ML13079A216

Letter from Kelly Mescher the Court in Sherman V. the Curators of the University of Missouri

ML13079A216
Person / Time
Site:	University of Missouri-Columbia
Issue date:	02/28/2013
From:	Mescher K Univ of Missouri - Columbia
To:	Office of Nuclear Reactor Regulation
References
TAC ME1580
Download: ML13079A216 (94)

Text

UNIVERSITY OF MISSOURI COLUMBIA 9 KANSAS CITY 9 ROLLA 9 ST. LOUIS OFFICE OF THE GENERAL COUNSEL 227 UNIVERSITY HALL COLUMBIA, MO 65211 TELEPHONE:

(573) 882-3211 FAX NUMBER: (573) 882-0050 Stephen J. Owens, General Counsel Robert L. Hess II, Counsel Phillip J. Hoskins, Deputy General Counsel Paul R. Maguffee, Counsel Katharine S. Bunn, Counsel Kathleen Murphy Markie, Counsel Susan M. Gardner, Counsel Kelly Mescher, Counsel Nancie D. Hawke, Counsel Matthew Volkert, Counsel February 28, 2013 Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 As a member of the Office of the General Counsel for the University of Missouri and the attorney who represents the Missouri University Research Reactor (MURA) I am able to state that The Curators of the University of Missouri is a state university which was created by the Missouri Constitution in Article IX Section 9(a): Section 9 (a). The government of the state university shall be vested in a board of curators consisting of nine members appointed by the governor, by and with the advice and consent of the senate.And enabled in Section 172.010 RSMo 2008: 172.010. A university is hereby instituted in this state, the government whereof shall be vested in a board of curators.The state is constitutionally required to provide funding to the University in Article IX Section 9(b): Section 9(b). The general assembly shall adequately maintain the state university and such other educational institutions as it may deem necessary.

Section 172.020 RSMo 2008 establishes that the University has all the necessary powers to operate as a state entity: 172.020. Pursuant to sections 9(a) and 9(b) of article IX of the Missouri Constitution, the state university is hereby incorporated and created as a body politic and shall be known by the name of "The Curators of the University of Missouri", and by that name shall have perpetual succession, power to sue and be sued, complain and defend in all courts; to make and use a common seal, and to alter the same at pleasure; to take, purchase and to February 28, 2013 Page 2 sell, convey and otherwise dispose of lands and chattels, except that the curators shall not have the power to subdivide, sell or convey title to any land contained within a university campus or to subdivide, sell or convey title to any portion of any parcel of land containing in excess of twenty-five hundred contiguous acres unless such transaction is approved by the general assembly by passage of a concurrent resolution signed by the governor.

The curators shall not sell, trade or otherwise convey or permit the severance of timber, minerals or other natural resources, unless the curators comply with bidding procedures established by rule that mandate notice of the transaction be provided in a manner reasonably calculated to apprise prospective purchasers.

Such rule or rules must at a minimum require at least one notice of the transaction be published in a newspaper of general circulation where the resources are located. The curators may act as trustee in all cases in which there be a gift of property or property left by will to the university or for its benefit or for the benefit of students of the university; to condemn an appropriate real estate or other property, or any interest therein, for any public purpose within the scope of its organization, in the same manner and with like effect as is provided in chapter 523, RSMo, relating to the appropriation and valuation of lands taken for telegraph, telephone, gravel and plank or railroad purposes; provided, that if the curators so elect, no assessment of damages or compensation under this law shall be payable and no execution shall issue before the expiration of sixty days after the adjournment of the next regular session of the legislature held after such assessment is made, but the same shall bear interest at the rate of six percent per annum from its date until paid; and provided further, that the curators may, at any time, elect to abandon the proposed appropriation of property by an instrument of writing to that effect, to be filed with the clerk of the court and entered on the minutes of the court, and as to so much as is thus abandoned, the assessment of damages or compensation shall be void.The federal courts have recognized that the. University is an arm of state government.

The Court in Sherman v. The Curators of the University of Missouri, 871 F.Supp. 344 (W.D.Mo. 1994), held the University is an alter-ego or instrumentality of the State, because the University does not enjoy a significant level of autonomy from the State, and any judgment against the University would ultimately be derived from the state treasury.

Id.It is my opinion that the language of the Missouri Constitution, statutes and relevant case law make clear that there is an obligation for the State of Missouri to provide financial support to the University in its obligations, should decommissioning of the properties owned by the University of Missouri take place.Very Jruly yours, Kelly M j/cher Counsel KM:lr 70.010 General Execution of Corporate or Board Instruments I Collected Rules I Rules an... Page 1 of 2 University of Missouri System COLuMBAU I KANSAS CTY I ROLuA I S. LOuIS Chapter 70: Execution of Instruments 70.010 General Execution of Corporate or Board Instruments 172.390, R.S.Mo. 1959; Bd. Min. 4-11-58, p. 12,512; Amended 5-20-77, p. 37,690 and 3-28-80, p. 38,100; Revised Bd. Min. 6-14-85; 1-21-98, Revised Bd. Min. 5-5-06.A. All Instruments-All instruments affecting The Curators of the University of Missouri, the Board of Curators of the University of Missouri, or the University generally shall be executed on behalf thereof as provided in this section unless execution thereof shall have otherwise been specifically provided for and directed by the Board.B. Real Estate 1. Any of the lands donated by the Atlantic & Pacific Railroad Company to the State of Missouri by deed dated the sixteenth day of February, 1871, and all other lands conveyed by corporations or individuals to the State of Missouri for sale in aid of the state university, may be sold and conveyed by the board of curators, and deeds of conveyance to same shall be executed by the president of the board, signed by him, with the seal of the corporation attached thereto, and attested by the secretary of the board; and provided further, that any conveyances of such lands heretofore made by said board in accordance with the provisions of this section shall divest the State of Missouri of all title to the same and vest said title in the grantees, their heirs and assigns forever.2. Instruments conveying title to real estate owned by The Curators of the University of Missouri shall, upon approval of same by the Board of Curators or University President as delegated by the Board, be executed in the name of The Curators of the University of Missouri and signed by the President of the University or his/her designee, with the corporate seal affixed, attested by the Secretary.

C. All Contracts, Other Instruments and Agreements-All contracts and other instruments and agreements of The Curators of the University of Missouri shall be executed in the name of The Curators of the University of Missouri and signed by the President thereof, the President of the University, the Vice President for Finance and Administration, or such other officer as may be specifically designated by the Board, http://www.umsystem.edu/ums/rules/collectedrules/business/ch7O/70.0O10_general_executi...

3/5/2013 70.010 General Execution of Corporate or Board Instruments I Collected Rules I Rules an... Page 2 of 2 and the corporate seal may be affixed, attested by the Secretary.

The named officers may, by written authorization, delegate special authority to sign specific instruments on their behalf to the Chancellor of each campus. The named officers and the Chancellors receiving delegation from such officers may, by specific written authorization, delegate to one or more designees all or partial authority to sign instruments on their behalf, such written authorization to be filed with the President, Vice President for Finance and Administration, and Secretary of The Board of Curators.D. Agreements Binding on Board 1. Any instrument heretofore or hereafter executed in conformity with this Section 70.010 shall have the same force and validity as if executed by the President of the Board;2. No contract or other instrument or agreement which has not been duly authorized by The Board of Curators and executed in the manner herein provided or in a manner specifically provided and directed by the Board shall be binding upon The Curators of the University of Missouri.http://www.umsystem.edu/ums/rules/collectedrules/business/ch7O/70.01 0_generalexecuti...

3/5/2013 ML kdvancinr AdvancingJissourITM 2011 Financial Report University of Missouri System COLUMBIA I KANSAS CITY I ROLLA ST.LOUIS This page is intentionaLLy Left bLank

• __ TabLe oF Contents 4 President's message 5 Statewide reach and impactCurators of the University of Missouri (i 7 University of Missouri System general officers S8 The University of Missouri System 13 Financial information 14 Management responsibility of financial statements s1 Management's discussion and analysis 30 Independent auditor's report 32 Statement of net assets 34 Statement of revenues, expenses and changes in net assets 36 Statement of cash flow 38 Statement of plan net assets 39 Notes to financial statements 69 Required supplementary information 71 Statistical section A A Message From the President The University of Missouri System plays a unique and pivotal role in our state. No other higher education institution in the state-public or private-has the breadth, reach and impact that advances Missouri in as many dimensions as our four campuses.This impact can be felt in every corner of Missouri, as the map to the right of this page shows. Whether it is educating more than 71,000 students; employing more than 28,000 employees and generating

$1.6 billion in salaries, wages and benefits; providing more than $39 million in uncompensated care to Missouri's neediest patients; or spurring economic development through start-up companies created around university-developed technologies, the University of Missouri is an unparalleled institution of higher education in this state.With our statewide impact comes a continued commitment to being good stewards of state resources.

Against a backdrop of declining state appropriations, we raised in-state undergraduate tuition an average of 5.5 percent this current academic year-a modest increase after two years of flat tuition, but nonetheless a difficult choice as we continue to balance the need for affordable access to our quality programs.

We took advantage of historically low interest rates in the bond markets to finance critically needed building renovations and new facilities on all four campuses, resulting in improved facilities for teaching, research and patient care. And we continued to bolster our financial position with assets totaling $6.1 billion and net assets of $4 billion, an increase of approximately

$335 million thanks in large part to increased investment and endowment income compared to fiscal year 2010.Our accountability to the state of Missouri and our fellow citizens also remains a top priority.

We provided our board of curators and other state leaders with our first annual progress report on our Accountability Measures, a comprehensive list of nearly 80 measures aligned with our mission, including best-in-class benchmarks, peer comparison data and three-year targets. These measures document our performance and serve as a guide for both our areas of excellence and need for continuing focus.Those measures and more are available on our Web site at www.umsystem.edu.

We invite you to take a look and discover all the ways the four campuses and health care enterprise of the University of Missouri System are advancing the education of our students, our state's economy, the health of our fellow citizens and the culture of our rural and urban communities.

Sincerly, StephenJ.

Owens Interm President, University of Missouri System Statewide Reach and Impact lf -ý -' -.I-[-s() U Key U M S st m C a p sS m all B u sin e ss T e c h no lo gT D e v e lo p m e fl C e n te r UM System Campus Research Parks / Business Incubators

'MORnet Member Sites Agriculture Research Stations M Missouri Telesealth Network Health Centers & Affiliates iliats alh NeworkSites Extension, Centers Curators of the University of Missouri The Board of Curators, the governing body of the University of Missouri, consists of nine members who are appointed by the governor, by and with the advice and consent of the Senate; provided, that not more than one person shall be appointed from the same congressional district, and no person shall be appointed a curator who shall not be a citizen of the United States, and who shall not have been a resident of the state of Missouri two years prior to his or her appointment.

Not more than five curators shall belong to any one political party.Warren K. Erdman David R. Bradley Donald L. Cupps Don M. Downing Kansas City, Chairman St.Joseph, Vice Chairman Cassville Webster Groves Term expires: Jan. 1,2013 Term expires: Jan. 1, 2015 Term expires: Jan. 1, 2017 Term expires: Jan. 1, 2015 Wayne Goode Judith G. Haggard David L. Steward Laura Confer St. Louis Kennett St. Louis Student Representative Term expires: Jan. 1, 2015 Term expires:Jan.

1,2013 Term expires: Jan. 1,2017 to the board of curators, Missouri S&T Term expires: Jan. 1,2012 Two Seats are Vacant.3 6 A* -0 University of Missouri System General OFficers StephenJ.

Owens Philullj.

Iloskins.

Gary K. Allen, Ph.D., Steven W. Graham, Ph.D.Interim President Acting General Counsel Vice President fbr Senior Associate Vice President Information Technology for Academic Aflfirs Stephen C. Knorr, Natalie "Nikki" Krawitz, Michael F. Nichols, Ph.l)., Elizabeth "Betsy" Rodriguez, Vice President for Vice President for Finance Vice President for Research Vice President for Humnan Government Relatiois

& Administration

& Economic Development Resources BradyJ. Deaton Thomas F. George Leo M. Morton Warren K. Wray Chancellor, University of Chancellor, University of Chancellor, University of Interim Chancellor, Missouri-Colu( bia Missouri-St.

Louis Missouri-Kansas City Missouri University of Science and Technology Finance Staff Natalie "Nikki" Krawitz, Vice President for finance & administration Jane E. Closterman, Controller Tom Richards, Treasurer Cuba Plain, Assistant Vice President for Budget Planning and Development The University oF Missouri -CoLumbia is the leading choice for higher education in the state with one-third of college-bound high school graduatesjoin-ing the Mizzou family each year. As one of only 34 public U.S. universities

-and one of only two institutions in Missouri -invited to membership in the prestigious Association of American Universities, it is among a handful of universities nationwide to have programs in law, medicine, veterinary medicine and a research reactor on one campus. Its economic impact on the state is far reaching, attracting approximately

$200 million in federal grants and contracts to the state each year, ultimately generating

$500 million in economic activity.

The University of Missouri -Kansas City is home to the nationally ranked Institute for Entrepreneurship and Innovation in the Bloch School of Management and has recognized performing arts programs.

It has four health science schools on one campus and is widely known for KC SourceLink, a program that helps small business development.

CENTER Missouri University of Science and TechnoLogy in Rolla is one of the nation's most focused technological research universities.

With 15 accredited undergraduate engineering programs, it provides more engineering degree options than MIT, Purdue, Illinois or Michigan, and three times the average number found at other U.S. universities.

Its graduates are highly sought by the business community, averaging the second-highest starting salaries.

UMUL The University of Missouri -Saint Louis is the largest university in the St. Louis region and third largest in Missouri.

It boasts several nationally ranked departments and programs, including the Department of Criminology and Criminal Justice and International Business.

With the largest university alumni population in the region, it is ranked 14"I' nationally for having one of the Best College and University Civic Partnerships, which measures economic, social and cultural impact on metropolitan regions.

The University of Missouri HeaLth System provides exceptional care for patients around the state and beyond. In partnership with the Tiger Institute for Health Innovations, it is equipping health professionals with the most advanced technology to provide safe and effective care. The hospital is one of only four in Missouri and 74 in the nation to be recognized for its heart and stroke care, and was recognized as one of the nation's "most wired" hospitals by Hospital & Health Networks magazine.

Advancing fisso url.F

• 0 inancial Information University of Missouri System COLUMBIA I KANSAS CITY I ROLLA I ST.LOUIS MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS October 11, 2011 The management of the University of Missouri System (the "University")

is responsible for the preparation, integrity, and fair presentation of the financial statements.

The financial statements, presented on pages 32 to 38, have been prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts based on judgments and estimates by management.

The financial statements have been audited by the independent accounting firm KPMG LLP, which was given unrestricted access to all financial records and related data, including minutes of all meetings of the Board of Curators.

The University believes that all representations made to the independent auditors during their audit were valid and appropriate.

KPMG's audit opinion is presented on pages 30-31.The University maintains a system of internal controls over financial reporting, which is designed to provide reasonable assurance to the University's management and Board of Curators regarding the preparation of reliable published financial statements.

Such controls are maintained by the establishment and communication of accounting and financial policies and procedures, by the selection and training of qualified personnel, and by an internal audit program designed to identify internal control weaknesses in order to permit management to take appropriate corrective action on a timely basis. There are, however, inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention of controls.The Board of Curators, through its Audit Committee, is responsible for engaging the independent auditors and meeting regularly with management, internal auditors, and the independent auditors to ensure that each is carrying out their responsibilities and to discuss auditing, internal control, and financial reporting matters. Both internal auditors and the independent auditors have full and free access to the Audit Committee.

Based on the above, I certify that the information contained in the accompanying financial statements fairly presents, in all material respects, the financial condition, changes in net assets and cash flows of the University.

Natalie "Nikki" Krawitz Vice President for Finance and Administration University of Missouri System COLUMBIA I KANSAS CITY I ROLLA I ST. LOUIS 215 University Hall .Columbia, MO 65211 .573-882-3611 www.umsystem.edu lq 2011 FinanciaL ReporL UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

Management's Discussion and Analysis provides an overview of the financial position and activities of the University of Missouri System (the "University")

for the fiscal years ended June 30, 2011 and 2010, and should be read in conjunction with the financial statements and notes. The University is a component unit of the state of Missouri and an integral part of the state's Comprehensive Annual Financial Report.This report includes five financial statements: " The three financial statements for the University of Missouri and its Discretely Presented Component Unit include the Statement of Net Assets, the Statement of Revenues, Expenses, and Changes in Net Assets, and the Statement of Cash Flows, where applicable." The two financial statements for the University's fiduciary fund, which includes the Retirement and the Other Postemployment Benefits Trust Funds, are the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets.The University's financial statements are prepared in accordance with U.S. generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB), which establishes financial reporting standards for public colleges and universities.

The University's significant accounting policies are summarized in Note 1 to the financial statements of this report, including further information on the financial reporting entity. In addition, a more detailed unaudited financial report that includes campus-level financial statements is available at the University of Missouri, 1000 W Nifong, Building 7, Suite 300, Columbia, MO 65211, and at www.umsystem.edu through the Finance and Administration page.FINANCIAL HIGHLIGHTS At June 30, 2011, the University's financial position remained sound, with Total Assets of $6.1 billion. Net Assets, which represent the residual value of the University's assets after deducting liabilities, totaled$4.0 billion. When operating, non-operating, and other changes are included, Net Assets increased by approximately

$335 million in fiscal year (FY) 2011, driven primarily by a $93.8 million increase in Investment and Endowment income as compared to FY 2010.2011 FinanciaL Report is UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

The following charts compare Total Assets, Liabilities, and Net Assets at June 30, 2011, 2010 and 2009, and the major components of changes in Net Assets for the years ended June 30, 2011, 2010 and 2009: STAEMET O NE ASET 02009 02010 M 2011$7,000$6,131$6,000$5,0005453 7 2 $4,000 0 o_= $3,365$3,000$2,000 $1856$1,000 soo$0 Total Assets Total Liabiliti2s Net Assets STATEMEN OF REEUS XESEADCAGSNNTAST 02009 02010 02011$3,000$2,500 -$2,000.$ $1,500$1,000-$500$316 $335$54 $58 $50 ($65)Nonoperating Revenues, Capital Contributions, Increase (Decrease) in Net* Endowment Additions

& Net Assets Extraordinary Items$0 I Operating Revenues Operating Expenses*includes State Appropriations and Cumulative Effects of Changes in Accounting Principles 16 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS 3une 30, 2011 and 2010 (unaudited)

CONDENSED STATEMENT OF NET ASSETS The Statement of Net Assets presents the University's financial position at the end of the fiscal year, including all assets and liabilities of the University and segregating them into current and noncurrent components.

Total Net Assets is an indicator of financial condition and changes in Total Net Assets indicate if the overall financial condition has improved or worsened.

Assets and liabilities are generally measured using current values with certain exceptions, such as capital assets which are stated at cost less accumulated depreciation, and long-term debt which is stated at cost.The following table summarizes the University's assets, liabilities and net assets at June 30, 2011, 2010 and 2009: CODESE STATEM~ ~i ~~ENT OF NE ASSETS (i 0huad ofd .aS As of June 30, 2011 Assets Current Assets $ 869,091 Noncurrent Assets Endowment and Other Long-Term Investments 2,519,102 Capital Assets, Net 2,642,196 Other 82,128 Deferred Outflow of Resources 19,023 Total Assets and Deferred Outflow of Resources

$ 6,131,540 Liabilities Current Liabilities Current Portion of Long-Term Debt $ 29,107 Long-Term Debt Subject to Rema rketi ng 220,885 Other 563,676 Noncurrent Liabilities Long-Term Debt 1,140,934 Other 160,694 Total Liabilities 2,115,296 Net Assets Invested in Capital Assets, Net of Related Debt 1,516,095 Restricted

-Nonexpenda bl e 788,876 Expendable 373,910 Unrestricted 1,337,363 Total Net Assets 4,016,244 Total Liabilities and Net Assets $ 6,131,540 ASSETS Total Assets increased by $595 million, or 10.7%, to$6.1 billion as of June 30, 2011, compared to the prior year. The increase during FY 2011 was driven primarily by the strong performance of the University's Investments.

At the same time, the University continued to expand Capital Assets across all of its campuses to meet housing, educational, and patient care needs. From FY 2009 to FY 2010, Total Assets increased by 14.5%, primarily due to strong performance of Investments.

At June 30, 2011, the University's working capital, which is current assets less current liabilities, was$55.4 million, an increase of $18.6 million over the previous year. The largest driver of the increase was a$129.4 million increase in short-term investments 2011 FinanciaL Report 17 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited) which was primarily related to a change in mix between short-term and long-term investments within the portfolio.

As a measurement of actual liquidity, working capital is adversely impacted by the inclusion, per accounting guidelines, of Long-Term Debt Subject to Remarketing as these balances are not contractually due within one year. If Long-Term Debt Subject to Remarketing were excluded from Current Liabilities, working capital would be $276.3 million at June 30, 2011, also expressed as Current Assets of 1.47 times Current Liabilities.

The following table illustrates actual working capital, as well as working capital adjusted for Long- Term Debt Subject to Remarketing:

SU M R OF WOKNGCPIA As of June 30, 2011 Current Assets $ 869,091 Current Li a bil i ties 813,668 Working Capital, Unadjusted

$ 55,423 Ratio of Current Assets to Current Liabilities (Unadjusted) 1.07 Current Assets 869,091 Current Liabilities 813,668 Less: Long-Term Debt Subject to Rema rketi ng (220,885)Current Liabilities, As Adjusted 592,783 Working Capital, As Adjusted $ 276,308 Ratio of Current Assets to Current Liabilities (As Adjusted) 1A7 18 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

At June 30, 2011, the University held $221.3 million in Cash and Cash Equivalents, a decrease of $106.0 million from June 30, 2010. The June 30, 2010 cash balances of $327.3 million were $74.4 million higher than June 30, 2009. The decrease in cash at June 30, 2011 is largely due to increased working capital being invested at June 30, 2011 as compared to June 30, 2010. Long-Term and Short-Term Investments totaled$2.7 billion as of June 30, 2011, representing an increase of 27.4% over the prior year as compared to a 27.7% increase from FY 2009 to FY 2010. The increase in investment balances during FY 2011 primarily reflects positive investment returns and unspent bond proceeds related to projects under construction at June 30, 2011. The financial markets continued to improve during FY 2011; net realized and unrealized gains and losses improved by $72.5 million, going from a net gain of $119.6 million in FY 2010 to a net gain of$192.1 million in FY 2011. The overall change in investment returns was most evident in the Balanced Pool, which experienced a net gain of 21.5% in FY 2011 as compared to a net gain of 11.4% in FY 2010.Composition and returns of the University's various investment pools for the years ended June 30, 2011 and 2010 were as follows: CASH, CASHI EQUIjVALENTS AND j ~INVESTMENT (i thuad of **~as June 30, 2011 Short-Term and Benchmark Cash and Cash Long-Term Total Index Equivalents Investments Total Return Return (A)General Pool Short-Term Funds $ 166,839 $ 1,127,038

$ 1,293,877 2.1% 1.7%Balanced Pool 13,478 294,197 307,675 21.5% 22.3%Treasury TIPs 375 137,553 137,928 7.5% 7.5%Endowment Funds Balanced Pool 44,411 969,376 1,013,787 21.5% 22.3%Fixed Income Pool 2,751 69,737 72,488 2.1% 3.7%Other (6,567) 121,535 114,968 N/A N/A Total $ 221,287 $ 2,719,436

$ 2,940,723 (A) Benchmark index returns are calculated by independent investment consultants based on returns of market indicies.2011 FinanciaL Report1 19 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

At June 30, 2011, Accounts Receivable, Net of $255.6 million included a $30.8 million receivable related to medical resident FICA refund claims and accrued interest income on the claims, for periods ending before April 1, 2005 due to notification for the Internal Revenue Service (IRS) of it is intent to honor these claims. The net FICA refund to the University, after settlements of $21.0 million to former medical residents and other third-party entities, is $6.8 million plus $3.0 million in interest income.At June 30, 2011, the University's investment in Capital Assets totaled $2.6 billion compared to $2.5 billion at June 30, 2010. The University added $262.9 million in capital assets, net of retirements, during FY 2011, offset by depreciation of $155.1 million for the year. FY 2010 capital asset additions of $293.6 million, net of retirements, were offset by $152.1 million in depreciation and transfers.

