 2008 FINANCIAL 2008 FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 52 52 A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI
3CJb J7eý FOR THE YEARS ENDED JUNE 30, 2008 YEARS ENDED 2008 AND 2007 AND 2007 The future minimum minimum payments payments on all significant significant leases with initial or remaining remaining terms of one year or or more at June June 30, 200S, 2008, are as follows:
Medical Alliance -- Future Me[d.ic[al~.
Al~iance(
(in thuad Fuur thousands of
~~Leas ~I Payments Lease P iayments I (i of dollars) dolas )
Fiscal Year Fiscal Year Capital Operating 2009 2010 2010 2011 2012 2012 2013 2013 2014-2017 2014-2017 Total Future Minimum Payments Less: Amount Representing Representing Interest Interest Present Value of Future Minimum Future Minimum Lease Payments Payments Total rental expenditures expenditures for operating leases for the years 2008, and 2007, were $719,000 years ended June 30, 200S, $719,000 and $550,000, respectively.
- 13. RISK MANAGEMENT
- 13. MANAGEMENT The University is exposed to various risks of loss related to torts; theft of, of, damage to, and destruction of destruction of assets; injuries to employees; natural natural disasters; and various medically related related benefit programs for prograinsfor employees. The University funds these losses through a combination of self-insured self-insured retentions retentions and commercially purchased com~ercially purchased insurance. The amount of self-insurance self-insurance funds and commercial commercial insurance maintained maintained are based upon analysis of historical historical information information and actuarial estimates.
estimates. Settled claims have not exceeded commercial commercial coverage in any of the past three fiscal years.
The liability liability for self-insurance self-insurance claims at June 30, 200S, 2008, and 2007 of $67,238,000
$67,23S,000 and $79,799,000,
$79,799,000, respectively, represents the present value of amounts estimated respectively, represents estimated to have been incurred by those dates, discount rates ranging from 3.7%
using 'discount 3.7% to 4.8%4.S% for fiscal year 2008 200S and 3.7% to 4.3% 4.3% for fiscal year 2007, based on expected-future expected future investment yield assumptions. Additionally, at June 30, ?OOS, 2008, there are self-insurance self-insurance claims outstanding, that range from $750,000 $750,000 to $1,000,000,
$1,000,000, for which the University has determined there is a reasonable reasonable possibility that a loss contingency contingency may be incurred, but no accrual has been made in the financial financial statements because , the loss is not both probable probable and estimable.
estimable.
2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNITUNIT OF THE STATE MISSOURI STATE OF MISSOURI 53 53
FOR FOR THETHE YEARS YEARS ENDED ENDED JUNE JUNE 30, 30, 2008 AND 2007 AND 2007 Changes in the self-insurance self-insurance liability during fiscal years 2008, 2007, and 2006 were as follows:
" . . .i ...
Self-Insurance Claims Liability (in thousands of dollars)
New Claims Fiscal Beginning and Changes Claim End of of Year of Year in Estimates Estimates Payments Year Year d<j?, r7-t;q "CIt,",>;""",, ,qra::; 'FA:;, ,1 *iL* X & \/.
- y"> " 0" k: 4 k 2008 $ 79,799 $ 136,343 (148,904)
$ (1~8,90_4) $ 67,238 67,238 2007 I 86,850 86,850 139,294 (146,345)
(146,345) 79,799 I 2006
- 14. CONTINGENCIES CONTINGENCIES The University does not have any contingencies contingencies that are probable and estimable estimable as of June 30, 2008. 2008.
- 15. RETIREMENT, RETIREMENT, DISABILITY DISABILITY AND AND DEATH BENEFIT PLAN Basis of Accounting Accounting - The University University of Missouri Retirement, Disability, and Death Benefit Plan (the "Retirement Plan") financial statements are prepared using the accrual "Retirement accrual basis of accounting. Employer Employer contributions contributions to the Retirement Plan are recognized recognized when due and the employer has made a formal commitment to provide the contributions.
commitment contributions. Benefits Benefits and refunds refunds are recognized recognized when due and payable in accordance with terms of the Retirement accordance Retirement Plan.
Investment Valuation Valuation - Investments Investments are reported at fair value. Short-term Short-term investments are reported at cost, which approximates approximates fair value.
Description - The Retirement Plan Description Retirement Plan is a single employer, employer, defined benefit plan for all qualified qualified employees. As authorized by Section 172.300, Section 172.300, Revised Revised Statutes of Missouri, the University's University'S Board of of Curators administers the Retirement Retirement Plan and establishes its terms. Separate Separate financial statements and supplemental schedules supplemental schedules are not prepared prepared for the Retirement Retirement Plan.
Retirement Plan Membership (active members)
." ,2008 ý"'ý2007 2008, .' I~L;2~07 , I,
. . . " lG g_-,,~,"'.. ," , __ r ' .
Active Active members:
members: I Vested I 10,094 : 10,015 10,015 i
I Nonvested I 7,760 : 7,439 7,439 Pensioners i J 6,773 : I 6,695 Employees with Deferred Pensions I 3,002 ;
Former Employees 2,757 2,757 Total i 27,629 I I 27,629 , 26,906 I 2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 54 54 A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF MISSOURI MISSOURI
FOR THE FOR THE YEARS ENDED JUNE YEARS ENDED JUNE 30, 30, 2008 2007 AND 2007 2008 AND employees vest in the Retirement Plan after five years of credited Full-time employees credited service service and become eligible benefits based on age and years of service. A vested employee for benefits retires at age 65 or older is eligible employee who retires for a lifetime annuity calculated at 2.2% 2.2% times the credited service years times the compensation compensation base.
compensation for the five highest consecutive salary years determines the average compensation The employee's average compensation base. Academic members who provide summer teaching compensation teaching and research research service service receive additional summer service service credit. At times, the Board approve pension Board of Curators may approve pension adjustments adjustments that increase the benefits paid to existing pensioners. However, vested members benefits paid members who leave the University University retirement are not eligible for these pension system prior to eligibility for retirement pension increases.
