GOVERNING BOARD AND ADMINISTRATIVE STAFF · Stephen C . Knorr,Vice President for Government Relations Natalie Krawitz, Vice President for Finance and Administration James H. Ross,

GOVERNING BOARD AND ADMINISTRATIVE STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

MANAGEMENT’S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INDEPENDENT AUDITORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

BASIC FINANCIAL STATEMENTS:

StatementsofNetAssets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

StatementsofRevenues,ExpensesandChangesinNetAssets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

StatementsofCashFlows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

StatementsofNetAssetsHeldforPensionBenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

StatementsofChangesinNetAssetsHeldforPensionBenefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

NotestoFinancialStatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

2 0 0 5 F i n a n c i a l R e p o R t : U n i v e R s i t y o F M i s s o U R i a c o M p o n e n t U n i t o F t h e s t a t e o F M i s s o U R i

Table of Contents

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2 0 0 5 F i n a n c i a l R e p o R t : U n i v e R s i t y o F M i s s o U R i a c o M p o n e n t U n i t o F t h e s t a t e o F M i s s o U R i2

UNIVERSITY OF MISSOURI

BOARD OF CURATORS

ThomasE .Atkins,PresidentAngelaM .Bennett,VicePresident

MarionH .CairnsJohnM .CarnahanIII

AnneC .ReamDougRussell

CherylD .S .WalkerDonWalsworth

DavidG .WasingerMariaC .Curtis,StudentRepresentative

GENERAL OFFICERS

ElsonS .Floyd,PresidentMarvinE .Wright,GeneralCounsel

JohnC .Gardner,VicePresidentforResearchandEconomicDevelopmentStevenGraham,AssociateVicePresidentforAcademicAffairsR .KennethHutchinson,VicePresidentforHumanResourcesStephenC .Knorr,VicePresidentforGovernmentRelations

NatalieKrawitz,VicePresidentforFinanceandAdministrationJamesH.Ross,ChiefExecutiveOfficerofUniversityofMissouriHealthCare

BradyDeaton,Chancellor,ColumbiaCampusStephenW .Lehmkuhle,InterimChancellor,KansasCityCampus

JohnF .CarneyIII,Chancellor,RollaCampusThomasF .George,Chancellor,St .LouisCampus

FINANCE STAFF

NatalieKrawitz,VicePresidentforFinanceandAdministrationJaneE .Closterman,ControllerShirleyS .DeJarnette,Treasurer

CubaPlain,DirectorBudgetPlanningandDevelopment

2 0 0 5 F i n a n c i a l R e p o R t : U n i v e R s i t y o F M i s s o U R i a c o M p o n e n t U n i t o F t h e s t a t e o F M i s s o U R i 1

G overning Board and Administrative Staff

ThefollowingManagement’sDiscussionandAnalysis(“MD&A”)providesanoverviewofthefinancialpositionandactivitiesoftheUniversityofMissouri(the“University”)forthefiscalyearendedJune30,2005and2004,andshouldbereadinconjunctionwiththefinancialstatementsandnotes.ThisoverviewisrequiredbyGovernmentalAccountingStandardsBoard (“GASB”)principles,GASBStatementNo.35,Basic Financial Statements – and Management’s Discussion and Analysis–for Public Colleges and Universities.

UNIVERSITY ACCOUNTING AND FINANCIAL REPORTING

Thisreport includesfivefinancialstatements: theStatementsofNetAssets, theStatementsofRevenues,ExpensesandChangesinNetAssetsandtheStatementsofCashFlowsfortheUniversityofMissouriSystemandAggregateDiscretelyPresentedComponentUnits;andtheStatementsofNetAssetsHeldforPensionBenefitsandtheStatementsofChanges inNetAssetsHeldforPensionBenefitsfor theUniversityofMissouriRetirementTrust.ThefinancialstatementsoftheUniversityarepreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericaasprescribedbyGASB.AsummaryofsignificantaccountingpoliciesfollowedbytheUniversityisincludedinNote1tothefinancialstatementsofthisreport.AmoredetailedunauditedfinancialreportthatincludesinformationoneachcampusisavailableattheUniversityofMissouri,118UniversityHall,Columbia,MO65211.

STATEMENTS OF NET ASSETS

TheStatementsofNetAssetspresentthefinancialpositionoftheUniversityattheendofthefiscalyearandincludeallassetsandliabilitiesoftheUniversity.Assetsandliabilitiesaregenerallymeasuredusingcurrentvalues,withcertainexceptions,suchascapitalassetswhicharestatedatcostlessaccumulateddepreciation,andlong-termdebtwhichisstatedatcost.AsummaryoftheUniversity’sassets,liabilitiesandnetassetsatJune30,2005,2004and2003,isasfollows(inthousandsofdollars):

FiscalYear2005

FiscalYear2004

FiscalYear2003

Assets:CurrentAssets $816,846 $596,448 $660,794Long-TermInvestments-EndowedandQuasi-EndowedInvestments 744,372 709,227 633,939OtherInvestments 387,926 504,110 336,935CapitalAssets,Net 1,795,513 1,700,324 1,542,432OtherNoncurrentAssets 86,702 70,806 77,870

TotalAssets $3,831,359 $3,580,915 $3,251,970

Liabilities:CurrentLiabilities $404,328 $370,280 $377,931NoncurrentLiabilities 622,997 631,587 517,975

TotalLiabilities 1,027,325 1,001,867 895,906

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 1,226,962 1,147,472 1,074,585Restricted-Nonexpendable 555,658 484,370 421,521Expendable 335,469 305,656 317,398Unrestricted 685,945 641,550 542,560

TotalNetAssets 2,804,034 2,579,048 2,356,064

TotalLiabilitiesandNetAssets $3,831,359 $3,580,915 $3,251,970

FiscalYear2005

FiscalYear2004

FiscalYear2003

Assets:CurrentAssets $816,846 $596,448 $660,794Long-TermInvestments-EndowedandQuasi-EndowedInvestments 744,372 709,227 633,939OtherInvestments 387,926 504,110 336,935CapitalAssets,Net 1,795,513 1,700,324 1,542,432OtherNoncurrentAssets 86,702 70,806 77,870

TotalAssets $3,831,359 $3,580,915 $3,251,970

Liabilities:CurrentLiabilities $404,328 $370,280 $377,931NoncurrentLiabilities 622,997 631,587 517,975

TotalLiabilities 1,027,325 1,001,867 895,906

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 1,226,962 1,147,472 1,074,585Restricted-Nonexpendable 555,658 484,370 421,521Expendable 335,469 305,656 317,398Unrestricted 685,945 641,550 542,560

TotalNetAssets 2,804,034 2,579,048 2,356,064

TotalLiabilitiesandNetAssets $3,831,359 $3,580,915 $3,251,970


F o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4Management’s Discussion and Analysis (unaudited)

FiSCAl YeAr 2005 CoMPAreD to FiSCAl YeAr 2004

Total Assets have increasedby$250.4million to $3.8 billion,which reflects theUniversity’s continued efforts tostrengthenitscapitalposition.ThisincreaseisprimarilyattributabletoincreasesintheUniversity’sCurrent Assetsdiscussedbelow,andtheexpansionofCapital Assetsacrossallofthecampuses .Netcapitaladditionsof$197 .6millionareoffsetby$102 .4millionindepreciation,resultinginanetchangeinCapital Assetsof$95.2million.MajoradditionstoCapital Assetsduringtheyearareshowninthefollowingtable .RefertoadditionalinformationinNote7 .

InCurrentAssets,theUniversityheldCash and Cash Equivalentsattheendoffiscalyear2005of$341.0million,anincreaseof$124.1millionfromtheprioryear.TheUniversity’sGeneralPoolwasmoreheavilyweightedinshort-termcommercialpaperasofJune30,2005,thanonJune30,2004.Stateappropriationwithholdingsof$61.7millionwerereleasedbytheStateofMissouriattheendofthefiscalyearandusedtopurchaseshort-terminvestments.TheUniversity’sBalancedPoolCashandCashEquivalentsalsoincreased$33.0millioninpreparationforthefiscalyear2006annualdistributionrequiredbytheBoardofCuratorsspendingpolicyasdiscussedinNote2ofthefinancialstatements .

Long-Term and Short-Term Investmentholdingsof$1.4billionasofJune30,2005,increased$7.3millionovertheprioryear.Long-TermInvestmentsintheUniversity’sendowmentfunds,comprisedprimarilyofBalancedandFixedIncomePool,increased$35.1millioninfiscalyear2005duetoreceiptofgiftsandpositivetotalreturnsinthepools.TheUniversity’slong-terminvestmentinitsgeneralpooldeclined$25.1millionlargelyduetotheUniversity’spurchaseofshort-terminvestmentsattheendoffiscalyear2005.PerformanceoftheUniversity’svariousinvestmentpoolsfortheyearendedJune30,2005,wasasfollows:

Infiscalyear2005,heightenedeffortstoincreaseresourcesthroughfundraisingcontinuedonallfourcampuses.TheseincreasedeffortsdirectlyresultedinanincreaseintotalPledges Receivable (currentandlong-term)infiscalyear2005to$39.5millionfrom$24.0millioninthepriorfiscalyear.

MAjOR ExPENDITURES RELATED TO CAPITAL ASSETS ADDITIONS DURING FISCAL YEAR ENDED jUNE 30, 2005

CAMPUS COST SOURCE OF FUNDINGColumbia:BasketballArena $4,563,000 StateAppropriationsandGiftsBrewerFieldhouseRenovation 18,357,000 BondProceedsVirginiaAvenueHousing 2,625,000 BondProceeds

KansasCity:UniversityWay $3,076,000 GiftsHealthSciences 3,516,000 StateAppropriationsandGifts

Rolla:HavenerCenter $5,448,000 BondProceedsandGiftsResidenceHall 6,296,000 BondProceeds

MAjOR ExPENDITURES RELATED TO CAPITAL ASSETS ADDITIONS DURING FISCAL YEAR ENDED jUNE 30, 2005

CAMPUS COST SOURCE OF FUNDINGColumbia:BasketballArena $4,563,000 StateAppropriationsandGiftsBrewerFieldhouseRenovation 18,357,000 BondProceedsVirginiaAvenueHousing 2,625,000 BondProceeds

KansasCity:UniversityWay $3,076,000 GiftsHealthSciences 3,516,000 StateAppropriationsandGifts

Rolla:HavenerCenter $5,448,000 BondProceedsandGiftsResidenceHall 6,296,000 BondProceeds

LONG-TERM AND ShORT-TERM INVESTMENTSASSET

DISTRIBUTIONTOTAL

RETURNBENChMARk

INDEx RETURNGeneralPool $547,074,000 3.5% 2.2%BalancedPool 684,903,000 9.6% 11.0%FixedIncomePool 61,380,000 4.8% 7.3%OtherInvestments 61,032,000 N/A N/A

Benchmark index returns are calculated by independent investment consultants based on returns of similar security portfolios.

LONG-TERM AND ShORT-TERM INVESTMENTSASSET

DISTRIBUTIONTOTAL

RETURNBENChMARk

INDEx RETURNGeneralPool $547,074,000 3.5% 2.2%BalancedPool 684,903,000 9.6% 11.0%FixedIncomePool 61,380,000 4.8% 7.3%OtherInvestments 61,032,000 N/A N/A

Benchmark index returns are calculated by independent investment consultants based on returns of similar security portfolios.


Management’s Discussion and Analysis (unaudited)F o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4

Total Liabilities increased$25.5millionover theprioryear.Significantchanges inCurrent Liabilities includea$20 .4millionincreaseinCollateral for Securities on Loanfrom$61.2millionasofJune30,2004,to$81.6millionasofJune30,2005,anda$10.4millionincreaseinAccruedLiabilitiesprimarilyrelatedtoaccruedself-insurance.

During fiscal year 2005,Bonds and Notes Payable, net of premium/discount and deferred losses on defeasance,decreased$11 .1million .Thefollowingisasummaryofthelong-termdebtbytypeofdebtinstrument(inthousandsofdollars) .

TheNet Assetsof theUniversity increased in totalby$225.0million,excludinganychanges in theUniversityofMissouriRetirementTrust.Anexplanationofthesechanges,basedonthefournetassetcategories,isasfollows:

• Invested in Capital Assets, Net of Related Debt,representscapitalholdings,netofaccumulateddepreciationandoutstandingdebtfinancingrelatedtotheacquisition,constructionorimprovementofthoseassets.Theincreaseof$79.5millionto$1.23billionisduetonetadditionstocapitalassets.

• Restricted Nonexpendable Net Assets are subject to externally imposed stipulations that they be maintainedpermanentlybytheUniversity.Thiscategoryofnetassetsrepresentsthehistoricalvalue(corpus)ofgiftstotheUniversity’spermanentendowment.Theincreaseof$71.3millionoverfiscalyear2004to$555.7millionatfiscalyearend2005isprimarilyaresultofprivatefundingforendowmentpurposes.

• Restricted Expendable Net Assets aresubjecttoexternallyimposedstipulationsgoverningtheiruse .Thiscategoryof net assets includes net assets restricted for operations and endowment purposes of $239 .6 million, facilitiesof$20.2millionandstudent loanprogramsof$75.7million.RestrictedExpendableNetAssets increased$29.8millionoverfiscalyear2004to$335.5millionatfiscalyearend2005primarilyduetoanincreaseinrestrictedgiftincome .

• Unrestricted Net Assets increased$44.4millionto$685.9millionatfiscalyearend2005.Thiscategoryofnetassetsisnotsubjecttoexternallyimposedstipulations,althoughmaybedesignatedforspecificpurposesbyactionofmanagementortheBoardofCurators.UnrestrictedNetAssetsareusedprimarilyforacademicsandgeneraloperationoftheUniversityandconsistof$479.4millionforthispurpose,aswellas$81.3millionforcapitalprojectsand $3.4million for student loan programs. In addition,UnrestrictedNetAssets include funds functioning asendowmentof$121.8million.

FiscalYear2005

FiscalYear2004

FiscalYear2003

SystemFacilitiesRevenueBonds $400,025 $408,295 $297,210HealthFacilitiesRevenueBonds 165,200 168,550 171,750NotesPayable 273UnamortizedPremium/DiscountandLossonDefeasance 312 (171) (3,968)

565,537 576,674 465,265

CapitalLeaseObligations 10,171 10,532 10,864

$575,708 $587,206 $476,129

FiscalYear2005

FiscalYear2004

FiscalYear2003

SystemFacilitiesRevenueBonds $400,025 $408,295 $297,210HealthFacilitiesRevenueBonds 165,200 168,550 171,750NotesPayable 273UnamortizedPremium/DiscountandLossonDefeasance 312 (171) (3,968)

565,537 576,674 465,265

CapitalLeaseObligations 10,171 10,532 10,864

$575,708 $587,206 $476,129



ThedistributionoftheNetAssetbalances,includingadditionaldetailsonunrestrictednetassetsbyfundtype,asofJune30,2005,areasfollows:


TotalAssetsincreased$328.9millionto$3.6billionasofJune30,2004comparedtoJune30,2003,whichreflectedtheUniversity’scontinuedefforts to strengthen itscapitalposition.This increasewasprimarilyattributable to theincreaseintheUniversity’sLong-Term Investments,andtheexpansionofCapital Assetsacrossallofthecampuses .Netcapitaladditionsof$247.7millionwereoffsetby$89.8millionindepreciation,resultinginanetchangeinCapital Assetsof$157.9million.

TheUniversityheldCash and Cash Equivalentsattheendoffiscalyear2004of$216.9million,adecreaseof$58.0millionfromtheprioryear.TheUniversity’sGeneralPoolwasmoreheavilyweightedinshort-termcommercialpaperonJune30,2003thanonJune30,2004.AccountsReceivable,netof$184.5million,increased$35.9millionasofJune30,2004,overtheprioryear .Theincreasewasprimarilyduetothereceiptofbondfundsof$34 .3millionfromtheStateofMissouriforconstructionofthenewsportsarenaontheColumbiacampus .

Long-Term and Short-Term Investmentholdingsof$1.3billionasofJune30,2004,increased$228.9millionovertheprioryear.Long-TermInvestments in theUniversity’s endowed funds, comprisedprimarilyofaBalancedandFixedIncomePool,increased$75.3millioninfiscalyear2004duetoreceiptofgifts,aswellasstrongbondmarketperformanceandimprovingstockmarketperformance .

Total Liabilities increased$106.0millionovertheprioryear.Duringfiscalyear2004,Bonds and Notes Payable,netofpremium/discountanddeferredlossesondefeasance,increased$111.4millionasaresultofa$155.2millionbondissuance.Thebondsfinanced$118.1millionforcapitalexpansionacrossallcampuses,$37.1milliontodefeaseaportionofexistingbondsandtofinancecertaincostsofissuance.

Asignificantchangeincurrent liabilities includeda$26.2millionincrease inFunds held for Others . InJanuary2004,theUniversitybecamecustodianofapproximately$13millionthatwaspreviouslyheldintrustbyathirdparty.AnotherfactoraffectingtheincreaseinFunds held for Otherswastheincreaseinpayrollwithholdingliabilitiesdue to timingof collection of employer and employee premiums and the subsequent remittance of these funds totheapplicablemedical,dentalandotheremployee-relatedprograms .Anoffsettingdecreaseinliabilitiesincludedadecreaseof$55.8millioninInvestment Settlements Payablefrom$74.3millionasofJune30,2003,to$18.5millionasof June30,2004.Purchasesandsalesof investmentsareaccounted foron the tradedatebasis.TheUniversityrecords Investment Settlements PayableforpurchasesofinvestmentsoccurringonorbeforeJune30,whichsettleaftersuchdate .