Note 6 presents additional information on changes by asset classification; major capital projects either substantially completed in FY 2011 or ongoing are shown in the following table: Expenditures Prject Thrugh Campus Budget June 30, 2011 Source of Funding Columbia: Renovation of Mark Twain Hall $ 19,900,000

$ 1,300,000 Revenue Bonds, Campus Reserves Renovation of Hudson, Gillett and Rollins Halls 42,000,000 35,800,000 Revenue Bonds, Campus Reserves Power Plant -Combined Heat & Power Upgrade 75,800,000 23,900,000 Revenue Bonds, Campus Reserves Patient CareTower (University Health System) 203,000,000 29,000,000 Revenue Bonds, Campus Reserves, Gifts Kansas City: Oak Street Parking Structure 23,100,000 3,300,000 Revenue Bonds Missouri S&T: Geothermal Energy Project $ 32,400,000

$ 300,000 Revenue Bonds Total Liabilities were $259.5 million higher at June 30, 2011 as compared to June 30, 2010, and $384.1 million higher at June 30, 2010 as compared to June 30, 2009.Significant changes in Current Liabilities at June 30, 2011 include a $9.7 million increase in Funds Held for Others; a $5.4 million increase in Investment Settlements Payable for purchases of investments occurring on or before June 30, but settling after June 30; and a $10.5 million decrease in Collateral Held for Securities Lending. Accounts Payable increased

$7.0 million which includes a $21.0 million payable for FICA refund and related inters on refund due to former medical residents and third-party entities discussed above. Issuance of new bonds in FY 2011, discussed below, represented the largest increase in liabilities at June 30, 2011.Current Liabilities include long-term variable rate demand bonds subject to remarketing totaling $220.9 million, $223.7 million and $224.9 million at June 30, 2011, 2010 and 2009, respectively, with final contractual maturities ranging from fiscal years 2031 to 2036. Despite contractual maturities beyond one year, these variable rate demand bonds are classified as current liabilities because the University is ultimately the sole source of liquidity should the option to tender be exercised by the bondholder.

Non Current Liabilities represent those commitments beyond one year. On December 21, 2010, the University issued $252.3 million in taxable Series 2010A System Facilities Revenue Bonds designated as"Build America Bonds" under the Internal Revenue Code of 1986, as amended. The Series 2010A bonds carry a weighted average coupon rate of 5.79%. With respect to the Series 2010A bonds, the University will receive a cash subsidy payment from the United States Treasury in an amount equal to 35% of the interest payable on each interest payment date. The all-in-true interest cost of the Series 2010A bonds, after taking into account the 35% interest payment from the federal government is 3.8%. The Series 2010A bonds were Aal and AA+ rated by Moody's and Standard &Poor's, respectively.

Proceeds from issuance of the 20 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

Series 2010A bonds are being used to finance construction or renovation of housing facilities on the Columbia, Kansas City, and Missouri Science and Technology (Missouri S&T) campuses, energy management improvements on the Columbia and Missouri S&T campuses, construction of a new parking structure on the Kansas City campus, new patient care tower and Ellis Fischel Cancer Center relocation at the Health System, and renovation, furnishing and equipping various other facilities, and to finance capitalized interest and certain costs of issuance.In July 2009, the University issued $332.1 million of System Facilities Revenue Bonds, consisting of $256.3 million in taxable Series 2009A Bonds designated as"Build America Bonds" under the Internal Revenue Code of 1986, as amended, and $75.8 million in traditional tax exempt Series 2009B Bonds. The Series 2009A and 2009B bonds carry weighted average coupon rates of 5.96% and 4.16%, respectively.

With respect to the Series 2009A bonds, the University will receive a cash subsidy payment from the United States Treasury in an amount equal to 35% of the interest payable on each interest payment date. The all-in-true interest cost of the Series 2009A bonds, after taking into account the 35% interest payment from the federal government is 3.95%. The Series 2009A and 2009B bonds were Aal and AA+ rated by Moody's and Standard & Poor's, respectively.

Proceeds from issuance of the Series 2009A and 2009B bonds are being used to finance construction or renovation of housing facilities on the Columbia, Kansas City, and Missouri S&T campuses, renovation of power plant and other energy management improvements on the Columbia campus, construction of a new student union facility on the Kansas City campus, Research Park office facility on the Missouri S&T campus, new patient care tower and Missouri Orthopaedic Institute at the Health System, and renovation, furnishing and equipping various other facilities, and to finance capitalized interest and certain costs of issuance.The following is a summary of long-term debt by type of debt instrument:

LONG-TEjRMEB As of June 30, 2011 System Facilities Revenue Bonds $ 1,367,925 Unamortized Premium and Loss on Defeasance 14,300 Total Bonds Payable 1,382,225 Capital Lease Obligations 7,405 Notes Payable 1,296 Total Long-Term Debt $ 1,390,926 Contractual Maturities Within One Year Bonds Payable -Fixed Rate $ 25,195 Bonds Payable -Variable Rate Demand 2,795 Notes Payable 328 Capital Lease Obligations 789 Total Contractual Maturities Within One Year $ 29,107 H 2011 FinanciaL Report 21 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

NET ASSETS Net Assets represent the value of the University's assets after liabilities are deducted.

The University's total Net Assets increased by $335.5 million during the year ended June 30, 2011, after increasing by $316.0 million in the year ended June 30, 2010. In FY 2010 and FY 2009 changes in total Net Assets include the effects of changes in accounting principles as follows: a decrease of $6.2 million in FY 2010 (GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments);

and an increase of $13.3 million in FY 2009 (GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments).

The distribution of the Net Asset balances, including additional details on unrestricted net assets by fund type, as of June 30, 2011, are as follows: TOA NET ASES-$4. ILO Total Net Assets are reflected in the four component categories as follows: Invested in Capital Assets, Net of Related Debt, represents the University's investment in capital assets, net of accumulated depreciation and outstanding debt related to acquisition, construction or improvement of those assets. This category increased by $31.0 million to $1.5 billion in FY 2011 after decreasing by $55.6 million in FY 2010. Such changes are largely driven by the timing of debt issuance and the completion of associated construction projects.Restricted Nonexpendable Net Assets include endowment and similar assets that are subject to externally imposed stipulations for the principal to be maintained in perpetuity by the University.

Realized and unrealized market gains contributed to a $109.4 million, or 16.1%, increase in Restricted Non-expendable Net Assets during FY 2011. Realized and unrealized market gains were largely responsible for a$67.4, or 11.0%, increase during FY 2010.22 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

Restricted Expendable Net Assets are resources that are subject to externally imposed stipulations regarding their use, but are not required to be maintained in perpetuity.

This category increased by$21.7 million, or 6.2%, during FY 2011 and $8.4 million, or 2.5%, in FY 2010. As of June 30, 2011, this category includes:-$264.6 million of net assets restricted for operations and endowment purposes compared to$244.2 million at June 30, 2010;-$77.3 million for student loan programs compared to $75.6 million at June 30, 2010; and-$32.0 million for facilities compared to $32.4 million at June 30, 2010.Unrestricted Net Assets are not subject to externally imposed stipulations although these resources may be designated for specific purposes by the University's management or Board of Curators.

This category increased by $173.4 million, or 14.9%, to $1.3 billion at June 30, 2011 after increasing by $295.7 million, or 34.1%, in FY 2010. Maintaining adequate levels of unrestricted net assets is one of several key factors that have enabled the University to maintain its Aal credit rating. As of June 30, 2011 and 2010, University Health System designated funds totaled $353.7 million and $319.2 million, respectively; capital project-designated funds totaled $215.7 million and $188.5 million, respectively; student loan program-designated funds totaled $8.5 million and $8.0 million, respectively; and unrestricted funds functioning as endowments totaled $118.3 million and $100.8 million, respectively.

The remaining Unrestricted Net Assets which are available for the University's instructional and public service missions and its general operations totaled $641.1 million and $547.4 million at June 30, 2011 and 2010, respectively.

2011 FinanciaL Report 23 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS The Statement of Revenues, Expenses, and Changes in Net Assets presents the University's results of operations.

The Statement distinguishes revenues and expenses between operating and non-operating categories, and provides a view of the University's operating margin.CONDENISED

~ m~~ b e~: '~~ STATEMENT~.

OF REEUS EXPENSE AN CHANGE IN NE ASET-I Fiscal Year Ended June 30, 2011 Operating Revenues Net Tuition and Fees n e c (502 453sef s6 Gr ants aEnd Contr acts 36,24 Patient Med icaF P Services, Net and Ote ,uiir Other Auxilianry Enterprises sgicat to the Other Oati Revenues rudoea Tot al Operating Revenues 2,le25,77i Operating Expenses Sa lar ies, Wages a nd Ben efi ts1,056 5343 Supplies, Services and Other Operating Expenses be r e n y is Other Operating Expenses 42 i 0t Total Expenses 2,30,503 Operating Loss Before State Appropriations(5476 State Appropriations 47631 4 i Income (Loss) after State Appropriations, before Nonoperating Revenues (Expenses)

......,155 Nonoperating Revenues (Expenses)

Investment and Endowment Income (Losses), Net of Fees 26,3 P ri vate Gifts ...52 '564 Inter es t Ex pen se (491S07)Other Nonoperati ng Revenues, Net 8,8 Net Nonoperati inl Revenues (Expenses)35,7 Income (Loss) before Capital Contributions, Additions to Permanent Endowments and Extraordinary Item28,3 State Ca pitalI Appropriations8,4 Ca pitalI Gifts and Grants 15,46 Private Gifts for Endowment Purposes 2,7 Extra ordi na ry Item Increase (Decrease) in Net Assets 335,508....

Net Assets, Beginning of Year3,876 Cumulative Effect of Chang~e in Accounting Principles

.........Net Assets, Beginning of Year, as Adjusted3,876 Net Assets, End of Year$4,124 fi P REVENUES Fees, Patient Medical Services and Other Auxiliary Opeatig Rvenes eprsen reoures eneate by Enterprises contributed most significantly to the the University in fulfilling its instruction, research, and inraeopatgrvnuinF201wleGns public service missions.

Total Operating Revenues adCnrcsadPtetMdclSrie a h increased by $84.9 million, or 4.4% in FY 2011, and by lreticessi h rvosya.Nnprtn

$78. milio, o 4.2 inFY 010 NetTuiionand Revenues are those not generated by the University's 2/4 2011 FinanciaL ReporL UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited) core missions and include such funding sources as State and Federal Appropriations, Pell Grants, Private Gifts and Investment and Endowment Income.The following is a graphic illustration of operating revenues by source for FY 2011: TT O REVENUS : 0I both fiscal years 2011 and 2010 at $26.9 million, or 3.6%, and $34.4 million, or 4.9%, respectively.

Nonoperating Revenues Total State Appropriations received for University operations, University Health System operations, and other special programs decreased by $60.7 million, or 12.2%, in FY 2011, and increased by $18.9 million, or 3.9%, in FY 2010. The decrease was largely related to a 5.2% reduction in state appropriations for operations in FY 2011 and one-time funding in FY 2010 in the amount of $23.5 million that was received for the Caring for Missourians initiative.

Additionally, state funding was cut or eliminated for other curator's programs such as MOREnet, the Health System and Mid-Missouri Mental Health Center.As one of the more volatile sources of nonoperating revenues, Investment and Endowment Income includes interest and dividend income as well as realized and unrealized gains and losses. Realized and unrealized market value gains, losses and other activity affecting Investment and Endowment Income resulted in a net gain of $266.6 million in FY 2011 as compared to a net gain of $172.8 million in FY 2010. This includes an increase in Investment and Endowment Income of$93.8 million for the year ended June 30, 2011, as compared to a $346.2 million increase for the year ended June 30, 2010.Gift income is reflected in three categories:

Private Gifts, Capital Gifts and Grants (which are restricted for adding or improving capital assets) and Private Gifts for Endowments (which are restricted for establishing endowments).

Private Gifts and Grants can fluctuate significantly from year to year due to the voluntary nature of donors' gifts. In FY 2011, the University received gifts totaling $94.4 million, as compared to$92.8 million and $86.7 million for FY 2010 and FY 2009, respectively.

Operating Revenues Tuition and Fees, net of Scholarship increased by $29.2 million, or 6.3%, in FY$13.1 million, or 2.9%, in FY 2010. The both FY 2011 and FY 2010 were driven increases in student enrollment.

Allowances, 2011 and by increases in primarily by As a research institution, the University receives a substantial amount of funding through Federal, State and Private Grants and Contracts.

Overall, sponsored funding increased by $2.4 million, or 0.8%, in FY 2011 compared to an increase of 7.2% in FY 2010. A 6.7%increase in Federal grants offset declines in State and Local and Private grants in FY 2011.The University's auxiliary enterprises include the University Health System, Housing and Dining Services, campus Bookstores, and other such supplemental activities.

Total operating revenues generated by these auxiliary enterprises increased by $51.6 million, or 4.8%, in FY 2011 as compared to an increase of $47.8 million, or 4.6%, in FY 2010. Patient Medical Services, which includes fees for services provided by the University Health System, had the largest increase in 2011 FinanciaL Report 25 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

Total Interest Expense during the years ended June 30, 2011 and 2010 was $59.7 million and $53.4 million, respectively.

Interest expense associated with financing projects during construction, net of any investment income earned on bond proceeds during construction, is capitalized.

For the years ended June 30, 2011 and 2010, capitalization of interest earned on unspent bond proceeds totaled $10.2 million and $7.3 million, respectively, resulting in net interest expense of $49.5 million and $46.1 million, respectively.

The following is a summary of interest expense associated with Long-Term Debt: INTEREST EXPENSE (in thousands of dol [a rs )Fiscal Year Ended June 30, 2011 System Facilities Revenue Bonds $ 53,563 Net Payment on Interest Rate Swaps 5,129 Total System Facilities Revenue Bonds 58,692 Capital Project Notes Capitalized Lease Obligations 986 Notes Payable 45 Total Interest Expense Before Capitalization of Interest 59,723 Capitalization of Interest, Net of Interest Earned on Unspent Bond Proceeds (10,216)Total Interest Expense $ 49,507 In FY 2011, Other Nonoperating Revenues, Net of$83.1 million increased

$15.0 million over FY 2010 largely due to increases in Federal Appropriations and Federal Pell Grants of $7.0 million, or 32.4%, and $9.7 million, or 20.0%, respectively.

In FY 2011 and FY 2010, Federal Appropriations include cash subsidy payments from the United States Treasury totaling $7.2 million and $5.0 million, respectively, for designated Build America Bonds outstanding.

Pell Grants increased by$9.7 million and were largely driven enrollment and student need.by increased In FY 2011, State Capital Appropriations of $8.0 million represented a decrease of $6.2 million from FY 2010. FY 2011 State Capital Appropriations included$2.6 million for the Mexico Plant Science Research Center (Columbia campus) and $2.8 million for Missouri Psychiatric Center (Columbia campus).26 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

OPERATING EXPENSES Total Operating Expenses increased by $111.7 million, or 4.6%, in FY 2011 compared to an increase of $53.1 million or 2.2% in FY 2010. The following graph illustrates the University's operating expenses by natural classification for FY 2011: OPRAIN EXESSBAUALCASFCTO

$.BIO growth in revenue. Other contributing factors relate to necessary expenses in the current fiscal year that were deferred in prior fiscal years due to budgetary constraints.

The following illustrates the University's operating expenses by function for FY 2007 through FY 2011: IF 207-FY21 Supplies, Services and_Other 28% j Benefitsj 13%Scholarships and-Fellowships 3%Depreciation 6%Salaries and Wages 50%2007 2008 2009 2010 2011 100%90%80%70%60%50%40%30%20%10%0%During FY 2011 and FY 2010, Salaries, Wages and Benefits increased approximately 3.9% and 1.8%, respectively, over the prior fiscal year. The increases in in FY 2011 were largely driven by increases in Staff Benefit costs. Staff Benefits as of June 30, 2011, increased by $25.0 million, or 8.2%, as compared to June 30, 2010. Contributing to this was an increase in the employer contributions rate for the retirement plan and increases in claims and administrative fees paid to medical and dental providers.

These increases were partially offset by a $6.8 million refund of the employer portion of FICA tax paid for medical residents between the years of 1995 and 2005. Excluding the medical resident FICA refund, Staff Benefits increased$31.8 million or 10.5% over FY 2010. For FY 2011, beyond a small pool for faculty and staff promotions, increases in salaries were primarily attributable to salaries funded by increased grant support and associated activities, as well as auxiliary enterprise growth driven by increased enrollment.

In FY 2011 and FY 2010, the University's Supplies, Services, and Other Operating expenses of $716.0 million and $676.4 million increased by $39.6 million, or 5.9%, and $3.7 million, or 0.5%, respectively, over the prior fiscal year. These increases are primarily driven by Auxiliary Enterprises and their related" Instructson" Research 1 Public Service" Academic Support* Student Services* Institutional Support* Operation

& Maintenance of Plant* Health System" Other Auilhary Enterprises Scholarshps

& Fellowships" Depreciation The core missions of instruction, research, and public service account for the largest proportion of Operating Expenses at 36.4% for FY 2011. The University Health System constitutes the next highest proportion at 29.2% of expenses for FY 2011. Excluding the Health System, instruction, research, and public service account for 51.3% of Operating Expenses for FY 2011.Institutional support, which represents the core administrative operations of the University, was less than 5 cents of each dollar spent during this 5-year period.2011 Financial Report 27 UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

STATEMENT OF CASH FLOWS The Statement of Cash Flows provides information about the University's sources and uses of cash and cash equivalents during the fiscal year. The following summarizes sources and uses of cash and cash equivalents for the three years ended June 30, 2011, 2010 and 2009: CONDENSED~~

STTMN6FCS LW Fiscal Year Ended June 30, 2011 Net Cash Used in Operating Activities (332,797)Net Cash Provided by Noncapital Financing Activities 617,306 Net Cash Provided by (Used in) Capital and Related Financing Activities (64,886)Net Cash Provided by (Used in) Investing Activities (325,649)Net Increase (Decrease) in Cash and Cash Equivalents (106,026)Cash and Cash Equivalents, Beginning of Year 327,313 Cash and Cash Equivalents, End of Year 221287 L L Net Cash Used in Operating Activities reflects the continued need for funding from the state of Missouri, as funding received from tuition and fees and related sales and services of auxiliary and educational activities are not sufficient to cover operational needs. In FY 2011, cash used in operating activities increased by$67.9 million as compared to FY 2010 due primarily to increased cash outflows from payroll and benefits and payments to suppliers.

In FY 2009, cash used in operating activities decreased by $62.1 million from FY 2009.The University's most significant source of cash, Net Cash Provided by Noncapital Financing Activities, includes funding from State and Federal appropriations, Pell grants and noncapital private gifts.Cash from these sources totaling $617.3 million,$622.4 million and $595.3 million in FY 2011, FY 2010 and FY 2009, respectively, directly offset the additional cash needs resulting from operations.

Net Cash Provided by (Used In) Capital and Related Financing Activities decreased by $70.6 million in FY 2011 due largely to a decrease in the amount of bonds issued in FY 2011. Net Cash Used in Capital and Related Financing Activities of $5.7 million in FY 2010 was due largely to the bond issue in July 2009 and related unspent bond proceeds associated with capital projects still under construction at June 30, 2010.Net Cash Provided by (Used In) Investing Activities reflects net cash outflows of $325.6 million and $288.9 million in FY 2011 and FY 2010, respectively.

This is consistent with growth in the University's investments, which includes the temporary investment of unspent bond proceeds.ECONOMIC OUTLOOK The University of Missouri is the state's public, research, land grant University committed to serving the students, patients, and citizens of the state of Missouri while being cognizant of the University's responsibility to use resources wisely. The University continues to successfully navigate through the financial challenges related to the general economic climate and uncertainties surrounding the state's financial support for higher education.

State appropriations for operations decreased by 5.2% in FY 2011 and will further decrease by 8.1% in FY 2012. Without significant increases in general revenues, the state will continue to be challenged to increase funding for higher education for FY 2013 and beyond.The University has experienced a significant amount of enrollment growth, over 28% growth between fall 2000 and fall 2010. However, enrollment growth is projected to slow given flattening in-state demographics.

28 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2011 and 2010 (unaudited)

The University is now educating 17,000 more students each year on less state support than received in 2001.Approximately 70% of the state's growth in undergraduate enrollment among four-year institutions over the last 10 years has occurred at the University of Missouri.

While this has increased revenue support to the operating budget it has significantly eroded the state appropriations per full-time equivalent student. These factors required the University to increase tuition and fees by an average of 5.5% for FY 2012. Future increases in tuition will largely be driven by the level of state support available.

Despite the challenges generated by decreased state funding and increased enrollment, the University has been able to strengthen its financial position due to diversified funding sources, historically low borrowing costs and cost containment measures.

The University continues to increase private gifts, with an increase of 7.9% in FY 2011 and a focus on improving in FY 2012.The increase in giving along with strong investment performance in FY 2011 will help provide additional resources to meet the future budget needs of the University.

The University continues to grow and improve upon its strong research base. Research expenditures continued to increase in FY 2011. It is expected this will remain relatively flat in FY 2012 as the funding provided by the American Recovery and Reinvestment Act begins to wane. Additionally, federal agencies are being faced with shrinking budgets as part of the broader reductions in the Federal budget.To offset these decreases the University is looking for other opportunities to partner with federal agencies in other grant and contracts areas. For example, the University has partnered with the Department of Health and Human Services to establish the Missouri Health Information Technology Assistance Center, which is a public-private partnership that brings together leading health care and information technology experts from health care organizations, academia, industry, and government and is focused on providing resources to promote meaningful use of health information technology.

The University is aware of its responsibility to control costs and provide an affordable education for Missourians.

The University has continued to control expenditures and is in the process of implementing business process redesigns to achieve greater cost savings and efficiencies.

Additionally, the University has benefited from historically low borrowing costs.This has allowed the University to move forward on some much needed capital improvements despite declining state support for capital improvements For fiscal year 2011, the University Health System continued to see increasing revenues, even during a time of economic instability.

As in prior years, the University Health System is focusing on improving patient care, customer service and quality. The State appropriation funding approved for fiscal year 2012 is slightly below fiscal year 2011. In April 2011, a 5% fee increase was implemented and continues into fiscal year 2012 with pricing revisions made throughout the year as needed. For the future, the University Health System continues to pursue growth and its academic mission. Currently under construction is a $203 million patient care tower, which includes a replacement of the Ellis Fischel Cancer Center. The patient tower is scheduled to be completed in fiscal year 2013. These capital investments will assist in providing quality care to patients and enhanced facilities for physician recruitments with the University of Missouri-Columbia School of Medicine.In March 2010, the federal government passed the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, collectively referred to as "Health Care Reform." This legislation will significantly impact the future of health care. As the final regulations and requirements of the Acts are prepared, University Health System management continues to review and monitor the effect that the legislation will have on the organization.

The University Health System has not determined the full financial statement effect of this new Health Care Reform legislation.

As noted in prior years, the national and state economy will continue to pose budgetary challenges for the University in the future. However, strong student demand, highly successful capital campaigns, robust research funding, economic development programs and a financially stable and growing healthcare system are all factors in the positive outlook for the University of Missouri.2011 Financial ReporL 29 INDEPENDENT AUDITORS' REPORT KPMG LLP Suite 900 10 South Broadway St. Louis, MO 63102-1761 The Board of Curators University of Missouri System: We have audited the accompanying financial statements of the business-type activities, the discretely presented component unit, and the aggregate remaining fund information of the University of Missouri System, a component unit of the State of Missouri, as of and for the years ended June 30, 2011 and 2010, which collectively comprise the University of Missouri System's basic financial statements as listed in the table of contents.

These financial statements are the responsibility of the University of Missouri System's management.

Our responsibility is to express opinions on these financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University of Missouri System's internal control over financial reporting.

Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinions.In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the discretely presented component unit, and the aggregate remaining fund information of the University of Missouri System as of June 30, 2011 and 2010, and the respective changes in financial position, and where applicable, cash flows thereof for the years then ended, in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated October 11, 2011 on our consideration of the University of Missouri System's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance.

That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.St. Louis Office KPMG LLP is a Delaware limited liability partnership.

I M Celebrating the U.S. member firm of KPMG International Cooperative ye a19114-011

("KPMG International"), a Swiss entity.2011 Financial Report 30 INDEPENDENT AUDITORS' REPORT The management's discussion and analysis on pages 15 through 29 and the schedules of employer contributions and the schedules of funding progress on pages 69 and 70 are not a required part of the basic financial statements but are supplementary information required by U.S. generally accepted accounting principles.

We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information.

However, we did not audit the information and express no opinion on it.Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University of Missouri System's basic financial statements.

The statistical section on pages 72 through 86 are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on it.KýMC, LL-P St. Louis, Missouri October 11,2011 2011 Financial Report 31 UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF NET ASSETS As of ]une 30, 2011 and 2010 (in thousands)

Discretely Presented University Component Unit 2011 2010 2011 2010 Assets Current Assets Cash and Cash Equivalents

$ 44,249 $ 149,515 $ 8,433 $ 7,318 Restricted Cash and Cash Equivalents 177,038 177,798 -Short-Term Investments 151,070 40,268 -Restricted Short-Term Investments 49,264 30,619 -Investment of Cash Collateral 101,047 111,557 -Accounts Receivable, Net 255,589 249,460 16,566 16,927 Pledges Receivable, Net 12,374 14,505 -Investment Settlements Receivable 15,634 6,200 Notes Receivable, Net 8,532 9,046 -Due From (To) Component Units (6,658) (5,285) 6,658 5,285 I nventori es 35,193 28,401 3,228 3,058 Prepaid Expenses and Other Current Assets 25,759 25,604 1,825 1,541 Total Current Assets 869.091 837.688 36.710 34.129 Noncurrent Assets Restricted Cash and Cash Equivalents Pledges Receivable, Net Notes Receivable, Net Deferred Charges and Other Assets Restricted Other Assets Long-Term Investments Restricted Long-Term Investments Capital Assets, Net Total Noncurrent Assets Deferred Outflow of Resources 14,895 54,015 13,218 1,357,918 1,161,184 2,642,196 5,243,426 19.023 4,346 16,256 50,635 12,374 1,171,998 891,067 2,534,365 4,676,695 22.192 1,788 3,279 55,627 69,021 134,061 3,838 1,798 3,563 48,229 73,684 131,112 Total Assets and Deferred Outflow of Resources

$6,131,540

$5,536,575

$ 170,771 $ 165,241 Liabilities Current Liabilities Accounts Payable $ 130,803 $ 123,809 $ 5,156 $ 3,974 Accrued Liabilities 143,347 138,309 13,879 12,707 Deferred Revenue 78,209 78,200 -Funds Held for Others 62,951 53,245 -Investment Settlements Payable 47,319 41,931 -Collateral Held for Securities Lending 101,047 111,557 -Current Portion of Long-Term Debt 29,107 30,139 2,263 2,154 Long-Term Debt Subject to Rema rketi ng Agreements 220,885 223,680 --Total Current Liabilities 813,668 800,870 21,298 18,835 (continued) 32 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF NET ASSETS As oF June 30, 2011 and 2010 (in thousands)

Discretely Presented University Component Unit 2011 2010 2011 2010 Liabilities, Continued Noncurrent Liabilities Long-Term Debt 1,140,934 915,906 34,447 36,679 Deferred Revenue 1,519 1,925 --Derivative Instrument Liability 26,702 30,680 Other Postemployment Benefits Liability 83,306 52,613 --Other Noncurrent Liabilities 49,167 53,845 1,156 959 Total Noncurrent Liabilities 1,301,628 1,054,969 35,603 37,638 Total Liabilities 2,115,296 1,855,839 56,901 56,473 Net Assets Invested in Capital Assets, Net of Related Debt 1,516,095 1,485,090 32,615 35,209 Restricted Nonexpendable

-Endowment 788,876 679,494 --Expendable

-Scholarship, Research, Instruction and Other 264,605 244,226 3,279 3,562 Loans 77,300 75,637 --Capital Projects 32,005 32,373 --Unrestricted 1,337,363 1,163,916 77,976 69,997 Total Net Assets 4,016,244 3,680,736 113,870 108,768 Total Liabilities and Net Assets $6,131,540

$5,536,575

$ 170,771 $ 165,241 See notes to the financial statements.

2011 FinanciaL Report 33 UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS For the Years Ended June 30, 2011 and 2010 (in thousands)

Discretely Presented University Component Unit 2011 2010 2011 2010 Operating Revenues Tuition and Fees (Net of Provision for Doubtful Accounts of $5,739 in 2011 and$6,459 in 2010) $ 671,419 $ 630,498 $ -$Less Scholarship Allowances 175,917 164,187 -Net Tuition and Fees 495,502 466,311 -Federal Grants and Contracts 196,122 183,885 -State and Local Grants and Contracts 57,375 66,194 -Private Grants and Contracts 67,025 68,044 -Sales and Services of Educational Activities 21,671 22,560 -Auxiliary Enterprises

-Patient Medical Services, Net 763,674 736,799 164,760 164,746 Housing and Dining Services (Net of Scholarship Allowance of $614 in 2011 and $542 in 2010) 93,724 89,743 -Bookstores 58,591 59,288 -Other Auxiliary Enterprises (Net of Scholarship Allowance of $7,704 in 2011 and $7,466 in 2010) 220,162 198,748 -Other Operating Revenues 51,871 49,250 -Total Operating Revenues 2,025,717 1,940,822 164,760 164,746 Operating Expenses Salaries and Wages 1,272,226 1,236,965 68,021 64,048 Benefits 328,340 303,300 14,655 15,115 Supplies, Services and Other Operating Expenses 716,044 676,362 65,177 63,156 Scholarships and Fellowships 58,790 55,469 -Depreciation 155,103 146,753 10,943 11,098 Total Operating Expenses 2,530,503 2,418,849 158,796 153,417 Operating Income (Loss) before State Appropriations (504,786)

(478,027) 5,964 11,329 State Appropriations 437,631 498,358 -Operating Income (Loss) after State Appropriations, before Nonoperating Revenues (Expenses)

(67,155) 20,331 5,964 11,329 Nonoperating Revenues (Expenses)

Federal Appropriations 28,416 21,455 -Federal Pell Grants 57,951 48,281 -Investment and Endowment Income (Losses), Net of Fees 266,633 172,833 652 789 Private Gifts 52,564 48,695 -21 Interest Expense (49,507) (46,103) (1,954) (1,950)Other Nonoperating Revenues (Expenses)

(3,279) (1,659) 440 761 Net Nonoperating Revenues (Expenses) 352,778 243,502 (862) (379)311 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS For the Years Ended June 30, 2011 and 2010 (in thousands)

Discretely Presented University Component Unit 2011 2010 2011 2010 Income before Capital Contributions and Additions to Permanent Endowments 285,623 263,833 5,102 10,950 State Capital Appropriations 8,043 14,205 --Capital Gifts and Grants 15,466 19,381 Private Gifts for Endowment Purposes 26,376 24,703 --Increase in Net Assets 335,508 322,122 5,102 10,950 Net Assets, Beginning of Year 3,680,736 3,364,777 108,768 97,818 Cumulative Effect of Change in Accounting Principles

-(6,163) --Net Assets, Beginning of Year, as Adjusted 3,680,736 3,358,614 108,768 97,818 Net Assets, End of Year $4,016,244

$3,680,736

$ 113,870 $ 108,768 See notes to the financial statements.

2011 FinanciaL Report 35 UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF CASH FLOWS For the Years Ended June 30, 2011 and 2010 (in thousands) 2011 2010 Cash Flows from Operating Activities Tuition and Fees $ 496,091 $ 467,230 Federal, State and Private Grants and Contracts 329,542 316,720 Sales and Services of Educational Activities and Other Auxiliaries 245,570 216,403 Patient Care Revenues 765,991 739,231 Student Housing Fees 93,747 89,585 Bookstore Collections 58,439 59,300 Payments to Suppliers (741,245)

(639,376)Payments to Employees (1,269,544)

(1,233,160)

Payments for Benefits (304,408)

(274,326)Payments for Scholarships and Fellowships (58,790) (55,469)Student Loans Issued (9,608) (8,190)Student Loans Collected 8,665 7,848 Student Loan Interest and Fees 1,601 1,657 Other Receipts, Net 51,152 47,690 Net Cash Used in Operating Activities (332,797)

(264,857)Cash Flows from Noncapital Financing Activities State Appropriations 437,631 498,358 Federal Appropriations and Pell Grants 88,242 65,473 Private Gifts 56,056 48,547 Endowment and Similar Funds Gifts 26,376 24,703 Direct Lending Receipts 347,237 225,429 Direct Lending Disbursements (347,237)

(225,429)PLUS Loan Receipts 81,683 56,246 PLUS Loan Disbursements (81,683) (56,246)Other Receipts, Net (705) (1,502)Deposits (Receipts) of Affiliates 9,706 (13,158)Net Cash Provided by Noncapital Financing Activities 617,306 622,421 Cash Flows from Capital and Related Financing Activities Capital State Appropriations 14,691 11,569 Capital Gifts and Grants 15,466 19,381 Proceeds from Sales of Capital Assets 1,050 589 Purchase of Capital Assets (269,172)

(289,012)Proceeds from Issuance of Capital Debt, Net 252,285 337,604 Principal Payments on Capital Debt (29,400) (24,093)Proceeds from Capital Project Notes -122,500 Payments on Capital Project Notes -(125,000)Payments on Capital Lease (739) (829)Payments of Bond Issuance Costs (1,551) (3,344)Interest Payments on Capital Debt (47,516) (43,632)Net Cash Provided by (Used in) Capital and Related Financing Activities (64,886) 5,733 (continued) 36 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF CASH FLOWS For the Years Ended June 30, 2011 and 2010 (in thousands) 2011 2010 Cash Flows from Investing Activities Interest and Dividends on Investments, Net 70,091 56,028 Purchase of Investments, Net of Sales and Maturities (397,113)

(346,338)Other Investing Activities 1,373 1,385 Net Cash Used in Investing Activities (325,649)

(288,925)Net Increase (Decrease) in Cash and Cash Equivalents (106,026) 74,372 Cash and Cash Equivalents, Beginning of Year 327,313 252,941 Cash and Cash Equivalents, End of Year $ 221,287 $ 327,313 Reconciliation of Operating Loss to Net Cash Used in Operating Activities Operating Loss $ (504,786)

$ (478,027)Adjustments to Net Cash Used in Operating Activities Depreciation Expense 155,103 146,753 Changes in Assets and Liabilities:

Accounts Receivable, Net (3,052) (1,236)Inventory, Prepaid Expenses and Other Assets (6,947) 894 Notes Receivable (252) 407 Accounts Payable (1,606) 31,778 Accrued Liabilities 28,824 37,013 Deferred Revenue (81) (2,439)Net Cash Used in Operating Activities (332,797)

$ (264,857)Supplemental Disclosure of Noncash Activities Net Increase in Fair Value of Investments Noncash Gifts$ 170,549 $ 93,912 22,820 20,103 See notes to the financial statements.

2011 FinanciaL Report 37 UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF PLAN NET ASSETS As of June 30, 2011 and 2010 (in thousands) 2011 2010 Assets Cash and Cash Equivalents

$ 116,216 $ 88,450 Investment of Cash Col lateral 257,463 277,747 Investment Settlements Receivable 27,006 13,935 I nvestments:

Debt Securities 984,980 906,562 Equity Securities 607,800 471,853 Commingled Funds 985,435 806,264 Nonmarketa ble Alternative Investments 174,899 136,502 Other 15,022 19,442 Total Assets 3,168,821 2,720,755 Liabilities Accounts Payable and Accrued Liabilities 119 1,758 Collateral Held for Securities Lending 257,463 277,747 Investment Settlements Payable 152,057 63,134 Total Liabilities 409,639 342,639 Net Assets Held in Trust for Retirement and OPEB $2,759,182

$2,378,116 UNIVERSITY OF MISSOURI SYSTEM STATEMENT OF CHANGES IN PLAN NET ASSETS For the Years Ended June 30, 2011 and 2010 (in thousands) 2011 2010 Net Revenues and Other Additions Investment Income: Interest&

Dividend Income, Net of Fees $ 61,723 $ 54,988 Net Appreciation in Fair Value of Investments 379,667 228,528 Net Investment Income 441,390 283,516 Contributions:

University 87,783 71,829 Members 26,000 22,734 Total Contributions 113,783 94,563 Other Revenues 695 Total Net Revenues and Other Additions 555,868 378,079 Expenses and Other Deductions Administrative Expenses 2,621 2,722 Payments to Retirees and Beneficiaries 172,181 162,947 Total Expenses and Other Deductions 174,802 165,669 Increase in Net Assets Held in Trust for Retirement and OPEB 381,066 212,410 Net Assets Held in Trust for Retirement and OPEB, Beginning of Year 2,378,116 2,165,706 Net Assets Held in Trust for Retirement and OPEB, End of Year $2,759,182

$2,378,116 See notes to the financial statements 38 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 1. ORGANIZATION AND

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES UNIVERSITY OF MISSOURI SYSTEM Organization

-The University of Missouri System (the"University"), a Federal land grant institution, conducts education, research, public service, and related activities, which include the University Health System and related health care facilities, principally at its four campuses in Columbia, Kansas City, Rolla and St. Louis.The University also administers a statewide cooperative extension service with centers located in each county in the State. The University is a component unit of the state of Missouri (the "State")and is governed by a nine-member Board of Curators appointed by the state's Governor.The income generated by the University, as an instrumentality unit of the State, is generally excluded from federal income taxes under Section 115 of the Internal Revenue Code. However, the University remains subject to income taxes on any net income that is derived from a trade or business, regularly carried on and not in furtherance of the purpose for which it is exempt. No income tax provision has been recorded as the net income, if any, from unrelated trade or business income, is not material to the financial statements.

Reporting Entity -As defined by generally accepted accounting principles established by the Governmental Accounting Standards Board ("GASB"), the financial reporting entity consists of the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or the nature and significance of their relationships with the primary government are such that exclusion would cause the primary government's financial statements to be misleading or incomplete.

The University of Missouri-Columbia Medical Alliance (the "Medical Alliance")

is considered a component unit of the University according to the criteria in GASB Statement No. 14, The Financial Reporting Entity, and is discretely presented in the University's financial statements.

The Medical Alliance, a not-for-profit corporation, provides an integrated health care delivery system for mid-Missouri by establishing affiliations with various medical facilities.

The purpose of the Medical Alliance is to develop a network of health care providers to support the missions of the University Health System. The Capital Region Medical Center ("CRMC") in Jefferson City, Missouri, operates as an affiliate of the Medical Alliance and provides inpatient, outpatient, and emergency care services to the surrounding community.

CRMC, a not-for-profit organization that follows generally accepted accounting principles under the Financial Accounting Standards Board ("FASB"), is a discretely presented component unit of the Medical Alliance.

The University appoints the Board of Directors of the Medical Alliance and can impose its will on the organization.

Financial statements for the Medical Alliance are not available.

The University operates the University of Missouri Retirement, Disability, and Death Benefit Plan (the"Retirement Plan") and the University of Missouri Other Postemployment Benefits Plan (the "OPEB Plan," which collectively with the Retirement Plan represent the "Pension Trust Funds"), which are single employer, defined benefit plans. The assets of the Retirement Plan and OPEB Plan are held in the Retirement Trust and OPEB Trust, respectively.

Financial Statement Presentation

-In accordance with GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the University follows all applicable GASB pronouncements.

In addition, the University applies all applicable FASB Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins issued on or before November 30, 1989, except those that conflict with a GASB pronouncement.

The University has elected not to apply FASB pronouncements issued after November 30, 1989.Pursuant to GASB Statement No. 35, Basic Financial Statement-and Management's Discussion and Analysis-for Public Colleges and Universities, the University's activities are considered to be a single business-type activity and accordingly, are reported in a single column in the financial statements.

Business-type activities are those that are financed in whole or part by funds received by external parties for goods or services.Basis of Accounting

-The University's financial statements have been prepared using the economic 2011 Financial Report 39 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 resource measurement focus and the accrual basis of accounting.

Under the accrual basis, revenues are recognized when earned and expenses are recorded when an obligation has been incurred, regardless of the timing of cash flows.On the Statement of Revenues, Expenses and Changes in Net Assets, the University defines operating activities as those generally resulting from an exchange transaction.

Nearly all of the University's expenses are from exchange transactions, which involve the exchange of equivalent values such as payments for goods or services.

Non-operating revenues or expenses are those in which the University receives or gives value without directly giving or receiving equal value, such as State and Federal appropriations, Federal Pell grants, private gifts, and investment income.The financial statements for the Pension Trust Funds have been prepared using the accrual basis of accounting, Benefits and refunds are recognized when due and payable. Investments are reported at fair value. Combining financial statements for these funds are presented in Note 15.Cash, Cash Equivalents and Investments

-Cash and cash equivalents consist of the University's bank deposits, repurchase agreements, money market funds, and other investments with original maturities of three months or less. Cash equivalents in fiscal year 2010 also include variable rate demand notes, which are debt securities with an original maturity beyond three months, but with a demand feature that allows for liquidity with advance notice of no more than seven days. For fiscal year 2011 the University did not hold any variable rate demand notes. Investment assets are carried at fair value based primarily on market quotations.

Purchases and sales of investments are accounted for on the trade date basis.Investment settlements receivable and investment settlements payable represent investment transactions occurring on or before June 30, which settle after that date. Investment income is recorded on the accrual basis. Net unrealized gains (losses) are included in investment and endowment income in the Statement of Revenues, Expenses and Changes in Net Assets.Nonmarketable alternative investments and certain commingled funds are recorded based on valuations provided by the general partners of the respective partnerships.

The University believes that the carrying value of these investments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, the estimated value is subject to uncertainty and therefore may differ materially from the value that would have been used had a ready market for investments existed.Derivative instruments such as forward foreign currency contracts are recorded at fair value. The University enters into forward foreign currency contracts to reduce the foreign exchange rate exposure of its international investments.

These contracts are marked to market, with the changes in market value being reported in investment and endowment income on the Statement of Revenues, Expenses, and Changes in Net Assets.Pledges Receivable

-The University receives unconditional promises to give through private donations (pledges) from corporations, alumni and various other supporters of the University.

Revenue is recognized when a pledge is received and all eligibility requirements, including time requirements, are met.These pledges have been recorded as pledges receivable on the Statement of Net Assets and as private or capital gift revenues on the Statement of Revenues, Expenses, and Changes in Net Assets, at the present value of the estimated future cash flows. An allowance of $6,482,000 and $5,761,000 as of June 30, 2011 and 2010, respectively, has been made for uncollectible pledges based upon management's expectations regarding the collection of the pledges and the University's historical collection experience.

Inventories

-These assets are stated at the lower of cost or market. Cost is determined on an average cost basis except for University Health System's inventories, for which cost is determined using the first-in, first-out method.Capital Assets -If purchased, these assets are carried at cost or, if donated, at fair value at the date of gift.Depreciation expense is computed using the straight-line method over the assets' estimated useful lives -generally ten to forty years for buildings and improvements, eight to twenty-five years for infrastructure, three to fifteen years for equipment and twenty years for library materials.

Net interest expense incurred during the construction of debt-financed facilities is included when capitalizing Z40 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 resulting assets. The University capitalizes works of art as these collections generally consist of historical artifacts and artworks, they are considered inexhaustible and not subject to depreciation.

The University does not capitalize collections of historical treasures held for public exhibition, education, research, and public service. These collections are not disposed of for financial gain and, accordingly, are not capitalized for financial statement purposes.

Proceeds from the sale, exchange, or other disposal of such items must be used to acquire additional items for the same collection.

Land is considered inexhaustible and is not subject to depreciation.

Deferred Revenue -Deferred revenues are recognized for amounts received prior to the end of the fiscal year but related to the subsequent period, including certain tuition, fees, and auxiliary revenues.

Deferred revenues also include grant and contract amounts that have been received but not yet earned.Net Assets -The University's net assets are classified as follows: Invested in Capital Assets, Net of Related Debt represents capital assets, net of accumulated depreciation and outstanding principal debt balances related to the acquisition, construction or improvement of those assets.Restricted Nonexpendable net assets are subject to externally imposed stipulations that the principal be maintained in perpetuity, such as the University's permanent endowment funds. The University's policy permits any realized and unrealized appreciation to remain with these endowments after the spending distribution discussed in Note 3.Restricted Expendable net assets are subject to externally imposed stipulations on the University's use of the resources.

Unrestricted net assets are not subject to externally imposed stipulations, but may be designated for specific purposes by the University's management or the Board of Curators.

Unrestricted net assets are derived from tuition and fees, sales and services, unrestricted gifts, investment income, and other such sources, and are used for academics and the general operation of the University.

When both restricted and unrestricted resources are available for expenditure, the University's policy is to first apply restricted resources, and then the unrestricted resources.

Tuition and Fees, Net of Scholarship Allowances

-Student tuition and fees, housing, dining, and other similar auxiliary revenues are reported net of any related scholarships and fellowships applied to student accounts.

However, scholarships and fellowships paid directly to students are separately reported as scholarship and fellowship expenses.Patient Medical Services, Net -Patient medical services are primarily provided through University of Missouri Hospitals and Clinics, Ellis Fischel Cancer Research Center, Columbia Regional Hospital, Missouri Rehabilitation Center and University Physicians (collectively, the "University Health System").

The University Health System has agreements with third-party payors that provide for payments at amounts different from established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discount charges, and per diem payments.

Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as estimates are refined and final settlements are determined.

Net patient service revenue is also shown net of estimated uncollectible accounts.Amounts receivable under Medicare and Medicaid reimbursement agreements are subject to examination and certain retroactive adjustments by the related programs.

These adjustments decreased net patient services revenues by $1,086,000 and $560,000 for the years ended June 30, 2011, and 2010, respectively.

The Medicaid program reimburses inpatient services on a prospective established per diem rate. The Medicaid program reimburses outpatient services under a combination of prospective and fee schedule amounts.2011 FinanciaL Report 141 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 For the years ended June 30, 2011 and 2010, the University Health System's percentage of gross patient accounts receivable classified by major payor is as follows: Table 1.1 -Percentage of Gross Patient Accounts Receivable (by Major Payor)2011 2010 Medicare 24% 23%Commercial Insurance 7% 4%Medicaid 22% 25%Self Pay & Other 18% 17%Managed Care Agreements 29% 31%100% 100%Patient services revenue includes the State of Missouri Federal Reimbursement Allowance Program (FRA Program) for uncompensated care. The Health System recognizes FRA Program revenue in the period earned.The Statement of Revenues, Expenses and Changes in Net Assets reflect the gross to net patient medical services revenue as follows: Table 1.2 -Gross to Net Patient Medical Services Revenue (in thousands) 2011 2010 Patient Medical Services Revenue, Gross $1,657,707

$ 1,561,797 Deductions for Contractuals (818,601)

(773,731)Deductions for Bad Debt (75,432) (51,267)Patient Medical Services Revenue, Net $ 763,674 $ 736,799 New Accounting Pronouncements

-Effective for fiscal year 2011, the University adopted GASB Statement No.59, Financial Instruments Omnibus, which updates and improves existing standards regarding financial reporting and disclosure requirements of certain financial instruments and external investment pools.Adoption of GASB Statement No. 59 had no effect on the University's financial statements.

Effective for fiscal year 2010, the University adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments.

In adopting this standard, University recognized the effect of a change in accounting principle, which decreased net assets by$6,163,000 for the prior periods decrease in fair value of the qualifying derivative instrument.

Changes in fair value in reporting periods subsequent to fiscal year 2010 are reported as current year investment income.Use of Estimates

-The preparation of financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCE Nature of Operations

-The Curators of the University of Missouri, for and on behalf of the University Health System, and CRMC entered into an Affiliation Agreement dated August 5, 1997. Pursuant to the Affiliation Agreement, the University created the Medical Alliance.

