ML14342A563

University of Maryland, Response to Request for Additional Information Regarding Financial Update for License Renewal

ML14342A563
Person / Time
Site:	University of Maryland
Issue date:	11/25/2014
From:	Koeth T Univ of Maryland - College Park
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
TAC ME1592
Download: ML14342A563 (70)

Text

Building 090 AUNIR I TY OCollege Park, Maryland 20742-2115 301.405.4952 TEL 301.405.6327 FAX 609.577.8790 CELL koeth@umd.edu GLENN L. MARTIN INSTITUTE OF TECHNOLOGY A. JAMES CLARK SCHOOL OF ENGINEERING Departmentof Materials Science & Engineering Nuclear Reactor & Radiation Facilities Timothy W. Koeth, Director November 25, 2014 US NRC Document Control Desk 11555 Rockville Pike Rockville, MD, 20852-2733

SUBJECT:

UNIVERSITY OF MARYLAND - REQUEST FOR ADDITIONAL INFORMATION RE: FINANCIAL UPDATE FOR LICENSE RENEWAL FOR THE MARYLAND UNIVERSITY TRAINING REACTOR (TAC NO. ME1 592) LICENSE NO. 70; DOCKET NO. 50-166 Enclosed please find the response to the RAI dated June 2, 2014 for the University of Maryland Training Reactor (MUTR), License No. R-70; Docket No. 50-166, regarding the update of financial information.

I declare under penalty of perjury that the foregoing is true and correct.

November 25, 2014 Timothy W. Koeth, Assistant Research Professor and Director University of Maryland Training Reactor & Radiation Facilities

OFFICE OF NUCLEAR REACTOR REGULATION REQUEST FOR ADDITIONAL INFORMATION REGARDING FINANCIAL OUALIFICATIONS FOR THE LICENSE RENEWAL FOR MARYLAND UNIVERSITY TRAINING REACTOR (TAC NO. ME15921 LICENSE NO. R-70 DOCKET NO. 50-166 As required by Title 10 of the Code of FederalRegulations(10 CFR) Section 50.33(f)(2), "[a]pplicants to renew or extend the term of an operating license for a nonpower reactor shall include the financial information that is required in an application for an initial license." To comply with this requirement, please provide an update to the supplemental information provided by letter dated May 27, 2010 (ADAMS Accession No. ML101670413). In some cases, the responses provided in aforementioned letters may not have changed (e.g., requests for additional information 4.(b) and 4.(c)). In that case, please indicate in the response "no change," no additional information is necessary, and the NRC staff will consider the response provided in the submittals to remain current.

1. The NRC staff will analyze the financial statements for the current year, which are required by 10 CFR 50.71(b), to determine if the applicant is financially qualified to operate the MUTR. Since UMD's financial statements included with the application are out of date, provide a copy of the latest financial statements for the NRC staff's review.

Response: Attached at Enclosure 1 are the "University System of Maryland Financial Statements and Supplemental Data Together with Report of Independent Public Accountants for the Years Ended June 30, 2013 and 2-12" (the "Financial Statement and Report"). The Financial Statement and Report constitutes the audit by SB& Company, LLC of the financial statements of the University System of Maryland and each of its constituent institutions, including the University of Maryland, College Park. Enclosure 1 does not include the financial statements of constituent institutions other than the University of Maryland, College Park.

2. Pursuant to 10 CFR 50.33(0(2), the regulation states that "[t]he applicant shall submit estimates for total annual operating costs for each of the first five years of operation of the facility."

Since the information included in the application is out of date, provide the following additional information:

(a) Projected operating costs of the MUTR for each of the fiscal years (FYs) 2015-2019 (the first five year period after the projected license renewal).

Response: The University hereby updates the information included in its April 27, 2000, May 12, 2000, and its May 27, 2010, submittals of the 2000 Safety Analysis Report ("SAR"):

Revised Section 15.1 FINANCIAL ABILITY TO OPERATE A NON-POWER REACTOR The estimated operating costs for each of the fiscal years (FY) 2015 through FY2019 (the first five-year period after the projected license renewal date) are presented in revised Table 15.1, attached at Enclosure 2. As shown in that table, the annual operating costs for the MUTR fall within one of three main categories of expenses: personnel, maintenance, and miscellaneous.

Building and maintenance expenses for other infrastructure fall within the budget of the University Department of Facilities Management and, as a result, those expenses are not included in Revised Table 15.1. In addition, waste disposal and health physics activities are performed by and included in the budget of the University Department of Environmental Safety. Hence, those expenses are also not included in revised Table 15.1. The calculations apply the Implicit Price Deflator for the Gross Domestic Product (IPD for GDP) of 2.7% as published in the Survey of current Business by the U.S. Department of Commerce.

(b) Confirm that UMD's primary source of funding to cover the operating costs for the aforementioned FYs will be funding by an annual appropriation from the State of Maryland's budget as described in the application.

Response: Revised Table 15.2, attached at Enclosure 2, depicts the University's primary sources of funding to cover the estimated annual operating costs for the first 5 years after the projected license renewal date. The State of Maryland, the largest source of funding, provides salary support. The second largest source of operational funds is generated by fees received from corporations and other entities for the provision of services that use the MUTR, the Co-60 irradiator or electron beam accelerator. The Federal funding in Table 15.2 represents a sum received from the NRC that is expressly designated for operating expenses.

3. The RAI response by letter dated May 27, 2010, references a decommissioning cost estimate for the MUTR of $10,979,000 (2011 dollars). In accordance with 10 CFR 50.75(d) (1), it states that,

"[e]ach non-power reactor applicant for or holder of an operating license for a production or utilization facility shall submit a decommissioning report as required by §50.33(k) of this part."

Under 10 CFR 50.75(d) (2) the report must:

(i) Contain a cost estimate for decommissioning the facility; (ii) [i]ndicate which method or methods described in paragraph (e) of this section as acceptable to the NRC will be used to provide funds for decommissioning; and (iii) [p]rovide a description of the means of adjusting the cost estimate and associated level periodically over the life of the facility.

Since the NRC staff needs the following additional information to complete its review of the MUTR application, update the application by providing the following:

(a) A current decommissioning cost estimate in 2015 dollars for the MUTR to meet the NRC's radiological release criteria for decommissioning the facility for unrestricted use, pursuant to 10 CFR 50.75(d)(2). Accordingly, describe the basis for how the cost estimate was developed, showing costs, in current dollars, specifically broken down into the categories of labor, waste

disposal, other items (e.g., energy, equipment, and supplies), and a 25 percent contingency factor.

Response: The University's 1980 itemized estimate of decommissioning costs was based on the decommissioning of the Diamond Ordnance Reactor Facility (DORF) that was located in Maryland in 1980 dollars. In its May 27, 2010 response to the NRC's RAI Regarding Financial Qualifications for License Renewal, the University used the IPD for GDP to update the 1980 estimate to 1989 dollars in connection with the submission of its updated decommissioning plan cost estimates. Other factors such as comparing the MUTR with other university reactors were also considered in developing the University's decommissioning cost estimate. A current decommissioning cost estimate in 2015 dollars for the MUTR to meet the NRC's radiological release criteria for decommissioning the facility for unrestricted use, pursuant to 10 CFR 50.75(d)(2) is presented at Enclosure 3. It employs uses a 25 percent contingency factor.

(b) State the decommissioning method to be used. If SAFSTOR is the proposed method, please state.

Response: There is no change in the proposed decommissioning method that the University identified in its May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications for License Renewal.

(c) A description of the means of adjusting the cost estimate and associated funding level periodically over the life of the facility, to comply with 10 CFR 50.75(d)(2)(iii). Also, provide a detailed numerical example showing how the 2015 cost estimate will be adjusted periodically in the future.

Response: Values from the May 27, 2010 letter were propagated using a 5-year running average of 2.7% inflation from the US Department of Commerce Implicit Price Deflator (IPD), in the future we will return to the IPD and re-evaluate the 5-year running average. A detailed numerical example is outlined in Enclosure 4.

4. The application includes a statement of intent (SOI) as the chosen method to provide decommissioning funding assurance for the MUTR. If the applicant intends to use a SOI as the method to provide decommissioning funding assurance, as provided for by 10 CFR 50.75(e) (1)(iv), the NRC staff must find that the applicant "...is a Federal, State, or local government licensee...." To make this finding, the applicant must state that it is a State government organization and that the decommissioning funding obligations of the applicant are backed by the State government, and also provide corroborating documentation. Further, the applicant must provide documentation verifying that the signatory of the SOI is authorized to execute said document that binds UMD. This document may be a governing body resolution, management directives, or other form that provides an equivalent level of assurance. As the application does not include all of the above information, submit the following:

(a) An updated SOI, which includes the current (2015 dollars) cost estimate for

decommissioning; a statement that funds for decommissioning will be obtained when necessary; name and title of signatory; and the signatory's oath or affirmation attesting to the information.

Response: An updated SOI that includes the information requested is attached at .

(b) Documentation that corroborates the statement in the application that UMD is a State agency and a State of Maryland government licensee under 10 CFR 50.75(e) (2) (iv).

Response: No change. Please refer to documentation provided at Enclosure 1 to the University's May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications for License Renewal.

(c) A statement as to whether the decommissioning funding obligations for the UMD are backed by the State of Maryland government. The application must also present documentation that corroborates this statement. For example, the documentation may be a copy of or complete citation to a state statute that expressly provides that the obligations, or at least the decommissioning funding obligations, of the applicant are backed or supported by the full faith and credit of the State of Maryland, or an opinion of the applicant's General Counsel with citations to statutes, regulations, and/or case law that the obligations, or at least those with respect to the decommissioning funding of the applicant are obligations backed or supported by the full faith and credit of the State of Maryland.

Response: See Enclosure 5 to this submission and Enclosure 1 to the May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications for License Renewal.

(d) Documentation verifying that the signatory of the SO is authorized to execute such a document that binds the applicant financially. For example, provide a copy of UMD's governing board or equivalent resolution that shows that the signatory of the SO has been authorized by UMD to bind UMD financially, at least with respect to funding the decommissioning of the MUTR, or provide a copy of an official UMD delegation of authority showing that the signatory of the SO is authorized to bind UM D financially, at least with respect to funding the decommissioning of the MUTR.

Response: Please refer to documentation provided at Enclosure 5 to the University's May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications for License Renewal which documents establish the authority of officials within the University System of Maryland and the University of Maryland to enter into binding agreements. Enclosure 6Lto be provided by PDF Wednesday November 26, 2014, presents a copy of express written delegation of responsibility and authority from the President of the University of Maryland to the University Vice President for Administration and Finance to bind the University financially, at least with respect to identifying and obtaining funding to decommission the MUTR.

ENCLOSURE 1 UNIVERSITY SYSTEM OF MARYLAND Financial Statements and Supplemental Data Together with Report of Independent Public Accountants For the Years Ended June 30, 2013 and 2012

Paqe REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2013 AND 2012:

Balance Sheet, University System of Maryland 11 Combining Balance Sheet, Component Units 12 Statement of Revenues, Expenses and Changes in Net Position, University System of Maryland 14 Combining Statement of Activities, Component Units 15 Statement of Cash Flows, University.System of Maryland 17 Notes to Financial Statements 18 SUPPLEMENTAL DATA:

Balance Sheet, Statement of Revenues, Expenses and Changes in Net Position, and Statement of Cash Flows for:

University of Maryland, Baltimore 44 University of Maryland, College Park 47 Bowie State University 50 Towson University 53 University of Maryland Eastern Shore 56 Frostburg State University 59 Coppin State University 62 University of Baltimore 65 Salisbury University 68.

University of Maryland University College 71 University of Maryland, Baltimore County 74 University of Maryland Center for Environmental Science 77 University System of Maryland Office 80 Combining Balance Sheets, Non-major Component Units 83 Combining Statements of Activities, Non-major Component Units 85 Notes to Supplemental Data 87

0 SB & COMPANY E;'PERFNCE " QUALITY N .LC

- CLIENT SERVICE REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Regents University System of Maryland Report on the Financial Statements We have audited the accompanying financial statements of the University System of Maryland (the System), and its discretely presented component units, as of and for the years ended June 30, 2013 and 2012, which collectively comprise the System's basic financial statements as listed in the table of contents.

Management'sResponsibilit. for the FinancialStatements The System's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We audited the component unit financial statements of UMBC Research Park Corporation, Inc. and the Bowie State University Foundation, Inc. We did not audit the financial statements of the other component units, which represent 99 percent, 99 percent, and 98 percent, respectively, of the total assets, net assets and unrestricted revenue of the total component units. Those financial statements were audited by other auditors whose reports thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for those component units, is based on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that.the audit evidence we and other auditors have obtained is sufficient and appropriate to provide a basis for our audit opinion.

200 International Circle, Suite 5500 - Hunt Valley , Maryland 21030 -, P 410-584-0060 ,. F 410-584-0061

0 SB & COMPANY.L-C EXPERIE NCE OUALITY - C ULICNTSERVICt Opinion In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the System and its discretely presented component units as of June 30, 2013 and 2012, and the respective changes in financial position and, as applicable, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

OtherMatters Required Supplementaty Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise the System's basic financial statements. The supplemental information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Hunt Valley, Maryland 0 YP November 15, 2013 a C 4 --%

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UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 The management of the University System of Maryland (the System), provides the readers of the System's financial statements with this narrative overview and analysis of the financial activities of the System for the years ended June 30, 2013 and 2012.

Financial Highlights

" Unrestricted net position increased by $122,678,729, for the year ended June 30, 2013 compared to an increase of $185,192,546 for the year ended June 30, 2012.

" State appropriations for the System increased by .7% for the year ended June 30, 2013 to

$1,070,834,339. For the year ended June 30, 2012, State appropriations increased by 1.8% from the amount received in the year ended June 30, 2011.

" Tuition and fees, after deducting Scholarship Allowances, increased by $21,102,066 or 1.8% for the year ended June 30, 2013. During the year ended June 30, 2012, net Tuition and fees, increased by

$80,672,778, or 7.4%.

" Investment income on Endowment assets amounted to $13,403,564, an investment return of 7.0%, for the year ended June 30, 2013. For the year ended June 30, 2012, investment income on Endowment assets was $1,267,272, representing investment returns of .6%.

Overview of the Financial Statements The System's financial statements consist of three basic financial statements and the notes that provide information on the accounting alternatives used, financial statements for discretely presented component units, and explanatory information and detail on certain financial statement elements. The three basic financial statements are the Balance Sheet, the Statement of Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows.

The Balance Sheet presents information on the System's assets, liabilities, deferred inflows of resources, and net position, all as of the end of the reporting period. Net position represent the difference between assets and liabilities plus deferred inflow of resources, and is detailed into classifications that help readers understand the constraints that the System must consider in making decisions on expending assets. Over time, changes in net position can help in understanding whether the financial condition of the System is improving or deteriorating.

The Statement of Revenues, Expenses and Changes in Net Position presents information on the changes in net position during the year. All changes in net postion are reported as soon as the underlying event takes place, regardless of the timing of the related cash flows. Thus, revenue and expenses are recorded for some items that will result in cash flows in future fiscal years (for example tuition and fees owed by students, or vacation earned by employees but not used as of the date of the financial statements).

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UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 The Statement of Cash Flows presents information on sources and uses of cash during the year. This statement details the changes in cash and cash equivalents from the amounts reported at the end of the preceding year, to the amounts reported in the Balance Sheet as of the end of the current year. Sources and uses are organized into operating activities, noncapital financing activities, capital and related financing activities, and investing activities.

The System's financial statements include all accounts and balances of the System (considered the primary government, in accounting terms), as well as 19 legally-separate and distinct entities for which the System is financially accountable, which are considered component units. Of the 19 component units, three are considered major component units due to their significance in terms of size, while the rest are considered non-major component units.

The focus of this Management's Discussion and Analysis is on the System itself. Reference should be made to the separately audited financial statements of the component units for additional information.

Financial Analysis As of June 30, 2013, the System's financial health remains strong, with assets exceeding liabilities by

$5,423,238,018, shown on the Balance Sheet as total net position. This compares with total net position of

$5,058,483,979, as of June 30, 2012. As suggested earlier, when viewed over time, net position may be useful as an indicator of financial health.

For the year ended June 30, 2013, total net position increased by $364,754,039. Net investment in capital assets increased by $248,090,907, while unrestricted net position increased by $122,678,729, and restricted net position categories decreased by $6,015,597.

Unrestricted net position represent the portion of assets, after taking into account liabilities, which can be used to meet ongoing obligations and fund new initiatives. The $122,678,729 increase in unrestricted net position for the year ended June 30, 2013, is attributable to continuing institutional efforts to limit expenditures, as well as efforts to accumulate resources to provide for future facilities needs and renewal and renovation requirements.

As of June 30, 2012, the System's assets exceeded liabilities by $5,058,483,979. This compares with total net position of $4,671,599,419 as of June 30, 2011.

For the year ended June 30, 2012, total net position increased by $386,884,560. Net investment in capital assets increased by $200,205,243, while unrestricted net position increased $185,192,546, and restricted net position categories increased by $1,486,771.

The $185,192,546 increase in unrestricted net position for the year ended June 30, 2012, is attributable to enrollment increases beyond that budgeted, continuing institutional efforts to limit expenditures, as well as efforts to accumulate resources to provide for future facilities needs and renewal and renovation requirements.

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UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 The table below presents summary-level information of the System's assets, liabilities, and net position as of June 30, 2013, 2012 and 2011.