TheNet Assetsof theUniversity increased in totalby$223.0million,excludinganychanges in theUniversityofMissouriRetirementTrust.Anexplanationofthesechanges,basedonthefournetassetcategories,isasfollows:

• Invested in Capital Assets, Net of Related Debt,representscapitalholdings,netofaccumulateddepreciationandoutstandingdebtfinancingrelatedtotheacquisition,constructionorimprovementofthoseassets.Theincreaseof$72.9millionto$1.15billionisduetonetadditionstocapitalassetsoffsetbypaydownofbondsoutstanding.

• Restricted Nonexpendable Net Assets are subject to externally imposed stipulations that they be maintainedpermanentlybytheUniversity.Thiscategoryofnetassetsrepresentsthehistoricalvalue(corpus)ofgiftstotheUniversity’spermanentendowment.Theincreaseof$62.8millionoverfiscalyear2003to$484.4millionatfiscalyearend2004isprimarilyaresultofprivatefundingforendowmentpurposesandstronginvestmentreturnsintheBalancedPool .

• Restricted Expendable Net Assets aresubjecttoexternallyimposedstipulationsgoverningtheiruse .Thiscategoryof net assets includes net assets restricted for operations and endowment purposes of $200 .6 million, facilitiesof$30.1millionandstudent loanprogramsof$75.0million.RestrictedExpendableNetAssetsdecreased$11.7millionfromfiscalyear2003to$305.7millionatfiscalyearend2004resultingfromspenddownofprioryeargiftsrestrictedforcapitalexpansionandthereleaseof$13 .4millionpreviouslyrestrictedforHealthSystemdebtcovenantrequirements.

• Unrestricted Net Assets increased$99.0millionto$641.6millionatfiscalyearend2004.Thiscategoryofnetassetsisnotsubjecttoexternallyimposedstipulations,althoughmaybedesignatedforspecificpurposesbyactionofmanagementortheBoardofCurators.UnrestrictedNetAssetsareusedprimarilyforacademicsandgeneraloperationof theUniversity and consist of $391.0million for this purpose, aswell as $126.9million for capitalprojectsand$3.3millionforstudentloanprograms.Inaddition,UnrestrictedNetAssetsincludefundsfunctioningasendowmentof$120 .4million .



STATEMENTS OF REVENUES, ExPENSES AND ChANGES IN NET ASSETS

TheStatementsofRevenues,ExpensesandChangesinNetAssetspresenttheUniversity’sresultsofoperations.TheStatementsdistinguishrevenuesandexpensesbetweenoperatingandnonoperatingcategories,andprovideaviewoftheUniversity’soperatingmargin(inthousandsofdollars).

FiscalYear2005

FiscalYear2004

FiscalYear2003

OperatingRevenues:NetTuitionandFees $355,516 $311,778 $273,419GrantsandContracts 293,885 259,092 259,268PatientMedicalServices 566,394 492,229 425,700OtherAuxiliaryEnterprises 236,217 214,621 192,465OtherOperatingRevenues 80,797 65,401 65,106TotalOperatingRevenues 1,532,809 1,343,121 1,215,958

OperatingExpenses:Salaries,WagesandStaffBenefits 1,214,209 1,133,772 1,059,342Supplies,ServicesandOtherOperatingExpenses 596,395 516,766 473,874OtherOperatingExpenses 133,197 115,529 111,452TotalOperatingExpenses 1,943,801 1,766,067 1,644,668

OperatingLoss (410,992) (422,946) (428,710)

NonoperatingRevenues(Expenses):StateAppropriations 430,127 421,434 423,330InvestmentandEndowmentIncome 89,236 104,486 68,880PrivateGifts 73,504 36,143 40,423OtherNonoperatingRevenues(Expenses) (8,982) (10,627) (6,779)NetNonoperatingRevenues 583,885 551,436 525,854

IncomebeforeCapitalContributionsandAdditionstoPermanentEndowments 172,893 128,490 97,144

StateCapitalAppropriationsandStateBondFunds 4,686 54,239 13,584CapitalGiftsandGrants 13,056 21,749 30,239PrivateGiftsforEndowmentPurposes 34,351 18,506 20,254

IncreaseinNetAssets 224,986 222,984 161,221NetAssets,BeginningofYear 2,579,048 2,356,064 2,194,843NetAssets,EndofYear $2,804,034 $2,579,048 $2,356,064

FiscalYear2005

FiscalYear2004

FiscalYear2003

OperatingRevenues:NetTuitionandFees $355,516 $311,778 $273,419GrantsandContracts 293,885 259,092 259,268PatientMedicalServices 566,394 492,229 425,700OtherAuxiliaryEnterprises 236,217 214,621 192,465OtherOperatingRevenues 80,797 65,401 65,106TotalOperatingRevenues 1,532,809 1,343,121 1,215,958

OperatingExpenses:Salaries,WagesandStaffBenefits 1,214,209 1,133,772 1,059,342Supplies,ServicesandOtherOperatingExpenses 596,395 516,766 473,874OtherOperatingExpenses 133,197 115,529 111,452TotalOperatingExpenses 1,943,801 1,766,067 1,644,668

OperatingLoss (410,992) (422,946) (428,710)

NonoperatingRevenues(Expenses):StateAppropriations 430,127 421,434 423,330InvestmentandEndowmentIncome 89,236 104,486 68,880PrivateGifts 73,504 36,143 40,423OtherNonoperatingRevenues(Expenses) (8,982) (10,627) (6,779)NetNonoperatingRevenues 583,885 551,436 525,854

IncomebeforeCapitalContributionsandAdditionstoPermanentEndowments 172,893 128,490 97,144

StateCapitalAppropriationsandStateBondFunds 4,686 54,239 13,584CapitalGiftsandGrants 13,056 21,749 30,239PrivateGiftsforEndowmentPurposes 34,351 18,506 20,254

IncreaseinNetAssets 224,986 222,984 161,221NetAssets,BeginningofYear 2,579,048 2,356,064 2,194,843NetAssets,EndofYear $2,804,034 $2,579,048 $2,356,064




TotalOperating Revenues increased$189.7millionoverfiscal year 2004 to$1.5billion infiscal year 2005.Thisfluctuationisduetoincreasesintuition,patientmedicalservicesandrevenuesrelatedtocertainauxiliaryoperations.Nonoperating Revenues include funding sources such as State Appropriations, State Bond Funds, FederalAppropriationsandGiftandInvestmentIncome .ThesesourcesarecategorizedunderGASBstandardsasnonoperatingbecausetheyarenotgeneratedasaresultoftheUniversity’scoremissionsofteaching,researchandpublicservice.Thefollowingisagraphicillustrationofrevenuesbysource,includingbothoperatingandnonoperatingrevenuestreamsforfiscalyear2005.

Tuition and Fees,netofScholarship Allowances,whichincludesUniversityresourcesusedtoreducefeeschargedtostudentsforrelatedservices,increased14.0%or$43.7millionoverfiscalyear2004.ThiswasprimarilyduetoBoard-approvedincreasesinundergraduateandgraduatetuitionandrelatedenrollmentfeesof7.5%.

Asaresearchinstitution,theUniversityreceivesasubstantialamountoffundingthroughFederal, State and Private Grants and Contracts. TheUniversity experienced growth in this revenue source of 13.4% from $259.1millioninfiscalyear2004 to$293.9million infiscalyear2005.Federalgrant fundingandStategrant funding increasedsignificantlyinfiscalyear2005withincreasesof13.4%and23.2%,respectively.Modestincreasesof6.9%occurredinprivategrantsandcontracts .

Patient Medical Services,which includes fees for services providedby theUniversityHospitals andClinics andrelatedhealthcareunits(“UHC”)andtheUniversityPhysiciansPracticePlan,increased$74.2millionor15.1%overfiscalyear2004.Ofthisincrease,$4.0millionrelatestotheoperationsoftheUniversityPhysiciansand$70.2millionrelatestoUHC.

Following two years of consecutive cuts, the University experienced an increase in fiscal year 2005 to its coreappropriationsfromtheStateofMissouri,resultinginnetState Appropriationsof$430.1million.Infiscalyear2004,theUniversity’scoreappropriationswerecut5.5%withadditionalextraordinarywithholdingsof$9.7millionwithheldfrom theState.Subsequently, theStateofMissouri released theextraordinarywithholdings throughoutfiscalyear2004,resultinginnetStateAppropriationsof$421.4millioninfiscalyear2004.

Infiscalyear2005,State Capital Appropriations and State Bond Fundsof$4 .7million,consistingprimarilyoffundingfortheHealthSciencesCenterontheKansasCitycampus,decreased$49.5millionfrom$54.2millioninfiscalyear2004.Infiscalyear2004,theStateofMissourireleased$34.3millionofbondfundsforthenewsportsarenaontheColumbiacampus.TheremainingStateCapitalAppropriationsinfiscalyear2004consistedprimarilyoffundingfortheLifeSciencesCenterontheColumbiacampus,whichopenedinAugust2004,andtheHealthSciencesCenterinKansasCity .



PrivateandCapitalGiftsandGrantsof$120.9millioninfiscalyear2005increased$44.5millioncomparedto$76.4millioninfiscalyear2004,consistingofanincreaseingiftincomeof$43.2millionandanincreaseincapitalgrantsof$1 .3million .

Giftincomeisreflectedinthreecategories:Private Gifts, Capital Gifts(restrictedforcapitalexpansion)andPrivate Gifts for Endowments(restrictedfortheestablishmentofendowments).TotalgiftstotheUniversityinfiscalyear2005of$117.4millionincreased$43.2millioncomparedto$74.2millioninthepriorfiscalyear.Noncapitalprivategiftsof$107.8millioninfiscalyear2005increased$53.2millionoverthepriorfiscalyearduetoincreasedfocusbythecampusesoncapitalcampaigns.Offsettingdecreasesof$10.0millionincapitalgiftsinfiscalyear2005werelargelyduetononrecurringpledgesinfiscalyear2004forrenovatingvarioussportsfacilities.

Capital Grantsof$3.5millioninfiscalyear2005and$2.2millioninfiscalyear2004representfundingreceivedfromFederalandStateagenciestobeusedfortheexpansionoftheUniversity’sphysicalplant.Theincreaseof$1.3millioninfiscalyear2005isprimarilyduetoanewgrantfromtheNationalAeronauticalSpaceAdministration.

Investment and Endowment Incomeincludesinterestanddividendincomeaswellasrealizedandunrealizedgainsandlosses.InvestmentandEndowmentIncomedecreased$15.3million,from$104.5millioninfiscalyear2004to$89.2millioninfiscalyear2005.ContributingfactorsincludeadeclineintherateofreturnontheBalancedPoolfrom17.4%infiscalyear2004to9.6%infiscalyear2005duetolowerdomesticandinternationalstockmarketreturnsinthecurrentfiscalyearcomparedtofiscalyear2004,andadecreaseinrealizedandunrealizednetgainsof$22.7millionfrom$61.0millioninfiscalyear2004to$38.3millioninfiscalyear2005.

Total Operating Expensesreflecta10.1%or$177.7millionincreaseoverfiscalyear2004.Thefollowingisagraphicillustrationoftotalexpensesbyobjectofexpenditureforfiscalyear2005:

Duringfiscalyear2005,Salaries and Wages increasedapproximately7.4%overfiscalyear2004primarilyduetomerit increases for employees effective September 2004. StaffBenefits showed a corresponding increase of 6.0%yearoveryearrelatedtoemployercostsassociatedwiththeUniversity’smedical,dentalandlifepremiums,aswellasretirementcontributions .

TheUniversity’sexpensesrelatedtoSupplies, Services and Other Operatingcostsincreasedby15.4%or$79.6millionto$596.4millioninfiscalyear2005,comparedto$516.8millioninfiscalyear2004.Increasedpatientcareoperatingcosts at theUHCdirectly correlatedwithUHC’s increase in services and patient care revenue, account for $42.0millionofthisincrease .Increasesincostsofgoodssoldaccountfor$6 .7millionoftheincrease,whichrelatesdirectlytotheincreaseinauxiliaryrevenue.Inaddition,theUniversityhasseenanincreaseincostsrelatedtomaintenance,repairandreplacementofcertaincomponentsinitsinfrastructureandphysicalplant .Thesemaintenance,repairandreplacementcosts,whichdonotmeettheUniversity’scapitalizationlimitof$5,000,accountedforapproximately$7.4millioninadditionalcostsoverfiscalyear2004.



Inadditiontotheirnaturalclassification,itisalsoinformativetoreviewoperatingexpensesbyfunction.Thefollowinggraphicillustrationpresentstotalexpensesbyfunctionforfiscalyear2005.


Tuition and Fees,netofScholarship Allowances,whichincludeUniversityresourcesusedtoreducefeeschargedtostudentsforrelatedservices,increased14.0%or$38.4millionoverfiscalyear2003.Thiswasattributabletoincreasesinenrollmentof1.9%andincreasesinundergraduateandgraduateeducationalfeesof3.2%plus$27percredithour.

Asaresearchinstitution,theUniversityreceivesasubstantialamountoffundingthroughFederal, State and Private Grants and Contracts.Overall,grantfundingremainedapproximatelythesameyearoveryearat$259.1millioninfiscalyear2004comparedto$259.3millioninfiscalyear2003.SmallincreasesinprivategrantsandcontractswereoffsetbysmalldecreasesinFederalandStategrantfunding .

Patient Medical Services,whichincludeservicesprovidedbytheUHCandrelatedhealthcareunitsandtheUniversityPhysiciansPracticePlan,increased$66.5millionor15.6%overfiscalyear2003.Ofthisincrease,$5.1millionrelatedtotheoperationsoftheUniversityPhysicians,with$61.4millionrelatedtoUHC.

Infiscalyear2003,theUniversityexperienceda10%cutof$50.5milliontoitscoreappropriationsfortheStateofMissouriplusextraordinarywithholdingsof$28.3million,resultinginnet State Appropriationsreceivedof$423 .3million.Infiscalyear2004, theUniversityexperiencedafurthercutof5.5%toitscoreappropriations.Additionalwithholdingsof$9.7millionweresubsequentlyreleasedthroughoutfiscalyear2004,resultinginnetStateAppropriationsof $421.4million, a slightdecrease fromfiscal year2003.State Capital Appropriations and State Bond Funds increased$40.6millionto$54.2millioninfiscalyear2004duetothereleaseof$34.3millionofstatebondfundsforthenewsportarenaontheColumbiacampus .TheremainingStateCapitalAppropriationsrelatedprimarilytofundingoftheLifeSciencesCenterontheColumbiacampusandtheHealthSciencesCenterontheKansasCitycampus .

Giftincomeisreflectedinthreecategories:Private Gifts,Capital Gifts(restrictedforcapitalexpansion)andPrivate Gifts for Endowments(restrictedfortheestablishmentofendowments).TotalgiftstotheUniversityinfiscalyear2004 of $74.2millionwere approximately equal to $74.3million in the prior fiscal year.Noncapital private giftsdecreased$6.0millionor9.9%.CapitalGiftsincreased$5.9millionlargelyrelatedtoalargepledgeforasportsparkontheColumbiacampus;offsetbyasinglegiftof$6.7millioninlandreceivedinfiscalyear2003.

Capital Grantsof$2.2millioninfiscalyear2004and$16.6millioninfiscalyear2003representedfundingreceivedfromFederalandStateagenciestobeusedfortheexpansionoftheUniversity’sphysicalplant.Thedecreaseof$14.4million infiscal year 2004was thedirect result of the completionof theLifeSciencesBuildingon theColumbiacampus,whichwaspartiallyfundedthroughfederalgrants .

Investment and Endowment Incomeincludesinterestanddividendincomeaswellasrealizedandunrealizedgainsand losses. Investment andEndowment Income increased$35.6million, from$68.9million infiscalyear2003 to



$104.5millioninfiscalyear2004.Themarketcontinuedtoimproveinfiscalyear2004,whichresultedinincreasesinmarketvaluesofinvestmentsandtherecordingofrealizedandunrealizednetgainsintheamountof$61 .0million,animprovementof$36.0millionovertherealizedandunrealizedgainsof$25.0millionrecordedinfiscalyear2003.

Total Operating Expensesreflecteda7.4%or$121.4millionincreaseoverfiscalyear2003,asdiscussedbelow.

Duringfiscalyear2004,Salaries and Wages increasedapproximately3.0%overfiscalyear2003primarilyduetomeritincreasesforemployeeseffectiveSeptember2003.StaffBenefitsshowedasignificantincreaseof28.3%yearoveryearduetoincreasesintheemployercostsassociatedwiththeUniversity’smedical,dentalandlifepremiums,aswellasretirementcontributions .

TheUniversity’sexpensesrelatedtoSupplies, Services and Other Operatingcostsincreasedby9.1%or$42.9million,to$516.8millioninfiscalyear2004,comparedto$473.9millioninfiscalyear2003.AconsiderableportionofthisincreaserelatedtoincreasedpatientcareoperatingcostsattheUHCwhichwasdirectlycorrelatedwithUHC’sincreaseinservicesandpatientcarerevenue.Inaddition,theUniversityhasseenanincreaseincostsrelatedtomaintenance,repairandreplacementofcertaincomponentsinitsinfrastructureandphysicalplant .Thesemaintenance,repairandreplacementcosts,whichdonotmeettheUniversity’scapitalizationlimitof$5,000,accountedforapproximately$15.4millioninadditionalcostsoverfiscalyear2003.Theincreaseinnon-patientcareoperatingcostswasapproximately7%yearoveryear.