The Medical Alliance then became the sole member of CRMC. The Medical Alliance's purpose is to develop a network of healthcare providers to support the missions of the University Health System.CRMC operates as a two-hospital system, which consists of the Southwest Campus and Madison Campus complemented by community medical clinics.CRMC primarily earns revenues by providing inpatient, outpatient, and emergency care services to patients in Jefferson City, Missouri.

It also operates medical clinics in the surrounding communities.

The operating results of the facilities and clinics are included in these financial statements.

CRMC is served by a group of admitting physicians that account for a significant portion of CRMC's net revenues.

Additionally, CRMC is also associated with the Capital Region Medical Foundation, which is intended to support the interest of CRMC through its fundraising activities.

Net Assets -As a not-for-profit organization, the Medical Alliance records its net assets in accordance with Financial Accounting Standards Board Accounting Standards Codification 958-205 Not-for-Profit Entities Presentation of Financial Statements.

For presentation within the accompanying basic financial statements, the net assets are redistributed amongst the net asset components defined by GASB Statement No. 34.Capital Assets -Capital Assets are recorded at cost and depreciated on a straight-line basis over the estimated useful life of each asset following guidelines 2011 Financial.

Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended ]une 30, 2011 and 2010 of the American Hospital Association.

Equipment under capital lease obligations is amortized on the straight-line basis over the shorter period of the lease term or the estimated useful life of the equipment.

Interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a cost of acquiring those assets.Net Patient Medical Service Revenue -Net patient medical service revenue is reported at the net amounts to be realized from patients, third-party payers, and others for services rendered, including estimated retroactive adjustments for reimbursement agreements with third-party payers. Retroactive adjustments are estimated and accrued in the period the related services are provided, and these amounts are adjusted in future periods as final settlements are determined.

2. CASH AND CASH EQUIVALENTS Custodial Credit Risk -The custodial credit risk for deposits is the risk that in the event of bank failure, the University's deposits may not be recovered.

State law requires collateralization of all deposits with federal depository insurance, bonds and other obligations of the U.S. Treasury, U.S. Agencies and instrumentalities of the state of Missouri; bonds of any city, county, school district or special road district of the state of Missouri; bonds of any state; or a surety bond having an aggregate value at least equal to the amount of the deposits.

The University's cash deposits were fully insured or collateralized at June 30, 2011 and 2010, respectively.

3. INVESTMENTS Investment policies are established by the Board of Curators ("the Board"). The policies ensure that funds are managed in accordance with Section 105.688 of the Revised Statutes of Missouri and prudent investment practices.

Additionally, investment policies established by the Board with respect to the Retirement Trust and Other Postemployment Benefit ("OPEB") Trust (collectively referred to as "Pension Trust Funds") and the Endowment Funds specifically recognize the fiduciary duties set forth in Section 105.688 of the Revised Statutes of Missouri.

The use of external investment managers has been authorized by the Board.Substantially all University cash and investments are managed centrally, generally in the following investment pools: General Pool -General Pool contains short-term University funds, including but not limited to cash and reserves, operating funds, bond funds, and plant funds.Subject to various limitations contained within the corresponding investment policy, the University's internally managed General Pool may be invested in the following instruments:

U.S. Government securities; U.S. Government Agency securities; U.S.Government guaranteed securities; investment grade corporate bonds; certificates of deposit; repurchase agreements; commercial paper; and other similar short-term investment instruments of like or better quality. A limited component of the General Pool may be invested in the University's Balanced Pool; at June 30, 2011 and 2010, 17.7% and 18.0%, respectively, of General Pool funds were invested in the Balanced Pool (refer to "Endowment Funds" below). The General Pool's total return, including unrealized gains and losses, was 5.7% and 5.2% for the years ended June 30, 2011 and 2010, respectively.

Endowment Funds -When appropriate and permissible, endowment and similar funds are pooled for investment purposes, with the objective of achieving long-term returns sufficient to preserve principal by protecting against inflation and to meet endowment spending targets.The Balanced Pool, which is externally managed, is the primary investment vehicle for endowment funds.Subject to various limitations contained within the corresponding investment policy, the Balanced Pool is allowed to invest in the following asset sectors: U.S and international equity, emerging markets debt and equity, absolute return strategies, private equity, real estate, global fixed income, high yield fixed income, bank loans, and Treasury inflation-protected securities.

The Balanced Pool's total return, including unrealized gains and losses, was 21.5% and 11.4% for the years ended June 30, 2011 and 2010, respectively.

The Fixed Income Pool, which is internally managed, is an additional investment vehicle for endowment funds. Fixed Income Pool asset sectors include debt securities issued by the U.S. government and its agencies, corporate bonds, commercial paper, and repurchase agreements.

The Fixed Income Pool's total 2011 Financial.

Report3/A3 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 return, including unrealized gains and losses, was 2.1%and 6.9% for the years ended June 30, 2011 and 2010, respectively.

If a donor has not provided specific restrictions, state law permits the Board to appropriate an amount of the Endowment Funds' net appreciation, realized and unrealized, as the Board considers to be prudent. In establishing this amount, the Board is required to consider the University's long- and short-term needs, present and anticipated financial requirements, expected total return on investments, price level trends, and general economic conditions.

Further, any expenditure of net appreciation is required to be for the purposes for which the endowment was established.

Inclusive of both realized and unrealized gains and losses on investments, donor-restricted endowments experienced net appreciation of approximately

$105,184,000 in fiscal year 2011, as compared to approximately

$52,142,000 in fiscal year 2010.The Board has adopted the total return concept (yield plus change in market value) in determining the spendable return for endowments and similar funds.Annually, the spending formula distributes 5% of a trailing 12-quarter average of the endowment's total market value, with the understanding that this spending rate over the long term will not exceed the total real return (net of inflation).

However, to achieve uniformity from year to year, the actual amount made available in any given year will be not less than 96% or more than 106% of the prior year's expenditure.

In addition, the University distributes 1% of the trailing 12-quarter average of the endowment's total market value to support internal endowment administration and development functions.

PENSION TRUST FUNDS The Retirement Trust and the OPEB Trust hold the assets of the Retirement Plan and OPEB Plan, respectively.

Subject to various limitations contained within the corresponding investment policy, the externally-managed Retirement Trust is allowed to invest in the following asset sectors: U.S and international equity, emerging markets debt and equity, absolute return strategies, private equity, real estate, global fixed income, high yield fixed income, bank loans, and Treasury inflation-protected securities.

The Retirement Trust's total return, including unrealized gains and losses, was 18.9% and 12.7% for the years ended June 30, 2011 and 2010, respectively.

The OPEB Trust held $45,748,000 and $38,417,000 at June 30, 2011 and 2010, respectively.

The OPEB Trust is invested in a money market mutual fund rated AAA and a global bond fund. The OPEB Trust has no other investments.

LA4 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 At June 30, 2011 and 2010, the University and Pension Trust Funds held the following types of investments:

Table 3.1 -Investments by Type (in thousands)

University of Missouri University of Missouri Pension Trust Funds As of June 30, 2011 2010 2011 2010 Debt Securities:

U.S. Treasury Obligations

$ 273,832 $ 282,345 $ 382,163 $ 408,769 U.S. Agency Obligations 779,507 688,890 3,829 1,030 Asset-Backed Securities 263,093 21,029 97,335 43,899 Government-Foreign 60,503 68,633 124,731 145,515 Corporate

-Domestic 255,279 253,453 201,846 174,629 Corporate

-Foreign 69,365 57,539 175,076 132,720 Equity Securities:

Domestic 212,457 161,762 261,413 226,780 Foreign 192,201 154,454 346,387 245,073 Commingled Funds: Absolute Return 62,819 56,984 139,068 127,788 Debt Securities

-Global -17,614 Debt Securities

-Domestic 42,190 33,568 146,099 139,757 Debt Securities

-Foreign 63,891 55,745 142,197 124,241 Equity Securities

-Domestic 146,424 73,118 190,315 140,390 Equity Securities

-Foreign 169,426 127,763 297,546 228,139 Real Estate 18,387 13,933 52,596 45,949 Nonma rketable Alternative Investments:

Real Estate 29,786 21,465 67,445 60,766 Private Equity 47,747 31,160 107,454 75,736 Other 32,529 32,111 15,022 19,442 Total Investments 2,719,436 2,133,952 2,768,136 2,340,623 Money Market Funds 33,715 124,216 50,199 76,768 Commercial Paper 162,100 160,275 -Va ri a bl e Rate Demand Notes -29,700 -Other 25,472 13,122 66,017 11,682 Total Cash and Cash Equivalents 221,287 327,313 116,216 88,450 Total Investments and Cash and Cash Equivalents

$ 2,940,723

$ 2,461,265

$ 2,884,352

$ 2,429,073 Custodial Credit Risk -For investments, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the University will not be able to recover the value of the investments held by an outside party. In accordance with its policy, the University minimizes custodial credit risk by establishing limitations on the types of instruments held with qualifying institutions.

Repurchase agreements must be collateralized by U.S. Government issues and/or U.S. Government Agency issues. All University and Pension Trust Fund investments are insured or registered and are held by the University, the Pension Trust Funds or an agent in its name.Concentration of Credit Risk -Concentration of credit risk is the risk associated with a lack of diversification, such as having substantial investments in a few individual issuers, thereby exposing the organization to greater risks resulting from adverse economic, political, regulatory, geographic or credit developments.

The investment policies for the General Pool, Endowment Funds, and Retirement Trust all specify diversification requirements across asset sectors. The investment policy for the General Pool has specific single issuer limits in place for corporate bonds and commercial paper.2011 Financiat Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 As of June 30, 2011, of the University's total investments and cash and cash equivalents, 16.0% are issues of the Federal Home Loan Bank (FHLB) and 9.4%are issues of Federal National Mortgage Association (FNMA). As of June 30, 2010, of the University's total investments and cash and cash equivalents, 15.3% are issues of FHLB and 10.2% are issues of FNMA.At June 30, 2011 and 2010, the Pension Trust Funds did not contain investments from any single issuer that exceeded 5% of the total portfolio.

Investments issued or guaranteed by the U.S.government as well as investments in mutual funds and other pooled investments are excluded from consideration when evaluating concentration risk.Credit Risk -Debt securities are subject to credit risk, which is the chance that an issuer will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer's ability to make these payments will cause security prices to decline.These circumstances may arise due to a variety of factors such as financial weakness, bankruptcy, litigation and/or adverse political developments.

Certain debt securities, primarily obligations of the U.S.government or those explicitly guaranteed by the U.S.government, are not considered to have credit risk.Nationally recognized statistical rating organizations, such as Moody's and Standard & Poor's (S&P), assign credit ratings to security issues and issuers that indicate a measure of potential credit risk to investors.

Debt securities considered investment grade are those rated at least Baa by Moody's and BBB by S&P. For General Pool investments, the following minimum credit ratings have been established to manage credit risk: minimum long-term rating of A or better by S&P, with minimum rating of A-i/P-1 for commercial paper and other short-term securities.

For Endowment Funds and Retirement Trust investments, the respective investment policies allow for a blend of different credit ratings, subject to certain restrictions by asset sector. In all cases, disposition of securities whose ratings have been downgraded after purchase is generally left to the discretion of the respective investment manager after consideration of individual facts and circumstances.

All holdings of commercial paper and variable rate demand notes were rated A-i/P-1 or better at June 30, 2011 and 2010. All holdings of money market funds were rated AAA at June 30, 2011 and 2010.2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 Based on investment ratings provided by Moody's or S&P, the University's and Pension Trust Funds' credit risk exposure as of June 30, 2011 and 2010, is as follows: Table 3.2 -Debt Securities by Type and Credit Rating (in thousands)

As of June 30, U.S. Treasury Obligations U.S. Agency Obligations Asset-Backed Securities Mortgage Backed Securities Guaranteed by U.S. Agencies Aa a /AAA Aa /AA A/A Baa/BBB Ba/BB and lower Unrated Government

-Foreign Aa a /AAA Aa/AA A/A Baa/BBB Ba/BB and lower Unrated Corporate

-Domestic Aa a/AAA Aa/AA A/A Baa/BBB Ba/BB and lower Unrated Corporate

-Foreign Aa a/AAA Aa/AA A/A Baa/BBB Ba/BB and lower Unrated University of Missouri 2011 2010$ 273,832 $ 282,345 779,507 688,890 University of Missouri Pension Trust Funds 2011 2010$ 382,163 $ 408,769 3,829 1,030 253,721 3,859 535 1,642 570 979 1,787 17,641 8,995 9,536 3,135 21,196 7,628 59,483 151,693 1,111 32,066 3,298 10,942 4,520 796 1,714 251 953 1,853 35,674 13,836 10,108 1,989 7,026 7,737 67,545 145,028 991 28,554 3,598 69,670 17,196 4,766 2,279 53 2,755 616 38,008 17,941 17,787 885 4,092 46,018 6,241 10,684 28,664 6,207 144,715 5,335 61,638 28,115 40,302 9,011 13,618 22,392 18,663 15,213 3,438 3,076 1,018 2,491 83,679 22,290 19,793 2,383 17,370 2,970 6,833 25,966 5,953 124,740 8,167 65,990 14,247 24,198 3,025 9,466 15,794 32,376 8,535 17,465 2,681 2,761 5,547 30,864 5,682 12,797 923 2,160 5,113 Total $ 1,701,579

$ 1,371,889

$ 984,980 $ 906,562 Interest Rate Risk -Interest rate risk is the risk that changes in interest rates over time will adversely affect the fair value of an investment.

Debt securities with longer maturities are likely to be subject to more variability in their fair values as a result of future changes in interest rates. Neither the University nor the Pension Trust Funds have a formal policy that addresses interest rate risk; rather, such risk is managed by each individual investment manager, as applicable.

The University and Pension Trust Funds have investments in asset-backed securities, which consist primarily of mortgage-backed securities guaranteed by U.S. agencies and corporate collateralized mortgage obligations.

These securities are based on cash flows from principal and interest payments on the underlying securities.

An asset-backed security may have repayments that vary significantly with changes in market interest rates.2011 FinanciaL Report L47 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 Table 3.3 presents the contractual final maturities of the University's and Pension Trust Funds' debt securities, which are not intended to reflect actual projected cash flows, as of June 30, 2011 and 2010, respectively:

Table 3.3 -Debt Securities by Type and Maturity (in thousands)

University of Missouri University of Missouri Pension Trust Funds As of June 30, 2011 2010 2011 2010 U.S. Treasury Obligations Less than 1 Year $ 10,247 $ 3,822 $ 18,988 $ 2,151 1-5 Years 117,493 119,210 125,645 135,475 6-10 Years 107,028 116,229 110,596 137,655 More than 10 Years 39,064 43,084 126,934 133,488 Total U.S Treasury Obligations 273,832 282,345 382,163 408,769 U.S. Agency Obligations Less than 1 Year 144,797 30,023 50 5 Years 301,861 342,720 2,814 51 6-10 Years 255,763 214,343 965 979 More than 10 Years 77,086 101,804 --Total U.S. Agency Obligations 779,507 688,890 3,829 1,030 Asset-Backed Securities Less than 1 Year 24 1-5 Years 266 1,091 502 3,174 6-10 Years 16,818 1,018 14,697 2,376 More than 10 Years 245,985 18,920 82,063 38,349 Total Asset-Backed Securities 263,093 21,029 97,335 43,899 Government

-Foreign Less than 1 Year 1,733 3,306 3,910 17,139 1-5 Years 21,961 23,377 44,877 43,132 6-10 Years 27,119 28,376 55,098 56,595 More than 10 Years 9,690 13,574 20,846 28,649 Total Government-Foreign 60,503 68,633 124,731 145,515 Corporate

-Domestic Less than 1 Year 33,377 28,620 3,798 4,277 1-5 Years 154,297 172,229 54,400 51,460 6-10 Years 58,197 48,272 121,242 105,798 More than 10 Years 9,408 4,332 22,406 13,094 Tota Corporate-Domestic 255,279 253,453 201,846 174,629 Corporate

-Foreign Less than 1 Year 10,156 5,116 22,466 13,867 1-5 Years 39,248 37,319 103,927 82,328 6-10 Years 12,406 9,614 36,824 25,131 More than 10 Years 7,555 5,490 11,859 11,394 Total Corporate

-Foreign 69,365 57,539 175,076 132,720 Total Debt Securities

$1,701,579

$1,371,889

$ 984,980 $ 906,562 Foreign Exchange Risk -Foreign exchange risk is the risk that investments denominated in foreign currencies may lose value due to adverse fluctuations in the value of the U.S. dollar relative to foreign currencies.

University and Retirement Trust investment policies allow for exposure to non-U.S. dollar denominated equities and fixed income securities, which may be fully or partially hedged using forward foreign currency exchange contracts.

148 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 At June 30, 2011 and 2010, 17.3%, of the University's total investments and cash and cash equivalents were denominated in foreign currencies.

Forward foreign currency contracts with notional amounts totaling$143,522,000 and $138,042,000 were in place at June 30, 2011 and 2010, respectively.

At June 30, 2011 and 2010, 34.7% and 32.7%, respectively, of the Pension Trust Funds' total investments and cash equivalents were denominated in foreign currencies.

Forward foreign currency contracts with notional amounts totaling $268,761,000 and $310,673,000 were in place at June 30, 2011 and 2010, respectively.

The University's and Pension Trust Funds' exposure to foreign exchange risk as of June 30, 2011 and 2010: Table 3.4 -Foreign Exchange Risk (in thousands)

University of Missouri 2011 2010 University of Missouri Pension Trust Funds 2011 2010 As of June 30, Debt Securities Euro Australian Dollar Canadian Dollar British Pound Sterling Japanese Yen Danish Krone Malaysian Ringgit South Korean Won Singapore Dollar Mexican New Peso Swedish Krona Other$ 46,284 8,097 3,834 8,514 6,244 1,909 2,195 3,136 2,209 2,934 2,940 5,657 93.953$51,625 9,840 6,126 6,528 8,587 2,900 2,603 2,240 2,201 2,145 526 4,270 99.591$ 118,216 15,897 10,854 17,777 9,893 3,370 3,897 5,759 3,542 5,178 5,653 11,857 211.893$ 123,658 19,940 17,631 13,724 11,019 5,356 4,517 3,942 3,652 3,486 1,059 7,047 215.031 Equity Securities Euro 60,033 49,195 105,903 75,677 Japanese Yen 34,461 30,136 60,967 47,141 British Pound Sterling 37,169 26,514 68,568 41,599 Australian Dollar 8,119 7,078 16,739 10,501 Canadian Dollar 8,966 5,210 13,340 8,733 Swiss Franc 15,001 10,868 28,455 19,256 Hong Kong Dollar 6,868 4,891 13,540 8,459 Swedish Krona 1,646 1,321 4,296 3,135 Other 4,653 3,064 13,691 5,936 176,916 138,277 325,499 220,437 Commingled Funds Various currency denominations:

Debt Securities

-Global --17,614 -Debt Securities

-Foreign 63,891 55,745 142,197 124,241 Equity Securities

-Foreign 169,426 127,763 297,546 228,139 233,317 183,508 457,357 352,380 Cash and Cash Equivalents Euro 2,529 4,311 4,197 5,357 Japanese Yen 605 147 474 365 British Pound Sterling 364 179 163 477 Other 419 223 825 708 3,917 4,860 5,659 6,907 Total Exposure to Foreign Exchange Risk $ 508,103 $ 426,236 $1,000,408

$ 794,755 2011 Financial.

Report Z49 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 Commingled Funds -Includes Securities and Exchange Commission regulated mutual funds and externally managed funds, limited partnerships, and corporate structures which are generally unrated and unregulated.

Certain commingled funds may use derivatives, short positions and leverage as part of their investment strategy.

These investments are structured to limit risk exposure to the amount of invested capital. Commingled funds have liquidity (redemption) provisions, which enable the University and Pension Trust Funds to make full or partial withdrawals with notice, subject to restrictions on the timing and amount.Of the University's and Pension Trust Funds'commingled funds at June 30, 2011, approximately 87% and 85%, respectively, are redeemable within 90 days, with the remaining redeemable within one year.Nonmarketable Alternative Investments

-Consists of limited partnerships involving an advance commitment of capital called by the general partner as needed and distributions of capital and return on invested capital as underlying strategies are concluded during the life of the partnership.

The committed but unpaid obligation to these limited partnerships is further discussed in Note 11.Securities Lending Transactions

-The University and Pension Trust Funds each participate in an external investment pool securities lending program to augment income. The program is administered by the custodial agent bank, which lends equity, government and corporate securities for a predetermined period of time to an independent broker/dealer (borrower) in exchange for collateral.

Collateral may be cash, U.S.Government securities, defined letters of credit or other collateral approved by the University or Pension Trust Funds. Loaned domestic securities are initially collateralized at 102% of their fair value, while loaned international securities are collateralized at 105% of fair value. Exposure to credit risk from borrower default has been minimized by having the custodial agent bank determine daily that required collateral meets a minimum of 100% of the fair value of loaned domestic securities and 105% for loaned international securities.

For the University, at June 30, 2011 and 2010, there were a total of $101,582,000 and $120,792,000, respectively, of securities out on loan to borrowers.

The value of collateral received from the borrower for these securities consisted of $101,047,000 cash and$3,687,000 noncash collateral at June 30, 2011 and$111,557,000 cash and $12,553,000 noncash collateral at June 30, 2010.For the Pension Trust Funds, at June 30, 2011 and 2010, there were a total of $272,633,000 and$302,918,000, respectively, of securities out on loan to borrowers.

The value of collateral received from the borrower for these securities consisted of$257,463,000 cash and $15,525,000 noncash collateral at June 30, 2011 and $277,747,000 cash and$31,925,000 noncash collateral at June 30, 2010.Cash collateral received from the borrower is invested by the custodial agent bank in investment pools in the name of the University and Pension Trust Funds, with guidelines approved by each. These investments are shown as Investment of Cash Collateral in the Statement of Net Assets and reported at fair value, with changes in market value recorded in Investment and Endowment Income on the Statement of Revenues, Expenses, and Changes in Net Assets.Noncash collateral received for securities lending activities is not recorded as an asset because the University and Pension Trust Funds do not have the ability to pledge or sell such collateral unless the borrower defaults.The University and Pension Trust Funds continue to receive interest and dividends during the loan period.The maturities of the investments made with the cash collateral generally match the maturities of the securities lent. At June 30, 2011 and 2010, neither the University nor the Pension Trust Funds have any credit risk exposure arising from the actual securities lending transactions since the collateral received from the borrower exceeds the value of the securities lent.Further, the University and Pension Trust Funds are fully indemnified by the custodial bank against any losses incurred as a result of borrower default.so 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCE Investments

-The investment policies of Medical Alliance are established by its board of directors.

The policies are established to ensure that Medical Alliance funds are managed in accordance with the "Prudent Man Rule." Medical Alliance investments are presented at fair value in accordance with FASB Accounting Standards Update 820, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to measurements involving significant unobservable inputs. The three levels of the fair value hierarchy are as follows: Level 1 -Quoted prices in active markets for identical assets that the Medical Alliance has the ability to access at the measurement date; Level 2 -Inputs other than quoted market prices included in Level 1, that are observable for the asset, either directly or indirectly; and, Level 3 -Inputs that are unobservable for the asset. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.At June 30, 2011 and 2010, Medical Alliance held the following investments:

Table 3.5 -Medical Alliance Cash, Cash Equivalents, and Investments AsofJune30, (in thousands) 2011 2010 Fair Value- Level 1 Money Market Accounts $ 19,671 $ 21,982 Federal Farm Callable Note 4,996 -Certificates of Deposit 13,614 10,641 Corporate Bonds 5,025 3,173 U.S. Treasury Obligations 74 74 Cash and Other Cash Equivalents 7,020 5,944 Total Fair Value- Level 1 50,400 41,814 Fair Value- Level 2 Mortgage-Backed Securities 18,006 14,500 Repurchase Agreements

-3,071 Total Fair Value- Level 2 18,006 17,571 Total Cash, Cash Equivalents, and Investments

$ 68,406 $ 59,385 L4. ACCOUNTS RECEIVABLE Accounts receivable at June 30, 2011 and 2010, are summarized as follows: Table 4.1 -Accounts Receivable (in thousands) 2011 2010 Grants and Contracts

$ 57,256 $ 68,687 Federal Appropriations 5,277 7,152 State Appropriations and State Bond Funds 573 7,221 Student Fees and Other Academic Charges 91,035 93,850 University Health System Patient Services, Net of Contractual Allowances 100,939 103,110 Medical Resident FICA Refund and Related Income 30,787 Subtotal 285,867 280,020 Less Provisions for Loss: Grants & Contracts 730 445 University Health System Patient Services 23,809 23,656 Student Fees and Other Academic Charges 5,739 6,459 Subtotal 30,278 30,560 Total Accounts Receivable, Net $255,589 $249,460 5. NOTES RECEIVABLE Notes receivable generally consist of resources available for financial loans to students.

