ML14342A563

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

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

Text

Building 090AUN IR I TY OCollege Park, Maryland 20742-2115301.405.4952 TEL 301.405.6327 FAX609.577.8790 CELLkoeth@umd.eduGLENN L. MARTIN INSTITUTE OF TECHNOLOGYA. JAMES CLARK SCHOOL OF ENGINEERINGDepartment of Materials Science & EngineeringNuclear Reactor & Radiation FacilitiesTimothy W. Koeth, DirectorNovember 25, 2014US NRCDocument Control Desk11555 Rockville PikeRockville, MD, 20852-2733SUBJECT: UNIVERSITY OF MARYLAND -REQUEST FOR ADDITIONALINFORMATION RE: FINANCIAL UPDATE FOR LICENSE RENEWAL FOR THEMARYLAND UNIVERSITY TRAINING REACTOR (TAC NO. ME1 592) LICENSE NO. 70;DOCKET NO. 50-166Enclosed please find the response to the RAI dated June 2, 2014 for the University of MarylandTraining Reactor (MUTR), License No. R-70; Docket No. 50-166, regarding the update offinancial information.I declare under penalty of perjury that the foregoing is true and correct.November 25, 2014Timothy W. Koeth, Assistant Research Professor and DirectorUniversity of Maryland Training Reactor & Radiation Facilities OFFICE OF NUCLEAR REACTOR REGULATIONREQUEST FOR ADDITIONAL INFORMATIONREGARDING FINANCIAL OUALIFICATIONS FOR THE LICENSE RENEWAL FORMARYLAND UNIVERSITY TRAINING REACTOR (TAC NO. ME15921LICENSE NO. R-70DOCKET NO. 50-166As required by Title 10 of the Code of Federal Regulations (10 CFR) Section 50.33(f)(2), "[a]pplicantsto renew or extend the term of an operating license for a nonpower reactor shall include thefinancial information that is required in an application for an initial license." To comply with thisrequirement, please provide an update to the supplemental information provided by letter datedMay 27, 2010 (ADAMS Accession No. ML101670413). In some cases, the responses provided inaforementioned letters may not have changed (e.g., requests for additional information 4.(b) and4.(c)). In that case, please indicate in the response "no change," no additional information isnecessary, and the NRC staff will consider the response provided in the submittals to remaincurrent.1. The NRC staff will analyze the financial statements for the current year, which are requiredby 10 CFR 50.71(b), to determine if the applicant is financially qualified to operate the M UTR. SinceUMD's financial statements included with the application are out of date, provide a copy of the latestfinancial statements for the NRC staff's review.Response: Attached at Enclosure 1 are the "University System of Maryland FinancialStatements and Supplemental Data Together with Report of Independent Public Accountants forthe Years Ended June 30, 2013 and 2-12" (the "Financial Statement and Report"). The FinancialStatement and Report constitutes the audit by SB& Company, LLC of the financial statements of theUniversity System of Maryland and each of its constituent institutions, including the University ofMaryland, College Park. Enclosure 1 does not include the financial statements of constituentinstitutions other than the University of Maryland, College Park.2. Pursuant to 10 CFR 50.33(0(2), the regulation states that "[t]he applicant shall submitestimates for total annual operating costs for each of the first five years of operation of the facility."Since the information included in the application is out of date, provide the following additionalinformation:(a) Projected operating costs of the MUTR for each of the fiscal years (FYs) 2015-2019(the first five year period after the projected license renewal).Response: The University hereby updates the information included in its April 27, 2000,May 12, 2000, and its May 27, 2010, submittals of the 2000 Safety Analysis Report ("SAR"):

Revised Section 15.1 FINANCIAL ABILITY TO OPERATE A NON-POWER REACTORThe estimated operating costs for each of the fiscal years (FY) 2015 through FY2019 (thefirst five-year period after the projected license renewal date) are presented in revised Table 15.1,attached at Enclosure 2. As shown in that table, the annual operating costs for the MUTR fallwithin one of three main categories of expenses: personnel, maintenance, and miscellaneous.Building and maintenance expenses for other infrastructure fall within the budget of the UniversityDepartment of Facilities Management and, as a result, those expenses are not included in RevisedTable 15.1. In addition, waste disposal and health physics activities are performed by and includedin the budget of the University Department of Environmental Safety. Hence, those expenses arealso not included in revised Table 15.1. The calculations apply the Implicit Price Deflator for theGross Domestic Product (IPD for GDP) of 2.7% as published in the Survey of current Business by theU.S. Department of Commerce.(b) Confirm that UMD's primary source of funding to cover the operating costs for theaforementioned FYs will be funding by an annual appropriation from the State of Maryland's budgetas described in the application.Response: Revised Table 15.2, attached at Enclosure 2, depicts the University's primarysources of funding to cover the estimated annual operating costs for the first 5 years after theprojected license renewal date. The State of Maryland, the largest source of funding, provides salarysupport. The second largest source of operational funds is generated by fees received fromcorporations and other entities for the provision of services that use the MUTR, the Co-60 irradiatoror electron beam accelerator. The Federal funding in Table 15.2 represents a sum received from theNRC that is expressly designated for operating expenses.3. The RAI response by letter dated May 27, 2010, references a decommissioning cost estimatefor the MUTR of $10,979,000 (2011 dollars). In accordance with 10 CFR 50.75(d) (1), it states that,"[e]ach non-power reactor applicant for or holder of an operating license for a production orutilization facility shall submit a decommissioning report as required by §50.33(k) of this part."Under 10 CFR 50.75(d) (2) the report must:(i) Contain a cost estimate for decommissioning the facility; (ii) [i]ndicate which method ormethods described in paragraph (e) of this section as acceptable to the NRC will be used toprovide funds for decommissioning; and (iii) [p]rovide a description of the means ofadjusting the cost estimate and associated level periodically over the life of the facility.Since the NRC staff needs the following additional information to complete its review of the MUTRapplication, update the application by providing the following:(a) A current decommissioning cost estimate in 2015 dollars for the MUTR to meet theNRC's radiological release criteria for decommissioning the facility for unrestricted use, pursuant to10 CFR 50.75(d)(2). Accordingly, describe the basis for how the cost estimate was developed,showing costs, in current dollars, specifically broken down into the categories of labor, waste disposal, other items (e.g., energy, equipment, and supplies), and a 25 percent contingency factor.Response: The University's 1980 itemized estimate of decommissioning costs was basedon the decommissioning of the Diamond Ordnance Reactor Facility (DORF) that was located inMaryland in 1980 dollars. In its May 27, 2010 response to the NRC's RAI Regarding FinancialQualifications for License Renewal, the University used the IPD for GDP to update the 1980 estimateto 1989 dollars in connection with the submission of its updated decommissioning plan costestimates. Other factors such as comparing the MUTR with other university reactors were alsoconsidered in developing the University's decommissioning cost estimate. A currentdecommissioning cost estimate in 2015 dollars for the MUTR to meet the NRC's radiological releasecriteria for decommissioning the facility for unrestricted use, pursuant to 10 CFR 50.75(d)(2) ispresented at Enclosure 3. It employs uses a 25 percent contingency factor.(b) State the decommissioning method to be used. If SAFSTOR is the proposed method, pleasestate.Response: There is no change in the proposed decommissioning method that the Universityidentified in its May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications forLicense Renewal.(c) A description of the means of adjusting the cost estimate and associated funding levelperiodically over the life of the facility, to comply with 10 CFR 50.75(d)(2)(iii). Also, provide adetailed numerical example showing how the 2015 cost estimate will be adjusted periodically in thefuture.Response: Values from the May 27, 2010 letter were propagated using a 5-year runningaverage of 2.7% inflation from the US Department of Commerce Implicit Price Deflator (IPD), in thefuture we will return to the IPD and re-evaluate the 5-year running average. A detailed numericalexample is outlined in Enclosure 4.4. The application includes a statement of intent (SOI) as the chosen method to providedecommissioning funding assurance for the MUTR. If the applicant intends to use a SOI as themethod to provide decommissioning funding assurance, as provided for by10 CFR 50.75(e) (1)(iv), the NRC staff must find that the applicant "...is a Federal, State, or localgovernment licensee...." To make this finding, the applicant must state that it is a State governmentorganization and that the decommissioning funding obligations of the applicant are backed by theState government, and also provide corroborating documentation. Further, the applicant mustprovide documentation verifying that the signatory of the SOI is authorized to execute saiddocument that binds UMD. This document may be a governing body resolution, managementdirectives, or other form that provides an equivalent level of assurance. As the application does notinclude all of the above information, submit the following:(a) An updated SOI, which includes the current (2015 dollars) cost estimate for decommissioning; a statement that funds for decommissioning will be obtained when necessary;name and title of signatory; and the signatory's oath or affirmation attesting to the information.Response: An updated SOI that includes the information requested is attached atEnclosure 5.(b) Documentation that corroborates the statement in the application that UMD is aState agency and a State of Maryland government licensee under 10 CFR 50.75(e) (2) (iv).Response: No change. Please refer to documentation provided at Enclosure 1 to theUniversity's May 27, 2010, Response to the NRC's RAI Regarding Financial Qualifications forLicense Renewal.(c) A statement as to whether the decommissioning funding obligations for the UMD arebacked by the State of Maryland government. The application must also present documentation thatcorroborates this statement. For example, the documentation may be a copy of or complete citationto a state statute that expressly provides that the obligations, or at least the decommissioningfunding obligations, of the applicant are backed or supported by the full faith and credit of the Stateof Maryland, or an opinion of the applicant's General Counsel with citations to statutes, regulations,and/or case law that the obligations, or at least those with respect to the decommissioning fundingof the applicant are obligations backed or supported by the full faith and credit of the State ofMaryland.Response: See Enclosure 5 to this submission and Enclosure 1 to the May 27, 2010,Response to the NRC's RAI Regarding Financial Qualifications for License Renewal.(d) Documentation verifying that the signatory of the SO is authorized to execute such adocument that binds the applicant financially. For example, provide a copy of UMD's governingboard or equivalent resolution that shows that the signatory of the SO has been authorized by UMDto bind UMD financially, at least with respect to funding the decommissioning of the MUTR, orprovide a copy of an official UMD delegation of authority showing that the signatory of the SO isauthorized to bind UM D financially, at least with respect to funding the decommissioning of theMUTR.Response: Please refer to documentation provided at Enclosure 5 to the University's May27, 2010, Response to the NRC's RAI Regarding Financial Qualifications for License Renewal whichdocuments establish the authority of officials within the University System of Maryland and theUniversity of Maryland to enter into binding agreements. Enclosure 6Lto be provided by PDFWednesday November 26, 2014, presents a copy of express written delegation of responsibility andauthority from the President of the University of Maryland to the University Vice President forAdministration and Finance to bind the University financially, at least with respect to identifyingand obtaining funding to decommission the MUTR.

ENCLOSURE 1 UNIVERSITY SYSTEM OF MARYLANDFinancial Statements and Supplemental DataTogether with Report of Independent Public AccountantsFor the Years Ended June 30, 2013 and 2012 PaqeREPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1MANAGEMENT'S DISCUSSION AND ANALYSIS 3FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2013 AND 2012:Balance Sheet, University System of Maryland 11Combining Balance Sheet, Component Units 12Statement of Revenues, Expenses and Changes in Net Position, UniversitySystem of Maryland 14Combining Statement of Activities, Component Units 15Statement of Cash Flows, University.System of Maryland 17Notes to Financial Statements 18SUPPLEMENTAL DATA:Balance Sheet, Statement of Revenues, Expenses and Changes in Net Position,and Statement of Cash Flows for:University of Maryland, Baltimore 44University of Maryland, College Park 47Bowie State University 50Towson University 53University of Maryland Eastern Shore 56Frostburg State University 59Coppin State University 62University of Baltimore 65Salisbury University 68.University of Maryland University College 71University of Maryland, Baltimore County 74University of Maryland Center for Environmental Science 77University System of Maryland Office 80Combining Balance Sheets, Non-major Component Units 83Combining Statements of Activities, Non-major Component Units 85Notes to Supplemental Data87 0SB & COMPANY N .LCE;'PERFNCE " QUALITY -CLIENT SERVICEREPORT OF INDEPENDENT PUBLIC ACCOUNTANTSTo the Board of RegentsUniversity System of MarylandReport on the Financial StatementsWe have audited the accompanying financial statements of the University System of Maryland (theSystem), and its discretely presented component units, as of and for the years ended June 30, 2013 and2012, which collectively comprise the System's basic financial statements as listed in the table ofcontents.Management's Responsibilit. for the Financial StatementsThe System's management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United States of America;this includes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due tofraud or error.Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audits. We auditedthe component unit financial statements of UMBC Research Park Corporation, Inc. and the Bowie StateUniversity Foundation, Inc. We did not audit the financial statements of the other component units, whichrepresent 99 percent, 99 percent, and 98 percent, respectively, of the total assets, net assets andunrestricted revenue of the total component units. Those financial statements were audited by otherauditors whose reports thereon has been furnished to us, and our opinion, insofar as it relates to theamounts included for those component units, is based on the reports of the other auditors. We conductedour audits in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audits to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity's preparationand fair presentation of the financial statements in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity'sinternal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements.We believe that.the audit evidence we and other auditors have obtained is sufficient and appropriate toprovide a basis for our audit opinion.200 International Circle, Suite 5500 -Hunt Valley , Maryland 21030 -, P 410-584-0060 ,. F 410-584-0061 0SB & COMPANY.L-CEXPERIE NCE C OUALITY -ULICNT SERVICtOpinionIn our opinion, based on our audits and the reports of other auditors, the financial statements referred toabove present fairly, in all material respects, the respective financial position of the System and itsdiscretely presented component units as of June 30, 2013 and 2012, and the respective changes infinancial position and, as applicable, cash flows thereof for the years then ended in accordance withaccounting principles generally accepted in the United States of America.Other MattersRequired Supplementaty InformationAccounting principles generally accepted in the United States of America require that the Management'sDiscussion and Analysis as listed in the table of contents be presented to supplement the basic financialstatements. Such information, although not a part of the basic financial statements, is required by theGovernmental Accounting Standards Board who considers it to be an essential part of financial reportingfor placing the basic financial statements in an appropriate operational, economic, or historical context.We have applied certain limited procedures to the required supplementary information in accordance withauditing standards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with management's responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express an opinionor provide any assurance on the information because the limited procedures do not provide us withsufficient evidence to express an opinion or provide any assurance.Supplementary and Other InformationOur audits were conducted for the purpose of forming an opinion on the financial statements thatcollectively comprise the System's basic financial statements. The supplemental information as listed inthe table of contents is presented for purposes of additional analysis and is not a required part of the