Vested employees who are at least age 55 and have ten years or more of credited credited service or age 60 with at least five years years of service may choose early retirement retirement with a reduced benefit. However, if the employee retires at age 62 and has at least 25 years of credited service, service, the benefit is not reduced. The Retirement Retirement Plan provides a minimum value feature for vested employees employees who terminate terminate or retire. The member receives the greater of a benefit equal to the actuarial equivalent of 5%
actuarial equivalent 5% of the employee's eligibleeligible invested at 7.5%
compensation invested compensation service year or the regularly calculated benefit. Up to 30% of 7.5% per credited service of retirement annuity value can be taken in a lump sum payment. In addition, the standard annuity can the retirement can be be exchanged for an actuarially-equivalent exchanged actuarially-equivalent annuity annuity selected selected from an array of options with joint and survivor, period certain, and guaranteed guaranteed annual increase increase features.
Vested employees who terminate prior to retirement retirement eligibility may elect elect to transfer the actuarial equivalent of their equivalent their benefit to an Individual Individual Retirement Account Account or into another employer's employer's qualified plan that accepts such rollovers. If If the actuarial actuarial equivalent is less than $20,000,
$20,000, it may instead instead be taken in the fom1 of a lump sum payment. The Retirement forni Retirement Plan allows vested employees who become become disabled- to continue service credit until they retire, and also provides a pre-retirement accruing. service continue accruing pre-retirement death death benefit for vested employees.
employees. .J Contributions - The University's contributions contributions to the Retirement Retirement Plan are equal to the actuarially actuarially determined determined Annual Required Contributions, which averaged averaged 8.0 and 8.7%8.7% of payroll payroll for the years ended June 30, 2008, and 2007, respectively. Retirement Plan does not require respectively. The Retirement require employee contributions and employee contributions and is, instead, funded entirely contribution rate is updated annually entirely by University contributions. The contribution annually on July 1, at the beginning of the University's fiscal year, to the actuarially actuarially determined amount from the most recent valuation valuation on thethe* preceding October 1. This actuarial valuation reflects preceding October reflects the adoption of any Retirement Plan amendments Retirement amendments during the previous fiscal year.
pension cost and net pension University's annual pension The University's pension obligation to the Retirement Plan for the current current year, along with three-year trend information, were as follows:
I Three-Year Trend Information (in thousands of dollars)
Annual i
1 Percentage of Percentage of I
Annual Required Annual Required Pension Pension Contributions Contributions APC Net Pension Fiscal Year Fiscal Contribution (ARC)
Contribution Cost (APC) Made Made Contributed Contributed Obligation Obligation 2006 4ý494 2006 2007 74,736 74,736 74,736 74,736 100%
100%
2008 72,284 72,284 72,284 72,284 100%
100% -I 2008 FINANCIAL 200$ FINANCIAL REPORT: UNIVERSITYUNIVERSITY OF MISSOURI OF MISSOURI A COMPONENT UNIT OF THE STATE COMPONENT UNIT STATE OF MISSOURI MISSOURI 55 55
FOR THE YEARS FOR YEARS ENDED ENDED JUNE 30, 2008 AND 2007 AND 2007 Funded Funded Status - As of the most recent recent actuarial actuarial valuation date, October. 1, 2007, the Retirement Plan October. I, was 103.8%
103.8% funded. The actuarial accrued liability liability for benefits was $2,555,592,000 and the actuarial value of the assets was $2,651,535,000,
$2,651,535,000, resulting in excess funding of $95,942,000.
$95,942,000. The covered payroll payroll (annual payroll of active employees covered by the plan) was $891,648,000, $891,648,000, and the ratio of excess.
excess, funding to covered payroll was 10.8%. 10.8%.
The Schedule Schedule of Funding Progress,Progress, presented presented as required supplementary supplementary information information (RSI) following the notes to the financial statements, statements, presents multiyear trend information about whether whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits.
Actuarial Actuarial Methods and Assumptions - In the October October 1, 1, 2007 actuarial actuarial valuation, the entry age actuarial actuarial cost method was used. Actuarial Actuarial assumptions included (1 assumptions included (1)an
)an 8.0% rate of investment investment return net expenses, and (2) projected of administrative expenses, projected salary increases ranging from 4.5 to 5.2% 5.2% per year. The assumptions did not include include postretirement postretirement benefit benefit increases.
increases. An approved ad hoc cost of living adjustment effective on SeptemberSeptember 1, 1, 2007, resulted in a $17,420,000
$17,420,000 increase increase in the actuarial accrued accrued liability and liability and a $1,712,000
$1,712,000 or .20% increase in annual employer contributions.
contributions. The actuarial value of assets was determined determined using techniques techniques that spread effects of short-term short-term volatility in the market value of of investments over a 5-year period. The overfunded overfunded actuarial actuarial accrued accrued liability is being amortized as a level dollar amount dollar amount on on anan open basis over 20 years from the October 1,2007 1, 2007 valuation valuation date.
- 16. OTHER POSTEMPLOYMENT POSTEMPLOYMENT BENEFITS Plan Description Description - In addition to the pension pension benefits benefits described described in Note 15,15, the University operates operates a single-employer, defined benefit postemployment single-employer, postemployment plan. The University'sUniversity's Other Postemployment Postemployment (OPEB) Plan provides postretirement Benefits (OPEB) postretirement medical, dental, and life insurance benefits to employees employees who retire from the University University after attaining age 55 and before reaching age 60 with ten or more years of of service, or after attaining age 60 with five or more years years of services. As of June 30, 2008, and 2007, 5,642 and 5,579 and 5,579 retirees, retirees, respectively, were were receiving benefits, and an estimated 17,854 active University receiving be~efits, employees may become eligible to receive future benefits benefits under the plan. Postemployment Postemployment medical, dental and life insurance insurance benefits are also provided provided, to long-term long-term disability claimants who were vested in the University's the University's Retirement Retirement Plan at the date the disability disability began, provided provided the onset date of the disability was onon or after September September 1, 1, 1990. As of June 30, 2008, and 2007, 244 and 231 long-term disability claimants, respectively, claimants, respectively, met those eligibility requirements.