STATEMENTS OF CASh FLOWS

TheStatementsofCashFlowsprovideinformationabouttheUniversity’ssourcesandusesofcashandcashequivalentsduringthefiscalyear.ThefollowingsummarizessourcesandusesofcashandcashequivalentsintothefourcategoriesdefinedbyGASBforthethreeyearsendedJune30,2005(inthousandsofdollars):


Net Cash Used in Operating ActivitiesreflectsthecontinuedneedforfundingfromtheStateofMissouri,asfundingreceivedfromtuitionandfeesandrelatedsalesandservicesofauxiliaryandeducationalactivitiesarenotsufficienttocoveroperationalneeds.Cashusedinoperatingactivitiesdecreased$35.3millionfrom$334.2millioninfiscalyear2004to$298.9millioninfiscalyear2005.Thisdecreaseintheuseofcashwasimpactedbyincreasesinoperatingrevenuessuchastuitionandfees,patientcarerevenuesandfederal,stateandprivategrantrevenue .

TheUniversity’smostsignificantsourceofcash,Net Cash Provided by Noncapital Financing Activities,includesfundsprovidedbyStateandFederalappropriationsandnoncapitalprivategifts.Thisfundingsourceof$538.5millionforfiscalyear2005and$486.6millionforfiscalyear2004directlyoffsetsusesoffunds.

Net Cash Used in Capital and Related Financing Activitiesincreased$122.2millionfrom$92.9millioninfiscalyear2004to$215.1millioninfiscalyear2005.TheUniversitydidnotissuenewbondsinfiscalyear2005tooffsetfundsusedforcapitalexpansionacrossallcampuses.Proceedsusedinnetcapitaladditionsdecreased$45.7millioninfiscalyear2005to$202.0millionfrom$247.7infiscalyear2004.

FiscalYear2005

FiscalYear2004

FiscalYear2003

NetCashUsedinOperatingActivities $(298,894) $(334,212) $(303,796)NetCashProvidedbyNoncapitalFinancingActivities 538,505 486,553 480,681NetCashUsedinCapitalandRelatedFinancingActivities (215,103) (92,891) (179,437)NetCashProvidedby(Usedin)InvestingActivities 99,628 (117,442) (28,389)

NetIncrease(Decrease)inCashandCashEquivalents 124,136 (57,992) (30,941)

CashandCashEquivalents,BeginningofYear 216,863 274,855 305,796

CashandCashEquivalents,EndofYear $340,999 $216,863 $274,855

FiscalYear2005

FiscalYear2004

FiscalYear2003

NetCashUsedinOperatingActivities $(298,894) $(334,212) $(303,796)NetCashProvidedbyNoncapitalFinancingActivities 538,505 486,553 480,681NetCashUsedinCapitalandRelatedFinancingActivities (215,103) (92,891) (179,437)NetCashProvidedby(Usedin)InvestingActivities 99,628 (117,442) (28,389)

NetIncrease(Decrease)inCashandCashEquivalents 124,136 (57,992) (30,941)

CashandCashEquivalents,BeginningofYear 216,863 274,855 305,796

CashandCashEquivalents,EndofYear $340,999 $216,863 $274,855



Net Cash Provided by (Used In) Investing Activitiesincreased$217.1millionfrom$(117.5)millioninfiscalyear2004to$99.6millioninfiscalyear2005.TheUniversity’sinvestmentpoolwasmoreheavilyweightedinshort-terminvestmentsasofJune30,2005,asaresultofyear-endcashflows.Thesefundswerenotusedtopurchaselong-terminvestmentsatthattime .


Net Cash Used in Operating ActivitiesreflectsthecontinuedneedforfundingfromtheStateofMissouri,asfundingreceivedfromtuitionandfeesandrelatedsalesandservicesofauxiliaryandeducationalactivitiesarenotsufficienttocoveroperationalneeds.Cashusedinoperatingactivitiesincreased$30.4millionfrom$303.8millioninfiscalyear2003to$334.2millioninfiscalyear2004.Thisincreaseintheuseofcashwasimpactedbyincreasesinemployee-relatedpayments,principallybenefitcosts,andoperationalpaymentstosuppliers.Offsettingoperatingsourcesofcashincludedincreasesintuitionandfeesandpatientcarerevenues .

TheUniversity’smostsignificantsourceofcash,Net Cash Provided by Noncapital Financing Activities,includesfundsprovidedbyStateandFederalappropriationsandnoncapitalprivategifts.Thisfundingsourceof$486.6millionforfiscalyear2004and$480.7millionforfiscalyear2003directlyoffsetusesoffunds.

Net Cash Used in Capital and Related Financing Activitiesdecreased$86.5millionfrom$179.4millioninfiscalyear2003to$92.9millioninfiscalyear2004.TheUniversityreceivedproceedsof$158.1millionfromissuanceofSystemFacilitiesRevenueBondsinfiscalyear2004.Proceedsfromissuanceofthebondswereusedtoadvancerefundanddefeaseexistingbondsintheamountof$36.4million.Nonewbondswereissuedinfiscalyear2003.Proceedsusedinnetcapitaladditionsincreased$62.6millioninfiscalyear2004to$247.7millionfrom$185.1infiscalyear2003primarilyduetocontinuedexpansionofcapitalassetsacrossallcampuses .

Net Cash Used in Investing Activitieswas$117.5millioninfiscalyear2004versus$28.4millioninfiscalyear2003,anincreaseof$89.1million.TheUniversity’sLong-TermInvestmentsincreasedsignificantlyinfiscalyear2004asaresultofinvestmentofproceedsfromtheissuanceofbondsandpositivetotalreturnsexperiencedinfiscalyear2004.

ECONOMIC OUTLOOk

TheUniversity ofMissouri continues to strengthen itsfinancial position throughpositiveoperating results and toprovidequality service to students, patients and citizens across the state ofMissouri. Improvements in the state’seconomicconditionandtherelatedincreasesintaxreceiptsresultedina3.1%increaseintheUniversity’scoreoperatingappropriation infiscalyear2005after threeyearsofextraordinarywithholdingsandappropriation reductions.Forfiscalyear2006,effortstobringstructuralbalancetothestate’sbudgetandendthestate’sdependenceonone-timefundsresultedinnoincreaseinappropriationsforhighereducation .However,becauseofthegrowthinstaterevenues,theUniversityanticipatesnomid-yearreductionsandismildlyoptimisticaboutfutureincreasesinstatefunding.

Fiscalyear2005was thesecondyear ina rowwhere tuitionandfeessurpassedstateappropriationsas the largestsourceofnon-healthcareoperatingrevenues.Thisisprojectedtocontinueinfiscalyear2006andbeyond.The3.5%increase in tuition for fiscal year 2006 is the lowest in three years; but, continued enrollment growth on all fourcampuseshascontributedtotheUniversity’sabilitytobalancethebudgetdespiteflatstatesupport.Bothheadcountandfull-timeequivalentenrollmentreachedhistorichighsinfall2004andagaininfall2005.TheUniversityofMissouri,asthestate’sresearchandland-grantinstitutionofhighereducation,enrollsthestate’stopstudents .Withthegoalofaddressingtheissueofaccessandaffordability,UniversityofMissouriPresidentElsonFloydhasinitiatedastatewidediscussionofguaranteedtuitionforundergraduatesasameansofprovidingcostpredictabilitytostudentsandtheirfamilies .

Increases inmandatory expenses such as health care benefits, retirement contributions, utilities and insurance, inconjunctionwithflatstatesupportandrisingenrollments,havecreatedabudgetarychallengefortheUniversity.Tomeetthischallenge,theUniversityhasimplementedavarietyofinitiativestoreduceand/orcontaincostsinsuchareasasstrategicprocurementandpharmacybenefits.Asaresult,overthefive-yearperiodfromfiscalyear2001throughfiscalyear2005,unrestrictedexpendituresperfull-timeequivalentstudenthaveincreasedonly5.6%,or1.4%annually.



Whenadjustedforinflation,totalexpendituresoverfiveyearsdecreased3.5%.Weexpectthistrendtocontinueinfiscalyear2006.

TheUniversityofMissouriHealthSystemcontinues to improve itsfinancialpositionendingfiscalyear2005witha6.3%excessmarginprovidingapproximately$30millionforcapitalprojectsandotherinitiatives.ThisimprovedperformancewasreflectedinthechangeinthecreditoutlookfromnegativetopositivebyMoody’sInvestorServicesinApril2005.Infiscalyear2006,theHealthSystemmustmanagethefinancialimpactofreductionsinthestateMedicaidprogram .Therecordhiringofspecialtyphysiciansandcontinuingincreasesinpatientcensus,surgicalvolumesanddeliveriesareprojectedtobolsterperformance .

TheUniversitycontinuestostrengthenanddiversifyitsfundingsourcesthrougheffectiveendowmentmanagement,increasedprivategivingand recordhighexternal research funding.TheUniversityofMissouri-Columbiacampusrecentlyannouncedthatitwasextendingitscapitalcampaigngoalto$1 .0billionafterreachingtheoriginalgoalof$600millionsixmonthsearly.Externalresearchfundingisatanalltimehighwitha20%increaseinFederalfundingontheColumbiacampus.WiththeadditionofeconomicdevelopmentasafourthmissionoftheUniversity,PresidentElsonFloydrecentlyappointedavicepresidentforresearchandeconomicdevelopmenttofosterpartnershipswiththestateofMissouriandtheprivatesectorinsupportofeconomicinitiativesthatbuildontheUniversity’sresearchstrength .




I ndependent Auditors’ Report


I ndependent Auditors’ Report

(in thousands of dollars)

UniversityDiscretely Presented

Component Units2005 2004 2005 2004

Assets

Current Assets:CashandCashEquivalents $131,614 $78,753 $8,053 $8,456RestrictedCashandCashEquivalents 209,385 138,110Short-TermInvestments 95,309 64,577RestrictedShort-TermInvestments 126,782 69,138AccountsReceivable,Net 185,206 184,488 22,470 22,167PledgesReceivable,Net 10,489 7,714InvestmentSettlementsReceivable 6,373 5,480NotesReceivable,Net 10,301 10,702DueFrom(To)ComponentUnitsandRetirement (2,616) (2,777) 2,612 2,701Inventories 29,872 27,189 2,232 2,545PrepaidExpensesandOtherCurrentAssets 14,131 13,074 1,120 976

Total Current Assets 816,846 596,448 36,487 36,845

Noncurrent Assets:RestrictedCashandCashEquivalents 9,416 4,874PledgesReceivable,Net 28,983 16,271NotesReceivable,Net 46,252 43,216DeferredChargesandOtherAssets 11,467 11,319 1,310 1,329RestrictedOtherAssets 1,640Long-TermInvestments 485,917 585,976 34,626 39,613RestrictedLong-TermInvestments 646,381 627,361DepreciableCapitalAssets,Net 1,600,789 1,434,244 45,353 47,785NondepreciableCapitalAssets 194,724 266,080 21,214 9,284

Total Noncurrent Assets 3,014,513 2,984,467 113,559 102,885Total Assets $ 3,831,359 $ 3,580,915 $ 150,046 $ 139,730

Liabilities

Current Liabilities:AccountsPayable $91,834 $88,348 $5,434 $4,060AccruedLiabilities 103,974 93,570 18,233 16,947DeferredRevenue 35,179 36,489FundsHeldforOthers 61,683 60,201InvestmentSettlementsPayable 16,170 18,495CollateralforSecuritiesonLoan 81,611 61,196CapitalLeaseObligations 392 361 112 102BondsandNotesPayable 13,485 11,620 870 480

Total Current Liabilities 404,328 370,280 24,649 21,589

Noncurrent Liabilities:CapitalLeaseObligations 9,779 10,171 95 189BondsandNotesPayable 552,052 565,054 38,895 39,765DeferredRevenue 2,908 2,677OtherNoncurrentLiabilities 58,258 53,685

Total Noncurrent Liabilities 622,997 631,587 38,990 39,954Total Liabilities 1,027,325 1,001,867 63,639 61,543

(continued)


a s o F J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4S tatements of Net Assets



Net AssetsInvestedinCapitalAssets,NetofRelatedDebt 1,226,962 1,147,472 27,199 17,260Restricted:

Nonexpendable-Endowment 555,658 484,370

Expendable-Scholarships,Research,InstructionandOther 239,585 200,641 1,640 4,875Loans 75,670 74,964CapitalProjects 20,214 30,051

Unrestricted 685,945 641,550 57,568 56,052Total Net Assets 2,804,034 2,579,048 86,407 78,187

Total Liabilities and Net Assets $ 3,831,359 $ 3,580,915 $ 150,046 $ 139,730

See notes to the financial statements.


a s o F J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4S tatements of Net Assets

Thispageisintentionallyleftblank .





Operating Revenues:TuitionandFees(NetofProvisionforDoubtfulAccountsof$4,609in2005and$4,858in2004) $471,240 $428,162 $ - $ -

Less:ScholarshipAllowances 115,724 116,384NetTuitionandFees 355,516 311,778 - -

FederalGrantsandContracts 193,473 170,542StateandLocalGrantsandContracts 43,638 35,434PrivateGrantsandContracts 56,774 53,116SalesandServicesofEducationalActivities 17,920 16,640AuxiliaryEnterprises-

PatientMedicalServices,Net 566,394 492,229 160,947 153,762HousingandDiningServices(NetofScholarshipAllowanceof$490in2005and$389in2004) 57,730 53,462

Bookstores 50,422 44,373OtherAuxiliaryEnterprises(NetofScholarshipAllowanceof$5,472in2005and$4,394in2004) 128,065 116,786

NotesReceivableInterestIncome,NetofFees 855 1,580OtherOperatingRevenues 62,022 47,181

Total Operating Revenues 1,532,809 1,343,121 160,947 153,762

Operating Expenses:SalariesandWages 987,240 919,594 46,952 44,246StaffBenefits 226,969 214,178 12,018 10,692Supplies,ServicesandOtherOperatingExpenses 596,395 516,766 87,365 87,362ScholarshipsandFellowships 30,783 25,755Depreciation 102,414 89,774 7,758 7,296

Total Operating Expenses 1,943,801 1,766,067 154,093 149,596

Operating Income (Loss) (410,992) (422,946) 6,854 4,166

StateAppropriations 430,127 421,434

Income after State Appropriations, beforeNonoperating Revenues (Expenses) 19,135 (1,512) 6,854 4,166

Nonoperating Revenues (Expenses):FederalAppropriations 15,776 14,602InvestmentandEndowmentIncome,NetofFees 89,236 104,486 1,024 300PrivateGifts 73,504 36,143 42 203InterestExpense (23,497) (23,785) (1,340) (1,236)OtherNonoperatingRevenues(Expenses) (1,261) (1,444) 1,640

Net Nonoperating Revenues (Expenses) 153,758 130,002 1,366 (733)

Income before Capital Contributions and Additions toPermanent Endowments 172,893 128,490 8,220 3,433

StateCapitalAppropriationsandStateBondFunds 4,686 54,239CapitalGiftsandGrants 13,056 21,749PrivateGiftsforEndowmentPurposes 34,351 18,506

Increase in Net Assets 224,986 222,984 8,220 3,433

Net Assets, Beginning of Year 2,579,048 2,356,064 78,187 74,754

Net Assets, End of Year $ 2,804,034 $ 2,579,048 $ 86,407 $ 78,187



S tatements of Revenues, Expenses and Changes in Net AssetsF o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4


(continued)

2005 2004Cash Flows from Operating Activities:

TuitionandFees $336,011 $321,506Federal,StateandPrivateGrantsandContracts 288,307 271,356SalesandServicesofEducationalActivitiesand

OtherAuxiliaries 174,492 130,647PatientCareRevenues 558,141 479,750StudentHousingFees 57,732 53,867BookstoreCollections 50,058 44,126PaymentstoSuppliers (584,618) (515,431)PaymentstoEmployees (981,507) (922,159)PaymentsforBenefits (226,969) (214,178)PaymentsforScholarshipsandFellowships (30,783) (25,755)StudentLoansIssued (16,718) (14,487)StudentLoansCollected 13,778 13,813StudentLoanInterestandFees 1,160 1,153OtherReceipts,Net 62,022 41,580

Net Cash Used in Operating Activities (298,894) (334,212)

Cash Flows from Noncapital Financing Activities:StateAppropriations 430,141 421,460FederalAppropriations 15,776 14,602PrivateGifts 58,016 7,243EndowmentandSimilarFundsGifts 34,351 18,506OtherPayments (1,261) (1,444)DepositsofAffiliates 1,482 26,186

Net Cash Provided by Noncapital Financing Activities 538,505 486,553

Cash Flows from Capital and Related Financing Activities:CapitalStateAppropriations 7,377 18,641CapitalGiftsandGrants 13,056 45,067ProceedsfromSalesofCapitalAssets 9,525 3,138PurchaseofCapitalAssets (211,567) (250,880)ProceedsfromIssuanceofCapitalDebt,Net 159,267PrincipalPaymentsonCapitalDebt (11,620) (10,773)ProceedsfromCapitalProjectNotes 1,600 3,360PaymentsonCapitalLease (361) (332)EscrowDepositonDefeasance (37,346)PaymentsonCostofDebtIssuance (821)InterestPaymentsonCapitalDebt (23,113) (22,212)

Net Cash Used in Capital and Related Financing Activities (215,103) (92,891)

Cash Flows from Investing Activities:InterestandDividendsonInvestments 51,598 56,424PurchaseofInvestments,NetofSalesandMaturities 48,190 (176,643)OtherInvestingActitities (160) 2,777

Net Cash Provided by (Used in) Investing Activities 99,628 (117,442)

Net Increase (Decrease) in Cash and Cash Equivalents 124,136 (57,992)

Cash and Cash Equivalents, Beginning of Year 216,863 274,855

Cash and Cash Equivalents, End of Year $ 340,999 $ 216,863


S tatements of Cash FlowsF o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4



2005 2004Reconciliation of Operating Loss Used in Operating Activities:

OperatingLoss $(410,992) $(422,946)AdjustmentstoNetCashUsedinOperatingActivities-

DepreciationExpense 102,414 89,774ChangesinAssetsandLiabilities:

AccountsReceivable,Net (3,422) (363)Inventory,PrepaidExpensesandOtherAssets 699 (1,230)NotesReceivable (2,635) (1,101)AccountsPayable 1,884 (12,374)AccruedLiabilities 14,927 7,980DeferredRevenue (1,769) 6,048

Net Cash Used in Operating Activities $ (298,894) $ (334,212)

Supplemental Disclosure of Noncash Activities:GiftsofNoncashAssetsandCapitalAssets $- $5,600

NetIncreaseinFairValueofInvestments $(6,447) $23,400


S tatements of Cash FlowsF o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4




2005 2004Assets

CashandCashEquivalents $50,039 $41,955CollateralforSecuritiesLending 173,580 149,917DuefromtheUniversityofMissouriSystem 4 76InvestmentSettlementsReceivable 22,594 16,647Investments:

GovernmentObligations 301,689 292,881CorporateBondsandNotes 109,375 108,304CorporateStocks 1,783,813 1,333,402Other 33,282 351,264

Total Assets 2,474,376 2,294,446

Liabilities

AccountsPayableandAccruedLiabilities 2,228 1,768CollateralforSecuritiesLending 173,580 149,917InvestmentSettlementsPayables 53,255 61,236

Total Liabilities 229,063 212,921

Net Assets Held for Pension Benefits $ 2,245,313 $ 2,081,525

2005 2004Net Revenues and Other Additions

InvestmentIncome:InterestandDividendIncome,NetofFees $41,423 $26,929NetAppreciationinFairValueofInvestments 177,105 298,720

NetInvestmentIncome 218,528 325,649

UniversityContribution 49,075 48,521

Total Net Revenues and Other Additions 267,603 374,170

Expenses and Other Deductions

AdministrativeExpenses 1,457 1,363PaymentstoRetireesandBeneficiaries 102,358 100,185

Total Expenses and Other Deductions 103,815 101,548

Increase in Net Assets Held for Pension Benefits 163,788 272,622

Net Assets Held for Pension Benefits, Beginning of Year 2,081,525 1,808,903

Net Assets Held for Pension Benefits, End of Year $ 2,245,313 $ 2,081,525


a s o F J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4

F o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4

S tatements of Net Assets Held for Pension Benefits

S tatements of Changes in Net Assets Held for Pension Benefits

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

UniverSitY oF MiSSoUri

Organization–TheUniversityofMissouri(the“University”),aFederallandgrantinstitution,conductseducation,researchandpublic serviceand relatedactivitiesprincipallyat its fourcampuses inColumbia,KansasCity,RollaandSt.Louis,whichincludetheUniversityofMissouriHospitalsandClinicsandrelatedhealthcarefacilities.TheUniversityalsoadministersastatewidecooperativeextensionservicewithcenterslocatedineachcountyintheState.TheUniversityisacomponentunitoftheStateofMissouri(the“State”)andisgovernedbyanappointednine-memberBoardofCurators .

Reporting Entity–AsdefinedbygenerallyacceptedaccountingprinciplesestablishedbytheGovernmentalAccountingStandardsBoard(“GASB”),thefinancialreportingentityconsistsoftheprimarygovernmentanditscomponentunits.Componentunitsarelegallyseparateorganizationsforwhichtheprimarygovernmentisfinanciallyaccountableorthenatureandsignificanceoftheirrelationshipswiththeprimarygovernmentaresuchthatexclusionwouldcausetheprimarygovernment’sfinancialstatementstobemisleadingorincomplete.

ThefollowingentitiesareconsideredcomponentunitsoftheUniversityaccordingtothecriteriainGASBStatementNo .14,the Financial reporting entityandarediscretelypresentedintheUniversity’sfinancialstatements.

• The University of Missouri-ColumbiaMedical Alliance (the “Medical Alliance”), a not-for-profit corporation,provides an integrated health care delivery system for mid-Missouri by establishing affiliations with variousmedicalfacilities.CapitalRegionMedicalCenter(“CRMC”)inJeffersonCity,Missouri,operatesasanaffiliateoftheMedicalAllianceandprovidesinpatient,outpatientandemergencycareservicestothesurroundingcommunity .CRMCisadiscretelypresentedcomponentunitoftheMedicalAllianceandCRMCisanot-for-profitorganizationthatfollowsgenerallyacceptedaccountingprinciplesundertheFinancialAccountingStandardsBoard(“FASB”) .ThepurposeoftheMedicalAllianceistodevelopanetworkofhealthcareproviderstosupportthemissionsoftheUniversityofMissouriHealthcare.TheUniversityappointstheBoardofDirectorsoftheMedicalAllianceandcanimposeitswillontheorganization .

• MissouriCareL.C.isanot-for-profithealthmaintenanceorganizationwhichprovidesservicestopatientsincentralMissouriunderacertificationfromtheMissouriDepartmentofSocialServices.MissouriCareL.C.hascontractedwiththeUniversityofMissouriHealthcareSystemasamajorproviderofhealthcareservicestotheorganization’smembers.MissouriCareL.C. is organized exclusively for charitable purposes, in particular, to benefit its solemember,theCuratorsoftheUniversityofMissouri.TheUniversityappointstheBoardofDirectorsofMissouriCareL .C .andcanimposeitswillontheorganization .

CompletefinancialstatementsforMissouriCareL.C.areavailableattheUniversityofMissouri,118UniversityHall,Columbia,MO65211.FinancialstatementsforMedicalAlliancearenotavailable.

TheUniversityoperatestheUniversityofMissouriRetirement,DisabilityandDeathBenefitPlan(the“Plan”),whichisasingleemployer,definedbenefitplan.TheassetsofthePlanareheldintrustandarerestrictedforuseonlytopayforbenefitsandexpensesofthePlan.ThePlanisreportedasafiduciaryfundoftheUniversity.

Financial Statement Presentation–InaccordancewithGASBStatementNo .20,Accounting and Financial reporting for Proprietary Funds and other Governmental entities that Use Proprietary Fund Accounting, the Universityis required tofollowallapplicableGASBpronouncements. Inaddition, theUniversityappliesallapplicableFASBStatementsandInterpretations,AccountingPrinciplesBoardOpinionsandAccountingResearchBulletinsissuedonorbeforeNovember30,1989,exceptthosethatconflictwithaGASBpronouncement.TheUniversityhaselectednottoapplyFASBpronouncementsissuedafterNovember30,1989.

TheUniversityhasadoptedGASBStatementNo.35,Basic Financial Statement–and Management’s Discussion and Analysis–for Public Colleges and Universities,asamendedbyGASBStatementsNo.37andNo.38.GASBStatementNo.35establishesstandardsforexternalfinancialreportingforpubliccollegesanduniversities.Thefinancialstatement


F o R t h e y e a R s e n d e d J U n e 3 0 , 2 0 0 5 a n d 2 0 0 4N otes to Combined Financial Statements

presentationprovidesacomprehensiveentity-wideperspectiveoftheUniversity’snetassets,revenues,expensesandchangesinnetassetsandcashflowsreplacingthefund-groupperspectivepreviouslyrequired.

EffectiveJuly1,2004,theUniversityhasadoptedGASBStatementNo.40,Deposit and investment risk Disclosures – an amendment of GASB Statement no. 3.ThestatementmodifiescertaindisclosurerequirementsofGASBStatementNo .3 .

Basis of Accounting–TheUniversity’sfinancialstatementshavebeenpreparedusingtheeconomicresourcefocusand theaccrualbasis.TheUniversity reportsasaBusinessTypeActivity,asdefinedbyGASBStatementNo.34.BusinessTypeActivitiesarethosethatarefinancedinwholeorinpartbyfundsreceivedfromexternalpartiesforgoodsorservices .

TheUniversity’spolicy fordefiningoperatingactivitiesas reportedon theStatementsofRevenues,ExpensesandChanges in Net Assets are those that generally result from exchange transactions such as payments received forprovidingservicesandpaymentsmadeforservicesorgoodsreceived.NearlyalltheUniversity’sexpensesarefromexchangetransactions.CertainsignificantrevenuestreamsrelieduponforoperationsarerecordedasnonoperatingrevenueasdefinedbyGASBStatementNo.34.Nonoperatingrevenuesincluderevenuesfromactivitiesthathavethecharacteristicsofnonexchangetransactions,suchasStateandFederalappropriationsandinvestmentincome .

TheUniversityofMissouriRetirementTrustisapensiontrustfundwhichaccountsfortheactivityoftheUniversityofMissouriRetirement,Disability,andDeathBenefitPlan.Thefinancialstatementsofthetrustfundhavebeenpreparedusingtheaccrualbasisofaccounting .

Cash, Cash Equivalents and Investments–CashandcashequivalentsconsistoftheUniversity’sbankdepositsandinvestmentswithoriginalmaturitiesofthreemonthsorless .Investmentassetsarecarriedatfairvaluebasedprimarilyonmarketquotations.Purchasesandsalesofinvestmentsareaccountedforonthetradedatebasis.InvestmentsettlementsreceivableandinvestmentsettlementspayablerepresentinvestmenttransactionsoccurringonorbeforeJune30,whichsettleaftersuchdate .Investmentincomeisrecordedontheaccrualbasis .Netunrealizedgains(losses)areincludedininvestmentandendowmentincomeintheStatementsofRevenues,ExpensesandChangesinNetAssets .Derivativeinstrumentssuchasforwardforeigncurrencycontractsarerecordedatfairvalue.TheUniversityentersintoforwardforeigncurrencycontractstoreducetheriskrelatedtofluctuationsincurrencyexchangeratesintheirinternationalinvestments .ThesecontractsaremarkedtomarketandthechangesintheirmarketvaluearerecordedininvestmentandendowmentincomeontheStatementsofRevenues,ExpensesandChangesinNetAssets .

Pledges Receivable –TheUniversity receivesunconditionalpromises togive (pledges) throughprivatedonationsfromcorporations,alumniandvariousothersupportersof theUniversity.Revenue is recognizedwhenapledge isreceivedandalleligibilityrequirements,includingtimerequirements,aremet.ThesepledgeshavebeenrecordedaspledgesreceivableontheStatementsofNetAssetsandasprivategiftrevenueontheStatementsofRevenues,ExpensesandChangesinNetAssets,atthepresentvalueoftheestimatedfuturecashflows.Anallowanceof$4,102,000and$6,251,000asofJune30,2005and2004hasbeenmadeforuncollectiblepledgesbaseduponmanagement’sexpectationsregardingthecollectionofthepledgesandtheUniversity’shistoricalcollectionexperience.

Inventories–Theseassetsarestatedatthelowerofcostormarket .Costisdeterminedonanaveragecostbasis,withtheexceptionoftheUniversityHospitalsandClinicsinventories,wherecostisdeterminedusingthefirst-in,first-outmethod .

Capital Assets–Theseassetsarecarried,ifpurchased,atcostor,ifdonated,atfairvalueatdateofgift .Depreciationexpenseiscomputedusingthestraight-linemethodovertheestimatedusefullivesoftherespectiveassets–generallytentofortyyearsforbuildingsandimprovements,eighttotwenty-fiveyearsforinfrastructure,seventofifteenyearsforequipmentandtwentyyearsforlibrarymaterials.Netinterestexpenseincurredduringtheconstructionofdebt-financedfacilitiesisincludedinthecapitalizationoftherelatedfacilities.TheUniversityhascapitalizedworksofartandcontinuestoaddtothesecollections .Asthesecollectionsgenerallyconsistofhistoricalartifactsandartworks,theyareconsideredinexhaustible,aswellasland,andhavenotbeensubjecttodepreciation.TheUniversitydoesnotcapitalizecollectionsofhistoricaltreasuresheldforpublicexhibition,education,researchandpublicservice .Thesecollectionsarenotdisposedofforfinancialgain.Accordingly,suchcollectionsarenotrecognizedorcapitalizedfor



financialstatementpurposes.Proceedsfromthesale,exchange,orotherdisposalofanyitembelongingtoacollectionofhistoricaltreasuresmustbeappliedtotheacquisitionofadditionalitemsforthesamecollection.

Deferred Revenue–Deferredrevenuesincludeamountsreceivedfortuitionandfeesandcertainauxiliaryactivitiesprior to theendof thefiscalyearbut related to the subsequent accountingperiod.Deferred revenues also includeamountsreceivedfromgrantandcontractsponsorsthathavenotyetbeenearned .

Net Assets–TheUniversity’snetassetsareclassifiedforfinancialreportinginthefollowingnetassetcategories:

• Invested in capital assets, net of related debt: This component of net assets includes capital assets, net ofaccumulated depreciation and outstanding principal debt balances related to the acquisition, construction orimprovementofthoseassets .

• Restricted:

Nonexpendable–NetassetssubjecttoexternallyimposedstipulationsthattheybemaintainedpermanentlybytheUniversity.SuchassetsincludetheUniversity’spermanentendowmentfunds.TheUniversity’spolicypermitsanyrealizedandunrealizedappreciationontheendowmentstoremainwiththeendowmentafterthe5%spendingdistributiondiscussedinNote3 .

Expendable–NetassetswhoseusebytheUniversityissubjecttoexternallyimposedstipulationsthatcanbefulfilledbyactionsoftheUniversitypursuanttothosestipulationsorthatexpirebythepassageoftime.

• Unrestricted: Netassets thatarenot subject toexternally imposedstipulations.UnrestrictednetassetsmaybedesignatedforspecificpurposesbyactionofmanagementortheBoardofCurators.Whenanexpenseisincurredthatcanbepaidusingeitherrestrictedorunrestrictedresources,theUniversity’spolicyistofirstapplytheexpensetowardsrestrictedresources,andthentowardsunrestrictedresources.UnrestrictednetassetsareusedforexpensesforacademicsandgeneraloperationoftheUniversity.

Scholarship Allowance–Tuitionandfeesandrelatedhousing,diningandotherauxiliaryenterprisesrevenuesarepresentednetofscholarshipsandfellowshipsappliedtostudentaccounts,whilescholarships,fellowshipsandotherpaymentsmadedirectlytostudentsarepresentedasscholarshipandfellowshipexpenses .

Patient Medical Services, Net–Patientmedicalservicesrevenuesarereportednetofcontractualallowancesandbad debt. Patient medical services are primarily provided through University ofMissouri Hospitals and Clinics,EllisFischelCancerResearchCenter,ColumbiaRegionalHospital,MissouriRehabilitationCenter andUniversityPhysicians(collectively,the“UniversityofMissouriHealthcare”).

TheUniversityofMissouriHealthcarehasagreementswiththird-partypayorsthatprovideforpaymentsatamountsdifferentfromestablishedrates .Paymentarrangementsincludeprospectivelydeterminedratesperdischarge,reimbursedcosts, discount charges and per diem payments . Patient medical services revenue is reported at the estimated netrealizableamountsfrompatients,third-partypayors,andothersforservicesrendered,includingestimatedretroactiveadjustments under reimbursement agreements with third-party payors . Retroactive adjustments are accrued on anestimatedbasisintheperiodtherelatedservicesarerenderedandadjustedinfutureperiodsasestimatesarerefinedandfinalsettlementsaredetermined.Patientmedicalservicesrevenueisalsoshownnetofestimateduncollectibleaccounts .

Amounts receivable under Medicare and Medicaid reimbursements agreements are subject to examination andcertainretroactiveadjustmentsbytherelatedprograms .Theseadjustmentsincreasednetpatientservicesrevenuesby$5,518,000and$4,001,000fortheyearsendedJune30,2005and2004,respectively.



ApercentagebreakdownofgrosspatientaccountsreceivablebymajorpayerclassificationoftheUniversityofMissouriHealthcarefortheyearsendedJune30,2005and2004,isasfollows:

Thegrosstonetpatientmedicalservicesrevenuedetailisreflectedbelowforfiscalyears2005and2004.TheStatementsofRevenues,ExpensesandChangesinNetAssetsreflectnetpatientmedicalservicesrevenueasfollows(inthousandsofdollars):

Interest Rate Swap Agreements–TheUniversityentersintointerestrateswapagreementstomodifyinterestratesonoutstandingdebt .Otherthanthenetpaymentsresultingfromthoseagreements,noamountsrelatedtotheinterestrateswapsarerecordedinthefinancialstatements.

New Accounting Pronouncements–TheGASBissuedGASBStatementNo .42,Accounting and Financial reporting for impairment of Capital Assets and for insurance recoveries,effectiveforfiscalyearsbeginningafterDecember15,2004.Thisstatementestablishesaccountingandfinancialreportingstandardsforimpairmentofcapitalassets,aswellasclarifyingandestablishingaccountingrequirementsfor insurancerecoveries.Impairmentofacapitalassetmaybetheresultofphysicaldamage,technologychanges,obsolescence,andconstructionstoppage .Ifimpairmentisdeterminedtoexist,thecapitalassetmayberevaluedanddisclosedinaccordancewiththeprovisionsofthestatement .TheUniversityhasnotyetdeterminedtheeffectthatadoptionofGASBStatementNo.42mayhaveonthefinancialstatements .

The GASB issued GASB Statement No . 43, Financial Reporting for Postemployment Benefit Plans other than Pension Plans,effectiveforfiscalyearsbeginningafterDecember15,2005andGASBStatementNo.45,Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions, effective forfiscalyearsbeginningafterDecember15,2006.TheUniversity’spostemploymentbenefitplanisself-insuredandmanagedbytheUniversity;therefore,bothstatementsareapplicable.Thestatementsprovidestandardsformeasurement,recognitionanddisplayofotherpostemploymentbenefitexpenditures,assets,andliabilities,includingapplicablenotedisclosuresandsupplementaryinformation.TheUniversityhasnotyetdeterminedtheeffectthatadoptionofGASBStatementNo.43andGASBStatementNo.45mayhaveonthefinancialstatements.

