ML093410385

University of New Mexico Response to Request for Additional Information Regarding the AGN-201M Reactor Application for License Renewal

ML093410385
Person / Time
Site:	University of New Mexico (R-102)
Issue date:	11/09/2009
From:	Busch R Univ of New Mexico
To:	Doyle P Research and Test Reactors Licensing Branch
References
TAC ME1590
Download: ML093410385 (59)

Text

~UNM Chemical & Nuclear Engineering November 9, 2009 Paul V. Doyle, Jr.

Project Manager Research and Test Reactors Branch A Division of Policy and Rulemaking Office of Nuclear Reactor Regulation Mail Stop 12 D3 U.S. Nuclear Regulatory Commission Washington, D.C. 20555-0001

Subject:

Docket No. 50-252, Facility License R-102 Request for Additional Information Regarding the AGN-201M Reactor Application for License Renewal (TAC No. ME1590).

Transmitted herewith is our formal response to your Requst for Additional Information (RAI),

dated August 11, 2009, regarding the renewal of the AGN-201M facility license.

If there are any questions or concerns with this response please contact me at (505) 277-8027, and/or e-mail me at busch a unrn.edu I declare under penalty of perjury that the foregoing is true and correct. Executed on November 9 th, 2009.

Respectfully Submitted Robert D. Busch, Ph.D, P.E.

Chief Reactor Supervisor, UNM AGN-201 M Reactor' 0

To'/

505.277.5433

• www.unm.edu The University of New Mexico - MSCO 1 1120 ° 1 University of New Mexico °Albuquerque,NM 87131-0001

• Phone 505.277.5431 - Fax 209 Farris Engineering Building

Response to Request for Additional Information From The University of New Mexico AGN-201M Reactor Docket 50-252 A. Technical Specifications

1. The paragraphshave been corrected to indicate 120 °C.

Technical Specifications 2.2 - Limiting Safety System Settings The second paragraph has been changed to read, In the event of failure of the reactor to scram, the self-limiting characteristics due to the high negative temperature coefficient, aiid the melting of the thermal fuse at a temperature below 120 0C will assure safe shutdown without exceeding a core temperature of 200'C (the Safety Limit).

Technical Specifications 5.1 - Reactor (Design Features)

Paragraph a has been changed to read,

a. The reactor core, including control rods, contains approximately 667 grams of U-235 in the form of <20% enriched U0 2 dispersed in approximately 11 kilograms of polyethylene. The lower section of the core is supported by an aluminum rod hanging from a fuse link. The fuse melts at a fuse temperature of about 120 0C causing the lower core section to fall away from the upper section reducing reactivity by at least 5% Ak/k. Sufficient clearance between-core and reflector is provided to ensure free fall of the bottom half of the core during the most severe transient.

2. The terminology of 10CFR 50.59 has changed and no longer refers to 'an unreviewed safety question'. The paragraphs(6.4.2.a, 6.4.2. b, 6. 4.2. c, and 6.9.

9.1. have been modified to reflect this change.

Technical Specifications 6.4.2 - Reviews The first three paragraphs have been changed to read, 6.4.2 Reviews The Reactor Safety Advisory Committee shall review:

a. Safety evaluations for changes to procedures, equipment or systems, and tests or experiments, conducted without Nuclear Regulatory Commission approval under the provision of 10 CFR 50.59 to verify that such actions do not require a license amendment.

b. Proposed changes to procedures, equipment or systems that change the original intent or use, and are non-conservative, or those that are covered in 10 CFR 50.59.

November 9, 2007 I UNM RAI Response

c. Proposed tests or experiments which are significantly different from previous approved tests or experiments, or those that are covered in 10 CFR 50.59.

Technical Specifications 6.9.1 -Annual Operating Report Paragraph f has been changed to read,

f. A summary of the safety evaluation made for each change, test or experiment not submitted for NRC approval pursuant to 10 CFR 50.59 which clearly shows the reason leading to the conclusion that no license amendment was required and that no Technical Specifications change was required.

3. The outlineformatfor Technical Specification 6. 9.1 has been changed to be consistent with the rest of the document.

The section now appears as follows.

6.9.1 Annual Operating Report Routine annual operating reports shall be submitted no later than ninety (90) days following June 30. The annual operating reports shall provide a comprehensive summary of the operating experience having safety significance gained during the year, even though some repetition of previously reported information may be involved. References in the annual operating report to previously submitted reports shall be clear.

Each annual operating report shall include:

a. A brief narrative summary of

1. Changes in facility design, performance characteristics, and operating procedures related to reactor safety that occurred during the reporting period.

2. Results of major surveillance tests and inspections:

b. A tabulation showing the hours the reactor was operated and the energy produced by the reactor in watt-hours.

c. List of the unscheduled shutdowns, including the reasons therefore and corrective action taken, if any.

d. Discussion of the major safety related corrective maintenance performedduring the period, including the effects, if any, on the safe operation of the reactor, and the reasons for the corrective maintenance required.

e. A brief description.of:

November 9, 2007 2 UNM RAI Response

1. Each change to the facility to the extent that it changes a description of the facility in the application for license and amendments thereto.

2. Changes to the procedures as described in Facility Technical Specifications.

3. Any new experiments or tests performed during the reporting period.

f. A summary of the safety evaluation made for each change, test or experiment not submitted for NRC approval pursuant to 10 CFR 50.59 which clearly shows the reason leading to the conclusion that no license amendment was required and that no Technical Specifications change was required.

g. A summary of the nature and amount of radioactive effluent released or discharged to the environs beyond the effective control of the licensee as determined at or prior to the point of such release or discharge.

1. Liquid Waste (summarized for each release)

a. Total estimated quantity of radioactivity released (in Curies) and total volume (in liters) of effluent water (including diluent) released.

2. Solid Waste (summarized for each release)

a. Total volume of solid waste packaged (in cubic meters)

b. Total activity in solid waste (in Curies)

c. The dates of shipment and disposition (if shipped off site).

h. A description of the results of any environmental radiation surveys performed outside the facility.

i. Radiation Exposure - A summary of personnel exposures received during the reporting period by facility personnel and visitors.

November 9, 2007 3 UNM RAI Response

B. Safety Analysis Report

1. Section 1.C.3 describes the 'Low Power Interlock" as preventing rod insertions if Channel #2 power is less than or equal to I x 10-12 amps, while Technical Specification 3.2.d.4 gives a value of 50 x 10-6 watts. Are these numbers equivalent?

5 watts is nominally 1xl0 7 amps so 50 x 10-6 watts is equivalent to 1 x 10-12 amps. The requirement is 50 microwatts and the implementation of this requirement is 1 x 1012 amps so the two are equivalent.

2. Section VA describes the MCA. Reactivity insertions of both 2% and 20% are mentioned. What is the correct value?

The MCA is analyzed as a 2% insertion. This is intended as an upper bound to any potential accident. An analysis was performed for completely filling the glory hole with fuel. This produced a 0.92% insertion, well below the bounding value of 2%.

The wording will be changed to reflect the upper bound and the new analysis.

The revised paragraph reads as follows:

V. Safety of the AGN-201 Reactor Facility A. Maximum Credible Accident The total excess reactivity of the reactor is given by the manufacturer as 0.5%.

For the purposes of a hazards analysis, however, it is assumed that an instantaneous insertion of 2% in reactivity occurs. Because of its inherently low excess reactivity, the system could never acquire this reactivity in the course of normal operation. It could only occur if improper materials were introduced into the reactor. Strict administrative controls discussed in the next section will normally make this impossible. The placing, for instance, of significant positive reactivity in the glory hole will be strictly forbidden.

In this sense, the assumed 2% in reactivity bounds the highest reactivity (about 0.92%)

that would be created if the glory hole was completely filled with nominal 20% enriched fuel. This analysis demonstrates the fact that the reactor does not "runaway" following a sudden increase in reactivity.

November 9, 2007 4 UNM RAI Response

3.Section V.D has incorrectunitsfor volume and density. Supply a correctedcopy of this section of the SAR for review.

Section V.D. now reads as:

D. Hypothetical Maximum Accident The accidental insertion of fissionable material into the core through the glory hold could produce a major accident. The hazards involved would be dependent upon the amount of fissionable material inserted, and the insertion speed of the material. The hypothetical maximum conceivable accident occurring, which could hardly be called an "accident", would be the insertion of 20 grams of U-235. The volume of the glory hole through the core is about 115 cm 3 . Typical fuel loading of the AGN is about 0.05456 g-U235/cm 3 so the glory hole in the core area could contain about 6.3 grams of U-235. The reactivity worth of a gram of U-235 ranges from 0.1% at the core centerline to 0.036% at the edge.***

4. The thirdparagraphof Section V.B refers to figure 19; there is no reference to figure 18 andfigure 19 seems to be missing.

Figure numbering was incorrect. The figures are now numbered as follows:

Figure 16 - Epicenter for Seismic Activity in Central New Mexico (referenced at the end of the seismology section)

Figure 17. Nuclear Engineering Laboratory Building (referenced in IV.A.)

Figure 18 - Campus Map (referenced in IV.A.)

Figure 19 was missing and has now been added as shown on next page. The paragraph has been revised to read:

The radiation levels associated with 4-watt operation (peak thermal flux of 2.0 x 108 n/cm 2 -sec) are given in Figure 19 as measured on February 12, 2009. (The radiation values scale linearly with power.)

November 9, 2007 5 UNM RAI Response

Nuclear Engineering AGN-201 Reactor Radiation Survey Date: 12 Feb 2009 Surveyed By: J. De Z re/R. Becker il/

Instruments Used: Victoreen Model 450P; SN 3028; cal date: 10 Sep 2008 Ludlum Model 3 (SN 25784) w/42-31 neutron CaI2 detector (SN 10432); cal date: 12Mar 2008 Tvyve of Operation: Routine ReactorPower: 4.0 watts Maximum: 5-6 watts Location y dose neutron rate dose rate Background 0.020 0 mrem/hr I Console 0.75 mR/hr 0.1 mrem/hr 2 Yellow Line on Floor 2.4 mR/hr 0.2 mrem/hr 3 Side of Rx Tank Shield 19 mR/hr 8 mrem/hr 4 Rx Skirt Shield 4 mR/hr 11 mrem/hr 5 Glory Hole Access

• 11 mR/hr 4 mrem/hr 6 Rx Top Center 230 mR/hr 40 mrem/hr 7 East Wall 17 mR/hr 7 mrem/hr 8 NorthWall 16.5mR/hr 9 mrem/hr Smear Survey Results Counting Instrument Bkgd. cpm MPC 9400 (ca) 0 MPC 9400 (P) 49 Ludlum 2200 286 Results (net dm)

a. 0 0 30

b. 2 8 0 IN

c. 0 0 28

d. 0 0 2

e. 0 0 0

f. 0 0 36 Comments: Alpha LLD = 6 dpm BetaLLD= 71 dpm Gamma LLD = 163 dpm

• BF3 detector probe in glory hole Figure 19 - Radiation Levels Associated with 4 Watt Operation November 9, 2007 6 UNM RAI Response

C. Financial Qualifications

1. FinancialStatement is out of date. A copy of the latestfinancialstatement (yearending June 30, 2008) is provided

2. Estimated Operating Costs (2010 dollars)for each of the years FY2010 through FY2014.

UNM's source offunding to cover the operatingcosts for the abovefiscal years.

Operating Costs $50,000 for 50% Lab Supervisor/Reactor Technician and 25% for Chief Reactor Supervisor salaries. These salaries are currently a part of UNM's state-funded Instruction and General budget, and this will continue to serve as the revenue source for these salaries through 2014. With an expected raise of 2% /annum over the next year, this is $51,000 in 2010$. (raises at UNM have averaged about 1.5% over the last 9 years.) Assuming a maximum of 2% increase over the 2010 - 2014 period, the operating costs (in 2010$) are projected to be:

$51,000 2010

$52,000 2011

$53,000 2012

$54,000 2013

$55,000 2014

3. a Estimated Decommissioning Costs (2010 dollars)for each of the years FY2010 through FY2014. UNM's source offunding to cover the operatingcosts for the above fiscal years.

As the last AGN to be decommissioned was more than 15 years ago, there do not appear to be any reliable records on the costs associated with such an effort. So the costs are estimated based on discussions with the University's Safety and Risk Services and their experiences in dealing with mixed, hazardous, and radioactive waste. Based on these conversations, the decommissioning costs in 2009$ are :

Waste Disposal ($40,000 based on conversation between UNM and the waste consolidator and assuming mixed waste)

Fuel Shipment ($10,000 based on 10 Type A container shipments no more than 10 lbs per container air shipped to INL.)