basicfinancial statements.The supplemental information is the responsibility of management and was derived from and relatesdirectly to the underlying accounting and other records used to prepare the basic financial statements.Such information has been subjected to the auditing procedures applied in the audit of the basic financialstatements and certain additional procedures, including comparing and reconciling such informationdirectly to the underlying accounting and other records used to prepare the basic financial statements or tothe basic financial statements themselves, and other additional procedures in accordance with auditingstandards generally accepted in the United States of America. In our opinion, the information is fairlystated, in all material respects, in relation to the basic financial statements as a whole.Hunt Valley, Maryland 0 YPNovember 15, 2013 a C 4 --%2 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012The management of the University System of Maryland (the System), provides the readers of the System'sfinancial statements with this narrative overview and analysis of the financial activities of the System for theyears ended June 30, 2013 and 2012.Financial Highlights" Unrestricted net position increased by $122,678,729, for the year ended June 30, 2013 compared to anincrease of $185,192,546 for the year ended June 30, 2012." State appropriations for the System increased by .7% for the year ended June 30, 2013 to$1,070,834,339. For the year ended June 30, 2012, State appropriations increased by 1.8% from theamount received in the year ended June 30, 2011." Tuition and fees, after deducting Scholarship Allowances, increased by $21,102,066 or 1.8% for the yearended June 30, 2013. During the year ended June 30, 2012, net Tuition and fees, increased by$80,672,778, or 7.4%." Investment income on Endowment assets amounted to $13,403,564, an investment return of 7.0%, for theyear ended June 30, 2013. For the year ended June 30, 2012, investment income on Endowment assetswas $1,267,272, representing investment returns of .6%.Overview of the Financial StatementsThe System's financial statements consist of three basic financial statements and the notes that provideinformation on the accounting alternatives used, financial statements for discretely presented component units,and explanatory information and detail on certain financial statement elements. The three basic financialstatements are the Balance Sheet, the Statement of Revenues, Expenses and Changes in Net Position, andthe Statement of Cash Flows.The Balance Sheet presents information on the System's assets, liabilities, deferred inflows of resources, andnet position, all as of the end of the reporting period. Net position represent the difference between assets andliabilities plus deferred inflow of resources, and is detailed into classifications that help readers understand theconstraints that the System must consider in making decisions on expending assets. Over time, changes innet position can help in understanding whether the financial condition of the System is improving ordeteriorating.The Statement of Revenues, Expenses and Changes in Net Position presents information on the changes innet position during the year. All changes in net postion are reported as soon as the underlying event takesplace, regardless of the timing of the related cash flows. Thus, revenue and expenses are recorded for someitems that will result in cash flows in future fiscal years (for example tuition and fees owed by students, orvacation earned by employees but not used as of the date of the financial statements).3 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012The Statement of Cash Flows presents information on sources and uses of cash during the year. Thisstatement details the changes in cash and cash equivalents from the amounts reported at the end of thepreceding year, to the amounts reported in the Balance Sheet as of the end of the current year. Sources anduses are organized into operating activities, noncapital financing activities, capital and related financingactivities, and investing activities.The System's financial statements include all accounts and balances of the System (considered the primarygovernment, in accounting terms), as well as 19 legally-separate and distinct entities for which the System isfinancially accountable, which are considered component units. Of the 19 component units, three areconsidered major component units due to their significance in terms of size, while the rest are considered non-major component units.The focus of this Management's Discussion and Analysis is on the System itself. Reference should be madeto the separately audited financial statements of the component units for additional information.Financial AnalysisAs of June 30, 2013, the System's financial health remains strong, with assets exceeding liabilities by$5,423,238,018, shown on the Balance Sheet as total net position. This compares with total net position of$5,058,483,979, as of June 30, 2012. As suggested earlier, when viewed over time, net position may beuseful as an indicator of financial health.For the year ended June 30, 2013, total net position increased by $364,754,039. Net investment in capitalassets increased by $248,090,907, while unrestricted net position increased by $122,678,729, and restrictednet position categories decreased by $6,015,597.Unrestricted net position represent the portion of assets, after taking into account liabilities, which can be usedto meet ongoing obligations and fund new initiatives. The $122,678,729 increase in unrestricted net positionfor the year ended June 30, 2013, is attributable to continuing institutional efforts to limit expenditures, as wellas efforts to accumulate resources to provide for future facilities needs and renewal and renovationrequirements.As of June 30, 2012, the System's assets exceeded liabilities by $5,058,483,979. This compares with totalnet position of $4,671,599,419 as of June 30, 2011.For the year ended June 30, 2012, total net position increased by $386,884,560. Net investment in capitalassets increased by $200,205,243, while unrestricted net position increased $185,192,546, and restricted netposition categories increased by $1,486,771.The $185,192,546 increase in unrestricted net position for the year ended June 30, 2012, is attributable toenrollment increases beyond that budgeted, continuing institutional efforts to limit expenditures, as well asefforts to accumulate resources to provide for future facilities needs and renewal and renovation requirements.4 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012The table below presents summary-level information of the System's assets, liabilities, and net position as ofJune 30, 2013, 2012 and 2011.Condensed Balance SheetJune 30, 2013, 2012 and 2011Current and other assetsCapital assets, netTotal assetsDebt and obligations under capital leaseagreementsOther liabilitiesTotal liabilitiesDeferred service concession arrangement receiptsNet position:Net investment in capital assetsRestrictedUnrestrictedTotal net positionTotal liabilities, deferred inflow ofresources and net position2013 2012 2011$2,425,856,576 $2,316,223,582 $2,108,263,5525,273,348,180 5,013,671,829 4,329,368,105$7,699,204,756 $7,329,895,411 $6,437,631,657$1,195,778,354 $1,170,358,857 $1,129,222,003699,476,706 668,651,521 636,810,2351,895,255,060 1,839,010,378 1,766,032,238380,711,678 432,401,0543,733,261,041 3,485,170,134 3,284,964,891247,865,966 253,881,563 252,394,7921,442,111,011 1,319,432,282 1,134,239,7365,423,238,018 5,058,483,979 4,671,599,419$7,699,204,756 $7,329,895,411 $6,437,631,6575 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012The table below presents summary-level information on revenues, expenses, and other changes in theSystem's net assets for the years ended June 30, 2013, 2012 and 2011.Condensed Statement of Revenues, Expenses and Changes in Net PositionYears ended June 30, 2013, 2012 and 2011Operating revenuesOperating expensesOperating lossState appropriationsOther nonoperatingTotal nonoperatingIncome before other revenuesOther revenuesIncrease in net positionNet position, beginning of yearNet position, end of year2013 2012 2011$3,185,101,706 $3,140,131,091 $3,020,337,7594,293,338,895 4,161,427,083 3,998,175,888(1,108,237,189) (1,021,295,992) (977,838,129)1,070,834,339 1,063,371,086 1,044,674,552212,230,547 163,051,998 201,250,4481,283,064,886 1,226,423,084 1,245,925,000174,827,697 205,127,092 268,086,871189,926,342 181,757,468 198,180,842364,754,039 386,884,560 466,267,7135,058,483,979 4,671,599,419 4,205,331,706$5,423,238,018 $5,058,483,979 $4,671,599,419The System's operating revenues arise from activities associated with its core mission: education, research,and public service.For the years ended June 30, 2013, 2012 and 2011, operating revenues, which under the definitions used bythe Governmental Accounting Standards Board (GASB) excludes state appropriations, are detailed below:Tuition and feesContracts and grantsSales and services ofeducational departmentsAuxiliary enterprisesOther operatingTotal2013 2012 2011$ %$ %$%$1,187,769,356 37.3% $1,166,667,290 37.2% $1,085,994,512 36.0%1,097,258,431 34.5 1,109,702,556 35.3 1,142,425,581 37.8287,007,719 9.0 257,697,032 8.2 243,851,740 8.1551,408,145 17.3 548,111,213 17.5 490,116,309 16.261,658,055 1.9 57,953,000 1.8 57,949,617 1.9$3,185,101,706 100.0% $3,140,131,091 100.0% $3,020,337,759 100.0%Tuition and fees reflect increases in resident undergraduate and graduate student rates, and non-resident ratesand other student charges enacted the for years ended 2013, 2012 and 2011. Enrollment declined slightlybetween 2013 and 2012 compared to a modest increase in enrollment in 2012 and 2011, most notably at theUniversity of Maryland University College. Fee increases for residence halls and dining facilities account forthe increase in revenue from auxiliary enterprise activities.6 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012For the years ended June 30, 2013, 2012 and 2011, operating expenses are detailed below:InstructionResearchPublic serviceAcademic supportStudent servicesInstitutional supportOperation &maintenance of plantScholarships and fellowshipsAuxiliary enterprisesHospitalTotal2013 2012 2011$ %$ %$%$1,139,913,339 26.5% $1,101,099,773 26.5% $1,034,072,780 25.9%931,958,951 21.7 922,874,070 22.2 945,626,792 23.7152,996,481 3.6 157,554,254 3.8 148,391,096 3.7411,613,583 9.6 380,187,264 9.1 349,062,701 8.7198,424,948 4.6 192,285,983 4.6 178,781,303 4.5386,575,951 9.0 364,278,425 8.8 354,617,377 8.9298,788,447 .7.0 316,887,436 7.6 309,762,858 7.7100,959,500 2.4 90,510,504 2.2 91,965,556 2.3498,923,433 11.6 480,543,544 11.5 444,579,270 11.1173,184,262 4.0 155,205,830 3.7 141,316,155 3.5$4,293,338,895 100.0% $4,161,427,083 100.0% $3,998,175,888 100.0%Operating expenses are detailed by (1) employee costs, (2) payments to suppliers, contractors and other, and(3) depreciation expense in the notes to the financial statements, in order to provide an alternative presentationof operating expenses.For the year ended June 30, 2013, increases in employee payments of $95,355,996, represent the largestcomponent of the overall increase in operating expenses over the year ended June 30, 2012, with the largestincrease associated with employee payments for instruction activities.For the year ended June 30, 2012, increases in employee payments of $133,323,249, represent the largestcomponent of the overall increase in operating expenses over the year ended June 30, 2011, with the largestincrease associated with employee payments for instruction activities.For the year ended June 30, 2011, increases in employee payments account for the largest component of theoverall increase in operating expenses of $133,450,196, over the year ended June 30, 2010, with the largestincrease associated with employee payments for instruction activities.7 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012Capital Asset and Debt AdministrationThe System continually makes investments in facilities necessary to achieve long-term objectives resultingfrom:" State-wide public policy goals,* System-wide strategic planning,* institutional facilities master planning," projected enrollment growth," projected research space needs, and* maintainance and renewal needs for existing facilities.Funding sources for additions to capital facilities and equipment for the last three fiscal years ended June 30,were funded through:Fundina source201320122011State of Maryland debt proceeds or cash balancesSystem debt proceedsSystem cash balances or donations$149,231,513159,223,347218,842,585$172,854,822133,013,284186,301,220$176,161,090180,139,550211,893,224$527,297,445 $492,169,326 $568,193,864TotalOver the past three fiscal years ended June 30, major projects completed or placed in service are as follows:ProjectInstitutionCostYear ended June 30, 2013John and Frances Angelos Law CenterTowson Center ArenaYear ended June 30, 2012Performing Arts and Humanties FacilityCollege of Liberal ArtsPerforming Arts CenterYear ended June 30, 2011Pharmacy Hall Addition and RenovationOakland Hall ResidencePerdue School of BusinessSeagull SquareUniversity of BaltimoreTowson UniversityUniversity of Maryland Baltimore CountyTowson UniversityBowie State UniversityUniversity of Maryland BaltimoreUniversity of Maryland College ParkSalisbury UniversitySalisbury University$107,279,00073,000,00081,703,00078,325,00067,453,00085,789,00081,000,00050,553,00041,000,0008 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012In August 2003, the System issued Revolving Loan Program Bonds to provide a pool of funds to finance theacquisition of personal property on a revolving basis. The Revolving Loan Program Bonds, currentlyoutstanding in the amount of $35,000,000, mature on July 1, 2023. In May 2009, the securities wereremarketed at an annual interest rate of 0.55% for the period June 1, 2009 through May 31, 2010. On June 1,2010, the securities were successfully remarketed on a multi-annual interest rate basis at an interest rate of1.50%. On June 1, 2013, the System redeemed $15,000,000 of the Revolving Loan Program Bonds. Theremaining principal balance of $35,000,000 was remarketed for five years at a multi-annual interest rate of1.25%.The System has issued revenue bonds to fund the construction, acquisition, and renewal and replacement offacilities, or refinance previously issued revenue bonds to realize lower current interest rates, during the yearsended June 30, 2012 and 2013, and since, as follows:Present Valueof Future DebtTotal Par ServiceRevenue Bond Issuance Date Purpose Value Issued Savings2011 Series A and B 10/20/2011 Refinancing, construction and $153,075,000 $1,357,495facilities renewal2012 Series A and B 2/9/2012 Refinancing 70,825,000 9,054,4112012 Series C and D 10/6/2012 Refinancing, construction and 169,005,000 5,281,851facilities renewalThe System continually pursues opportunities to reduce its overall effective cost of capital financing, and asconditions in the financial markets allow, refinances previously issued debt with new debt at lower interestcosts.Economic Factors and Next Year's Budget and RatesEnrollment demand, availability of funding for contracts and grants, and the State of Maryland support throughboth operating and capital appropriations are the three most significant drivers of the System's revenue base.Across all student categories, enrollment is expected to continue to increase over the next ten years, withmore than 16% more full-time equivalent students anticipated by the fall 2022. Preliminary fall 2013enrollment indicates a slight decline in headcount enrollment, reflecting demographic changes in high schoolgraduation numbers, the impact of lack of state financial support for enrollment growth, and a strengtheningemployment situation.The University of Maryland, College Park, the University of Maryland, Baltimore, and the University ofMaryland, Baltimore County each have considerable numbers of faculty that pursue research grants and othersponsored funding arrangements. Indirect cost recoveries associated with contract and grants are animportant funding source for institution's administrative costs. The Federal Budget Control Act places limitson Federal government spending commonly referred to as sequestration. These limits have constrainedFederal spending on research activities, will reduce indirect cost recoveries generally, and will continue, unlessCongress and the President agree upon and enact legislation that relieves the constraints on governmentalspending currently in place.9 UNIVERSITY SYSTEM OF MARYLANDMANAGEMENT'S DISCUSSION AND ANALYSISYEARS ENDED JUNE 30, 2013 AND 2012In February of 2009, as part of the American Recovery and Reinvestment Act, the Federal governmentestablished a program where tax-exempt issuers of debt would issue bonds, referred to as Build AmericaBonds, which would produce interest income that is taxable to those who buy and hold the bonds. Under theterms of the program, which ended December 31, 2010, the Federal government is to reimburse the issuer for35% of the interest payments made on Build America Bonds. The University System of Maryland has issuedand outstanding $206,465,000 of Build America Bonds. The Federal Budget Control Act (or sequestration),also impacts the Federal government subsidy of Build America Bond interest payments, and until the effects ofsequestration are relieved or changed, the System expects interest subsidies reduced to be by approximately8.7%. This reduction in interest subsidies at an 8.7% reduction, will amount to approximately $325,000 peryear. The first reduction in Federal interest subsidy happened in September 2013.As a region with a significant Federal government employee population, the potential for significant reductionsin Federal spending in all likelihood will have serious implications for state