Condensed Balance Sheet June 30, 2013, 2012 and 2011 2013 2012 2011 Current and other assets $2,425,856,576 $2,316,223,582 $2,108,263,552 Capital assets, net 5,273,348,180 5,013,671,829 4,329,368,105 Total assets $7,699,204,756 $7,329,895,411 $6,437,631,657 Debt and obligations under capital lease agreements $1,195,778,354 $1,170,358,857 $1,129,222,003 Other liabilities 699,476,706 668,651,521 636,810,235 Total liabilities 1,895,255,060 1,839,010,378 1,766,032,238 Deferred service concession arrangement receipts 380,711,678 432,401,054 Net position:

Net investment in capital assets 3,733,261,041 3,485,170,134 3,284,964,891 Restricted 247,865,966 253,881,563 252,394,792 Unrestricted 1,442,111,011 1,319,432,282 1,134,239,736 Total net position 5,423,238,018 5,058,483,979 4,671,599,419 Total liabilities, deferred inflow of resources and net position $7,699,204,756 $7,329,895,411 $6,437,631,657 5

UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 The table below presents summary-level information on revenues, expenses, and other changes in the System's net assets for the years ended June 30, 2013, 2012 and 2011.

Condensed Statement of Revenues, Expenses and Changes in Net Position Years ended June 30, 2013, 2012 and 2011 2013 2012 2011 Operating revenues $3,185,101,706 $3,140,131,091 $3,020,337,759 Operating expenses 4,293,338,895 4,161,427,083 3,998,175,888 Operating loss (1,108,237,189) (1,021,295,992) (977,838,129)

State appropriations 1,070,834,339 1,063,371,086 1,044,674,552 Other nonoperating 212,230,547 163,051,998 201,250,448 Total nonoperating 1,283,064,886 1,226,423,084 1,245,925,000 Income before other revenues 174,827,697 205,127,092 268,086,871 Other revenues 189,926,342 181,757,468 198,180,842 Increase in net position 364,754,039 386,884,560 466,267,713 Net position, beginning of year 5,058,483,979 4,671,599,419 4,205,331,706 Net position, end of year $5,423,238,018 $5,058,483,979 $4,671,599,419 The System's operating revenues arise from activities associated with its core mission: education, research, and public service.

For the years ended June 30, 2013, 2012 and 2011, operating revenues, which under the definitions used by the Governmental Accounting Standards Board (GASB) excludes state appropriations, are detailed below:

2013 2012 2011

$  %$  %$%

Tuition and fees $1,187,769,356 37.3% $1,166,667,290 37.2% $1,085,994,512 36.0%

Contracts and grants 1,097,258,431 34.5 1,109,702,556 35.3 1,142,425,581 37.8 Sales and services of educational departments 287,007,719 9.0 257,697,032 8.2 243,851,740 8.1 Auxiliary enterprises 551,408,145 17.3 548,111,213 17.5 490,116,309 16.2 Other operating 61,658,055 1.9 57,953,000 1.8 57,949,617 1.9 Total $3,185,101,706 100.0% $3,140,131,091 100.0% $3,020,337,759 100.0%

Tuition and fees reflect increases in resident undergraduate and graduate student rates, and non-resident rates and other student charges enacted the for years ended 2013, 2012 and 2011. Enrollment declined slightly between 2013 and 2012 compared to a modest increase in enrollment in 2012 and 2011, most notably at the University of Maryland University College. Fee increases for residence halls and dining facilities account for the increase in revenue from auxiliary enterprise activities.

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UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 For the years ended June 30, 2013, 2012 and 2011, operating expenses are detailed below:

2013 2012 2011

$  %$  %$%

Instruction $1,139,913,339 26.5% $1,101,099,773 26.5% $1,034,072,780 25.9%

Research 931,958,951 21.7 922,874,070 22.2 945,626,792 23.7 Public service 152,996,481 3.6 157,554,254 3.8 148,391,096 3.7 Academic support 411,613,583 9.6 380,187,264 9.1 349,062,701 8.7 Student services 198,424,948 4.6 192,285,983 4.6 178,781,303 4.5 Institutional support 386,575,951 9.0 364,278,425 8.8 354,617,377 8.9 Operation &

maintenance of plant 298,788,447 .7.0 316,887,436 7.6 309,762,858 7.7 Scholarships and fellowships 100,959,500 2.4 90,510,504 2.2 91,965,556 2.3 Auxiliary enterprises 498,923,433 11.6 480,543,544 11.5 444,579,270 11.1 Hospital 173,184,262 4.0 155,205,830 3.7 141,316,155 3.5 Total $4,293,338,895 100.0% $4,161,427,083 100.0% $3,998,175,888 100.0%

Operating expenses are detailed by (1) employee costs, (2) payments to suppliers, contractors and other, and (3) depreciation expense in the notes to the financial statements, in order to provide an alternative presentation of operating expenses.

For the year ended June 30, 2013, increases in employee payments of $95,355,996, represent the largest component of the overall increase in operating expenses over the year ended June 30, 2012, with the largest increase associated with employee payments for instruction activities.

For the year ended June 30, 2012, increases in employee payments of $133,323,249, represent the largest component of the overall increase in operating expenses over the year ended June 30, 2011, with the largest increase associated with employee payments for instruction activities.

For the year ended June 30, 2011, increases in employee payments account for the largest component of the overall increase in operating expenses of $133,450,196, over the year ended June 30, 2010, with the largest increase associated with employee payments for instruction activities.

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UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 Capital Asset and Debt Administration The System continually makes investments in facilities necessary to achieve long-term objectives resulting from:

" State-wide public policy goals,

• System-wide strategic planning,

• institutional facilities master planning,

" projected enrollment growth,

" projected research space needs, and

• maintainance and renewal needs for existing facilities.

Funding sources for additions to capital facilities and equipment for the last three fiscal years ended June 30, were funded through:

Fundina source 2013 2012 2011 State of Maryland debt proceeds or cash balances $149,231,513 $172,854,822 $176,161,090 System debt proceeds 159,223,347 133,013,284 180,139,550 System cash balances or donations 218,842,585 186,301,220 211,893,224 Total $527,297,445 $492,169,326 $568,193,864 Over the past three fiscal years ended June 30, major projects completed or placed in service are as follows:

Project Institution Cost Year ended June 30, 2013 John and Frances Angelos Law Center University of Baltimore $107,279,000 Towson Center Arena Towson University 73,000,000 Year ended June 30, 2012 Performing Arts and Humanties Facility University of Maryland Baltimore County 81,703,000 College of Liberal Arts Towson University 78,325,000 Performing Arts Center Bowie State University 67,453,000 Year ended June 30, 2011 Pharmacy Hall Addition and Renovation University of Maryland Baltimore 85,789,000 Oakland Hall Residence University of Maryland College Park 81,000,000 Perdue School of Business Salisbury University 50,553,000 Seagull Square Salisbury University 41,000,000 8

UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 In August 2003, the System issued Revolving Loan Program Bonds to provide a pool of funds to finance the acquisition of personal property on a revolving basis. The Revolving Loan Program Bonds, currently outstanding in the amount of $35,000,000, mature on July 1, 2023. In May 2009, the securities were remarketed at an annual interest rate of 0.55% for the period June 1, 2009 through May 31, 2010. On June 1, 2010, the securities were successfully remarketed on a multi-annual interest rate basis at an interest rate of 1.50%. On June 1, 2013, the System redeemed $15,000,000 of the Revolving Loan Program Bonds. The remaining principal balance of $35,000,000 was remarketed for five years at a multi-annual interest rate of 1.25%.

The System has issued revenue bonds to fund the construction, acquisition, and renewal and replacement of facilities, or refinance previously issued revenue bonds to realize lower current interest rates, during the years ended June 30, 2012 and 2013, and since, as follows:

Present Value of Future Debt Total Par Service Revenue Bond Issuance Date Purpose Value Issued Savings 2011 Series A and B 10/20/2011 Refinancing, construction and $153,075,000 $1,357,495 facilities renewal 2012 Series A and B 2/9/2012 Refinancing 70,825,000 9,054,411 2012 Series C and D 10/6/2012 Refinancing, construction and 169,005,000 5,281,851 facilities renewal The System continually pursues opportunities to reduce its overall effective cost of capital financing, and as conditions in the financial markets allow, refinances previously issued debt with new debt at lower interest costs.

Economic Factors and Next Year's Budget and Rates Enrollment demand, availability of funding for contracts and grants, and the State of Maryland support through both operating and capital appropriations are the three most significant drivers of the System's revenue base.

Across all student categories, enrollment is expected to continue to increase over the next ten years, with more than 16% more full-time equivalent students anticipated by the fall 2022. Preliminary fall 2013 enrollment indicates a slight decline in headcount enrollment, reflecting demographic changes in high school graduation numbers, the impact of lack of state financial support for enrollment growth, and a strengthening employment situation.

The University of Maryland, College Park, the University of Maryland, Baltimore, and the University of Maryland, Baltimore County each have considerable numbers of faculty that pursue research grants and other sponsored funding arrangements. Indirect cost recoveries associated with contract and grants are an important funding source for institution's administrative costs. The Federal Budget Control Act places limits on Federal government spending commonly referred to as sequestration. These limits have constrained Federal spending on research activities, will reduce indirect cost recoveries generally, and will continue, unless Congress and the President agree upon and enact legislation that relieves the constraints on governmental spending currently in place.

9

UNIVERSITY SYSTEM OF MARYLAND MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2013 AND 2012 In February of 2009, as part of the American Recovery and Reinvestment Act, the Federal government established a program where tax-exempt issuers of debt would issue bonds, referred to as Build America Bonds, which would produce interest income that is taxable to those who buy and hold the bonds. Under the terms of the program, which ended December 31, 2010, the Federal government is to reimburse the issuer for 35% of the interest payments made on Build America Bonds. The University System of Maryland has issued and outstanding $206,465,000 of Build America Bonds. The Federal Budget Control Act (or sequestration),

also impacts the Federal government subsidy of Build America Bond interest payments, and until the effects of sequestration are relieved or changed, the System expects interest subsidies reduced to be by approximately 8.7%. This reduction in interest subsidies at an 8.7% reduction, will amount to approximately $325,000 per year. The first reduction in Federal interest subsidy happened in September 2013.

As a region with a significant Federal government employee population, the potential for significant reductions in Federal spending in all likelihood will have serious implications for state tax revenues, both from income as well as sales taxes. The State government closely monitors revenue receipts and revises projections on a quarterly basis. As an economic engine for the entire state and region, System officials point out the impact that proposed reductions of State funding provided to higher education would have on state-wide economic activity and work-force development.

Personnel costs account for more than two-thirds of the System's noncapital spending. Healthcare costs and the adoption of a state-wide funding strategy for providing for retiree's healthcare costs are expected to be significant considerations for the System's future spending levels.

Requests for Information This financial report is intended to provide a general overview of the System's finances. Questions concerning any of the information provided in this report, or requests for additional information should be addressed to the Office of the Vice Chancellor for Administration and Finance and Chief Operating Officer, 3300 Metzerott Road, Adelphi, MD 20783.

10

UNIVERSITY SYSTEM OF MARYLAND BALANCE SHEET JUNE 30, 2013 AND 2012 June 30, June 30, 2013 2012 ASSETS Current assets:

Cash and cash equivalents $1,820,390,529 $1,653,689,625 Accounts receivable, net 268,855.816 282,367,444 Notes receivable, current portion, net 7,728,081 7,731,196 Inventories 10,271,714 11,889,509 Prepaid expenses and deferred charges 9,038,098 7,092,331 Total current assets 2,116,284,238 1,962,770,105 Noncurrent assets:

Restricted cash and cash equivalents 51,390,989 75,673,619 Endowment investments 192,920,622 190,279,721 Restricted investments 21,875,318 Other investments 6,693,185 5,128,471 Notes receivable, net 58,567,542 60,496,348 Capital assets, net 5,273,348,180 5,013,671,829 Total noncurrent assets 5.582,920,518 5,367,125,306 Total assets $7,699,204,756 LIABILITIES Current liabilities:

Accounts payable and accrued liabilities $310.619,251 $272,522,879 Accrued workers' compensation, current portion 4,375,805 4,438,425 Accrued vacation costs, current portion 89.344,370 83.198,226 Revenue bonds and notes payable, current portion 79,050,151 80,770,694 Obligations under capital lease agreements, current portion 1,104,394 296,434 Deferred revenue 177,345,393 191,690.521 Total current liabilities 661,839,364 632,917,179 Noncurrent liabilities:

Accrued workers' compensation 23,855,195 24,196,575 Accrued vacation costs 93,936,692 92,604,895 Revenue bonds and notes payable 1,104,318,155 1,075,822,504 Obligations under capital lease agreements 11,305,654 13,469,225 Total noncurrent liabilities 1,233.415,696 1,206,093,199 Total liabilities 1,895,255,060 1,839,010,378 DEFERRED INFLOWS OF RESOURCES Deferred service concession arrangement receipts 380,711,678 432.401,054 NET POSITION Unrestricted 1,442,111,011 1,319,432,282 Net investment in capital assets 3,733,261,041 3,485,170,134 Restricted:

Nonexpendable:

Scholarships and fellowships 15,729,733 13,147,768 Research 4,055,554 4,033,185 Other 16,518,773 16,517,485 Expendable:

Scholarships and fellowships 37,653,479 36,791,120 Research 69,959,016 69,334,753 Loans 71,207,868 72,533,907 Capital projects 5,651,220 15,055,226 Other 27,090.323 26,468,119 Total net position 5,423.238,018 5,058.483,979 Total liabilities, deferred inflows of resources and net position $7,699,204,756 $7,329,895,411 See accompanying notes.

11

UNIVERSITY SYSTEM OF MARYLAND COMBINING BALANCE SHEET, COMPONENT UNITS JUNE 30, 2013 Major Component Units University University of University System of Maryland Maryland of Maryland College Park Baltimore Total Nonmajor Foundation, Inc. Foundation, Inc. Foundation, Inc. Component Units Total ASSETS Current assets Cash $134,000 $17,426,872 $157,014 $24,903,989 $42,621,875 Accounts receivable, net 74,598,000 28,292,348 14,510,723 4,937,729 122,338,800 Other assets 282,000 184,488 534,402 1,000,890 Total current assets 75,014,000 45,903,708 14,667,737 30,376,120 165,961,565 Investments Endowment investments 225.682,000 244.725.820 128.291,957 180,117,272 778,817,049 Other investments 284,021,000 53,369,262 53,533.012 25.493,472 416,416,746 Total investments 509,703,000 298,095,082 181,824,969 205,610,744 1,195,233,795 Other assets Accounts receivable, net 5,119,000 25,864,477 15,377,755 12,708,083 59,069,315 Capital assets, net 10,382,000 100,000 5,833,980 16,315,980 Other assets 407,000 777,840 5.179,829 4,014.258 10,378,927 Total other assets 15,908,000 26,742,317 20,557,584 22,556,321 85,764,222 Total assets $600,625,000 $370,741,107 $217,050,290 $258,543,185 $1,446,959,582 LIABILITIES Current liabilities Accounts payable & accrued expenses $71,064,000 $4,880,957 $1,600,761 $5,745,564 $83,291,282 Long-term debt, current 1,948,018 1,948,018 Deferred income 2,315,000 2,158,683 7,272,025 11,745,708 Total current liabilities 73,379,000 7,039,640 1,600,761 14,965,607 96,985,008 Other liabilities Other payables 46.728,768 3,146,534 1,234,403 3.829,739 54,939,444 Due to primary government 192,797,232 192,797.232 Long-term debt, noncurrent 318,014 318,014 Total other liabilities 239,526,000 3,146,534 1,234,403 4,147,753 248,054,690 Total liabilities 312,905,000 10,186,174 2,835,164 19,113,360 345,039,698 NET ASSETS Unrestricted 62,731.000 10,265,864 20,128,368 33,164,013 126,289,245 Temporarily restricted:

Scholarships & fellowships 19,289,000 37,446,000 7.226,401 21.881,400 85,842,801 Research 11,625,000 9,957,000 8,511.724 627.004 30,720,728 Other 34,422.000 91,724,328 55,277,255 56,540.201 237,963,784 Permanently restricted:

Scholarships & fellowships 88,415,000 76,829,000 27,534,841 68,770,894 261.549,735 Research 2,340,000 1,081,000 1,010,474 356,478 4,787,952 Other 68,898,000 133,251,741 94,526,063 58,089,835 354,765,639 Total net assets 287,720,000 360,554,933 214,215,126 239,429,825 1,101,919,884 Total liabilities and net assets $600,625,000 $370,741,107 $217,050,290 $258,543,185 $1,446,959,582 See accompanying notes.