TheGASBhasalsoissuedGASBStatementNo .46,net Assets restricted by enabling legislation,effectiveforfiscalyears beginning after June 15, 2005.This statement provides guidance to governments for determiningwhen netassetshavebeenrestrictedtoaparticularusebythepassageofenablinglegislationandspecifieshowthosenetassetsshouldbereportedinfinancialstatementswhentherearechangesinthecircumstancessurroundingsuchlegislation.Enablinglegislationisaspecifictypeoflegislationthatbothauthorizestheraisingofnewresourcesandimposeslegallyenforceablelimitsonhowtheymaybeused.Thisstatementalsorequiresgovernmentstodiscloseinthenotestothefinancialstatementstheamountofnetassetsrestrictedbyenablinglegislation.TheUniversityhasnotyetdeterminedtheeffectthatadoptionofGASBStatementNo.46mayhaveonthefinancialstatements.

TheGASBhasalso issuedGASBStatementNo .47,Accounting for Termination Benefits,effectiveforfiscalyearsbeginningafterJune15,2005.Thestatementprovidesaccountingandreportingguidanceforentitiesthatofferbenefits

2005 2004Medicare 29% 22%CommercialInsurance 10% 9%Medicaid 24% 21%SelfPayandOther 11% 13%ManagedCareAgreements 26% 35%

100% 100%

2005 2004Medicare 29% 22%CommercialInsurance 10% 9%Medicaid 24% 21%SelfPayandOther 11% 13%ManagedCareAgreements 26% 35%

100% 100%

2005 2004PatientMedicalServicesRevenue,Gross $1,063,495 $900,419

LessDeductionsforContractuals (464,970) (385,174)LessBadDebtDeductions (32,131) (23,016)

PatientMedicalServicesRevenue,Net $566,394 $492,229

2005 2004PatientMedicalServicesRevenue,Gross $1,063,495 $900,419

LessDeductionsforContractuals (464,970) (385,174)LessBadDebtDeductions (32,131) (23,016)

PatientMedicalServicesRevenue,Net $566,394 $492,229



suchasearlyretirement incentivesor toemployeeswhoareinvoluntarily terminated .Thestatement is intendedtoenhanceboththeconsistencyofreportingforterminationbenefitsandthecomparabilityoffinancialstatements,byrequiringthatsimilarformsofterminationbenefitsbeaccountedforinthesamemanner.TheUniversityhasnotyetdeterminedtheeffectthatadoptionofGASBStatementNo.47mayhaveonthefinancialstatements.

Reclassifications–Certainprioryearamountshavebeenreclassifiedtoconformtocurrentyearpresentation.

Use of Estimates – The preparation of financial statements, in conformity with accounting principles generallyacceptedintheUnitedStatesofAmerica,requiresmanagement tomakeestimatesandassumptionsthataffect thereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod .Actualresultscoulddifferfromthoseestimates .

DiSCretelY PreSenteD CoMPonent Unit – MeDiCAl AlliAnCe

Nature of Operations–TheCuratorsoftheUniversityofMissouri,forandonbehalfoftheUniversityofMissouriHealthcare, and CRMC entered into an Affiliation Agreement dated August5, 1997. Pursuant to the AffiliationAgreement, theUniversity created theMedical Alliance. TheMedical Alliance then became the solemember ofCRMC .TheMedicalAlliance’spurposeistodevelopanetworkofhealthcareproviderstosupportthemissionsoftheUniversityofMissouriHealthcare.

CRMCoperatesasatwo-hospitalsystem,whichconsistsoftheSouthwestCampusandMadisonCampuscomplementedbycommunitymedicalclinics .CRMCprimarilyearnsrevenuesbyprovidinginpatient,outpatient,andemergencycareservicestopatientsinJeffersonCity,Missouri .Italsooperatesmedicalclinicsinthesurroundingcommunities .Theoperatingresultsofbothfacilitiesandclinicsareincludedinthefinancialstatements.CRMCisservedbyagroupofadmittingphysicianswhichaccountforasignificantportionofCRMC’snetrevenues.Additionally,CRMCisalsoassociatedwiththeCapitalRegionMedicalFoundation,whichisintendedtosupporttheinterestofCRMCanddoessobyraisingandholdingfundsforthebenefitofCRMC.

Net Assets – The Medical Alliance’s net assets are classified for financial reporting in the following net assetcategories:

• Invested in capital assets, net of related debt: This component of net assets includes capital assets, net ofaccumulated depreciation and outstanding principal debt balances related to the acquisition, construction orimprovementofthoseassets .

• Restricted:

Expendable–NetassetswhoseusebytheMedicalAllianceissubjecttoexternallyimposedstipulationsthatcanbefulfilledbyactionsoftheMedicalAlliancepursuanttothosestipulationsorthatexpirebythepassageoftime.

• Unrestricted:Netassets thatarenot subject toexternally imposedstipulations.UnrestrictednetassetsmaybedesignatedforspecificpurposesbyactionofmanagementortheBoardofDirectors.Whenanexpenseisincurredthatcanbepaidusingeitherrestrictedorunrestrictedresources,theMedicalAlliance’spolicyistofirstapplytheexpensetowardsrestrictedresources,andthentowardsunrestrictedresources .

Capital Assets–CapitalAssetsarerecordedatcostandaredepreciatedonastraight-linebasisovertheestimateduseful lifeofeachassetfollowingguidelinesof theAmericanHospitalAssociation.Equipmentundercapital leaseobligations isamortizedon thestraight-linebasisover theshorterperiodof the lease termor theestimatedusefullifeoftheequipment.Interestcostincurredonborrowedfundsduringtheperiodofconstructionofcapitalassetsiscapitalizedasacomponentofthecostofacquiringthoseassets.

Net Patient Medical Service Revenue–Netpatientmedicalservicerevenueisreportedattheestimatednetrealizableamountsfrompatients,third-partypayers,andothersforservicesrendered,includingestimatedretroactiveadjustmentsunderreimbursementagreementswiththird-partypayors .Retroactiveadjustmentsareaccruedonanestimatedbasisintheperiodtherelatedservicesarerenderedandadjustedinfutureperiodsasfinalsettlementsaredetermined.



2. CASh AND CASh EQUIVALENTS

Cash & Cash Equivalents – University–TheUniversity’scashandcashequivalentsincludebankdeposits,repurchaseagreementsandinvestmentsmaturinginthreemonthsorless .

Custodial Credit Risk – Deposits – University–Thecustodialcreditriskfordepositsistheriskthatintheeventofbankfailure,theUniversity’sdepositsmaynotberecovered.Statelawrequirescollateralizationofalldepositswithfederaldepositoryinsurance,bondsandotherobligationsoftheU.S.Treasury,U.S.AgenciesandinstrumentalitiesofthestateofMissouri;bondsofanycity,county,schooldistrictorspecialroaddistrictofthestateofMissouri;bondsofanystate;orasuretybondhavinganaggregatevalueatleastequaltotheamountofthedeposits.ThefollowingchartpresentscashandcashequivalentdepositsbalancesasofJune30,2005(inthousandsofdollars):

Custodial Credit Risk – Deposits – University of Missouri Retirement Trust – The University of MissouriRetirementTrusthelddeposits,consistingofcashandcashequivalentsintheamountof$211,062,000asofJune30,2005.Thesebalancesarefullysecuredandcollateralizedandarenotexposedtocustodialcreditrisk.

3. INVESTMENTS


Investments-TheinvestmentpoliciesoftheUniversityareestablishedbyitsgoverningboard,theBoardofCurators.ThepoliciesareestablishedtoensurethattheUniversityfundsaremanagedinaccordancewithSection105.688oftheRevisedStatutesofMissouri.InvestmentsfortheUniversityaremanagedintwomajorcategories:

Pooled General Investments–Thegeneralinvestmentpools,managedbytheUniversity,averagedatotalreturnof3.53%and.87%,includingunrealizedgainsandlosses,fortheyearsendedJune30,2005and2004,respectively.

Pooled Endowment Investments–Endowmentandsimilarfundsarepooledforinvestmentpurposeswhenappropriateandpermissible.Theinvestmentobjectiveistoachievelong-termtotalreturnssufficienttopreserveprincipal,afteradjusting for inflation, and tomeet the endowment spending targets. The endowment pools,managed by outsidemanagers,arethebalancedpoolandthefixedincomepoolandearnedatotalreturnof9.6%and4.8%,respectively,includingunrealizedgainsandlosses,fortheyearendedJune30,2005,and17.4%and0.0%,respectively,fortheyearendedJune30,2004 .

Ifthedonorhasnotprovidedspecificinstructionsorrestrictions,statelawpermitstheBoardofCuratorstoappropriateforexpenditureanamountofnetappreciation, realizedandunrealized,of the investmentsofendowmentfundsastheBoardconsiderstobeprudent.Whenadministeringthepowertospendnetappreciation,theBoardisrequiredto consider the University’s long- and short-term needs, present and anticipated financial requirements, expectedtotalreturnonitsinvestments,priceleveltrends,andgeneraleconomicconditions .Anynetappreciationexpendedisrequiredtobespentforthepurposesforwhichtheendowmentwasestablished.Thenetappreciationoninvestmentsofdonor-restrictedendowmentsauthorizedforexpenditureinfiscalyear2005isapproximately$26,949,000.

TheBoardofCuratorshasadoptedatotalreturnphilosophyindeterminingthespendablereturnfortheendowmentsandsimilarfunds.Thespendingformuladistributesannually5%ofatrailing12-quarteraverageoftheendowment’stotalmarketvalue,withtheunderstandingthatthisspendingrateoverthelongtermwillnotexceedtotalrealreturn

2005UninsuredandUncollateralized

UnsecuredandCollateralizedwithSecuritiesheldby

PledgingInstitution’sTrustDepartmentNotintheUniversity’s

Name

CollateralizedandFullyInsured

BankBalancesTotalCarrying

Value

CashandCashEquivalentDeposits $532 $- $148,974 $149,506

Total $532 $- $148,974 $149,506

2005UninsuredandUncollateralized

UnsecuredandCollateralizedwithSecuritiesheldby

PledgingInstitution’sTrustDepartmentNotintheUniversity’s

Name

CollateralizedandFullyInsured

BankBalancesTotalCarrying

Value

CashandCashEquivalentDeposits $532 $- $148,974 $149,506

Total $532 $- $148,974 $149,506



(netofinflations)frominvestments.However,toachieveuniformityinamountstospendfromoneyeartothenext,theactualamountavailabletospendinanygivenyearwillnotbelessthan96%ormorethan106%oftheprioryear’sexpenditure .

AtJune30,2005,theUniversityheldinvestments,byinvestmenttype,asfollows(inthousandsofdollars):

Custodial Credit Risk – The custodial credit risk for investments is the risk that in the event of failure of thecounterpartytoatransaction,theUniversitywillnotbeabletorecoverthevalueoftheinvestments.InaccordancewithUniversitypolicy,theUniversityminimizesitscustodialcreditriskondepositsbyestablishinglimitationsonthetypesofinstrumentsheldwithqualifyinginstitutions.RepurchaseagreementsmustbecollateralizedbyU.S.Governmentissuesand/orU.S.GovernmentAgencyissues.CertificatesofdepositmustbecollateralizedandheldatabankwithwhichtheUniversityhasadepositoryagreement.TheUniversity’sinvestmentof$179,590,000incommercialpaperisuninsuredanduncollaterialized.TheUniversity’sinvestmentof$11,903,000inrepurchaseagreementsisheldbytheinvestment’scounterparty,notinthenameoftheUniversity.AlloftheremainingUniversityinvestmentsareinsuredandregisteredandareheldbytheUniversityoranagentinitsname.

Interest Rate Risk–Interestrateriskistheriskthatchangesininterestrateswilladverselyaffectthefairvalueofaninvestment.TheUniversity’sPooledGeneralInvestmentsconsistprimarilyoffixedincomesecurities,withaspecificlimitationthatnomorethan15%ofthepoolconsistsofvariableratesecurities.AsameansofensuringthesafetyofprincipalinvestedinthePooledEndowmentInvestments,theUniversity’sinvestmentpolicyrequiresdiversificationoftheinvestmentportfolio .

AtJune30,2005,thematuritiesoftheUniversity’sinvestmentsareasfollows(inthousandsofdollars):

Credit Risk–Thecreditriskofinvestmentsistheriskthattheissuerorothercounterpartywillnotmeetitsobligations .ThiscreditriskistypicallymeasuredbythecreditqualityratingsofinvestmentsindebtsecuritiesasdescribedbyanationalrecognizedstatisticalratingorganizationsuchasStandardandPoor’s(S&P)andMoody’s .ForportionsoftheUniversity’sinvestments,specificallytheEndowmentFund,theUniversity’spolicystatesthatinvestmentsincorporatebondsandotherfixedincomesecuritiesmusthaveanS&PratingofAorbetter.

CarryingValueasof

June30,2005GovernmentObligations $571,579CorporateBondsandNotes 197,249CorporateStocks 563,042Other 22,519

TotalShort-TermandLong-TermInvestments 1,354,389

CommercialPaper 179,590RepurchaseAgreements 11,903TotalCashandCashEquivalents 191,493

TotalInvestments $1,545,882

CarryingValueasof

June30,2005GovernmentObligations $571,579CorporateBondsandNotes 197,249CorporateStocks 563,042Other 22,519


CommercialPaper 179,590RepurchaseAgreements 11,903TotalCashandCashEquivalents 191,493


AsofJune30,2005

Lessthan1Year

1-5Years 6-10Years

Morethan10Years CarryingValue

U.S.AgencyObligations $141,148 $263,293 $33,964 $15,364 $453,769U.S.TreasuryObligations 6,248 27,162 8,221 9,834 51,465ForeignGovernmentObligations 637 30,807 22,997 11,904 66,345U.S.CorporateBonds&Notes 55,945 101,741 12,340 6,121 176,147ForeignCorporateBonds&Notes 1,952 6,979 7,050 5,121 21,102

Total $205,930 $429,982 $84,572 $48,344 $768,828

AsofJune30,2005

Lessthan1Year

1-5Years 6-10Years

Morethan10Years CarryingValue

U.S.AgencyObligations $141,148 $263,293 $33,964 $15,364 $453,769U.S.TreasuryObligations 6,248 27,162 8,221 9,834 51,465ForeignGovernmentObligations 637 30,807 22,997 11,904 66,345U.S.CorporateBonds&Notes 55,945 101,741 12,340 6,121 176,147ForeignCorporateBonds&Notes 1,952 6,979 7,050 5,121 21,102

Total $205,930 $429,982 $84,572 $48,344 $768,828



However,theUniversityhaselectedtouseMoody’sInvestorsServiceinvestmentratingsinthefollowingCreditRiskreport .SeveralsecuritieswithinthePooledEndowmenthaveMoody’sratingsofBaaorBaandStandardandPoor’sratingsintheArange(A-,A,&A+),whichplacesthosebondswithintheparametersspecifiedintheUniversity’spolicy .

ThefollowingrepresentstheUniversity’sinvestmentexposuretocreditrisk,basedonMoody’sinvestmentratings(inthousandsofdollars):

Foreign Currency Risk –Foreigncurrencyriskistheriskthatchangesinexchangerateswilladverselyaffectthefairvalueofaforeigninvestment.Universitypolicyallows15-25%oftheinvestmentportfoliotobeinvestedininternationalinvestments(12.1%and12.2%denominatedinforeigncurrencyinfiscalyears2005and2004,respectively).Toreducetheriskrelatedtofluctuationsincurrencyexchangerates,theUniversityhasenteredintoforwardforeigncurrencycontractsthroughouttheyear.AsofJune30,2005and2004,4.7%or$63,383,000and4.6%or$61,571,000,respectively,of theUniversity’s total investmentportfoliois investedinforwardforeigncurrencycontracts.ThesecontractsaremarkedtomarketandthechangesintheirmarketvaluearerecordedininvestmentandendowmentincomeontheStatementsofRevenues,ExpensesandChangesinNetAssets.ThefollowingrepresentstheUniversity’sexposuretoforeigncurrencyrisk(inthousandsofdollars):

AsofJune30,2005Aaa Aa A Baa Ba Unrated Total

U.S.AgencyObligations $377,698 $54,979 $35 $- $- $21,057 $453,769U.S.TreasuryObligations 51,465 51,465ForeignGovernmentObligations 50,083 1,331 11,582 3,349 66,345U.S.CorporateBonds&Notes 22,870 67,706 82,691 245 2,635 176,147ForeignCorporateBonds&Notes 11,315 2,877 3,189 680 3,041 21,102

Total $461,966 $126,893 $97,497 $925 $- $81,547 $768,828


U.S.AgencyObligations $377,698 $54,979 $35 $- $- $21,057 $453,769U.S.TreasuryObligations 51,465 51,465ForeignGovernmentObligations 50,083 1,331 11,582 3,349 66,345U.S.CorporateBonds&Notes 22,870 67,706 82,691 245 2,635 176,147ForeignCorporateBonds&Notes 11,315 2,877 3,189 680 3,041 21,102

Total $461,966 $126,893 $97,497 $925 $- $81,547 $768,828

ForeignCurrencyRiskInternationalInvestmentSecuritiesatFairValue


Currency 2005

AustralianDollar $2,856BritishPoundSterling 27,112CanadianDollar 2,814ChileanPeso 21DanishKrone 911Euro 65,203HongKongDollar 2,978IsraeliShekel 166JapaneseYen 42,062MexicanNewPeso 301NewTaiwanDollar 42NewZealandDollar 67NorwegianKrone 589PolishZloty 135SouthAfricanCommRand 425SingaporeDollar 898SouthKoreanWon 98SwedishKrona 4,527SwissFranc 12,124

Total $163,329



Currency 2005

AustralianDollar $2,856BritishPoundSterling 27,112CanadianDollar 2,814ChileanPeso 21DanishKrone 911Euro 65,203HongKongDollar 2,978IsraeliShekel 166JapaneseYen 42,062MexicanNewPeso 301NewTaiwanDollar 42NewZealandDollar 67NorwegianKrone 589PolishZloty 135SouthAfricanCommRand 425SingaporeDollar 898SouthKoreanWon 98SwedishKrona 4,527SwissFranc 12,124

Total $163,329



Concentration of Credit Risk–Theconcentrationofcreditriskistheriskoflossthatmayoccurduetotheamountofinvestmentsinasingleissuer(notincludinginvestmentsissuedorguaranteedbytheU.S.government,investmentsinmutualfunds,orexternalinvestmentpools) .