The terms and conditions conditions governing the postemployment postemployment benefits to which employees are entitled are at the sole authority and discretion discretion of the University's University'S Board Board of Curators.
Basis of Basis of Accounting Accounting -- In In June June 2008, 2008, the the University established its University established its OPEB OPEB Trust Fund, the assets of which are irrevocable are irrevocable and legally protected and legally protected from creditors creditors and dedicated postemployment benefits dedicated to providing postemployment benefits in accordance accordance with terms of the plan. Previously, postemployment benefit postemployment benefit costs other than long-term disability were funded on a current basis, and expenses were recorded on a pay-as-you-go pay-as-you-go basis. Long-term disability costs were recognized recognized during the period in which the employee became eligible to receive receive disability benefits. The University'S University's OPEB Trust Fund does not issue a separate financial report.
Contributions and Reserves requirements of employees and the University are Reserves - Contribution requirements established and established and maymay be be amended amended by the the University'S University's Board of Curators. For employees employees retiring prior to September 1, September 1, 1990, 1990, the University contributes toward premiums University contributes premiums at the same rate as for active employees, employees, which is which 2/3 of is 2/3 of the medical benefits the medical premium and benefits premium and 112 1/2 of of the dental plan premium. For employees the dental employees who retired on or after September 1, 1, 1990, 1990, the University University contributes toward premiums based on the employee's length of service service and age at retirement.
2008 FINANCIAL 2008 FINANCIAL REPORT: UNIVERSITYUNIVERSITY OF MISSOURI MISSOURI 56 56 COMPONENT UNIT OF THE STATE A COMPONENT MISSOURI STATE OF MISSOURI
FOR FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND 2007 AND 2007 The University makes available two group term life insurance insurance options. Option A coverage is equal to the salary at the date of retirement, while Option B is equal to two times that amount. For each retiree's salary each Option, graded decreases decreases in coverage are made when the retiree retiree attains specific age levels. The University pays the full cost of Option A and approximately 91% 91 % of the Option B B premium, with the retiree paying the remainder. Coverage for group term term life ends on insurance ends life insurance January 11 following on January the retiree's following the retiree's 7700 thth birthday. For the year ended ended June 30, 2008,2008, participants contributed contributed $11,860,000
$11,860,000 or approximately approximately 46.5%
46.5%
of total total premiums premiums through their required contributions, which vary depending on the plan and coverage selection. Other contributions to the Plan were Medicare Medicare Part D retiree drug subsidies subsidies received from the federal government.
The University makes available two long-term disability options to its employees. Option A coverage is equal to 60%
60% of the employee's salary on the date the disability disability began, when when integrated with benefits from all other sources. Option B B coverage is equal to 66-2/3%
66-2/3% of the employee's salary, integrated so sci that benefits from all sources will not exceed exceed 85%85% of the employee's salary. Both options have a 149-day 149-day waiting period and provide benefitsbenefits until age 65. University pays the full cost of the Option A
- 65. The University premium, while employees enrolled in employees enrolled Option B Option B pay the additional additional cost over over the Optional A premium.
contribute to the trust fund an amount that, in addition to the currently plans to contribute Further, the University currently current year premium contributions, is sufficient to fund 50% 50% of the annual required contribution (ARC).
The ARC, which which is actuarially accordance with the parameters of GASB Statement 45, determined in accordance actuarially determined 45, represents the ongoing level of funding projected to cover normal normal cost each year year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. In fiscal year 2008, liabilities over 2008, the University contributed $53,460,000,
$53,460,000, or 100.2%100.2% of the ARC. The $53,310,000 $53,310,000 ARC represents 5.9% of annual .
covered payroll.
The following table presents presents the OPEBOPEB cost for the year, the amount amount. contributed, and changes in the OPEB obligation for fiscal year 2008:
Changes in Net OPEB Obligation (Asset)
Changes in Ne S OblgtoSAst (in thousands of dollars) ,
Annual required contribution/OPEB Annual contribution/OPEB cost $ 53,310 53,310 Contributions made Contributions (53,460)
(53,460)
Increase in net OPEB obligation Increase obligation (asset) (150)
(150) obligation Net OPEB obligation - beginning of year Net Net OPEB obligation (asset) - June OPEB obligation June 30, 2008 I
$$ (150)i (150)i Funding Status and Funding Funding Progress - As of July 1, actuarial accrued liability (AAL) for 1, 2006, the actuarial postemployment benefits was $546,058,000, with no actuarial value of assets, resulting in an unfunded posternployment unfunded actuarial accrued liability (UAAL) of $546,058,000.
$546,058,000. The covered covered payroll (annual(annual payroll payroll of active
$883,614,000, and the ratio of UAAL to covered payroll was 61.8%.
employees covered by the plan) was $883,614,000, 61.8%.
University implemented its OPEB Trust Fund in June The University June 2008, after the July 1, 2006 1,2006 actuarial valuation valuation actuarial valuation date, there were no trust fund assets, but as of June 30, date. At the actuarial 30, 2008, the fund had
$34 million in net assets.
FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI A COMPONENT COMPONENT UNIT UNIT OF OF THE OF MISSOURI STATE OF THE STATE MISSOURI 57 57
FOR THE YEARS ENDEDENDED JUNE 30, 2008 AND 2007 AND 2007 Actuarial estimates of the value Actuarial valuations involve estimates value of reported reported amounts and assumptions assumptions about the probability probability of events far into the future. Examples include assumptions about future employment, mortality, mortality, and the healthcare cost trend. Actuarially Actuarially determined determined amounts are subject to continual continual revision of actual results are compared compared to past expectations expectations and new estimates are made about the future. The Schedule of Funding Progress, presented presented as required supplementary supplementary information information following the notes to the financial financial statements, will present present multiyear trend information information about whether the actuarial actuarial value ofof plan assets is increasing increasing or decreasing decreasing over time relative to the actuarial accrued liabilities for benefits.
Benefit projections for financial reporting purposes are based on the benefits provided under the terms of Benefit projections of the substantive substantive plan in effect at the time of each valuation and the historical pattern of cost sharing sharing between between the employer employer and plan members to that point. The projection projection of benefits for financial reporting purposes purposes does not explicitly incorporate incorporate the potential potential effects effects of legal or contractual contractual funding limitations on the pattern of cost sharing between between the University University and plan members in the future.
Actuarial Actuarial Methods Methods and Assumptions Assumptions - Consistent Consistent with the long-term perspective perspective of actuarial calculations, calculations, the actuarial methods and assumptions assumptions used include techniques techniques that are designed to reduce short-term volatility volatility in actuarial actuarial accrued liabilities liabilities and the actuarial value of assets. The projected projected unit credit actuarial actuarial cost method method was used in the July 1, 1, 2006, actuarial valuation. Actuarial Actuarial assumptions 6.75% investment included a 6.75% investment rate of return, net of administrative expenses. The projected projected annual healthcare healthcare trend rate is 7.0 to 11.5%
11.5% initially, reduced by 0.5% 0.5% decrements to an ultimate rate of 4.5%.4.5%.
The UAAL UAAL is being amortized amortized as a level dollar amount on an open basis, level percent percent of pay, over a 30-year amortization amortization period.
- 17. SEGMENT INFORMATION INFORMATION A segment is an identifiable activity reported within a stand-alone entity for which one or more revenue bonds bonds are outstanding.
outstanding. A segment identifiable revenue segment has a specific identifiable revenue stream stream pledged in support of of revenue revenue bonds and has related expenses, gains and losses, assets and liabilities that are required required by an external external party to be accounted accounted for separately.
separately. The University University has one segment that meets the reporting requirements requirements of GASB Statement No.3 No. 37.
7.
As of June 30, 2008, the University's outstanding bond debt consists of System Facilities Revenue Revenue Bonds.
The System Facilities Facilities Revenue Bonds are issued in accordance accordance with a Resolution Resolution adopted by the Board of of Curators Curators in October 1993.
1993. The Resolution Resolution provides that the bonds are payable from the gross income and revenues derived from the related facilities including student fees, housing, dining, bookstore, parking, revenues "derived parking, and various other revenues.
During fiscal year 2006, the University University defeased the debt previously previously reported within the Health Facilities Revenue Revenue Bonds secured secured by revenues of the Health System. The Health System consists of the University of Missouri Hospitals and Clinics, which includes the University of Missouri Hospital, Hospital, Ellis Fischel Cancer Center, Rusk Rehabilitation Cancer Center, Rusk Rehabilitation Center and the Children's Hospital; Children's Hospital; the University University Physicians Medical Medical Practice Plan, which includes faculty of the University University of Missouri-Columbia Missouri-Columbia School of of Medicine; Medicine; and the Missouri Rehabilitation Rehabilitation Center.
2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 58 A COMPONENT COMPONENT UNIT OF THE UNIT OF THE STATE OF OF MISSOURI MISSOURI
FOR THE YEARS FOR YEARS ENDED ENDED JUNE 2008 AND 30, 2008 2007 AND 2007 Summary financial information for the System Facilities Revenue Bonds as of June 30, 2008, and 2007, Summary 2007, is is as follows:
as follows:
System Facilities Revenue Bonds Condensed Financial Statem~nts (in thousands of dollars) I 2008 2007 ftandýýýýý05'57 et W,'.K1 Assets:
Current Assets Current $ 239,366 239,366 $ 254,967 254,967 Capital Assets, Net Capital 966,244 966,244 817,585 Noncurrent Assets Noncurrent 351,557 351,557 180,695 Total Assets Total $ 1,557,167 1,557,167 I$ 1,253,247 1 1,253,247 Liabilities:
Liabilities:
Current Liabilities $ 159,049 159,049 $ 146,927 146,927 Noncurrent Noncurrent Liabilities 857,675 857,675 646,864 Total Liabilities 1,016,724 1,016,724 793,7911 793,791 Net Assets:
Invested in Capital Assets, Net of Related Debt 181,352 181,352 160,375 160,375 Restricted -
Nonexpendable Nonexpendable 595 595 622 Expendable Expendable 10,874 10,874 10,460 Unrestricted 347,622 347,622 287,999 Total Net Assets 540,443 459,456 459,4561 Total Liabilities and Net Assets $ 1,557,167 1,557,167 $ .. 1>~~},2;q1 1 ?1,5,24ý7
~ondensed Statement of Revenues, E~xpenses and @hanges in N.et Assets Operating Operating Revenues:
Net Patient Revenue * $ 663,227 663,227 $ 620,241 620,241 Net Tuition and Fees 15,853 15,853 13,846 Bookstore 61,423 61,423 56,929 Housing and Related Food Service 72,382 72,382 66,730 Parking 15,218 15,218 14,035 Other Other Operating Revenue 19,922 19,922 20,774 Total Operating Revenues 848,025 848,025 792,555 Operating Expenses:
Depreciation 52,784 52,784 51,175 All Other Other Operating Expenses Expenses 772,105.