12

UNIVERSITY SYSTEM OF MARYLAND COMBINING BALANCE SHEET, COMPONENT UNITS JUNE 30, 2012 ajor Component Units University University of University System of Maryland Maryland of Maryland College Park Baltimore Total Nonmajor Foundation, Inc. Foundation. Inc. Foundation. Inc. Component Units Total ASSETS Current assets Cash $714,000 $22,403,012 $31,320,867 $54,437,879 Accounts receivable, net 5,916,000 36,360,828 $13,548,212 9,776,299 65,601,339 Other assets 241,000 102,278 760,458 1,103,736 Total current assets 6,871,000 58,866,118 13,548,212 41,857,624 121,142,954 Investments Endowment investments 214,762,000 222,672,248 113,710,602 164,177,009 715,321,859 Other investments 280,545,000 46,215,332 53,193,380 17,672,634 397.626,346 Total investments 495,307,000 268,887,580 166,903,982 181,849,643 1,112,948,205 Other assets Accounts receivable, net 2,910,000 32,069,335 12,115,645 7,306,245 54,401,225 Capital assets, net 10,009,000 100,000 5,788,292 15,897,292 Other assets 432,000 1,008,450 5,020,298 8,367,419 14,828,167 Total other assets 13,351,000 33,177,785 17,135,943 21,461,956 85,126,684 Total assets $515,529,000 $360,931,483 $197,588,137 $245,169,223 $1,319,217,843 LIABILITIES Current liabilities Accounts payable & accrued expenses $2,824,000 $1,834,267 $3,108,741 $2,832,810 $10,599,818 Long-term debt, current 1,056,350 1,056,350 Deferred income 1,470,000 755,546 6.552,116 8,777,662 Total current liabilities 4,294,000 2,589,813 3,108,741 10,441,276 20,433,830 Other liabilities Other payables 43,993,109 3,314,392 1,002,708 3,716,781 52,026,990 Due to primary government 190,171.891 190,171.891 Long-term debt, noncurrent 2,272,485 2,272,485 Total other liabilities 234,165,000 3,314,392 1,002,708 5,989,266 244,471,366 Total liabilities 238,459,000 5,904,205 4,111,449 16,430,542 264,905,196 NET ASSETS Unrestricted 65,951,000 12,854,849 19,113,761 31,391,289 129,310,899 Temporarily restricted:

Scholarships & fellowships 19,388,000 34,658,000 6.474,949 12,309,934 72,830,883 Research 12,558,000 8,394,000 7,493,869 558,717 29,004,586 Other 31,314,000 95,479,256 47,174,676 64,349,615 238,317,547 Permanently restricted:

Scholarships & fellowships 82,177,000 65,623,000 26,071,731 70,416,205 244,287,936 Research 2,291,000 1.055,000 1,003,631 251,323 4,600,954 Other 63,391,000 136,963,173 86.144,071 49,461,598 335.959,842 Total net assets 277,070,000 355,027,278 193,476,688 228,738,681 1,054,312,647 Total liabilities and net assets $515,529,000 $360,931,483 $197,588,137 $245,169,223 $1,319,217,843 See accompanying notes.

13

UNIVERSITY SYSTEM OF MARYLAND STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEARS ENDED JUNE 30, 2013 AND 2012 Year ended June 30, Year ended June 30, 2013 2012 OPERATING REVENUES:

Tuition and fees $1,433,382,221 $1,403,570,031 Less: scholarship allowances (245,612,865) $1,187,769,356 (236,902,741) $1,166,667,290 Federal grants and contracts 691.994,706 723,008,546 State and local grants and contracts 188,065,280 175,216,123 Nongovernmental grants and contracts 217,198,445 211.477,887 Sales and services of educational departments 287,007,719 257,697,032 Auxiliary enterprises:

Residential facilities 163,147,129 161,811,133 Less: scholarship allowances (13,346,944) 149,800,185 (11,592.037) 150,219,096 Dining facilities 115,694,298 114,536,929 Less: scholarship allowances (8,165,031) 107,529,267 (6,863,867) 107,673,062 Intercollegiate athletics 95,851,126 97,424,482 Less: scholarship allowances (4,603,108) 91,248,018 (4,233,267) 93,191,215 Bookstore 27,778,782 28,816,802 Less: scholarship allowances (1,599,367) 26,179,415 (1,530,243) 27,286,559 Parking facilities 38,875,667 41,176,924 Other auxiliary enterprises revenues 137,815,456 128,602,143 Less: scholarship allowances 137,775,593 (37,786) 128,564,357 Other operating revenues 61.658,055 57,953,000 Total operating revenues 3,185,101,706 3,140,131,091 OPERATING EXPENSES:

Instruction 1,139,913,339 1,101,099,773 Research 931,958,951 922,874,070 Public service 152,996,481 157,554,254 Academic support 411,613,583 380,187,264 Student services 198,424,948 192,285,983 Institutional support 386,575,951 364,278,425 Operation and maintenance of plant 298,788,447 316,887,436 Scholarships and fellowships 100,959,500 90,510,504 Auxiliary enterprises:

Residential facilities 136,208,180 119,746,524 Dining facilities 105,843,280 104,886,987 Intercollegiate athletics 89,937,185 94,824,576 Bookstore 27,352,051 26,841,606 Parking facilities 25,342,513 25,942,018 Other auxiliary enterprises expenses 114,240,224 108,301,833 Hospital 173,184,262 155,205,830 Total operating expenses 4,293,338,895 4,161,427,083 Operating loss (1,108,237,189) (1,021,295,992)

NONOPERATING REVENUES (EXPENSES):

State appropriations 1,070,834,339 1,063,371,086 Pell grants 134,134,086 131,092,951 Gifts 44,631,760 42,770,704 Investment income 33,695,044 22,873,739 Less: Investment expense (703,636) 32,991,408 (734,646) 22,139,093 Interest on indebtedness (45,504,869) (43,587,538)

Other revenues, (expenses), gains and (losses) 45,978,162 10,636,788 Total net nonoperating revenues 1,283,064.886 1.226,423.084 Income before other revenues 174,827,697 205,127,092 OTHER REVENUES:

Capital appropriations 149,213,513 172,854,822 Capital gifts and grants 38,107,205 6,689,307 Additions to permanent endowments 2,605,624 2,213,339 Total other revenues 189,926,342 181,757,468 Increase In net position 364,754,039 386,884,560 Net position - beginning of year 5,058,483,979 4,671,599,419 Net position - end of year $5,423,238,018 $5,058,483,979 See accompanying notes.

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UNIVERSITY SYSTEM OF MARYLAND COMBINING STATEMENT OF NET ACTIVITIES, COMPONENT UNITS YEAR ENDED JUNE 30, 2013 Major Component Units University University of University System of Maryland Maryland of Maryland College Park Baltimore Total Nonmajor Totnl Foundation Inc Foundation Inc Foundation Inc Com onent Units Total CHANGES IN UNRESTRICTED NET ASSETS Revenues Contributions & grants $2,263,000 $8,109,072 $3,997,393 $14,369,465 Investment income 3,892,000 $4,769,084 556,284 3,441,533 12,658.901 Other income 4,578,000 1,134,081 412,521 7,868,394 13,992.996 Assets released from restrictions ....... - -,145,149 14.64.,-8 30.703.689 101.660.796 Total revenues 27,895,000 45,049,314 23,726,835 46,011,009 142,682,158 Expenses Program 21,252,681 46,345,339 20,184,448 36.907,747 124,690,215 General & administrative 5,052,000 1,107,025 1,595,456 3.492.784 11,247,265 Fundraising 4,792,000 185,935 950,643 1,106,068 7,034,646 Other expense 2,560,534 2,560,534 Total expenses 31,096,681 47,638,299 22,730,547 44"067,133 145,532,660 Transfer per Board resolution (18.319) 18,319 Change in unrestricted net assets (3,220,000) (2,588,985) 1,014,607 1,943,876 (2,850,502)

CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Contributions & grants 10,595,000 27,344,817 15,092,229 15,800,348 68,832,394 Investment income (loss) 8,663,000 12,562,037 9,408,615 15,982,887 46,616,539 Other income (loss) (364.965) 1,488,871 1.123,906 Assets released from restrictions (17,162,000) (38,945,817) (14,648,958) (31,439,473) (102,196,248)

Transfer per Board resolution (20,000) 20,000 Change in temporarily restricted net assets 2,076,000 596,072 9,871,886 1,832,633 14,376,591 CHANGES IN PERMANENTLY RESTRICTED NET ASSETS Contributions & grants 7,762,000 7,629,855 9,851,945 4,737,749 29,981,549 Investment income (toss) 4.032,000 1,425,659 5.457,659 Other income (loss) 91,045 15,443 106,488 Assets released from restrictions (200.332) 735,784 535,452 Change in permanently restricted net assets 11,794,000 7,520,568 9,851,945 6,914,635 36,081,148 Total change in net assets 10,650,000 5,527,655 20,738,438 10,691,144 47,607,237 Net assets - beginning of year 277,070,000 355,027,278 193,476,688 228,738,681 1,054,312,647 Net assets - end of year $287,720,000 $360,554,933 $214.215,126 $239,429,825 $1,101,919,884 See accompanying notes.

15

UNIVERSITY SYSTEM OF MARYLAND COMBINING STATEMENT OF NET ACTIVITIES, COMPONENT UNITS YEAR ENDED JUNE 30, 2012 Major Component Units University University of University System of Maryland Maryland of Maryland College Park Baltimore Total Nonmajor Foundation, Inc. Foundation, Inc. Foundation, Inc. Component Units Total CHANGES IN UNRESTRICTED NET ASSETS Revenues Contributions & grants $3,945,000 $39,100 $7,044,715 $5,783,247 $16,812,062 Investment income 3,210,000 4,829.499 1,836,688 346,300 10,222,487 Other income 5,845,000 2,875,995 579,053 8,097,212 17,397,260 Assets released from restrictions 20,507,000 47,564,240 14,395,731 15,222,535 97,689,506 Total revenues 33,507,000 55,308,834 23,856,187 29,449,294 142,121,315 Expenses Program 21,358,499 49,246,012 19,179,192 23,484,690 113,268,393 General & administrative 4,795,000 1,046,455 1,472,371 4,359,261 11,673,087 Fundraising 3,428,000 244,760 579,756 1,163,823 5.416,339 Other expense 5,433,931 1.560,083 6,994,014 Total expenses 29,581,499 55,971,158 21,231,319 30,567,857 137,351,833 Transfer per Board resolution (13,501) 13,501 Change in unrestricted net assets 3,912,000 (662,324) 2,638,369 (1,118,563) 4,769,482 CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Contributions & grants 9,153,000 33,051.104 16,679,090 16,539,624 75,422,818 Investment income (loss) 9,608,068 (1,690,988) 243,130 (286,673) 7,873,537 Other income (loss) (332,074) 1,155,070 822,996 Assets released from restrictions (20,507,000) (48,055,862) (14,395,731) (15,627,815) (98.586,408)

Transfer per Board resolution (520.068) 471,208 48,860 Change in temporarily restricted net assets (2,266,000) (16,556,612) 2,575,349 1,780,206 (14,467,057)

CHANGES IN PERMANENTLY RESTRICTED NET ASSETS Contributions & grants 2,077,000 9,786,721 10,178,016 3,646,171 25.687,908 Investment income (loss) (9.941,000) 94,284 (9,846,716)

Other income (loss) 3,000 (152,340) 13,800 (135,540)

Assets released from restrictions 491,622 405,280 896.902 Change in permanently restricted net assets (7,861,000) 10,126,003 10,178,016 4,159,535 16,602,554 Total change in net assets (6,215,000) (7,092,933) 15,391,734 4,821,178 6,904,979 Net assets - beginning of year 283,285,000 362,120,211 178,084,954 223,917,503 1,047,407,668 Net assets - end of year $277,070,000 $355,027,278 $193,476,688 $228,738,681 $1,054,312,647 See accompanying notes.

16

UNIVERSITY SYSTEM OF MARYLAND STATEMENT OF CASH FLOWS YEARS ENDED JUNE 30, 2013 AND 2012 Years ended June 30, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees $1,187,346,510 $1,162,560,692 Research contracts and grants 1,125,325,398 1,118,949,727 Payments to employees (2,809,241,146) (2,714.062,702)

Payments to suppliers and contractors (1,175,107,072) (1,161.756,018)

Loans issued to students (9,332,750) (12,811.230)

Coltlections of loans to students 10,017,321 10,818,076 Auxiliary enterprises:

Residential facilities 130,380,620 124,951,037 Dining facilities 107,507,187 107,417,002 Intercollegiate athletics 72,164,684 92,146,351 Bookstore 25,998,462 33,473,871 Parking facilities 38,882,727 40,264,930 Other 137,423,886 128,940,543 Other receipts 407,644,252 383,627,098 Net cash used by operating activities (750.989,921) (685,480,623)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State appropriations 1,070.834,339 1,063,371,086 Gifts and grants received for other than capital purposes:

Private gifts for endowment purposes 2,605,624 948.423 Pelt grants 134.134,086 131,092.951 Net cash provided by noncapital financing activities 1.207,574,049 1,195.412,460 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds of capital debt 186,517,107 241,423,290 Capital appropriations 149,213,513 172,231,887 Capital grants and gifts received 23,027,912 5,746.968 Proceeds from sales of capital assets 1,870,459 2,950,976 Purchases of capital assets (516,053,770) (485,775,230)

Principal paid on debt and capital leases (156,040,603) (193,727,596)

Interest paid on debt and capital leases (53,017,193) (51,011,102)

Net cash used by capital and related financing activities (364,482,575) (308,160,807)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales and maturities of investments 33,218,570 47,602,393 Interest on investments 18,610,882 20,909,372 Investment expense (927,297) (734.646)

Purchases of investments (585.434) (23,275,053)

Net cash provided by investing activities 50,316.721 44,502,066 Net Increase in cash and cash equivalents 142,418.274 246,273,096 Cash and cash equivalents - beginning of the year 1.729,363,244 1,483,090.148

$1,r729,363,244 Cash and cash equivalents -end of the year SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Gifts and transfer of capital assets $12.712,643 $685,885 Changes in unrealized appreciation on investments 13,383.800 533,226 Capital assets related to service concession arrangements 457,423,762 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:

Operating loss ($1,108,237.189) ($1.021,295,992)

Adjustments to reconcile operating loss to net cash used by operating activities:

Depreciation expense 264,593,814 260,357,159 Amortization of deferred service concession arrangement receipts (51,689,376) (25,022.708)

Gifts and other revenues, (expenses), gains, and (losses) 90,609,922 53,407,492 Changes in assets and liabilities:

Accounts receivables, net 13,511,628 16,203,449 Inventories 1,617,795 (185,850)

Prepaid expenses and deferred charges (1,945,767) 1,114,745 Notes receivable 1,931,921 (882,903)

Accounts payable, net and accrued liabilities 45,888,518 26.970,585 Deferred revenue (14,345,128) 2,097,381 Accrued vacation 7,477,941 664,254 Accrued workers' compensation (404,000) 1,091,765

($685,480,623)

Net cash used by operating activities ($750,989,921)

See accompanying notes.

17

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

1. ORGANIZATION AND PURPOSE The University System of Maryland (the System) is a component unit of the State of Maryland (the State) and is governed by its Board of Regents (the Board).

The System comprises eleven degree-granting institutions, one research entity and an administrative unit. Its degree-granting institutions provide a full range of undergraduate, graduate, professional and continuing education opportunities for students. Its research and public service entities conduct basic and applied research, and transfer new technology to constituencies. The administrative unit includes the System Chancellor and staff who serve as support to the Board.

2.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed by the System are summarized below.

Reporting Entity - The financial statements of the System include all funds and organizations included in the legal entity encompassed by the System, and other legally separate entities for which the System is financially accountable or which otherwise meet the criteria established by the Governmental Accounting Standards Board (GASB). Amounts held in System accounts on behalf of separately organized entities are included as assets, with a corresponding liability reflected.

The System has recognized, as affiliated foundations, nineteen organizations created and operated in support of the interests of the System or any of the institutions that comprise the System. Each of these affiliated foundations are considered to (1) receive or hold economic resources that are to be used for the benefit of the System or its institutions, (2) receive or hold economic resources which the System or its institutions are entitled to or otherwise have the ability to access, and (3) are significant to the financial statements of the System or the institutions with which the foundation is affiliated. As a result, each of the eighteen affiliated foundations meet the criteria for inclusion in the financial reporting entity, and thus each of the affiliated foundations are shown in a discrete presentation.

The University System of Maryland Foundation, Inc., the University of Maryland College Park Foundation, Inc.,

and the University of Maryland Baltimore Foundation, Inc. are considered major component units due to the significance of the financial statement amounts to the System and its financial statements.

18

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 The following affiliated foundations are considered nonmajor component units:

Medical Alumni Association of the University of Maryland, Inc.

M Club Foundation, University of Maryland, Inc.

The Robert H. Smith School of Business Foundation, Inc.

Harry R. Hughes Center for Agro-Ecology, Inc.

Bowie State University Foundation, Inc.

Towson University Foundation, Inc.

Frostburg State University Foundation, Inc.

Coppin State University Development Foundation, Inc.

University of Baltimore Foundation, Inc. and University Properties, Inc.

Salisbury University Foundation, Inc.

The Ward Foundation, Inc.

The Maryland 4-H Foundation, Inc.

University Research Corporation International, Inc.

The Maryland Center @ Bowie State University, Inc.

University of Maryland, Baltimore County Research Park Corporation, Inc.

Maryland Hawk Corporation During the years ended June 30, 2013 and 2012, the foundations distributed approximately $106,696,000 and

$96,454,000 respectively, to the System including its institutions for both restricted and unrestricted purposes.

All of the System's component units are nongovernmental entities that prepare financial statements using the principals and accounting standards promulgated by the Financial Accounting Standards Board (FASB).

Complete financial statements of the affiliated foundations may be requested from the System's Office of the Comptroller at 3300 Metzerott Road, Adelphi, MD 20783.

The University of Maryland, Baltimore provides services to hospital and critical care facilities under contractual arrangements with the State. The expenditures relating to these activities are reported within the hospital functional category. The revenue derived from these activities are reported primarily as contract and grant revenue.