For University funds invested through the Pooled General Investments category the following restrictions apply:1)CorporateBonds shouldnot exceed20%of theportfolio;2)VariableRate securities shouldnot exceed15%ofthe portfolio; and 3) Investments in obligations of theU.S.Government,U.S.GovernmentAgency issues orU.S.Governmentguaranteedsecuritiesisunlimited .

ForUniversityfundsinvestedthroughthePooledEndowmentInvestmentscategory,targetassetmixesareassessedandevaluatedtoensurediversification.Theinvestmentpolicyallowsforaportfolioconsistingofnomorethan47.5%U.S.equity,25%internationalequity,10%emergingmarketsequity,10%alternativeinvestments(maximumof5.0%inhedgefunds),10%realestateand27.5%globalfixedincome.

PortionsofthePooledEndowmentInvestmentsareinvestedinafixedincomefund,calledtheFixedIncomePool,which,duetodonorrestrictions,canonlybeinvestedinfixedincomesecurities.InvestmentsinthisportfolioconsistofU.S.Government,U.S.GovernmentAgency issues, corporate fixed income, commercial paper and repurchaseagreements .

AsofJune30,2005,oftheUniversity’stotalinvestments,18.7%areissuesoftheFederalHomeLoanBank(FHLB),8.5%areissuesoftheFederalNationalMortgageAssociation(FNMA),and5.1%areissuesoftheFederalHomeLoanMortgageCorporation(FHLMC) .

Securities Lending Transactions –TheUniversity participates in an external investment pool securities lendingprogram to augment income. The program is administered by theUniversity’s custodial agent bank,which lendsequity, government and corporate securities for a predetermined period of time to an independent broker/dealer(borrower) inexchangeforcollateral.Collateralmaybecash,U.S.Governmentsecurities,defined lettersofcreditorothercollateralapprovedbytheUniversity.Loansofdomesticsecuritiesareinitiallycollateralizedat102%ofthefairvalueofsecuritieslent.Loansofinternationalsecuritiesareinitiallycollateralizedat105%ofthefairvalueofsecuritieslent.TheUniversityhasminimizeditsexposuretocreditriskfromborrowerdefaultbyhavingthecustodialagentbankdeterminedailythatrequiredcollateralmeetsaminimumof100%ofthefairvalueofsecuritiesonloanfordomesticsecuritieslentand105%forinternationalsecuritieslent.Thefairvalueofcollateralforsecuritiesonloantotaled$81,611,000and$61,196,000atJune30,2005and2004,respectively.

TheUniversitycontinuestoreceiveinterestanddividendsduringtheloanperiod,aswellasafeefromtheborrower.In addition, the maturities of the investments made with the cash collateral generally match the maturities of thesecuritieslent.AtJune30,2005,theUniversityhasnocreditriskexposuresincethecollateralheldexceedsthevalueofthesecuritieslent.TheUniversityisfullyindemnifiedbyitscustodialbankagainstanylossesincurredasaresultofborrowerdefault .

Inaddition,atJune30,2005and2004,lettersofcreditandsecuritycollateral,notmeetingthecriteriaforinclusionintheStatementsofNetAssets,totaled$3,170,000and$941,000,respectively.AtJune30,2005,theaggregatefairvalueofthesecuritieslentandrelatedcollateralreceivedwas$81,799,000and$60,000,000,respectively.


Investments–TheinvestmentpoliciesofMedicalAllianceareestablishedbyitsboardofdirectors .ThepoliciesareestablishedtoensurethatMedicalAlliancefundsaremanagedinaccordancewiththe“PrudentManRule .”



AtJune30,2005and2004,MedicalAllianceheldthefollowinginvestments(inthousandsofdollars):

UniverSitY oF MiSSoUri retireMent trUSt

Investments – Retirement Trust–TheBoardofCuratorsoftheUniversityofMissouriestablishestheinvestmentpoliciesfortheRetirementTrust.Retirementinvestmentsemphasizediversificationacrossassetclasses,dominatedbyequitysecurities,inordertomaximizetotalinvestmentreturns.Whilepursuingthisobjective,theRetirementTrustmaintainsitsfiduciarydutiesapplicabletoinvestmentssetforthinSection105.688oftheRevisedStatutesofMissouri.TheRetirementTrustinvestmentsearnedatotalreturnof11.1%,includingunrealizedgainsandlosses,fortheyearendedJune30,2005,and18.5%fortheyearendedJune30,2004.

AtJune30,2005,theRetirementTrustheldinvestments,byinvestmenttype,asfollows(inthousandsofdollars):

Custodial Credit Risk – The custodial credit risk for investments is the risk that in the event of failure of thecounterpartytoatransaction,theRetirementTrustwillnotbeabletorecoverthevalueoftheinvestmentsthatareinthepossessionofanoutsideparty.Theinvestmentof$12,557,000incommercialpaperisuninsuredanduncollateralized.TheremainderoftheRetirementTrust’sinvestmentsareinsuredorregisteredandareheldbytheRetirementTrustoranagentinitsname .

Interest Rate Risk–Interestrateriskistheriskthatchangesininterestrateswilladverselyaffectthefairvalueofaninvestment.Asameansofensuringthesafetyofprincipalinvested,theRetirementTrust’sinvestmentpolicyrequiresdiversificationoftheinvestmentportfolio.

2005 2004InternallyDesignatedforCapitalImprovements:

RepurchaseAgreements $- $5,000Mortgage-backedsecurities 10,668 8,083MoneyMarketAccounts 13,766 6,100InterestReceivable 57 33U.S.TreasuryObligations 74 74CertificatesofDeposit 11,271 5,525

Subtotal 35,836 24,815

HeldbyTrusteeUnderIndentureAgreement:MoneyMarketAccounts 8,381 19,390InterestReceivable 8LessPortionRequiredforCurrentObligations (1,210) (748)

$43,015 $43,457

2005 2004InternallyDesignatedforCapitalImprovements:

RepurchaseAgreements $- $5,000Mortgage-backedsecurities 10,668 8,083MoneyMarketAccounts 13,766 6,100InterestReceivable 57 33U.S.TreasuryObligations 74 74CertificatesofDeposit 11,271 5,525

Subtotal 35,836 24,815

HeldbyTrusteeUnderIndentureAgreement:MoneyMarketAccounts 8,381 19,390InterestReceivable 8LessPortionRequiredforCurrentObligations (1,210) (748)

$43,015 $43,457

CarryingValueasof

June30,2005GovernmentObligations $301,689CorporateBondsandNotes 109,375CorporateStocks 1,783,813Other 33,282


CommercialPaper 12,557TotalCashandCashEquivalents 12,557


CarryingValueasof

June30,2005GovernmentObligations $301,689CorporateBondsandNotes 109,375CorporateStocks 1,783,813Other 33,282


CommercialPaper 12,557TotalCashandCashEquivalents 12,557




AtJune30,2005,thematuritiesoftheRetirementTrust’sinvestmentsareasfollows(inthousandsofdollars):

Credit Risk –Thecreditriskofinvestmentsistheriskthattheissuerorothercounterpartywillnotmeetitsobligations .ThiscreditriskismeasuredbythecreditqualityratingsofinvestmentsindebtsecuritiesasdescribedbyanationallyrecognizedstatisticalratingorganizationsuchasStandardandPoor’s(S&P)andMoody’s.TheUniversity’spolicyoninvestmentsfortheRetirementTruststatesthatinvestmentsincorporatebondsandotherfixedincomesecuritiesmusthavearatingofAorbetter .

However,theUniversityhaselectedtouseMoody’sInvestorsServiceinvestmentratingsinthefollowingCreditRiskreport .Severalsecuritieswithin theRetirementTrusthaveMoody’s ratingsofBaaorBaandStandardandPoor’sratingsintheArange(A-,A,&A+),whichplacesthosebondswithintheparametersspecifiedbyUniversity’spolicyoninvestmentsfortheRetirementTrust .

The following represents theRetirementTrust’s investment exposure to credit risk, basedonMoody’s investmentratings(inthousandsofdollars):

Concentration of Credit Risk–Theconcentrationofcreditriskistheriskoflossthatmayoccurduetotheamountofinvestmentsinasingleissuer(notincludinginvestmentsissuedorguaranteedbytheU.S.government,investmentsinmutualfunds,orexternalinvestmentpools) .TheRetirementTrustinvestmentpolicyallowsforaportfolioconsistingofnomorethan47.5%U.S.equity,25%internationalequity,10%emergingmarketsequity,10%alternativeinvestments(maximumof5.0%inhedgefunds),10%realestateand27.5%globalfixedincome.AtJune30,2005,theRetirementTrustportfoliodidnotcontainanyinvestmentsfromasingleissuerwhichexceeded5%ofthetotalportfolio.

Foreign Currency Risk –Foreigncurrencyriskistheriskthatchangesinexchangerateswilladverselyaffectthefairvalueofaforeigninvestment.TheRetirementTrustinvestsasignificantportionofitsportfolioininternationalinvestments (23.8% and 23.1% denominated in foreign currency in fiscal years 2005 and 2004, respectively). Toreduce the risk related tofluctuations in currency exchange rates, theUniversity has entered into forward foreigncurrencycontractsthroughouttheyear.AsofJune30,2005and2004,9.7%or$216,017,000and9.5%or$199,007,000,respectively,oftheRetirementTrust’sinvestmentportfolioisinvestedinforwardforeigncurrencycontracts .Thesecontractsaremarkedtomarketandthechangesintheirmarketvaluearerecordedinnetappreciation(depreciation)infairvalueofinvestmentsintheStatementsofChangesinNetAssetsHeldforPensionBenefits.

AsofJune30,2005Lessthan

1Year 1-5Years 6-10YearsMorethan10Years CarryingValue

U.S.AgencyObligations $1,527 $2,950 $5,871 $45,985 $56,333U.S.TreasuryObligations 8,414 4,883 5,665 11,787 30,749ForeignGovernmentObligations 1,678 102,338 71,641 38,950 214,607U.S.CorporateBonds&Notes 3,047 13,436 11,320 14,547 42,350ForeignCorporateBonds&Notes 6,674 24,284 21,662 14,405 67,025

Total $21,340 $147,891 $116,159 $125,674 $411,064

AsofJune30,2005Lessthan

1Year 1-5Years 6-10YearsMorethan10Years CarryingValue

U.S.AgencyObligations $1,527 $2,950 $5,871 $45,985 $56,333U.S.TreasuryObligations 8,414 4,883 5,665 11,787 30,749ForeignGovernmentObligations 1,678 102,338 71,641 38,950 214,607U.S.CorporateBonds&Notes 3,047 13,436 11,320 14,547 42,350ForeignCorporateBonds&Notes 6,674 24,284 21,662 14,405 67,025

Total $21,340 $147,891 $116,159 $125,674 $411,064


U.S.AgencyObligations $6,088 $974 $- $- $- $49,271 $56,333U.S.TreasuryObligations 30,749 30,749ForeignGovernmentObligations 160,096 7,005 39,190 8,316 214,607U.S.CorporateBonds&Notes 18,494 7,387 11,467 762 4,240 42,350ForeignCorporateBonds&Notes 34,352 7,099 9,768 2,126 13,680 67,025

Total $219,030 $22,465 $60,425 $2,888 $- $106,256 $411,064


U.S.AgencyObligations $6,088 $974 $- $- $- $49,271 $56,333U.S.TreasuryObligations 30,749 30,749ForeignGovernmentObligations 160,096 7,005 39,190 8,316 214,607U.S.CorporateBonds&Notes 18,494 7,387 11,467 762 4,240 42,350ForeignCorporateBonds&Notes 34,352 7,099 9,768 2,126 13,680 67,025

Total $219,030 $22,465 $60,425 $2,888 $- $106,256 $411,064



Securities Lending Transactions–TheRetirementTrustparticipatesinanexternalinvestmentpoolsecuritieslendingprogram to augment income .Theprogram is administeredby theRetirementTrust’s custodial agent bank,whichlendsequity,governmentandcorporatesecuritiesforapredeterminedperiodoftimetoanindependentbroker/dealer(borrower)inexchangeforcollateral.Collateralmaybecash,U.S.Governmentsecurities,definedlettersofcreditorothercollateralapprovedbytheRetirementTrust.Loansofdomesticsecuritiesareinitiallycollateralizedat102%ofthefairvalueofsecuritieslent.Loansofinternationalsecuritiesareinitiallycollateralizedat105%ofthefairvalueofsecuritieslent .TheRetirementTrusthasminimizeditsexposuretocreditriskfromborrowerdefaultbyhavingthecustodialagentbankdeterminedailythatrequiredcollateralmeetsaminimumof100%ofthefairvalueofsecuritieson loan fordomestic securities lentand105%for international securities lent.The fairvalueofcollateralheld forsecuritiesonloantotaled$173,580,000and$149,917,000atJune30,2005and2004,respectively.

TheRetirementTrustcontinues to receive interestanddividendsduring the loanperiod,aswellasa feefromtheborrower .Inaddition,thematuritiesoftheinvestmentsmadewiththecashcollateralgenerallymatchthematuritiesofthesecuritieslent.AtJune30,2005,theRetirementTrusthasnocreditriskexposuresincethecollateralheldexceedsthevalueof thesecurities lent.TheRetirementTrust is fully indemnifiedby itscustodialbankagainstany lossesincurredasaresultofborrowerdefault .

Inaddition,atJune30,2005and2004,lettersofcreditandsecuritycollateral,notmeetingthecriteriaforinclusionin theStatementsofNetAssetsHeldforPensionBenefits, totaled$11,014,000and$1,776,000,respectively, for theRetirementTrust.At June30, 2005 and2004, the aggregate fair valueof the securities lent and related collateralreceivedwas$177,170,000and$145,735,000,respectively.



Currency 2005

AustralianDollar $8,582BritishPoundSterling 89,712CanadianDollar 18,281ChileanPeso 72DanishKrone 2,476Euro 211,619HongKongDollar 8,206IsraeliShekel 561JapaneseYen 140,182MexicanNewPeso 1,014NewTaiwanDollar 94NewZealandDollar 639NorwegianKrone 1,417PolishZloty 453SouthAfricanCommRand 930SingaporeDollar 3,582SouthKoreanWon 289SwedishKrona 12,084SwissFranc 30,515

Total $530,708



Currency 2005

AustralianDollar $8,582BritishPoundSterling 89,712CanadianDollar 18,281ChileanPeso 72DanishKrone 2,476Euro 211,619HongKongDollar 8,206IsraeliShekel 561JapaneseYen 140,182MexicanNewPeso 1,014NewTaiwanDollar 94NewZealandDollar 639NorwegianKrone 1,417PolishZloty 453SouthAfricanCommRand 930SingaporeDollar 3,582SouthKoreanWon 289SwedishKrona 12,084SwissFranc 30,515

Total $530,708



4. FUNDS hELD IN TRUST BY OThERS

AtJune30,2005and2004,FundsHeldinTrustbyOthers(principallyendowmentfunds)aggregated$83,896,000and$67,349,000,respectively,atfairvalue .Duetotimerestrictionsoralegaleventthathasnotoccurred,thesefundsarenotavailabletotheUniversityandarenotincludedintheaccompanyingStatementsofNetAssets.IncomeearnedanddistributedtotheUniversityfortheyearsendedJune30,2005and2004,aggregated$1,920,000and$1,716,000,respectively .