These resources are provided through Federal loan programs and University loan programs generally funded by external sources. Notes receivable at June 30, 2011 and 2010, are summarized as follows: Table 5.1 -Notes Receivable (in thousands) 2011 2010 Federal Health Profession Loans $ 16,097 $ 14,643 Carl D. Perkins National Loans 28,992 30,381 University Loan Programs 18,501 18,225 Other 2,614 -Subtotal 66,204 63,249 Less Provisions for Loss 3,657 3,568 Total Notes Receivable, Net $ 62,547 $ 59,681 2011 Financial Report 51 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 6. CAPITAL ASSETS UNIVERSITY OF MISSOURI Capital assets activity for the years ended June 30, 2011 and 2010, is summarized as follows: Table 6.1 -Capital Assets (in thousands) 2011 2011 Beginning Ending Balance Additions Retirements Balance Capital Assets, Nondepreciable:

Land $ 72,857 $ 2,231 $ -75,088 Artwork and Historical Artifacts 12,624 116 12,740 Construction in Progress 156,601 (26,385) 130,216 Total Capital Assets, Nondepreciable 242,082 (24,038) 218,044 Capital Assets, Depreciable:

Buildings and Improvements 2,754,619 167,452 (2,603) 2,919,468 Infrastructure 267,063 50,851 (363) 317,551 Equipment 634,360 64,944 (18,982) 680,322 Library Materials 240,590 7,349 -247,939 Total Capital Assets, Depreciable 3,896,632 290,596 (21,948) 4,165,280 Less Accumulated Depreciation:

Buildings and Improvements 937,541 79,662 (1,641) 1,015,562 Infrastructure 113,990 12,129 (175) 125,944 Equipment 402,165 55,357 (16,508) 441,014 Library Materials 150,653 7,955 -158,608 Total Accumulated Depreciation 1,604,349 155,103 (18,324) 1,741,128 Total Capital Assets, Depreciable, Net 2,292,283 135,493 (3,624) 2,424,152 Total Capital Assets, Net $2,534,365

$ 111,455 $ (3,624) $ 2,642,196 2010 2010 Beginning Additions/

Ending Balance Transfers Retirements Balance Capital Assets, Nondepreciable:

Land $ 69,325 $ 3,758 $ (226) $ 72,857 Artwork and Historical Artifacts 11,854 775 (5) 12,624 Construction in Progress 118,895 37,706 -156,601 Total Capital Assets, Nondepreciable 200,074 42,239 (231) 242,082 Capital Assets, Depreciable:

Buildings and Improvements 2,587,249 168,782 (1,412) 2,754,619 Infrastructure 252,454 14,622 (13) 267,063 Equipment 592,429 64,890 (22,959) 634,360 Library Materials 235,517 5,073 -240,590 Total Capital Assets, Depreciable 3,667,649 253,367 (24,384) 3,896,632 Less Accumulated Depreciation:

Buildings and Improvements 858,606 80,053 (1,118) 937,541 Infrastructure 102,703 11,287 -113,990 Equipment 369,360 54,290 (21,485) 402,165 Library Materials 144,202 6,451 -150,653 Total Accumulated Depreciation 1,474,871 152,081 (22,603) 1,604,349 Total Capital Assets, Depreciable, Net 2,192,778 101,286 (1,781) 2,292,283 Total Capital Assets, Net $2,392,852

$ 143,525 $ (2,012) $2,534,365 52 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 The estimated cost to complete construction in progress at June 30, 2011, is $582,808,000 of which$231,306,000 is available from unrestricted net assets.The remaining costs are expected to be funded from$31,927,000 of gifts, $16,186,000 of grants, and$303,389,000 of bond proceeds.Capital assets include a building facility under a capital lease of $8,332,000 and related accumulated depreciation of $4,895,000 and $4,478,000 at June 30, 2011 and 2010, respectively, and equipment under a capital lease of $964,000 and related accumulated depreciation of $362,000 and $181,000 at June 30, 2011 and 2010, respectively.

DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCE Capital assets at June 30, 2011 and 2010 are summarized as follows: Table 6.2 -Medical Alliance -Capital Assets (in thousands) 2011 2010 Land & Improvements

$ 6,670 $ 6,482 Buildings 113,990 112,740 Movable Equipment 73,931 72,899 Construction in Progress 734 702 195,325 192,823 Less Accumulated Depreciation 126,304 119,139 Total Capital Assets, Net $ 69,021 $ 73,684 8. OTHER NONCURRENT LIABILITIES Table 8.1 -Other Noncurrent Liabilities (in thousands)

7. ACCRUED LIABILITIES Accrued liabilities at June 30, 2011 and 2010, are summarized as follows: Table 7.1 -Accrued Liabilities (in thousands) 2011 2010 Accrued Salaries, Wages & Benefits $ 52,831 $ 51,095 Accrued Vacation 42,877 42,393 Accrued Self Insurance Claims 37,592 37,004 Accrued Interest Payable 10,047 7,817 Total Accrued Liabilities

$143,347 $138,309 Beginning of Total End of Less Current Noncurrent Fiscal Year 2011 Year Additions Payments Year Portion End of Year Accrued Vacation $ 55,741 $ 40,111 $ (39,165) $ 56,687 $ (42,877) $ 13,810 Accrued Self-Insurance Claims 77,501 194,051 (198,603) 72,949 (37,592) 35,357$ 133,242 $ 234,162 $ (237,768)

$ 129,636 $ (80,469) $ 49,167 Beginning of Total End of Less Current Noncurrent Fiscal Year 2010 Year Additions Payments Year Portion End of Year Accrued Vacation $ 54,986 $ 39,602 $ (38,847) $ 55,741 $ (42,393) $ 13,348 Accrued Self-Insurance Claims 73,266 191,350 (187,115) 77,501 (37,004) 40,497$ 128,252 $ 230,952 $ (225,962)

$ 133,242 $ (79,397) $ 53,845 2011 Financial.

Report 53 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 9. LONG-TERM DEBT The University's outstanding debt at June 30, 2011 and 2010, with corresponding activity, is as follows: Table 9.1 -Long-Term Debt (in thousands)

Beginning Ending Current As of June 30, 2011 Balance Additions Reductions Balance Portion System Facilities Revenue Bonds -Fixed $ 919,725 $ 252,285 $ (27,765) $1,144,245

$ 25,195 System Facilities Revenue Bonds -Variable 224,925 -(1,245) 223,680 2,795 Unamortized Premium 25,000 -(1,538) 23,462 -Unamortized Loss on Defeasance (9,755) -593 (9,162) -Net System Facilities Revenue Bonds 1,159,895 252,285 (29,955) 1,382,225 27,990 Notes Payable 1,686 -(390) 1,296 328 Capital Lease Obligations 8,144 -(739) 7,405 789 Total Long-Term Debt $1,169,725

$ 252,285 $ (31,084) $1,390,926

$ 29,107 Beginning Ending Current As of June 30, 2010 Balance Additions Reductions Balance Portion System Facilities Revenue Bonds -Fixed $ 610,185 $ 332,060 $ (22,520) $ 919,725 $ 27,765 System Facilities Revenue Bonds -Variable 226,120 -(1,195) 224,925 1,245 Unamortized Premium 20,967 5,544 (1,511) 25,000 -Unamortized Loss on Defeasance (10,348) -593 (9,755) -Net System Facilities Revenue Bonds 846,924 337,604 (24,633) 1,159,895 29,010 Capital Project Notes -125,000 (125,000)

--Notes Payable 2,064 -(378) 1,686 390 Capital Lease Obligations 8,973 -(829) 8,144 739 Total Long-Term Debt $ 857,961 $ 462,604 $ (150,840)

$1,169,725

$ 30,139 System Facilities Revenue Bonds System Facilities Revenue Bonds have provided financing for capital expansion or renovation of various University facilities.

The principal and interest of the bonds are payable from, and secured by a first lien on and pledge of, designated revenues which include the following:

a portion of tuition and fees, sales and services from the financed facilities, such as bookstore collections, housing and dining charges, patient services, and parking collections, as well as certain assessed fees, such as the recreational facility fees, stadium surcharges, and student center fees.On December 21, 2010, the University issued$252,285,000 in taxable Series 2010A System Facilities Revenue Bonds designated as "Build America Bonds" under the Internal Revenue Code of 1986, as amended.With respect to the Series 2010A bonds, the University will receive a cash subsidy payment from the United States Treasury in an amount equal to 35% of the interest payable on each interest payment date. The all-in-true interest cost of the Series 2010A bonds, after taking into account the 35% interest payment from the federal government is 3.8%.Proceeds from issuance of the Series 2010A bonds are being used to finance construction or renovation of housing facilities on the Columbia, Kansas City, and Missouri Science and Technology (Missouri S&T)campuses, energy management improvements on the Columbia and Missouri S&T campuses, construction of a new parking structure on the Kansas City campus, new patient care tower and Ellis Fischel Cancer Center relocation at the Health System, and renovation, furnishing and equipping various other facilities, and to finance capitalized interest and certain costs of issuance.On July 23, 2009, the University issued $332,060,000 of System Facilities Revenue Bonds, consisting of$256,300,000 in taxable Series 2009A Bonds designated as "Build America Bonds" under the Internal Revenue Code of 1986, as amended, and$75,760,000 in traditional tax exempt Series 2009B Bonds. With respect to the Series 2009A bonds, the University will receive a cash subsidy payment from the United States Treasury in an amount equal to 35%of the interest payable on each interest payment date.The all-in-true interest cost of the Series 2009A bonds, after taking into account the 35% interest payment from the federal government is 3.95%. The all-in-true interest cost of the Series 2009B bonds is 3.13%.514 2011 Financial.

Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 Interest expense associated with financing projects during construction, net of any investment income earned on bond proceeds during construction, is capitalized.

Total interest expense during the years ended June 30, 2011 and 2010 was $59,723,000 and$53,384,000, respectively.

Interest expense associated with financing projects during construction, net of any investment income earned on bond proceeds during construction, is capitalized.

For the years ended June 30, 2011 and 2010, capitalization of interest earned on unspent bond proceeds totaled $10,216,000 and$7,281,000, respectively, resulting in net interest expense of $49,507,000 and $46,103,000, respectively.

• For the years ended June 30, 2011 and June 30, 2010, the University earned cash subsidy payments from the United States Treasury totaling $7,193,000 and$5,020,000, respectively for designated Build America Bonds outstanding, which was recorded as Federal Appropriations on the Statement of Revenues, Expenses, and Changes in Net Assets.Table 9.2 -System Facilities Revenue Bonds (in thousands)

Weighted Balance June 30, Series Type Average Coupon Final Maturity Original Issue 2011 2010 1998 Fixed 4.966% 11/1/2017

$ 65,010 $ 9,985 $ 11,155 2000A Fixed 5.20% 11/1/2010 28,950 -3,620 2001B Fixed 5.103% 11/1/2027 44,975 40,635 42,060 2003A Fixed 4.532% 11/1/2014 118,080 9,520 11,620 2003B Fixed 4.657% 11/1/2023 37,085 27,030 28,575 2006A Fixed 4.745% 11/1/2028 260,975 227,385 235,195 2007A Fixed 4.916% 11/1/2037 262,970 250,450 255,440 2009A (1) Fixed 5.960% 11/1/2039 256,300 256,300 256,300 2009B Fixed 4.160% 11/1/2021 75,760 70,655 75,760 2010A (1) Fixed 5.792% 11/1/2041 252,285 252,285 -Total Fixed Rate Bonds 1,402,390 1,144,245 919,725 2000B Variable 0.03% (2) 11/1/2030 50,000 50,000 50,000 2001A Variable 0.03% (2) 11/1/2031 39,225 32,825 33,685 2006B Variable 0.03% (2) 11/1/2035 39,705 39,705 39,705 2007B Variable 0.05% (2) 11/1/2031 102,250 101,150 101,535 Total Variable Rate Demand Bonds 231,180 223,680 224,925 Total System Facilities Revenue Bonds $ 1,633,570

$ 1,367,925

$ 1,144,650 (1) Taxable issue designated as Build America Bonds under the Internal Revenue Code of 1986, as amended.(2) As of June 30, 2011; rates are determined daily or weekly by the remarketing agents. The rate is usually within a range at or near the Securities Industry and Financial Markets Association Municipal Swap Index (SIFMA Index) rate, which resets weekly.System Facilities Revenue Bonds, Series 2000B, Series 2001A, Series 2006B, and Series 2007B are variable rate demand bonds with remarketing features which allow bondholders to put debt back to the University.

Because the University is the sole source of liquidity should the option to tender be exercised by the bondholder, these variable rate demand bonds are classified in their entirety as current liabilities on the Statement of Net Assets, with the balance in excess of actual current principal maturities reported as Long-Term Debt Subject to Remarketing.

In-substance defeased bonds aggregating

$96,965,000 are outstanding at both June 30, 2011 and 2010.Interest Rate Swap Agreements With an objective of lowering the University's borrowing costs, when compared against fixed-rate bonds at the time of issuance, the University entered into interest rate swap agreements in connection with certain variable-rate System Facilities Revenue Bonds.Under each of the swap agreements, the University pays the swap counterparty a fixed interest rate payment and receives a variable rate interest rate payment that effectively changes a component of the University's variable interest rate bonds to fixed rate debt. Table 9.3 presents the terms of the outstanding swaps and their fair values at June 30, 2011.2011 FinanciaL Report 55 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 Table 9.3 -Interest Rate Swaps (in thousands)

Notional Effective Maturity Counterparty Type Amount Date Date Terms Fair Value Credit Rating Payfixed;

$ 40,000 7/18/2002 11/1/2032 Pay 3.950%; receive $ (7,679) Aal/AA-receive variable SIFMA Index Pay fixed; 101,150 7/26/2007 11/1/2031 Pay 3.798%; receive 68% (19,023) Aal/AA-receive variable of 1-Month LIBOR Total $ 141,150 $ (26,702)The 2002 swap does not specifically hedge any The notional amount of the 2007 swap is equal to the currently outstanding bond issue; rather, it serves to outstanding balance of the Series 2007B bonds.reduce the overall exposure to interest rate risk on the University's variable bonds not otherwise specifically The University recognizes the fair value and hedged. The notional amount is fixed at $40,000,000 corresponding changes in fair value of the outstanding over the life of the agreement.

The 2007 swap swaps in the University's financial statements.

specifically hedges System Facilities Revenue Bond Changes in fair value of the outstanding swaps, with Series 2007B, the effectiveness of which has been respective financial statement presentation, are determined using the synthetic instrument method. presented in Table 9.4: Table 9.4 -Interest Rate Swaps -Change in Fair Value (in thousands)

Fair Value at June 30, Change in Type 2011 2010 Fair Value Presentation of Change in Fair Value 2002 Swap -Investment Derivative

$ (7,679) $ (8,488) $ 809 Investment and Endowment Income, Net 2007 Swap -Cash Flow Hedge (19,023) (22,192) 3,169 Deferred Outflow of Resources Total $ (26,702) $ (30,680) $ 3,978 Fair Value. There is a risk that the fair value of a swap could be adversely affected by changing market conditions.

The fair values, developed using the zero coupon method with proprietary models, were prepared by the counterparty, JPMorgan Chase Bank, N.A., a major U.S. financial institution.

The zero coupon method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each net settlement of the swap. The fair value of the interest rate swaps is the estimated amount the University would have either (paid) or received if the swap agreements were terminated on June 30, 2011.Credit Risk. Although the University has entered into the interest rate swaps with a creditworthy financial institution, there is credit risk for losses in the event of non-performance by the counterparty.

Subject to applicable netting arrangements, swap contracts with positive fair values are exposed to credit risk. The University faces a maximum possible loss equivalent to the amount of the derivative's fair value. Subject to applicable netting arrangements, swaps with negative fair values are not exposed to credit risk. Collateral requirements apply to both parties and are determined by a combination of credit ratings and the aggregate fair value of all outstanding swap agreements as presented in Table 9.5-Table 9.5 -Swap Collateral Requirements Fair Value Credit Rating Threshold (S&P / Moody's) (in thousands)

AAA/Aa a $ 50,000 AA+/Aa 1 30,000 AA/Aa 2 30,000 AA-/Aa 3 20,000 A+/A1 20,000 A/A2 10,000 A-/A3 10,000 BBB+/Ba a 1 5,000 If the aggregate fair value is positive and exceeds the fair value threshold for the applicable credit rating, the 56 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 counterparty is required to post collateral.

If the aggregate fair value is negative and exceeds the fair value threshold for the applicable credit rating, the University is required to post collateral.

Permitted collateral for either party includes U.S. Treasuries, U.S.government agencies, cash, and commercial paper rated A1/P1 by S&P or Moody's, respectively.

On June 30, 2011, the negative aggregate fair value was below$30,000,000, which is the current fair value threshold for the University given a Moody's rating of Aal.Basis Risk. The variable-rate payments received by the University on the 2007 swap are determined by 68% of one month LIBOR, whereas the interest rates paid by the University on its variable-rate bonds correspond to the SIFMA Index. The University is exposed to basis risk only to the extent that the historical relationship between these variable market rates changes going forward, resulting in a variable-rate payment received on the 2007 swap that is significantly less than the variable-rate interest payment on the bonds.Termination Risk. The University is exposed to termination risk for both interest rate swaps as the counterparty has the right to terminate the agreements in certain circumstances.

For the 2002 swap, the counterparty has a contractual right to terminate the agreement if the daily weighted average of the SIFMA Index for the preceding 30 calendar day period is greater than 7.00%. With regard to the 2007 swap, the counterparty has a contractual right to terminate the agreement if the daily weighted average of the SIFMA Index for the preceding 180 days is greater than 6.00%. The SIFMA Index was .09% at June 30, 2011.Pledged Revenues and Debt Service Requirements For fiscal years 2011 and 2010, annual debt service, including net payments on associated interest rate swaps, totaled $88,237,000 and $76,142,000, respectively.

For fiscal years 2011 and 2010, System Facilities Pledged Revenue was eleven and twelve times greater than the annual debt service. Net System Facilities Revenue was 122% and 151% of annual debt service, respectively.

Table 9.6 provides the System Facilities pledged revenues and operating expenses.Table 9.6 -System Facilities Pledged Revenues and Operating Expenses (in thousands) 2011 2010 Pledged Revenues: Net Patient Revenue $ 745,010 $ 718,687 Housing and Related Food Service 93,744 89,744 Bookstores 58,382 59,288 Net Tuition and Fees 24,950 18,180 Other Operating Revenue 36,914 35,704 Pledged Revenues 959,000 921,603 Operating Expenses 851,729 806,439 Net Revenues $ 107,271 $ 115,164 Table 9.7 provides future debt service requirements for the System Facilities Revenue Bonds, including the impact of both interest rate swap agreements.

With respect to the inclusion of variable rate bond interest payments and net payments on swaps, the following data was based upon variable rates in effect at June 30, 2011. As market rates vary, variable rate bond interest payments and net swap payments will vary.Table 9.7 -Future Debt Service -System Facilities Revenue Bonds (in thousands)

Total Before Hedging Investment Investment Total Future Fiscal Year Principal Interest Derivatives, Net Derivatives Derivatives, Net Debt Service 2012 27,990 59,641 3,701 91,332 1,544 92,876 2013 29,510 58,514 3,685 91,709 1,544 93,253 2014 30,825 57,305 3,670 91,800 1,544 93,344 2015 31,805 56,048 3,653 91,506 1,544 93,050 2016 33,720 54,769 3,571 92,060 1,544 93,604 2017-2021 187,230 252,806 15,887 455,923 7,720 463,643 2022-2026 235,755 210,668 12,179 458,602 7,720 466,322 2027-2031 253,425 160,862 5,472 419,759 7,720 427,479 2032-2036 182,065 121,997 119 304,181 2,059 306,240 2037-2041 271,505 73,668 -345,173 -345,173 2042 84,095 2,436 -86,531 -86,531$ 1,367,925

$ 1,108,714

$ 51,937 $ 2,528,576

$ 32,939 $ 2,561,515 2011 Financial Report 57 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 Capital Project Notes During the year ended June 30, 2011, the University did not sell or have any capital project notes outstanding.

During the year ended June 30, 2010, the University sold $125,000,000 of capital project notes at an effective interest rate of 0.4%. The maximum amount of notes outstanding was $125,000,000 and all were repaid in full by June 30, 2010. Proceeds from the issuance of the capital project notes were used to fund various construction projects.Capital Projects Notes are secured by the University's unrestricted revenues (generally state appropriations for general operations, student fee revenue, and other operating revenues), plus unencumbered balances from prior fiscal years. These balances totaled approximately

$2,000,000,000 by the end of fiscal year 2011. Excluded are revenues from auxiliary enterprises (such as bookstore and housing operations), the Health System, and other such facilities pledged to repay System Facilities Revenue Bonds.Notes Payable Notes payable consist of two loans from the state Department of Natural Resources Energy Efficiency Leveraged Loan Program. Interest is payable semiannually and ranges from 3.0% to 3.2%. One of these loans matures in February 2012, while the second loan matures in February 2016.Capital Lease Obligations The University leases various facilities and equipment through capital leases. Facilities and equipment under capitalized leases are recorded at the present value of future minimum lease payments.The future minimum payments on all capital leases at June 30, 2011, are as follows: Table 9.8 -Future Capital Lease Payments Amount Year Ending June 30 (in thousands) 2012 1,718 2013 1,563 2014 1,563 2015 1,563 2016 1,563 2017-2020 5,078 Total Future Minimum Payments 13,048 Less: Amount Representing Interest (5,643)Present Value of Future Minimum Lease Payments $ 7,405 DISCRETELY PRESENTED COMPONENT UNIT -MEDICAL ALLIANCE The Medical Alliance's outstanding debt at June 30, 2011 and 2010, with corresponding activity, is as follows: Table 9.9 -Long-Term Debt -Medical Alliance (in thousands)

Beginning Ending Current As of June 30, 2011 Balance Additions Reductions Balance Portion Health Facilities Revenue Bonds Series 1998 $ 19,510 $ $ (635) $ 18,875 $ 660 Health Facilities Revenue Bonds Series 2004 15,570 (420) 15,150 445 Total Bonds Payable 35,080 (1,055) 34,025 1,105 Capital Lease Obligations 3,753 (1,068) 2,685 1,158 Total Long-Term Debt $ 38,833 $ $ (2,123) $ 36,710 $ 2,263 Beginning Ending Current As of June 30, 2010 Balance Additions Reductions Balance Portion Health Facilities Revenue Bonds Series 1998 $ 20,110 $ -(600) $ 19,510 $ 635 Health Facilities Revenue Bonds Series 2004 15,980 (410) 15,570 420 Total Bonds Payable 36,090 (1,010) 35,080 1,055 Capital Lease Obligations 4,832 (1,079) 3,753 1,099 Total Long-Term Debt $ 40,922 $ $ (2,089) $ 38,833 $ 2,154 58 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 Bonds Payable In June 2004, the Medical Alliance issued $17,500,000 of tax-exempt Health Facilities Revenue Bonds Series 2004 through the Health and Educational Facilities Authority of the state of Missouri.