19

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Measurement Focus and Basis of Accounting - For financial reporting purposes, the System is considered a special-purpose government engaged only in business-type activities. Accordingly, the System's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenue is recognized when earned, and expenses are recorded when an obligation has been incurred.

Application of Accounting Standards - The System has the option to apply all FASB pronouncements issued after November 30, 1989, except for instances in which a pronouncement of the FASB conflicts with pronouncements of the GASB. The System has elected to not apply FASB pronouncements issued after November 30, 1989.

When an expense is incurred that can be paid using either restricted or unrestricted resources, the System's policy is to first apply the expense toward restricted resources and then toward unrestricted resources.

Operating and Nonoperating Revenue and Expenses - Operating revenue and expenses are generally associated with those activities that relate directly to the core activities of instruction, research and public service that form the essence of the System's mission. Nonoperating revenue, expenses, gains and losses represent amounts that recur regularly but are not included in operating revenue and expenses. Generally accepted accounting principles defines State appropriations as nonoperating revenue.

Cash and Cash Equivalents - Cash and cash equivalents include demand deposits with financial institutions, as well as highly liquid investments that are both readily convertible to known amounts of cash and are so near to their maturity that they present an insignificant risk of changes in value because of changes in interest rates.

Only investments with an original maturity of three months or less satisfy the criteria for cash equivalents.

Investments - Investments are valued at fair market value.

Inventories - Inventories are valued at cost, determined under the first-in, first-out method, which is not in excess of net realizable value.

20

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Capital Assets - Property, plant, equipment, and books and materials which are part of a catalogued library, are stated principally at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. Personal property with an original cost of more than $5,000 and outlays for real property in excess of

$250,000 are considered capital assets.

Generally, the cost of all capital assets other than land, certain inexhaustible improvements to land, and collections of works of art are assigned to expense over a set of useful lives specific to the type of asset, using a straight-line method of depreciation. The range of useful lives used for the major categories of capital assets is:

Infrastructure and land improvements 20 - 25 years Buildings and improvements 20 - 40 years Contents 3 - 15 years Depreciation expense is assigned to program expense based on the nature and use of the capital asset.

Deferred Outflows/Inflows of Resources - In adition to assets, the statement of financial position wil sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resource, represents a consumption of net position that applies to a futher period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.

Reclassifications - Certain amounts for the year ended June 30, 2012, have been reclassified to conform with the presentation for the year ended June 30, 2013.

Pending change in accounting principles - In March 2012, the GASB issued GASB Statement #65, Items Previously Reported as Assets and Liabilities. GASB Statement #65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The provisions of this Statement are effective for financial periods beginning after December 15, 2012.

In March 2012, the GASB also issued GASB Statement #66, Technical Corrections-2012-anamendment of GASB Statements No. 10 and No. 62, which resolves conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.

21

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 The provisions of GASB Statement #66 are effective for financial periods beginning after December 15, 2012.

In June 2012, GASB Statement #67, Financial Reporting for Pension Plan-an amendment of GASB Statement No. 25 was issued. This Statement establishes accounting and financial reporting requirements related to pensions. The provisions related to this Statement are effective for financial periods beginning after June 15, 2013.

In June 2012, GASB Statement #68, Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27 was issued, providing new financial accounting recognition and presentation guidance relating to pension obligations in employer financial statements. The provisions of GASB Statement #68 are effective for financial periods beginning after June 15, 2014 and are expected to have a significant impact on the System's financial statements.

In January 2013, GASB Statement #69, Government Combinations and Disposals of Government Operations was issued. This Statement requires disclosures to be made about government combinantions and disposals of operations. The provisions of this Statement are effective for financial periods beginning after December 15, 2013.

In April 2013, GASB Statement #70, Accounting and Financial Reporting for Nonexchange Financial Guaranteeswas issued. The objective of this Statement is to improve accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees. This provisions of this Statement are effective for financial statements for reporting beginning after June 15, 2013.

The System is in the process of assessing the impact of these new accounting standards and will present its financial statements for the year ended June 30, 2014, taking into account the requirements of GASB Statement #65, #66, #67 and #70 and will present its financial statements for the year ending June 30, 2015, taking into account the requirements of GASB Statement #68 and #69.

3. CASH AND INVESTMENTS Cash and cash equivalents As of June 30, unrestricted cash and cash equivalents consisted of the following:

2013 2012 Cash and short-term investments on deposit with the State Treasurer $1,776,421,823 $1,607,903,103 Demand and time deposits 43,968,706 45,786,522 Total $1,820,390,529 $1,653,689,625 The System does not have a formal policy addressing custodial credit risk.

22

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 As of June 30, 2013 and 2012, the carrying amount of the System's demand and time deposits was

$43,968,706 and $45,786,522, as compared to bank balances of $48,125,276 and $47,408,129, respectively.

The difference is primarily caused by items in-transit. Of the bank balances, $41,580,724 and $41,508,593 was covered by Federal, private or foreign national government depository insurance, or was collateralized by a pledge of United States Treasury obligations held by the System's agents in the name of the System, and

$6,544,552 and $5,899,536 was uninsured and uncollateralized as of June 30, 2013 and 2012, respectively.

The Annotated Code of Maryland requires the System to maintain its cash balances on deposit with the State Treasurer, except for demand and time deposit accounts established to satisfy urgent cash requirements, assets associated with endowment funds or proceeds of System financing arrangements. The State Treasurer maintains State funds on a pooled basis in accordance with the Annotated Code of Maryland.

Money market accounts used for unrestricted cash and cash equivalents are not rated by rating agencies.

The System has entered into agreements with trustees for the benefit and security of registered holders of certain debt obligations issued by the System. These agreements permit the System to invest amounts maintained in trust funds in:

" United States Treasury and agency obligations.

• Deposits, having a maturity of no more than 365 days, in any bank, savings institution or trust company to the extent such deposits are fully insured or collateralized.

" Commercial paper rated at least A-1 by Standard & Poor's Corporation (Standard & Poor's) and P-1 by Moody's Investors Service, Inc. (Moody's) having a maturity of no more than 270 days.

" Repurchase agreements.

" Obligations of any state or political subdivision rated by Standard & Poor's and Moody's in one of its two highest rating categories.

" Corporate obligations rated AAA by Standard & Poor's and Aaa by Moody's.

As of June 30, restricted cash and cash equivalents included:

2013 2012 Money market accounts - endowment fund uninvested cash $48,147 $52,280 Money market accounts - unspent proceeds of debt 51,342,842 75,621,339 Total $51,390,989 $75,673,619 23

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Unspent proceeds and other restricted debt-related trust account balances and endowment fund uninvested cash balances are maintained in money market accounts rated AAA or equivalent by rating agencies.

Investments In July 2005, the System transferred title to its endowment investments, approximately $197 million in fair market value at the time of the transfer, to the University System of Maryland Foundation, Inc., (USMF) in exchange for an equivalent proportionate interest in the long-term investment portfolio managed by the University System of Maryland Foundation, Inc.

In June 2011, the System entered into a new agreement with the USMF. Beginning with fiscal year 2012, the per annum fee to be paid to the USMF for investment management services is to be 0.37% of the beginning of the year market value of managed funds. The agreement is for a term of five years, with renewable two-year extensions at the option of the System, unless notice of intent to terminate the arrangement is provided within 180 days prior to the expiration of the term. In the event of termination of the arrangement, funds invested with individual investment managers that have commitments from the University System of Maryland Foundation, Inc., to maintain investments for certain minimum time periods may not be returned to the System until those constraints have been satisfied.

Investments in the University System of Maryland Foundation, Inc. are accounted for as an open-ended mutual fund. Asset values, investment gains and losses, and other portfolio-wide transactions are allocated based on the number of units or shares that each fund has relative to the total number of shares or units.

Assets associated with the System's investments are reported as Endowment Investments on the Balance Sheet of the University System of Maryland, and Investments on the Balance Sheet of the University System of Maryland Foundation, Inc., with a corresponding liability reflecting the fair value of the System's interest in the investment portfolio.

The System discloses investment risks, below.

Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.

The System has no formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Custodial credit risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the System would not be able to recover the value of its investments or collateral securities that are 24

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 in the possession of an outside party. Investment securities are exposed to custodial risk if the securities are uninsured, are not registered in the name of the System, and are held by either (a) the counterparty or (b) the counterparty's trust department or agent but not in the System's name.

Endowment investments managed by the University System of Maryland Foundation, Inc. are uninsured and are not registered in the name of the System, as they are a part of a commingled portfolio comprising proportionate interests of several different entities.

None of the System's restricted investments are exposed to custodial credit risk.

Credit risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The System is exposed to credit risk on its Endowment investments managed by the University System of Maryland Foundation, Inc.

As of June 30, 2012, commercial paper included in restricted investments held by the System is rated P-1 by Moody's and A-1 or better by Standard & Poor's. As of June 30, 2013, the System does not have restricted investments.

Foreign currency risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment.

The System is not exposed to any material amount of foreign currency risk.

As of June 30, 2013, the System did not have any restricted investments. As of June 30, 2012, the System had the following investments, which individually represent 5% or more of total investments:

2012 Portion of Fair value total Federal Home Loan Bank $12,310,738 6%

25

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Endowment investments As of June 30, endowment investments consisted of the following, stated at fair value:

2013 2012 Corporate debt $17,625 $17,625 Corporate equities 83,229 68,310 Certificate of deposits 22,536 21,895 Assets invested with University System of Maryland Foundation, Inc. 192,797,232 190,171,891 Total $192,920,622 $190,279,721 As of June 30, the balances of the fund groups making up the Endowment were as follows:

2013 2012 Pure endowments $128,566,255 $124,854,909 Funds functioning as endowments 63,511,672 62,405,123 Term endowments 3,502,470 3,019,689 Total $195,580,397 $190,279,721 Endowment fund balances includes $2,659,775 held with the State Treasurer as of June 30, 2013.

Assets associated with endowment funds are invested in accordance with the terms of donor agreements in those instances where such agreements place constraints on allowable investments.

A spending rule has been adopted by the Board to ensure that endowment funds retain a consistent level of purchasing power over time. The spending rule provides for a target rate of spending of 4.75% of a rolling twelve-quarter average market value of the endowment fund. The spending rule is reviewed periodically by the Finance Committee of the Board. Net appreciation on investments of the pure endowment funds totaled

$92,262,195 and $91,156,471 as of June 30, 2013 and 2012, respectively. Reinvestments of net appreciation are considered to be subject to donor spending restrictions, and accordingly, are reflected as a component of restricted, expendable net assets.

The Maryland Uniform Prudent Management of Institutional Funds Act governs the use of net appreciation, both realized and unrealized, of endowment investments. This law allows a governing board to appropriate for expenditure only those amounts in excess of the historic gift amount that are prudent, taking into consideration long and short term needs of the institution in carrying out its educational, religious, charitable, or other eleemosynary purposes, its present and anticipated financial requirements, expected total return on its investments, price level trends, and general economic conditions.

26

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Other investments Other investments include a partnership interest in a real estate partnership formed to facilitate the long-term development of a parcel of land owned by the University of Maryland College Park. The carrying value of other investments is assessed on an annual basis by reference to the reported value of the University's partnership interest.

Restricted investments Restricted investments represent unspent proceeds and other debt-related trust account balances invested in U.S. government and agency obligations. As of June 30, 2013, the System held no restricted investments.

As of June 30, 2012, restricted investments consisted of:

Investment maturities Investment Fair value - less than 1 year maturities

- 1 year and greater U.S. government and agency obligations $15,875,4 438 $15,875,438 Commercial Paper 5,999,8380 $5,999,880 Total $21,875,3318 $5,999,880 $15,875,438 Allocation of investment income Investment income is assigned to the accounting funds, including endowments, in proportions associated with investments held by the various accounting funds. For the years ended June 30, 2013 and 2012, investment income attributed to unrestricted funds and restricted funds was:

2013 2012 Unrestricted funds $23,634,631 $21,850,807 Restricted funds 10,060,413 1,022,932 Total investment income $33,695,044 $22,873,739 27

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Major component units The University System of Maryland Foundation, Inc. invests funds on behalf of the System and several other System component units. The majority of the amounts reported as investments by the University of Maryland College Park Foundation, Inc., and the University of Maryland Baltimore Foundation, Inc. are included in the investments reported by the University System of Maryland Foundation, Inc.

As of June 30, 2013 and 2012, major component unit investments, recorded at fair value, were:

University System of Maryland Foundation, Inc.

2013 2012 Money market funds and short-term investments $137,069,000 $74,849,000 Corporate and municipal bonds 21,468,000 40,024,000 Equities and mutual funds 113,637,000 90,791,000 U.S. treasury notes and bonds 3,579,000 7,085,000 U.S. agencies 1,313,000 6,689,000 Collateral mortgage obligations and asset and mortgage-backed securities 8,511,000 22,483,000 Absolute return 227,626,000 212,552,000 Long and short equity hedge funds 237,119,000 208,686,000 Private capital 99,257,000 107,827,000 Real estate and energy and natural resources 145,087,000 170,824,000 Total 994,666,000 941,810,000 Due to other foundations (484,963,000) (446,503,000)

Total Investments 509,703,000 495,307,000 Due to primary government (192,797,232) (190,171,891)

Total University System of Maryland Foundation $316,905,768 $305,135,109 Investments 28

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 University of Maryland College Park Foundation, Inc.

2013 2012 Short-term investments $16,075,094 $15,793,686 Cash equivalents and short term securities 436,143 493,378 Mutual funds 4,940,282 4,719,253 Bonds 5,801,000 901,000 Maryland Proton Treatment Center, LLC 1,000,000 Investments in special strategies - USMF 271,928,394 249,360,613 Total 300,180,913 271,267,930 Due to other foundations (2,085,831) (2,380,350)

Total Investments $298.095,082 $268.887,580 University of Maryland Baltimore Foundation, Inc.

2013 2012 Cash equivalents and short term securities $6,249,377 $6,783,824 Commonfund 1,901,920 1,588,795 Lanx stock 1,630,682 1,490,781 Investments in special strategies - USMF 172,042,990 157,040,582 Total Investments $181,824,969 $166,903,982

4. ACCOUNTS RECEIVABLE, NOTES RECEIVABLE, AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts receivable as of June 30, 2013 and 2012, were comprised of:

2013 2012 Tuition and fees $82,420,092 $75,506,944 Contracts and grants 174,552,565 207,842,789 Other 30,489,588 26,299,286 Subtotal 287,462,245 309,649,019 Allowance for doubtful accounts (18,606,429) (27,281,575)

Accounts receivable, net $268,855,816 $282,367,444 29

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Notes receivable as of June 30, 2013 and 2012, were comprised of:

2013 2012 Student loans $72,454,072 $74,167,691 Business development loans 7,282,988 6,948,847 Subtotal 79,737,060 81,116,538 Allowance for doubtful notes (13,441,437) (12,888,994)

Notes receivable, net $66,295,623 $68,227,544 Accounts payable and accrued liabilities as of June 30, 2013 and 2012, were comprised of:

2013 2012 Payroll and benefits $139,109,528 $122,652,668 Suppliers and contractors 131,825,184 115,265,145 Accrued interest payable 10,822,665 10,847,516 Other 28,861,874 23,757,550 Accounts payable and accrued liabilities $310,619,251 $272,522,879 Major component units Accounts receivable include unconditional promises of contributions pledged to the affiliated foundations.

Promised contributions are recorded at a discounted value that reflects the time value of money.

As of June 30, 2013 and 2012, contributions receivable are due as follows:

University System of Maryland Foundation, Inc.

Due Discount rates 2013 2012 Within one year Not applicable $3,972,000 $5,091,000 One to five years 3.25% 4,485,000 1,898,000 More than five years 3.25% 4,000 200,000 8,461,000 7,189,000 Subtotal Pledge discount (502,000) (331,000)

Net contributions receivable $7,959,000 $6,858,000 30

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 University of Maryland, College Park Foundation, Inc.

Due Discount rates 2013 2012 Within one year Not applicable $31,069,381 $41,180,868 Two to five years 2.19% 26,982,877 32,149,724 More than five years 3.25% 4,415,424 7,371,164 Subtotal 62,467,682 80,701,756 Allowance for doubtful accounts (7,082,876) (8,902,869)

Pledge discount (2,231,826) (3,372,575)

Net contributions receivable $53,152,980 $68,426,312 University of Maryland, Baltimore Foundation, Inc.