Reactor Vessel Disposal ($10,000 based on decontaminated disposal at area landfill)

Labor and Equipment ($16,000 based on skilled labor cost of $75/hr including fringe, overhead, etc. for 20 person days, rental of power washing equipment and torch needed to clean and dismantle tank)

This comes to $76,000 and with a 25% contingency is then $95,000. These costs are then escalated to 2010$ using an average increase of 3% per year. Inflation has averaged 2.54% over the last 10 years, so the 3% value was used to conservatively estimate change (according to the CPI-U (all urban consumers), Bureau of Labor Statistics, US Department of Labor).

November 9, 2007 7 UNM RAI Response

I I Decommissioning (in 2010$)

Waste Disposal $41,200 Fuel Shipment $10,300 Labor $16,480 Reactor Vessel $10,300 Total $78,280 25% Contingency $19,570 Total $97,850 Costs were calculated in 2009$ and then extended to 2010$ based on an average increase of 3%

per year.

3.b Statement of Decommissioning method to be used To comply with UNM's commitment to the state of NM and its citizens, the reactor laboratory will be decontaminated to meet the requirements of 10CFR20.1402 "Radiological Criteria for Unrestricted Use." The Nuclear Engineering Laboratory Building will remain in place, and the laboratory room will be analyzed and characterized to ensure that it meets the requirements. At the time of decommissioning, UNM will determine which computer codes and instrumentation are best suited for characterization of the area.

3. c Descriptionof meads of adjustingdecommissioning costs.

The decommissioning cost estimate will be updated every 10 years beginning in 2020.

The adjusted costs will be based on the average CPI-U for the previous 10 years.

3. d Numerical example showing how the decommissioning costs will be updatedperiodically in the future.

Adjusted Cost example for 2020.

If previous 10 year average CPI was 2.75%, then the total cost will be adjusted to:

$97,850 * (1.0275)^10 = $128, 345.

4. Statement of Intent to ensure availability of sufficientfunds UNM will provide a Statement of Intent according to Appendix A of NUREG-1757, Vol.3. along with documentation verifying that the signatory is authorized to represent the licensee in providing the statement of intent (signatory should be head of agency or designee),

and the amount of the statement of intent equals or exceeds the required coverage level (attached).

November 9, 2007 8 UNM RAI Response

THE UNIVERSITY of fU NEW MEXICO U.S. Nuclear Regulatory Commission Washington, DC 20555 November 2, 2009

Subject:

UNM AGN-201M Research Reactor, Facility Operating License R-102 University of New Mexico Financial Assurance STATEMENT OF INTENT As Executive Vice President for Administration, Chief Operating Officer, and Chief Financial Officer, of the University of New Mexico, I exercise authority and responsibility to request from the State of New Mexico funds for decommissioning activities associated with operations authorized by the U.S. Nuclear Regulatory Commission Facility Operating License R-102. This authority is established by the UNM Board of Regents' Policy Manual. Within this authority, I intend to request that funds be made available in the amount of $100,000 to decommission the UNM AGN-201M Reactor located in Building 121 on the campus of the University of New Mexico, Albuquerque, New Mexico 87131 (estimated costs of decommissioning are $100,000). I intend to request and obtain these funds sufficiently in advance of decommissioning to prevent delay of required activities.

Executive Vice President for Administration, COO & CFO Before me on this day personally appeared the above named applicant who, being by me duly sworn upon oath, says that all the acts, statements and answers contained in this application are true and correct.

ofSw9.V& sf, 2oa ,.....

and subscribed to before me ( ,4L , (? A(ll _,, on this day Notary Public: ic:_____

My Commission Expires: __________

7, ' ~ '. \ \

()FFICi UNM of/UNIV SITY C(UNSlI Memorandum TO: Regent Koch, President of the Board egents FROM: Patrick V. Apodaca, Universit oun DATE: February 20, 2009 y RE: Duties and Responsibilities of the Board of Regents As you requested, this memorandum summarizes the Board of Regents' (the "Board")

legal responsibilities for governance of the University of New Mexico.

For purposes of this summary, it is important to recognize that Art. XII, sec. 13, of the New Mexico Constitution confers the Board broad authority for "contro and management" of the University. In a memorandum dated April 30, 2007, this office provided you a general analysis of the Board's plenary authority under the "control and management" provision, as further defined and explained by State statutes and court decisions. However, the Board may delegate, and has delegated, certain of this authority to the President and other officials of the University. Thus, the Board's legal authority is broader than that which it exercises pursuant to current Regents' policies.

Below, under "I. Responsibilities of Board," we have first outlined the current duties and responsibilities of the Board as described in Regents' Policy and the law.

A key responsibility of the Board is to decide what aspects of its authority may be delegated to the President and other officers in order to ensure the prudent management of the University. The Board has in fact delegated significant duties and functions consistent with its control and management responsibility. For purposes of better informing the scope of the Board's responsibilities, it is helpful to consider certain duties that have been delegated to the President. Under "II. Responsibilities Delegated to the President," we provide a summary of the delegated duties.

I. Responsibilities of the Board Regents' Policy 1.1: Responsibilities of the Board of Regents and certain New Mexico statues charge the Board with the following duties and responsibilities:

The University of Newv Mexico * \1i( 0S ;440 - I Uni'rt.ty )fsw cxv Ic, AXluq*ucrquc

-* NM 8-1 1-000l *- www.unm.cdu

'*holc,, IH ll, Room 21-) " Ih,nc 5,i0 .27 .i035 IFax ioi.277.4154

A. General Responsibilities of the Board:

I. Ultimate responsibility for governance of the University.

2. Fiduciary responsibility for the assets and programs of the University.

3. Establish goals and policies to guide the University.

4. Oversight over functioning of the University.

5. Carrying out duties and functions authorized by law and specified in Regents' Policies.

B. Specific Duties and Functions of the Board:

1. Appoint a President of the University, who serves as Chief Executive Officer.

2. Delegate authority to the President for effective operation of the University.

3. Adopt Board policies for the governance of the University, and at least biennially, review the Regents' Policy Manual for compliance and revision, in addition to revisions submitted, as necessary, at any time.

4. Establish, and periodically review, the mission, goals and objectives of the University, and a long-range campus master plan for the physical development of the University.

5. Set tuition and student fees.

6. Create colleges, schools and branches.

7. Approve the constitution or other governing document of faculty, staff, and student governing bodies and component or affiliated organizations, as determined to be appropriate by the President and the Board.

8. Approve all degrees awarded by the University.

9. Enter into, and review biennially, operating agreements with the Board of Advisors of each branch college.

10. Approve the organizational structure for the University, and any major revisions proposed by the President.

11. Approve budget, including salary increases.

12. Take any other actions required by law to be decided at the level of the Board. These include, for example, the award and revocation of degrees (NMSA (1978), § 21-7-9), issue and sell building and improvement bonds (NMSA (1978), §§ 21-7-16 et seq.), establish and charge matriculation and tuition fees (NMSA (1978), § 21-1-2(A)), determine and fix the standard of requirements for admission (NMSA (1978), § 21-1-1 (A)), and annual adoption of notice provisions for open meetings (NMSA (1978), § 10-15-1(D)).

Regents' Policy 1.1 reserves unto the Board the right to consider and determine any matter relating to the University.

2

II. Responsibilities Delegated to the President Pursuant to Regents' Policy 1.1, the Board specifically "vest[s] responsibility for the operation and management" of the University in the President.

Under Regents' Policy 3.1: Responsibilities of the President, the Board delegated "authority to the President to carry out his or her responsibilities to manage the University, as set forth generally in this policy, and to adopt administrative policies and procedures consistent with Regents' policies."

The President is permitted to further delegate his or her authority unless a law or Regents' policy specifically prohibits the delegation of such authority.

Among the responsibilities delegated by Regents' Policy are:

1. Oversight of the quality of the academic and support programs of the University.

2. Supervision of the relationship between students and the administration.

3. Management of the University's finances.

4. Administration of the personnel system.

5. Operation and maintenance of real and personal property under the jurisdiction of the University.

6. Fundraising, intercollegiate athletics, auxiliary enterprises, and alumni activities.

7. Consultation and cooperation with the Board and other University groups on various matters, including planning for the future development of the University.

8. Representation of the University in public affairs.

9. Accounting to the Board for the University's finances on a quarterly and annual basis.

10. Establishing a centralized system for fundraising, advancement, and development.

11. Reporting annually to the Board on the state of the University.

12. Presenting to the Board for approval the organizational structure of the University.

13. Appointment, dismissal and setting compensation for certain key administrators, including the Executive Vice Presidents, Vice Presidents and University Counsel, subject to informing the Board in advance of such actions.

14. Where matters emerge that are not specifically addressed by the Board's delegation, Regents' Policy 3.1 makes it the responsibility of the President "in consultation with the President of the Board, to seek Regents' approval when a proposed action is of such consequence that it could affect the fiscal condition of the University or its academic mission or is of such public importance as to warrant the involvement of the Regents even though Regents' approval is not specifically required by this Policy Manual or any statute or other regulation."

Please contact me if you have any questions regarding this summary or if you would like me to provide additional information.

3

UNM Regents' Policy Manual 7.8 - Signature Authority 10/20/09 2:54 PM 7.8

Subject:

SIGNATURE AUTHORITY FOR CONTRACTS Adopted: September 12, 1996 Amended: March 10, 1997 Amended: December 6, 2007 Amended: August 12, 2008 Applicability This policy applies to all members of the Board of Regents, faculty, staff and students.

Policy The Board must approve and an officer must sign the following types of contracts and documents:

1. Contracts between the President and the University

2. Bond resolution, notification and certification documents, including certification of bond sale

3. Any contracts or other documents required by law to be signed by an officer of the Board of Regents.

The Director of Purchasing or designee must sign contracts for the purchase of goods and services, and the authority to do so is hereby delegated.

Jke Prosidet shallhav dw t obiyt ign all other contracts and documents for the operation of the University and maydelegate this auithority. The President's signature authority includes the authority to execute certificates representing stocks, bonds, or other securities in order to buy, sell, assign, or endorse for transfer such securities. The President shall also have authority to require additional signatures on contracts for the purchase of goods and services.

It is the official policy of the University to avoid financial settlements of claims and lawsuits against the University except when appropriate. The University shall not agree to pay a financial settlement without (a) an appropriate risk assessment of the case, and (b) written approval by the cognizant Executive Vice President if the University's settlement payment obligation is less than $50,000 or written approval by the President if the University's payment obligations is $50,000 or more. A financial settlement payment by the University of $200,000 or more, must also be approved by the Board of Regents.

The President, or the Executive Vice President for Health Sciences as the designee, is authorized to enter into affiliation agreements with other patient care facilities to provide educational opportunities.

The signature authority delegated in this policy must be exercised in accordance with other Regents' policies, some of which may require approval of the contract or other document by the Board.

References Appointment of the President of the University, RPM 1.4; Borrowing and Bonding Authority, RPM 7.10; UBPPM Policy 2010 Comments should be sent to BRPM@UNM.edu http://www.unm.edu/-brpm/r78.htmP Page 1 of 2

UNM Regents' Policy Manual 7.8 - Signature Authority 10/20/09 2:54 PM Go to:

Table of Contents Table of Contents - Section 7 Regents' Policy Manual Homepage f The University of New Mexico 7-Albuquerque, New Mexico http://www.u nm.edu/-brpm/r78.htm Page 2 of 2

UNM Policy 2010 10/20/09 2:53 PM THE UNIVERSITY P$rleUesiv*sfy s1I NEW MEXICO n Proceduires Manla

, ,' -20101 CONTRACTS, SIGNATURE AUTHORITY .AND REVIEW Effective Date: May- 1, 1997 Revised: 08/01/97, 05/08/98, 01/29/99, 12/08/99, 07/i2/00,V08/02/04, 08/01/06, 11/15/07, 01/01/08, 08/12/08 Subject to ChangeWithout Notice Authorized by UNMRegetits' Policy 7.8 "SiginatureAuthoritv'fo Cntracts,"

1. General ' "

This, policy: designates whp,within theUiniversity, is authotized-to sign'conitracts on behalf of the University.

All previous delegations or communications on.this subject are superseded. Contracts-may be signed on behalf of the University only by: < ...... . "

• A'person in a position specifically autho0rized by the University Board of Regents.