tax revenues, both from income aswell as sales taxes. The State government closely monitors revenue receipts and revises projections on aquarterly basis. As an economic engine for the entire state and region, System officials point out the impactthat proposed reductions of State funding provided to higher education would have on state-wide economicactivity and work-force development.Personnel costs account for more than two-thirds of the System's noncapital spending. Healthcare costs andthe adoption of a state-wide funding strategy for providing for retiree's healthcare costs are expected to besignificant considerations for the System's future spending levels.Requests for InformationThis financial report is intended to provide a general overview of the System's finances. Questions concerningany of the information provided in this report, or requests for additional information should be addressed to theOffice of the Vice Chancellor for Administration and Finance and Chief Operating Officer, 3300 MetzerottRoad, Adelphi, MD 20783.10 UNIVERSITY SYSTEM OF MARYLANDBALANCE SHEETJUNE 30, 2013 AND 2012June 30, June 30,2013 2012ASSETSCurrent assets:Cash and cash equivalentsAccounts receivable, netNotes receivable, current portion, netInventoriesPrepaid expenses and deferred chargesTotal current assetsNoncurrent assets:Restricted cash and cash equivalentsEndowment investmentsRestricted investmentsOther investmentsNotes receivable, netCapital assets, netTotal noncurrent assetsTotal assetsLIABILITIESCurrent liabilities:Accounts payable and accrued liabilitiesAccrued workers' compensation, current portionAccrued vacation costs, current portionRevenue bonds and notes payable, current portionObligations under capital lease agreements, current portionDeferred revenueTotal current liabilitiesNoncurrent liabilities:Accrued workers' compensationAccrued vacation costsRevenue bonds and notes payableObligations under capital lease agreementsTotal noncurrent liabilitiesTotal liabilitiesDEFERRED INFLOWS OF RESOURCESDeferred service concession arrangement receiptsNET POSITIONUnrestrictedNet investment in capital assetsRestricted:Nonexpendable:Scholarships and fellowshipsResearchOtherExpendable:Scholarships and fellowshipsResearchLoansCapital projectsOtherTotal net positionTotal liabilities, deferred inflows of resourcesand net position$1,820,390,529268,855.8167,728,08110,271,7149,038,0982,116,284,23851,390,989192,920,6226,693,18558,567,5425,273,348,1805.582,920,518$7,699,204,756$310.619,2514,375,80589.344,37079,050,1511,104,394177,345,393661,839,36423,855,19593,936,6921,104,318,15511,305,6541,233.415,6961,895,255,060380,711,6781,442,111,0113,733,261,04115,729,7334,055,55416,518,77337,653,47969,959,01671,207,8685,651,22027,090.3235,423.238,018$1,653,689,625282,367,4447,731,19611,889,5097,092,3311,962,770,10575,673,619190,279,72121,875,3185,128,47160,496,3485,013,671,8295,367,125,306$272,522,8794,438,42583.198,22680,770,694296,434191,690.521632,917,17924,196,57592,604,8951,075,822,50413,469,2251,206,093,1991,839,010,378432.401,0541,319,432,2823,485,170,13413,147,7684,033,18516,517,48536,791,12069,334,75372,533,90715,055,22626,468,1195,058.483,979$7,699,204,756 $7,329,895,411See accompanying notes.11 UNIVERSITY SYSTEM OF MARYLANDCOMBINING BALANCE SHEET, COMPONENT UNITSJUNE 30, 2013Major Component UnitsUniversityof MarylandCollege ParkUniversity Systemof MarylandUniversity ofMarylandBaltimoreTotal NonmajorASSETSCurrent assetsCashAccounts receivable, netOther assetsTotal current assetsInvestmentsEndowment investmentsOther investmentsTotal investmentsOther assetsAccounts receivable, netCapital assets, netOther assetsTotal other assetsTotal assetsLIABILITIESCurrent liabilitiesAccounts payable & accrued expensesLong-term debt, currentDeferred incomeTotal current liabilitiesOther liabilitiesOther payablesDue to primary governmentLong-term debt, noncurrentTotal other liabilitiesTotal liabilitiesNET ASSETSUnrestrictedTemporarily restricted:Scholarships & fellowshipsResearchOtherPermanently restricted:Scholarships & fellowshipsResearchOtherTotal net assetsTotal liabilities and net assetsFoundation, Inc. Foundation, Inc. Foundation, Inc. Component Units Total$134,000 $17,426,872 $157,014 $24,903,989 $42,621,87574,598,000 28,292,348 14,510,723 4,937,729 122,338,800282,000 184,488 534,402 1,000,89075,014,000 45,903,708 14,667,737 30,376,120 165,961,565225.682,000 244.725.820 128.291,957 180,117,272 778,817,049284,021,000 53,369,262 53,533.012 25.493,472 416,416,746509,703,000 298,095,082 181,824,969 205,610,744 1,195,233,7955,119,000 25,864,477 15,377,755 12,708,083 59,069,31510,382,000 100,000 5,833,980 16,315,980407,000 777,840 5.179,829 4,014.258 10,378,92715,908,000 26,742,317 20,557,584 22,556,321 85,764,222$600,625,000 $370,741,107 $217,050,290 $258,543,185 $1,446,959,582$71,064,000 $4,880,957 $1,600,761 $5,745,564 $83,291,2821,948,018 1,948,0182,315,000 2,158,683 7,272,025 11,745,70873,379,000 7,039,640 1,600,761 14,965,607 96,985,00846.728,768 3,146,534 1,234,403 3.829,739 54,939,444192,797,232 192,797.232318,014 318,014239,526,000 3,146,534 1,234,403 4,147,753 248,054,690312,905,000 10,186,174 2,835,164 19,113,360 345,039,69862,731.000 10,265,864 20,128,368 33,164,013 126,289,24519,289,000 37,446,000 7.226,401 21.881,400 85,842,80111,625,000 9,957,000 8,511.724 627.004 30,720,72834,422.000 91,724,328 55,277,255 56,540.201 237,963,78488,415,000 76,829,000 27,534,841 68,770,894 261.549,7352,340,000 1,081,000 1,010,474 356,478 4,787,95268,898,000 133,251,741 94,526,063 58,089,835 354,765,639287,720,000 360,554,933 214,215,126 239,429,825 1,101,919,884$600,625,000 $370,741,107 $217,050,290 $258,543,185 $1,446,959,582See accompanying notes.12 UNIVERSITY SYSTEM OF MARYLANDCOMBINING BALANCE SHEET, COMPONENT UNITSJUNE 30, 2012ajor Component UnitsUniversityof MarylandCollege ParkUniversity Systemof MarylandUniversity ofMarylandBaltimoreTotal NonmajorASSETSCurrent assetsCashAccounts receivable, netOther assetsTotal current assetsInvestmentsEndowment investmentsOther investmentsTotal investmentsOther assetsAccounts receivable, netCapital assets, netOther assetsTotal other assetsTotal assetsLIABILITIESCurrent liabilitiesAccounts payable & accrued expensesLong-term debt, currentDeferred incomeTotal current liabilitiesOther liabilitiesOther payablesDue to primary governmentLong-term debt, noncurrentTotal other liabilitiesTotal liabilitiesNET ASSETSUnrestrictedTemporarily restricted:Scholarships & fellowshipsResearchOtherPermanently restricted:Scholarships & fellowshipsResearchOtherTotal net assetsTotal liabilities and net assetsFoundation, Inc. Foundation. Inc. Foundation. Inc. Component Units Total$714,000 $22,403,012 $31,320,867 $54,437,8795,916,000 36,360,828 $13,548,212 9,776,299 65,601,339241,000 102,278 760,458 1,103,7366,871,000 58,866,118 13,548,212 41,857,624 121,142,954214,762,000 222,672,248 113,710,602 164,177,009 715,321,859280,545,000 46,215,332 53,193,380 17,672,634 397.626,346495,307,000 268,887,580 166,903,982 181,849,643 1,112,948,2052,910,000 32,069,335 12,115,645 7,306,245 54,401,22510,009,000 100,000 5,788,292 15,897,292432,000 1,008,450 5,020,298 8,367,419 14,828,16713,351,000 33,177,785 17,135,943 21,461,956 85,126,684$515,529,000 $360,931,483 $197,588,137 $245,169,223 $1,319,217,843$2,824,000 $1,834,267 $3,108,741 $2,832,810 $10,599,8181,056,350 1,056,3501,470,000 755,546 6.552,116 8,777,6624,294,000 2,589,813 3,108,741 10,441,276 20,433,83043,993,109 3,314,392 1,002,708 3,716,781 52,026,990190,171.891 190,171.8912,272,485 2,272,485234,165,000 3,314,392 1,002,708 5,989,266 244,471,366238,459,000 5,904,205 4,111,449 16,430,542 264,905,19665,951,000 12,854,849 19,113,761 31,391,289 129,310,89919,388,000 34,658,000 6.474,949 12,309,934 72,830,88312,558,000 8,394,000 7,493,869 558,717 29,004,58631,314,000 95,479,256 47,174,676 64,349,615 238,317,54782,177,000 65,623,000 26,071,731 70,416,205 244,287,9362,291,000 1.055,000 1,003,631 251,323 4,600,95463,391,000 136,963,173 86.144,071 49,461,598 335.959,842277,070,000 355,027,278 193,476,688 228,738,681 1,054,312,647$515,529,000 $360,931,483 $197,588,137 $245,169,223 $1,319,217,843See accompanying notes.13 UNIVERSITY SYSTEM OF MARYLANDSTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONYEARS ENDED JUNE 30, 2013 AND 2012OPERATING REVENUES:Tuition and feesLess: scholarship allowancesFederal grants and contractsState and local grants and contractsNongovernmental grants and contractsSales and services of educational departmentsAuxiliary enterprises:Residential facilitiesLess: scholarship allowancesDining facilitiesLess: scholarship allowancesIntercollegiate athleticsLess: scholarship allowancesBookstoreLess: scholarship allowancesParking facilitiesOther auxiliary enterprises revenuesLess: scholarship allowancesOther operating revenuesTotal operating revenuesOPERATING EXPENSES:InstructionResearchPublic serviceAcademic supportStudent servicesInstitutional supportOperation and maintenance of plantScholarships and fellowshipsAuxiliary enterprises:Residential facilitiesDining facilitiesIntercollegiate athleticsBookstoreParking facilitiesOther auxiliary enterprises expensesHospitalTotal operating expensesOperating lossNONOPERATING REVENUES (EXPENSES):State appropriationsPell grantsGiftsInvestment incomeLess: Investment expenseInterest on indebtednessOther revenues, (expenses), gains and (losses)Total net nonoperating revenuesIncome before other revenuesOTHER REVENUES:Capital appropriationsCapital gifts and grantsAdditions to permanent endowmentsTotal other revenuesIncrease In net positionNet position -beginning of yearNet position -end of yearYear ended June 30,2013$1,433,382,221(245,612,865) $1,187,769,356691.994,706188,065,280217,198,445287,007,719Year ended June 30,2012$1,403,570,031(236,902,741)163,147,129(13,346,944)115,694,298(8,165,031)95,851,126(4,603,108)27,778,782(1,599,367)137,815,456161,811,133149,800,185 (11,592.037)114,536,929107,529,267 (6,863,867)97,424,48291,248,018 (4,233,267)28,816,80226,179,415 (1,530,243)38,875,667128,602,143(37,786)137,775,59361.658,0553,185,101,7061,139,913,339931,958,951152,996,481411,613,583198,424,948386,575,951298,788,447100,959,500136,208,180105,843,28089,937,18527,352,05125,342,513114,240,224173,184,2624,293,338,895(1,108,237,189)1,070,834,339134,134,08644,631,76032,991,408(45,504,869)45,978,1621,283,064.886174,827,697149,213,51338,107,2052,605,624189,926,342364,754,0395,058,483,979$5,423,238,018$1,166,667,290723,008,546175,216,123211.477,887257,697,032150,219,096107,673,06293,191,21527,286,55941,176,924128,564,35757,953,0003,140,131,0911,101,099,773922,874,070157,554,254380,187,264192,285,983364,278,425316,887,43690,510,504119,746,524104,886,98794,824,57626,841,60625,942,018108,301,833155,205,8304,161,427,083(1,021,295,992)1,063,371,086131,092,95142,770,70422,139,093(43,587,538)10,636,7881.226,423.084205,127,092172,854,8226,689,3072,213,339181,757,468386,884,5604,671,599,419$5,058,483,97933,695,044(703,636)22,873,739(734,646)See accompanying notes.14 UNIVERSITY SYSTEM OF MARYLANDCOMBINING STATEMENT OF NET ACTIVITIES, COMPONENT UNITSYEAR ENDED JUNE 30, 2013Major Component UnitsUniversity University ofUniversity System of Maryland Marylandof Maryland College Park Baltimore Total NonmajorTotnlFoundation Inc Foundation Inc Foundation Inc Com onent Units TotalCHANGES IN UNRESTRICTED NET ASSETSRevenuesContributions & grantsInvestment incomeOther incomeAssets released from restrictionsTotal revenuesExpensesProgramGeneral & administrativeFundraisingOther expenseTotal expensesTransfer per Board resolutionChange in unrestricted net assetsCHANGES IN TEMPORARILY RESTRICTED NET ASSETSContributions & grantsInvestment income (loss)Other income (loss)Assets released from restrictionsTransfer per Board resolutionChange in temporarily restricted net assetsCHANGES IN PERMANENTLY RESTRICTED NET ASSETSContributions & grantsInvestment income (toss)Other income (loss)Assets released from restrictionsChange in permanently restricted net assetsTotal change in net assetsNet assets -beginning of yearNet assets -end of year$2,263,0003,892,0004,578,000$4,769,0841,134,081$8,109,072556,284412,521$3,997,393 $14,369,4653,441,533 12,658.9017,868,394 13,992.99630.703.689 101.660.796....... --,145,149 14.64.,-827,895,000 45,049,314 23,726,835 46,011,009 142,682,15821,252,681 46,345,339 20,184,448 36.907,747 124,690,2155,052,000 1,107,025 1,595,456 3.492.784 11,247,2654,792,000 185,935 950,643 1,106,068 7,034,6462,560,534 2,560,53431,096,681 47,638,299 22,730,547 44"067,133 145,532,660(18.319) 18,319(3,220,000) (2,588,985) 1,014,607 1,943,876 (2,850,502)10,595,000 27,344,817 15,092,229 15,800,348 68,832,3948,663,000 12,562,037 9,408,615 15,982,887 46,616,539(364.965) 1,488,871 1.123,906(17,162,000) (38,945,817) (14,648,958) (31,439,473) (102,196,248)(20,000) 20,0002,076,000 596,072 9,871,886 1,832,633 14,376,5917,762,000 7,629,855 9,851,945 4,737,749 29,981,5494.032,000 1,425,659 5.457,65991,045 15,443 106,488(200.332) 735,784 535,45211,794,000 7,520,568 9,851,945 6,914,635 36,081,14810,650,000 5,527,655 20,738,438 10,691,144 47,607,237277,070,000 355,027,278 193,476,688 228,738,681 1,054,312,647$287,720,000 $360,554,933 $214.215,126 $239,429,825 $1,101,919,884See accompanying notes.15 UNIVERSITY SYSTEM OF MARYLANDCOMBINING STATEMENT OF NET ACTIVITIES, COMPONENT UNITSYEAR ENDED JUNE 30, 2012CHANGES IN UNRESTRICTED NET ASSETSRevenuesContributions & grantsInvestment incomeOther incomeAssets released from restrictionsTotal revenuesExpensesProgramGeneral & administrativeFundraisingOther expenseTotal expensesTransfer per Board resolutionChange in unrestricted net assetsCHANGES IN TEMPORARILY RESTRICTED NET ASSETSContributions & grantsInvestment income (loss)Other income (loss)Assets released from restrictionsTransfer per Board resolutionChange in temporarily restricted net assetsCHANGES IN PERMANENTLY RESTRICTED NET ASSETSContributions & grantsInvestment income (loss)Other income (loss)Assets released from restrictionsChange in permanently restricted net assetsTotal change in net assetsNet assets -beginning of yearNet assets -end of yearMajor Component UnitsUniversity University ofUniversity System of Maryland Marylandof Maryland College Park Baltimore Total NonmajorFoundation, Inc. Foundation, Inc. Foundation, Inc. Component Units Total$3,945,000 $39,100 $7,044,715 $5,783,247 $16,812,0623,210,000 4,829.499 1,836,688 346,300 10,222,4875,845,000 2,875,995 579,053 8,097,212 17,397,26020,507,000 47,564,240 14,395,731 15,222,535 97,689,50633,507,000 55,308,834 23,856,187 29,449,294 142,121,31521,358,499 49,246,012 19,179,192 23,484,690 113,268,3934,795,000 1,046,455 1,472,371 4,359,261 11,673,0873,428,000 244,760 579,756 1,163,823 5.416,3395,433,931 1.560,083 6,994,01429,581,499 55,971,158 21,231,319 30,567,857 137,351,833(13,501) 13,5013,912,000 (662,324) 2,638,369 (1,118,563) 4,769,4829,153,000 33,051.104 16,679,090 16,539,624 75,422,8189,608,068 (1,690,988) 243,130 (286,673) 7,873,537(332,074) 1,155,070 822,996(20,507,000) (48,055,862) (14,395,731) (15,627,815) (98.586,408)(520.068) 471,208 48,860(2,266,000) (16,556,612) 2,575,349 1,780,206 (14,467,057)2,077,000 9,786,721 10,178,016 3,646,171 25.687,908(9.941,000) 94,284 (9,846,716)3,000 (152,340) 13,800 (135,540)491,622 405,280 896.902(7,861,000) 10,126,003 10,178,016 4,159,535 16,602,554(6,215,000) (7,092,933) 15,391,734 4,821,178 6,904,979283,285,000 362,120,211 178,084,954 223,917,503 1,047,407,668$277,070,000 $355,027,278 $193,476,688 $228,738,681 $1,054,312,647See accompanying notes.16 UNIVERSITY SYSTEM OF MARYLANDSTATEMENT OF CASH FLOWSYEARS ENDED JUNE 30, 2013 AND 2012CASH FLOWS FROM OPERATING ACTIVITIESTuition and feesResearch contracts and grantsPayments to employeesPayments to suppliers and contractorsLoans issued to studentsColtlections of loans to studentsAuxiliary enterprises:Residential facilitiesDining facilitiesIntercollegiate athleticsBookstoreParking facilitiesOtherOther receiptsNet cash used by operating activitiesCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESState appropriationsGifts and grants received for other than capital purposes:Private gifts for endowment purposesPelt grantsNet cash provided by noncapital financing activitiesCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESProceeds of capital debtCapital appropriationsCapital grants and gifts receivedProceeds from sales of capital assetsPurchases of capital assetsPrincipal paid on debt and capital leasesInterest paid on debt and capital leasesNet cash used by capital and related financing activitiesCASH FLOWS FROM INVESTING ACTIVITIESProceeds from sales and maturities of investmentsInterest on investmentsInvestment expensePurchases of investmentsNet cash provided by investing activitiesNet Increase in cash and cash equivalentsCash and cash equivalents -beginning of the yearCash and cash equivalents -end of the yearYears ended June 30,2013 2012$1,187,346,510 $1,162,560,6921,125,325,398 1,118,949,727(2,809,241,146) (2,714.062,702)(1,175,107,072) (1,161.756,018)(9,332,750) (12,811.230)10,017,321 10,818,076130,380,620 124,951,037107,507,187 107,417,00272,164,684 92,146,35125,998,462 33,473,87138,882,727 40,264,930137,423,886 128,940,543407,644,252 383,627,098(750.989,921) (685,480,623)1,070.834,3392,605,624134.134,0861.207,574,049186,517,107149,213,51323,027,9121,870,459(516,053,770)(156,040,603)(53,017,193)(364,482,575)33,218,57018,610,882(927,297)(585.434)50,316.721142,418.2741.729,363,244$12.712,64313,383.800($1,108,237.189)264,593,814(51,689,376)90,609,92213,511,6281,617,795(1,945,767)1,931,92145,888,518(14,345,128)7,477,941(404,000)($750,989,921)1,063,371,086948.423131,092.9511,195.412,460241,423,290172,231,8875,746.9682,950,976(485,775,230)(193,727,596)(51,011,102)(308,160,807)47,602,39320,909,372(734.646)(23,275,053)44,502,066246,273,0961,483,090.148$1,r729,363,244$685,885533,226457,423,762($1.021,295,992)260,357,159(25,022.708)53,407,49216,203,449(185,850)1,114,745(882,903)26.970,5852,097,381664,2541,091,765($685,480,623)SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:Gifts and transfer of capital assetsChanges in unrealized appreciation on investmentsCapital assets related to service concession arrangementsRECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:Operating lossAdjustments to reconcile operating loss to net cash used by operating activities:Depreciation expenseAmortization of deferred service concession arrangement receiptsGifts and other revenues, (expenses), gains, and (losses)Changes in assets and liabilities:Accounts receivables, netInventoriesPrepaid expenses and deferred chargesNotes receivableAccounts payable, net and accrued liabilitiesDeferred revenueAccrued vacationAccrued workers' compensationNet cash used by operating activitiesSee accompanying notes.17 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 20121. ORGANIZATION AND PURPOSEThe University System of Maryland (the System) is a component unit of the State of Maryland (the State) andis governed by its Board of Regents (the Board).The System comprises eleven degree-granting institutions, one research entity and an administrative unit. Itsdegree-granting institutions provide a full range of undergraduate, graduate, professional and continuingeducation opportunities for students. Its research and public service entities conduct basic and appliedresearch, and transfer new technology to constituencies. The administrative unit includes the SystemChancellor and staff who serve as support to the Board.