5. ACCOUNTS RECEIVABLE

AccountsreceivableatJune30,2005and2004,aresummarizedasfollows(inthousandsofdollars):

6. NOTES RECEIVABLE

Notesreceivableconsistofresourcesavailableforfinancialloanstostudents.TheseresourcesareprovidedthroughFederalloanprogramsandUniversityloanprogramsgenerallyfundedbyexternalsources.NotesreceivableatJune30,2005and2004,aresummarizedasfollows(inthousandsofdollars):

2005 2004GrantsandContracts $43,500 $34,037StateAppropriationsandStateBondFunds 835 37,821StudentFeesandOtherAcademicCharges 72,891 49,257UniversityHospitalsandClinicsPatientServices,Net

ofContractualAllowances 80,364 65,825UniversityPhysiciansPatientServices,Net

ofContractualAllowances 15,357 15,819Subtotal 212,947 202,759

LessProvisionsforLossonAccountsReceivable:GrantsandContractsAllowance 3,885 -UniversityHospitalsandClinicsPatientServicesAllowances 14,757 12,544UniversityPhysiciansPatientServicesAllowances 4,490 879StudentFeesandOtherAcademicCharges 4,609 4,848

Subtotal 27,741 18,271$185,206 $184,488

2005 2004GrantsandContracts $43,500 $34,037StateAppropriationsandStateBondFunds 835 37,821StudentFeesandOtherAcademicCharges 72,891 49,257UniversityHospitalsandClinicsPatientServices,Net

ofContractualAllowances 80,364 65,825UniversityPhysiciansPatientServices,Net

ofContractualAllowances 15,357 15,819Subtotal 212,947 202,759

LessProvisionsforLossonAccountsReceivable:GrantsandContractsAllowance 3,885 -UniversityHospitalsandClinicsPatientServicesAllowances 14,757 12,544UniversityPhysiciansPatientServicesAllowances 4,490 879StudentFeesandOtherAcademicCharges 4,609 4,848

Subtotal 27,741 18,271$185,206 $184,488

2005 2004FederalHealthProfessionLoans $12,752 $12,983CarlD .PerkinsNationalLoans 29,712 28,228UniversityLoanPrograms 15,656 14,273

Subtotal 58,120 55,484

LessProvisionforLossonNotesReceivable 1,567 1,566$56,553 $53,918

2005 2004FederalHealthProfessionLoans $12,752 $12,983CarlD .PerkinsNationalLoans 29,712 28,228UniversityLoanPrograms 15,656 14,273

Subtotal 58,120 55,484

LessProvisionforLossonNotesReceivable 1,567 1,566$56,553 $53,918



7. CAPITAL ASSETS


CapitalassetsactivityfortheyearsendedJune30,2005and2004,issummarizedasfollows(inthousandsofdollars):

2005BeginningBalance

Additions/Transfers Retirements

2005EndingBalance

CapitalAssets,Nondepreciable:Land $53,023 $1,242 $- $54,265ArtworkandHistoricalArtifacts 16,379 167 5,412 11,134ConstructioninProgress 196,678 (67,353) - 129,325TotalCapitalAssets,Nondepreciable 266,080 (65,944) 5,412 194,724

CapitalAssets,Depreciable:BuildingsandImprovements 1,697,801 183,707 11,450 1,870,058Infrastructure 175,486 12,746 515 187,717Equipment 412,899 69,154 36,599 445,454LibraryMaterials 193,022 8,476 - 201,498TotalCapitalAssets,Depreciable 2,479,208 274,083 48,564 2,704,727

LessAccumulatedDepreciation:BuildingsandImprovements 615,822 48,461 10,107 654,176Infrastructure 60,853 7,059 515 67,397Equipment 258,551 39,603 32,818 265,336LibraryMaterials 109,738 7,291 - 117,029TotalAccumulatedDepreciation 1,044,964 102,414 43,440 1,103,938

TotalCapitalAssets,Depreciable,Net 1,434,244 171,669 5,124 1,600,789

TotalCapitalAssets,Net $1,700,324 $105,725 $10,536 $1,795,513



2004EndingBalance

CapitalAssets,Nondepreciable:Land $53,989 $1,118 $2,084 $53,023ArtworkandHistoricalArtifacts 16,298 81 - 16,379ConstructioninProgress 146,845 49,833 - 196,678TotalCapitalAssets,Nondepreciable 217,132 51,032 2,084 266,080

CapitalAssets,Depreciable:BuildingsandImprovements 1,555,321 145,412 2,932 1,697,801Infrastructure 169,354 9,441 3,309 175,486Equipment 417,046 36,394 40,541 412,899LibraryMaterials 182,345 10,677 - 193,022TotalCapitalAssets,Depreciable 2,324,066 201,924 46,782 2,479,208

LessAccumulatedDepreciation:BuildingsandImprovements 578,367 40,189 2,734 615,822Infrastructure 56,994 6,518 2,659 60,853Equipment 260,715 36,019 38,183 258,551LibraryMaterials 102,690 7,048 - 109,738TotalAccumulatedDepreciation 998,766 89,774 43,576 1,044,964





2005EndingBalance

CapitalAssets,Nondepreciable:Land $53,023 $1,242 $- $54,265ArtworkandHistoricalArtifacts 16,379 167 5,412 11,134ConstructioninProgress 196,678 (67,353) - 129,325TotalCapitalAssets,Nondepreciable 266,080 (65,944) 5,412 194,724

CapitalAssets,Depreciable:BuildingsandImprovements 1,697,801 183,707 11,450 1,870,058Infrastructure 175,486 12,746 515 187,717Equipment 412,899 69,154 36,599 445,454LibraryMaterials 193,022 8,476 - 201,498TotalCapitalAssets,Depreciable 2,479,208 274,083 48,564 2,704,727

LessAccumulatedDepreciation:BuildingsandImprovements 615,822 48,461 10,107 654,176Infrastructure 60,853 7,059 515 67,397Equipment 258,551 39,603 32,818 265,336LibraryMaterials 109,738 7,291 - 117,029TotalAccumulatedDepreciation 1,044,964 102,414 43,440 1,103,938





2004EndingBalance

CapitalAssets,Nondepreciable:Land $53,989 $1,118 $2,084 $53,023ArtworkandHistoricalArtifacts 16,298 81 - 16,379ConstructioninProgress 146,845 49,833 - 196,678TotalCapitalAssets,Nondepreciable 217,132 51,032 2,084 266,080

CapitalAssets,Depreciable:BuildingsandImprovements 1,555,321 145,412 2,932 1,697,801Infrastructure 169,354 9,441 3,309 175,486Equipment 417,046 36,394 40,541 412,899LibraryMaterials 182,345 10,677 - 193,022TotalCapitalAssets,Depreciable 2,324,066 201,924 46,782 2,479,208

LessAccumulatedDepreciation:BuildingsandImprovements 578,367 40,189 2,734 615,822Infrastructure 56,994 6,518 2,659 60,853Equipment 260,715 36,019 38,183 258,551LibraryMaterials 102,690 7,048 - 109,738TotalAccumulatedDepreciation 998,766 89,774 43,576 1,044,964





The estimated cost to complete construction in progress at June 30, 2005, is $460,667,000 ofwhich $168,321,000isavailablefromunrestrictednetassets.Theremainingcostsareexpectedtobefundedfrom$27,235,000ofStateappropriations,$69,898,000ofgifts,$10,991,000ofgrants,and$184,222,000ofbondproceeds.

Capitalassetsincludeabuildingfacilityunderacapitalleaseof$8,332,000andrelatedaccumulateddepreciationof$2,396,000and$1,979,000atJune30,2005and2004,respectively.


CapitalAssetsatJune30,2005and2004aresummarizedasfollows(inthousandsofdollars):

8. ACCRUED LIABILITIES

AccruedliabilitiesatJune302005and2004,aresummarizedasfollows(inthousandsofdollars):

9. OThER LIABILITIES

OtherliabilitiesatJune30,2005and2004,aresummarizedasfollows(inthousandsofdollars):

10. BONDS AND NOTES PAYABLE


AsofJune30,2005and2004,$565,537,000and$576,674,000,respectively,ofbondsandnoteswereoutstanding,netofunamortizedpremium/discountandlossondefeasanceof$312,000and($171,000),respectively .Theseoutstandingbondsarecomprisedof$400,025,000and$408,295,000inSystemFacilitiesRevenueBondsand$165,200,000and

2005 2004LandandImprovements $6,623 $6,519Buildings 77,229 76,644MovableEquipment 47,101 43,814ConstructioninProgress 14,591 2,765

145,544 129,742

LessAccumulatedDepreciation 78,977 72,673

TotalCapitalAssets,Net $66,567 $57,069

2005 2004LandandImprovements $6,623 $6,519Buildings 77,229 76,644MovableEquipment 47,101 43,814ConstructioninProgress 14,591 2,765

145,544 129,742

LessAccumulatedDepreciation 78,977 72,673

TotalCapitalAssets,Net $66,567 $57,069

2005 2004AccruedSalaries,WagesandRelatedBenefits $36,836 $34,541AccruedVacation 33,806 31,120AccruedSelfInsuranceClaims 29,417 24,043InterestPayable 3,915 3,866

$103,974 $93,570

2005 2004AccruedSalaries,WagesandRelatedBenefits $36,836 $34,541AccruedVacation 33,806 31,120AccruedSelfInsuranceClaims 29,417 24,043InterestPayable 3,915 3,866

$103,974 $93,570

2005Beginning

ofYear Additions Payments

2005EndofYear

CurrentPortion

AccruedVacation $39,852 $34,559 $(31,120) $43,291 $33,806AccruedSelf-InsuranceClaims 68,996 155,415 (146,221) 78,190 29,417

$108,848 $189,974 $(177,341) $121,481 $63,223

2004Beginning


2004EndofYear

CurrentPortion


$98,307 $168,827 $(158,286) $108,848 $55,163

2005Beginning


2005EndofYear

CurrentPortion


$108,848 $189,974 $(177,341) $121,481 $63,223

2004Beginning


2004EndofYear

CurrentPortion


$98,307 $168,827 $(158,286) $108,848 $55,163



$168,550,000 inHealthFacilitiesRevenueBonds at June30,2005and2004, respectively.Thebonds arepayable,bothastoprincipalandinterest,fromnetincomeordesignatedrevenuesfromtherelatedfinancedactivities.Thesebondsbearinterestatfixedandvariableratesrangingfrom2.29%to5.75%perannumandmatureatvariousdatesthroughNovember2034 .InterestonthevariablerateSystemFacilitiesRevenueBonds ispaidat theBondMarketAssociation™dailybondrate .

BondsandNotesPayableactivitybyseriesofissuancefortheyearsendedJune30,2005and2004,wasasfollows(inthousandsofdollars):

2005BeginningBalance Issuance Payments Defeasance Amortization

2005EndingBalance

SystemFacilitiesRevenueBonds:Series1997 $4,210 $- $(975) $- $- $3,235Series1998 54,165 (2,290) 51,875Series2000 71,830 (2,635) 69,195Series2001 82,925 (690) 82,235Series2002 40,000 40,000Series2003 155,165 (1,680) 153,485LessUnamortizedPremium/Discount 4,171 (110) 4,061LessLossonDefeasance (2,364) 433 (1,931)

HealthFacilitiesRevenueBonds:Series1996A 109,035 (1,380) 107,655Series1998A 59,515 (1,970) 57,545LessUnamortizedPremium/Discount (1,206) 54 (1,152)LessLossonDefeasance (772) 106 (666)

576,674 $- $(11,620) $- $483 565,537LessCurrentPortion 11,620 13,485

$565,054 $552,052


2004EndingBalance

SystemFacilitiesRevenueBonds:Series1993 $37,810 $- $(1,030) $(36,780) $- $-Series1997 5,135 (925) 4,210Series1998 56,365 (2,200) 54,165Series2000 74,325 (2,495) 71,830Series2001 83,575 (650) 82,925Series2002 40,000 40,000Series2003 155,165 155,165LessUnamortizedPremium/Discount (199) 4,102 368 (100) 4,171LessLossonDefeasance (1,631) (1,143) 410 (2,364)

HealthFacilitiesRevenueBonds:Series1996A 110,355 (1,320) 109,035Series1998A 61,395 (1,880) 59,515LessUnamortizedPremium/Discount (1,260) 54 (1,206)LessLossonDefeasance (878) 106 (772)NotePayable 273 (273) -

465,265 $159,267 $(10,773) $(37,555) $470 576,674LessCurrentPortion 10,773 11,620

$454,492 $565,054


2005EndingBalance

SystemFacilitiesRevenueBonds:Series1997 $4,210 $- $(975) $- $- $3,235Series1998 54,165 (2,290) 51,875Series2000 71,830 (2,635) 69,195Series2001 82,925 (690) 82,235Series2002 40,000 40,000Series2003 155,165 (1,680) 153,485LessUnamortizedPremium/Discount 4,171 (110) 4,061LessLossonDefeasance (2,364) 433 (1,931)

HealthFacilitiesRevenueBonds:Series1996A 109,035 (1,380) 107,655Series1998A 59,515 (1,970) 57,545LessUnamortizedPremium/Discount (1,206) 54 (1,152)LessLossonDefeasance (772) 106 (666)

576,674 $- $(11,620) $- $483 565,537LessCurrentPortion 11,620 13,485

$565,054 $552,052


2004EndingBalance

SystemFacilitiesRevenueBonds:Series1993 $37,810 $- $(1,030) $(36,780) $- $-Series1997 5,135 (925) 4,210Series1998 56,365 (2,200) 54,165Series2000 74,325 (2,495) 71,830Series2001 83,575 (650) 82,925Series2002 40,000 40,000Series2003 155,165 155,165LessUnamortizedPremium/Discount (199) 4,102 368 (100) 4,171LessLossonDefeasance (1,631) (1,143) 410 (2,364)

HealthFacilitiesRevenueBonds:Series1996A 110,355 (1,320) 109,035Series1998A 61,395 (1,880) 59,515LessUnamortizedPremium/Discount (1,260) 54 (1,206)LessLossonDefeasance (878) 106 (772)NotePayable 273 (273) -

465,265 $159,267 $(10,773) $(37,555) $470 576,674LessCurrentPortion 10,773 11,620

$454,492 $565,054



AsofJune30,2005,thetotalofprincipalandinterest(inthousandsofdollars)dueonbondsduringthenextfiveyearsandinsubsequentfive-yearperiodsisasfollows:

FutureinterestpaymentrequirementsforvariableratedebtaredeterminedusingtherateineffectatJune30,2005,of2.29%.Theaboveinterestpaymentsalsoincludeestimatedpaymentsontheinterestrateswapagreement,asdiscussedbelow,atafixedrateof3.95%,netofthefundsreceivedfromthecounterpartytothetransactionatarateeffectiveatJune30,2005,of2.43%.

On November 13, 2003, the University issued $155,165,000 of System Facilities Revenue Bonds, consisting of$118,080,000inSeries2003Abondsattheinterestcostof4.72%and$37,085,000ofSeries2003Bbondsattheinterestcostof4.19%.ProceedsfromtheissuanceoftheSeries2003AbondswereusedtofinanceconstructionofnewhousingfacilitiesontheColumbia,KansasCityandRollacampuses,variousotherprojectsandthecostofissuance .Proceedsfromthe issuanceof theSeries2003Bbondswereused toadvance refundanddefease theUniversityofMissouriSystemFacilitiesRevenueBonds,Series1993intheamountof$36,780,000andtofinancecertaincostsofissuance.

A $1,143,000 loss in connection with the defeasance of the Series 1993 Bonds is included as a reduction of debtoutstandingandwillbeamortizedovertheremaininglifeoftheoriginalSeries1993Bonds .Thedefeasancedecreasedaggregatedebtservicepaymentsby$5,288,000resultinginaneconomicgain(differencebetweenthepresentvaluesoftheoldandnewdebtservicepayments)totheUniversityof$3,525,000.

OnJune14,2005,theUniversityenteredintoaninterestrateswapagreementon$134,425,000,notionalamount,tohedgetheinterestrateriskassociatedwithfutureTax-ExemptBonds.TheUniversitymakespaymentsbasedonafixedrateof3.353%andreceivespaymentsfromthecounterpartybasedonafloatingrateof70%ofLIBOR.NetpaymentswillcommenceonDecember1,2005andwillcontinueonamonthlybasisuntiltheswapterminates.Theinterestrateswapagreementwill terminateno later thanFebruary15,2006.The2006Aand2006BSystemFacilitiesRevenueBondsareanticipatedtobeissuedonorbeforeFebruary15,2006.

Ontheterminationdate,ifinterestrateshaverisen,theUniversitywouldreceiveapaymentfromthecounterparty,therebyreducingtheamount thatneeds tobeborrowedandloweringdebtservice to thesamelevelhadthebondsbeenissuedonthedatetheswapwasagreedto.Ifinterestrateshavefallen,theUniversityofMissouriwouldmakeapaymenttothecounterpartybyissuingahigheramountofdebt .However,byissuingatalowerinterestrate,debtservicewouldagainapproximatewhatwouldhavebeenavailableonthedatetheagreementwassigned .

AsofJune30,2005,theswaphadafairvalueof($2,145,940),whichrepresentsthecosttotheUniversitytoterminatetheswap .Thefairvaluewasdevelopedusingthezerocouponmethodandproprietarymodels,andwaspreparedbythecounterparty,BankofAmerica,amajorU.S.financialinstitution.Thezerocouponmethodcalculatesthefuturenetsettlementpaymentsrequiredbytheswap,assumingthatthecurrentforwardratesimpliedbytheyieldcurvecorrectly

FiscalYear Principal Interest

NetPaymentsonSwap

Agreement2006 $13,485 $24,676 $6032007 14,155 24,062 6082008 14,785 23,423 6082009 15,480 22,751 6082010 16,235 22,024 6162011-2015 79,255 99,280 3,0292016-2020 95,670 79,207 3,0382021-2025 117,905 54,381 3,0382026-2030 130,170 23,664 3,0382031-2035 68,085 3,429 1,681

$565,225 $376,897 $16,867

FiscalYear Principal Interest

NetPaymentsonSwap

Agreement2006 $13,485 $24,676 $6032007 14,155 24,062 6082008 14,785 23,423 6082009 15,480 22,751 6082010 16,235 22,024 6162011-2015 79,255 99,280 3,0292016-2020 95,670 79,207 3,0382021-2025 117,905 54,381 3,0382026-2030 130,170 23,664 3,0382031-2035 68,085 3,429 1,681

$565,225 $376,897 $16,867



anticipatefuturespotinterestrates .Thesepaymentsarethendiscountedusingthespotratesimpliedbythecurrentyieldcurveforhypotheticalzero-couponbondsdueonthedateofeachnetsettlementoftheswap .

Inaddition,theUniversitymaintainsathirty-yearinterestrateswapagreementon$40,000,000,notionalamount,ofitsvariablerateSystemFacilitiesRevenueBonds .Thepurposeoftheinterestrateswapagreementistoconvertvariableratedebttofixedratedebt.Basedontheswapagreement,theUniversityowesinterestcalculatedatafixedrateof3.95%tothecounterpartytotheswap.Inreturn,thecounterpartyowestheUniversityinterestbasedonavariableratesetweekly.The$40,000,000inbondprincipalisnotexchanged;itisonlythebasisonwhichtheinterestpaymentsarecalculated .