• A vice president or Provost, to whom the President has, delegated the authority delegated to ,the President by the Board of Regents',as specified herein.

• The Director of Purchasing and Vice President 'for Human Resources, as specified herein.

• A person- who has, received a sub-delegation in accordance with.this policy.

2., Contract For the purposes of this policy, a "contract" is defined as- a-written agreement between two (2) parties intended to have legal-effect, including Memorandums of Understanding and Letters 'ofUnderstanding,,in one of the fol.lowing forms listed below-.

• Documents signed by UNM and another party.

o Offers signed by UNM o Certain pre-approyed UNM forms signed by others-.

' Contract forms promulgated by'others signedby UNM.

The term "contract" does not include written agreements between different departments or other similar units ,of the University. While such interdepartmental agreements are not legally binding on the departments or units that participate in.the agreement, they. may serve, th6 useful purpose of memorializing agreed upon arrangements between departments. Interdepartmentalwritten agreements should be in form 'of a-memorandum signed by one or more cognizant vice presidehts or executive vice presidents, as appropriate.

University Purchase, Orders, although contracts; are also discussed' in " Purchasing Goods Off Campus" "

Policy 4320,.UBP and. "Purchasing Professional Services From Independent Contractors" Policy'4325, UBP.

3. Signature Authority'and Delegation, The 'University has a centralized system of signature authority. The Regents have delegated- general '

signature authority to the President, who has delegated portions of that authority to the Provost, vice http://www.unm.edu/'-ubppm/ubppmanual/2010.htm Page 1 of 8

UINM Policy 2010 10/20/09 2:53 PM presidents, Director of Purchasing, and Vice President for Human Resources under this Policy. These positions may further delegate that authority only by using the Signature Authority Delegation Form (Exhibit A.). The Signature Delegation Form must be approved by a Senior Associate University Counsel, who will then forward it to the University Secretary's Office. Exhibit B. lists all such delegations made prior to the date shown on the exhibit and will be updated regularly.

All delegations shall be to a position within the University and not to the individual holding the position at the time of the delegation. When there is turnover in a position, the new individual has the authority of the previous incumbent. Persons in an acting or interim position also have the general signature authority of that position.

All contracts must be reviewed by a contract review officer for legal form, prior to signature. If a contract is a form contract using language that has been approved by University Counsel's Office then a person with signature authority may, in his or her discretion, sign it without review by a contract review officer.

4. General Delegation of Signature Authority Throughout this section, certain signature authority delegations are made for "main campus and the branches." For the purposes of this Policy, "main campus and the branches" refers to all components of The University of New Mexico outside of the Health Sciences Center, including, for example off-campus centers, graduate centers, the athletic campus, rented buildings, and other off-campus sites.

,-4.1 Operations T xe~xui Vic y lq:.ignall contracts, excep~t those att and hose used for the purchase of good-, and/or The Executive Vice President for Health Sciences has authority to sign all contracts for the Health Sciences Center, except those reserved to the President or to the Regents, contracts for the purchase of goods and/or services (refer to Section 4.2. herein), settlement agreements (except in accordance with Section 4.7. herein), intellectual property assignments (refer to Section 4.8. herein), real estate contracts (refer to Section 4.9. herein), and contracts for purchase of construction and certain professional services (refer to Section 4.10. herein).

Signature of employment contracts for officials reporting to the President is reserved to the President and may not be delegated.

These delegations overlap with many of the more specific delegations listed below.

4.2. Contracts For Purchase of Certain Goods and/or Services and for Sub-Awards The Director of Purchasing or delegee has exclusive authority to sign sponsored project sub-awards and contracts for the purchase of goods and/or services, other than construction contracts and certain professional services contracts, as set forth in Section 4.10. herein. The purchase of goods and/or services for clinical components of the Health Sciences Center may be performed by The University of New Mexico Hospital Purchasing Department, as a separate satellite purchasing office of the University, in compliance with University procurement policies http://www.unm.edu/h-ubppm/ubppmanual/2010.htmPae2o8 Page 2 of 8

UNM Policy 2010 10/20/09 2:53 PM and procedures.

4.3. Research and Other Sponsored !Projects

.4.3.1. Main Campus and the Branches 4,3.1.1' Contracts and Grants Documents._

The Executive'VicePresident for Administration has authority -to sign contracts and grant documents requiring approval for sponsored projectg' for-main campus and the branches.

.4.3.12. Proposals  :

The, Provost/! Executive Vice President for Academic Affairs has

,'

authority to sign proposals for-sponsored projects.

4.3.1.3. Research Contracts Not Covered by Other Sections The Provosti Executive Vice President for Academic Affair' has authority, to sign research contracts not involving the receipt or expenditure of funds or otherwise incurring direct financial obligations and not covered by other sections.

4.32. Health Sciences. Center , .

The Executive Vice President for Health Sciences has authority to sign contracts, projects for the Health Sciences Center. .

4.4. Employment Contracts 4.4.1. Faculty Employment The Provost/ Executive.Vice President for Academic Affairs has aUthoriity to sign faculty employment offers and contracts.

4.4.2. Staff Employment 4.4.2.1. Annual Employment Contracts The vice president responsible for the position being employed and the President have authority to sign employment contracts and offers for contract employees under "Contract Emprloyees" 'Policy 3240, UBP.

4.4.2.2. Offers of Employment .

The Vice President for Human Resources has authority to sign staff employment offers, and mry further delegate this authority consistent http://www.unm.edu/.-ubppm/ubppmanual/2010.htmPge3o8 Page 3 of 8

UNM Policy 2010 10/20/09 2:53 PM with w the provisions of Section 3., wihthe written approval of the Executive Vice President for Administrati'on.  :"

'.4.3. Student Employment, The Vice President for Student Affairs has authority to sign contracts for student

• emiployment, including work study. .,.'.,'

4.5. Contracts Affecting Students - ' -

4.5.1. Financial Aid and Loans to Students The Vice President for StudentAffairs has authority to sign applications and proposals to Outside funding -entjities, short term emergency promissory. notes to students, and other agreements relating to financial aid prdgrams administered by Student Financial Aid, The Executive Vice President for Administration, has authority-to sign contracts With outside fufiding entities and other loafis to students.

4S.2. Student Housing, The Executive Vice President for Administration has authority to sign contracts relating tostudent housi'ng.

4.5.3. Other Contracts Relating to Students and Not Covered by Other Sections The Vice President for Student Affairs has, authority to sign other contracts relating to students not involving the receipt of funds. Executive Vice Presideht 'for Administration has authority to sign other contracts relating to students inVolving

• the receipt of funds.

4.6. Academic Matters The Provost/ Executive Vice President for Academic Affairs has authority to sign contracts

• concerning academic matters notinvolving the receipt or expenditure of funds.

4.7. Settlement Agreements When the contract is a settlement agreement, release of rights, or similar agreement resolving legal claims against the University" it must be co-signed by an attorney in the University

• Counsel's Office, as well as signed by the Provost/ Executive Vice President for Academic Affairs' or Vice President who has responsibility for the matter.'

It is the official pollcy of the Uniyersity to avoid financial settlements of claims and lawsuits -

against the University except when, appropriate: The University shall not, agree to pay a financial settlement without (a) an appropriate risk assessment of the case, and (b) written

-approval by the cognizant Executive Vice President if the University's settlement payment obligation is less than $50,000 or written approval by the President if the University's payment obligation is $50,000 or more. A financjal settlement payment by the University-of $200,000 or more must also be approved bythe Board of Regents. ,

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UNIVIPolicy 2010 10/20/09 2:53 PM

• ' ~~~etual Pr perftyAsig"S*  :

4.8.,Intellec or sig ents The ExecutiveVice President for Administration has authority to sign agreements assigning,

.. .intellectualpropertyrights by, or to the.Universitylexcept contracts for: putchases by the Uriiversity which 'must be signed'by theiDirector.of Purchasing (refer to Setfion,4.2. herein). -

4.9.-Real EstAte' I

4.9.1. Main Campus and the Branches - Real Estate, 4.9.1.1. Short-Term teases of UNM,-Real Property and Leases 6f, Others' Reil Property of a !Period.of Six (6) Months or Less The Director of Purchasing is ahthorized'to sign, all shoft-term real,

'estate leases.

4.9-.1.2.,Long-Term Leases of UNM Real Property and LeaSes of Others' Real Property of aPeriod&Exceeding Six: (6), Months, The Executive Vice President for.Amini'tration and the Director of Purchasing, are authorized .to sign' all l6n.glternirel estate cotracts.

Both signatures are requir.d: .. , o S4.9.1.3. Other eal- Estate Contr ct The Executive Vice President for. Administration is authorized to sign all other real estate contracts. .... "

4.9.2.

4 Sciences Center ..

The"Director of Purchasing. and the Executive Vice President for Administration have authority to sign real estate, contracts for,the Health Sciences Center to the .

extent provided in Section 4;9. .above, Wifh the proviso that all such contracts,.

must-Cbear *tie written approval of the Executive Vice President foi-"Healtf -Sciences.

4.10. Constrdetion Contractswith- External Contractors and Contracts for Purchase of.f Professional Services Related to Architectural Services, External Auditing Services,Debt Financing and, Investment Managementt' The Executive Vice, President forWAdminristration -and the"Director of Purchasing. are authorized

-to 'sign all' construction. contracts with external contractors and contracts for purchase of pr6fessional'services related to architedtural services', external auditinj serliCes, debt financing, and investmentr'management. Both signatures are required. . , ' - P

-5. Contract Review , . . ...

Each contract must be Carefully:reviewed by the Univeisity 'employeeinitiating thel'coitract and a,-'.

SUniversty contract rev.iew fficer prior to signature. Pre-approved Form Contracts (refer to Sectiohn 6.-

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UNM Policy 2010 10/20/09 2:53 PM herein) have ~een thoroughly -reviewed forlegal form; and therefore do not-require review-,by a contract

ýreview officer, unless additional language has been added (Sectionis 5.2. and 5.3. hereih do not apply)i.The,,

pniversity-, administrator"-with signhatute authority may' desigal review ,reqiiirements forj :,'ý particular types 6feContracts, suci~has.Co'fifroller's-review for, budget. ,.

5.1. University Employee Initiating the Contract ,-

Theq perSon initiatinlg'the contract ,for the University is~respohsibie for reading the 6ontract-entirely and deterniining that:, - . '- .

-, -the contractIanguage accurately reflects- the current state of negotiations-

• the contract meets programmatic and University'mission requirements;,

- the contract represents a :good deal for the University;.;. 'y .

• he or. she. can ensureicOmpli.ance 'with the'.obligations it places t n-the University-;

• .0.risk mhanagementconcein's have. been readsonably addressed; ,and,*

'the contr'actis sufficiently cear and consistent., -,'  :  : , '

After being satisfied with the form and content of the.'contract, the, initiatingeiemployeermust complete, the appropriate sections, of the, Contract Review Form (Exhibit C.). Pre-approved Form Contracts do'not require' a Contract Review Form, To the extent the inain poe does not understand the proposed contract, oris uncomforable with any,, of its provisions, he or.:

she should note thatrinfornmadtnrion.the Contract Revieew'Form or-attachan explaiatory'memo." ,

He or. she .sall submit the-'contract along with any 0other necessary documents, such 'asas:coy of the lpurchase, requissifon. where requiredto the appropriate contract re'view officer'for .. ' '

proceSSing. Contract-review 'officers foreach area of specialty within the University are' listed on the Contract Review Forrn. The initiating-department should submit a purchase requisition; if required, into the system for approVal;' howevel,a purchase orderwill not be processed untilthe. .

signed con'tractrand the Contra'ci' Review form is receivedby the- Purchasing Department 5.2.,Contract Review Officer - ' ", .' "j' - ,, '

The University"Counsel's Office shall designdite and traidn coitract-revieW officers. All contrlact re.view officers shall, be UNM emnpioyees`. The Uiiiversity Counsel's Office shall'set training -Z requirements necessary to maintain cofntract review officer' status. The. Universiiy, Counsel and"

.all-Associate and Assistant UniversityCounsel are conitract review officers.

.The contract review officer wiHl.review for the d0ncerns'ddscribedin SeCtion S.I herein.; The.."

contract review officer shall ilso performthe foll6wing review functiohfsfor each' contract, prior, t6 submission to -a Person'with.signature authority. '

5.2.1. Legal Form-The contract review-officer' ghall review contracts, to the 'xatent for:

" consistency o' -With,law, (obtaining University Counsefreview, if necesgary);

7. consistency with UNM rules and regulations;'

0 reasonablW'internal consistency and clarity; and,

• - consistency with, anypredeessor documents.' ., .