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies followed by the System are summarized below.Reporting Entity -The financial statements of the System include all funds and organizations included in thelegal entity encompassed by the System, and other legally separate entities for which the System is financiallyaccountable or which otherwise meet the criteria established by the Governmental Accounting StandardsBoard (GASB). Amounts held in System accounts on behalf of separately organized entities are included asassets, with a corresponding liability reflected.The System has recognized, as affiliated foundations, nineteen organizations created and operated in supportof the interests of the System or any of the institutions that comprise the System. Each of these affiliatedfoundations are considered to (1) receive or hold economic resources that are to be used for the benefit of theSystem or its institutions, (2) receive or hold economic resources which the System or its institutions areentitled to or otherwise have the ability to access, and (3) are significant to the financial statements of theSystem or the institutions with which the foundation is affiliated. As a result, each of the eighteen affiliatedfoundations meet the criteria for inclusion in the financial reporting entity, and thus each of the affiliatedfoundations are shown in a discrete presentation.The University System of Maryland Foundation, Inc., the University of Maryland College Park Foundation, Inc.,and the University of Maryland Baltimore Foundation, Inc. are considered major component units due to thesignificance of the financial statement amounts to the System and its financial statements.18 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012The following affiliated foundations are considered nonmajor component units:Medical Alumni Association of the University of Maryland, Inc.M Club Foundation, University of Maryland, Inc.The Robert H. Smith School of Business Foundation, Inc.Harry R. Hughes Center for Agro-Ecology, Inc.Bowie State University Foundation, Inc.Towson University Foundation, Inc.Frostburg State University Foundation, Inc.Coppin State University Development Foundation, Inc.University of Baltimore Foundation, Inc. and University Properties, Inc.Salisbury University Foundation, Inc.The Ward Foundation, Inc.The Maryland 4-H Foundation, Inc.University Research Corporation International, Inc.The Maryland Center @ Bowie State University, Inc.University of Maryland, Baltimore County Research Park Corporation, Inc.Maryland Hawk CorporationDuring the years ended June 30, 2013 and 2012, the foundations distributed approximately $106,696,000 and$96,454,000 respectively, to the System including its institutions for both restricted and unrestricted purposes.All of the System's component units are nongovernmental entities that prepare financial statements using theprincipals and accounting standards promulgated by the Financial Accounting Standards Board (FASB).Complete financial statements of the affiliated foundations may be requested from the System's Office of theComptroller at 3300 Metzerott Road, Adelphi, MD 20783.The University of Maryland, Baltimore provides services to hospital and critical care facilities under contractualarrangements with the State. The expenditures relating to these activities are reported within the hospitalfunctional category. The revenue derived from these activities are reported primarily as contract and grantrevenue.19 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Measurement Focus and Basis of Accounting -For financial reporting purposes, the System is considereda special-purpose government engaged only in business-type activities. Accordingly, the System's financialstatements have been presented using the economic resources measurement focus and the accrual basis ofaccounting. Under the accrual basis, revenue is recognized when earned, and expenses are recorded whenan obligation has been incurred.Application of Accounting Standards -The System has the option to apply all FASB pronouncementsissued after November 30, 1989, except for instances in which a pronouncement of the FASB conflicts withpronouncements of the GASB. The System has elected to not apply FASB pronouncements issued afterNovember 30, 1989.When an expense is incurred that can be paid using either restricted or unrestricted resources, the System'spolicy is to first apply the expense toward restricted resources and then toward unrestricted resources.Operating and Nonoperating Revenue and Expenses -Operating revenue and expenses are generallyassociated with those activities that relate directly to the core activities of instruction, research and publicservice that form the essence of the System's mission. Nonoperating revenue, expenses, gains and lossesrepresent amounts that recur regularly but are not included in operating revenue and expenses. Generallyaccepted accounting principles defines State appropriations as nonoperating revenue.Cash and Cash Equivalents -Cash and cash equivalents include demand deposits with financial institutions,as well as highly liquid investments that are both readily convertible to known amounts of cash and are so nearto their maturity that they present an insignificant risk of changes in value because of changes in interest rates.Only investments with an original maturity of three months or less satisfy the criteria for cash equivalents.Investments -Investments are valued at fair market value.Inventories -Inventories are valued at cost, determined under the first-in, first-out method, which is not inexcess of net realizable value.20 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Capital Assets -Property, plant, equipment, and books and materials which are part of a catalogued library,are stated principally at cost at the date of acquisition, or fair market value at the date of donation in the caseof gifts. Personal property with an original cost of more than $5,000 and outlays for real property in excess of$250,000 are considered capital assets.Generally, the cost of all capital assets other than land, certain inexhaustible improvements to land, andcollections of works of art are assigned to expense over a set of useful lives specific to the type of asset, usinga straight-line method of depreciation. The range of useful lives used for the major categories of capitalassets is:Infrastructure and land improvements 20 -25 yearsBuildings and improvements 20 -40 yearsContents 3 -15 yearsDepreciation expense is assigned to program expense based on the nature and use of the capital asset.Deferred Outflows/Inflows of Resources -In adition to assets, the statement of financial position wilsometimes report a separate section for deferred outflows of resources. This separate financial statementelement, deferred outflows of resource, represents a consumption of net position that applies to a futherperiod(s) and will not be recognized as an outflow of resources (expense/expenditure) until then.In addition to liabilities, the statement of financial position will sometimes report a separate section for deferredinflows of resources. This separate financial statement element, deferred inflows of resources, represents anacquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources(revenue) until that time.Reclassifications -Certain amounts for the year ended June 30, 2012, have been reclassified to conformwith the presentation for the year ended June 30, 2013.Pending change in accounting principles -In March 2012, the GASB issued GASB Statement #65, ItemsPreviously Reported as Assets and Liabilities. GASB Statement #65 establishes accounting and financialreporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certainitems that were previously reported as assets and liabilities and recognizes, as outflows of resources orinflows of resources, certain items that were previously reported as assets and liabilities. The provisions ofthis Statement are effective for financial periods beginning after December 15, 2012.In March 2012, the GASB also issued GASB Statement #66, Technical Corrections-2012-an amendment ofGASB Statements No. 10 and No. 62, which resolves conflicting guidance that resulted from the issuance oftwo pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions,and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30,1989 FASB and AICPA Pronouncements.21 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012The provisions of GASB Statement #66 are effective for financial periods beginning after December 15, 2012.In June 2012, GASB Statement #67, Financial Reporting for Pension Plan-an amendment of GASBStatement No. 25 was issued. This Statement establishes accounting and financial reporting requirementsrelated to pensions. The provisions related to this Statement are effective for financial periods beginning afterJune 15, 2013.In June 2012, GASB Statement #68, Accounting and Financial Reporting for Pensions-an amendment ofGASB Statement No. 27 was issued, providing new financial accounting recognition and presentationguidance relating to pension obligations in employer financial statements. Theprovisions of GASB Statement #68 are effective for financial periods beginning after June 15, 2014 and areexpected to have a significant impact on the System's financial statements.In January 2013, GASB Statement #69, Government Combinations and Disposals of Government Operationswas issued. This Statement requires disclosures to be made about government combinantions and disposalsof operations. The provisions of this Statement are effective for financial periods beginning after December15, 2013.In April 2013, GASB Statement #70, Accounting and Financial Reporting for Nonexchange FinancialGuarantees was issued. The objective of this Statement is to improve accounting and financial reporting bystate and local governments that extend and receive nonexchange financial guarantees. This provisions ofthis Statement are effective for financial statements for reporting beginning after June 15, 2013.The System is in the process of assessing the impact of these new accounting standards and will present itsfinancial statements for the year ended June 30, 2014, taking into account the requirements of GASBStatement #65, #66, #67 and #70 and will present its financial statements for the year ending June 30, 2015,taking into account the requirements of GASB Statement #68 and #69.3. CASH AND INVESTMENTSCash and cash equivalentsAs of June 30, unrestricted cash and cash equivalents consisted of the following:Cash and short-term investments on deposit with theState TreasurerDemand and time depositsTotal2013 2012$1,776,421,823 $1,607,903,10343,968,706 45,786,522$1,820,390,529 $1,653,689,625The System does not have a formal policy addressing custodial credit risk.22 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012As of June 30, 2013 and 2012, the carrying amount of the System's demand and time deposits was$43,968,706 and $45,786,522, as compared to bank balances of $48,125,276 and $47,408,129, respectively.The difference is primarily caused by items in-transit. Of the bank balances, $41,580,724 and $41,508,593was covered by Federal, private or foreign national government depository insurance, or was collateralized bya pledge of United States Treasury obligations held by the System's agents in the name of the System, and$6,544,552 and $5,899,536 was uninsured and uncollateralized as of June 30, 2013 and 2012, respectively.The Annotated Code of Maryland requires the System to maintain its cash balances on deposit with the StateTreasurer, except for demand and time deposit accounts established to satisfy urgent cash requirements,assets associated with endowment funds or proceeds of System financing arrangements. The StateTreasurer maintains State funds on a pooled basis in accordance with the Annotated Code of Maryland.Money market accounts used for unrestricted cash and cash equivalents are not rated by rating agencies.The System has entered into agreements with trustees for the benefit and security of registered holders ofcertain debt obligations issued by the System. These agreements permit the System to invest amountsmaintained in trust funds in:" United States Treasury and agency obligations.* Deposits, having a maturity of no more than 365 days, in any bank, savings institution or trust company tothe extent such deposits are fully insured or collateralized." Commercial paper rated at least A-1 by Standard & Poor's Corporation (Standard & Poor's) and P-1 byMoody's Investors Service, Inc. (Moody's) having a maturity of no more than 270 days." Repurchase agreements." Obligations of any state or political subdivision rated by Standard & Poor's and Moody's in one of its twohighest rating categories." Corporate obligations rated AAA by Standard & Poor's and Aaa by Moody's.As of June 30, restricted cash and cash equivalents included:Money market accounts -endowment fund uninvested cashMoney market accounts -unspent proceeds of debtTotal2013 2012$48,147 $52,28051,342,842 75,621,339$51,390,989 $75,673,61923 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Unspent proceeds and other restricted debt-related trust account balances and endowment fund uninvestedcash balances are maintained in money market accounts rated AAA or equivalent by rating agencies.InvestmentsIn July 2005, the System transferred title to its endowment investments, approximately $197 million in fairmarket value at the time of the transfer, to the University System of Maryland Foundation, Inc., (USMF) inexchange for an equivalent proportionate interest in the long-term investment portfolio managed by theUniversity System of Maryland Foundation, Inc.In June 2011, the System entered into a new agreement with the USMF. Beginning with fiscal year 2012, theper annum fee to be paid to the USMF for investment management services is to be 0.37% of the beginning ofthe year market value of managed funds. The agreement is for a term of five years, with renewable two-yearextensions at the option of the System, unless notice of intent to terminate the arrangement is provided within180 days prior to the expiration of the term. In the event of termination of the arrangement, funds investedwith individual investment managers that have commitments from the University System of MarylandFoundation, Inc., to maintain investments for certain minimum time periods may not be returned to the Systemuntil those constraints have been satisfied.Investments in the University System of Maryland Foundation, Inc. are accounted for as an open-endedmutual fund. Asset values, investment gains and losses, and other portfolio-wide transactions are allocatedbased on the number of units or shares that each fund has relative to the total number of shares or units.Assets associated with the System's investments are reported as Endowment Investments on the BalanceSheet of the University System of Maryland, and Investments on the Balance Sheet of the University Systemof Maryland Foundation, Inc., with a corresponding liability reflecting the fair value of the System's interest inthe investment portfolio.The System discloses investment risks, below.Interest rate riskInterest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.The System has no formal investment policy that limits investment maturities as a means of managing itsexposure to fair value losses arising from increasing interest rates.Custodial credit riskFor an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, theSystem would not be able to recover the value of its investments or collateral securities that are24 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012in the possession of an outside party. Investment securities are exposed to custodial risk if the securities areuninsured, are not registered in the name of the System, and are held by either (a) the counterparty or (b) thecounterparty's trust department or agent but not in the System's name.Endowment investments managed by the University System of Maryland Foundation, Inc. are uninsured andare not registered in the name of the System, as they are a part of a commingled portfolio comprisingproportionate interests of several different entities.None of the System's restricted investments are exposed to custodial credit risk.Credit riskCredit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. TheSystem