The bonds proceeds were used primarily to pay or reimburse the costs of acquiring, constructing and equipping certain health facilities of Medical Alliance.Similar to the Series 1998 bonds, the Series 2004 bonds were issued pursuant to the Master Trust Indenture dated December 1, 1998, as supplemented on June 1, 2004. Under the terms of the Master Trust Indenture (the "Master Indenture"), Medical Alliance is required to make payments of principal, premium, if any, and interest on the bonds. The Series 1998 and 2004 bonds are secured by the unrestricted receivables of Medical Alliance.

In addition, the Master Indenture contains certain restrictions on the operations and activities of Medical Alliance, including, among other things, covenants restricting the incurrence of additional indebtedness and the creation of liens on property, except as permitted by the Master Indenture.

The Master Indenture has mandatory sinking fund redemption requirements in which funds are required to be set aside beginning in 2014 and 2025 for the Series 1998 bonds and Series 2004 bonds, respectively.

Interest expense incurred on the bonds during the years ended June 30, 2011 and 2010 was $1,830,000 and $1,867,000, respectively, of which $0 and $93,000 were capitalized during the years ended June 30, 2011 and 2010, respectively.

As of June 30, 2011, the total of principal and interest due on bonds during the next five years and in subsequent five-year periods is as follows: Table 9.10 -Future Debt Service -Medical Alliance (in thousands)

Fiscal Year Principal Interest Total 2012 1,105 1,779 2,884 2013 1,155 1,725 2,880 2014 1,210 1,669 2,879 2015 1,270 1,607 2,877 2016 1,330 1,542 2,872 2017-2021 6,045 5,429 11,474 2022-2026 9,520 4,766 14,286 2027-2030 12,390 1,803 14,193$ 34,025 $ 20,320 $ 54,345 Capital Leases The Medical Alliance leases certain equipment through capital leases. Equipment under capitalized leases is recorded at the present value of future minimum lease payments.The future minimum payments on all capital leases at June 30, 2011, are as follows: Table 9.11 -Future Capital Lease Payments Medical Alliance (in thousands)

Year Ending June 30 Amount 2012 $ 1,243 2013 1,240 2014 328 Total Future Minimum Payments 2,811 Less: Amount Representing Interest (126)Present Value of Future Minimum Lease Payments $ 2,685 2011 FinanciaL Report 59 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 10. RISK MANAGEMENT The University is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; natural disasters; and various medically related benefit programs for employees.

The University funds these losses through a combination of self-insured retentions and commercially purchased insurance.

The amount of self-insurance funds and commercial insurance maintained are based upon analysis of historical information and actuarial estimates.

Settled claims have not exceeded commercial coverage in any of the past three fiscal years.The liability for self-insurance claims at June 30, 2011 and 2010 of $72,949,000 and $77,501,000, respectively, represents the present value of amounts estimated to have been incurred by those dates, using discount rates ranging from 2.0% to 3.4% for fiscal year 2011 and 2.5% to 3.6% for fiscal year 2010, based on expected future investment yield assumptions.

Changes in the self-insurance liability during fiscal years 2011, 2010, and 2009 were as follows: Table 10.1 -Self-Insurance Claims Liability (in thousands) 2011 and 2010 were $20,251,000 and $19,162,000, respectively.

Future minimum payments on all significant operating leases with initial or remaining terms of one year or more at June 30, 2011, are as follows: Table 11.1 -Future Operating Lease Payments Fiscal Year Amount 2012 $ 4,218 2013 3,120 2014 2,697 2015 1,719 2016 1,037 2017-2020 304 Total Future Lease Payments $ 13,095 In addition to the above lease obligations, the University has outstanding commitments for the usage and ongoing support of University Health System's information technology environment.

As of January 2010, the University Health System began contracting for software usage and maintenance fees, as well as, labor costs for approximately 100 full-time equivalent employees, with the Cerner Corporation.

This agreement, called IT Works, represents the labor and software component of a cooperative relationship between the University Health System and Cerner Corporation referred to as the Tiger Institute for Health Innovation (the Tiger Institute).

The Tiger Institute provides continued development of information technology within the clinical areas, as well as developing new technology initiatives in health information systems.As of June 30, 2011, these commitments totaled$136,646,000 and will be paid in the following amounts: $13,002,000 in 2012, $14,938,000 in 2013,$15,386,000 in 2014, $15,847,000 in 2015,$16,322,000 in 2016 and $61,151,000 thereafter.

Fiscal Year 2011 2010 2009 Beginning of Year$ 77,501 73,266 67,238 New Claims and Changes in Estimates$ 194,051 191,350 177,386 Claim Payments$ (198,603)(187,115)(171,358)End of Year$72,949 77,501 73,266 11. COMMITMENTS AND CONTINGENCIES Endowment and Pension Trust Funds The University Endowment Fund and Pension Trust Funds have made commitments to make investments in certain investment partnerships pursuant to provisions in the various partnership agreements.

These commitments totaled $33,535,000 and$67,775,000 for the University and the Pension Trust Funds, respectively, at June 30, 2011.University Operating Leases The University leases various facilities and equipment under agreements recorded as operating leases.Operating lease expenses for the years ended June 30, 60 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 Medical Resident FICA Refunds In March 2010, the United States Internal Revenue Service accepted the position that medical residents are excepted from FICA taxes based upon the "student exception" for tax periods ending before April 1, 2005 when new regulations became effective.

In December 2010, the University of Missouri perfected its claims for the refund of taxes withheld for the relevant periods. As of June 30, 2011, the University has recorded a receivable for this refund and related accrued interest income in the amounts of$19,187,000 and $11,600,000, respectively, which reflects the estimated total refund from the Internal Revenue Service. In addition, accounts payable increased by $21,026,000 representing the portion of the refund and accrued interest income due to individual medical residents and third-party entities.

A net amount of $6,761,000 was recorded as a contra expense to benefits and $3,000,000 as investment income.Pollution Remediation The University has been working with the Voluntary Cleanup Program of the Missouri Department of Natural Resources (MDNR) to characterize subsurface contamination on a University owned property.

The results have been reported to MDNR and the University is awaiting direction on how to proceed. As a result, the University is unable to estimate future costs to clean up the site at this time.2011 Financial.

Report 61 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 12. RETIREMENT, DISABILITY AND DEATH BENEFIT PLAN Plan Description

-the Retirement Plan is a single employer, defined benefit plan for all qualified employees.

As authorized by Section 172.300, Revised Statutes of Missouri, the University's Board of Curators administers the Retirement Plan and establishes its terms. Full-time employees vest in the Retirement Plan after five years of credited service and become eligible for benefits based on age and years of service. A vested employee who retires at age 65 or older is eligible for a lifetime annuity calculated at 2.2% times the credited service years times the compensation base (average compensation for the five highest consecutive salary years). Academic members who provide summer teaching and research service receive additional summer service credit. The Board of Curators may periodically approve increases to the benefits paid to existing pensioners.

However, vested members who leave the University prior to eligibility for retirement are not eligible for these pension increases.

Table 12.1 -Retirement Plan Membership 2011 2010 Active Members Vested 10,758 10,538 Nonvested 7,634 7,688 Pensioners 7,323 7,092 Former Employees with Deferred Pensions 4,211 3,158 Total Members 29,926 28,476 Vested employees who are at least age 55 and have ten years or more of credited service or age 60 with at least five years of service may choose early retirement with a reduced benefit. However, if the employee retires at age 62 and has at least 25 years of credited service, the benefit is not reduced. Up to 30% of the retirement annuity can be taken in a lump sum payment. In addition, the standard annuity can be exchanged for an actuarially-equivalent annuity selected from an array of options with joint and survivor, period certain, and guaranteed annual increase features.Vested employees who terminate prior to retirement eligibility may elect to transfer the actuarial equivalent of their benefit to an Individual Retirement Account or into another employer's qualified plan that accepts such rollovers.

If the actuarial equivalent is less than$20,000, it may instead be taken in the form of a lump sum payment.In addition, the Retirement Plan allows vested employees who become disabled to continue accruing service credit until they retire. It also provides a pre-retirement death benefit for vested employees.

The Retirement Plan provides a minimum value feature for vested employees who terminate or retire.The minimum value is calculated as the actuarial equivalent of 5% of the employee's eligible compensation invested at 7.5% per credited service year or the regularly calculated benefit.Contributions

-The University's contributions to the Retirement Plan are equal to the actuarially determined employer contribution requirement, as a percent of payroll, which averaged 5.7% and 4.9% for the years ended June 30, 2011 and 2010, respectively.

Employees are required to contribute 1% of their salary up to $50,000 in a calendar year and 2% of their salary in excess of $50,000. An actuarial valuation of the Plan is performed annually and the University's contribution rate is updated at the beginning of the University's fiscal year on July 1, to reflect the actuarially determined funding requirement from the most recent valuation, as of the preceding October 1.This actuarial valuation reflects the adoption of any Retirement Plan amendments during the previous fiscal year.62 2011 Financial.

Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 The University's annual pension cost and net pension obligation to the Retirement Plan for the current year, excluding the impact of employee contributions, along with three-year trend information, were as follows: Table 12.2 -Three-Year Trend Information (in thousands)

Annual Required Percentage of Contribution Annual Pension Contributions APC Net Pension Fiscal Year Ending (ARC) Cost (APC) Made Contributed Obligation 6/30/2009

$ 56,663 $ 56,663 $ 56,663 100%6/30/2010 48,040 48,040 48,040 100%6/30/2011 57,541 57,541 57,541 100%Basis of Accounting

-The Retirement Plan's accounting records are prepared using the accrual basis of accounting.

Employer contributions to the Retirement Plan are recognized when due and the employer has made a formal commitment to provide the contributions.

Benefits and refunds are recognized when due and payable in accordance with terms of the Retirement Plan. The Retirement Plan does not issue a separate financial report.Investment Valuation

-Investments are reported at fair value.Funded Status -As of the most recent actuarial valuation date, October 1, 2010, the Retirement Plan was 96.3% funded. The actuarial accrued liability (AAL)for benefits was $2,960,832,000 and the actuarial value of the assets was $2,851,957,000, resulting in unfunded AAL of funding of $108,875,000.

The covered payroll (annual payroll of active employees covered by the plan) was $979,888,000, and the ratio of unfunded AAL funding to covered payroll was 11.1%.The Schedule of Funding Progress, presented as required supplementary information (RSI) following the notes to the financial statements, presents multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits.Actuarial Methods and Assumptions

-In the October 1, 2010 actuarial valuation, the entry age actuarial cost method was used. Actuarial assumptions included (1)an 8% rate of investment return net of administrative expenses, and (2) projected salary increases ranging from 4.5% to 5.3% per year. The assumptions did not include postretirement benefit increases.

The actuarial value of assets was determined using techniques that spread effects of short-term volatility in the market value of investments over a 5-year period. On May 1, 2011, an approved plan amendment increasing the amount of summer session salary that can be recognized was implemented, and resulted in a$6,423,000 increase in the actuarial accrued liability and an additional

.09%, or $891,000, in the annual employer contribution rate effective for fiscal year 2012. The underfunded actuarial accrued liability is being amortized as a level dollar amount on an open basis over 20 years from the October 1, 2010 valuation date.13. OTHER POSTEMPLOYMENT BENEFITS Plan Description

-In addition to the pension benefits described in Note 12, the University operates a single-employer, defined benefit postemployment plan. The University's Other Postemployment Benefits (OPEB)Plan provides postretirement medical, dental, and life insurance benefits to employees who retire from the University after attaining age 55 and before reaching age 60 with ten or more years of service, or after attaining age 60 with five or more years of service. As of June 30, 2011 and 2010, 6,080 and 5,881 retirees, respectively, were receiving benefits, and an estimated 18,452 active University employees may become eligible to receive future benefits under the plan.Postemployment medical, dental and life insurance benefits are also provided to long-term disability claimants who were vested in the University's Retirement Plan at the date the disability began, provided the onset date of the disability was on or after September 1, 1990. As of June 30, 2011 and 2010, 227 and 232 long-term disability claimants, respectively, met those eligibility requirements.

2011 FinanciaL Report 63 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended 3une 30, 2011 and 2010 The terms and conditions governing the postemployment benefits to which employees are entitled are at the sole authority and discretion of the University's Board of Curators.Basis of Accounting

-The OPEB Plan's accounting records are prepared using the accrual basis of accounting, in accordance with GASB Statements No.43 and No. 45, which established requirements for financial reporting for postemployment benefits other than pension plans. The assets of the OPEB Trust Fund are irrevocable and legally protected from creditors and dedicated to providing postemployment benefits in accordance with terms of the plan. The OPEB Plan does not issue a separate financial report.Contributions and Reserves -Contribution requirements of employees and the University are established and may be amended by the University's Board of Curators.

For employees retiring prior to September 1, 1990, the University contributes toward premiums at the same rate as for active employees, which is 2/3 of the medical benefits premium and 1/2 of the dental plan premium. For employees who retired on or after September 1, 1990, the University contributes toward premiums based on the employee's length of service and age at retirement.

The University makes available two group term life insurance options. Option A coverage is equal to the retiree's salary at the date of retirement, while Option B is equal to two times that amount. For each Option, graded decreases in coverage are made when the retiree attains specific age levels. The University pays the full cost of Option A and approximately 91% of the cost of Option B coverage.

Coverage for group term life insurance ends on January 1 following the retiree's 70th birthday.For the year ended June 30, 2011, participants contributed

$12,994,000 or approximately 47.6% of total premiums through their required contributions, which vary depending on the plan and coverage selection.

The University makes available two long-term disability options to its employees.

Option A coverage is equal to 60% of the employee's salary on the date the disability began, when integrated with benefits from all other sources. Option B coverage is equal to 66-2/3% of the employee's salary, integrated so that benefits from all sources will not exceed 85% of the employee's salary.Both options have a 149-day waiting period and provide benefits until age 65. The University pays the full cost of the Option A premium, while employees enrolled in Option B pay the additional cost over the Optional A premium.The Annual Required Contribution (ARC) represents a level of funding that an employer is projected to need in order to prefund its obligations for postemployment benefits over its employees' years of service. The University has no obligation to make contributions in advance of when insurance premiums or claims are due for payment and currently funds postemployment benefits at a level no less than the pay-as-you-go basis.In fiscal year 2011, the University contributed

$30,242,000, or 50.0% of the ARC, which was$60,484,000 and represented 6% of annual covered payroll. In fiscal year 2010, the University contributed

$23,789,000, or 45.3% of the ARC, which was$52,563,000 and represented 5.2% of annual covered payroll.Table 13.1 presents the OPEB cost for the year, the amount contributed, and changes in the OPEB obligation for fiscal year 2011: Table 13.1 -Changes in Net OPEB Obligation (in thousands)

Annual Required Contribution

$ 60,485 Interest on Existing Net OPEB Obligation 3,025 ARC Adjustment (2,575)Annual OPEB Cost 60,935 Contributions Made (30,242)Increase in net OPEB obligation 30,693 Net OPEB obligation -beginning of year 52,613 Net OPEB obligation -June30,2011

$ 83,306 Funding Status and Funding Progress -As of July 1, 2009, the date of the last valuation, the OPEB Plan was 5.7% funded. The actuarial accrued liability (AAL) for postemployment benefits was $646,655,000, with$37,171,000 in actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of$609,484,000.

The covered payroll (annual payroll of active employees covered by the plan) was$1,009,800,000, and the ratio of UAAL to covered payroll was 60.4%.6z4 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision of actual results, are compared to past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, will present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.Benefit projections for financial reporting purposes are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation and the historical pattern of cost sharing between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the University and plan members in the future.The University's annual OPEB cost and net OPEB obligation to the OPEB Plan for the current year, along with three-year trend information, were as follows: Table 13.2 -OPEB Plan Three-Year Trend Information (in thousands)

Fiscal Year Ending 6/30/2009 6/30/2010 6/30/2011 Annual Required Contribution 47,578 52,563 60,485 Annual OPEB Cost (AOC)$ 47,578 52,763 60,935 Contributions Made$ 23,789 23,789 30,242 Percentage of AOC Contributed 50.0%45.1%49.6%Net OPEB Obligation (Asset)$ 23,639 52,613 83,306 Actuarial Methods and Assumptions

-Consistent with the long-term perspective of actuarial calculations, the actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The projected unit credit actuarial cost method was used in the July 1, 2009 actuarial valuation.

Actuarial assumptions included a 5.75% investment rate of return, net of administrative expenses.

The projected annual healthcare trend rate is 6.0% to 10.0% initially, reduced by 0.5% decrements to an ultimate rate of 5.0%. The UAAL is being amortized as a level dollar amount on an open basis, level percent of pay, over a 30-year amortization period.2011 FinanciaL Report 65 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 1i4. OPERATING EXPENSES BY FUNCTION The operating expenses of the University are presented based on natural expenditure classifications.

The University's operating expenses by functional classification are as follows: Table 14.1 -Operating Expenses by Functional and Natural Classifications (in thousands)

Supplies, Scholarships Salaries and Services and and Fiscal Year Ended June 30, 2011 Wages Benefits Other Fellowships Depreciation Total Instruction

$ 394,945 $ 105,048 $ 57,088 $ $ $ 557,081 Research 113,872 24,441 81,590 219,903 Public Service 73,888 20,139 49,519 143,546 Academic Support 75,563 22,321 29,972 127,856 Student Services 38,454 10,971 20,567 69,992 Institutional Support 94,518 28,840 (25,424) 97,934 Operation and Maintenance of Plant 34,614 10,901 24,467 69,982 Auxiliary Enterprises 446,372 105,679 478,265 1,030,316 Scholarships and Fellowships

---58,790 58,790 Depreciation

---155,103 155,103 Total Operating Expenses $ 1,272,226

$ 328,340 $ 716,044 $ 58,790 $ 155,103 $2,530,503 Supplies, Scholarships Salaries and Services and and Fiscal Year Ended June 30, 2010 Wages Benefits Other Fellowships Depreciation Total Instruction

$ 386,089 $ 91,532 $ 60,192 $ -$ $ 537,813 Research 111,710 23,648 79,182 -214,540 Public Service 74,007 19,783 52,929 -146,719 Academic Support 75,057 19,816 29,246 -124,119 Student Services 39,795 9,742 21,134 -70,671 Institutional Support 91,654 25,404 (7,565) -109,493 Operation and Maintenance of Plant 34,329 9,840 11,709 -55,878 Auxiliary Enterprises 424,324 103,535 429,535 -957,394 Scholarships and Fellowships

---55,469 55,469 Depreciation

---146,753 146,753 Total Operating Expenses $1,236,965

$ 303,300 $ 676,362 $ 55,469 $ 146,753 $2,418,849 66 2011 Financial Report UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 15. FIDUCIARY FUNDS -PENSION TRUST FUNDS COMBINING STATEMENTS Combining financial statements for the Fiduciary Funds -Pension Trust Funds, which encompass the Retirement Trust and OPEB Trust, are as follows: Table 15.1 -Statement of Plan Net Assets (in thousands) 2011 2010 Retirement OPEB Total Retirement OPEB Total Assets Cash and Cash Equivalents

$ 88,085 $ 28,131 $ 116,216 $ 50,033 $ 38,417 $ 88,450 Investment of Cash Collateral 257,463 -257,463 277,747 -277,747 Investment Settl ements Recei va bl e 27,003 3 27,006 13,935 13,935 Investments:

Debt Securities 984,980 -984,980 906,562 906,562 Equity Securities 607,800 -607,800 471,853 471,853 Commingled Funds 967,821 17,614 985,435 806,264 806,264 Nonmarketable Alternative Investments 174,899 -174,899 136,502 136,502 Other 15,022 -15,022 19,442 19,442 Total Assets 3,123,073 45,748 3,168,821 2,682,338 38,417 2,720,755 Liabilities Accounts Payable and Accrued Liabilities 119 119 1,758 -1,758 Collateral Held for Securities Lending 257,463 -257,463 277,747 277,747 InvestmentSettlements Payable 152,054 3 152,057 63,134 63,134 Total Liabilities 409,636 3 409,639 342,639 342,639 Net Assets Held in Trust for Retirement and OPEB $2,713,437

$ 45,745 $2,759,182

$2,339,699

$ 38,417 $2,378,116 Table 15.2 -Statement of Changes in Plan Net Assets (in thousands) 2011 2010 Retirement OPEB Total Retirement OPEB Total Net Revenues and Other Additions Investment Income: Interest and Dividend Income, Net of Fees $ 61,718 $ 5 $ 61,723 $ 54,983 $ 5 $ 54,988 Net Appreciation in Fair Value of Investments 379,606 61 379,667 228,528 -228,528 Net Investment Income (Loss) 441,324 66 441,390 283,511 5 283,516 Contributions:

University 57,541 30,242 87,783 48,040 23,789 71,829 Members 12,610 13,390 26,000 10,198 12,536 22,734 Total Contributions 70,151 43,632 113,783 58,238 36,325 94,563 Other Revenues -695 695 ---Total Net Revenues and Other Additions 511,475 44,393 555,868 341,749 36,330 378,079 Expenses and Other Deductions Administrative Expenses 2,297 324 2,621 2,391 331 2,722 Payments to Retirees and Beneficiaries 135,440 36,741 172,181 128,194 34,753 162,947 Total Expenses and Other Deductions 137,737 37,065 174,802 130,585 35,084 165,669 Increase in Net Assets Held in Trust for Retirement and OPEB 373,738 7,328 381,066 211,164 1,246 212,410 Net Assets Held i n Trust for Retirement&

OPEB, Beginning of Year 2,339,699 38,417 2,378,116 2,128,535 37,171 2,165,706 Net Assets Held in Trust for Retirement and OPEB, End of Year $2,713,437

$ 45,745 $2,759,182

$2,339,699

$ 38,417 $2,378,116 2011 FinanciaL Report 67 UNIVERSITY OF MISSOURI SYSTEM NOTES TO FINANCIAL STATEMENTS For the Years Ended June 30, 2011 and 2010 16. SUBSEQUENT EVENT On August 3, 2011, the University issued$54,125,000 of Series 2011 System Facilities Revenue Bonds with average coupon rate of 4.6%.The Series 2011 bonds and other funds of the University were used to refund all of System Facilities Revenue Bonds, Series 1998A, which were outstanding in the principal amount of $9,985,000, all of the System Facilities Revenue Bonds, Series 2001B, which were outstanding in the principal amount of $40,635,000, and $9,035,000 principal amount of the System Facilities Revenue Bonds, Series 2003B, which were outstanding in the principal amount of $27,030,000.

The average coupon for the refunded bonds was 5.0% and generated net present value savings of $6.5 million for the University.