I ' J http://www.unm.edu/-ubppm/ubppmanual/2010.htm Page 6 of 8

UNM Policy 2010 10/20/09 2:53 PM 5.2.2. Other Institutional Reviews The 6" contrac"t ecessa reviewsubmission

.ry prior'to of determirie officer shall the'contractwhat other institutional for signature, indicate reviews are, these reviews" on the form, and coordinate obtaining the appropriate reviews. In particular, contract review officers are responsible for making sure that departments which will" be obligated or otherwise affected bythe p-erforma nce of a Contract, hae an adequate opportunity'to review the contract. The routing for particular types of contracts will generally be established by the person with signature authority: The contract revie6w officer will &'oordinatethe reviews and then-forward the cofntract to the person- with signature-authority. _ ' ". . "

5.3. C aontrct`Review Form'-,.,

Contracts submitted for signature mist, be. accompani ed by a Contract Review Formn ;(Exhibit -

C_)o."IndividualS rev*iewing the prqposed contract prior to its' signature (execution) shall sign the,,-

Contract Review Form indicating that they have reviewed it, and 'whatthey 'rev ieWed it for:-.The Contract Review Form will normally have at least two (2) signatures consisting that of the'.

in: .ititinemployee (originator), and, that of a contract review officer. - .

5.4.,Sighature (Execution) of Contract on Behalf of University. -.

The contract review officer will forward the contract to the University. admihistrator who has

,-been delegated signature authority forthat contract. . - ,

6. Form Contracts 6.1. Pre-approved Form Contract Review .

University Counsel's Office may-review and-approve form contracts. The pre-approved form contracts will. not require review by a contract review officer prior to. execution, proyided that any blanks are-filled in as per -any instructions on the form and provided the language has not been altered. The Utniversity Counsel,'s, Office shall consult with the cognizant vice president prior to approval. The University Secretary shall assign a numbe'r to each such pre-approved form contract and shall maintain a record of them.

6.2. Contracts for the Purchase of Goods and Services -

The President and the Director of Purchasing may *afdopt policies and procedures authorizing the, execution .of pre-approved Purchase Order forms to be Used-in limited circumstances defined in

'thepolicies and procedures in Section 40 of the University Business Policies and

' ProceduresManaalby individuals defined in those policies and procedures. Any such policies and procedures, flow in existence are hereby confirmed as part of this policy.

7.Compliancee-"

No University employee may sign(execute), any contract purPorting to be on behalf of the University, unless delegated signature authority todo so., pursuant, to this policy. Any employee who violates this http://www.unm.edu/-ubppm/ubppmanual/2010.htm Page 7 of 8

UNM Policy 2010 10/20/09 2:53 PM section may be subjectito disciplinary action., No cointract signed jbya person witho'ut signat.ire authority, delegated'by the' Board of Regents or purS'uant to'this p6licy shall be bindingý on'the Ufiiversity,

'. Records Retention ... . ' ' . .

Each administrator who signs a.contract shall keep the-signined contract on file or'designate where the, signed' contract; should be kept., Th cobntract will be"kept on file for,at least the period of the contract plus, three (31 years orthle period of time. required by laiw, whichever:. iloigerr. If signed contracsare'-ent~t6 a different loca aept og should be describing the contractand idicting where it was'sent. The, University" Secretary's Office should be advised'of the location. -. ' '

9. Attachments '"

Exhibit.A.- signature Authority. Delegation.Form (To complete this form using.MS Word 6lick here)

SExhibit B.- Delegatidn of-Signature Authority ', ' - '.. ""' '. " ' '

Exhibit C* - Contract. Review Form (To ,complete this form u:UsingMS'Word clidk here).

4'

'I'"

4'

-- 'F.'-

"C

'-A' Comnlents may be sentto UBPPM@UNM.edu http://ww-w.unm.edu/fubppm Sectids3000 .UBP Manual.'

Contents -PoliCy ListinF Forms . ndex *, Ho, e UBP Homepage "UNM Honepae Contents' 7 a"e ' " . . . "

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THE UNW1*S*V TYOJ NEW MEXICO

~s. ~

9 g 1-

~ -~5 ~ ~ I (F I For thbeyearr endhingJune 309 2008

THE UNIVERSITY OF NEW MEXICO June 30, 2008 BOARD OF REGENTS AND PRINCIPAL OFFICERS Board of Regents Appointed Members: Title: Term Expires:

James H. Koch President 12/31/2008 Jack L. Fortner Vice President 12/31/2010 Carolyn J. Abeita Secretary/Treasurer 12/31/2012 Don L. Chalmers Member 12/31/2012 John M. "Mel" Eaves Member 12/31/2008 Raymond Sanchez Member 12/31/2010 Dahlia Dorman Student Member 12/31/2008 Ex officio Members:

The Honorable Bill Richardson Governor of the State of New Mexico Dr. Veronica Garcia Secretary of Education Advisors:

Howard Snell President, Faculty Senate Ashley C. Fate President, Associated Students of the University of New Mexico Christopher Ramirez President, Graduate & Professional Student Association Loyola Chastain President, Staff Council Lillian Montoya-Rael President, Alumni Association Susan Deese-Roberts President, UNM Retiree Association Maria Probasco President, UNM Parent Association Thelma Domenici Chair, UNM Foundation PrincipalAdministrative Officials University David J. Schmidly President David W. Harris Executive Vice President for Administration, COO and CFO Suzanne Ortega Provost and Executive Vice President for Academic Affairs Dr. Paul Roth Executive Vice President, Health Sciences Center UNM Hospitals Stephen W. McKernan Chief Executive Officer & Vice President for Hospital Operations PrincipalFinancialOfficials Main Campus Ava J. Lovell Vice President, HSC/UNM Finance & University Controller Andrew Cullen Associate Vice President of Budget, Planning and Analysis Elizabeth Metzger Chief Finance & Treasury Officer, Financial Services Michael D. Schwantes Director of Finance Systems & Restricted Accounting Julian Sandoval Associate University Controller, Finance Project Director Health Sciences Center Ava J. Lovell Vice President, HSC/UNM Finance & University Controller Robert Fondino Chief Budget & Finance Officer, HSC Keith Mellor Associate Controller, Health Sciences Center UNM Hospitals Ella B. Watt Chief Financial Officer Valri Ward Executive Director of Finance & Controller i

THE UNIVERSITY OF NEW MEXICO June 30, 2008 TABLE OF CONTENTS FINANCIAL STATEMENTS Exhibit Page Independent Auditors' Report iv - vi Management's Discussion and Analysis 2- 14 BASIC FINANCIAL STATEMENTS Statements of Net Assets A 16 - 17 Statements of Revenues, Expenses and Changes in Net Assets B 18- 19 Statements of Cash Flows C 20-21 Combining Statement of Net Assets - Discretely Presented Component Units 2008 D 22 - 23 Combining Statement of Net Assets - Discretely Presented Component Units 2007 E 24 - 25 Combining Statement of Revenues, Expenses and Changes in Net Assets -

Discretely Presented Component Units 2008 F 26-27 Combining Statement of Revenues, Expenses and Changes in Net Assets -

Discretely Presented Component Units 2007 G 28-29 Notes to the Basic Financial Statements 30 - 86 REQUIRED SUPPLEMENTAL INFORMATION Schedule Schedule of Funding Progress & Employer Contributions 1 88 SUPPLEMENTAL INFORMATION Schedule Budget Comparison 2-6 90 - 95 Schedule of Pledged Collateral 7 96.- 97 Schedule of Individual Deposit and Investment Accounts 8 98 - 99 SINGLE AUDIT INFORMATION Schedule of Expenditures of Federal Awards 9 100- 108 Notes to Schedule of Expenditures of Federal Awards 110-125 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance With Government Auditing Standards 126-128 Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 130- 132 Summary Schedule of Prior Audit Findings 134 Schedule of Findings and Questioned Costs 136- 146 UNAUDITED INFORMATION Schedule of Pledged Revenues 10 148- 149 Schedule of Campus Statistics 11 150- 151 EXIT CONFERENCE 152 ii

THE UNIVERSITY OF NEW MEXICO (THIS PAGE INTENTIONALLY LEFT BLANK) iii

CMwvinM PIJBLM A ONMWMf tI 1aSrnHM =WLAUzMm Independent Auditors' Report 505-830-6200 505-830-6282 Board of Regents University of New Mexico and Mr. Hector H. Balderas New Mexico State Auditor We have audited the accompanying financial statements of the business-type activities and aggregate discretely presented component units of the University of New Mexico (University) as of and for the years ended June 30, 2008 and 2007, which collectively comprise the University's basic financials statements as listed in the accompanying table of contents. We have also audited the budget comparisons presented as supplemental information for the year ended June. 30, 2008, as listed in the accompanying table of contents. These basic financial statements and budget comparisons are the responsibility of the University's management. Our responsibility is to express opinions on these basic financial statements and budget comparisons based on our audits. We did not audit the financial statements of the UNM Hospital, UNM Psychiatric Center, or UNM Children's Psychiatric Center, collectively known as the clinical operations of the University (clinical operations) or the financial statements of the UNM Medical Group, a blended component unit (blended component unit). The financial statements of the clinical operations and the blended component unit reflect total assets of 25% and 26%, and total revenues of 36%

and 27%, for the years ended June 30, 2008 and 2007, respectively, of the related totals.

We also did not audit the 2007 financial statements of the University Physician Associates, a discretely presented component unit, which financial statements reflect total assets and revenues of 11% of the related 2007 discretely presented component unit totals. The 2008 and 2007 financial statements of the clinical operations and the blended component unit, and the 2007 financial statements of the University Physician Associates, were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the clinical operations, the blended component unit, and the discretely presented component unit, is based solely on the reports of the other auditors.

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 audits 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's internal control over financial reporting.

PraxitY.. Accordingly, we express no such opinion. An audit also includes examining on a test JUDPE*N,*",IRMS basis, evidence supporting the amounts and disclosures in the financial statements. An 6100 UptoWn Blvd. NE iv Suite 400 Albuquerque, NM 87110

cHuIIfli i~am= A=Wnmim 1ja~

ffmsCxzw=irI Board of Regents University of New Mexico and Mr. Hector H. Balderas New Mexico State Auditor audit also includes 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 and the reports of other auditors provide a reasonable basis for our opinions.

As discussed in Note 1, the financial statements of the University are intended to present the financial position and changes in financial position and cash flows of only that portion of the business type activities of the State of New Mexico that is attributable to the transactions of the University. They do not purport to, and do not, present fairly the financial position of the State of New Mexico as of June 30, 2008 and 2007, the changes in its financial position or its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, based on our audit and the reports of other auditors, the basic financial statements of the University referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of the University as of June 30, 2008 and 2007, and the respective changes in financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In addition, in our opinion, the budget comparisons referred to above present fairly, in all material respects the budgetary comparison for the year ended June 30, 2008 in conformity with the budgetary basis of accounting prescribed by the New Mexico Administrative Code, and more fully described in the budgetary schedules, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, on July 1, 2007, the University adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.

GASB Statement No. 45 requires the University to recognize and match other postemployment benefit costs with related services received and disclose additional information.

In accordance with Government Auditing Standards, we have also issued our report dated January 5, 2009, on our consideration of the University's internal control over financial reporting and 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 V

GLUUMW kUMZL AMAMM4 M I UUMMOS UMSULZAKM Board of Regents University of New Mexico and Mr. Hector H. Balderas New Mexico State Auditor 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 Audit Standards and should be considered in assessing the results of our audits and the reports of other auditors.

Management's Discussion and Analysis and the required supplemental information on page 88 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. 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 audits were conducted for the purpose of forming opinions on the basic financial statements and the budget comparisons. The accompanying Schedule of Expenditures of Federal Awards (Schedule 9) is presented for purposes of additional analysis as required by US Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is not a required part of the basic financial statements. In addition, the Schedule of Pledged Collateral (Schedule 7),

Schedule of Individual Deposit and Investment Accounts (Schedule 8), Schedule of Pledged Revenue (Schedule 10), and Schedule of Campus Statistics (Schedule 11) are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards, the Schedule of Pledged Collateral, and the Schedule of Individual Deposit and Investment Accounts have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Schedule of Pledged Revenue has not been subjected to the auditing procedures applied in the audits of the basic financial statements and, accordingly, we express no opinion on it.