is exposed to credit risk on its Endowment investments managed by the University System ofMaryland Foundation, Inc.As of June 30, 2012, commercial paper included in restricted investments held by the System is rated P-1 byMoody's and A-1 or better by Standard & Poor's. As of June 30, 2013, the System does not have restrictedinvestments.Foreign currency riskForeign currency risk is the risk that changes in exchange rates will adversely affect the fair value of aninvestment.The System is not exposed to any material amount of foreign currency risk.As of June 30, 2013, the System did not have any restricted investments. As of June 30, 2012, the Systemhad the following investments, which individually represent 5% or more of total investments:2012Portion ofFair value totalFederal Home Loan Bank $12,310,738 6%25 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Endowment investmentsAs of June 30, endowment investments consisted of the following, stated at fair value:Corporate debtCorporate equitiesCertificate of depositsAssets invested with University System ofMaryland Foundation, Inc.Total2013 2012$17,625 $17,62583,229 68,31022,536 21,895192,797,232 190,171,891$192,920,622 $190,279,721As of June 30, the balances of the fund groups making up the Endowment were as follows:Pure endowmentsFunds functioning as endowmentsTerm endowmentsTotal2013 2012$128,566,255 $124,854,90963,511,672 62,405,1233,502,470 3,019,689$195,580,397 $190,279,721Endowment fund balances includes $2,659,775 held with the State Treasurer as of June 30, 2013.Assets associated with endowment funds are invested in accordance with the terms of donor agreements inthose instances where such agreements place constraints on allowable investments.A spending rule has been adopted by the Board to ensure that endowment funds retain a consistent level ofpurchasing power over time. The spending rule provides for a target rate of spending of 4.75% of a rollingtwelve-quarter average market value of the endowment fund. The spending rule is reviewed periodically bythe Finance Committee of the Board. Net appreciation on investments of the pure endowment funds totaled$92,262,195 and $91,156,471 as of June 30, 2013 and 2012, respectively. Reinvestments of net appreciationare considered to be subject to donor spending restrictions, and accordingly, are reflected as a component ofrestricted, expendable net assets.The Maryland Uniform Prudent Management of Institutional Funds Act governs the use of net appreciation,both realized and unrealized, of endowment investments. This law allows a governing board to appropriate forexpenditure only those amounts in excess of the historic gift amount that are prudent, taking into considerationlong and short term needs of the institution in carrying out its educational, religious, charitable, or othereleemosynary purposes, its present and anticipated financial requirements, expected total return on itsinvestments, price level trends, and general economic conditions.26 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Other investmentsOther investments include a partnership interest in a real estate partnership formed to facilitate the long-termdevelopment of a parcel of land owned by the University of Maryland College Park. The carrying value ofother investments is assessed on an annual basis by reference to the reported value of the University'spartnership interest.Restricted investmentsRestricted investments represent unspent proceeds and other debt-related trust account balances invested inU.S. government and agency obligations. As of June 30, 2013, the System held no restricted investments.As of June 30, 2012, restricted investments consisted of:Fair valueU.S. government and agency obligations $15,875,4Commercial Paper 5,999,8Total $21,875,3Investment maturities-less than 1 yearInvestmentmaturities-1 year and greater438 $15,875,438380 $5,999,880318 $5,999,880 $15,875,438Allocation of investment incomeInvestment income is assigned to the accounting funds, including endowments, in proportions associated withinvestments held by the various accounting funds. For the years ended June 30, 2013 and 2012, investmentincome attributed to unrestricted funds and restricted funds was:Unrestricted fundsRestricted fundsTotal investment income2013 2012$23,634,631 $21,850,80710,060,413 1,022,932$33,695,044 $22,873,73927 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Major component unitsThe University System of Maryland Foundation, Inc. invests funds on behalf of the System and several otherSystem component units. The majority of the amounts reported as investments by the University of MarylandCollege Park Foundation, Inc., and the University of Maryland Baltimore Foundation, Inc. are included in theinvestments reported by the University System of Maryland Foundation, Inc.As of June 30, 2013 and 2012, major component unit investments, recorded at fair value, were:University System of Maryland Foundation, Inc.Money market funds and short-term investmentsCorporate and municipal bondsEquities and mutual fundsU.S. treasury notes and bondsU.S. agenciesCollateral mortgage obligations and asset andmortgage-backed securitiesAbsolute returnLong and short equity hedge fundsPrivate capitalReal estate and energy and natural resourcesTotalDue to other foundationsTotal InvestmentsDue to primary governmentTotal University System of Maryland FoundationInvestments2013 2012$137,069,000 $74,849,00021,468,000 40,024,000113,637,000 90,791,0003,579,000 7,085,0001,313,000 6,689,0008,511,000 22,483,000227,626,000 212,552,000237,119,000 208,686,00099,257,000 107,827,000145,087,000 170,824,000994,666,000 941,810,000(484,963,000) (446,503,000)509,703,000 495,307,000(192,797,232) (190,171,891)$316,905,768 $305,135,10928 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012University of Maryland College Park Foundation, Inc.Short-term investmentsCash equivalents and short term securitiesMutual fundsBondsMaryland Proton Treatment Center, LLCInvestments in special strategies -USMFTotalDue to other foundationsTotal InvestmentsUniversity of Maryland Baltimore Foundation, Inc.Cash equivalents and short term securitiesCommonfundLanx stockInvestments in special strategies -USMFTotal Investments2013$16,075,094436,1434,940,2825,801,0001,000,000271,928,394300,180,913(2,085,831)$298.095,0822012$15,793,686493,3784,719,253901,000249,360,613271,267,930(2,380,350)$268.887,5802013$6,249,3771,901,9201,630,682172,042,990$181,824,9692012$6,783,8241,588,7951,490,781157,040,582$166,903,9824. ACCOUNTS RECEIVABLE, NOTES RECEIVABLE, AND ACCOUNTS PAYABLE AND ACCRUEDLIABILITIESAccounts receivable as of June 30, 2013 and 2012, were comprised of:Tuition and feesContracts and grantsOtherSubtotalAllowance for doubtful accountsAccounts receivable, net2013$82,420,092174,552,56530,489,588287,462,245(18,606,429)$268,855,8162012$75,506,944207,842,78926,299,286309,649,019(27,281,575)$282,367,44429 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Notes receivable as of June 30, 2013 and 2012, were comprised of:2013Student loans $72,454,072Business development loans 7,282,988Subtotal 79,737,060Allowance for doubtful notes (13,441,437)Notes receivable, net $66,295,623Accounts payable and accrued liabilities as of June 30, 2013 and 2012, were comprised of:20132012$74,167,6916,948,84781,116,538(12,888,994)$68,227,5442012Payroll and benefits $139,109,528 $122,652,668Suppliers and contractors 131,825,184 115,265,145Accrued interest payable 10,822,665 10,847,516Other 28,861,874 23,757,550Accounts payable and accrued liabilities $310,619,251 $272,522,879Major component unitsAccounts receivable include unconditional promises of contributions pledged to the affiliated foundations.Promised contributions are recorded at a discounted value that reflects the time value of money.As of June 30, 2013 and 2012, contributions receivable are due as follows:University System of Maryland Foundation, Inc.Due Discount rates 2013 2012Within one yearOne to five yearsMore than five yearsNot applicable3.25%3.25%$3,972,0004,485,0004,000$5,091,0001,898,000200,000SubtotalPledge discountNet contributions receivable8,461,000 7,189,000(502,000) (331,000)$7,959,000 $6,858,00030 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012University of Maryland, College Park Foundation, Inc.DueDiscount rates20132012Within one yearTwo to five yearsMore than five yearsSubtotalAllowance for doubtful accountsPledge discountNet contributions receivableNot applicable2.19%3.25%$31,069,38126,982,8774,415,424$41,180,86832,149,7247,371,16462,467,682 80,701,756(7,082,876) (8,902,869)(2,231,826) (3,372,575)$53,152,980 $68,426,312University of Maryland, Baltimore Foundation, Inc.DueDiscount rates20132012Within one yearTwo to five yearsMore than five yearsNot applicable1.94%2.59%$15,336,11717,209,79764,200$12,694,16913,483,280289,054SubtotalAllowance for doubtful accountsPledge discountNet contributions receivable32,610,114 26,466,503(1,332,686) (1,106,397)(1,410,902) (1,361,728)$29,866,526 $23,998,37831 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 20125. CHANGES IN NET CAPITAL ASSETSChanges in net capital assets for the years ended June 30, 2013 and 2012:June 30, 2011 June 30, 2012 June 30, 2013Balance Additions Decreases Balance Additions Decreases BalanceCapital assets being depreciated:Infrastructure & Land Improvements $318,881,776 $12,056,846 $330,938,622 $20,785,712 $351,724,334Buildings & Improvements 4,937,142,980 895,795,711 $11,397,720 5,821,540,971 201,656,419 $1,920,602 6,021,276,788Contents 1.136,244,493 104,196,112 25,811,450 1.214.629,155 78,091,858 27,689,956 1,265.031,057Buildings recorded under capital lease agreements 14,629,140 14,629,140 14,629,140Total capital assets being depreciated 6,406,898,389 1,012,048,669 37,209,170 7,381,737,888 300,533,989 29,610,558 7,652,661,319Less accumulated depreciation for:Infrastructure & Land ImprovementsBuildings & ImprovementsContentsBuildings recorded under capital lease agreementsTotal accumulated depreciationTotal capital assets being depreciated, netCapital assets not being depreciated:LandContentsConstruction in progressTotal capital assets not being depreciatedCapital assets, net151,423,099 13,421,017 164,844,116 13,841,735 178,685,8511,816,810,126 164.967,960 8.580,473 1,973,197,613 167,806,191 707,089 2,140,296,715792,015,505 81.830,307 23.942,308 849,903,504 81,758,709 25,901,791 905,760,4222,895,375 137,875 3,033,250 1,187,179 4,220,4292,763,144.105 260,357,159 32,522,781 2,990,978,483 264,593,814 26,608,880 3,228,963,4173,643,754,284 751,691,510 4,686,389 4,390,759,405 35,940,175 3,001,678 4,423,697,902136,295,375 6.704,227 142,999,602 10,142,726 153,142,32822,504.959 184,337 22,689,296 2,734,181 25,602 25,397,875526,813,487 354.038,439 423,628,400 457,223,526 415,553,707 201,667,158 671,110,075685,613,821 360.927,003 423,628,400 622,912.424 428,430,614 201,692,760 849,650,278$4,329,368,105 $1,112,618,513 $428,314,789 $5,013,671,829 $464,370,789 $204,694,438 $5,273,348,180Interest expense of $966,298 and $239,973 associated with projects not yet completed was capitalized and recorded asconstruction in progress during the years ended June 30, 2013, and 2012 respectively.32 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 20126. SERVICE CONCESSION ARRANGEMENTS FOR STUDENT HOUSINGThe System implemented GASB Statement #60 'Accounting and Financial Reporting for Service ConcessionArrangements' as of July 1, 2011 and has restated balances for June 30, 2012 as appropriate.The University System of Maryland has entered into long-term leases of university-owned land, and otheragreements with a quasi-governmental issuer of debt, developer to build, and an operator to manage, studenthousing projects at seven of the System's institutions. These agreements satisfy the criteria established to beconsidered service concession arrangements (SCAs).Under the terms of the ground leases, the System transfers rights to university-owned property for a term of 40years to the quasi-governmental issuer of debt (the 'project owner'). The project owner contracts with adeveloper to build student housing on the property, as well as an operator that manages the facility on behalf ofthe owner. Each student housing project is financed using tax-exempt debt that limits the use of the project touses that support the institution. The owner of the project charges and collects rent from the students, andpays the operating costs and debt service associated with the project. The residual cash flow from the project,after paying all operating costs and management fees, is paid to the university as the ground lease payment.The institution has the ability to approve what services the operator is required to provide and the rates that canbe charged.Upon final payment of the outstanding debt associated with the project, or upon termination of the groundlease, whichever is sooner, the ownership of the project transfers to the university and the owner's rights to usethe land reverts to the university.As of June 30, the following balances associated with service concession agreements are reflected on theBalance Sheet:2013 2012Capital assets, net $389,641,837 $441,994,338Deferred service concession arrangement receipts 380,711,678 432,401,05433 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 20127. REVENUE BONDS AND NOTES PAYABLEThe System finances the construction, renovation and acquisition of certain facilities and equipment throughthe issuance of debt obligations. State law limits the aggregate principal amount of debt outstanding and thepresent value of future minimum lease payments on capital lease obligations for real property to no more than$1,400,000,000.Revenue bonds and notes payable consisted of the following as of June 30, 2013 and 2012:Revenue Bonds, netRevolving Loan Program BondsCertificates of ParticipationOtherRevenue bonds and notes payable, net2013 2012$1,108,158,762 $1,061,819,44235,000,000 50,000,0002,800,00040,209,544 41,973,756$1,183,368,306 $1,156,593,198Auxiliary Facility and Tuition Revenue BondsAs of June 30, 2013, Auxiliary Facility and Tuition Revenue Bonds (Revenue Bonds) consisted of the following:PrincipalOutstandingInterest RatesMaturity Dates2003 Series A & B2004 Series A & B2005 Series A2006 Series A2007 Refunding Series A2008 Series A2008 Refunding Series B2009 Series A & B2009 Refunding Series C2009 Refunding Series D2010 Series A & B2010 Series C2010 Series D & E2011 Series A2011 Refunding Series B2012 Refunding Series A & B2012 Series C & D4.0% -5.0%4.5% -5.7%4.0% -5.0%5.0%4.0% -5.0%4.0%-5.0%3.5% -4.0%4.0%-6.0%2.5% -4.0%3.0% -4.0%2.5% -5.4%2.0% -4.0%3.0% -5.8%3.0% -5.0%3.0% -5.0%2.0%-4.0%2.0% -5.0%2014-20162014-20162014-20212013-20172013-20232014-20282013-20172014-20292013-20192013-20222014-20302014-20232014-20302014-20312015-20242014-20242014-2032$11,785,0003,165,00089,535,00017,780,00075,345,00074,855,00011,190,00085,480,00018,380,00051,510,000106,750,00044,775,000106,110,000107,225,00038,075,00059,500,000167,270,0001,068,730,000Unamortized discounts, premiums and refunding adjustments 39,428,762Revenue bonds, net$1,108,158,76234 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Revenue Bonds have been issued pursuant to an Indenture of Trust, an agreement entered into with a trusteefor the benefit of holders of Revenue Bonds. Pursuant to the Indenture of Trust, the System has agreed tocharge and collect tuition revenues and net auxiliary facility fees in an amount that is not less than 200% of themaximum annual debt service on Revenue Bonds.Revenue Bonds issued during the years ended June 30, 2013 and 2012, including the results of any advancerefunding of previously-issued debt, are as follows:ReductionPar value of in future Deferred EconomicDate of Par value of Premium on debt debt amount on gain orDebt issuance issue debt issued issuance refunded service refunding (loss)2011 Series A 10/6/2011 $115,000,000 $11,216,4622011 Refunding Series B 10/6/2011 38,075,000 3,641,915 $38,750,000 $1,631,266 $1,043,816 $1,357,4942012 Refunding Series A & B 2/9/2012 70,825,000 4,419,184 69,735,000 9,560,388 5,116,958 9,054,4112012 Series C 10/6/2012 115,000,000 6,582,5872012 Refunding Series D 10/6/2012 54,005,000 10,820,564 55,420,000 6,335,509 7,471,867 5,281,851The System has issued series of revenue bonds that qualify for participation in the Build America Bondsprogram, a provision of the American Recovery and Reinvestment Act of 2009. The provisions of the BuildAmerica Bonds provide that the Federal government will reimburse issuers of Build America Bonds an amountequal to 35% of the interest payments made to bondholders. The 2009 Series B, the 2010 Series B, and 2010Series E bonds have been issued to comply with the requirements of the Build America Bonds program, theSystem has been receiving the interest payment reimbursements from the Federal government, and theSystem expects that these bonds will continue to qualify under the program in the future. The interestamounts reflected in the future principal and interest payments schedule on the following page reflect theSystem's obligations to bondholders, and have not been reduced for any expectation of interest reimbursementfrom the Federal government under the Build America Bonds program.As of June 30, 2013, previously issued debt removed from the System's financial statements through advancerefunding transactions still outstanding was $113,880,000.As of June 30, 2013 and 2012, cash and cash equivalents and investments restricted by the terms of theIndenture of Trust totaled $34,925,663 and $65,202,153, respectively.35 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Revolving Loan Program BondsRevolving Loan Program Bonds include debt issued pursuant to an Indenture of Trust, an agreement enteredinto with a trustee for the benefit of holders of the debt, dated April 1, 1995.On August 8, 2003, the System issued $65,000,000 of University System