772,105. 728,410 Operating Expenses Total Operating Expenses 824,889 824,889 779,5851 Operating Income Income 23,136 23,136 12,970 Nonoperating Nonoperating Revenues 13,515 13,515 9,368 Income Income Before Before Transfers Transfers 36,651 36,65 I 22,3381 Transfer From Other University From Other University Units 44,336 44,336 33,9461 Increase Increase in Net Assets 80,987 80,987 56,284 Net Assets, Beginning of Year 459,456 459,456 403,172 Net Assets, End of Year Year $ 540,443 459,4561 Net Net Cash Cash Flows Provided by Flows Provided by Operating Operating Activities Activities $ 74,416 $ 53,283 Net Net Cash Flows Provided Cash Flows Provided by by (Used (Used In)
In) Investing Investing Activities Activities (176,233) 4,611 Net Net Cash Cash Flows Provided by Flows Provided by (Used In) Capital (Used In) Capital and and Related Related Financing Financing Activities Activities 21,554 (125,948)
Net Cash Cash Flows Flows Provided Provided by by Noncapital Noncapital Financing Financing Activities Activities 21,689 21,689 58,341 Net Net Decrease Decrease inin Cash Cash and and Cash Cash Equivalents Equivalents (58,574)
(58,574) (9,713)
Cash and Cash Cash Equivalents, Beginning of Equivalents, Beginning of Year Year 106,213 115,926 Cash and Cash Cash Equivalents, Equivalents, End End of Year Year $ 47,639ý 1 106,2131 2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A
A COMPONENT COMPONENT UNIT UNIT OFOF THE THE STATE STATE OFOF MISSOURI MISSOURI 59 59
Jb FOR THE FoR, THE YEARS YEARS ENDEDENDED JUNE JUNE 30, 30, 2008 2008 AND AND'2007 2007 18.
- 18. OPERATING OPERATING EXPENSES EXPENSES BY BY FUNCTION FUNCTION expenses of the University operating expenses The operating University are presented based are presented based on on natural expenditure classifications.
natural expenditure classifications. The The University's operating expenses University's operating functional classification expenses by functional classification are as follows:
Operating Expenses Operating Expenses by Functional and by Functional Natural Classifications and Natural Classifications (in thousands thousands of dollars) dollars)
For the Year Year EndedEnded June 30, 30, 2008 2008 Supplies, Supplies, Services Services Salaries Salaries and Other and Other Scholarships Scholarships and Staff Operating Operating and and Functional Classification Classification Wages Benefits Benefits Expenses Expenses Fellowships Depreciation Fellowships Depreciation Total Total
,~- ,; .... ",'- '," .f ~ ~ ,r:'-:?".;,?"',*.",.,,**, ~ , ,"""
" '-'::.~~ "
Instruction Instruction $ 362,929 $ 88,380 $ 66,971 66,971 $$ -
- $$ - $$ 518,280, 518,280 Research Research 104,556 22,787 80,702 208,0451 208,045:
Public Service Service 79,571 21,323 63,254 164, 148!
164,1481 ,
Academic Academic Support 69,735 9,520 32,488 111,743 Student Services Student Services 35,535 8,978 25,578 25,578 70,091 70,091' Institutional Support Institutional 84,507 53,525 (20,357) 117,6751 117,675:
Operation and Operation and Maintenance Maintenance of Plant Plant 33,378 9,767 5,057 48,202, 48,202:
Auxiliary Enterprises Auxiliary Enterprises 383,465 96,095 408,638 888,198 Scholarships and Scholarships Fellowships and Fellowships 39,485 39,485, 39,485, Depreciation Depreciation _________ ________
________125,996 125,996 125,996 125,9961 1 Total Operating Expenses Expenses $ 1,153,676 $$ 310,375 $ 662,331 $ 39,485 $ 125,996 2,291,863'1
$ 2,291,863 For the Year Ended June 30, 2007 2007 Supplies, Supplies, Services Services Salaries and Other Scholarships Scholarships and and Staff Operating and Functional Classification Classification Wages Wages Benefits Benefits Expenses Fellowships Depreciation Fellowships Depreciation Total
__ _ _ _ .. _ _ __ _ _ _ _ ,~'_ ,'~ ,
__ _ :~":::~.i...\~;U:::':':'~~~:,,~,".;~o-1'~';"'"
_V-- ":!""",,~!+/-,~ ~ " :,);~)M
-.- 7 -: S~~
';( ~.t '~~.t;~
Instruction instruction $ 338,850 338,850 $$ 82,249 $$ 54,267 $$ -- $$ -
- $$ 475,3166 475,366 Research 107,630 23,532 23,532 73,259 204,,421 204,421 Public Service 75,135 20,041 20,041 56,559 151,735 151,735 Academic Academic Support 66,993 15,896 15,896 33,386 116,275 116,275 Services Student Services Student 40,597 9,639 24,561 74,797 74,797 Institutional Support 83,168 83,168 23,325 23,325 (41,111) 65,382 Operation Operation and Maintenance Maintenance of Plant 31,655 31,655 9,188 22,589 63,432 63,432 Auxiliary Enterprises Auxiliary Enterprises 357,839 89,053 384,624 384,624 831,516 831,516 Scholarships and Scholarships and Fellowships 38,602 38,602 38,602 38,602 Depreciation Depreciation _____ 19,069 19,069 I______
1_____ 119,069 119,0691 Expenses Total Operating Expenses [$
[ 1,101,867 1,101,867 272,923
$ 272,923 608,134
$ 608,134
$$ 38,602
$ 119,069 19,069 2,140,5951[
$$ 2,140,595 2008 FINANCIAL 2008 FINANCIAL REPORT: REPORT: UNIVERSITYUNIVERSITY OF OF MISSOURI MISSOURI 60 A COMPONENT A COMPONENT UNIT UNIT OF OF THE THE STATE STATE OF OF MISSOURI MISSOURI
FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND JUNE 30, AND 2007 2007
- 19. DISCRETELY PRESENTED
- 19. DISCRETELY PRESENTED COMPONENT COMPONENT UNIT(S) UNIT(S)
The Discretely Discretely Presented Component Unit(s) columns in the financial statements Unites) columns.in statements include the financial data of the Medical Alliance Alliance and Missouri Care L.C.