68 2011 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEM REQUIRED SUPPLEMENTARY INFORMATION For the Years Ended June 30, 2011 and 2010 (unaudited)

Retirement Plan -Schedule of Funding Progress (in thousands)

Actuarial Valuation Date Actuarial Valuation of Assets (a)Actuarial Accrued Liability (AAL)(b)Unfunded AAL/(Excess Funding)(b-a)Funded Ratio (a / b)Annual Covered Payroll (c)UAAL (Excess) as a% of Covered Payroll ([b-a] /c)10/1/2005

$2,125,656

$2,271,230

$ 145,574 93.6% $ 795,758 18.3%10/1/2006 2,325,264 2,400,807 75,543 96.9% 846,884 8.9%10/1/2007 2,651,535 2,555,592 (95,943) 103.8% 891,648 -10.8%10/1/2008 2,808,126 2,733,032 (75,094) 102.7% 954,430 -7.9%10/1/2009 2,843,422 2,819,524 (23,898) 100.8% 970,060 -2.5%10/1/2010 2,851,957 2,960,832 108,875 96.3% 979,888 11.1%Retirement Plan -Schedule of Employer Contributions (in thousands)

Actuarial Annual Net Pension Valuation Required Percentage Obligation Year Ended Date Contribution Contributed (Asset)6/30/2006 10/1/2004

$ 64,399 100% $6/30/2007 10/1/2005 74,736 100%6/30/2008 10/1/2006 72,284 100% -6/30/2009 10/1/2007 56,663 100% -6/30/2010 10/1/2008 48,040 100% -6/30/2011 10/1/2009 57,541 100% -See independent auditors' report.2011 Financial Report 69 OPEB Plan -Schedule of Funding Progress (in thousands)

Actuarial Actuarial Accrued Annual UAAL as a %Actuarial Valuation of Liability Unfunded Funded Covered of Covered Valuation Assets (AAL) AAL Ratio Payroll Payroll Date (a) (b) (b-a) (a / b) (c) ([b-a] /c)7/1/2006 $ $ 546,058 $ 546,058 0.0% $ 883,614 61.8%7/1/2007 (a) 560,340 560,340 0.0% 930,365 60.2%7/1/2009 (b) 37,171 646,655 609,484 5.7% 1,009,800 60.4%(a) The 7/1/2007 Actuarial Valuation was revised based on a change in the discount rate from 6.75% to 5.75%.(b) Date of last valuation provided OPEB Plan -Schedule of Employer Contributions (in thousands)

Actuarial Annual Net Pension Valuation Required Percentage Obligation Year Ended Date Contribution Contributed (Asset)6/30/2009 7/1/2007 47,578 50% 23,639 6/30/2010 7/1/2007 (a) 52,563 45% 52,613 6/30/2011 7/1/2009 60,485 50% 83,306 (a) The 7/1/2007 Actuarial Valuation was revised based on a change in the discount rate from 6.75%to 5.75%.See independent auditors' report.70 2011 FinanciaL Report AdvancingM Issourin 0 0 Statistical 0 Section University of Missouri System COLUMBIA KANSAS CITY ROLLA ST.LOUIS STTMN OFNTAST ttsia eto Supplementary Information

-Unaudited

-See Accompanying Independent Auditars' Repart Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Assets Current Assets Cash and Cash Equivalents

$ 44,249 $ 149,515 $ 115,919 $ 57,987 $ 164,919 $ 146,169 Restricted Cash and Cash Equivalents 177,038 177,798 137,022 109,022 163,582 68,978 Short-Term Investments 151,070 40,268 124,609 172,294 104,032 75,830 Restricted Short-Term Investments 49,264 30,619 25,882 91,800 86,222 87,983 Investment of Cash Collateral 101,047 111,557 111,719 106,360 138,014 100,618 Accounts Receivable, Net 255,589 249,460 241,325 249,654 235,975 198,087 Pledges Receivable, Net 12,374 14,505 13,382 9,796 12,980 11,562 Investment Settlements Receivable 15,634 6,200 15,800 72,878 3,617 6,266 Notes Receivable, Net 8,532 9,046 12,564 13,747 14,599 14,848 Due To Component Units (6,658) (5,285) (3,900) (4,355) (4,062) (3,976)Inventories 35,193 28,401 33,009 33,063 33,121 31,886 Prepaid Expenses and Other Current Assets 25,759 25,604 21,618 18,636 18,248 13,313 Total Current Assets 869,091 837,688 848,949 930,882 971,247 751,564 Noncurrent Assets Pledges Receivable, Net 14,895 16,256 17,231 21,147 23,000 29,437 Notes Receivable, Net 54,015 50,635 47,524 46,898 45,425 44,052 Deferred Charges and Other Assets 13,218 12,374 9,836 10,397 9,340 9,868 Lang-Term Investments 1,357,918 1,171,998 778,538 810,655 707,333 708,052 Restricted Long-Term Investments 1,161,184 891,067 741,556 919,364 767,332 743,326 Capital Assets, Net 2,642,196 2,534,365 2,392,852 2,227,427 2,039,069 1,926,942 Total Noncurrent Assets 5,243,426 4,676,695 3,987,537 4,035,888 3,591,499 3,461,677 Deferred Outflow of Resources 19,023 22,192 ----Total Assets and Deferred Outflow of Resources

$ 6,131,540

$ 5,536,575

$ 4,836,486

$ 4,966,770

$4,562,746

$ 4,213,241 Liabilities Current Liabilities Accounts Payable $ 130,803 $ 123,809 $ 94,531 $ 105,024 $ 101,330 $ 114,302 Accrued Liabilities 143,347 138,309 130,837 120,967 114,976 111,646 Deferred Revenue 78,209 78,200 80,703 67,821 64,030 60,814 Funds Held for Others 62,951 53,245 66,403 70,744 77,148 67,840 Investment Settlements Payable 47,319 41,931 50,318 136,606 41,021 19,582 Collateral Held for Securities Lending 101,047 111,557 115,291 106,360 138,014 100,618 Current Portion of Long-Term Debt 29,107 30,139 24,922 21,697 17,437 15,185 Long-Term Debt Subject to Remarketing 220,885 223,680 224,925 226,120 164,990 165,730 Total Current Liabilities 813,668 800,870 787,930 855,339 718,946 655,717 Noncurrent Liabilities Lang-Term Debt 1,140,934 915,906 608,114 631,742 479,712 496,318 Deferred Revenue 1,519 1,925 1,603 1,876 2,162 2,460 Derivative Instrument Liability 26,702 30,680 ----Other Post Employment Benefits Liability 83,306 52,613 23,639 ---Other Noncurrent Liabilities 49,167 53,845 50,423 47,371 58,720 63,765 Total Noncurrent Liabilities 1,301,628 1,054,969 683,779 680,989 540,594 562,543 Total Liabilities 2,115,296 1,855,839 1,471,709 1,536,328 1,259,540 1,218,260 Net Assets Invested in Capital Assets, Net of Related Debt $1,516,095

$ 1,485,090

$ 1,540,654

$ 1,439,753

$ 1,379,098

$ 1,263,187 Restricted Nonexpendlable

-Endowment Expendable

-Scholarship, Research, Instruction

& Other Loans Capital Projects Unrestricted 788,876 679,494 612,119 718,314 738,153 624,821 264,605 244,226 235,405 262,266 270,238 267,514 77,300 75,637 78,357 77,656 75,785 74,825 32,005 32,373 30,043 27,597 24,593 23,697 1,337,363 1,163,916 868,199 904,856 815,339 740,937 4,016,244 3,680,736 3,364,777 3,430,442 3,303,206 2,994,981$6,131,540

$ 5,536,575

$ 4,836,486

$ 4,966,770

$ 4,562,746

$ 4,213,241 Total Net Assets Total Liabilities

& Net Assets 72 72 2011 FinanciaL Report Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Operating Revenues Tuition and Fees, Net $ 671,419 $ 630,498 $ 601,742 $ 557,085 $ 537,832 $ 501,347 Less: Scholarship Allowances 175,917 164,187 148,578 139,880 136,527 126,421 Net Tuition and Fees 495,502 466,311 453,164 417,205 401,305 374,926 Federal Grants and Contracts 196,122 183,885 172,669 184,416 163,517 176,442 State and Local Grants and Contracts 57,375 66,194 53,042 54,414 47,045 41,255 Private Grants and Contracts 67,025 68,044 71,034 60,318 54,268 46,310 Sales and Services of Educational Activities 21,671 22,560 22,088 19,569 22,346 18,267 Auxiliary Enterprises

-Patient Medical Services, Net 763,674 736,799 702,424 681,312 648,802 620,577 Housing and Dining Services, Net 93,724 89,743 81,939 72,503 66,828 61,548 Bookstores 58,591 59,288 62,113 61,423 56,930 54,308 Other Auxiliary Enterprises, Net 220,162 198,748 190,315 181,893 154,113 133,135 Other Operating Revenues 51,871 49,250 53,681 46,968 53,523 49,851 Total Operating Revenues 2,025,717 1,940,822 1,862,469 1,780,021 1,668,677 1,576,619 Operating Expenses Salaries and Wages 1,272,226 1,236,965 1,213,837 1,153,676 1,101,867 1,044,462 Benefits 328,340 303,300 299,586 310,375 272,923 248,688 Supplies, Services and Other Operating Expenses 716,044 676,362 672,711 662,331 608,134 606,617 Scholarships and Fellowships 58,790 55,469 48,456 39,485 38,602 35,090 Depreciation 155,103 146,753 131,167 125,996 119,069 110,924 Total Operating Expenses 2,530,503 2,418,849 2,365,757 2,291,863 2,140,595 2,045,781 Operating Loss before State Appropriations (504,786)

(478,027)

(503,288)

(511,842)

(471,918)

(469,162)State Appropriations 437,631 498,358 479,478 462,281 440,855 428,893 Operating Income (Loss) after State Appropriations, Before Nonoperating Revenues (Expenses)

(67,155) 20,331 (23,810) (49,561) (31,063) (40,269)Nonoperating Revenues (Expenses)

Federal Appropriations 28,416 21,455 14,858 14,277 14,105 14,203 Federal Pell Grants 57,951 48,281 31,649 27,232 23,613 22,994 Investment and Endowment Income (Losses), Net 266,633 172,833 (173,355) 45,629 202,633 111,675 Private Gifts 52,564 48,695 52,552 51,680 53,268 64,483 Interest Expense (49,507) (46,103) (31,432) (43,055) (29,497) (28,563)Other Nonoperating Revenues (Expenses)

(3,279) (1,659) (3,930) (4,750) (3,147) (4,971)Net Nonooerating Revenues (Expenses) 352.778 243.502 (109,6581 91,013 260.975 179,821 Income (Loss) before Capital Contributions, Additions to Permanent Endowments and Extraordinary Item State Capital Appropriations Capital Gifts and Grants Private Gifts for Endowment Purposes Extraordinary Item: Net Proceeds from Sale of Missouri Care Increase (Decrease) in Net Assets Net Assets, Beginning of Year Cumulative Effect of Change in Accounting Principles 285,623 263,833 (133,468) 41,452 229,912 139,552 8,043 14,205 17,817 15,532 18,138 8,503 15,466 19,381 13,009 17,341 12,941 16,285 26,376 24,703 21,093 32,995 27,917 26,607--2,550 -19,317 -335,508 322,122 (78,999) 107,320 308,225 190,947 3,680,736 3,364,777 3,430,442 3,303,206 2,994,981 2,804,034-(6,163) 13,334 19,916 --3,680,736 3,358,614 3,443,776 3,323,122 2,994,981 2,804,034$ 4,016,244

$ 3,680,736

$ 3,364,777

$ 3,430,442

$ 3,303,206

$ 2,994,981 Net Assets, Beginning of Year, as Adjusted Net Assets, End of Year 2011 FinanciaL Report 73 Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Operating Revenues Tuition and Fees, Net 6.5% 4.8% 8.0% 3.6% 7.3% 6.4%Less: Scholarship Allowances 7.1% 10.5% 6.2% 2.5% 8.0% 9.2%Net Tuition and Fees 6.3% 2.9% 1.8% 1.1% -0.7% -2.9%Federal Grants and Contracts 6.7% 6.5% -6.4% 12.8% -7.3% 4.7%State and Local Grants and Contracts

-13.3% 24.8% -2.5% 15.7% 14.0% -5.5%Private Grants and Contracts

-1.5% -4.2% 17.8% 11.1% 17.2% -18.4%Sales and Services of Educational Activities

-3.9% 2.1% 12.9% -12.4% 22.3% 1.9%Auxiliary Enterprises

-Patient Medical Services, Net 3.6% 4.9% 3.1% 5.0% 4.5% 9.6%Housing and Dining Services, Net 4.4% 9.5% 13.0% 8.5% 8.6% 6.6%Bookstores

-1.2% -4.5% 1.1% 7.9% 4.8% 7.7%Other Auxiliary Enterprises, Net 10.8% 4.4% 4.6% 18.0% 15.8% -8.0%Other Operating Revenues 5.3% -8.3% 14.3% -12.2% 7.4% 7.7%Total Operating Revenues 4.4% 4.2% 4.6% 6.7% 5.8% 4.6%Operating Expenses Salaries and Wages 2.9% 1.9% 5.2% 4.7% 5.5% 5.8%Benefits 8.3% 1.2% -3.5% 13.7% 9.7% 9.6%Supplies, Services and Other Operating Expenses 5.9% 0.5% 1.6% 8.9% 0.3% 2.5%Scholarships and Fellowships 6.0% 14.5% 22.7% 2.3% 10.0% 14.0%Depreciation 5.7% 11.9% 4.1% 5.8% 7.3% 8.3%Total Operating Expenses 4.6% 2.2% 3.2% 7.1% 4.6% 5.5%Operating Loss before State Appropriations 5.6% -5.0% -1.7% 8.5% 0.6% 8.7%State Appropriations

-12.2% 3.9% 3.7% 4.9% 2.8% -0.3%Operating Income (Loss) after State Appropriations, Before Nonoperating Revenues (Expenses)

-430.3% -185.4% -52.0% 59.5% -22.9% 2797.1%Nonoperating Revenues (Expenses)

Federal Appropriations 32.4% 44.4% 4.1% 1.2% -0.7% -10.0%Federal Pell Grants 20.0% 52.6% 16.2% 15.3% 2.7% -7.9%Investment and Endowment Income (Losses), Net 54.3% -199.7% -479.9% -77.5% 81.4% 25.1%Private Gifts 7.9% -7.3% 1.7% -3.0% -17.4% -15.5%Interest Expense 7.4% 46.7% -27.0% 46.0% 3.3% 21.6%Other Nonoperating Revenues (Expenses) 97.6% -57.8% -17.3% 50.9% -36.7% -12.8%Net Nonoperating Revenues (Expenses) 44.9% -322.1% -220.5% -65.1% 45.1% 1.6%Income (Loss) before Capital Contributions, Additions to Permanent Endowments and Extraordinary Item 8.3% -297.7% -422.0% -82.0% 64.8% -20.6%State Capital Appropriations

-43.4% -20.3% 14.7% -14.4% 113.3% 81.5%Capital Gifts and Grants -20.2% 49.0% -25.0% 34.0% -20.5% 24.7%Private Gifts for Endowment Purposes 6.8% 17.1% -36.1% 18.2% 4.9% -15.7%Extraordinary Item: Net Proceeds from Sale of Missouri Care ----Increase (Decrease) in Net Assets 4.2% -507.8% -173.6% -65.2% 61.4% -15.1%Net Assets, Beginning of Year 9.4% -1.9% 3.9% 10.3% 6.8% 8.7%Cumulative Effect of Change in Accounting Principles

-100.0% -146.2% -33.0% 100.0% 0.0% 0.0%Net Assets, Beginning of Year, as Adjusted 9.6% -2.5% 3.6% 11.0% 6.8% 8.7%Net Assets, End of Year 9.1% 9.4% -1.9% 3.9% 10.3% 6.8%741 2011 FinanciaL Report CO PO IT FIA CA IN E Sttsial eto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006+ Primary Reserve Ratio 0.67 0.62 0.50 0.54 0.54 0.53/ Conversion Factor 0.133 0.133 0.133 0.133 0.133 0.133= Strength Factor 5.01 4.63 3.78 4.08 4.10 3.99 x Weighting Factor 35% 35% 35% 35% 35% 35%= Ratio Subtotal 1.75 1.62 1.32 1.43 1.43 1.40 Primary Reserve Ratio -measures the financial strength of the institution by indicating how long the institution could function using its expendable reserves to cover operations should additional net assets not be available.

A positive ratio and an increasing amount over time denotes strength.+ Return on Assets Ratio 8.7% 9.2% -2.3% 3.2% 9.8% 6.6%/ Conversion Factor 0.020 0.020 0.020 0.020 0.020 0.020= Strength Factor 4.36 4.58 (1.16) 1.59 4.89 3.29 x Weighting Factor 20% 20% 20% 20% 20% 20%Ratio Subtotal 0.87 0.92 (0.23) 0.32 0.98 0.66 Return on Assets Ratio -measures total economic return. While an increasing trend reflects strength, a decline may be appropriate and even warranted if it represents a strategy on the part of the institution to fulfill its mission.+ Net Operating Revenues Ratio 5.1% 7.7% 6.0% 4.0% 5.2% 5.1%/ Conversion Factor 0.013 0.013 0.013 0.013 0.013 0.013 Strength Factor 3.96 5.89 4.60 3.10 4.00 3.95 x Weighting Factor 10% 10% 10% 10% 10% 10%Ratio Subtotal 0.40 0.59 0.46 0.31 0.40 0.40 Net Operating Revenues Ratio -measures whether the institution is living within available resources.

A positive ratio and an increasing amount over time generally reflects strength.+ Viability Ratio 1.21 1.27 1.38 1.42 1.75 1.60/ Conversion Factor 0.417 0.417 0.417 0.417 0.417 0.417= Strength Factor 2.90 3.04 3.30 3.39 4.21 3.84 x Weighting Factor 35% 35% 35% 35% 35% 35%= Ratio Subtotal 1.01 1.06 1.16 1.19 1.47 1.34 Viability Ratio -measures the ability of the institution to cover its debt as of the balance sheet date, should the institution need to do so. A positive ratio greater than 1.00 generally denotes strength.Composite Financial Index 4.03 4.19 2.71 3.24 4.28 3.79 Composite Financial Index -Three Year Average 3.64 3.38 3.41 3.77 4.11 4.06 Composite Financial Index (CFI) -provides a methodology for a single overallfinancial measurement of the institution's health based on the four core ratios. The CFI uses a reasonable weighting plan and allows for a weakness or strength in a specific ratio to be offset by another ratio result, which provides a more balanced measure. The CFI provides a more holistic approach to understanding the financial health of the institution.

The CFI scores are not intended to be precise measures; they are indicators of ranges of financial health that can be indicators of overall institutional well-being when combined with non-financial indicators.

2011 FinanciaL Report 75 MA KE RA IO Sttsialeto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Net Tuition per Student Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Gross Tuition and Fees $ 671,419 $ 630,498 $ 601,742 $ 557,085 $ 537,832 $ 501,347 Less: Scholarship Discounts

/ Allowances (175,917)

(164,187)

(148,578)

(139,880)

(136,527)

(126,421)Less: Scholarship

/ Fellowship Expenses (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Net Tuition $ 436,712 $ 410,842 $ 404,708 $ 377,720 $ 362,703 $ 339,836 Net Tuition $ 436,712 $ 410,842 $ 404,708 $ 377,720 $ 362,703 $ 339,836 Number of Students -Fall Semester (FTEs) 55,272 53,292 51,025 48,994 48,431 47,752 Net Tuition per Student $ 7,901 $ 7,709 $ 7,932 $ 7,710 $ 7,489 $ 7,117 State Appropriations per Student Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 State Appropriations

$ 437,631 $ 498,358 $ 479,478 $ 462,281 $ 440,855 $ 428,893 Number of Students -Fall Semester (FTEs) 55,272 53,292 51,025 48,994 48,431 47,752 State Appropriations per Student $ 7,918 $ 9,351 $ 9,397 $ 9,435 $ 9,103 $ 8,982 Educational Expenses per Student Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Total Operating Expenses $ 2,530,503

$ 2,418,849

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Less: Scholarships

/ Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Less: Auxiliary Operating Expenses (1,028,491)

(956,455)

(901,089)

(886,774)

(829,830)

(771,976)Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Less: Auxiliary Interest Expense (9,006) (9,197) (7,437) (7,905) (8,380) (9,307)Net Educational Expenses $ 1,483,723

$ 1,443,831

$ 1,440,207

$ 1,400,754

$ 1,293,280

$ 1,257,971 Net Educational Expenses $ 1,483,723

$ 1,443,831

$ 1,440,207

$ 1,400,754

$ 1,293,280

$ 1,257,971 Number of Students -Fall Semester (FTEs) 55,272 53,292 51,025 48,994 48,431 47,752 Educational Expenses per Student $ 26,844 $ 27,093 $ 28,226 $ 28,590 $ 26,704 $ 26,344 Total Tuition Discount Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Scholarship Allowances

$ 175,917 $ 164,187 $ 148,578 $ 139,880 $ 136,527 $ 126,421 Scholarships

/ Fellowships Expense 58,790 55,469 48,456 39,485 38,602 35,090 Total Tuition Discounts

($) $ 234,707 $ 219,656 $ 197,034 $ 179,365 $ 175,129 $ 161,511 Total Tuition Discounts

($) $ 234,707 $ 219,656 $ 197,034 $ 179,365 $ 175,129 $ 161,511 Tuition and Fees, Net $ 671,419 $ 630,498 $ 601,742 $ 557,085 $ 537,832 $ 501,347 Total Tuition Discount (%)35.0% 34.8% 32.7% 32.2% 32.6% 32.2%76 2011 Financial Report CA IA RA IO Sttstcl Seto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Unrestricted Financial Resources to Direct Debt Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Current Portion of Long-Term Debt $ 29,107 $ 30,139 $ 24,922 $ 21,697 $ 17,437 $ 15,185 Long-Term Debt Subject to Remarketing 220,885 223,680 224,925 226,120 164,990 165,730 Long-Term Debt 1,140,934 915,906 608,114 631,742 479,712 496,318 Total Direct Debt $ 1,390,926

$ 1,169,725

$ 857,961 $ 879,559 $ 662,139 $ 677,233 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Total Direct Debt $ 1,390,926

$ 1,169,725

$ 857,961 $ 879,559 $ 662,139 $ 677,233 Unrestricted Financial Resources to Direct Debt 0.96 1.00 1.01 1.03 1.23 1.09 Expendable Financial Resources to Direct Debt (Viability Ratio)Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Net Assets -Restricted Expendable

-Scholarships, Research, Instruction and Other 264,605 244,226 235,405 262,266 270,238 267,514 Net Assets -Restricted Expendable

-Loans 77,300 75,637 78,357 77,656 75,785 74,825 Expendable Net Assets $ 1,679,268

$ 1,483,779

$ 1,181,961

$ 1,244,778

$ 1,161,362

$ 1,083,276 Expendable Net Assets $ 1,679,268

$ 1,483,779

$ 1,181,961

$ 1,244,778

$ 1,161,362

$ 1,083,276 Total Direct Debt $ 1,390,926

$ 1,169,725

$ 857,961 $ 879,559 $ 662,139 $ 677,233 Viability Ratio 1.21 1.27 1.38 1.42 1.75 1.60 Total Financial Resources to Direct Debt Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Net Assets -Restricted Expendable

-Scholarships, Research, Instruction and Other 264,605 244,226 235,405 262,266 270,238 267,514 Net Assets -Restricted Expendable

-Loans 77,300 75,637 78,357 77,656 75,785 74,825 Net Assets -Restricted Nonexpendable 788,876 679,494 612,119 718,314 738,153 624,821 Total Financial Resources

$ 2,468,144

$ 2,163,273

$ 1,794,080

$ 1,963,092

$ 1,899,515

$ 1,708,097 Total Financial Resources

$ 2,468,144

$ 2,163,273

$ 1,794,080

$ 1,963,092

$ 1,899,515

$ 1,708,097 Total Direct Debt $ 1,390,926

$ 1,169,725

$ 857,961 $ 879,559 $ 662,139 $ 677,233 Total Financial Resources to Direct Debt 1.77 1.85 2.09 2.23 2.87 2.52 Direct Debt per Student Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Total Direct Debt $ 1,390,926

$ 1,169,725

$ 857,961 $ 879,559 $ 662,139 $ 677,233 Number of Students -End of Fiscal Year (FTEs) 56,795 55,272 53,292 51,025 48,994 48,431 Direct Debt per Student 2011 Financial Report$ 24,490 $ 21,163 $ 16,099 $ 17,238 $ 13,515 $ 13,983 77 CA IA A IS Sttstcl Seto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Actual Debt Service to Operations Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Debt Service -Principal

$ 29,010 $ 24,922 $ 21,987 $ 17,437 $ 15,185 $ 13,877 Debt Service -Interest 49,507 46,103 31,432 43,055 29,497 28,563 Total Debt Service $ 78,517 $ 71,025 $ 53,419 $ 60,492 $ 44,682 $ 42,440 Operating Expenses $ 2,530,503

$ 2,418,849

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Less: Scholarships

& Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Total Debt Service $ 78,517 $ 71,025 $ 53,419 $ 60,492 $ 44,682 $ 42,440 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Actual Debt Service to Operations 3.1% 2.9% 2.3% 2.6% 2.1% 2.1%Capital Expense to Operations Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Depreciation Expense $ 155,103 $ 146,753 $ 131,167 $ 125,996 $ 119,069 $ 110,924 Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Total Capital Expense $ 204,610 $ 192,856 $ 162,599 $ 169,051 $ 148,566 $ 139,487 Operating Expenses $ 2,530,503