of Maryland Revolving LoanProgram Bonds, 2003 Series A. The 2003 Series A Bonds were initially issued as auction rate resetsecurities, meaning interest is calculated on outstanding Revolving Loan Program Bonds using a rate ofinterest determined through a weekly auction process. In April, 2008, the System purchased $15,000,000 ofthe auction rate reset securities in response to failed auctions that were occurring for most issuers of auctionrate reset securities as a result of the collapse of the credit insurance market. On June 26, 2008, the 2003Series A Bonds in a principal amount of $50,000,000 were converted from an auction rate mode to aMultiannual Rate. On June 1, 2009, the 2003 Series A Bonds were remarketed for another one year period ona multi-annual interest rate basis at an interest rate of .55%. On June 1, 2010, the securities weresuccessfully remarketed on a multi-annual interest rate basis at an interest rate of 1.50%. On June 1, 2013the System redeemed $15,000,000 of the 2003 Series A Bonds. The remaining principal balance of$35,000,000 of the 2003 Series A Bonds was remarketed for five years at a multi-annual interest rate of1.25%.As of June 30, 2013 and 2012, cash and cash equivalents in the amount of $16,415,499 and $30,145,543,respectively, was held by the trustee as unspent proceeds of the Revolving Loan Program Bonds.OtherOther debt and notes payable includes amounts borrowed to finance facilities, equipment acquisitions, amarine research vessel and other improvements designed to enhance energy efficiency savings.The System is subject to Federal arbitrage laws governing the use of proceeds of tax-exempt debt.36 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Future principal and interest payments as of June 30, 2013, were as follows:Auxiliary Facility and TuitionRevenue BondsNotes Payable and OtherLong-term DebtTotalPaymentsYears ending June 30,PrincipalInterestPrincipalInterest201420152016201720182019-20232024 -20282029- 2033Total8. LEASES$72,335,00075,880,00079,595,00078,565,00077,465,000351,255,000240,640,00092,995,000$46,607,13543,638,93440,273,02836,662,18433,247,646117,234,33051,999,0247,511,315$6,715,1515,565,7215,061,7823,943,7912,907,02537,956,51713,059,557$1,209,9891,109,141999,926896,0151,211,2535,950,11073,445$126,867,275126,193,796125,929,736120,066,990114,830,924512,395,957305,772,026100,506,315$1,068,730,000 $377,173,596 $75,209,544 $11,449,879 $1,532,563,019Obligations under capital lease agreementsThe System leases two facilities for the use of the University of Maryland College Park and Towson Universityunder agreements recorded as capital lease obligations. The obligations are recorded at the present value offuture minimum lease payments using a discount rate of 6.8% and 3.2%, for the University of MarylandCollege Park and the Towson University leases, respectively,Future minimum payments on obligations under capital lease agreements as of June 30, 2013, were asfollows:Years ending June 30,Total201420152016201720182019-2023Total future lease paymentsLess: Interest componentObligations under capital lease agreements$1,602,9381,635,6671,669,3771,704,0991,739,8626,571,05114,922,994(2,512,946)$12,410,04837 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Operating leasesThe System and its constituent units lease facilities and equipment under agreements reported as operatingleases. Many of the leases provide for an optional extension of the terms of the agreements and increases inpayment amounts based on changes in indices such as the Consumer Price Index.Future minimum payments on operating leases as of June 30, 2013, were as follows:Minimum AnnualLease PaymentsYear endina June 30.201420152016201720182019-20232024- 2028Total$15,993,77914,296,12312,802,73511,524,0769,847,53825,935,7087,521,791$97,921,750Operating lease expenditures for the years ended June 30, 2013 and 2012, were $21,312,289 and$20,548,836, respectively.38 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 20129. CHANGES IN LONG-TERM LIABILITIESChanges in long-term liabilities for the years ended June 30, 2013 and 2012, were as follows:June 30, 2011 June 30, 2012Balance Additions Reductions Balance AdditAccrued vacation costs $175,138,867 $88,799,014 $88,134,760 $175,803,121 $96,:Accrued workers' compensation 27,543,235 6,548,800 5,457,035 28,635,000 4,Revenue bonds and notes payahle, net 1.115,178,914 241,422,893 200,008.409 1.158,593,198 193,Obligations under capital lease agreements 14,043,089 277,430 13,765,659Total long-term liabilities $1,331,904,105 $336,770,507 $293,877,634 $1,374,796,978 $294,110. OPERATING EXPENSES BY OBJECTThe System reports operating expenses in the Statement of Revenues, Expenses and Changes in Net Assets by program category.Operating espenses for the years ended June 30. 2013 and 2012, by grouping of object classification were as follows:June 30, 2013 Due Withinions Reductions Balance One Year306,968 $88,829,027 $183,281,062 $89,344,370717,821 5,121,821 28,231,000 4.375.805870.546 167,095,438 1,183,368,306 79.050,1511,355,611 12,410,048 1,104,394895,335 $262,401,897 $1,407,290,416 $173,874,72020132012InstructionResearchPublic serviceAcademic suppedtStudent servicesInstitutional supportOperation and maintenance of plantScholarships and fellowshipsAusiliary enterprises:Residential facilitiesDining facilitiesIntercollegiate athleticsBookstoresParking facilitiesOther ausitiary enterprisesHospitalTotalPayments to Payments toSuppliers, Suppliers,Contractors and Contractors andEmployee Costs Others Depreciation Total Employee Costs Others Depreciation Total$981,476,896 $117,432,872 $41,003,571 $1,139,913,339 $949,147,627 $110,976,841 $40,975,305 $1,101,099,773571,677,511 335,3115:557 24,965,883 931,958,951 563,727,321 335,594,368 23,552,381 922,874,07090,866,256 58,539,149 3,591,076 152,996,481 90,877,000 63,533,565 3,143,689 157.554,254264,425,951 107,041,343 40,146,289 411,613,583 244,320,030 100,362,037 35,505,197 380,187,264124,003,082 69,945,387 4,476,479 198,424,948 120,770,559 67,046.782 4,468,642 192.285,983307,987,872 64,064,896 14,523,183 386,575,951 299,210,371 47,332.550 17,735,504 384,278,425121,042,648 127,310,105 50,435,694 298,788,447 118,013,481 144,626,701 54,247,254 316,887,4366,258,529 94,700,971 100,959,500 7,114,171 83,396,333 90,510,50442,962,533 51,832,827 41,412,820 136,208.180 40,972,342 42,435,195 36,338,987 119,746,52433,208,173 67,815,519 4,819,588 105,843,280 32,481,671 86,962,570 5,442,746 104,886,98749,074,429 34,045,693 6,817,063 89,937,185 50,352,141 35,635,872 8,836,563 94,824,5764,646,578 22,620,424 85,051 27,352,051 4,411,332 22,140,895 289,379 26,841,60611,145,074 9,010,235 5,187,204 25,342,513 10,736,068 10,277,434 4,928,516 25,942.01851,069,489 38,058,879 27,111,876 114,240,224 49,990,541 33,434,488 24,876,804 108,301,833171,466,606 1,699,619 18,037 173,184,282 153,830,954 1,358,684 18.192 155,205,830$2.831,311,605 $1,197,433,476 $264,593,814 $4,293,338,895 $2,735,955,609 $1,165,114,315 $260,357,159 $4,161,427,08339 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 201210. RETIREMENT AND PENSION PLANSMost System employees participate in the State Retirement and Pension System of Maryland (the StateSystem), which is an agent, multiple-employer public employee retirement system. While the State System isan agent, multiple-employer public employee retirement system, the System accounts for the plan as a cost-sharing multiple-employer public employee retirement system, as a separate valuation is not performed for theSystem, and the only obligation to the plan is its required annual contributions.The State System includes four pension and retirement plans that System employees participate in:Teachers Retirement SystemsTeachers Pension SystemsEmployees Retirement SystemsEmployees Pension SystemsThe State System prepares a Comprehensive Annual Financial Report, which can be obtained from the StateRetirement and Pension System at 120 East Baltimore Street, Suite 1600, Baltimore, MD 21202.System employees may alternatively elect to participate in an optional retirement program.State SystemsPlan DescriptionThe State System are defined benefit plans with unfunded accrued actuarial liabilities. The State System,which is administered in accordance with the State Personnel and Pensions Article of the Annotated Code ofMaryland, is managed by a Board of Trustees, and included in the State of Maryland financial reporting entity.All plan benefits are specified by the State Personnel and Pensions Article of the Annotated Code of Maryland.Retirement allowances are computed using both the highest three years' average final salary (AFS) and theactual number of years of accumulated creditable service. Pension allowances are computed using both thehighest three consecutive years' AFS and the actual number of years of accumulated creditable service.Various retirement options are available under each system which ultimately determines how a retiree's benefitallowance will be computed. Some of these options require actuarial reductions based on the retiree's and/ordesignated beneficiary's attained age and similar actuarial factors.40 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012Funding PolicyThe System's required contributions are based upon actuarial valuations. Effective July 1, 1980, inaccordance with the law governing the State System, all benefits of the State System are funded in advance.The aggregate entry age normal cost method is the actuarial cost method used.Both the System and covered employees are required by State statute to contribute to the State System. Thecontribution from the employees is 5% for participants in the State System retirement plans (with a 5% limit onthe annual cost of living allowance and 7% for those who elect a limit on the cost of living allowancecommensurate with the Consumer Price Index); and 2% for participants in the State System pension plans.Contributions are deducted from participant's salary and wage payments and are remitted to the State Systemon a regular, periodic basis.The System made its required contributions during the years ended June 30, 2013, 2012, and 2011 of$84,938,801, $73,660,374, and $74,127,461, respectively.Optional Retirement ProgramSome employees participate in the optional retirement programs, which are defined contribution moneypurchase plans funded currently each year and invested in specific funds offered by one of three vendors. Indefined contribution plans, benefits depend solely on amounts contributed plus investment earnings. Qualifiedemployees are eligible to participate from the date of employment.State legislation provides that the System contribute 7.25% of covered employees' annual salaries eachmonth. The System's contribution along with that of the employee is immediately and fully vested.The contributions for the year ended June 30, 2013 were $133,171,956, which consisted of $66,763,426 fromthe System and $66,408,530 from employees. The contributions for the year ended June 30, 2012 were$131,559,709, which consisted of $64,287,486 from the System and $67,272,223 from employees.Major component unitsThe University System of Maryland Foundation, Inc. maintains a defined contribution plan for certain personnelprovided by TIAA-CREF. The University System of Maryland Foundation, Inc. contributes 7.25% of theemployee's compensation to the plan. In addition, eligible employees are entitled to make voluntarycontributions to the plan. Total pension expense for the years ended June 30, 2013 and 2012 wasapproximately $212,000 and $141,000, respectively.41 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 201211. OTHER POSTEMPLOYMENT BENEFITSMembers of the State Retirement and Pension System of Maryland (the State System) and their dependentsare provided postemployment health care benefits through the State Employee and Retiree Health andWelfare Benefits Program (the Plan). The Plan is a cost sharing defined benefit healthcare plan establishedby the State Personnel and Pensions Article, Section 2-501 through 2-516 of the Annotated Code of Maryland.The Plan is self-insured to provide medical, hospitalization, prescription drug and dental insurance benefits toeligible state employees, retirees, and their dependents. The State does not distinguish employees byemployer/State agency. Instead, the State allocates the postemployment health care costs to all participatingemployers.Financial information for the Plan is included in the State of Maryland Comprehensive Annual FinancialReport, which can be obtained from the Comptroller of Maryland, Louis L. Goldstein Treasury Building,Annapolis, MD 21404.A separate actuarial valuation is not performed by the System. The System's only obligation to the Plan is itsrequired annual contribution, which it has fully funded during the years ended June 30, 2013 and 2012. Theamounts contributed for the years ended June 30, 2013 and 2012, were $75,416,841 and $63,367,379,respectively.12. CONSTRUCTION COMMITMENTSThe estimated costs to complete construction in progress as of June 30, 2013 is $359,034,094, of which$80,800,885 is to be funded from Revenue Bond proceeds, $208,723,571 is to be derived from Stateappropriations and grants, and $69,509,638 to be provided from System funds.13. CONTINGENT LIABILITIESThe System has entered into future purchase commitments for natural gas and electricity, as a means ofhedging its risk against fluctuations in price of an important fuel commodity and electricity supplies. As of June30, 2013, the System had entered into open contracts for the purchase of $2,201,024, of natural gas to bedelivered monthly through June 2015. Future purchase commitments for electricity to be supplied throughDecember 2014 totaled $1,539,480 as of June 30, 2013. The System and its institutions generally takedelivery of the natural gas and electricity purchased through future purchase contracts.The System is involved in a number of legal actions that arise in the normal course of its operations. In theopinion of management, based on the advice of the State Attorney General, such actions, as well as anyexposure to unasserted claims, will not have a material adverse effect on the System's financial position.42 UNIVERSITY SYSTEM OF MARYLANDNOTES TO FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013 AND 2012The Atlantic Coast Conference (the ACC), an intercollegiate sports association, has filed a request for adeclaratory judgement asserting that the University of Maryland College Park will owe the ACC a withdrawalfee of more than $52 million associated with the University's announced intention to begin participation in theBig Ten Conference beginning July 1, 2014. The University disputes the claim, and at this point, cannotreasonably conclude that the ACC will prevail in its claim, or estimate any potential liability that might resultwere the ACC to prevail.15. RISK MANAGEMENTThe System participates in State-wide self-insurance programs for many forms of risk of loss, includinggeneral liability, property and casualty, workers' compensation, environmental and anti-trust liabilities, as wellas certain employee health benefit programs.The System remits premiums to the State, to cover costs of claims servicing and claims payments. Thepremiums are based on a percentage of annual payroll or are based on average loss experience, taking intoaccount recent trends in actual claims experience, and providing for catastrophic losses.The System records a liability when it is probable that a loss has been incurred and the amount of that losscan be reasonably estimated. Liabilities recorded include a provision for claims incurred but not reported.Because actual claims liabilities depend on such complex factors such as inflation, changes in legal doctrines,and damage awards, actual claims could differ from estimates. Claims liabilities are re-evaluated periodicallyto take into consideration recently settled claims, the frequency of claims and other economic and socialfactors. Liabilities for incurred workers' compensation losses to be settled by fixed or reasonably determinablepayments over a long period of time are reported at their present value using a 4% discount rate. Theprovision for workers' compensation is based upon a separately determined actuarial valuation for the fiscalyears ended June 30, 2013 and 2012. Settlement amounts have not exceeded insurance coverage levels forthe years ended June 30, 2013, 2012, or 2011.As of June 30, 2013 and 2012, the System has recorded $28,231,000 and $28,635,000 in liabilities associatedwith workers' compensation, respectively.43 UNIVERSITY OF MARYLAND, COLLEGE PARKBALANCE SHEETJUNE 30, 2013 AND 2012June 30.2013 2012Component ComponentInstitution Units institution UnitsASSETSCurrent assets:Cash and cash equivalentsAccounts receivable, netNotes receivable, current portionInventoriesPrepaid expenses, deferred charges and other assetsInter-institutional balancesTotal current assetsNoncurrent assets:Restricted cash and cash equivalentsAccounts receivable, netEndowment investmentsOther investmentsNotes receivable, netOther assetsCapital assets, netTotal noncurrent assetsTotal assetsLIABILITIESCurrent liabilities:Accounts payable and accrued liabilitiesAccrued workers' compensation, current portionAccrued vacation costs, current portionRevenue bonds and notes payable, current portionDeferred revenueCurrent portion of obligations under capital lease obligalionsTotal current liabilitiesNoncurrent liabilities:Accrued workers' compensationAccrued vacation costsEndowments invested on behalf of primary governmenlOther payablesRevenue bonds and notes payableObligations under capital lease agreementsTotal noncurrent liabilitiesTotal liabilitiesDEFERRED INFLOWS OF RESOURCESDeterred service concession arrangement receiptsNET POSITIONUnrestncledNet investment in capital assetsRestricted:Nonexpendable:Scholarships and fellowshipsResearchOtherExpendable:Scholarships and