The Medical Alliance, a not-for-profit corporation, provides not-for-profit corporation, provides an integrated health care care delivery system for* for mid-Missouri by establishing affiliations mid-Missouri affiliations with various medical medical facilities. Capital Region Medical Center Center in Jefferson City, Missouri, Missouri, operates operates as an affiliate affiliate of the Medical Alliance and provides inpatient, outpatient, and emergency emergency care services to the surrounding community. community.
Missouri Care L.C. was organized as a not-for-profit not-for-profit health maintenance organization exclusively exclusively for charitable purposes, in particular charitable particular to benefit benefit its sole member, the Curators of the University of Missouri.
During fiscal year 2007, Missouri Missouri Care L.C. contracted contracted as a major provider provider of health care services services for the University of Missouri Healthcare System. On January University January 31, 31, 2007, 2007, Schaller Anderson Anderson Acquisition, Inc., Inc.,
purchased certain assets of Missouri Care L.c. L.C. and assumed its liabilities as part of the sales agreement.
Therefore, in fiscal year 2008, Missouri Care L.C. is no longer a discretely presented presented component component unit of of the University.
In the accompanying financial statements, Medical Medical Alliance Alliance is presented presented as of and for the years ended June 30, 2008, and 2007, while Missouri Care L.C. is presented as of and for the thirteen months ended ended January 31, January 31, 2007, to coincide coincide with its final fiscal period, for fiscal year 2007. The Condensed Condensed Statement of Net Assets and Condensed Statement Statement of Revenues, Expenses and Changes in Net Assets for these periods are shown below:
Discretely Presented Component Unit(s) II Condensed Condnse Financial Finacia Statements Staeet
, (in thousands of dollars) 2008 Medical CondensedStatement Condensed Statement ofNet Assets A 11...
Alliance Assets:
I-xSSCLS:
Current Assets $ 32,037 32,037 Capital Assets, Net 75,159 75,159 Noncurrent Assets 34,015 34,015 Total Assets $ 141,211 141,211 Liabilities:
Liabilities Current Liabilities $ 15,012 15,012 Noncurrent Liabilities Liabilities 36,837 36,837 Liabilities Total Liabilities 51,849 51,849 '
Net Assets:
Invested in Capital Assets, Assets, Net of Related Debt 38,463 38,463 3 Restricted -
Expendable 2,963 44;904 4-,904 Unrestricted Unrestricted 47,936 ,_
Total Net Assets 89,362 2 8 Total Liabilities Liabilities and and Net Assets Net Assets $$ 141,211 141,211 $l3,2 - $1326 (continued on next page) 2008 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNIT UNIT OF THE STATE OF THE STATE OFOF MISSOURI MISSOURI 6161
FOR THE YEARS ENDED JUNE 30, 30, 2008 AND 2007 2007 Discretely Presented Component Unit(s)
Condensed Cne se Financial Fiaca Statements Staemnt (in thousands of dollars) 2008 I 2007 I Condensed Statement Condensed Statement of Revenues, Medical Medical Medical Missouri Expenses, and Expenses, and Changes Changes in in Net Assets Alliance Alliance Alliance Care L.c.
L.C. Total
., ~,
1111111;31M 4ý 004, Operating Revenues:
Net Patient Revenue Revenue $ 147,932 147,932 138,258
$ 138,258 $ - 138,258
$ 138,258 Other Operating Operating Revenue 79,538 79,538 Operating Revenues Total Operating 147,932 147,932 I 138,258 138,258 79,538 217,796 217,796 I Operating Operating Expenses:
Salaries Salaries and Wages 57,984 51,911 51,911 51,911 51,911 Staff Benefits 12,589 12,589 11,450 11,450 11,450 11,450 Supplies, Services Supplies, Services and Other Other Operating Operating Expenses 64,878 64,878 63,916 63,916 80,533 144,449 144,449 Depreciation Depreciation 10,061 10,132 10,132 10,132 10,132 Total Operating Operating Expenses 145,512 145,512 I 137,409 137,409 80,533 217,942 I Operating Income Income (Loss) 2,420 I 849 (995)
(995) (146) I (146)
Nonoperating Nonoperating Revenues Revenues (Expenses):
(Expenses):
Investment Income Investment Income 1,844 1,844 1,500 1,500 1,500 Private Gifts 15 Interest Expense Expense (1,760)
(1,760) (1,813)
(1,813) (1,813)
(1,813)
Other Nonoperating Revenues Nonoperating Revenues (Expenses)
(Expenses) 320 320 1,378 1,378 1,378 Extraordinary Extraordinary Items: I Net Proceeds Proceeds from Sale of of Missouri Care (19,317)
(19,317) (19,317)
(19,317)
Gain from Sale of Missouri Missouri Care 12,293 12,293 Net Nonoperating Nonoperating Revenues Revenues (Expenses) 419 1 1,065 (7,024) (5,959)
Increase Increase (Decrease) in Net Assets 2,839 2,839 1,914 1,914 (8,019)
(8,019) (6,105)
(6,105)
Net Assets, Beginning of Year Year 86,523 86,523 1 84,609 8,019 92,628 1 Net Assets, End of Year Year $ 89,362 89,362 1$ $ 86,523
$ 86,523 86,5231 2008 FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI 62 A COMPONENT COMPONENT UNIT OF THE STATE MISSOURI STATE OF MISSOURI
FOR THE FOR THE YEARS ENDED JUNE YEARS ENDED JUNE 30, 2008 2008 ANDAND 2007 2007
- 20. FIDUCIARY FIDUCIARY FUNDS FUNDS - PENSION TRUST TRUST FUNDS FUNDS COMBINING COMBINING STATEMENTS STATEMENTS Combining Combining financial statements statements for the Fiduciary Funds - Pension Trust Funds, which encompass encompass the University Retirement University Retirement and OPEB Trust Funds, are as follows: . .