Albuquerque, New Mexico January 5, 2009 vi

THE UNIVERSITY OF NEW MEXICO (THIS PAGE INTENTIONALLY LEFT BLANK)

I

THE UNIVERSITY OF NEW MEXICO MANAGEMENT'S DISCUSSION AND ANALYSIS Year Ended June 30, 2008 The following discussion and analysis provides an overview of the financial position and activities of The University of New Mexico (University or UNM) as of and for the years ended June 30, 2008, 2007, and 2006. This discussion should be read in conjunction with the accompanying financial statements and notes. Management has prepared the basic financial statements and the related note disclosures along with this discussion and analysis. As such, the basic financial statements, notes and this discussion are the responsibility of University management.

This Management's Discussion and Analysis (MD&A) includes comparative financial information for fiscal years 2008, 2007, and 2006, of the primary institution, which includes the UNM Medical Group, a blended component unit. The MD&A does not include information of the discretely presented component units, for which separately issued financial statements are available.

Using the Basic Financial Statements The Statement of Net Assets presents the assets, liabilities and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point-in-time financial statement, the purpose of which is to give the readers of the financial statements a fiscal snapshot of the University. The statement presents end-of-year data concerning assets (current and non-current), liabilities (current and noncurrent), and net assets (assets minus liabilities).

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. This statement begins with a presentation of the operatingrevenues received by the institution. Operating revenues are defined by Governmental Accounting Standards as revenues arising from an exchange (earned) transaction. In a public university, such as UNM, income from state government appropriations, although not earned, are heavily relied upon to pay operating expenses for almost all instruction and general programs. However, Governmental Accounting Standards define state appropriation income as non-operating revenue, causing the presentation of a large operating loss on the first page of the Statement of Revenues, Expenses, and Changes in Net Assets. The operating loss is offset by non-operatingrevenues in the next section of this statement, Non-operating Revenues (Expenses).

The final statement presented is the Statement of Cash Flows. The Statement of Cash Flows presents the inflows and outflows of cash, summarized by operating, capital, financing and investing activities.

The statement is prepared using the direct method of cash flows, and as such, presents gross rather than net, amounts for the year's activities.

2

NET ASSETS AND REVENUES, EXPENSES AND CHANGES IN NET ASSETS The University of New Mexico Condensed Summary of Net Assets As of June 30 ASSETS 2008 2007 2006 Current assets $ 746,019,365 $ 567,958,497 $ 514,241,683 Capital assets, net 1,068,662,755 954,002,967 806,823,830 Non-current assets 445,220,640 443,576,535 470,463,069 Total assets $ 2,259,902,760 $ 1,965,537,999 $ 1.791.528,582 LIABILITIES 2008 2007 2006 Current liabilities $ 226,902,083 $ 218,047,182 $ 191,771,545 Non-current liabilities 676,566,839 546,600,411 558,963,488 Total liabilities $ 903,468,922 $ 764.647.593 $ 750.735.033 NET ASSETS 2008 2007 2006 Invested in capital assets, net of related debt $ 267,418,948 $ 284,379,306 $ 327,229,723 Restricted 618,766,768 518,443,493 404,498,599 Unrestricted 470,248,122 398,067,607 309,065,227 Total net assets $ 1,356,433,838 $ 1.200.890.406 $ 1,040,793,549 Current Assets and Liabilities Current assets include cash and other assets that are deemed to be consumed or convertible to cash within one year. The most significant current assets of the University are cash and cash equivalents and short-term investments consisting of certificates of deposit, U.S. Treasury Bills and other government-backed securities totaling $543.0 million, $369.6 million and $324.8 million as of June 30, 2008, 2007, and 2006 respectively.

Current liabilities are generally defined as amounts due within one year, and include accounts payable, payroll accruals, and accrued compensated absences. The 4.1% increase in current liabilities for the year ended June 30, 2008 is primarily due to increases in accrued compensated absences, estimated third-party payor liability, and the current portion of bonds payable.

At June 30, 2008, the University's current ratio, the amount of current assets ($746.0 million) available to cover current liabilities ($226.9 million), was 3.29 to 1. At June 30, 2007, the University's current ratio, the amount of current assets ($568.0 million) available to cover current liabilities ($218.0 million),

was 2.61 to 1. At June 30, 2006, the University's current ratio, the amount of current assets ($514.2 million) available to cover current liabilities ($191.8 million), was 2.68 to 1.

3

Capital and Debt Activity Capital assets are the largest category of non-current assets, and are shown net of accumulated deprecia-tion, at $1.069 billion and $954.0 million as of June 30, 2008 and 2007, respectively. During fiscal year 2008, the largest capital asset additions for the University were within Buildings. Overall, the Univer-sity increased Buildings by $98.0 million in FY08, compared to a net increase of $24.3 million in FY07 and a net increase in FY06 of $16.8 million. The University's increase in Buildings in FY08 is due to the purchase and construction of new buildings as well as renovations to existing buildings. The Univer-sity purchased three buildings, which totaled $14.6 million in FY08. In addition, the University added the newly opened George Pearl Hall, the Indoor Practice Facility and the Sevilleta Research Building, which totaled $41.6 million. During FY08, there were also renovations to eight existing buildings total-ing $27.8 million. The branch campuses added three buildings and renovated one building during FY08, which totaled $14.0 million.

Capital projects currently under construction include Phase II of the Cancer Research & Treatment Cen-ter (CRTC). The new five-story, 141,000 sq ft Phase II facility will provide additional services to better serve New Mexico's unique tri-cultural population and to better care for the underserved. It is programmed to expand public education and outreach services, to encourage patient participation in clinical trials, and to increase clinical treatment space consistent with its National Cancer Institute (NCI) Designation. Construc-tion of an attached 5-level 43,000 sq ft Administrative Wing is also under way, with interior build-out to be completed after the clinical facilities are operating. Occupancy of the Main Building is scheduled for June 2009. Also under construction is Phase II of the Domenici Center for Health Sciences Education. This second phase, extending north and connected to the first phase completed in late Fall 2006, will house student organization space, case method classrooms, human anatomy and a Clinical Performance Cen-ter, accommodating the expanding physician, nursing, dental, and occupational/physical therapy student programs. All are designed to provide the latest technology to support the teaching mission. Construc-tion on Phase II began in June 2008 and will take approximately 16 months.

Capital projects in the design and planning stage include the Sciences & Mathematics Learning Center.

In addition to providing undergraduate teaching laboratories, this facility will also provide research labo-ratories for Biology faculty. These labs will support the activities of many grant-supported investigators who do much to advance the overall level of training and technology at UNM. The four levels of this facility will provide approximately 101,000 sq ft of instructional space and support (including a 180-seat auditorium for teaching various science and mathematics lecture classes) and teaching and research laboratories. Construction is anticipated to begin in May 2009. Also in the design and planning stage is the University Arena expansion and renovation. This project will initiate the first of several phases to improve spectator and other amenities and enhance the infrastructure of this 40-year-old facility. Con-course areas, restrooms and concession stands will be expanded to relieve crowding. Other proposed additions include new space for the Lobo Store, ticketing, men's and women's training, club seating and boxes. Construction is expected to begin in April 2009 and take approximately 18 months.

Capital asset expenditures for Clinical Operations were $41.3 million in 2008, as compared to expendi-tures of $110.1 million in 2007, and $91.8 million in 2006 respectively. Within Clinical Operations dur-ing 2008, the largest capital expenditures were within the categories of major moveable equipment

($14.0 million) and construction in progress ($26.9 million). The largest capital expenditures in major moveable equipment include the Magnetom Trio A 3.OT MRI ($2.3 million), the Somatom Definition CT ($2.1 million), the Allura Xper FD20 cardiovascular x-ray machine ($1.2 million), a Digital Diag-4

nostic Machine with Dual Detectors ($427,000), and a Surgical Microscope ($265,000). The largest capital expenditures in construction in progress include final capital expenditures for the Barbara and Bill Richardson Pavilion (CHCCP) project ($13.5 million), infrastructure related to emergency opera-tions ($3.8 million), computerized physician order entry ($2.4 million), expansion of the electronic medical record ($1.7 million), intermediate nursery construction ($1.3 million), Lands West parking

($672,000) and Cardiac Cath Lab backfill ($604,000).

UNM's long-term debt, bonds payable, totaled $658.0 million and $530.8 million at June 30, 2008 and 2007, respectively. The University sold $136.7 million in bonds during fiscal year 2008 to fund a variety of projects, including but not limited to: the purchase and renovation of a 120,000 square foot building to house the University Hospital Business operations, construction of new parking structures, classroom modernization, and renovation and improvement to the University's athletic facilities. Many of these projects will be self-supporting.

Total Capital Assets at Cost 7% 6% 6% 7%

29% 28%

40%47 5%

7% 7%

FY08 FY07 N Library Books N Land & Improvements N Buildings 0 Equipment & Furnishings N CIP U Infrastructure 5

Infrastructure assets are defined as long-lived capital assets that normally can be preserved for a significantly greater number of years than most capital assets and that normally are stationary in nature. Examples of University infrastructure assets include domestic water systems, conduit and cabling systems, and the telecommunications systems. The following charts show a breakdown of infrastructure assets at UNM.

I Infrastructure Assets at Cost 212% 16% 3Oýo%12%

2%11%

9% 8%

4 4%

10% eno0 12%

FY08 FY07 0 Telecommunications El Paving & Sidewalks

• Domestic Water System U Energy Conservation M Electrical System U Chilled Water System M Conduits & Cabling U LINK - Admin Infrastructure 6

Condensed Summary of Revenues, Expenses and Changes in Net Assets For the years ended June 30 OPERATING REVENUES BY MAJOR SOURCE 2008 2007 2006 Tuition and fees $ 94,752,894 $ 91,687,417 $ 87,865,694 Grants and contracts 288,706,531 268,162,204 266,650,439 Clinical operations 381,510,475 316,139,010 297,507,483 Patient services, net 168,189,995 133,379,950 113,156,291 Sales and services 104,881,546 103,402,512 98,222,173 Other operating revenues 31,989,816 32,585,167 25,051,331 Total operating revenues $ 1,070,031,257 $ 945,356,260 $ 888,453,411 OPERATING EXPENSES BY MAJOR FUNCTION 2008 2007 2006 Instruction $ 224,731,491 $ 208,476,169 $ 197,389,591 Research 142,389,365 132,105,790 135,911,705 Public service 262,645,417 222,396,808 197,124,775 Academic support 40,896,777 39,165,662 36,048,570 Student services 26,013,764 23,156,558 21,157,649 Institutional support 58,527,904 52,434,568 49,970,332 Operations of plant 112,498,528 110,980,705 101,352,488 Student aid and activities 44,616,583 43,014,797 38,409,481 Intercollegiate athletics 27,856,989 23,885,278 24,909,654 Auxiliary enterprises 58,249,675 56,900,903 53,333,940 Other operating expenses 42,619,155 39,477,098 36,211,219 Clinical operations 459,129,518 382,939,552 361,905,430 Total operating expenses $1,500,175,166 $1,334,933,888 $1,253,724,834 NON-OPERATING REVENUES (EXPENSES) 2008 2007 2006 Appropriations $ 346,044,844 $ 295,424,572 $ 271,940,479 Gifts 35,838,414 22,504,697 21,086,477 Clinical operations 112,350,113 89,260,571 66,738,725 Investment income 16,148,502 88,477,470 50,580,757 Other non-operating expenses 1,872,106 4,694,158 7,811,150 Capital gifts, grants and appropriations 73,433,362 49,313,017 65,431,767 Net non-operating revenues $ 585,687,341 $ 549,674,485 $ 483,589,355 Income before other revenues, expenses, gains and losses $ 155,543,432 $ 160,096,857 $ 118,317,932 Total increase in net assets $ 155,543,432 $ 160,096,857 $ 118,317,932 Net assets at beginning of year $1,200,890,406 $1,040,793,549 $ 922,475,617 Net assets at end of year $1.356,433-838 $1,200,890,406 $ 1,040,793,549 7

Revenues and Expenses The presentation of revenues in the GASB reporting model requires that we exclude state and local appropriation income when calculating the financial results of operations. This presentation method results in an "operating loss". The operating loss is offset by "non-operating revenues (expenses)" to arrive at an actual result of operations amount. The definition of "non-operating revenues" revolves around the concept of exchange versus non-exchange transactions. State and local appropriations, along with the Bernalillo County Mill Levy, are considered revenues from non-exchange transactions, because they do not involve an exchange of value for value. Conversely, tuition income is defined as "operating revenue," because a student pays tuition (value) to receive an education (value). Other non-operating revenues are gifts and income from investing and capital activities.