fellowshipsResearchLoansCapital projectsOtherTotal net positionTotal liabilities, deferred Inflows of resources, and net position$608,264.73296,997.0041.544.7793.247.0701,254,59016,665,026)704,643,14910.484,00196.408.8576.693,1858.969.1901.787.06.2121.889.611.405$105.818,1692.032.67020.873,44229.301,76560.318.737316.740218.661.52311,081.33034,272,883321.449,1632.659.449369,462,825588,124,348$19,846.858 $564,146.52758.879,512 86.477.7061,514.6023,358.732231,211 1,150,12844.10678,957,581 656,691,80126,783.971344.089.095176,501.450865,9123.688,398551,928982611,861.55195,433.6065,128A4719,398.5571,709,440,1771,831.262.362$24.292,94737.482,543379.43462,154,92433,143,115316,359,209177.282.9111.649.8503,596,6689531.431,754$4.032,5101.836,2875,868879795.394.0833.867,81199,261,8941050130,691$36.347.746 $96.851,0401.992,99020,359,75131,908,9553,901,324 65,682.515296,43440.249,070 217,091.68596.408,8573,146,53499,555,391139,804,46110.865.01033.890.869301.170.3432.976.189348,902,411565,994,096168,175,327 175q885,442487.263.9671,245,153.7685,542,7973.533.0114.761.4269.460.28663.731.67610.992.200711,6756.884.0731.837.954.87945,712,250 441,925.8631.197.202.814113,193.8402,043.435163,535,18745,379,53514,738,344106,479.354491,081.9465,385,7083,010,6424,761,2969,593,67563,355,72910,793,3592,868,1916.677.3481,746.074.62563,092A49997.173.5261.934.592163.259.04842,017,24313,160.731107,818,348488.455,987__5916586A67847 UNIVERSITY OF MARYLAND, COLLEGE PARKSTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONYEARS ENDED JUNE 30, 2013 AND 20122013Years ended June 30,2012ComponentUnits InstitutionInstitutionComponentUnitsOPERATING REVENUES:Tuition and feesLess: scholarship allowancesFederal grants and contractsState and local grants and contractsNongovernmental grants and contractsSales and services of educational departmentsAuxiliary enterprises:Residential facilitiesLess: scholarship allowancesDining facilitiesLess: scholarship allowancesontercollegiate athleticsParking facilitiesOther auxiliary enterprses revenuesOther operating revenuesTotal operating revenuesOPERATING EXPENSES:InstructionResearchPublic serrcaAcademic suppertStudent servicesInstitutional supportOperation and maintenance of plantScholarships and fellowshipsAuxiliary enterprisesResidential faclitiesDining facilitiesIntercollegiate athleticsParking facilitiesOther auxiliary enterprises expensesTotal operating expensesOperating income (loss)NONOPERATING REVENUES (EXPENSES):State appropriationsPall grantsGiftsInvestment incomeLess: Investment expenseinterest on indebtednessOther revenues (expenses). gains and (losses)Other affiliated foundation revenuesOther affiliated foundation expensesTransfers (to) from other University System of Maryland institutionsTotal nonoperating revenues (expenses)Income (loss) before other revenuesOTHER REVENUES:Capital appropriationsCapital gifts and grantsAdditions to permanent endowmentsTotal other revenuesIncrease (decrease) in net positionNet position -beginning of yearNet position -end of year$400479,355(71,737,566)$408.741,7t9352,788,34851,004,39375,927,11125,373,836$463.244.720(67,106.577)60,011,887(5.212.732)47.376.695(2627.656)61,410,20215.502,727) 55,907.47548.461.428(2,913,936) 4,5.47,49250,888.50213,284.16847.754.50935,459,1001.162,676,723$396.138.143357.567.67155.926.17871,741,89026,278,90654.799,15544.749,03953.172,66113,513.87545.729.62532,714,5621.152,331,705435,061,165411,720,65186.806.904150.127.74848.717.876105.088.94598.327.40330.344.,6170.260.98549.008.84148.407.05210.143.71350,210,4151,594,226,2591431,549,536)418.877.865404.022.79293.494,029137.381,88246.193.07594,843,44194.835.10230,740,05760.345,99447.995,55853.164,7689,666.57447,h58,1961,539,019,333(386,787,628)414.567.04621,860,81728.781.33814.333.3011352.958) 13,980,343(11.953.354)(57.616)273.767467.452,341350902.80537.302.97118.494.8891790589550977,44991,880,2541,746,074,625$40,521.16625.194.9204.390.864(67.480.991)2,625,9592.625.9592,625.959488,455,987$4108r46414,752,09621.748.07227.208.8958.989.403(371.776) 8.617,627(11.307.992)(1.332.365)(5,823,314)453,063r01967,075,391$51.118.7143.783,3366.380.252(72,232.175)(10r949,873)(10,949,873)35.524.6246,062.6321,327,7584209150014109,990.405 (10.949.873)1 636,084,220 4990405,860$1,746,074,625 $ r58748 UNIVERSITY OF MARYLAND, COLLEGE PARKSTATEMENT OF CASH FLOWSYEARS ENDED JUNE 30, 2013 AND 2012CASH FLOWS FROM OPERATING ACTIVITIES:Tuition and feesResearch contracts and grantsPayments to employeesPayments to suppliers and contractorsLoans issued to studentsCollections of loans to studentsAuxiliary enterprises:Residential facilitiesDining facilitiesIntercollegiate athleticsParking facilitiesOtherOther receiptsNet cash provided (used) by operating activitiesCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:State appropriationsGifts and grants received for other than capital purposes:Private gifts for endowment purposesPell grantsNet cash provided by noncapital financing activitiesCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Proceeds of capital debtCapital appropriationsCapital grants and gifts receivedProceeds from sales of capital assetsPurchases of capital assetsPrincipal paid on debt and capital leasesInterest paid on debt and capital leasesTransfers (to) from other University System of Maryland institutionsNet cash provided (used) by capital and related financing activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investmentsInterest on investmentsInvestment expensePurchases of investmentsNet cash provided by Investing activitiesNet increase in cash and cash equivalentsCash and cash equivalents -beginning of the yearCash and cash equivalents -end of the yearYears ended June 30,2013 2012$406,724,898 $396,087,820487,763.587 474,520,594(1,065,932,707) (1.031.565.259)(427.927,883) (403,153,488)(1,281.248) (1,873,545)1,680,478 2.094,44748,197,360 47,045,71445,547,492 44,726,59931,592,718 58,743,25513.284,168 13,513,87547,717,689 46,077,06287.823.760 88.767,7351324,809,688) (265,015,201)414,567.046179.58921,860,817436,607,45234.130,71737.302.9718.776,129432,776(139,332,596)(40.301.971)(12.931.628)31,426,115(80,497,487)6,019.3216,031,389(352.958)(257.374)11,440.37842.740.655576.008,078$618,748,733414.752,09657,38021.748.072436.557.54867,229.25835,524,6245,675,1371,319,403(138.692,839)(82,662.287)(14,411.243)11,073,800(114,944,147)5,469.9797,021.388(371.776)(141,101)11,978,49068,576,690507.431,38849 UNIVERSITY SYSTEM OF MARYLAND OFFICEBALANCE SHEETJUNE 30, 2013 AND 2012June 30,ASSETSCurrent assets:Cash and cash equivalentsAccounts receivable, netPrepaid expenses, deferred charges and other assetsInter-insbtubonal balancesTotal current assetsNoncurrent assets:Restricted cash and cash equivalentsAccounts receivable, netEvdomment investmentsOther investmentsRestricted investmentsOther assetsCapital assets, netTotal noncurrent assetsTotal assetsLIABILITIESCurrent liabilities:Accounts payable and accrued liabilitiesAccrued workers' compensation, current portionAccrued vacation costs, current portionRevenue bonds and notes payable, current portionDeferred revenueTotal current liabilitiesNoncurrent liabilities:Accrued workers' compensationAccrued vacation costsEndowments invested on behalf of primary governmentOther payablesRevenue bonds and notes payableTotal noncurrent liabilitiesTotal liabilitiesNET POSITIONUnrestrictedNet investment in capital assetsRestricted:Nonexpendable:Scholarships and fellowshipsResearchOtherExpendable:Scholarships and fellowshipsResearchCapital projectsOtherTotal net positionTotal liabilities and net position2013ComponentInstitution Units$148,665,828 $48,547503,097 4,454,306272,7796,096.669155.265,594 4,775,6322012Componentinstitution Units$124,950.163 $691,2431.483,451 761,802132,01811,156.451137.590,065 1,585,06337.7825.948,892.66483.88165291309556787$285,822.381$4,138.62812,710544,4082.649.4917,345023769,2901.032,41562.201f 69163,303,39670,648,633$155.90.221154,949,795347,604471.3308050055356.5351.863.245477,973215P1 73,748$285,822 38113.328.09357.481,268275,0353.281.75674,366.152$79,141,78460.428,8529.011,80421.875.31886.491,159177.807.133$3150.397.1 98$5,348,070 $10.043,73814.105582.9724.409.41012.5345,360,604 115.050.2258.852,50146.728.76855,581,26960,941,87376,895947,399101,404,537102,4268,31117.479,05641,65324.375,75151.312,631390.6003.148.39579.269.030$80,854.093$1,315.0713341,315.4059.011.25243.439.69052,450,94253,766,347$4,897.1927,345,820204.7935.666,5352.750,1801,781.3484,441.87827,087,746$90r954 093$3,968,114 $132,265,07654.935.4275.592.792148,0194,358.2221.220.107735,3282,177,33018,199,911347,604471.330212,0338,856.046830,626197.918.142$315.397.19880 UNIVERSITY SYSTEM OF MARYLAND OFFICESTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONYEARS ENDED JUNE 30, 2013 AND 20122013InstitutionYears ended June 30,2012ComponentUnits InstitutionComponentUnitsOPERATING REVENUES:Federal grants and contractsState and socal grants and contractsNongovernmental grants and contractsOther operating revenuesTotal operating revenuesOPERATING EXPENSES:Academic supportInstitutional supportTotal operating expensesOperating income (loss)NONOPERATING REVENUES (EXPENSES);State approprationsGiftsInvestment income (loss)Less: Investment expenseInterest on indebtednessOther revenues (expenses), gains and (losses)Other affiliated foundation revenuesOther affiliated foundation expensesTransfers (to) from other University System of Maryland institutionsTotal nonoperating revenue (expenses)Income (loss) before other revenueOTHER REVENUE:Capital appropriationsTotal other revenueIncrease (decrease) in net positionNet position -beginning of yearNet position -end of year$3.442.513148,656330,093174,3004,095.5526.334.07714,006.22020,340.297(16,244.735)$3.155,53090.363107.159201,2053,554.2576.030.37013.418.83819,449,208(15,894.951)$2,005.919(33,342).19,262.8861.972.577(6.263.571)2.256,46415,417.326$1.178,823(8.373.680) $1.478,951(34.474) 1.444.d77(7,170.624)2,618.8192.333.915(4.026,893)23,623,124(8.887,835) 35,933,122(8.887,835) 20,038217116,271q98533,500.34117.255.60617,255.606197.918,142$1.391.2381.166.9553,216.560(5.691.069)855q68485.684855.6427.002.062(8.887,835)27.087.746622.935622.93520.661,106177,257.036$197,9181481 UNIVERSITY SYSTEM OF MARYLAND OFFICESTATEMENT OF CASH FLOWSYEARS ENDED JUNE 30, 2013 AND 2012CASH FLOWS FROM OPERATING ACTIVITIES:Research contracts and grantsPayments to employeesPayments to suppliers and contractorsOther receiptsNet cash provided (used) by operating activitiesCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:State appropriationsNet cash provided by noncapital financing activitiesCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Proceeds of capital debtPurchases of capital assetsPrincipal paid on debt and capital leasesInterest paid on debt and capital leasesTransfers (to) from other University System of Maryland institutionsNet cash provided (used) by capital and related financing activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investmentsInterest on investmentsInvestment expensePurchases of investmentsNet cash provided by investing activitiesNet increase in cash and cash equivalentsCash and cash equivalents -beginning of the yearCash and cash equivalents -end of the yearYears ended June 30,2013 2012$3,746,769 $3,460,612(13,761,506) (13,327,269)(8,929,299) (2,643,874)3,601,934 4,154.096(15,342,102) (8,356.435)19,262.886 15,417,32619,2626886 15,417,32635,993.077(432.163)(18,691.937)(7,053,436)136,410,290)(26,594,749)22.616.9191,383,456(257,003)23,743,3721,069,407185,379,015$186,448,42270,961.182(143,883)(13,291.324)(8,085.521)(47,697,158)1,743,29637.620.0251.453,108(34,474)(21,875,318)17,163.34125,967.528159,411 ,48782 UNIERSITY SYSTEM SE MARYLANDCOMBINING BALANCE SHEET. NONMAJOR COMPONENT UNITSJUNE 30, 2013ASSETSCoshYotI ourmnt aosutInvestmentsCodowcoci investlcotsOther ontoCap,lasso~ets netLMAM ILTIESCu tnt Ila bllltAc ts payaOA 00130ru40expenseTooal DUTTOlt libiltieOther fie blldt leOoer payablesLonge debt, tTool othel l6bi1ft15Tooal lbilitIa,NETASSEISTompo tujrintresioted:Scho-hips & fllowshipsReset,P-,n ny ,st,,ctd:51o,40hipD & IflowhtpsTool IlbILitis ond rmt a ft0oAWyoy) M CJo T. ROheO H. CoppA S.00 Uo.froly TMb UDovnly.oAssb0tio01el Foondaon Smt. School Rary 0. HughoN Booo S00 T-on Fmotborg Unleoroty Un.ioly of Sl.sou y MaryqboB R.s..T C-o1oal MarybndUh` U" ogyy o Unlveootyof ol BuoleB C.ntT"oT Onioesity UnsT*Iy heltnS SGateU.n 09 BOlopoent GBaElor Unbv.ltl y ThoVWard 4.0 Corpoolloy BoowieStat BaBioo'Cou.ty TotlNonmoJorM-I=an,. Inc, Moryad Inc, Foundaon., -c. AIOO-E.1ooA I Inc. Foundaobn Ic. Found.11on In-. Fondtion, I... Fouodaonrbo Ioc. F-0,oHto,., Inc. Foouondain Ibo. Foundotion -c. Foun ,at IonI. Foundaon,-, U. 1- tetional Unihv1. Ilncl. R....1, Par. Copone.nlnt UnB51.151.741 $30391 51.613 60T $75.651 $429.480 55,287.876 U59S520 S583354 $1.804,975 11.784.329 S367,727 S79.01 $W14 884 S14.T01 SDT7.735 12U.'03,2996.899 406 456.724 13 305.205 01.030 2"4.344 105.785 367.280 2.610.300 3N7.114 26.66U 4U.I18 82.091 133m18S 4.937.729T1,7U 25,00 -t,13 1091 2969 123 18151 4245 16,151 121,455 1049 534402I.2B4rBIB $5rTOT 20.DB.937 76.194 737T71 551.5D 3 BO84 7T763MT 2,1785500 14.3B4,2B BtD.DB2 2114S 651 00.758 1,100.42482 3Tr 3 1206488.822 2.144,422 6.193.061 54.516.417 15.IS,773 I .084.41 T37S.242 45,12 415 20` DU 2.225.234 .180 117.27106598 51.787219 810 110 4561 11081431 182Ur012 83820 2543r412S4088182 254,5r50 5r887,219 6,193.061 54.516,247 16,261,883 8,139063 42,058,673 52.841.328 20.50N 21825234 B13B2.036 205B610.744954.239 497.476 5.292,4.4 5.n3.3W4 72.708.0833502 T5,206 911 705.696 1.263 601 109,141 93,416 4.714 2857.727 5 63T,980512,068 257,845 Ir040101 2,159054 2r384 4014,258257,741 1t167,274 71M.298 7l158777 9,3861849 895S0 93B416 4,714 2.857.727 2245SO03216717801400 80,441317 670871,188 518T'3 061900 175 981 0855,IB 010152.130 81717251081 10883DB 580 88065821079 952 708 109 89811073 09.5878601 8801 884 812.3491705 $2814040185$34.497 1.639.M41 $913.561 $482.506 $18049 S16.128 S1170.4 2 w 7 445 3200.186 950.509 S164 201 $21608 S35 570 5,174 5641.,815,57 23000 4A 261 1,948.0192,500 751310 32.66 717.0970 16r141 39.113 55034 6, 161.%04 71272,02536,117 10168,841 13.567 402,591 91.30 0.81992 170.474 3844012 2273084 890622 168298 998402 624,6801 1489658,475,662 3.215.557 5.543 6029177 3.629.139318r1 31 Sr01458662 3,2158557 5,543 920,991 4,147,75308997 13.567 I082.691 01.38 48.992 1781136 3,604.542 5,43,41 8022 160298 105,165 7,167,792 19,113A00971.656 $2461.317 6,231 515 546.773 614.441 2.915.807 1.419.679 286.003 89.532 5.947,447 4.800.083 273.0M3 M03.757 (3.673) 5.181.V43 33.1"1.0137,.99.569 100.766 676.306 7217490 6067.204 21.91.4005,050 42,373 519.501 6210046,524.785 21.959 1,825.690 12.785.860 10,154 1.776.908 2.652.192 10460.850 19,896.585 9.916 569.353 M.6540,20122.591,446 10.820.115 2M.702.328 11.6517,05 18,770.8A410,203 31.171 315,104 046,478255000 44771057 14,4M.90 416171153 6712337 11,719,40W 10 94.T61 4442 1.845.803 5404983514011 244131 6,231,515 76,732 8911,208 60,57249.5 1,429,782 181,76,409 10.130.427 ODD047?537 57,5028 29,651 3419,03 (3,673) 5,18,940 239429,825017073 430 80.4011311 01.871.188 010r732 06.0930r718 908.85.515 81.521.138 811.145r481 t015306.808 $500082r079 852.738.1608 0381013 09587r381 t0185128 012019r735 8250.543.18883 UNIVERSITY SYSTEM OF MARYLANDCOMBINING BALANCE SHEET. NONMAJOR COMPONENT UNITSJUNE 30,2012Medical Atum.nI M Clue The Robert 0. Coppln stateAaeolaton of Foundation Smith School Harry R. Hughes Bowle Stato T- .on Frostburg Unioersity UnlvemIty of Salisburythe Unioersity of Unioersity of of BRsiness Center for Unioreity Unoversity State University Deoelopment Baoimore Untoerity .The WardUnoversty The Maryland SoUnerety ofMaryland Researuh Ceo..r at Maryland441 CrRoraton Rl Stat Baltimore County Total Nonm.jorASSETSCurrent assetsCashAcunts rtcoeiabio, netOther aselSTotal cunentessaInuestmentsECdronrnotl irureonatsOther inestmentsTotal inestrnraOther ..eetsA ountsrenmeable, netCapial assots. rotother sotsTotal otber assetsTotal ---toLIARItI~ESCurrent tiebiititesAcounts payablr & atcrued oupnnsosLong-term debt, currentDefenod imcoteTotal cutnt tiabilitie.Other liablil itieOther Payable,Long-term dubt. noncutntTotal otbet liablittie.Total lisblil~erNETASSETSUnroestictedTnmpuoraly restrtcd:Scholarohips & lellcahipoResearchPermarontyrosclcedScholarships & toill--hipeOthetTotal net aseetTotal [iabilitis. and net -ss.tsMeyland. Inc. Roleod. Inc. Foundation. Inc. Ar-o-Eooluo6. Inc. Foundetion. Itn. Fouoertlon Inc. Founderlonr Inc. Foundrtron Inc. Foundotion Int. Foundatio. I.c. Foundation, Inc. Foundation, Inc. International Utn.erlty. Inc. Rese.ach Pert Component Units$593.253 $86.940 $95.684 $88.352 $775.313 $3.564.722 S536.425 $2.120.759 $20.727.745 W31.582 101.334 $654,848 $462.154 B93,59 $808.227 $31.320.8678.649 406 167.678 26 572.991 179.794 141.111 322,05. 6.756,376 -1.373.,00 33.416 34.895 30.394 48.452 108.458 9.776.299124t310 237,162 1.061 6t3O7 169.942 21.298 10t483 58,570 88.123 40.519 2.683 760 45872621t2 87,346 .1.000,524 89t439 1,354,611 3R914458 69R8.34 2.4503292 27,542t694 1.773,305 1750269 692,426 492,548 141t981 714,685 41,B7,R6245.664.504 2.432.237 5.526.357 48.666.519 14.464.881 7.648.921 39.508 346 37.792,948 2 472.236 164.177.0M9239,155 6 037,640 814.225 2.112.844 SB.770 17.672,6343,664,564 2,671,392 6,037,640 5,526,357 48B666,t19 15,279,106 7,643,021 39OB.56346 39,.05,792 2,472,236 8D468,770 181R849,643022008 67831: 6,105.024 7308.2453834 1,136 1 371.285 1,289.748 109,505 100.926 6,336 2.900.722 0788.2921,200,000 181200 2223107 656845808 998224 8,367,4191,725,640 RH0S61 222,1t7 19371t285 =08729 1...926 6,336 2.905,722 21t461,956$613B0.776 12175BfR7 B? $7108.164 189 439 B.BO.883f5 354a.306r17 $1t5.tt.591 gtg01324 3aD 68.4221025 355.759.6t7 138335998 $3.26515R8 $492.548 £1483137 Bt21.8t1t77 B24311691223t300,940 $1 525 $637.376 $60 149 5286.187 D28031 8144 763 $658011 $128.576 $63,387 $123.363 $322.553 $12.407 $85.042 62.132.6101.000 000 8,500 47 50 1 058350140565 12.000 190,410 2698700 159.117 49.631 851080 5,771.633 6.552 116315,505 1.525 649,376 60.140 1.266.1B7 218.441 144.763 927.711 287.693 113B018 123.3R0 322.553 105,967 51.05,025 10,441,27675 2.730.149 5.818 980.739 3.716.7811,693,070 379.415 2.272.48575 4,6232319 5,818 1,360,1S4 5,93,.266315,S5