I I I Statement Statmen of of Plan Pla Net Assets Ne sst I' ~
(in (ithuad thousands ofof dollars) dolas) 2008 2007 Pension Pension OPEB Total Afsstet Cash and Cash Cash Equivalents Equivalents $$ 95,363 $ 34,497 $ 129,860 129,860 $ 79,714 Collateral for Securities Securities Lending 294,781 294.781 294,781 382,023 Due to the University University of Missouri Missouri System (46)
Receivable Investment Settlements Receivable 181,062 181,062 23,659 Investments:
Investments:
Government Obligations Government Obligations 640,544 640,544 640,544 4004*16, Corporate Bonds and Notes Corporate 281,693 281,693 182,837 Corporate Stocks Corporate 1,699,133 1,699,133 1,699,133 2,269,794 Other Other 220,180 220,180 220,180 104,832, Total Assets 3,412,756 34,497 3,447,253 1 3,443,229 Ifi-ab.ilities Accounts Payable and Accrued Liabilities 2,429 2,429 2,429 2,850 Collateral Collateral for Securities Securities Lending 294,781 294,781 294,781 382,023 Investment Investment Settlements Payable 400,142 400,142 127,322 Total Liabilities 697,352 697,352 1 512,195 Net Assets Held in Trust for Pension Pension and OPEB $ 2,715,404 $ 34,497 34,497 $ 2,749,901 2,749,901 1$$ 2,931,034' (continued on next page)
FINANCIAL REPORT:
2008 FINANCIAL REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT COMPONENT UNIT UNIT OF THE STATE OF THE STATE OF MISSOURI MISSOURI 63
otz k ltý 644W'6ýý FOR THE YEARS ENDED JUNE FOR 30, JUNE 30, 2008 AND 2007 2008 2007 Statement Statement of Changes of Cags in in Plan Net Assets PlnNesst (in thousands of dollars) 2008 2008 ~
2007 2007 Pension Pension OPEB Total x 4 -~ ;!f .~ ~T--,-,T-:;:----:~ ;;; 6
. ' Net Net' Revenues 'and and 'C)ther Other Additions" Additions- . 1 Investment Income (Loss):
Interest and Dividend Income, Income, Net of Fees :$$ 77,372 $ 4 $ 77,376 $ 62,749 Net Appreciation (Depreciation) in Fair Appreciation (Depreciation) Fair Value of Investments (243,951)
(243,951) (243,951), 415,263 Net Investment Investment Income Income (Loss) I (166,579)
(166,579) 4 (166,575),
(I 66,575} I 478,012 Contributions: ;
University 72,284 53,461 125,745 125,745 ! 74,736 Members 12,231 12,231 I Other 2,503 2,503 Total Contributions Contributions 72,284 68,195 140,479 140,479 I 74,736 Total Net Revenues Revenues and Other Additions (94,295)
(94,295) 68,199 (26,096) I 552,748 i ..,.-.-.- . I ;t i -~~ .. -
-- --1
, 'V4 Epenses and Other Deductions (Exi{e"nsesandOther Deductions -----~--~-- ---- ---
/"
Administrative Expenses Administrative Expenses 1,932 241 241 2,173 2,043 i
Payments Payments to Retirees Retirees and Beneficiaries and Beneficiaries 119,403 119,403 33,461 152,864 152,864 114,412 114,412 Total Expenses Expenses and Other Other Deductions 121,335 121,335 33,702 33,702 155,037 155,037 I 116,455 116,455 Increase Increase (Decrease)
(Decrease) in Net Assets Assets Held in Trust for Pension Pension i (215,630)
(215,630) 34,497 34,497 (181,133)
(181,133) 436,293 436,293 and OPEB Net Assets Held in Trust for Pension and OPEB, Beginning Beginning of Year Year 2,931,034 2,931,034 2,494,741 Net Assets Assets Held in Trust for Pension Pension and OPEB, End of Year Year :$$ 2,715,404 $$ 34,497 34,497 $$ 2,749,901 1$$ 2,931,034 2,931,034 21.
- 21. EXTRAORDINARY EXTRAORDINARY ITEMS On January 31, 31, 2007, Schaller Anderson Acquisition, Incorporated, purchased purchased certain assets of Missouri L.C., a discretely Care L.c., discretely presented presented component component unit of the University, and assumed its liabilities as part of of the sales agreement. Missouri Care L.C. is described described further in Note 19. 19. The University received received net proceeds of $19.3$19.3 million resulting from the sale which was recorded as an extraordinary extraordinary item in the Statement Statement of Revenues, Expenses and Changes Changes in Net Assets for the year ended June 30, 2007. An extraordinary extraordinary gain of approximately approximately $12.3 $12.3 million was recorded recorded by Missouri Missouri Care L.C. as a result of the sale.
2008 FINANCIAL REPORT: UNIVERSITY 2008 FINANCIAL UNIVERSITY OF MISSOURI MISSOURI 64 A COMPONENT A COMPONENT UNIT OF THE THE STATE STATE OF MISSOURI MISSOURI
cg~4 FOR THETI-iE YEARS ENDED JUNE 30, 2008 AND YEARS ENDED 2007 AND 2007
- 22. SUBSEQUENT EVENTS
- 22. SUBSEQUENT EVENTS On July 2, 2, 2008, the University sold $100,000,000
$100,000,000 of capital capital project notes at an effective interest rate of of 3.0%. The notes will be repaid in full by June 30, 2009. Proceeds from the issuance issuan.ce of the capital capital project project notes will be used to fund various construction projects projects of the University.