Due Discount rates 2013 2012 Within one year Not applicable $15,336,117 $12,694,169 Two to five years 1.94% 17,209,797 13,483,280 More than five years 2.59% 64,200 289,054 Subtotal 32,610,114 26,466,503 Allowance for doubtful accounts (1,332,686) (1,106,397)

Pledge discount (1,410,902) (1,361,728)

Net contributions receivable $29,866,526 $23,998,378 31

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

5. CHANGES IN NET CAPITAL ASSETS Changes in net capital assets for the years ended June 30, 2013 and 2012:

June 30, 2011 June 30, 2012 June 30, 2013 Balance Additions Decreases Balance Additions Decreases Balance Capital assets being depreciated:

Infrastructure & Land Improvements $318,881,776 $12,056,846 $330,938,622 $20,785,712 $351,724,334 Buildings & Improvements 4,937,142,980 895,795,711 $11,397,720 5,821,540,971 201,656,419 $1,920,602 6,021,276,788 Contents 1.136,244,493 104,196,112 25,811,450 1.214.629,155 78,091,858 27,689,956 1,265.031,057 Buildings recorded under capital lease agreements 14,629,140 14,629,140 14,629,140 Total capital assets being depreciated 6,406,898,389 1,012,048,669 37,209,170 7,381,737,888 300,533,989 29,610,558 7,652,661,319 Less accumulated depreciation for:

Infrastructure & Land Improvements 151,423,099 13,421,017 164,844,116 13,841,735 178,685,851 Buildings & Improvements 1,816,810,126 164.967,960 8.580,473 1,973,197,613 167,806,191 707,089 2,140,296,715 Contents 792,015,505 81.830,307 23.942,308 849,903,504 81,758,709 25,901,791 905,760,422 Buildings recorded under capital lease agreements 2,895,375 137,875 3,033,250 1,187,179 4,220,429 Total accumulated depreciation 2,763,144.105 260,357,159 32,522,781 2,990,978,483 264,593,814 26,608,880 3,228,963,417 Total capital assets being depreciated, net 3,643,754,284 751,691,510 4,686,389 4,390,759,405 35,940,175 3,001,678 4,423,697,902 Capital assets not being depreciated:

Land 136,295,375 6.704,227 142,999,602 10,142,726 153,142,328 Contents 22,504.959 184,337 22,689,296 2,734,181 25,602 25,397,875 Construction in progress 526,813,487 354.038,439 423,628,400 457,223,526 415,553,707 201,667,158 671,110,075 Total capital assets not being depreciated 685,613,821 360.927,003 423,628,400 622,912.424 428,430,614 201,692,760 849,650,278 Capital assets, net $4,329,368,105 $1,112,618,513 $428,314,789 $5,013,671,829 $464,370,789 $204,694,438 $5,273,348,180 Interest expense of $966,298 and $239,973 associated with projects not yet completed was capitalized and recorded as construction in progress during the years ended June 30, 2013, and 2012 respectively.

32

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

6. SERVICE CONCESSION ARRANGEMENTS FOR STUDENT HOUSING The System implemented GASB Statement #60 'Accounting and Financial Reporting for Service Concession Arrangements' as of July 1, 2011 and has restated balances for June 30, 2012 as appropriate.

The University System of Maryland has entered into long-term leases of university-owned land, and other agreements with a quasi-governmental issuer of debt, developer to build, and an operator to manage, student housing projects at seven of the System's institutions. These agreements satisfy the criteria established to be considered service concession arrangements (SCAs).

Under the terms of the ground leases, the System transfers rights to university-owned property for a term of 40 years to the quasi-governmental issuer of debt (the 'project owner'). The project owner contracts with a developer to build student housing on the property, as well as an operator that manages the facility on behalf of the owner. Each student housing project is financed using tax-exempt debt that limits the use of the project to uses that support the institution. The owner of the project charges and collects rent from the students, and pays the operating costs and debt service associated with the project. The residual cash flow from the project, after paying all operating costs and management fees, is paid to the university as the ground lease payment.

The institution has the ability to approve what services the operator is required to provide and the rates that can be charged.

Upon final payment of the outstanding debt associated with the project, or upon termination of the ground lease, whichever is sooner, the ownership of the project transfers to the university and the owner's rights to use the land reverts to the university.

As of June 30, the following balances associated with service concession agreements are reflected on the Balance Sheet:

2013 2012 Capital assets, net $389,641,837 $441,994,338 Deferred service concession arrangement receipts 380,711,678 432,401,054 33

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

7. REVENUE BONDS AND NOTES PAYABLE The System finances the construction, renovation and acquisition of certain facilities and equipment through the issuance of debt obligations. State law limits the aggregate principal amount of debt outstanding and the present value of future minimum lease payments on capital lease obligations for real property to no more than

$1,400,000,000.

Revenue bonds and notes payable consisted of the following as of June 30, 2013 and 2012:

2013 2012 Revenue Bonds, net $1,108,158,762 $1,061,819,442 Revolving Loan Program Bonds 35,000,000 50,000,000 Certificates of Participation 2,800,000 Other 40,209,544 41,973,756 Revenue bonds and notes payable, net $1,183,368,306 $1,156,593,198 Auxiliary Facility and Tuition Revenue Bonds As of June 30, 2013, Auxiliary Facility and Tuition Revenue Bonds (Revenue Bonds) consisted of the following:

Principal Interest Rates Maturity Dates Outstanding 2003 Series A & B 4.0% - 5.0% 2014-2016 $11,785,000 2004 Series A & B 4.5% - 5.7% 2014-2016 3,165,000 2005 Series A 4.0% - 5.0% 2014-2021 89,535,000 2006 Series A 5.0% 2013-2017 17,780,000 2007 Refunding Series A 4.0% - 5.0% 2013-2023 75,345,000 2008 Series A 4.0%-5.0% 2014-2028 74,855,000 2008 Refunding Series B 3.5% - 4.0% 2013-2017 11,190,000 2009 Series A & B 4.0%-6.0% 2014-2029 85,480,000 2009 Refunding Series C 2.5% - 4.0% 2013-2019 18,380,000 2009 Refunding Series D 3.0% - 4.0% 2013-2022 51,510,000 2010 Series A & B 2.5% - 5.4% 2014-2030 106,750,000 2010 Series C 2.0% - 4.0% 2014-2023 44,775,000 2010 Series D & E 3.0% - 5.8% 2014-2030 106,110,000 2011 Series A 3.0% - 5.0% 2014-2031 107,225,000 2011 Refunding Series B 3.0% - 5.0% 2015-2024 38,075,000 2012 Refunding Series A & B 2.0%-4.0% 2014-2024 59,500,000 2012 Series C & D 2.0% - 5.0% 2014-2032 167,270,000 1,068,730,000 Unamortized discounts, premiums and refunding adjustments 39,428,762 Revenue bonds, net $1,108,158,762 34

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Revenue Bonds have been issued pursuant to an Indenture of Trust, an agreement entered into with a trustee for the benefit of holders of Revenue Bonds. Pursuant to the Indenture of Trust, the System has agreed to charge and collect tuition revenues and net auxiliary facility fees in an amount that is not less than 200% of the maximum annual debt service on Revenue Bonds.

Revenue Bonds issued during the years ended June 30, 2013 and 2012, including the results of any advance refunding of previously-issued debt, are as follows:

Reduction Par value of in future Deferred Economic Date of Par value of Premium on debt debt amount on gain or Debt issuance issue debt issued issuance refunded service refunding (loss) 2011 Series A 10/6/2011 $115,000,000 $11,216,462 2011 Refunding Series B 10/6/2011 38,075,000 3,641,915 $38,750,000 $1,631,266 $1,043,816 $1,357,494 2012 Refunding Series A &B 2/9/2012 70,825,000 4,419,184 69,735,000 9,560,388 5,116,958 9,054,411 2012 Series C 10/6/2012 115,000,000 6,582,587 2012 Refunding Series D 10/6/2012 54,005,000 10,820,564 55,420,000 6,335,509 7,471,867 5,281,851 The System has issued series of revenue bonds that qualify for participation in the Build America Bonds program, a provision of the American Recovery and Reinvestment Act of 2009. The provisions of the Build America Bonds provide that the Federal government will reimburse issuers of Build America Bonds an amount equal to 35% of the interest payments made to bondholders. The 2009 Series B, the 2010 Series B, and 2010 Series E bonds have been issued to comply with the requirements of the Build America Bonds program, the System has been receiving the interest payment reimbursements from the Federal government, and the System expects that these bonds will continue to qualify under the program in the future. The interest amounts reflected in the future principal and interest payments schedule on the following page reflect the System's obligations to bondholders, and have not been reduced for any expectation of interest reimbursement from the Federal government under the Build America Bonds program.

As of June 30, 2013, previously issued debt removed from the System's financial statements through advance refunding transactions still outstanding was $113,880,000.

As of June 30, 2013 and 2012, cash and cash equivalents and investments restricted by the terms of the Indenture of Trust totaled $34,925,663 and $65,202,153, respectively.

35

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Revolving Loan Program Bonds Revolving Loan Program Bonds include debt issued pursuant to an Indenture of Trust, an agreement entered into with a trustee for the benefit of holders of the debt, dated April 1, 1995.

On August 8, 2003, the System issued $65,000,000 of University System of Maryland Revolving Loan Program Bonds, 2003 Series A. The 2003 Series A Bonds were initially issued as auction rate reset securities, meaning interest is calculated on outstanding Revolving Loan Program Bonds using a rate of interest determined through a weekly auction process. In April, 2008, the System purchased $15,000,000 of the auction rate reset securities in response to failed auctions that were occurring for most issuers of auction rate reset securities as a result of the collapse of the credit insurance market. On June 26, 2008, the 2003 Series A Bonds in a principal amount of $50,000,000 were converted from an auction rate mode to a Multiannual Rate. On June 1, 2009, the 2003 Series A Bonds were remarketed for another one year period on a multi-annual interest rate basis at an interest rate of .55%. On June 1, 2010, the securities were successfully remarketed on a multi-annual interest rate basis at an interest rate of 1.50%. On June 1, 2013 the System redeemed $15,000,000 of the 2003 Series A Bonds. The remaining principal balance of

$35,000,000 of the 2003 Series A Bonds was remarketed for five years at a multi-annual interest rate of 1.25%.

As of June 30, 2013 and 2012, cash and cash equivalents in the amount of $16,415,499 and $30,145,543, respectively, was held by the trustee as unspent proceeds of the Revolving Loan Program Bonds.

Other Other debt and notes payable includes amounts borrowed to finance facilities, equipment acquisitions, a marine research vessel and other improvements designed to enhance energy efficiency savings.

The System is subject to Federal arbitrage laws governing the use of proceeds of tax-exempt debt.

36

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Future principal and interest payments as of June 30, 2013, were as follows:

Auxiliary Facility and Tuition Notes Payable and Other Revenue Bonds Long-term Debt Total Years ending June 30, Principal Interest Principal Interest Payments 2014 $72,335,000 $46,607,135 $6,715,151 $1,209,989 $126,867,275 2015 75,880,000 43,638,934 5,565,721 1,109,141 126,193,796 2016 79,595,000 40,273,028 5,061,782 999,926 125,929,736 2017 78,565,000 36,662,184 3,943,791 896,015 120,066,990 2018 77,465,000 33,247,646 2,907,025 1,211,253 114,830,924 2019-2023 351,255,000 117,234,330 37,956,517 5,950,110 512,395,957 2024 - 2028 240,640,000 51,999,024 13,059,557 73,445 305,772,026 2029- 2033 92,995,000 7,511,315 100,506,315 Total $1,068,730,000 $377,173,596 $75,209,544 $11,449,879 $1,532,563,019

8. LEASES Obligations under capital lease agreements The System leases two facilities for the use of the University of Maryland College Park and Towson University under agreements recorded as capital lease obligations. The obligations are recorded at the present value of future minimum lease payments using a discount rate of 6.8% and 3.2%, for the University of Maryland College Park and the Towson University leases, respectively, Future minimum payments on obligations under capital lease agreements as of June 30, 2013, were as follows:

Years ending June 30, Total 2014 $1,602,938 2015 1,635,667 2016 1,669,377 2017 1,704,099 2018 1,739,862 2019-2023 6,571,051 14,922,994 Total future lease payments Less: Interest component (2,512,946)

Obligations under capital lease agreements $12,410,048 37

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Operating leases The System and its constituent units lease facilities and equipment under agreements reported as operating leases. Many of the leases provide for an optional extension of the terms of the agreements and increases in payment amounts based on changes in indices such as the Consumer Price Index.

Future minimum payments on operating leases as of June 30, 2013, were as follows:

Minimum Annual Year endina June 30. Lease Payments 2014 $15,993,779 2015 14,296,123 2016 12,802,735 2017 11,524,076 2018 9,847,538 2019-2023 25,935,708 2024- 2028 7,521,791 Total $97,921,750 Operating lease expenditures for the years ended June 30, 2013 and 2012, were $21,312,289 and

$20,548,836, respectively.

38

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

9. CHANGES IN LONG-TERM LIABILITIES Changes in long-term liabilities for the years ended June 30, 2013 and 2012, were as follows:

June 30, 2011 June 30, 2012 June 30, 2013 Due Within Balance Additions Reductions Balance Addit ions Reductions Balance One Year Accrued vacation costs $175,138,867 $88,799,014 $88,134,760 $175,803,121 $96,:306,968 $88,829,027 $183,281,062 $89,344,370 Accrued workers' compensation 27,543,235 6,548,800 5,457,035 28,635,000 4,717,821 5,121,821 28,231,000 4.375.805 Revenue bonds and notes payahle, net 1.115,178,914 241,422,893 200,008.409 1.158,593,198 193, 870.546 167,095,438 1,183,368,306 79.050,151 Obligations under capital lease agreements 14,043,089 277,430 13,765,659 1,355,611 12,410,048 1,104,394 Total long-term liabilities $1,331,904,105 $336,770,507 $293,877,634 $1,374,796,978 $294, 895,335 $262,401,897 $1,407,290,416 $173,874,720 110.OPERATING EXPENSES BY OBJECT The System reports operating expenses in the Statement of Revenues, Expenses and Changes in Net Assets by program category.

Operating espenses for the years ended June 30. 2013 and 2012, bygrouping of object classification were as follows:

2013 2012 Payments to Payments to Suppliers, Suppliers, Contractors and Contractors and Employee Costs Others Depreciation Total Employee Costs Others Depreciation Total Instruction $981,476,896 $117,432,872 $41,003,571 $1,139,913,339 $949,147,627 $110,976,841 $40,975,305 $1,101,099,773 Research 571,677,511 335,3115:557 24,965,883 931,958,951 563,727,321 335,594,368 23,552,381 922,874,070 Public service 90,866,256 58,539,149 3,591,076 152,996,481 90,877,000 63,533,565 3,143,689 157.554,254 Academic suppedt 264,425,951 107,041,343 40,146,289 411,613,583 244,320,030 100,362,037 35,505,197 380,187,264 Student services 124,003,082 69,945,387 4,476,479 198,424,948 120,770,559 67,046.782 4,468,642 192.285,983 Institutional support 307,987,872 64,064,896 14,523,183 386,575,951 299,210,371 47,332.550 17,735,504 384,278,425 Operation and maintenance of plant 121,042,648 127,310,105 50,435,694 298,788,447 118,013,481 144,626,701 54,247,254 316,887,436 Scholarships and fellowships 6,258,529 94,700,971 100,959,500 7,114,171 83,396,333 90,510,504 Ausiliary enterprises:

Residential facilities 42,962,533 51,832,827 41,412,820 136,208.180 40,972,342 42,435,195 36,338,987 119,746,524 Dining facilities 33,208,173 67,815,519 4,819,588 105,843,280 32,481,671 86,962,570 5,442,746 104,886,987 Intercollegiate athletics 49,074,429 34,045,693 6,817,063 89,937,185 50,352,141 35,635,872 8,836,563 94,824,576 Bookstores 4,646,578 22,620,424 85,051 27,352,051 4,411,332 22,140,895 289,379 26,841,606 Parking facilities 11,145,074 9,010,235 5,187,204 25,342,513 10,736,068 10,277,434 4,928,516 25,942.018 Other ausitiary enterprises 51,069,489 38,058,879 27,111,876 114,240,224 49,990,541 33,434,488 24,876,804 108,301,833 Hospital 171,466,606 1,699,619 18,037 173,184,282 153,830,954 1,358,684 18.192 155,205,830 Total $2.831,311,605 $1,197,433,476 $264,593,814 $4,293,338,895 $2,735,955,609 $1,165,114,315 $260,357,159 $4,161,427,083 39

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

10. RETIREMENT AND PENSION PLANS Most System employees participate in the State Retirement and Pension System of Maryland (the State System), which is an agent, multiple-employer public employee retirement system. While the State System is an agent, multiple-employer public employee retirement system, the System accounts for the plan as a cost-sharing multiple-employer public employee retirement system, as a separate valuation is not performed for the System, and the only obligation to the plan is its required annual contributions.

The State System includes four pension and retirement plans that System employees participate in:

Teachers Retirement Systems Teachers Pension Systems Employees Retirement Systems Employees Pension Systems The State System prepares a Comprehensive Annual Financial Report, which can be obtained from the State Retirement and Pension System at 120 East Baltimore Street, Suite 1600, Baltimore, MD 21202.

System employees may alternatively elect to participate in an optional retirement program.

State Systems Plan Description The State System are defined benefit plans with unfunded accrued actuarial liabilities. The State System, which is administered in accordance with the State Personnel and Pensions Article of the Annotated Code of Maryland, is managed by a Board of Trustees, and included in the State of Maryland financial reporting entity.

All plan benefits are specified by the State Personnel and Pensions Article of the Annotated Code of Maryland.

Retirement allowances are computed using both the highest three years' average final salary (AFS) and the actual number of years of accumulated creditable service. Pension allowances are computed using both the highest three consecutive years' AFS and the actual number of years of accumulated creditable service.

Various retirement options are available under each system which ultimately determines how a retiree's benefit allowance will be computed. Some of these options require actuarial reductions based on the retiree's and/or designated beneficiary's attained age and similar actuarial factors.

40

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 Funding Policy The System's required contributions are based upon actuarial valuations. Effective July 1, 1980, in accordance with the law governing the State System, all benefits of the State System are funded in advance.

The aggregate entry age normal cost method is the actuarial cost method used.