• 1r525 649,376 60,149 1,266,187 213.441 144,338 927,711 4.910,912 113,018 123,3f3 322,553 111,785 7,265,179 16,430,542724.854 2,757.213 6.38B.788 S60.540 320.453 2.749.334 140.352 349.204 7.687.438 4.169.419 252.985 760.184 1869.95 36.532 4.823.998 31.391.2895.448.793 130,508 2.768,755 3.982.318 12.309.9343.539 34.950 720,128 558.7175.350.417 28,99 2.036,201 10.457,193 t,827.179 3.215.252 22.380.071 18.620.938 9.353 424.112 54,349.617521.127.428 1".t23."77 27.880.%01 11.384.139 70.416.20510003 30.687 210,633 231.3234.464.165 13r34430 4.312.737 68815.026 8.777.389 11.981170 8.642 1,957.929 49..81 0986.0753.27 2,7537213 6$7,03788 B9.439 HOB 80=R19 539848.430 16 Ott 158 1081794 1 2 674404 614 55.489.743 070B.98 3.1425.25 t492.54 31.532 44129.993 245.716.6811613B0r776 12.Ta758 7 $TB7.3Br164 $89.430 36rEttrB53 354,30t6.1T 316.II8r381 Slt,3241320 $688r422.025 $85575gr657 $3863rgee 3.2651588 $492r548 1148.017 112r08e.177 $245r1R9r223Be ANIERBSITY SYSTEM OF MARYLANDCOMBINING STATEMENT OF NET ACTIVITIES, NONMAJOR COMPONENT UNITSYEAR ENDED JUNE 30.2013Medicl Aluoi M O.IN The Robet H. Coppin SlateAo.o. of Foundalion. SIth School Harry R. Hughe. Bowl. State To.oT Foostbug UTim0aity Unicoosity of Salisburycho deU rityo AUnicersfty o oflBusiwos Crenlo' Uniootytc UOniverity Thooawok State UuO'.ity Declooop t Ba.ltior ULlnety TheWardOniceslty TtwMaryOand Uoileoccy ofManhoda Researoh Corde. 0 Maryland4-A CofpotatiOc Bowle Stale Batloo County Total NoeojorCOANOES IN UNRESTRICTED NET ASSETSContr,Nbbono A gronsAsseS wllocsd hrocc rehVIcbonTotal lrcnce.FundrasinOthr .peseTotal ecpencoe.Changeinuestncced ,tla..et.CHANCES B TEMPORARILY RESTRICTED NET ASSETSCcOntbubcon A g-tcOtý -. mreleasd flom eslril-onChang. in te-mpotaoly rstrict ed Tet assetsCHANOES IN PERMANENTL RESTRICTED NET ASSETSIt.gimncin.y-...' .l. d from reatonMa';lndl. aranfnc Pudam.IF Alg .:~lg/I-. F.nd onlc. F.u Flnrn .I-nalnln.P~alnl. Founoa... lnc. Ioun.a .n. Fc. Fonal~,l .PO -alrl. -o Ir-m~ Unlelt. l. Keerch ark C,.mponen um$1.0t 3 270 $8.O65 $h.0O 0230 041.160 0410.094 3363.033 $70,608 $266,14 02A5.102 3250.676 52.0T7S $26.255 13.9,:l03953.TAS l83.31h A6h707 $555 1.003 670.432 26JAA Oc720 2.009 0h4,C23 34h.TA4 511t55 145h432 B2AA.9 0.441,533427.761 (14.203) 2.009.711 09.h4N 17.259 1.447.310 231.750 72.004 33.276 1.402.17 291.304 2 U5.N44 10.020 0.543.300 7.068.3144000 041 1.212.157 5.1h. 92 5.777 1.001.220 I.014.471 18200010 2.050.14 930 370 710 0.703.9001T42,642.0 1. tt 2.00r470 100.6 .. 131034 60330,241 10Bgg,.s 2..2,n2. 10.00.322 10r444.30 4.',0r000 100 0600002 aT0.T, 1.001 000 000511000061.38 416.095 I 294.71 7 11.950 923.000 h3.7653 310.343 1.522.325 -0.2H7 19 291.111 3.747.727 662.041 723 475 311.02 440.320 69017.747231.437 56.TIs 785.75t 1.712 59010 h15 025 94.393 ITT 35 105.673 h73.02' 434.TA2 :37.402 thc.h9T 0.900 S4ndy 3492,704202.582 c6.oo 26 T67 057 20.0 23.04 2.3.19. 162.332 41.038 30 07 1.10..06D754.233 75.347 343237 003.200 94 5169.005 310.057 2560.5"41,296.017 473,713 2a 34,751 13,262 1.010'000 j.09j..0 4803,60 2.023,925 1.4100014 20,184.327 4.343,828 040060 017,161 0060.00 19T00 0 1.443004 440067,1332460802 1295,0961 (157,273) (10.766) 2-0.008 000.473 1.411110 318,802 (2916.72) 0000 0711 651,2"4 00100 01.6073 0160.9011 1402006) 3570945 l104307620000 h6..000 0.84.5945 634.142 3600 7 9875.24 1.834.385 6.002 409003 19.00.34.1.150.068 050.749 5,192.4-0 3.293 s9co3o 9.206571 5.452.4-7 04430 15.002.00730.750 791.190 15.80 257 874 100 747 559392 00.000 0.488871(40000, (0211 11.022,0401 15190.741, 25.77'7 127:.'180 11.14 4711 (01 710 r998 f3.914,0491 590301 I379.702! (91.439 4730111.4,300 10411 1210.111) 40681964 t03,03 100r6041 026.040 10400T400 1,40000 600 120041 1,8320633250.O00 2.64Q.254 379.2W0 84072 333.604 1.050.400 4.747.7491,162.426 275.2.9 112.036, 1.405.65112.001 2.030 610 05.44126892 32.413 (703.407, 429006 004.600 7n5.704250,000 12,892 2,604,1.1 841.131 04,072 763,380 2.290.028 (12,036) 6I.04,631.671.170 (21,5096) (157.273) (t.707) 96.309 7.632.495 1.429.702 1.076.339 (41.051) (7.447.077) 6.401,783 2.000 276.770 (162,9951 (40.206) 367,945 10,691.14467006,27: 0.061.013 0.000.000 00.000 6200010 63,020.400 16600.000 0100,402 06.494.014 60.048,740 2700800 0140.005 000.006 80.633 4.620,006 220,030,00000,040,440 0 3 0010,0337 0020. 7 6.00 8 000 0.602.020 01420.082 1117.041,- 03011102420 000040.500 0503050 520 0000450 0.4190.03 103r0001 06.1001040 30.400.025.6 UNIVERSITY SYSTEM OF MARYLANDCOMBINING STATEMENT OF NET ACTIVlllES, NONMAJOR COMPONENT UNITSYEAR ENDED JUNE 30. 2012CHANGES IN UNRESTRICTED NET ASSETSRecenoteConEnbuonist & 9g0tsI otl,n,,,l &550,w-,0hoInhangen inoIn nstWsnt -AsseS eleated R IC NETrAcLiSnEProgran'Generaltb & gd-nsta~vFutnd -df-ln,ýt-OTlier epeenseChange In utn stricted net a ...etCRANOES IN TERMPORARILY RESTRICTED NET ASSETSContE,Eulonn S SIDnAssets rt-el d W.o stE tlnSChange in tepDariljy -citd net a.e.teCHANGES IN PERMANENTO.T RESTRICTED RET ASSETS0 gr~ntAsetsO relDased 7rom Chanoe inErnlan~eneTlwyetrktedoneteassetsTotal harnge In net DssetsNet ase -beginning If yea.et a.e.l. -ed o yerMedical Alun.i M Club The RDbSd H. Coppin Stote Uniceity The MerYlend Uninenity o1Ae, cltonT Df Fcu-dation. SIUh S1chol Henr R. Hughe,. Rwee Stale T.nD FtneturN Univetity U'n-loIty If SaT.ebuy Maryland Rn.eerch Cent-r al Marotandthle Unlverelly Df Unloetelty o1 f BI Roletae Cente, bor Unallteey UTliOClO" Dtals Unlrersity Deoelopernt RBaltmore UnloelullE The WanE 040 Corpgretion Rowie. Stole BRolloRe ~ounty Total Ron~njo.MorondT Icc. Marnland, Inc. FoundaIon Inc. AroCEcoloo/, Inc. F.ondation I-. Foundation. Inc. Fondation In1. Foudat.io-n Icc Foundationr no. Foun "'on. no. Foondat ln I F. no. Iternalanal UoiveIlr. Ino. Resecroh Pork Comno.nn UTIleS1 T7$.2T0 .1.940 01592 0523 $440.590 $315.598 8404.190 1235.782 31.7081 7T03 225 $340.811 $1.377.613 S523.040 S5.783.24715.254 22.13 (240.4001 D805 I49T78 219 04 10,17 2 11 710 404) 142.21.1 153.12 33.510 W $173,40 346.300.86.198 125.022 1.716 4TO 00.001 002231 2552t IIT.5S5 T1O237 1,07,88t 204.870 327,311 ' 4T3 47.667 1 514 120 8,0T.21225,N2 541177 537ITT 4,8770 23 1T727T7T2 1,488T79c 1.491 724 48141118 1I5T 1182.40 23r12 151222.55514115R65D rot5oD 1,557.t02 54.982 786,996 6N429T735 2.259.528 2.122.641 2.287.608 6.679.W42 11154r407 $93,2U4 1370,086 5701707 1D716.686 29r49.204T39.579 61.454 1.0"4.173 52.332 7TE.520 5.262.177 1.960.112 14.4.437 2.165 801 5.878.180 70T.72 527.484 1ST 303 535.031 342.493 22.084.610042.900 87.196 733.007 1,617 45.044 002.022 33M.952 142.070 33.121 4177147 350.032 102.925 8043313 1360420 09.02 4.35-2%1345.4Q9 372 06.965 240.001 32377 252.155 107,04 0t 41140 1.03 0334280671 671403 T,03,362 1560 031.325,978 108.52 11818t640 548901 869.387 6.1004994 2.297.0t4 20382704 2.757177 6.42.1731 1,165.316 791,55S 2717.613 0480855 1.T501107 305,W185779010 930 (261,038) 1 61 (82,3911 4241741 (3735363 23.877 14159,569 217.111 (7,9091 101,676 D1,339,5271 21.852 2101549 (081,118.3)45.202 340,003 3.165159 1.135.372 887.64 1.278.937 8.778.071 301.54 6.M624199,185 1137.132) .31.053 224,231 05.540 (707,804) (750.452) 25.207 (206073)55.717 621.004 22S.035 02.705 70.337 08.512 1.155.0771255020 1541771 912r3281 (4.799 263. 1727.7921 11,517.793) 11.539.4381 (4..44.731) (1,1501 (182.074) (23 1491 115.627.815)174,185 (9.177) (645,360) 419,243 1139,294) (4838W1 (938,998) 302641400 (111501 14",341 123.1491 1.780.206788.907 127.335 2.500.040 133,147 20.033 3.645.11145 122.14U (21..22) (0,685) 900.20413.8M 13.803374.999 (77.760) 280994 40 44 30,613 405.2023.7000 704047 15nr329 2,737,5n2 142 538 2::148 4159535200.000 030 1261.0081 70.1861 (3T2,707) 1.56t.1 1176,830) (283.637) 1,328.962 3.62,00 (10.059) 261.173 (I.336.0271 21.852 107.400 4.e21.178021406 27568283 6,649082U 98,65 7173,526 511411490 15,1760980 10.4631111 66.165.652 V.22410696 281r039 2004rnO2 1509.522 14.11t 4,6361598 223r917,503ST 075 271 $2r7571213 St61 RR17t8 2891430 $6421 02416400430 $166001150 $TDrI79T402 8071400.610 0084825 8270.980 $3r100r22R $9t 531 040231OOR $028.700481 UNIVERSITY SYSTEM OF MARYLANDNOTES TO SUPPLEMENTAL DATAYEARS ENDED JUNE 30, 2013 AND 2012ACCOUNTING AND REPORTING PRACTICESSupplemental data reporting unitsUniversity System of Maryland Office (System Office), composed of the offices of the Chancellor and ViceChancellors and their respective staffs, provides central executive and administrative services and supportsand coordinates the efforts of the entire System. The expenses incurred in connection with these activitieshave not been allocated to the other units of the System and accordingly have been included in the financialrecords of the System Office.Facilities maintenance expensesCertain expenses for facilities management for the System Office and the University of Maryland UniversityCollege are included in the financial records of University of Maryland, College Park.System-wide financing arrangementsThe System constructs, acquires, and renovates plant facilities using the proceeds of Revenue Bonds andother financing arrangements. The proceeds of System-wide financing arrangements are used in accordancewith Board authorizations, which specify the projects for which the funds are to be used. Unexpendedproceeds and a proportionate share of the outstanding debt obligation are reported on the financial records ofthe System Office.Institutions are obligated to provide a proportionate share of the principal and interest payments attributable toauxiliary enterprises projects financed using the proceeds of System-wide financing arrangements. Currently,each instructional institution, with the exception of the University of Maryland University College, provides aportion of the debt service attributable to academic facilities. To the extent that an instructional institutionprovides (or receives) resources for debt service for academic facilities (and the proportionate share of theoutstanding debt obligation) recorded on another System institution or unit, such amounts are reported as aTransfer To / (From) Other University System of Maryland Institutions on the Statement of Revenues,Expenses, and Changes in Net Position.87 ENCLOSURE 2 T~hl.. 1 1" C, ,nmm~r, nf M I ITR CostCategory Subcategory 5 year projection(FY15) (in US dollars)Salaries (% FTE Funded) 2015 2016 2017 2018 20191. Reactor Director (100%) $145,821 $149,758 $153,802 $157,954 $162,2192. Assoc Director (100%) $102,080 $104,836 $107,667 $110,574 $113,5593. Assit Director (10% of 76,500) $7,650 $7,857 $8,069 $8,287 $8,5104. Rad Fac Technician (33% of 60,000) $19,800 $20,335 $20,884 $21,447 $22,027Personnel Total Salary Funding $275,351 $282,785 $290,421 $298,262 $306,315Fringe Benefits (30% of Salary) $76,665 $78,735 $80,861 $83,044 $85,287Total Personnel Funding $352,016 $361,521 $371,282 $381,306 $391,602Water Handling System $1,400 $1,438 $1,477 $1,516 $1,557Maintenance Reactor Controls and Instrumentation $8,000 $8,216 $8,438 $8,666 $8,900Experimental Facilities $5,000 $5,135 $5,274 $5,416 $5,562Total Maintenance $14,400 $14,789 $15,188 $15,598 $16,019Miscellaneous Supplies, Communication, etc $5,500 $5,649 $5,801 $5,958 $6,118Total Costs $371,916 $381,958 $392,271 $402,862 $413,740Projected Syear total costs $1,962,747Table 15.2: Summary of MUTR Funding SourcesSupportCategory Subcategory 5 year projection(in US dollars)Salaries (% FTE Funded) 2015 2016 2017 2018 20191. Reactor Director (100%) $145,821 $149,758 $153,802 $157,954 $162,2192. Assoc Director (100%) $102,080 $104,836 $107,667 $110,574 $113,559State of Maryland 3. Assit Director (10% of 76,500) $7,650 $7,857 $8,069 $8,287 $8,5104. Rad Fac Technician (33% of 60,000) $19,800 $20,335 $20,884 $21,447 $22,027Total Salary Funding $275,351 $282,785 $290,421 $298,262 $306,315Fringe Benefits (30% of Salary) $76,665 $78,735 $80,861 $83,044 $85,287Total Personnel Funding $352,016 $361,521 $371,282 $381,306 $391,602Federal $10,000 $10,270 $10,547 $10,832 $11,125Private Sector & Other- Support from Co60 & Linacs $30,000 $30,810 $31,642 $32,496 $33,374Total Funding $392,016 $402,601 $413,471 $424,635 $436,100Projected 5 year Total Funding 12,068,822.49Note: Per year costs are increased by: .2.7%-Funding for reactor operation and maintenance are gerenated from the Co60 Irradiator and linear accelerators ENCLOSURE 3 Estimated Decomissioning Costs for MUTRItem 1980 Cost 2000 Cost 2010 Cost 2015 2016 2017 2018 2019Cooldown and Preparation:Insurance $7,000/yr for 5 years $13048/yr for five years $16,571 $18,932 $19,443 $19,968 $20,507 $21,061Reactor Director' $26,000/yr for first 2 years $50,000/yr for five years $77,000 $145,821 $149,758 $153,802 $157,954 $162,219Assoc Director $30,000/yr for 3 years $25,000/yr for five years $90,000 $102,080 $104,836 $107,667 $110,574 $113,559Assitant Director (101A salary) $7,650 $7,857 $8,069 $8,287 $8,510Technician (33% salary) $5,000/yr for 5 years $10,000/yr for five yearsCombined with Manager $19,800 $20,335 $20,884 $21,447 $22,027Benefits @ 30% $50,100 $82,605 $84,836 $87,126 $89,479 $91,895Security, Communications, andother Misc. Expenses' $20,000 $22,850 $23,467 $24,101 $24,751 $25,420Total for 5 years$203,000 $347,744 $253,671 $399,738 $410,531 $421,616 $432,999 $444,690External Contract fordecomissioning the facility $1,294,000 $1,478,381 $1,518,298 $1,559,292 $1,601,393 $1,644,630Outside Consultant SiteCharacterization and Site $63,000 $71,977 $73,920 $75,916 $77,966 $80,071PreparationALARA Allowance $10,00d $11,425 $11,733 $12,050 $12,376 $12,710Contingency Fee (25 %) $405,168 $490,380 $503,621 $517,218 $531,183 $545,525Total $1,186,000 $2,165,2721 $2,025,839 $2,451,902 $2,518,103 $2,586,092 $2,655,917 $2,727,626Includes an updated estimate of personel costs and a 27% increase in costs as indicated by the Implicit Price Deflator as isued by the U.S. department of Commerce.Total cost assuming start date of OIJUL15 and completion date of 30JUN19 $12,939,640 ENCLOSURE 4 Cost Estimation for SAFSTOR for MUTRItem 1980 Cost 2000 Cost 2015 Cost 2016 2017 2018 2019Cooldown and Preparation:Insurance $7,000/yr for 5 years $13048/yr for five years $16,571 $17,018 $17,478 $17,950 $18,434Reactor Director $26,000/yr for first 2 $50,000/yr for five years $145,821 $149,758 $153,802 $157,954 $162,219Associate Director $30,000/yr for 3 years $25,000/yr for five years $102,080 $104,836 $107,667 $110,574 $113,559Assistant Director (10%) $7,650 $7,857 $8,069 $8,287 $8,510Technician (33%) $5,000/yr for 5 years $10,000/yr for five years $19,800 $20,335 $20,884 $21,447 $22,027Benefits2 $82,605 $76,378 $78,441 $80,558 $82,733Security, Communications, $200/yr for 5 years $1,500/yr for five yearsand other Misc. Expenses1 $22,850 $23,467.0 $24,101 $24,751 $25,420Total $203,000 $347,744 $397,377 $399,649 $410,440 $421,521 $432,903Dismantling $600,000 $1,118,478 $285,000 $292,695 $300,598 $308,714 $317,049Packaging and Shipping of $50,000 $93,206 $138,995 $142,748 $146,602 $150,560 $154,625WasteFinal Report and Surveys $175,000 $326,222 $97,231 $99,856 $102,552 $105,321 $108,165Unexpected Expenses $150,000 $279,619 $229,651 $233,737 $240,048 $246,529 $253,186Total $1,186,000 $2,165,272 $1,148,254 $1,168,685 $1,200,240 $1,232,646 $1,265,928Includes an updated estimate of personnel costs and a 2.7% annual increase in costsas indicated by the Implicit Price Deflator as isued by the U.S. department of Commerce.

ENCLOSURE 5 UNIVERSITY OF2101 Main Administration BuildingCollege Park, Maryland 20742301.405.4945 TEL 301.314.9395 FAXOFFICE OF THE PRESIDENTNovember 24, 2014U. S. Nuclear Regulatory CommissionWashington, D.C. 20555Reference: NRC Request for Additional Financial Information, Docket No. 50-166, for the MarylandUniversity Training and Research Reactor (MUTR). University of Maryland, Application forRenewal of Facility Operating License No. R-70STATEMENT OF INTENTAs Vice President for Administration and Finance of the University of Maryland, College Park, I, CarloColella exercise express authority and responsibility to request from the State of Maryland through theBoard of Regents for the University System of Maryland funds for decommissioning activities associatedwith operations authorized by U.S. Nuclear Regulatory Commission Facility Operating License No. R-70,further identified above. This authority and responsibility has been delegated to me by the President ofthe University of Maryland, who himself has delegated authority from the Board of Regents for theUniversity System of Maryland to undertake such actions as are needed to manage the University.Within this authority, I intend to request that funds be made available when necessary to cover the costto decommission the Maryland University Training Reactor located on the campus of the University ofMaryland, College Park. The cost, in 2015 dollars, to decommission the MUTR is estimated at$12,939,640. I intend to request and obtain these funds sufficiently in advance of decommissioning toprevent delay of directed actions.A copy of Sections12-104 and 12-109 of the Education Article of the Annotated Code of the State ofMaryland and President Wallace D. Loh's express written delegation of authority to the University's VicePresident for Administration and Finance to request funds for the decommissioning of MUTR areattached as evidence that I am authorized to represent the University of Maryland in this matter.I, Carlo Colella, Vice President for Administration and Finance of the University of Maryland, do herebyaffirm that the content of this Statement of Intent is true and accurate.Date Carlo ColellaVice President for Administration & FinanceSubscribed and sworn to before me this __ day of QJ 4i 2014.Notary Public: MXA2AL" jXeMy Commission Expires: ÷Howar lm ~n