Although State of New Mexico appropriations are considered non-operating revenues in the basic financial statements, the University uses these funds to support all instruction and general programs. If state and local appropriations were included in operating revenues, they would comprise 24%, 24%, and 23% of total operating revenues for fiscal years 2008, 2007, and 2006 respectively. The following chart depicts operating revenues (with state and local appropriations) by source (some categories have been combined).

Revenue by Source 24% 24% 23%

27% , 25%, 26% N 20% 22% 23%

FY08 FY07 FY06

" Tuition & Fees Di Patient Services

" Grants & Contracts U Sales & Services

" Clinical Operations N Other Operating Revenues

" State & Local Appropriations 8

The changes in operating revenues for the University over the fiscal years of 2006, 2007, and 2008 show increases of 6.4% for 2007 over 2006 and 13.2% for 2008 over 2007. Additional enrollment and tuition rate increases in academic functions of the University are:

Fall 2007 Fall 2006 Fall 2005 Enrollment increase(decrease) (0.8)% (1.7)% (1.1)%

Tuition rate increase 5.4% 5.6% 9.9%

The slight headcount decrease represents a stable Albuquerque Campus enrollment and some continued changes in the Branch Campuses. All forecast a growing headcount and student credit hours in 2008.

Branch campuses are essentially community colleges and will always be dependent on population demographics, work force needs, and public school connections to maintain or increase enrollment.

They tend to adjust to the market and declines in enrollments are often followed by increases in a cycli-cal manner. The main campus has renewed emphasis on student success meaning increases in retention and graduation rates are primary goals. This planning will lead to shifts of student populations in an ef-fort to obtain optimal enrollment levels to support students, but careful planning will ensure stable head-count and student credit hour generation as well as healthier, more predictable projections.

The net non-operating revenue increases of 6.6% and 13.7% for the years ended 2008 and 2007, respectively, are primarily driven by gifts received by the University and state appropriations.

The GASB reporting model allows public universities to present operating expenses in either a functional or natural format. UNM chose to present expenses on the Statement of Revenues, Expenses and Changes in Net Assets by the major functions of the University. The chart below shows the distribution of operating expenses by functional category (smaller categories have been combined).

Functional Expense Categories 4% 4% 4%

2% 2% 2%

3% 3% 8% 8%39/c 7% 3%3% 3%

17% 2%4% 17%% 154 4% 2%

U 9%o31

31% 10% 29% 11%% 29%

FY08 FY07 FY06 0 Instruction U Student Services U Other operating expenses M Research U Institutional Support U Athletics El Public Service U Operations of Plant U Auxiliaries 0 Academic Support EL Student aid & activities U Clinical 9

The charts below show total expenses by natural category (excluding clinical operations and component units) for the years ended June 30, 2008, 2007, and 2006.

Natural Expense Categories 2% 2% 2% 2% 2%

1%4% 7% 4%2% 1%4% 8%2% 1%4% 7%0%

6% 8% 8%

4% 4%

4%

14% 9% 13% 49% %1%

3%2% 3%2%

2%2%

FY08 FY07 FY06 0 Payroll U Repairs & Maintenance U Contract 0 Subcontract U Materials & Supplies U Other F Bad Debt E Patient Li Auxiliary Cost M Benefits U Travel 0 Utilities U Student 10

Change in Net Assets The University's total change in net assets showed a net increase for 2008 and 2007. Total net assets (assets minus liabilities) are classified by the University's ability to use these assets to meet operating needs. Net assets that are restricted as to their use by sponsoring agencies, donors or other non-UNM entities are classified as either, "non-expendable" or "expendable". Restricted nonexpendable net assets are true endowments and State Land and Permanent Fund assets. Restricted expendable net assets are those generated by contracts or grants, gifts, and assets required to be set aside for debt service. The restricted net assets are further classified in general terms as to the function for which they must be used.

Unrestricted net assets may be used to meet all operating needs of the University. Net Assets increased approximately $159 million in 2008. Some of the major reasons for the increase include a $98.4 million increase in the capitalization of assets, and a $72.2 million increase in unrestricted net assets due to the excess of revenues over expenses in fiscal year 2008, primarily in clinical operations and state funded operations. The chart below shows the change in net assets by category for the fiscal years ended June 30, 2008 and 2007.

Change in Net Assets 120

'1 100 i 80 60-0= 40 20-0o1- - - -

-m I

-

I

- I I

I Invested in Rest Rest Rest Expend Rest Expend Rest Expend Unrestricted Capital Nonexpend Nonexpend Debt Service Capital Other Assets, Net of State Scholarships Projects Debt Investment Council 1FY08

• FY071 II

Budget Activity Original budgets for each fiscal year are prepared many months in advance based on prior year expendi-tures and revenue activity as well as best estimates of projected revenue and expenditure activity for the budgeted year. During the year, it is necessary to revise the original budgets to more accurately reflect current needs of the institution and to highlight unanticipated events in both revenue and expenditures.

Some of the more significant changes to the original budget for fiscal year 2008 include adjustments for the UNM 2007 Bond Issue within Main Campus. In regard to Health Sciences Center, adjustments were made to reflect the reclassification of the inflammatory breast cancer appropriation from unrestricted research to restricted research. The public service restricted awards budget was decreased while the un-restricted revenue budget was increased. These increases were due to the patient care equipment appro-priation, an increase in patient revenue, increases in clinical expenses, and bad debt expenses. In inde-pendent operations, sales and services were greater than the original budget for Carrie Tingley Hospital, Children's Psychiatric Hospital, and UNM Medical Group; likewise, the expenses for Carrie Tingley Hospital, Children's Psychiatric Hospital, and UNM Medical Group were greater than original budget.

The instruction and general budget was increased to reflect the Higher Education Department's award to the College of Nursing, the additional Nursing compensation, and an increase in F&A revenue.

Overall, the University's change in net assets on a budgetary basis for unrestricted and restricted funds was an increase of over $142 million (see Schedule 2). The change is a result of UNM 2007 Bond Issue proceeds received but not spent. These proceeds will be expensed in future fiscal years. However, ac-tual revenues were less than budgeted revenues mainly due to the fact that contract and grant revenues were lower than expected. For Main Campus, actual expenditures were less than budgeted expenditures largely due to the need to budget enough expenditure authority for unanticipated events.

Endowments At June 30, 2008, the University of New Mexico's endowment assets totaled more than $508 million including approximately $330 million in the Consolidated Investment Fund (CIF) and more than $168 million for the University's share of the State Permanent Fund.

The University of New Mexico Board Of Regents has delegated authority to the UNM Foundation In-vestment Committee to act as the official "Advisory Committee" to oversee and manage the combined endowment assets of the University and the Foundation. The pooled assets are combined for investment purposes and operated as a unitized pool known as the Consolidated Investment Fund (CIF). Due largely to an increase in new endowment gifts during the year, the market value of the CIF grew from approximately $324 million at June 30, 2007 to approximately $330 million at June 30, 2008. In 2007-08, investment returns were led by the fixed income portion of the portfolio at 13.5% and real assets at 14.6% which offset the Domestic and International Equity returns of -11.8% and -8.8% respectively, and allowed the total return of the portfolio to finish the year in positive territory at +0.7%. The alternative investment portion of the portfolio returned 6.6% for the year while the private equity portion of the portfolio is still too new to assess performance. The 3-Year return of 10.6% and the 5-Year return of 10.9% continue to outperform established benchmarks. The CIF is a well-diversified fund with an asset allocation consisting of approximately 21% U.S. equity, 20% international equity, 19% fixed in-come/cash, 6% private equity, 14% real assets, and 20% alternative investments at June 30, 2008. In ad-dition to the customary investment management expenses, an administrative allocation equivalent to 1.10% of the market value was allocated from each participating fund in the CIF for 2007-08.

12

The Foundation and the University recognize the need to provide a steady and reasonably predictable stream of income while protecting the real value of the principal of the endowment and has therefore adopted a spending policy that is based on a 12 quarter moving average and a distribution rate in the range of 4 percent to 6 percent. For the year ended June 30, 2008, the spending distribution target rate was set at 4.65 percent, which provided over $14 million to the beneficiary Schools, Colleges and Pro-grams.

Sponsored Programs The University of New Mexico is a Carnegie Doctoral-Granting Research University/Very High re-search activity (RU/VH) - one of 96 nationwide. 63 public and 33 private institutions carry this high distinction. In order to be classified as such an institution, universities must offer a full range of bacca-laureate programs, be committed to graduate education through the doctorate, give high priority to re-search, award 20 or more doctoral degrees each year, and be in the upper third of research expenditures compared to other doctoral granting universities.

During the 2007-08 fiscal year, federal and state agencies, industry, foundations and national laborato-ries provided $303 million in contract and grant awards to UNM for sponsored projects ranging from engineering to medicine and education to the humanities. The Main Campus and Branches were awarded $169 million, and the Health Sciences Center (HSC) was awarded $134 million.

The majority of contracts and grants, 61%, were awarded by federal agencies, while the remaining came from the following sources: State of New Mexico, 21%; industry, 5%; foundations, 5%; national labora-tories, 2%; and other, 6%.

Among UNM Main Campus outstanding research units are the Center for High Technology Materials, the Center for Alcoholism, Substance Abuse and Addictions and the Center for Micro Engineered Mate-rials. HSC's key research programs focus on the health issues of New Mexicans. Major research units at HSC include the Cancer Research and Treatment Center, General Clinical Research Center, and the Center for Infectious Disease and Immunity.

Factors Impacting Future Periods The Governmental Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Fi-nancial Reporting by Employers for Post-employment Benefits Other Than Pensions in June, 2004.

This statement was effective for the University at the beginning of fiscal year 2008 and has had an im-pact on the way certain employee benefits are presented in the current financial statements, and it is ex-pected to continue to have a significant impact in future financial statements. GASB 45 requires that the University account for and report the cost and obligations related to post-employment healthcare and other non-pension benefits ("OPEB") and include specific disclosures regarding these OPEB plans.

OPEB costs will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. GASB 45 has been applied pro-spectively and does not require the University to fund its existing OPEB plans. The University has es-tablished its OPEB liability at zero as of the beginning of the initial year of implementation, and the un-funded liability will require amortization over future periods.

GASB has issued several other statements that will impact the University's financial statements in future periods. GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obli-13

gations, effective beginning with the fiscal year 2009 financial statements, will require "all governments to account for pollution remediation obligations in the same manner, including required reporting of pol-lution remediation obligations that previously may not have been reported." It also requires more timely and comprehensive reporting of obligations as they become reasonably estimable. GASB Statement No.

51, Accounting and Financial Reporting for Intangible Assets, effective beginning with the fiscal year 2010 financial statements, provides guidance as to whether and when an intangible asset should be con-sidered capital assets in the financial statements. The potential impacts of this statement are the identifi-cation of intangible assets that were not previously recorded and the need for additional processes, poli-cies, and procedures to properly identify intangible assets and to accurately determine the cost of these assets. GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, ef-fective beginning with the fiscal year 2009 financial statements, will require endowments (excluding quasi-endowments) to report land and other real estate investments at fair value, rather than historical cost. The fair value of these investments will need to be determined on an annual basis through ap-praisal or some other method, and investment income will be recorded in the year that it occurs, rather than only in the year that the investment is sold. The University has not completed the process of evalu-ating the impact that will result from adopting GASB 49, 51, and 52 and is therefore unable to disclose the effect that adopting these statements will have on its financial statements.

Subsequent to the end of the 2008 fiscal year, there have been significant fluctuations in investment market values. The ultimate impact of these fluctuations on the value of investments reported in the ac-companying financial statements cannot reasonably be determined.

Requests for Additional Financial Information This financial report is designed to provide the executive and legislative branches of the State of New Mexico, the public, the University's retailers and vendors and other interested parties with a general overview of the financial position as of June 30, 2008 and 2007, and the results of its operations, cash flows, and variances from the budgets for the years then ended for the University of New Mexico.

If you have any questions about this report or need additional financial information, contact The University of New Mexico, Financial Services, 1700 Lomas NE, Suite 3100, MSCO1 1300, Albuquerque, New Mexico 87131.