Both the System and covered employees are required by State statute to contribute to the State System. The contribution from the employees is 5% for participants in the State System retirement plans (with a 5% limit on the annual cost of living allowance and 7% for those who elect a limit on the cost of living allowance commensurate with the Consumer Price Index); and 2% for participants in the State System pension plans.

Contributions are deducted from participant's salary and wage payments and are remitted to the State System on a regular, periodic basis.

The System made its required contributions during the years ended June 30, 2013, 2012, and 2011 of

$84,938,801, $73,660,374, and $74,127,461, respectively.

Optional Retirement Program Some employees participate in the optional retirement programs, which are defined contribution money purchase plans funded currently each year and invested in specific funds offered by one of three vendors. In defined contribution plans, benefits depend solely on amounts contributed plus investment earnings. Qualified employees are eligible to participate from the date of employment.

State legislation provides that the System contribute 7.25% of covered employees' annual salaries each month. The System's contribution along with that of the employee is immediately and fully vested.

The contributions for the year ended June 30, 2013 were $133,171,956, which consisted of $66,763,426 from the System and $66,408,530 from employees. The contributions for the year ended June 30, 2012 were

$131,559,709, which consisted of $64,287,486 from the System and $67,272,223 from employees.

Major component units The University System of Maryland Foundation, Inc. maintains a defined contribution plan for certain personnel provided by TIAA-CREF. The University System of Maryland Foundation, Inc. contributes 7.25% of the employee's compensation to the plan. In addition, eligible employees are entitled to make voluntary contributions to the plan. Total pension expense for the years ended June 30, 2013 and 2012 was approximately $212,000 and $141,000, respectively.

41

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012

11. OTHER POSTEMPLOYMENT BENEFITS Members of the State Retirement and Pension System of Maryland (the State System) and their dependents are provided postemployment health care benefits through the State Employee and Retiree Health and Welfare Benefits Program (the Plan). The Plan is a cost sharing defined benefit healthcare plan established by the State Personnel and Pensions Article, Section 2-501 through 2-516 of the Annotated Code of Maryland.

The Plan is self-insured to provide medical, hospitalization, prescription drug and dental insurance benefits to eligible state employees, retirees, and their dependents. The State does not distinguish employees by employer/State agency. Instead, the State allocates the postemployment health care costs to all participating employers.

Financial information for the Plan is included in the State of Maryland Comprehensive Annual Financial Report, which can be obtained from the Comptroller of Maryland, Louis L. Goldstein Treasury Building, Annapolis, MD 21404.

A separate actuarial valuation is not performed by the System. The System's only obligation to the Plan is its required annual contribution, which it has fully funded during the years ended June 30, 2013 and 2012. The amounts contributed for the years ended June 30, 2013 and 2012, were $75,416,841 and $63,367,379, respectively.

12. CONSTRUCTION COMMITMENTS The estimated costs to complete construction in progress as of June 30, 2013 is $359,034,094, of which

$80,800,885 is to be funded from Revenue Bond proceeds, $208,723,571 is to be derived from State appropriations and grants, and $69,509,638 to be provided from System funds.

13. CONTINGENT LIABILITIES The System has entered into future purchase commitments for natural gas and electricity, as a means of hedging its risk against fluctuations in price of an important fuel commodity and electricity supplies. As of June 30, 2013, the System had entered into open contracts for the purchase of $2,201,024, of natural gas to be delivered monthly through June 2015. Future purchase commitments for electricity to be supplied through December 2014 totaled $1,539,480 as of June 30, 2013. The System and its institutions generally take delivery of the natural gas and electricity purchased through future purchase contracts.

The System is involved in a number of legal actions that arise in the normal course of its operations. In the opinion of management, based on the advice of the State Attorney General, such actions, as well as any exposure to unasserted claims, will not have a material adverse effect on the System's financial position.

42

UNIVERSITY SYSTEM OF MARYLAND NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2013 AND 2012 The Atlantic Coast Conference (the ACC), an intercollegiate sports association, has filed a request for a declaratory judgement asserting that the University of Maryland College Park will owe the ACC a withdrawal fee of more than $52 million associated with the University's announced intention to begin participation in the Big Ten Conference beginning July 1, 2014. The University disputes the claim, and at this point, cannot reasonably conclude that the ACC will prevail in its claim, or estimate any potential liability that might result were the ACC to prevail.

15. RISK MANAGEMENT The System participates in State-wide self-insurance programs for many forms of risk of loss, including general liability, property and casualty, workers' compensation, environmental and anti-trust liabilities, as well as certain employee health benefit programs.

The System remits premiums to the State, to cover costs of claims servicing and claims payments. The premiums are based on a percentage of annual payroll or are based on average loss experience, taking into account recent trends in actual claims experience, and providing for catastrophic losses.

The System records a liability when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. Liabilities recorded include a provision for claims incurred but not reported.

Because actual claims liabilities depend on such complex factors such as inflation, changes in legal doctrines, and damage awards, actual claims could differ from estimates. Claims liabilities are re-evaluated periodically to take into consideration recently settled claims, the frequency of claims and other economic and social factors. Liabilities for incurred workers' compensation losses to be settled by fixed or reasonably determinable payments over a long period of time are reported at their present value using a 4% discount rate. The provision for workers' compensation is based upon a separately determined actuarial valuation for the fiscal years ended June 30, 2013 and 2012. Settlement amounts have not exceeded insurance coverage levels for the years ended June 30, 2013, 2012, or 2011.

As of June 30, 2013 and 2012, the System has recorded $28,231,000 and $28,635,000 in liabilities associated with workers' compensation, respectively.

43

UNIVERSITY OF MARYLAND, COLLEGE PARK BALANCE SHEET JUNE 30, 2013 AND 2012 June 30.

2013 2012 Component Component Institution Units institution Units ASSETS Current assets:

Cash and cash equivalents $608,264.732 $19,846.858 $564,146.527 $24.292,947 Accounts receivable, net 96,997.004 58.879,512 86.477.706 37.482,543 Notes receivable, current portion 1.544.779 1,514.602 Inventories 3.247.070 3,358.732 Prepaid expenses, deferred charges and other assets 1,254,590 231,211 1,150,128 379.434 Inter-institutional balances 16,665,026) 44.106 Total current assets 704,643,149 78,957,581 656,691,801 62,154,924 Noncurrent assets:

Restricted cash and cash equivalents 10.484,001 11,861.551 Accounts receivable, net 26,783.971 33,143,115 Endowment investments 96.408.857 344.089.095 95,433.606 316,359,209 Other investments 6.693,185 176,501.450 5,128A471 177.282.911 Notes receivable, net 8.969.190 9,398.557 Other assets 865,912 1.649.850 Capital assets, net 1.787.06.212 3.688,398 1,709,440,177 3,596,6689 Total noncurrent assets 1.889.611.405 551,9289826 1,831.262.362 531.431,754 Total assets LIABILITIES Current liabilities:

Accounts payable and accrued liabilities $105.818,169 $36.347.746 $96.851,040 $4.032,510 Accrued workers' compensation, current portion 2.032.670 1.992,990 Accrued vacation costs, current portion 20.873,442 20,359,751 Revenue bonds and notes payable, current portion 29.301,765 31,908,955 Deferred revenue 60.318.737 3,901,324 65,682.515 1.836,287 Current portion of obligations under capital lease obligalions 316.740 296,434 Total current liabilities 218.661.523 40.249,070 217,091.685 5,8688797 Noncurrent liabilities:

Accrued workers' compensation 11,081.330 10.865.010 Accrued vacation costs 34,272,883 33.890.869 Endowments invested on behalf of primary governmenl 96.408,857 95.394.083 Other payables 3,146,534 301.170.343 3.867,811 321.449,163 Revenue bonds and notes payable Obligations under capital lease agreements 2.659.449 2.976.189 Total noncurrent liabilities 369,462,825 99,555,391 348,902,411 99,261,894 Total liabilities 588,124,348 139,804,461 565,994,096 1050130,691 DEFERRED INFLOWS OF RESOURCES Deterred service concession arrangement receipts 168,175,327 175q885,442 NET POSITION Unrestncled 487.263.967 45,712,250 441,925.863 63,092A499 Net investment in capital assets 1,245,153.768 1.197.202.814 Restricted:

Nonexpendable:

Scholarships and fellowships 5,542,797 113,193.840 5,385,708 97.173.526 Research 3.533.011 2,043.435 3,010,642 1.934.592 Other 4.761.426 163,535,187 4,761,296 163.259.048 Expendable:

Scholarships and fellowships 9.460.286 45,379,535 9,593,675 42,017,243 Research 63.731.676 14,738,344 63,355,729 13,160.731 Loans 10.992.200 10,793,359 Capital projects 711,675 2,868,191 Other 6.884.073 106,479.354 6.677.348 107,818,348 Total net position 1.837.954.879 491,081.946 1,746.074.625 488.455,987 Total liabilities, deferred Inflows of resources, and net position __5916586A678 47

UNIVERSITY OF MARYLAND, COLLEGE PARK STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEARS ENDED JUNE 30, 2013 AND 2012 Years ended June 30, 2013 2012 Component Component Institution Units Institution Units OPERATING REVENUES:

Tuition and fees $400479,355 $463.244.720 Less: scholarship allowances (71,737,566) $408.741,7t9 (67,106.577) $396.138.143 Federal grants and contracts 352,788,348 357.567.671 State and local grants and contracts 51,004,393 55.926.178 Nongovernmental grants and contracts 75,927,111 71,741,890 Sales and services of educational departments 25,373,836 26,278,906 Auxiliaryenterprises:

Residential facilities 61,410,202 60,011,887 Less: scholarship allowances 15.502,727) 55,907.475 (5.212.732) 54.799,155 Dining facilities 48.461.428 47.376.695 Less: scholarship allowances (2,913,936) 4,5.47,492 (2627.656) 44.749,039 ontercollegiateathletics 50,888.502 53.172,661 Parking facilities 13,284.168 13,513.875 Other auxiliary enterprses revenues 47.754.509 45.729.625 Other operating revenues 35,459,100 32,714,562 Total operating revenues 1.162,676,723 1.152,331,705 OPERATING EXPENSES:

Instruction 435,061,165 418.877.865 Research 411,720,651 404.022.792 Public serrca 86.806.904 93.494,029 Academic suppert 150.127.748 137.381,882 Student services 48.717.876 46.193.075 Institutional support 105.088.945 94,843,441 Operation and maintenance of plant 98.327.403 94.835.102 Scholarships and fellowships 30.344.,61 30,740,057 Auxiliaryenterprises Residential faclities 70.260.985 60.345,994 Dining facilities 49.008.841 47.995,558 Intercollegiateathletics 48.407.052 53.164,768 Parking facilities 10.143.713 9,666.574 Other auxiliary enterprises expenses 50,210,415 47,h58,196 Total operating expenses 1,594,226,259 1,539,019,333 Operating income (loss) 1431,549,536) (386,787,628)

NONOPERATING REVENUES (EXPENSES):

State appropriations 414.567.046 414,752,096 Pall grants 21,860,817 21.748.072 Gifts 28.781.338 $40,521.166 27.208.895 $51.118.714 Investment income 14.333.301 25.194.920 8.989.403 3.783,336 Less: Investment expense 1352.958) 13,980,343 (371.776) 8.617,627 interest on indebtedness (11.953.354) (11.307.992)

Other revenues (expenses). gains and (losses) (57.616) (1.332.365)

Other affiliated foundation revenues 4.390.864 6.380.252 Other affiliated foundation expenses (67.480.991) (72,232.175)

Transfers (to) from other University System of Maryland institutions 273.767 (5,823,314)

Total nonoperating revenues (expenses) 467.452,341 2,625,959 453,063r019 (10r949,873)

Income (loss) before other revenues 350902.805 2.625.959 67,075,391 (10,949,873)

OTHER REVENUES:

Capital appropriations 37.302.971 35.524.624 Capital gifts and grants 18.494.889 6,062.632 Additions to permanent endowments 1790589 1,327,758 Total other revenues 550977,449 4209150014 Increase (decrease) in net position 91,880,254 2,625.959 109,990.405 (10.949.873)

Net position - beginning of year 1,746,074,625 488,455,987 1 636,084,220 4990405,860 Net position - end of year $4108r46 $1,746,074,625 $ r587 48

UNIVERSITY OF MARYLAND, COLLEGE PARK STATEMENT OF CASH FLOWS YEARS ENDED JUNE 30, 2013 AND 2012 Years ended June 30, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES:

Tuition and fees $406,724,898 $396,087,820 Research contracts and grants 487,763.587 474,520,594 Payments to employees (1,065,932,707) (1.031.565.259)

Payments to suppliers and contractors (427.927,883) (403,153,488)

Loans issued to students (1,281.248) (1,873,545)

Collections of loans to students 1,680,478 2.094,447 Auxiliary enterprises:

Residential facilities 48,197,360 47,045,714 Dining facilities 45,547,492 44,726,599 Intercollegiate athletics 31,592,718 58,743,255 Parking facilities 13.284,168 13,513,875 Other 47,717,689 46,077,062 Other receipts 87.823.760 88.767,735 Net cash provided (used) by operating activities 1324,809,688) (265,015,201)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

State appropriations 414,567.046 414.752,096 Gifts and grants received for other than capital purposes:

Private gifts for endowment purposes 179.589 57,380 Pell grants 21,860,817 21.748.072 Net cash provided by noncapital financing activities 436,607,452 436.557.548 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Proceeds of capital debt 34.130,717 67,229.258 Capital appropriations 37.302.971 35,524,624 Capital grants and gifts received 8.776,129 5,675,137 Proceeds from sales of capital assets 432,776 1,319,403 Purchases of capital assets (139,332,596) (138.692,839)

Principal paid on debt and capital leases (40.301.971) (82,662.287)

Interest paid on debt and capital leases (12.931.628) (14,411.243)

Transfers (to) from other University System of Maryland institutions 31,426,115 11,073,800 Net cash provided (used) by capital and related financing activities (80,497,487) (114,944,147)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales and maturities of investments 6,019.321 5,469.979 Interest on investments 6,031,389 7,021.388 Investment expense (352.958) (371.776)

Purchases of investments (257.374) (141,101)

Net cash provided by Investing activities 11,440.378 11,978,490 Net increase in cash and cash equivalents 42.740.655 68,576,690 Cash and cash equivalents - beginning of the year 576.008,078 507.431,388 Cash and cash equivalents -end of the year $618,748,733 49

UNIVERSITY SYSTEM OF MARYLAND OFFICE BALANCE SHEET JUNE 30, 2013 AND 2012 June 30, 2013 2012 Component Component Institution Units institution Units ASSETS Current assets:

Cash and cash equivalents $148,665,828 $48,547 $124,950.163 $691,243 Accounts receivable, net 503,097 4,454,306 1.483,451 761,802 Prepaid expenses, deferred charges and other assets 272,779 132,018 Inter-insbtubonal balances 6,096.669 11,156.451 Total current assets 155.265,594 4,775,632 137.590,065 1,585,063 Noncurrent assets:

Restricted cash and cash equivalents 37.7825.94 60.428,852 Accounts receivable, net 41,653 Evdomment investments 8,892.664 13.328.093 9.011,804 24.375,751 Other investments 57.481,268 51.312,631 Restricted investments 21.875.318 Other assets 275,035 390.600 Capital assets, net 83.8816529 3.281.756 86.491,159 3.148.395 Total noncurrent assets 1309556787 74,366.152 177.807.133 79.269.030

$285,822.381 $79,141,784 $3150.397.1 98 $80,854.093 Total assets LIABILITIES Current liabilities:

Accounts payable and accrued liabilities $4,138.628 $5,348,070 $10.043,738 $1,315.071 Accrued workers' compensation, current portion 12,710 14.105 Accrued vacation costs, current portion 544,408 582.972 Revenue bonds and notes payable, current portion 2.649.491 4.409.410 Deferred revenue 12.534 334 Total current liabilities 7,3450237 5,360,604 115.050.225 1,315.405 Noncurrent liabilities:

Accrued workers' compensation 69,290 76,895 Accrued vacation costs 1.032,415 947,399 Endowments invested on behalf of primary government 8.852,501 9.011.252 Other payables 46.728.768 43.439.690 Revenue bonds and notes payable 62.201f 691 101,404,537 Total noncurrent liabilities 63,303,396 55,581,269 102,4268,31 52,450,942 Total liabilities 70,648,633 60,941,873 117.479,056 53,766,347 NET POSITION Unrestricted $155.90.2211 $3,968,114 $132,265,076 $4,897.192 Net investment in capital assets 54,949,795 54.935.427 Restricted:

Nonexpendable:

Scholarships and fellowships 347,604 5.592.792 347,604 7,345,820 Research 148,019 204.793 Other 471.330 4,358.222 471.330 5.666,535 Expendable:

Scholarships and fellowships 8050055 1.220.107 212,033 2.750,180 Research 356.535 735,328 1,781.348 Capital projects 1.863.245 8,856.046 477,973 2,177,330 830,626 4,441.878 Other Total net position 215P173,748 18,199,911 197.918.142 27,087,746

$285,822 381 $315.397.198 $90r954 093 Total liabilities and net position 80

UNIVERSITY SYSTEM OF MARYLAND OFFICE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEARS ENDED JUNE 30, 2013 AND 2012 Years ended June 30, 2013 2012 Component Component Institution Units Institution Units OPERATING REVENUES:

Federal grants and contracts $3.442.513 $3.155,530 State and socalgrants and contracts 148,656 90.363 Nongovernmental grants and contracts 330,093 107.159 Other operating revenues 174,300 201,205 Total operating revenues 4,095.552 3,554.257 OPERATING EXPENSES: 6.030.370 Academic support 6.334.077 Institutional support 14,006.220 13.418.838 Total operating expenses 20,340.297 19,449,208 Operating income (loss) (16,244.735) (15,894.951)

NONOPERATING REVENUES (EXPENSES);

State approprations 19,262.886 15,417.326 Gifts $1.178,823 $1.391.238 Investment income (loss) $2,005.919 (8.373.680) $1.478,951 1.166.955 Less: Investment expense (33,342). 1.972.577 (34.474) 1.444.d77 Interest on indebtedness (6.263.571) (7,170.624)

Other revenues (expenses), gains and (losses) 2.256,464 2,618.819 Other affiliated foundation revenues 2.333.915 3,216.560 Other affiliated foundation expenses (4.026,893) (5.691.069)

Transfers (to) from other University System of Maryland institutions 16,271q985 23,623,124 Total nonoperating revenue (expenses) 33,500.341 (8.887,835) 35,933,122 855q684 Income (loss) before other revenue 17.255.606 (8.887,835) 20,0382171 85.684 OTHER REVENUE:

Capital appropriations 622.935 Total other revenue 622.935 Increase (decrease) in net position 17,255.606 (8.887,835) 20.661,106 855.64 Net position - beginning of year 197.918,142 27.087.746 177,257.036 27.002.062 Net position - end of year $197,91814 81

UNIVERSITY SYSTEM OF MARYLAND OFFICE STATEMENT OF CASH FLOWS YEARS ENDED JUNE 30, 2013 AND 2012 Years ended June 30, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES:

Research contracts and grants $3,746,769 $3,460,612 Payments to employees (13,761,506) (13,327,269)

Payments to suppliers and contractors (8,929,299) (2,643,874)

Other receipts 3,601,934 4,154.096 Net cash provided (used) by operating activities (15,342,102) (8,356.435)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

State appropriations 19,262.886 15,417,326 Net cash provided by noncapital financing activities 19,2626886 15,417,326 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Proceeds of capital debt 35,993.077 70,961.182 Purchases of capital assets (432.163) (143,883)

Principal paid on debt and capital leases (18,691.937) (13,291.324)

Interest paid on debt and capital leases (7,053,436) (8,085.521)

Transfers (to) from other University System of Maryland institutions 136,410,290) (47,697,158)

Net cash provided (used) by capital and related financing activities (26,594,749) 1,743,296 CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales and maturities of investments 22.616.919 37.620.025 Interest on investments 1,383,456 1.453,108 Investment expense (257,003) (34,474)

Purchases of investments (21,875,318)

Net cash provided by investing activities 23,743,372 17,163.341 Net increase in cash and cash equivalents 1,069,407 25,967.528 Cash and cash equivalents - beginning of the year 185,379,015 159,411 ,487 Cash and cash equivalents - end of the year $186,448,422 82

UNIERSITY SYSTEMSE MARYLAND COMBINING BALANCE SHEET. NONMAJOR COMPONENT UNITS JUNE30,2013 oAWyoy)

Med~i* MCJo T. ROheO H. CoppAS.00 Uo.froly TMb A*abooyA' UDovnly.o Assb0tio01el Foondaon Smt. School Rary 0. HughoN Booo S00 T-on Fmotborg Unleoroty Un.ioly of Sl.sou y MaryqboB R.s..T C-o1oal Marybnd Uh`U" ogyyo Unlveootyof olBuoleB C.ntT"oT Onioesity UnsT*Iy heltnS SGateU.n 09 BOlopoent GBaElor Unbv.ltly ThoVWard 4.0 Corpoolloy BoowieStat BaBioo'Cou.ty TotlNonmoJor M-I=an,. Inc, Moryad Inc, Foundaon., -c. AIOO-E.1ooA I Inc. Foundaobn Ic. Found.11onIn-. Fondtion, I... Fouodaonrbo Ioc. F-0,oHto,.,Inc. FoouondainIbo. Foundotion -c. Foun ,at IonI. U.

Foundaon,-,

1- tetional Unihv1. Ilncl. R....1, Par. Copone.nlntUnB ASSETS Cosh 51.151.741 $30391 51.613 60T $75.651 $429.480 55,287.876 U59S520 S583354 $1.804,975 11.784.329 S367,727 S79.01 $W14 884 S14.T01 SDT7.735 12U.'03,299 6.899 406 456.724 13 305.205 01.030 2"4.344 105.785 367.280 2.610.300 3N7.114 26.66U 4U.I18 82.091 133m18S 4.937.729 T1,7U 25,00 - t,13 1091 2969 123 18151 4245 16,151 121,455 1049 534402 YotI ourmntaosut I.2B4rBIB $5rTOT 20.DB.937 76.194 737T71 551.5D 3 BO84 7T763MT 2,1785500 14.3B4,2B BtD.DB2 2114S 651 00.758 1,100.42482 3Tr 3 120 Investments Codowcoci investlcots 6488.822 2.144,422 6.193.061 54.516.417 15.IS,773 I.084.41 T37S.242 45,12 415 20`DU 2.225.234 . 180117.271 06598 51.787219 810 110 4561 11081431 182Ur012 83820*6 2543r412 S4088182 254,5r50 5r887,219 6,193.061 54.516,247 16,261,883 8,139063 42,058,673 52.841.328 20.50N 21825234 B13B2.036 205B610.744 Otheronto Cap,lasso~ets net 954.239 497.476 5.292,4.4 5.n3.3W4 72.708.083 3502 T5,206 911 705.696 1.263601 109,141 93,416 4.714 2857.727 5 63T,980 512,068 257,845 Ir040101 2,159054 2r384 4014,258 257,741 1t167,274 71M.298 7l158777 9,3861849 895S0 93B416 4,714 2.857.727 2245SO0321 670871,188 518T'3 061900 175 9810855,IB 010152.130 81717251081 10883DB580 88065821079 952708 109 89811073 09.5878601 8801 884 812.3491705 $2814040185 6717801400 80,441317 LMAM ILTIES Cu tnt Ilablllt Ac ts payaOA 00130ru40expense $34.497 1.639.M41 $913.561 $482.506 $18049 S16.128 S1170.4 2 w 7 445 3200.186 950.509 S164201 $21608 S35570 5,174564 1.,815,57 23000 4A261 1,948.019 2,500 751310 32.66 717.0970 16r141 39.113 55034 6, 161.%04 71272,025 Tooal DUTTOlt libiltie 36,117 10168,841 13.567 402,591 91.30 0.81992 170.474 3844012 2273084 890622 168298 998402 624,6801 1489658,47 Otherfieblldtle Ooerpayables 5,662 3.215.557 5.543 6029177 3.629.139 Longe debt,n1o100*3 t 318r1 31Sr014 Tool othel l6bi1ft15 58662 3,2158557 5,543 920,991 4,147,753 TooallbilitIa, 08997 1.63*.01 I082.691 13.567 01.38 48.992 1781136 3,604.542 5,43,41 8022 160298 105,165 7,167,792 19,113A00 NETASSEIS 971.656 $2461.317 6,231515 546.773 614.441 2.915.807 1.419.679 286.003 89.532 5.947,447 4.800.083 273.0M3 M03.757 (3.673) 5.181.V43 33.1"1.013 Tompo tujrintresioted:

Scho-hips & fllowships 7,.99.569 100.766 676.306 7217490 6067.204 21.91.400 621004 5,050 42,373 519.501 Reset, 6,524.785 21.959 1,825.690 12.785.860 10,154 1.776.908 2.652.192 10460.850 19,896.585 9.916 569.353 M.6540,201 P-,n ny ,st,,ctd:

51o,40hipD & Iflowhtps 22.591,446 10.820.115 2M.702.328 11.6517,05 18,770.8A4 046,478 10,203 31.171 315,104 255000 44771057 14,4M.90 416171153 6712337 11,719,40W 10 94.T61 4442 1.845.803 54049835 14011 244131 6,231,515 76,732 8911,208 60,57249.5 1,429,782 181,76,409 10.130.427 ODD047?537 57,5028 29,651 3419,03 (3,673) 5,18,940 239429,825 010r732 06.0930r718 908.85.515 81.521.138 811.145r481 t015306.808 $500082r079 852.738.1608 0381013 09587r381 t0185128 012019r735 8250.543.188 017073 430 80.4011311 01.871.188 Tool IlbILitisondrmta ft0 83

UNIVERSITY SYSTEM OF MARYLAND COMBINING BALANCE SHEET.NONMAJOR COMPONENT UNITS JUNE30,2012 MedicalAtum.nI M Clue TheRobert 0. Coppln state Unoversty The Maryland SoUnerety of Aaeolaton of Foundation SmithSchool HarryR. Hughes BowleStato T- .on Frostburg Unioersity UnlvemItyof Salisbury Maryland Researuh Ceo..rat Maryland the Unioersityof Unioersityof of BRsiness Centerfor Unioreity Unoversity State University Deoelopment Baoimore Untoerity . TheWard 441 CrRoraton Rl Stat BaltimoreCounty TotalNonm.jor Meyland. Inc. Roleod. Inc. Foundation.Inc. Ar-o-Eooluo6.Inc. Foundetion.Itn. Fouoertlon Inc. FounderlonrInc. Foundrtron Inc. Foundotion Int. Foundatio. I.c. Foundation,Inc. Foundation,Inc. International Utn.erlty. Inc. Rese.ach Pert ComponentUnits ASSETS Current assets Cash $593.253 $86.940 $95.684 $88.352 $775.313 $3.564.722 S536.425 $2.120.759 $20.727.745 W31.582 101.334 $654,848 $462.154 B93,59 $808.227 $31.320.867 Acunts rtcoeiabio,net 8.649 406 167.678 26 572.991 179.794 141.111 322,05. 6.756,376 - 1.373.,00 33.416 34.895 30.394 48.452 108.458 9.776.299 OtheraselS 21.298 10t483 58,570 88.123 40.519 2.683 760 458 124t310 237,162 1.061 6t3O7 169.942 Totalcunentessa 72621t2 87,346 . 1.000,524 89t439 1,354,611 3R914458 69R8.34 2.4503292 27,542t694 1.773,305 1750269 692,426 492,548 141t981 714,685 41,B7,R624 Inuestments ECdronrnotl irureonats 5.664.504 2.432.237 5.526.357 48.666.519 14.464.881 7.648.921 39.508346 37.792,948 2 472.236 164.177.0M9 Other inestments 239,155 6 037,640 814.225 2.112.844 SB.770 17.672,634 Totalinestrnra 3,664,564 2,671,392 6,037,640 5,526,357 48B666,t19 15,279,106 7,643,021 39OB.56346 39,.05,792 2,472,236 8D468,770 181R849,643 Other

.. eets A ountsrenmeable,net 022008 67831: 6,105.024 7308.245 Capial assots. rot 3834 1,136 1 371.285 1,289.748 109,505 100.926 6,336 2.900.722 0788.292 other sots 1,200,000 181200 2223107 656845808 998224 8,367,419 Totalotber assets 1,725,640 RH0S61 222,1t7 19371t285 .D14.80*.6. =08729 1...926 6,336 2.905,722 21t461,956 Total- - -to $613B0.776 12175BfR7 B?

$7108.164 189439 B.BO.883f5 354a.306r17 $1t5.tt.591 gtg013243aD 68.4221025 355.759.6t7 138335998 $3.26515R8 $492.548 £1483137 Bt21.8t1t77 B24311691223 LIARItI~ES Currenttiebiitites Acounts payablr&atcruedoupnnsos t300,940 $1525 $637.376 $60 149 5286.187 D28031 8144763 $658011 $128.576 $63,387 $123.363 $322.553 $12.407 $85.042 62.132.610 Long-term debt, current 1.000000 8,500 47 50 1 058350 Defenodimcote 140565 12.000 190,410 2698700 159.117 49.631 851080 5,771.633 6.552 116 Totalcutnt tiabilitie. 315,505 1.525 649,376 60.140 1.266.1B7 218.441 144.763 927.711 287.693 113B018 123.3R0 322.553 105,967 51.05,025 10,441,276 Other liablilitie Other Payable, 75 2.730.149 5.818 980.739 3.716.781 Long-term dubt.noncutnt 1,693,070 379.415 2.272.485 Total otbet liablittie. 75 4,6232319 5,818 1,360,1S4 5,93,.266 Totallisblil~er 315,S5

• 1r525 649,376 60,149 1,266,187 213.441 144,338 927,711 4.910,912 113,018 123,3f3 322,553 111,785 7,265,179 16,430,542 NETASSETS Unroesticted 724.854 2,757.213 6.38B.788 S60.540 320.453 2.749.334 140.352 349.204 7.687.438 4.169.419 252.985 760.184 1869.95 36.532 4.823.998 31.391.289 Tnmpuoraly restrtcd:

Scholarohips & lellcahipo 5.448.793 130,508 2.768,755 3.982.318 12.309.934 Research 3.539 34.950 558.717 720,128 5.350.417 28,99 2.036,201 10.457,193 t,827.179 3.215.252 22.380.071 18.620.938 9.353 424.112 54,349.6175 Permarontyrosclced Scholarships & toill--hipe 21.127.428 1".t23."77 27.880.%01 11.384.139 70.416.205 10003 30.687 210,633 231.323 Othet 4.464.165 13r34430 4.312.737 68815.026 8.777.389 11.981170 8.642 1,957.929 49..81 098 Totalnet aseet 6.0753.27 2,7537213 6$7,03788 B9.439 HOB 80=R19 539848.430 16 Ott 158 1 10817942 674404614 55.489.743 070B.98 3.1425.25 t492.54 31.532 44129.993 245.716.681 Total[iabilitis.and net -ss.ts 1613B0r776 12.Ta7587 $TB7.3Br164 $89.430 36rEttrB53 354,30t6.1T 316.II8r381 Slt,3241320 $688r422.025 $85575gr657 $3863rgee 3.2651588 $492r548 1148.017 112r08e.177 $245r1R9r223 Be

ANIERBSITY SYSTEM OF MARYLAND COMBINING STATEMENT OFNETACTIVITIES, NONMAJOR COMPONENT UNITS YEAR ENDED JUNE30.2013 Medicl Aluoi MO.IN The Robet H. CoppinSlate Oniceslty TtwMaryOand Uoileoccyof Ao.o. of Foundalion. SIth School HarryR. Hughe. Bowl.State To.oT Foostbug UTim0aity Unicoosityof Salisbury Manhoda Researoh Corde.0 Maryland cho deUrityo AUnicersfty o oflBusiwos Crenlo' Uniootytc UOniverity Thooawok State UuO'.ity Declooop t Ba.ltior ULlnety TheWard 4-A CofpotatiOc BowleStale Batloo County TotalNoeojor Ma';lndl. aranfnc Pudam.IF Alg .:~lg/I-. F.nd onlc. F.u . Flnrn I-nalnln.P~alnl.

Founoa... lnc. Ioun.a .n. Fc. . PO Fonal~,l -alrl. -o alnr*.' Ir-m~ Unlelt. l. Keerch ark C,.mponen um COANOES INUNRESTRICTED NETASSETS Contr,Nbbono A grons $1.0t 2703 $8.O65 $h.0O 0230 041.160 0410.094 3363.033 $70,608 $266,14 02A5.102 3250.676 52.0T7S $26.255 13.9,:l039 53.TAS l83.31h A6h707 $555 1.003 670.432 26JAA Oc720 2.009 0h4,C23 34h.TA4 511t55 145h432 B2AA.9 0.441,533 427.761 (14.203) 2.009.711 09.h4N 17.259 1.447.310 231.750 72.004 33.276 1.402.17 291.304 2 U5.N44 10.020 0.543.300 7.068.314 AsseS wllocsdhrocc rehVIcbon 4000 041 1.212.157 5.1h. 92 5.777 I.014.471 1.001.220 18200010 2.050.14 930 370 710 0.703.900 Total lrcnce. 1T42,642.0

1. tt 2.00r470 100.6

.. 131034 60330,241 10Bgg,.s 2..2,n2. 10.00.322 10r444.30 4.',0r000 100 0600002 aT0.T, 1.001000 000511000 061.38 416.095 I 294.717 11.950 923.000 h3.7653 310.343 1.522.325 -0.2H7 19291.111 3.747.727 662.041 723475 311.02 440.320 69017.747 231.437 56.TIs 785.75t 1.712 h15025 59010 94.393 ITT35 105.673 h73.02' 434.TA2 thc.h9T 0.900 S4ndy 3492,704

37.402 Fundrasin 202.582 c6.oo T67 26 057 20.0 23.04 2.3.19. 162.332 41.038 30 07 1.10..06D Othr.pese 754.233 75.347 343237 003.200 94 5169.005 310.057 2560.5"4 Totalecpencoe. 1,296.017 473,713 2a 34,751 13,262 1.010'000 j.09j..0 4803,60 2.023,925 1.4100014 20,184.327 4.343,828 040060 017,161 0060.00 0 19T00 1.443004 440067,133 Changeinuestncced ,tla..et. 2460802 1295,0961 (157,273) (10.766) 2-0.008 000.473 1.411110 318,802 (2916.72) 0000 0711 651,2"4 00100 01.6073 0160.9011 1402006) 3570945 l1043076 CHANCES B TEMPORARILY RESTRICTED NETASSETS CcOntbubcon A g-tc 20000 h6..000 0.84.5945 634.142 3600 7 9875.24 1.834.385 6.002 409003 19.00.34.