$ 2,418,849

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Less: Scholarships

& Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Total Capital Expense $ 204,610 $ 192,856 $ 162,599 $ 169,051 $ 148,566 $ 139,487 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Capital Expense to Operations 8.1% 8.0%6.9%7.4%7.0%6.8%78 2011 Financial Report SHEE RATIOS Sttstcl Secio Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Unrestricted Financial Resources to Operations Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Operating Expenses $ 2,530,503

$ 2,418,849

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Less: Scholarships

& Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Unrestricted Financial Resources to Operations 0.53 0.48 0.37 0.39 0.38 0.36 Expendable Financial Resources to Operations (Primary Reserve Ratio)Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Net Assets -Restricted Expendable

-Scholarships, Research, Instruction and Other 264,605 244,226 235,405 262,266 270,238 267,514 Net Assets -Restricted Expendable

-Loans 77,300 75,637 78,357 77,656 75,785 74,825 Expendable Net Assets $ 1,679,268

$ 1,483,779

$ 1,181,961

$ 1,244,778

$ 1,161,362

$ 1,083,276 Operating Expenses $ 2,530,503

$ 2,418,849

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Less: Scholarships

& Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Expendable Net Assets $ 1,679,268

$ 1,483,779

$ 1,181,961

$ 1,244,778

$ 1,161,362

$ 1,083,276 Adjusted Total Operating Expense $ 2,521,220

$ 2,409,483

$ 2,348,733

$ 2,295,433

$ 2,131,490

$ 2,039,254 Primary Reserve Ratio 0.67 0.62 0.50 0.54 0.54 0.53 Total Financial Resources per Student Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Net Assets -Unrestricted

$ 1,337,363

$ 1,163,916

$ 868,199 $ 904,856 $ 815,339 $ 740,937 Net Assets -Restricted Expendable

-Scholarships, Research, Instruction and Other 264,605 244,226 235,405 262,266 270,238 267,514 Net Assets -Restricted Expendable

-Loans 77,300 75,637 78,357 77,656 75,785 74,825 Net Assets -Restricted Nonexpendable 788,876 679,494 612,119 718,314 738,153 624,821 Total Financial Resources

$ 2,468,144

$ 2,163,273

$ 1,794,080

$ 1,963,092

$ 1,899,515

$ 1,708,097 Total Financial Resources

$ 2,468,144

$ 2,163,273

$ 1,794,080

$ 1,963,092

$ 1,899,515

$ 1,708,097 Number of Students -End of Fiscal Year (FTE) 56,795 55,272 53,292 51,025 48,994 48,431 Total Financial Resources per Student$ 43,457 $ 39,139 $ 33,665 $ 38,473$ 38,770 $ 35,269 2011 FinanciaL Report 79 OPRA IN RATIS Sttstcl Seto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Annual Operating Margin (Net Operating Revenues Ratio)Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Operating Inc (Loss) After State Appropriations

$ (67,155) $ 20,331 $ (23,810) $ (49,561) $ (31,063) $ (40,269)Federal Appropriations 28,416 21,455 14,858 14,277 14,105 14,203 Federal Pell Grants 57,951 48,281 31,649 27,232 23,613 22,994 Normalized Investment Income 114,592 107,236 105,498 95,963 86,504 77,538 Private Gifts 52,564 48,695 52,552 51,680 53,268 64,483 Interest Expense (49,507) (46,103) (31,432) (43,055) (29,497) (28,563)Net Operating Surplus (Deficit)

$ 136,861 $ 199,895 $ 149,315 $ 96,536 $ 116,930 $ 110,386 Total Operating Revenues $ 2,025,717

$ 1,940,822

$ 1,862,469

$ 1,780,021

$ 1,668,677

$ 1,576,619 Less: Scholarship

& Fellowships Expense (58,790) (55,469) (48,456) (39,485) (38,602) (35,090)State Appropriations 437,631 498,358 479,478 462,281 440,855 428,893 Federal Appropriations 28,416 21,455 14,858 14,277 14,105 14,203 Federal Pell Grants 57,951 48,281 31,649 27,232 23,613 22,994 Normalized Investment Income (a) 114,592 107,236 105,498 95,963 86,504 77,538 Private Gifts 52,564 48,695 52,552 51,680 53,268 64,483 Total Operating Revenues $ 2,658,081

$ 2,609,378

$ 2,498,048

$ 2,391,969

$ 2,248,420

$ 2,149,640 (a) Normalized investment income is equal to 5% of the rolling average balance of total cash and investments over the previous three fiscal years.Net Operating Surplus (Deficit)

$ 136,861 $ 199,895 $ 149,315 $ 96,536 $ 116,930 $ 110,386 Total Operating Revenues $ 2,658,081

$ 2,609,378

$ 2,498,048

$ 2,391,969

$ 2,248,420

$ 2,149,640 Net Operating Revenues Ratio 5.1% 7.7% 6.0% 4.0% 5.2% 5.1%Debt Service Coverage Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Total Debt Service $ 78,517 $ 71,025 $ 53,419 $ 60,492 $ 44,682 $ 42,440 Net Operating Surplus (Deficit)

$ 136,861 $ 199,895 $ 149,315 $ 96,536 $ 116,930 $ 110,386 Add Back: Interest Expense 49,507 46,103 31,432 43,055 29,497 28,563 Add Back: Depreciation Expense 155,103 146,753 131,167 125,996 119,069 110,924 Adjusted Net Operating Surplus (Deficit)

$ 341,471 $ 392,751 $ 311,914 $ 265,587 $ 265,496 $ 249,873 Adjusted Net Operating Surplus (Deficit)

$ 341,471 $ 392,751 $ 311,914 $ 265,587 $ 265,496 $ 249,873 Total Debt Service $ 78,517 $ 71,025 $ 53,419 $ 60,492 $ 44,682 $ 42,440 Debt Service Coverage 4.35 5.53 5.84 4.39 5.94 5.89 Return on Net Assets Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Change in Net Assets $ 335,508 $ 322,122 $ (78,999) $ 107,320 $ 308,225 $ 190,947 Average Net Assets $ 3,848,490

$ 3,519,675

$ 3,404,277

$ 3,376,782

$ 3,149,094

$ 2,899,508 Return on Net Assets Ratio 8.7%9.2% -2.3% 3.2% 9.8%6.6%80 2011 Financial Report Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Contribution Ratios Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 State Appropriations

$ 437,631 $ 498,358 $ 479,478 $ 462,281 $ 440,855 $ 428,893 Tuition and Fees, Net of Scholarship Allow/Exp 436,712 410,842 404,708 377,720 362,703 339,836 Auxiliary Enterprises 372,477 347,779 334,367 315,819 277,871 248,991 Grants and Contracts 320,522 318,123 296,745 299,148 264,830 264,007 Federal Pell Grants 57,951 48,281 31,649 27,232 23,613 22,994 Gifts 52,564 48,695 52,552 51,680 53,268 64,483 Normalized Investment Income (a) 114,592 107,236 105,498 95,963 86,504 77,538 Patient Care 763,674 736,799 702,424 681,312 648,802 620,577 Other 101,958 93,265 90,627 80,814 89,974 82,321 Total $ 2,658,081

$ 2,609,378 S 2,498,048

$ 2,391,969

$ 2,248,420

$ 2,149,640 State Appropriations 16.5% 19.1% 19.2% 19.3% 19.6% 20.0%Tuition and Fees, Net of Scholarship Allow/Exp 16.4% 15.7% 16.2% 15.8% 16.1% 15.8%Auxiliary Enterprises 14.0% 13.3% 13.4% 13.2% 12.4% 11.6%Grants and Contracts 12.1% 12.2% 11.9% 12.5% 11.8% 12.3%Federal Pell Grants 2.2% 1.9% 1.3% 1.1% 1.1% 1.1%Gifts 2.0% 1.9% 2.1% 2.2% 2.4% 3.0%Normalized Investment Income (a) 4.3% 4.1% 4.2% 4.0% 3.8% 3.6%Patient Care 28.7% 28.2% 28.1% 28.5% 28.9% 28.9%Other 3.8% 3.6% 3.6% 3.4% 4.0% 3.8%Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%(a) Normalized investment income is equal to 5% of the rolling average balance of total cash and investments over the previous three fiscal years.Operating Expenses by Functional Classifications Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Instruction

$ 556,631 $ 537,613 $ 544,025 $ 513,970 $ 475,366 $ 455,134 Research 219,903 214,540 214,491 206,803 204,421 207,504 Public Service 143,546 146,719 173,627 163,203 151,735 145,257 Academic Support 127,856 124,119 108,626 120,071 116,275 107,041 Student Services 69,992 70,671 69,234 69,669 74,797 72,305 Institutional Support 97,934 109,493 104,198 116,672 65,382 74,778 Operation and Maintenance of Plant 69,982 55,878 70,002 47,796 63,432 62,100 Auxiliary Enterprises 1,030,316 957,394 901,931 888,198 831,516 775,648 Scholarships and Fellowships 58,790 55,469 48,456 39,485 38,602 35,090 Depreciation 155,103 146,753 131,167 125,996 119,069 110,924 Total Operating Expenses $ 2,530,053

$ 2,418,649

$ 2,365,757

$ 2,291,863

$ 2,140,595

$ 2,045,781 Instruction 22.0% 22.2% 23.0% 22.4% 22.2% 22.2%Research 8.7% 8.9% 9.1% 9.0% 9.5% 10.1%Public Service 5.7% 6.1% 7.3% 7.1% 7.1% 7.1%Academic Support 5.1% 5.1% 4.6% 5.2% 5.4% 5.2%Student Services 2.8% 2.9% 2.9% 3.0% 3.5% 3.5%Institutional Support 3.9% 4.5% 4.4% 5.1% 3.1% 3.7%Operation and Maintenance of Plant 2.8% 2.3% 3.0% 2.1% 3.0% 3.0%Auxiliary Enterprises 40.7% 39.6% 38.1% 38.8% 38.8% 37.9%Scholarships and Fellowships 2.3% 2.3% 2.0% 1.7% 1.8% 1.7%Depreciation 6.1% 6.1% 5.5% 5.5% 5.6% 5.4%Total Operating Expenses 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%2011 FinanciaL Report 81 ST D N IN O M TO -CO SO IA E Sttstcl Sectio Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Enrollment Fall Semester 2010 2009 2008 2007 2006 2005 Undergraduate Students (Head Count) 53,358 51,352 49,510 47,864 47,841 47,739 Graduate Students (Head Count) 15,232 15,080 14,336 13,846 13,158 12,875 Professional Students (Head Count) 3,006 2,952 2,873 2,830 2,784 2,770 Total Students (Head Count) 71,596 69,384 66,719 64,540 63,783 63,384 Undergraduate Students (FTE) 43,737 41,974 40,294 38,642 38,381 37,927 Graduate Students (FTE) 8,571 8,401 7,890 7,553 7,299 7,095 Professional Students (FTE) 2,964 2,917 2,841 2,799 2,751 2,730 Total Students (FTE) 55,272 53,292 51,025 48,994 48,431 47,752 Acceptance Rate -First-time Freshmen 80% 80% 81% 80% 79% 81%Acceptance Rate -Undergraduate Transfers 73% 72% 72% 70% 80% 86%Matriculation

-First-time Freshmen 42% 41% 46% 47% 45% 45%Matriculation

-Undergraduate Transfers 67% 68% 68% 64% 61% 60%Demographics Fall Semester 2010 2009 2008 2007 2006 2005 Male 47% 47% 46% 47% 47% 46%Female 53% 53% 54% 53% 53% 54%Undergraduate Residence

-Missouri 83% 84% 84% 85% 86% 86%Undergraduate Residence

-Out of State 17% 16% 16% 15% 14% 14%Undergraduate Full-Time 77% 77% 76% 76% 75% 74%Undergraduate Part-Time 23% 23% 24% 24% 25% 26%Graduate Full-Time 45% 40% 38% 39% 41% 40%Graduate Part-Time 55% 60% 62% 61% 59% 60%white 76.5% 77.1% 78.2% 78.6% 79.1% 79.5%Black or African American 9.8% 9.9% 9.3% 9.3% 9.0% 9.0%Non-Resident Alien 6.2% 6.1% 6.0% 5.6% 5.5% 5.2%Asian / Pacific Is. 3.5% 3.5% 3.4% 3.6% 3.6% 3.5%Hispanic 2.8% 2.6% 2.5% 2.3% 2.2% 2.3%Other 1.2% 0.8% 0.6% 0.6% 0.6% 0.5%Degrees Awarded Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Baccalaureate 9,703 9,605 9,291 8,997 9,038 8,535 Graduate Certificate 539 520 438 321 293 259 Master's 3,870 3,608 3,620 3,432 3,193 3,227 Educational Specialist 100 123 148 102 106 91 Doctoral 557 519 487 510 479 470 First Professional Degree 818 800 763 749 771 741 Total 15,587 15,175 14,747 14,111 13,880 13,323 82 2011 FinanciaL Report ST D N IF R ATO -COUM I Sttsia Seto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Enrollment Fall Semester 2010 2009 2008 2007 2006 2005 Undergraduate Students (Head Count) 24,834 23,799 22,980 21,586 21,484 21,335 Graduate Students (Head Count) 6,310 6,288 6,024 5,708 5,598 5,512 Professional Students (Head Count) 1,197 1,150 1,126 1,111 1,102 1,083 Total Students (Head Count) 32,341 31,237 30,130 28,405 28,184 27,930 Undergraduate Students (FTE) 22,899 21,943 21,197 19,847 19,781 19,441 Graduate Students (FTE) 3,765 3,721 3,536 3,340 3,319 3,198 Professional Students (FTE) 1,174 1,134 1,108 1,094 1,083 1,066 Total Students (FTE) 27,838 26,798 25,841 24,281 24,183 23,705 Acceptance Rate -First-time Freshmen 83% 83% 85% 85% 78% 83%Acceptance Rate -Undergraduate Transfers 67% 69% 71% 67% 79% 91%Matriculation

-First-time Freshmen 42% 41% 47% 48% 47% 46%Matriculation

-Undergraduate Transfers 66% 66% 68% 71% 67% 70%Demographics Fall Semester 2010 2009 2008 2007 2006 2005 Male 47% 46% 46% 46% 47% 47%Female 53% 54% 54% 54% 53% 53%Undergraduate Residence

-Missouri 81% 83% 84% 85% 86% 86%Undergraduate Residence

-Out of State 19% 17% 16% 15% 14% 14%Undergraduate Full-Time 94% 94% 94% 94% 94% 94%Undergraduate Part-Time 6% 6% 6% 6% 6% 6%Graduate Full-Time 58% 48% 46% 48% 50% 48%Graduate Part-Time 42% 52% 54% 52% 50% 52%White 81.8% 82.9% 83.6% 83.8% 83.8% 84.2%Black or African American 6.6% 6.4% 5.9% 5.8% 5.7% 5.6%Non-Resident Alien 5.4% 5.4% 5.4% 5.3% 5.3% 5.1%Asian / Pacific Is. 2.4% 2.5% 2.5% 2.7% 2.8% 2.8%Hispanic 2.5% 2.2% 2.0% 1.8% 1.8% 1.8%Other 1.3% 0.6% 0.6% 0.6% 0.6% 0.5%Degrees Awarded Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Baccalaureate 5,087 4,963 4,855 4,779 4,736 4,461 Graduate Certificate 162 142 88 69 68 84 Master's 1,513 1,515 1,506 1,421 1,350 1,314 Educational Specialist 53 59 57 34 36 21 Doctoral 365 322 306 326 293 277 First Professional Degree 306 304 307 303 289 292 Total 7,486 7,305 7,119 6,932 6,772 6,449 2011 FinanciaL Report 83 I !S UD N IN O M TO --AS SCT ttsia eto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors'Report Enrollment Fall Semester 2010 2009 2008 2007 2006 2005 Undergraduate Students (Head Count) 9,850 9,381 9,261 9,094 9,383 9,487 Graduate Students (Head Count) 3,771 3,795 3,651 3,800 3,321 3,296 Professional Students (Head Count) 1,638 1,623 1,569 1,548 1,509 1,523 Total Students (Head Count) 15,259 14,799 14,481 14,442 14,213 14,306 Undergraduate Students (FTE) 7,395 6,972 6,662 6,400 6,528 6,540 Graduate Students (FTE) 2,030 2,021 1,936 1,909 1,776 1,755 Professional Students (FTE) 1,618 1,604 1,555 1,535 1,495 1,500 Total Students (FTE) 11,043 10,597 10,153 9,844 9,799 9,795 Acceptance Rate -First-time Freshmen 71% 72% 73% 66% 82% 81%Acceptance Rate -Undergraduate Transfers 72% 70% 66% 61% 80% 86%Matriculation

-First-time Freshmen 39% 40% 42% 44% 36% 39%Matriculation

-Undergraduate Transfers 65% 68% 67% 67% 57% 57%Demographics Fall Semester 2010 2009 2008 2007 2006 2005 Male 43% 43% 43% 42% 42% 42%Female 57% 57% 57% 58% 58% 58%Undergraduate Residence

-Missouri 75% 75% 77% 78% 77% 79%Undergraduate Residence

-Out of State 25% 25% 23% 22% 23% 21%Undergraduate Full-Time 68% 67% 63% 61% 61% 60%Undergraduate Part-Time 32% 33% 37% 39% 39% 40%Graduate Full-Time 33% 33% 33% 30% 35% 34%Graduate Part-Time 67% 67% 67% 70% 65% 66%White 67.7% 67.6% 68.9% 71.1% 71.5% 72.0%Black or African American 12.6% 12.7% 12.5% 12.0% 12.1% 12.1%Non-Resident Alien 7.1% 7.4% 7.3% 6.3% 5.9% 5.5%Asian/ Pacific Is. 6.4% 6.5% 6.2% 6.2% 6.1% 5.8%Hispanic 4.7% 4.3% 4.4% 3.8% 3.6% 3.9%Other 1.5% 1.4% 0.7% 0.7% 0.7% 0.8%Degrees Awarded Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Baccalaureate 1,523 1,633 1,496 1,289 1,428 1,425 Graduate Certificate 24 18 20 24 19 23 Master's 972 911 917 852 769 791 Educational Specialist 25 33 49 40 39 41 Doctoral 77 83 68 59 71 61 First Professional Degree 468 455 412 408 438 415 Total 3,089 3,133 2,962 2,672 2,764 2,756 8 1 2011 FinanciaL Report ST D N INF R ATO -MISO R S& Sttsia eto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Enrollment Fall Semester 2010 2009 2008 2007 2006 2005 Undergraduate Students (Head Count) 5,503 5,206 4,911 4,752 4,515 4,311 Graduate Students (Head Count) 1,702 1,608 1,456 1,414 1,343 1,289 Professional Students (Head Count) ------Total Students (Head Count) 7,205 6,814 6,367 6,166 5,858 5,600 Undergraduate Students (FTE) 5,127 4,886 4,622 4,483 4,200 4,000 Graduate Students (FTE) 1,036 979 831 840 783 800 Professional Students (FTE)Total Students (FTE) 6,163 5,865 5,453 5,323 4,983 4,800 Acceptance Rate -First-time Freshmen 87% 89% 88% 90% 90% 92%Acceptance Rate -Undergraduate Transfers 67% 74% 74% 76% 77% 80%Matriculation

-First-time Freshmen 47% 47% 49% 49% 49% 48%Matriculation

-Undergraduate Transfers 80% 71% 67% 73% 66% 81%Note: Rolla's pre-application advising process encourages unqualified students to apply elsewhere, thereby producing misleading acceptance rate figures.Demographics Fall Semester 2010 2009 2008 2007 2006 2005 Male 78% 78% 78% 77% 77% 78%Female 22% 22% 22% 23% 23% 22%Undergraduate Residence

-Missouri 80% 81% 81% 81% 81% 81%Undergraduate Residence

-Out of State 20% 19% 19% 19% 19% 19%Undergraduate Full-Time 91% 92% 93% 92% 91% 90%Undergraduate Part-Time 9% 8% 7% 8% 9% 10%Graduate Full-Time 59% 59% 52% 54% 56% 60%Graduate Part-Time 41% 41% 48% 46% 44% 40%White 75.7% 76.4% 78.3% 78.7% 78.9% 79.3%Black or African American 4.6% 5.4% 4.9% 4.6% 4.4% 4.4%Non-Resident Alien 13.9% 12.6% 11.0% 10.4% 10.4% 10.6%Asian / Pacific Is. 2.5% 2.7% 3.1% 3.3% 3.5% 3.0%Hispanic 2.4% 2.3% 2.2% 2.3% 2.4% 2.4%Other 0.9% 0.6% 0.5% 0.7% 0.4% 0.3%Degrees Awarded Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Baccalaureate 1,001 998 922 913 835 744 Graduate Certificate 282 278 250 164 127 75 Master's 517 411 426 430 356 392 Educational Specialist

---

Doctoral 65 51 50 63 63 74 First Professional Degree ------Total 1,865 1,738 1,648 1,570 1,381 1,285 2011 FinanciaL Report 85 ST D N IN O M TO -S .L US Sttsia eto Supplementary Information

-Unaudited

-See Accompanying Independent Auditors' Report Enrollment Fall Semester 2010 2009 2008 2007 2006 2005 Undergraduate Students (Head Count) 13,171 12,966 12,358 12,432 12,459 12,606 Graduate Students (Head Count) 3,449 3,389 3,205 2,924 2,896 2,778 Professional Students (Head Count) 171 179 178 171 173 164 Total Students (Head Count) 16,791 16,534 15,741 15,527 15,528 15,548 Undergraduate Students (FTE) 8,317 8,172 7,814 7,912 7,873 7,947 Graduate Students (FTE) 1,740 1,681 1,587 1,464 1,422 1,341 Professional Students (FTE) 171 179 178 171 173 164 Total Students (FTE) 10,228 10,032 9,579 9,547 9,468 9,452 Acceptance Rate -First-time Freshmen 58% 60% 59% 62% 64% 62%Acceptance Rate -Undergraduate Transfers 78% 77% 79% 78% 81% 84%Matriculation

-First-time Freshmen 37% 39% 38% 38% 39% 43%Matriculation

-Undergraduate Transfers 66% 69% 69% 57% 60% 54%Demographics Fall Semester 2010 2009 2008 2007 2006 2005 Male 39% 38% 35% 40% 39% 39%Female 61% 62% 65% 60% 61% 61%Undergraduate Residence

-Missouri 93% 93% 93% 93% 93% 93%Undergraduate Residence

-Out of State 7% 7% 7% 7% 7% 7%Undergraduate Full-Time 46% 46% 47% 48% 47% 47%Undergraduate Part-Time 54% 54% 53% 52% 53% 53%Graduate Full-Time 28% 23% 23% 26% 24% 24%Graduate Part-Time 72% 77% 77% 74% 76% 76%White 73.7% 74.2% 75.4% 75.1% 76.9% 77.5%Black or African American 16.4% 16.6% 15.6% 15.8% 14.4% 14.3%Non-Resident Alien 3.7% 3.6% 3.9% 3.7% 3.6% 3.1%Asian / Pacific Is. 3.2% 3.2% 3.0% 3.3% 3.1% 3.2%Hispanic 2.1% 1.9% 1.7% 1.8% 1.7% 1.7%Other 0.9% 0.5% 0.4% 0.3% 0.3% 0.2%Degrees Awarded Fiscal Year Ended June 30, 2011 2010 2009 2008 2007 2006 Baccalaureate 2,092 2,011 2,018 2,016 2,039 1,905 Graduate Certificate 71 82 80 64 79 77 Master's 868 771 771 729 718 730 Educational Specialist 22 31 42 28 31 29 Doctoral 50 63 63 62 52 58 First Professional Degree 44 41 44 38 44 34 Total 3,147 2,999 3,018 2,937 2,963 2,833 86 2011 Financial ReporL (Page intentionally left blank)2011 FinanciaL Report 87 AdvancingMissou FIT.University of Missouri System COLUMBIA I KANSAS CITY I ROLLA I ST.LOUIS 201 Fiania. Repoi-Advancing l'0ur Uie sit ofM ssor Ofieo iac n Admnsrto 215Unvesit.Hl Couba MO 6521 University of M issuiSse 4MS