14

THE UNIVERSITY OF NEW MEXICO (THIS PAGE INTENTIONALLY LEFT BLANK) 15

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Statements of Net Assets as of June 30, 2008 and 2007 PRIMARY INSTITUTION COMPONENT UNITS 2008 2007 2008 2007 ASSETS Current assets Cash and cash equivalents (note 3) $ 216,723,607 $ 156,081,340 $ 35,143,300 $ 40,424,185 Short-term investments (note 3) 326,306,774 213,534,102 5,192,671 6,505,413 Accounts receivable, net (note 4) 69,802,921 75,968,593 1,904,439 1,841,656 Patient receivables, net (note 4) 76,049,549 54,084,290 12,052,055 Notes receivable, net (note 5) 6,344,742 5,581,321 Due from component units 1,111,590 19,668,726 Estimated third-party payor settlements 23,471,501 13,232,912L -

Other receivables, net (note 4) 3,737,631 4,153,591 - 1,108,397 Invenstories 12,299,996 12,713,323 20,628 20,671 Due from The University of New Mexico - 57,116 34,301 Other current assets 10,164,054 12,940,299 29,671 423,361 Total current assets $ 746,019,365 $ 567,958,497 $ 42,347,832 $ 62,410,039 Non-current assets Cash and cash equivalents (note 3) S 3,313,168 S - S - $

Notes receivable - non-current (note 5) 12,056,789 13,535,073-State Investment Council assets (note 3) 168,211,831 175,313,519-Deferred bond issuance costs 5,651,151 6,197,105 -

Investments (note 3) 248,418,143 241,550,358 128,213,605 121,153,924 Other non-current assets 7,499,558 6,980,480 6,387,587 4,760,019 Capital assets, net (note 6) 1,061,662,755 954,002,967 125,951 477,909 Total non-current assets $ 1,513,883,395 $ 1,397,579,502 $ 134,727,143 $ 126,391,852 Total assets $ 2,259,902,760 $ 1,965,537,999 $ 177,074,975 $ 188,801,891 LIABILITIES Current liabilities Accounts payable and accrued payroll (note 7) 61,351,399 $ 60,466,723 $ 484,086 $ 408,241 Due to The University of New Mexico 1,118,590 19,668,726 Due to component units 57,116 34,301 Estimated third-party payor liability 24,001,140 17,425,454 Accrued compensated absences (note 8) 36,362,136 31,254,280 Other accrued liabilities (note 9) 31,062,198 36,961,436 Deferred revenue (note 10) 42,462,316 47,687,261 2,096,053 2,441,634 Bonds payable - current (notes I11& 12) 14,041,741 12,792,506 Other current liabilities 3,219,677 2,345,588 701,347 2,767,086 Deposits and funds held for others 7,344,360 9,079,633 -

Total current liabilities $ 226,902,083 $ 218,047,182 $ 4,400,076 $ 25,285,687 Non-current liabilities (note 11)

Bonds payable - non-current (notes 11I& 12) S 657,991,804 $ 530,820,677 $ - $-

Student loan program (note 11) 14,793,447 15,440,417-Net OPEB obligation (note 16) 2,918,000 - -

Deferred annuities payable 145,422 339,317 2,547,631 1,634,457 Other non-current liabilities 718,166 - -

Total non-current liabilities $ 676,566,839 $ 546,600,411 $ 2,547,631 $ 1,634,457 Total liabilities $ 903,461,922 S 764,647,593 $ 6,947,707 $ 26,920,144 16

EXHIBIT A Statements of Net Assets as of June 30, 2008 and 2007 PRIMARY INSTITUTION COMPONENT UNITS 2008 2007 2008 2007 NET ASSETS Invested in capital assets, net of related debt $ 267,418,948 $ 284,379,306 $ 87,483 $- 32,034 Restricted for:

Non-expendable:

State Investment Council 168,211,831 175,313,519 Scholarships 117,199,275 115,171,993 Grants, bequests and contributions 115,346,088 107,086,236 Expendable:

Scholarships 3,278,916 3,373,027 Grants, bequests and contributions 3,472,754 1,959,274 Debt service 33,367,353 27,815,597 Capital projects 293,236,639 194,810,083 Other - 40,265,771 42,439,942 Unrestricted 470,248,122 398,067,607 14,427,926 12,323,535 Total net assets $ 1,356,433,838 $ 1,200,890,406 $ 170,127,268 $ 161,881,747 See accompanying notes to the basic financial statements.

17

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Statements of Revenues, Expenses and Changes in Net Assets for the years ended June 30, 2008 and 2007 PRIMARY INSTITUTION COMPONENT UNITS 2008 2007 2008 2007 OPERATING REVENUES Student tuition and fees (net of scholarship allowances of

$35,398,573 in 2008 and $30,667,258 in 2007) $ 94,752,894 $ 91,687,417 $ - $

Patient services (net of provision for doubtful accounts of

$23,319,707 in 2008 and $24,259,191 in 2007) (note 13) 168,189,995 133,379,950 Federal grants and contracts 203,965,559 195,481,369 State and local grants and contracts 33,683,548 27,789,682 State lottery scholarships 22,508,084 20,928,658 Non-governmental grants and contracts 28,549,340 23,962,495 28,473,828 24,970,345 Sales and services (net of scholarship allowances of

$6,337,933 in 2008 and $5,317,087 in 2007) 104,881,546 103,402,512 5,585,025 14,805,101 Other operating revenues 31,989,816 32,585,167 6,240,333 6,006,211 Clinical operations University of New Mexico Hospital (net of provision for doubtful accounts of $91,412,617 in 2008 and $64,932,577 in 2007) 357,842,174 291,602,454 University of New Mexico Psychiatric Center (net of provision for doubtful accounts of $704,367 in 2008 and $1,754,968 in 2007) 15,549,919 16,683,105 University of New Mexico Children's Psychiatric Center (net of provision for doubtful accounts of $607,052 in 2008 and $252,280 in 2007) 8,118,382 7,853,451 Total operating revenues $ 1,070,031,257 $ 945,356,260 $ 40,299,186 $ 45,781,657 OPERATING EXPENSES Educational and general Instruction $ 224,731,491 $ 208,476,169 $ $

Research 142,389,365 132,105,790 Public service 262,645,417 222,396,808 Academic support 40,896,777 39,165,662 Student services 26,013,764 23,156,558 Institutional support 58,527,904 52,434,568 Operations and maintenance of plant 65,504,557 68,281,149 Depreciation expense 46,993,971 42,699,556 Student aid 38,494,172 37,352,791 Student activities .6,122,411 5,662,006 Intercollegiate athletics 27,856,989 23,885,278 Auxiliary enterprises 58,249,675 56,900,903 Other operating expenses 42,619,155 39,477,098 48,928,737 47,736,598 Clinical operations University of New Mexico Hospital 419,978,670 343,808,529 University of New Mexico Psychiatric Center 24,429,970 24,788,414 University of New Mexico Children's Psychiatric Center 14,720,878 14,342,609 -

Total operating expenses $ 1,500,175,166 $ 1,334,933,888 $ 48,928,737 $ 47,736,598 Operating loss $ (430,143,909) $ (389,577,628) $ (8,629,551) $ (1,954,941) 18

EXHIBIT B Statements of Revenues, Expenses and Changes in Net Assets for the years ended June 30, 2008 and 2007 PRIMARY INSTITUTION COMPONENT UNITS 2008 2007 2008 2007 NON-OPERATING REVENUES (EXPENSES)

State appropriations $ 340,410,735 $ 291,077,007 $ $

Local appropriations 5,634,109 4,347,565 Gifts 35,838,414 22,504,697 Investment income (note 3) 16,148,502 88,477,470 2,786,466 21,244,322 Other non-operating revenues (expenses) 21,256,289 13,262,588 (93,032) 62,638 Interest on capital asset-related debt (18,291,415) (15,250,886)

Gain/(loss) on disposal of capital assets (1,092,768) 6,682,456 Clinical operations University of New Mexico Hospital 94,997,396 73,700,149 University of New Mexico Psychiatric Center 10,083,017 9,099,451 University of New Mexico Children's Psychiatric Center 7,269,700 6,460,971 Net non-operating revenues $ 512,253,979 $ 500,361,468 $ 2,693,434 $ 21,306,960 Income (loss) before other revenues, expenses, gains and losses $ 82,110,070 $ 110,783,840 $ (5,936,117) $ 19,352,019 Capital appropriations $ 62,580,953 $ 41,651,658 $ - $

Capital grants and gifts 10,852,409 7,661,359 Contributions to permanent endowments - - 14,181,638 15,721,756 Total other revenues $ 73,433,362 $ 49,313,017 $ 14,181,638 $ 15,721,756 Change in net assets $ 155,543,432 $ 160,096,857 $ 8,245,521 $ 35,073,775 NET ASSETS Net assets at beginning of year 1,200,890,406 1,040,793,549 161,881,747 126,807,972 Net assets at end of year $ 1,356,433,838 $ 1,200,890,406 $170,127,268 $161,881,747 See accompanying notes to the basic financial statements.

19

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Statements of Cash Flows for the years ended June 30, 2008 and 2007 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees $ 92,053,801 $ 93,577,293 Grants and contracts 300,733,566 281,758,855 Insurance and patients 501,010,098 514,938,248 Sales and services 103,175,840 99,993,894 Payments to suppliers (365,723,650) (374,752,495)

Payments to employees (723,145,364) (709,060,246)

Payments for utilities (37,162,425) (35,217,228)

Payments for benefits (154,571,171) (130,808,168)

Payments for scholarships and fellowships (42,231,434) (42,969,613)

Loans issued to students (4,309,560) (4,483,586)

Collection of loans to students 3,915,194 2,356,376 Other payments (2,146,442) (6,558,675)

Net cash used by operating activities $ (328,401,547) $ (311,225,345)

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State appropriations $ 351,375,152 $ 295,328,733 Local appropriations 5,634,109 4,347,565 Bemalillo County mill levy 83,734,750 75,922,429' Land and permanent fund 691,416 820,916 Gifts 35,838,414 22,504,697 Other non-operating receipts 16,136,899 43,102,798 Net cash provided by non-capital financing activities $ 493,410,740 $ 442,027,138 CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES Interest payments on bonds $ (26,941,988) $ (24,463,427)

Capital appropriations 63,231,134 48,083,438 Capital gifts and grants 14,354,863 18,514,486 Additions to bonds 136,710,000 Principal payments of bonds (11,557,506) (9,232,741)

Cash received from cigarette tax bonds 22,400,291 2,357,033 Cash received from disposal of capital assets 2,447,000 3,610,000 Purchase of capital assets (214,524,225) (221,733,563)

Other receipts 3,720,231 264,227 Net cash used by capital financing activities $ (10,160,200) $ (182,600,547) 20

EXHIBIT C IStatements of Cash Flows for the years ended June 30, 2008 and 2007 2008 2007 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale and maturities of investments $ 352,056,158 $ 384,046,965 Purchase of investments (478,495,978) (292,783,877)

State investment income 8,502,365 8,408,285 Investment income 27,043,897 14,141,792 Net cash provided (used) by investing activities $ (90,893,558) $ 113,813,165 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 63,955,435 $ 62,014,411 Cash and cash equivalents - beginning of the year 156,081,340 94,066,929 Cash and cash equivalents - end of the year $ 220,036,775 $ 156,081,340 NON-CASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Assumption of surplus in net assets of CTH as of 7/1/06 $ $ 3,845,872 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES Operating loss $ (430,143,909) $ (389,577,628)

Adjustments to reconcile operating loss to net cash used by operating activities Depreciation expense 77,070,545 62,488,917 Bad debt expense 94,727,895 91,794,961 Gain on retirement of assets 1,849,400 Changes in assets and liabilities Accounts receivable 5,941,618 (28,740,860)

Patient receivables (93,840,750) (67,949,890)

Estimated third-party payor settlements (10,264,029) 6,387,652 Notes receivable 714,863 (1,418,078)

Inventories 458,273 (753,271)

Other assets 406,553 (55,604)

Due from component units (164,903) 1,171,849 Accounts payable 9,740,432 (2,739,497)

Accrued expenses and compensated absences 5,340,046 9,607,273 Other current liabilities (103,435) 605,927 Estimated third-party payor liability 6,601,126 530,718 Deferred revenue 5,114,128 5,572,786 Net cash used by operating activities $ (328,401,547) $ (311,225,345)

See accompanying notes to the basic financial statements.

21

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS lCombining Statement of Net Assets as of June 30, 2008 -Discretely Presented Component Units The Robert 0.