1.150.068 050.749 5,192.4-0 s9co3o 9.206571 3.293 5.452.4-7 04430 15.002.007 Otý -.m 30.750 791.190 15.80 257874 100747 559392 00.000 0.488871

-*stlreleasd flom eslril-on (40000, (0211 11.022,0401 15190.741, 25.77'7 127:.'180 11.144711 (01710r998 f3.914,0491 590301 I379.702! (91.439 4730 Chang.in te-mpotaoly rstrict ed Tetassets 111.4,300 10411 1210.111) 40681964 t03,03 100r6041 026.040 10400T400 1,40000 600 120041 1,8320633 CHANOES INPERMANENTL RESTRICTED NETASSETS 250.O00 2.64Q.254 379.2W0 84072 333.604 1.050.400 4.747.749 1,162.426 275.2.9 112.036, 1.405.651 12.001 2.030 610 05.44 126892 32.413 (703.407, 429006 004.600 7n5.704 250,000 12,892 2,604,1.1 841.131 04,072 763,380 2.290.028 (12,036) 6I.04,63 1.671.170 (21,5096) (157.273) (t.707) 96.309 7.632.495 1.429.702 1.076.339 (41.051) (7.447.077) 6.401,783 2.000 276.770 (162,9951 (40.206) 367,945 10,691.144 Neia*-on. It.gimncin.y- 67006,27: 0.061.013 0.000.000 00.000 6200010 63,020.400 16600.000 0100,402 06.494.014 60.048,740 2700800 0140.005 000.006 80.633 4.620,006 220,030,000

' . l. ...reaton dfrom 00,040,440 03 0010,0337 0020.7 6.00 0008 0.602.020 01420.082 1117.041,- 03011102420 000040.500 0503050 520 0000450 0.4190.03 103r0001 06.1001040 30.400.025

.6

UNIVERSITYSYSTEM OF MARYLAND COMBINING STATEMENT OFNETACTIVlllES, NONMAJOR COMPONENT UNITS YEAR ENDEDJUNE30.2012 MedicalAlun.i MClub The RDbSdH. CoppinStote Uniceity TheMerYlend Uninenityo1 Ae, cltonTDf Df thle Unlverelly Fcu-dation.

Unloeteltyo1 f SIUh S1chol Roletae BI Henr R.Hughe,.

Cente,bor RweeStale Unallteey T.nD UTliOClO" FtneturN DtalsUnlrersity Univetity Deoelopernt U'n-loIty If RBaltmore SaT.ebuy UnloelullE TheWanE Maryland 040 Rn.eerch Corpgretion Cent-r al Rowie.

Stole Marotand BRolloRe ~ounty TotalRon~njo.

MorondTIcc. Marnland,Inc. FoundaIon Inc. AroCEcoloo/,Inc. F.ondation I-. Foundation.Inc. Fondation In1. Foudat.io-nIcc Foundationrno. Foun"'on.no. ln Foondat I counda*ln,no.

F. Iternalanal UoiveIlr. Ino. ResecrohPork Comno.nn UTIle CHANGES INUNRESTRICTED NET ASSETS Recenote ConEnbuonist & 9g0ts S1T7$.2T0 01592

.1.940 0523 $440.590 $315.598 8404.190 1235.782 31.7081 7T03 225 $340.811 $1.377.613 S523.040 S5.783.247 15.254 22.13 (240.4001 D805 I49T78 219 04 10,17 2 11 710404) 142.21.1 153.12 33.510 W $173,40 346.300

.86.198 125.022 1.7164TO 00.001 002231 2552t IIT.5S5 T1O237 1,07,88t 204.870 327,311 ' 4T3 47.667 1 514 120 8,0T.212 AsseSeleated R IC NETrAcLiSnE 25,N2 541177 537ITT 4,877023 1T727T7T2 1,488T79c 1.491 724 48141118 1I5T 1182.40 23r12 151222.555 I otl,n,,,l

&550,w-,0ho 14115R65D rot5oD 1,557.t02 54.982 786,996 6N429T735 2.259.528 2.122.641 2.287.608 6.679.W42 11154r407 $93,2U4 1370,086 5701707 1D716.686 29r49.204 Inhangen Progran' inoIn nstWsnt - T39.579 61.454 1.0"4.173 52.332 7TE.520 5.262.177 1.960.112 14.4.437 2.165801 5.878.180 70T.72 527.484 1ST 303 535.031 342.493 22.084.610 042.900 87.196 733.007 1,617 45.044 002.022 33M.952 142.070 33.121 4177147 350.032 8043313 102.925 1360420 09.02 4.35-2%1 345.4Q9 372 06.965 240.001 32377 252.155 107,04 0t 41140 1.03 033 4280671 671403 T,03,362 156003 OTlierepeense Generaltb& gd-nsta~v 1.325,978 108.52 11818t640 548901 869.387 6.1004994 2.297.0t4 20382704 2.757177 6.42.1731 1,165.316 791,55S 2717.613 0480855 1.T501107 305,W1857 Futnd ChangeInutn stricted

-df-ln,ýt- net a et... 79010 930 (261,038) 1 61 (82,3911 4241741 (3735363 23.877 14159,569 217.111 (7,9091 D1,339,5271 101,676 21.852 2101549 (081,118.3)

CRANOES INTERMPORARILY RESTRICTED NET ASSETS ContE,Eulonn S SIDn 45.202 340,003 3.165159 1.135.372 887.64 1.278.937 8.778.071 301.54 6.M624 199,185 1137.132) 224,231 05.540 (707,804) (750.452)

.31.053 25.207 (206073) 1.155.077 55.717 621.004 22S.035 02.705 70.337 08.512 Assetsrt-el d W.o stEtlnS 1255020 1541771 912r3281 (4.799263. 1727.7921 11,517.793) 11.539.4381 (4..44.731) (1,1501 (182.074) (23 1491 115.627.815)

Changein tepDariljy - citd neta.e.te 174,185 (9.177) (645,360) 419,243 1139,294) (4838W1 (938,998) 302641400 (111501 14",341 123.1491 1.780.206 CHANGES INPERMANENTO.T RESTRICTED RET ASSETS ContIbobo*n 0 gr~nt 788.907 127.335 2.500.040 133,147 20.033 3.645.111 45 122.14U (21..22) (0,685) 900.204 13.8M 13.803 AsetsOrelDased7rom 10tl2-i04o* 374.999 (77.760) 280994 4044 30,613 405.202 ChanoeinErnlan~eneTlwyetrktedoneteassets 3.7000 704047 15nr329 2,737,5n2 142538 2::148 4159535 200.000 030 1261.0081 70.1861 (3T2,707) 1.56t.1 1176,830) (283.637) 1,328.962 3.62,00 (10.059) 261.173 (I.336.0271 21.852 107.400 4.e21.178 Total harngeInnet Dssets Net ase - beginningIf yea 021406 27568283 6,649082U 98,65 7173,526 511411490 15,1760980 10.4631111 66.165.652 V.22410696 281r039 2004rnO2 1509.522 14.11t 4,6361598 223r917,503 a.e.l. .et o yer

- ed ST075271 $2r7571213 St61 RR17t8 2891430 $6421 810* 02416400430 $166001150 $TDrI79T402 8071400.610 0084825 8270.980 $3r100r22R $9t 531 040231OOR $028.700481

UNIVERSITY SYSTEM OF MARYLAND NOTES TO SUPPLEMENTAL DATA YEARS ENDED JUNE 30, 2013 AND 2012 ACCOUNTING AND REPORTING PRACTICES Supplemental data reporting units University System of Maryland Office (System Office), composed of the offices of the Chancellor and Vice Chancellors and their respective staffs, provides central executive and administrative services and supports and coordinates the efforts of the entire System. The expenses incurred in connection with these activities have not been allocated to the other units of the System and accordingly have been included in the financial records of the System Office.

Facilities maintenance expenses Certain expenses for facilities management for the System Office and the University of Maryland University College are included in the financial records of University of Maryland, College Park.

System-wide financing arrangements The System constructs, acquires, and renovates plant facilities using the proceeds of Revenue Bonds and other financing arrangements. The proceeds of System-wide financing arrangements are used in accordance with Board authorizations, which specify the projects for which the funds are to be used. Unexpended proceeds and a proportionate share of the outstanding debt obligation are reported on the financial records of the System Office.

Institutions are obligated to provide a proportionate share of the principal and interest payments attributable to auxiliary enterprises projects financed using the proceeds of System-wide financing arrangements. Currently, each instructional institution, with the exception of the University of Maryland University College, provides a portion of the debt service attributable to academic facilities. To the extent that an instructional institution provides (or receives) resources for debt service for academic facilities (and the proportionate share of the outstanding debt obligation) recorded on another System institution or unit, such amounts are reported as a Transfer To / (From) Other University System of Maryland Institutions on the Statement of Revenues, Expenses, and Changes in Net Position.

87

ENCLOSURE 2 T~hl.. 1

• 1" C, ,nmm~r, nf M I ITR C*nor~tin* (.rnt*

Cost Category Subcategory 5 year projection (FY15) (in US dollars)

Salaries (% FTE Funded) 2015 2016 2017 2018 2019

1. Reactor Director (100%) $145,821 $149,758 $153,802 $157,954 $162,219

2. Assoc Director (100%) $102,080 $104,836 $107,667 $110,574 $113,559

3. Assit Director (10% of 76,500) $7,650 $7,857 $8,069 $8,287 $8,510

4. Rad Fac Technician (33% of 60,000) $19,800 $20,335 $20,884 $21,447 $22,027 Personnel Total Salary Funding $275,351 $282,785 $290,421 $298,262 $306,315 Fringe Benefits (30% of Salary) $76,665 $78,735 $80,861 $83,044 $85,287 Total Personnel Funding $352,016 $361,521 $371,282 $381,306 $391,602 Water Handling System $1,400 $1,438 $1,477 $1,516 $1,557 Maintenance Reactor Controls and Instrumentation $8,000 $8,216 $8,438 $8,666 $8,900 Experimental Facilities $5,000 $5,135 $5,274 $5,416 $5,562 Total Maintenance $14,400 $14,789 $15,188 $15,598 $16,019 Miscellaneous Supplies, Communication, etc $5,500 $5,649 $5,801 $5,958 $6,118 Total Costs $371,916 $381,958 $392,271 $402,862 $413,740 Projected Syear total costs $1,962,747 Table 15.2: Summary of MUTR Funding Sources Support Category Subcategory 5 year projection (in US dollars)

Salaries (% FTE Funded) 2015 2016 2017 2018 2019

1. Reactor Director (100%) $145,821 $149,758 $153,802 $157,954 $162,219

2. Assoc Director (100%) $102,080 $104,836 $107,667 $110,574 $113,559 State of Maryland 3. Assit Director (10% of 76,500) $7,650 $7,857 $8,069 $8,287 $8,510

4. Rad Fac Technician (33% of 60,000) $19,800 $20,335 $20,884 $21,447 $22,027 Total Salary Funding $275,351 $282,785 $290,421 $298,262 $306,315 Fringe Benefits (30% of Salary) $76,665 $78,735 $80,861 $83,044 $85,287 Total Personnel Funding $352,016 $361,521 $371,282 $381,306 $391,602 Federal $10,000 $10,270 $10,547 $10,832 $11,125 Private Sector & Other- Support from Co60 & Linacs $30,000 $30,810 $31,642 $32,496 $33,374 Total Funding $392,016 $402,601 $413,471 $424,635 $436,100 Projected 5 year Total Funding 12,068,822.49 Note: Per year costs are increased by: . 2.7%

-Funding for reactor operation and maintenance are gerenated from the Co60 Irradiator and linear accelerators

ENCLOSURE 3 Estimated Decomissioning Costs for MUTR Item 1980 Cost 2000 Cost 2010 Cost 2015 2016 2017 2018 2019 Cooldown and Preparation:

Insurance $7,000/yr for 5 years $13048/yr for five years $16,571 $18,932 $19,443 $19,968 $20,507 $21,061 Reactor Director' $26,000/yr for first 2 years $50,000/yr for five years $77,000 $145,821 $149,758 $153,802 $157,954 $162,219 Assoc Director $30,000/yr for 3 years $25,000/yr for five years $90,000 $102,080 $104,836 $107,667 $110,574 $113,559 Assitant Director (101Asalary) $7,650 $7,857 $8,069 $8,287 $8,510 Technician (33% salary) $5,000/yr for 5 years $10,000/yr for five years Combined with Manager $19,800 $20,335 $20,884 $21,447 $22,027 Benefits @ 30% $50,100 $82,605 $84,836 $87,126 $89,479 $91,895 Security, Communications, and other Misc. Expenses' $20,000 $22,850 $23,467 $24,101 $24,751 $25,420 Total for 5 years

$203,000 $347,744 $253,671 $399,738 $410,531 $421,616 $432,999 $444,690 External Contract for decomissioning the facility $1,294,000 $1,478,381 $1,518,298 $1,559,292 $1,601,393 $1,644,630 Outside Consultant Site Characterization and Site $63,000 $71,977 $73,920 $75,916 $77,966 $80,071 Preparation ALARAAllowance $10,00d $11,425 $11,733 $12,050 $12,376 $12,710 Contingency Fee (25 %) $405,168 $490,380 $503,621 $517,218 $531,183 $545,525 Total $1,186,000 $2,165,2721 $2,025,839 $2,451,902 $2,518,103 $2,586,092 $2,655,917 $2,727,626 Total cost assuming start date of OIJUL15 and completion date of 30JUN19 $12,939,640 Includes an updated estimate of personel costs and a 27% increase in costs as indicated by the Implicit Price Deflator as isued by the U.S. department of Commerce.

ENCLOSURE 4 Cost Estimation for SAFSTOR for MUTR Item 1980 Cost 2000 Cost 2015 Cost 2016 2017 2018 2019 Cooldown and Preparation:

Insurance $7,000/yr for 5 years $13048/yr for five years $16,571 $17,018 $17,478 $17,950 $18,434 Reactor Director $26,000/yr for first 2 $50,000/yr for five years $145,821 $149,758 $153,802 $157,954 $162,219 Associate Director $30,000/yr for 3 years $25,000/yr for five years $102,080 $104,836 $107,667 $110,574 $113,559 Assistant Director (10%) $7,650 $7,857 $8,069 $8,287 $8,510 Technician (33%) $5,000/yr for 5 years $10,000/yr for five years $19,800 $20,335 $20,884 $21,447 $22,027 Benefits 2 $82,605 $76,378 $78,441 $80,558 $82,733 Security, Communications, $200/yr for 5 years $1,500/yr for five years and other Misc. Expenses 1 $22,850 $23,467.0 $24,101 $24,751 $25,420 Total $203,000 $347,744 $397,377 $399,649 $410,440 $421,521 $432,903 Dismantling $600,000 $1,118,478 $285,000 $292,695 $300,598 $308,714 $317,049 Packaging and Shipping of $50,000 $93,206 $138,995 $142,748 $146,602 $150,560 $154,625 Waste Final Report and Surveys $175,000 $326,222 $97,231 $99,856 $102,552 $105,321 $108,165 Unexpected Expenses $150,000 $279,619 $229,651 $233,737 $240,048 $246,529 $253,186 Total $1,186,000 $2,165,272 $1,148,254 $1,168,685 $1,200,240 $1,232,646 $1,265,928 Includes an updated estimate of personnel costs and a 2.7% annual increase incosts as indicated by the Implicit Price Deflator as isued by the U.S. department of Commerce.

ENCLOSURE 5 UNIVERSITY OF 2101 Main Administration Building College Park, Maryland 20742 301.405.4945 TEL 301.314.9395 FAX OFFICE OF THE PRESIDENT November 24, 2014 U. S. Nuclear Regulatory Commission Washington, D.C. 20555

Reference:

NRC Request for Additional Financial Information, Docket No. 50-166, for the Maryland University Training and Research Reactor (MUTR). University of Maryland, Application for Renewal of Facility Operating License No. R-70 STATEMENT OF INTENT As Vice President for Administration and Finance of the University of Maryland, College Park, I, Carlo Colella exercise express authority and responsibility to request from the State of Maryland through the Board of Regents for the University System of Maryland funds for decommissioning activities associated with operations authorized by U.S. Nuclear Regulatory Commission Facility Operating License No. R-70, further identified above. This authority and responsibility has been delegated to me by the President of the University of Maryland, who himself has delegated authority from the Board of Regents for the University System of Maryland to undertake such actions as are needed to manage the University.

Within this authority, I intend to request that funds be made available when necessary to cover the cost to decommission the Maryland University Training Reactor located on the campus of the University of Maryland, College Park. The cost, in 2015 dollars, to decommission the MUTR is estimated at

$12,939,640. I intend to request and obtain these funds sufficiently in advance of decommissioning to prevent delay of directed actions.

A copy of Sections12-104 and 12-109 of the Education Article of the Annotated Code of the State of Maryland and President Wallace D. Loh's express written delegation of authority to the University's Vice President for Administration and Finance to request funds for the decommissioning of MUTR are attached as evidence that I am authorized to represent the University of Maryland in this matter.

I, Carlo Colella, Vice President for Administration and Finance of the University of Maryland, do hereby affirm that the content of this Statement of Intent is true and accurate.

Date Carlo Colella Vice President for Administration & Finance Subscribed and sworn to before me this __ day of *, QJ 4i* 2014.

Notary Public: MXA2AL" jXe My Commission Expires: ÷ HowarComVrntl* lm ~n