Since June 30, 2008, the global financial markets have been experiencing experiencing a severe downturn, downturn, which in turn tum resulted resulted in unrealized decreases in the fair market value of the University's long-term investmentinvestment portfolio. As of the date of this report, it is unclear unclear how long this downward downward pressure on investment investment values might continue and what other implications there will be for the overall U.S. and global economy.
The University's management management and its investment advisors are monitoring monitoring the situation to determine appropriate strategies and actions. The University's investment strategy University's investment strategy is to take a long-term long-term approach to maximizing investment return. Because Because of its ample liquidity liquidity and minimal exposure exposure to troubled institutions, the University University is well positioned to weather the problems problems and uncertainty uncertainty in the markets.
2008 FINANCIAL 2008 FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT COMPONENT UNITUNIT OF THE STATE STATE OF MISSOURI MISSOURI 65 65
rf5J(~(j?I~ ~47?Dkr~ ~~
I - 6/ 1 FOR FOR THE YEARS ENDED ENDED JUNE 30, 2008 AND 2007 2007 RETIREMENT PLAN PLAN Schedule Scedl of Funding of Fudn Progress PrSogrss (in (ithuad thousands of of dollars) dollrs Actuarial Actuarial Unfunded Unfunded UAAL/(Excess)
UAAL/(Excess)
Actuarial Accrued AAL/
AALI Annual as a Percentage Percentage Actuarial Valuation Liability (Excess Funded Funded Covered Covered of Covered Covered Valuation of Assets (AAL) Funding) Ratio Payroll Payroll thý th-al in I h) ( el (lh-al / el Date 10/1/2002 10/1/2003 10/1/2004 10/1/2005 1011/2005 2,125,656 2,271,230 145,574 145,574 93.6%
93.6% 795,758 795,758 18.3%/
'" ~
10/1/2006 10/1/2006 2,325,264 2,325,264 2,400,807 75,543 96.9%
96.9% 846,884 846,884 8.9%'
8.9%,
10/1/2007 10/1/2007 2,651,535 2,651,535 2,555,592 (95,943)
(95,943) 103.8%
103.8% 891,648 -10.8%
-10.8%
Schedule of Employer (in thouand Contributions ie S'1~o]14lolars) of d K (in thousands of dollars)
Actuarial Annual Net Pension Year Year Valuation Required Percentage Obligation/
Obligationl Ended Date Contribution Contributed (Asset) 6/3 0/2003 6/30/2003 . . ... . ..... . . .
6/30/2004 6/30/2005 1 10
/2001' 6/30/2006 /204 6/30/20071 6/30/2007\ 10/1/2005 74,736 74,736 100%
100% -
6/30/2008*
6/30/2008' 10/1/2006 10/112006 72,284 72,284 100%
100% -I 2008 FINANCIAL FINANCIAL REPORT: REPORT: UNIVERSITY UNIVERSITY OF OF MISSOURI MISSOURI 66 A COMPONENT COMPONENT UNIT OF THE STATE OF THE STATE OF MISSOURI MISSOURI
m'~@1~ f~maUo?b ?42aUdh/J . FOR THE FOR THE YEARSYEARS ENDED ENDED JUNE JUNE 30, 30, 2008 AND 2007 AND 2007 OTHER POSTEMPLOYMENT POSTEMPL 0 YMENT BENEFITS (OPEB) (OPEB) PLAN PLAN Schdul Schedule (inof of Fning
~ Funding Prgrs
~Progress
~ ~ thuad-fdlas S I
(in thousands of dollars) I Actuarial UAAL as a VAAL Accrued Accrued " Annual Percentage of Percentage of Actuarial Valuation Valuation Liability Liability Unfunded Unfunded Funded Covered Covered Covered Covered Actuarial Actuarial of Assets (AAL) AAL Ratio Payroll Payroll Valuation Valuation Date (a)
(a) (b)
., , ~
(b-a) (a / b) (c)
( c) ([b-a] / c)
([b-a]
~---~~
,;*;;;9 '
~
7/1/2006' $ $
7/1/2006: - $546,058
$ 546,058 - $ 546,058 546,058 0.0% $$883,614 883,614 61.8%
61.8%
--. ~-
Schedue Schedule of Employer S. Contributions C I (in thousands of dollars)
Actuarial Actuarial Annual NetOPEB Net OPEB Year Valuation Valuation Required Required Percentage Percentage Obligation /I Ended Date Contribution Contributed Contributed (Asset)
-~ -- .- .::.:..-:
6/30/2008, 6/30/2008 7/1/2006 53,310 100.2%
100.2%
$ ... (150)
(1502 2008 FINANCIAL FINANCIAL REPORT:
REPORT: UNIVERSITY UNIVERSITY OF MISSOURI MISSOURI A COMPONENT A COMPONENT UNIT OF THE STATE STATE OF MISSOURI MISSOUII 6 667 7
"The mission of the four-campus "The four-campus University University of Missouri System System - a land-grant university and Missouri's only public research and land-grant doctoral-level doctoral-level institution - is to discover, disseminate, preserve and apply knowledge. The university university facilitates facilitates lifelong-learning lifelong-learning by its students students and Missouri's citizens; fosters innovation to support support economic development; and advances economic development; advances the health, cultural cultural and social interests interests of the people people of Missouri, the nation nation and the world."
www.umsystem.edu www.umsystem.edu
PUBLISHED BY UNIVERSITY OF MISSOURI OFFICE OF FINANCE AND ADMINISTRATION 215 UNIVERSITY HALL COLUMBIA, MISSOURI 65211