The University of Anderson Schools New Mexico of Management Foundation, Inc. Foundation STC.UNM ASSETS Current assets Cash and cash equivalents S 26,586,413 $ 1,376,861 $ 773,835 Short-term investments - 599,187 Accounts receivable, net - 987,279 356,801 Inventories - 20,628 Due from The University of New Mexico - 57,116 Other current assets - 5,318 Total current assets $ 26,586,413 $ 3,046,389 $ 1,130,636 Non-current assets Investments $ 127,721,289 $ 488,463 $ 3,853 Other non-current assets 6,387,557 Capital assets Equipment and furnishings, net 84,550 Other capital assets, net Total non-current assets $ 134,108,846 $ 488,463 $ 88,403 Total assets $ 160,695,259 $ 3,534,852 $ 1,219,039 LIABILITIES Current liabilities Accounts payable and accrued expenses $ 40,798 $ 100,080 $ 241,854 Due to The University of New Mexico 927,110 139,341 Deferred revenue 922,147 1,000 Other current liabilities 419,342 _ 282,005 Total current liabilities $ 460,140 $ 1,949,337 $ 664,200 Non-current liabilities Deferred annuities payable $ 2,547,631 $ $

Total non-current liabilities $ 2,547,631 $ $

Total liabilities $ 3,007,771 $ 1,949,337 $ 664,200 NET ASSETS Invested in capital assets, net of related debt $ - $ 84,550 Restricted non-expendable 115,346,088 Restricted expendable 39,766,944 443,355 Unrestricted 2,574,456 1,142,160 470,289 Total net assets $ 157,687,488 $ 1,585,515 $ 554,839 See accompanying notes to the basic financial statements.

22

EXHIBIT D University of Lobo Lobo The University New Mexico Development Energy, of New Mexico Lobo Club Corp Inc. Alumni Association Total

$ 2,140,569 $ 427.274 $ 537.192 $ 3,301,15 6 $ 35,143,300 4,593,49 1 5,192,678 240,011 320,34 8 1,904,439

- 20,628

- 57,116 5,281 19,07 2 29,671 2,385,861 $ 427,274 $ 537,192 $ 8,234,06 7 $ 42,347,832

$ $ $ $ $ 128,213,605 30 6,387,587 2,933 87,483 38,468 38,468

$ 2,933 $ $ 38,498 $ $ 134,727,143

$ 2,388,794 $ 427,274 $ 575,690 $ 8,234,067 $ 177,074,975 62,235 $ 54 $ 34,065 $ 5,000 $ 484,086 52,139 - 1,118,590 714,334 458,572 2,096,053 701,347

$ 828,708 $ 54 $ 34,065 $ 463,572 $ 4,400,076

$ $ $ $ $ 2,547,631

$ $ $ - $ 2,547,631

$ 828,708 $ 54 $ 34,065 $ 463,57:2 $ 6,947,707

$ 2,933 $ $ $ $ 87,483

- 115,346,088 26,216 29,25 6 40,265,771 1,530,937 427,220 541,625 7,741,23 9 14,427,926 1,560,086 $ 427,220 5 41,625 7,770,495 $ 170,127,268 23

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Combining Statement of Net Assets as of June 30, 2007 - Discretely Presented Component Units The Robert 0.

University The University of Anderson Schools Physician New Mexico of Management Associates Foundation, Inc. Foundation ASSETS Current assets Cash and cash equivalents $ 4,829,636 $ 28,288,970 $ 1,427,699 Short-term investments 656,725 Accounts receivable, net 1,251,828 Patient receivables, net 12,052,055 Other receivables, net 1,108,397 Inventories 20,671 Due from The University of New Mexico 15,417 Other current assets 1,900 Total current assets $ 17,990,088 $ 28,288,970 $ 3,374,240 Non-current assets Investments $ 1,619,700 $ 119,075,665 $ 454,729 Other non-current assets 86,077 4,673,912 Capital assets Equipment and furnishings, net 445,875 Total non-current assets $ 2,151,652 $ 123,749,577 $ 454,729 Total assets $ 20,141,740 $ 152,038,547 $ 3,828,969 LIABILITIES Current liabilities Accounts payable and accrued expenses $ $ 4,809 $ 167,510 Due to The University of New Mexico 18,351,324 23,376 1,068,732 Deferred revenue 1,064,494 Other current liabilities 1,790,416 323,800 _

Total current liabilities $ 20,141,740 $ 351,985 $ 2,300,736 Non-current liabilities Deferred annuities payable $ $ 1,634,457 $

Total non-current liabilities $ $ 1,634,457 $

Total liabilities $ 20,141,740 $ 1,986,442 $ 2,300,736 NET ASSETS Invested in capital assets, net of related debt $ - S Restricted non-expendable 107,086,236 Restricted expendable 41,955,297 438,665 Unrestricted 1,010,572 1,089,568 Total net assets 150,052,105 $ 1,528,233 See accompanying notes to the basic financial statements.

24

EXHIBIT E University of Lobo The University New Mexico Energy, of New Mexico STC.UNM Lobo Club Inc. Alumni Association Total

$ 729,313 $ 2,141,023 $ 729,407 $ 2,278,137 $ 40,424,185 5,848,688 6,505,413 211,584 162,488 215,756 1,841,656 12,052,055 1,108,397 20,671 18,884 34,301 1,000 6,665 406,317 7,479 423,361 941,897 $ 2,310,176 $ 1,154,608 $ 8,350,060 $ 62,410,039

$ 3,830 $ - $ $ $ 121,153,924 30 4,760,019 28,871 3,163 477,909

$ 32,701 $ 3,163 $ 30 $ $ 126,391,852

$ 974,598 $ 2,313,339 $ 1,154,638 $ 8,350,060 $ 188,801,891

$ 100,671 $ 50,785 $ 71,498 $ 12,968 $ 408,241 136,934 88,360 19,668,726 1,280 759,431 616,429 2,441,634 246,553 - 406,317 _ 2,767,086

$ 485,438 $ 898,576 $ 477,815 $ 629,397 $ 25,285,687

$ $ $ $ $ 1,634,457

$ $ $ $ $ 1,634,457

$ 485,438 $ 898,576 $ 477,815 $ 629,397 $ 26,920,144 28,871 $ 3,163 $ - $ $ 32,034 107,086,236 16,812 29,168 42,439,942 460,289 1,394,788 676,823 7,691,495 12,323,535 489,160 $ 1,414,763 $ 676,823 $ 7,720,663 $ 161,881,747 25

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Combining Statement of Revenues, Expenses and Changes in Net Assets for the year ended June 30, 2008 -

Discretely Presented Component Units The Robert O.

The University of Anderson Schools New Mexico of Management Foundation, Inc. Foundation STC.UNM REVENUES Operating revenues Fees $ $ 2,203,896 $ 2,605,276 Grants, bequests and contributions 22,992,282 245,095 Operational support 4,338,881 Other operating revenues 753,626 25,466 _

Total operating revenues $ 28,084,789 $ 2,474,457 $ 2,605,276 EXPENSES Operating expenses General and administrative $ 5,259,189 $ 1,708,932 $ 2,574,005 Program expenses 547,419 Distributions to the University of New Mexico 32,183,259 Total operating expenses $ 37,442,448 $ 2,256,351 $ 2,574,005 Net operating income (loss) $ (9,357,659) $ 218,106 $ 31,271 NON-OPERATING REVENUES (EXPENSES)

Investment income $ 2,811,404 $ 18,592 $ 27,200 Other non-operating revenues (179,416) 7,208 Total non-operating revenues $ 2,811,404 $ (160,824) $ 34,408 Income (loss) before other revenues $ (6,546,255) $ 57,282 $ 65,679 Contributions to permanent endowments $ 14,181,638 $ - $ -

Total other revenues $ 14,181,638 $ $

Change in net assets $ 7,635,383 $ 57,282 $ 65,679 Net assets at beginning of year $ 150,052,105 $ 1,528,233 $ 489,160 Net assets at end of year $ 157,687,488 $ 1,585,515 $ 554,839 See accompanying notes to the basic financial statements.

26

EXHIBIT F University of Lobo Lobo The University New Mexico Development Energy, of New Mexico Lobo Club Corp Inc. Alumni Association Total

$ 240,463 $ - $ 535,390 $ $ 5,585,025 4,851,451 385,000 28,473,828 4,338,881 2,866 - - 1,119,494 1,901,452

$ 5,094,780 $ 385,000 $ 535,390 $ 1,119,494 $ 40,299,186

$ 820,998 $ 1,799 $ 706,093 $ 33,110 $ 11,104,126 4,315,552 778,381 5,641,352 32,183,259

$ 5,136,550 $ 1,799 $ 706,093 $ 811,491 $ 48,928,737

$ (41,770) $ 383,201 $ (170,703) $ 308,003 $ (8,629,551)

$ 187,093 $ 44,019 $ 35,505 $ (337,347) $ 2,786,466 S- - 79,176 (93,032)

$ 187,093 $ 44,019 $ 35,505 $ (258,171) $ 2,693,434

$ 145,323 $ 427,220 $ (135,198) $ 49,832 $ (5,936,117)

$ - $ - $ $ - $ 14,181,638

$ - $ - $ $ - $ 14,181,638

$ 145,323 $ 427,220 $ (135,198) $ 49,832 $ 8,245,521

$ 1,414,763 $ - $ 676,823 $ 7,720,663 $ 161,881,747

$ 1,560,086 $ 427,220 $ 541,625 $ 7,770,495 $ 170,127,268 27

THE UNIVERSITY OF NEW MEXICO BASIC FINANCIAL STATEMENTS Combining Statement of Revenues, Expenses and Changes in Net Assets for the year ended June 30, 2007 -

Discretely Presented Component Units The Robert O.

University The University of Anderson Schools Physician New Mexico of Management Associates Foundation, Inc. Foundation REVENUES Operating revenues Fees $ 8,779,043 $ $ 2,283,835 Grants, bequests and contributions 20,909,962 359,938 Operational support 4,056,741 Other operating revenues 649,211 24,731 Total operating revenues $ 8,779,043 $ 25,615,914 $ 2,668,504 EXPENSES Operating expenses General and administrative $ 9,292,870 $ 4,587,132 $ 1,849,704 Program expenses 538,462 Distributions to the University of New Mexico 23,263,099 _

Total operating expenses $ 9,292,870 $ 27,850,231 $ 2,388,166 Net operating income (loss) $ (513,827) $ (2,234,317) $ 280,338 NON-OPERATING REVENUES (EXPENSES)

Investment income $ 513,827 $ 19,571,802 $ 151,495 Other non-operating revenues (19,694)

Total non-operating revenues $ 513,827 $ 19,571,802 $ 131,801 Income before other revenues $ - $ 17,337,485 $ 412,139 Contributions to permanent endowments $ $ 15,721,756 $

Total other revenues $ $ 15,721,756 $

Change in net assets $ $ 33,059,241 $ 412,139 Net assets at beginning of year $ $ 116,992,864 $ 1,116,094 Net assets at end of year $ $ 150,052,105 $ 1,528,233 See accompanying notes to the basic financial statements.

28

EXHIBIT G University of Lobo The University New Mexico Energy, of New Mexico STC.UNM Lobo Club Inc. Alumni Association Total

$ 2,764,508 $ 210,787 $ 766,928 $ $ 14,805,101

- 3,700,445 24,970,345 4,056,741

- 27,320 - 1,248,208 1,949,470

$ 2,764,508 $ 3,938,552 $ 766,928 $ 1,248,208 $ 45,781,657

$ 2,753,568 $ 543,378 $ 700,346 $ 66,045 $ 19,793,043

- 3,481,375 660,619 4,680,456 23,263,099

$ 2,753,568 $ 4,024,753 $ 700,346 $ 726,664 $ 47,736,598

$ 10,940 $ (86,201) $ 66,582 $ 521,544 $ (1,954,941)

$ 35,348 $ 147,626 $ 34,096 $ 790,128 $ 21,244,322 S- - 82,332 62,638

$ 35,348 $ 147,626 $ 34,096 $ 872,460 $ 21,306,960

$ 46,288 $ 61,425 $ 100,678 $ 1,394,004 $ 19,352,019

$ - $ - $ - $ - $ 15,721,756

$ - $ $ - $ - $ 15,721,756

$ 46,288 $ 61,425 $ 100,678 $ 1,394,004 $ 35,073,775

$ 442,872 $ 1,353,338 $ 576,145 $ 6,326,659 $ 126,807,972

$ 489,160 $ 1,414,763 $ 676,823 $ 7,720,663 $ 161,881,747 29