TheUniversitycontinuestopayinteresttothebondholdersatthevariablerateprovidedbythebonds.However,duringthetermoftheswapagreement,theUniversityeffectivelypaysafixedrateonthedebt.TheUniversitywillreverttovariableratesifthecounterpartytotheswapdefaultsoriftheswapisterminated .AterminationoftheswapagreementmayalsoresultintheUniversitymakingorreceivingaterminationpayment.

AsofJune30,2005,theswaphadafairvalueof($3,690,830),whichrepresentsthecosttotheUniversitytoterminatetheswap .Thefairvaluewasdevelopedusingthezerocouponmethodandproprietarymodels,andwaspreparedbythecounterparty,J.P.MorganChaseBank,amajorU.S.financialinstitution.Thezerocouponmethodcalculatesthefuturenetsettlementpaymentsrequiredbytheswap,assumingthatthecurrentforwardratesimpliedbytheyieldcurvecorrectlyanticipatefuturespotinterestrates .Thesepaymentsarethendiscountedusingthespotratesimpliedbythecurrentyieldcurveforhypotheticalzero-couponbondsdueonthedateofeachnetsettlementoftheswap .

AsofJune30,2005,theUniversitywasnotexposedtocreditriskontheterminationpaymentbecausetheswaphadanegative fairvalueand theUniversitywouldhaveowed thepayment.However, should interest rateschangeandthefairvalueof theswapbecomepositive, theUniversitywouldbeexposedtocreditrisk.Theswapcounterpartywas ratedAA- by Standard&Poor’s andAa2 byMoody’s Investors Service as of June 30, 2005. In the event aratingsdowngradeoccurs,thecounterpartymayberequiredtoprovidecollateraliftheUniversity’soverallexposureexceedspredetermined levels.Permittedcollateral investments includeU.S.Treasuries,U.S.governmentagencies,cashandcommercialpaperratedA1/P1byStandard&Poor’sandMoody’s,respectively .CollateralmaybeheldbytheUniversityorbyathirdpartycustodian.

TheswapexposestheUniversitytobasisriskshouldtheweeklyBMAratepaidbythecounterpartyfallbelowthedailyinterestratedueonthebonds.ThisbasisriskcanbetheresultofadowngradeoftheUniversity’srating,dailyratesbecominghigherthanweeklyrates,orthepricingoftheUniversity’sbondsbytheremarketingagentatrateshigherthantheBMAindex .

AtJune30,2005and2004,in-substancedefeasedbondsaggregating$52,205,000and$53,620,000,respectively,areoutstanding .




BondsandNotespayableactivitybyseriesofissuancefortheyearsendedJune30,2005and2004,wasasfollows(inthousandsofdollars):

InJune2004,MedicalAllianceissued$17,500,000oftax-exemptHealthFacilitiesRevenueBondsSeries2004thoughtheHealthandEducationalFacilitiesAuthorityoftheStateofMissouri .Thebondsproceedswillbeusedprimarilytopayorreimbursethecostsofacquiring,constructingandequippingcertainhealthfacilitiesofMedicalAllianceandtofundthefuturedebtservicerequirementfundfortheseSeries2004bonds.

Similar to theSeries1998bonds, theSeries2004bondswere issuedpursuant to theMasterTrust IndenturedatedDecember1, 1998, as supplemented on June1, 2004.Under the terms of theMasterTrust Indenture (the“MasterIndenture”),MedicalAllianceisrequiredtomakepaymentsofprincipal,premium,ifany,andinterestonthebonds.TheSeries1998and2004bondsare securedby theunrestricted receivablesofMedicalAlliance. In addition, theMasterIndenturecontainscertainrestrictionsontheoperationsandactivitiesofMedicalAlliance,including,amongother things, covenants restricting the incurrenceof additional indebtedness and thecreationof liensonproperty,exceptaspermittedbytheMasterIndenture .

TheMasterIndenturehasmandatorysinkingfundredemptionrequirementsinwhichfundsarerequiredtobesetasidebeginningin2014and2025fortheSeries1998bondsandSeries2004bonds,respectively.

InterestexpenseincurredonthebondsduringtheyearsendedJune30,2005and2004was$2,077,000and$1,185,000,respectively,ofwhich$737,000wascapitalizedduringtheyearendedJune30,2005.

2005BeginningBalance Issuance Payments

2005EndingBalance

HealthFacilitiesRevenueBondsSeries1998,datedDecember1,1998andmaturingNovember1,2028,payableingraduatedinstallmentsfromNovember1,1999toNovember1,2028,bearinginterestrangingfrom3.35%to5.30% $22,745 $- $(480) $22,265

HealthFacilitiesRevenueBondsSeries2004,datedJune1,2004andmaturingNovember1,2029,payableingraduatedinstallmentsfromNovember1,2005toNovember1,2029,bearinginterestrangingfrom2.25%to5.75% 17,500 17,500

40,245 $- $(480) 39,765Lesscurrentmaturities (480) (870)

$39,765 $38,895


2004EndingBalance



23,210 $17,500 $(465) 40,245Lesscurrentmaturities (465) (480)

$22,745 $39,765


2005EndingBalance



40,245 $- $(480) 39,765Lesscurrentmaturities (480) (870)

$39,765 $38,895


2004EndingBalance



23,210 $17,500 $(465) 40,245Lesscurrentmaturities (465) (480)

$22,745 $39,765



AsofJune30,2005,thetotalofprincipalandinterest(inthousandsofdollars)dueonbondsduringthenextfiveyearsandinsubsequentfive-yearperiodsisasfollows:

11. ShORT-TERM BORROWINGS

DuringtheyearendedJune30,2005,theUniversitysold$168,000,000ofcapitalprojectnotesataneffectiveinterestrateof1.5%.Themaximumamountofnotesoutstandingduringtheyearwas$168,000,000andallwererepaidinfullby June30, 2005.Proceeds from the issuanceof the capital project noteswere used to fundvarious constructionprojects.CapitalprojectnoteactivityfortheyearendedJune30,2005isasfollows(inthousandsofdollars):

TherewerenocapitalprojectnotessoldbytheUniversityduringtheyearendedJune30,2004.

12. LEASE OBLIGATIONS AND COMMITMENTS

TheUniversityleasesvariousfacilitiesandequipmentthroughoperatingandcapitalleases.Facilitiesundercapitalizedleasesarerecordedatthepresentvalueoffutureminimumleasepayments .

CapitalleaseobligationsactivityfortheyearsendedJune30,2005and2004,isasfollows(inthousandsofdollars):

ThefutureminimumpaymentsonallsignificantleaseswithinitialorremainingtermsofoneyearormoreatJune30,2005,areasfollows(inthousandsofdollars):

Total rental expenditures for operating leases for the years ended June 30, 2005 and 2004,were $14,121,000 and$12,087,000,respectively.

YearEndingJune30 Principal Interest2006 $870 $2,0242007 900 1,9922008 935 1,9572009 970 1,9172010 1,010 1,8742011-2015 5,795 8,6082016-2020 7,375 6,9712021-2025 9,520 4,7662026-2029 12,390 1,803

$39,765 $31,912

YearEndingJune30 Principal Interest2006 $870 $2,0242007 900 1,9922008 935 1,9572009 970 1,9172010 1,010 1,8742011-2015 5,795 8,6082016-2020 7,375 6,9712021-2025 9,520 4,7662026-2029 12,390 1,803

$39,765 $31,912

FiscalYearBeginning

ofYear Issuance PaymentsEndofYear

CapitalProjectNotes,SeriesFY2004-2005 2005 $- $168,000 $(168,000) $-FiscalYear

BeginningofYear Issuance Payments

EndofYear

CapitalProjectNotes,SeriesFY2004-2005 2005 $- $168,000 $(168,000) $-

FiscalYear

BeginningofYear Additions Payments

EndofYear

CurrentPortion

2005 $10,532 $- $(361) $10,171 $3922004 10,864 - (332) 10,532 361

FiscalYear


EndofYear

CurrentPortion

2005 $10,532 $- $(361) $10,171 $3922004 10,864 - (332) 10,532 361

FiscalYear Capital Operating2006 $1,374 $3,4862007 1,374 7852008 1,374 4562009 1,374 4562010 1,374 4422011-2015 6,871 1,7592016-2020 5,840 143

TotalFutureMinimumPayments 19,581 $7,527Less:AmountRepresentingInterest 9,410PresentValueofFutureMinimumLeasePayments $10,171

FiscalYear Capital Operating2006 $1,374 $3,4862007 1,374 7852008 1,374 4562009 1,374 4562010 1,374 4422011-2015 6,871 1,7592016-2020 5,840 143

TotalFutureMinimumPayments 19,581 $7,527Less:AmountRepresentingInterest 9,410PresentValueofFutureMinimumLeasePayments $10,171



Inadditiontotheaboveleaseobligations,theUniversityhasoutstandingcommitmentsfortheacquisition,usageandongoingsupportofcertainsoftwareforitspatientclinicalsystems.AsofJune30,2005,thesecommitmentstotaled$21,180,000andwillbepaidinthefollowingamounts:$4,351,000in2006,$3,960,000inyear2007and$12,869,000inyears2008-2011.

Description of Sublease Arrangement with institute for outpatient Surgery (“ioS”) –Concurrentwith the saleofassets to IOSon July1, 2002, theUniversity entered into an agreementwith IOSwhereby IOS subleased certainbuilding space from theUniversity for aperiodof approximately17years at currentmarket rates.TheUniversityrecordedthetransactionasadirectfinancingleaseandrecordedaminimumleasepaymenttobereceivedof$6,375,000,unearned rental income of $3,233,000 and a write-off of $3,142,000 of building and improvements related to thesublease.ThefutureminimumleasepaymentstobereceivedunderthissubleaseasofJune30,2005,areasfollows(inthousandsofdollars):

During2005and2004,theUniversityreceived$303,000and$287,000,respectively,ofrentalincomefromIOS.


TheMedicalAllianceleasescertaincomputerandmedicalequipmentthroughoperatingandcapitalleases.Equipmentundercapitalizedleasesisrecordedatthepresentvalueoffutureminimumleasepayments .

CapitalleaseobligationsactivityfortheyearsendedJune30,2005and2004,isasfollows(inthousandsofdollars):

ThefutureminimumpaymentsonallsignificantleaseswithinitialorremainingtermsofoneyearormoreatJune30,2005,areasfollows(inthousandsofdollars):

TotalrentalexpendituresforoperatingleasesfortheyearsendedJune30,2005and2004,were$542,000and$614,000,respectively .

13. RISk MANAGEMENT

TheUniversityisexposedtovariousrisksoflossrelatedtotorts;theftof,damageto,anddestructionofassets;injuriestoemployees;naturaldisasters;andvariousmedicallyrelatedbenefitprogramsforemployees.TheUniversityfundsthese losses through a combination of self-insured retentions and commercially purchased insurance . The amountofself-insurancefundsandcommercialinsurancemaintainedarebaseduponanalysisofhistoricalinformationandactuarialestimates.Settledclaimshavenotexceededcommercialcoverageinanyofthepastthreefiscalyears.

TotalMinimumLeasePaymentstobeReceived:Current $418Noncurrent 5,539Total 5,957Less:UnearnedRentalIncome (3,087)PresentValueofFutureMinimumLeasePaymentsReceivable $2,870

TotalMinimumLeasePaymentstobeReceived:Current $418Noncurrent 5,539Total 5,957Less:UnearnedRentalIncome (3,087)PresentValueofFutureMinimumLeasePaymentsReceivable $2,870

FiscalYear


EndofYear

CurrentPortion

2005 $291 $24 $(108) $207 $1122004 388 (97) 291 102

FiscalYear


EndofYear

CurrentPortion

2005 $291 $24 $(108) $207 $1122004 388 (97) 291 102

FiscalYear Capital Operating2006 $120 $2122007 85 812008 9 192009 4 -

TotalFutureMinimumPayments 218 $312Less:AmountRepresentingInterest 11PresentValueofFutureMinimumLeasePayments $207

FiscalYear Capital Operating2006 $120 $2122007 85 812008 9 192009 4 -

TotalFutureMinimumPayments 218 $312Less:AmountRepresentingInterest 11PresentValueofFutureMinimumLeasePayments $207



The liability for self-insurance claims at June 30, 2005 and 2004 of $78,190,000 and $68,996,000, respectively,representsthepresentvalueofamountsestimatedtohavebeenincurredbythosedates,usingdiscountratesrangingfrom2.70%to4.20%forfiscalyear2005and3.25%to3.70%forfiscalyear2004,basedonexpectedfutureinvestmentyieldassumptions.Additionally,atJune30,2005,thereisarangeofself-insuranceclaimsoutstanding,from$560,000to$1,065,000,whichtheUniversityhasdeterminedthereisareasonablepossibilitythatalosscontingencymaybeincurred but no accrual has beenmadewithin the financial statements because the loss is not both probable andestimable.Changesinthisliability(inthousandsofdollars)duringfiscalyears2005and2004wereasfollows:

14. CONTINGENCIES

InDecember2002,theCircuitCourtofSt.LouisCounty,MissourirenderedadecisioninacasefiledinJanuary,1998,findingthattheUniversityhadviolatedastatuteenactedin1872whichprovidedthatyouthovertheageof16andresidentoftheStateofMissouricouldattendtheUniversitywithoutpaymentoftuitionforundergraduateeducation.Thecourtdecidedonlytheliabilityphaseofthecaseanddidnotconsiderwhatwouldbeanappropriateremedyorifinfactthereshouldbeanyfindingofdamages.TheUniversityappealedthatCourt’sdecisiontotheEasternDistrictCourtofAppealsinSt .Louis,whichtransferredtheappealtotheSupremeCourtofMissouri .TheSupremeCourtdismissedtheappealasbeingprematureandremandedthecasetotheCircuitCourtofSt .LouisCountyforatrialanddeterminationofwhatremedy,ifany,isappropriate .Thestatutewasamendedin2001toauthorizethechargingoftuition .Thelitigation,therefore,concernsstudentsenrolledpriortothefallsemesterof2001 .

The Circuit Court of St . Louis County appointed a Special Commissioner to conduct discovery and non-bindingmediation in thiscase.Asaresult,asettlementwasagreed toby theparties,whichprovidesfor theUniversity toestablish a scholarship fund of $10 million for the class members and spouses and children of class members . Inaddition,theUniversitywouldpayslightlyinexcessof$1millioninattorneyfees,expensesandcosts.AsofJune30,2005,theUniversityaccountedforthe$10millionscholarshipfundasrestrictednetassets.ThestatusofthesettlementapprovedisdiscussedinNote21 .

15. RETIREMENT, DISABILITY AND DEATh BENEFIT PLAN

Basis of Accounting–TheUniversityofMissouriRetirement,Disability,andDeathBenefitPlan(the“Plan”)financialstatementsincludedhereinarepreparedusingtheaccrualbasisofaccounting .Employercontributionstotheplanarerecognizedwhendueand theemployerhasmadea formalcommitment toprovide thecontributions.Benefitsandrefundsarerecognizedwhendueandpayableinaccordancewiththetermsoftheplan .

Plan Description–ThePlanisasingleemployer,definedbenefitplanforallqualifiedemployees.AsauthorizedbyState statute, theUniversity’sBoardofCurators administers thePlan and establishes its terms.SeparatefinancialstatementsandsupplementalschedulesarenotpreparedforthePlan .

TotalUniversitypayrollswere$987,240,000and$919,594,000theyearsendedJune30,2005and2004,respectively,ofwhich$766,794,000and$720,973,000werecoveredbythePlanfortherespectiveperiods.AtJune30,2005and2004,membershipinthePlanconsistedof:

FiscalYear

BeginningofYear

NewClaimsandChangesinEstimates

ClaimPayments

EndofYear

2005 $68,996 $155,415 $(146,221) $78,1902004 58,275 137,746 (127,025) 68,9962003 49,855 122,277 (113,857) 58,275

FiscalYear

BeginningofYear

NewClaimsandChangesinEstimates

ClaimPayments

EndofYear

2005 $68,996 $155,415 $(146,221) $78,1902004 58,275 137,746 (127,025) 68,9962003 49,855 122,277 (113,857) 58,275

2005 2004Activemembers:Vested 9,382 8,689Nonvested 7,469 7,656Pensioners 6,443 6,429FormerEmployeeswithDeferredPensions 2,473 2,281Total 25,767 25,055

2005 2004Activemembers:Vested 9,382 8,689Nonvested 7,469 7,656Pensioners 6,443 6,429FormerEmployeeswithDeferredPensions 2,473 2,281Total 25,767 25,055



Benefit Provisions–Allfull-timeemployeesareeligibleforbenefitsafterfiveyearsofcreditedservice.Theannuallifetimeannuitypayabletoavestedemployeewhoretiresatage65orlateriscalculatedas2.2%timesthenumberofyearsofservicetimesthecompensationbase.Compensationbaseisdefinedastheindividual’saveragecompensationforthefiveconsecutivehighestsalaryyears.Academicmemberswhorendersummerteachingandresearchservicereceiveanadditionalcreditforsuchservice .Pensionadjustmentsmaybeapprovedatcertaintimes,whichincreasethebenefitspaidexistingpensioners.

Full benefits are available tomemberswho retire at age65or after.Vested employeesmay retireprior to age65,providedtheyareatleastage55withatleasttenyearsofcreditedservice,orage60withfiveyearsofcreditedservice.Benefitsarereducedforthosewhoretireearly,unlesstheyretireatage62orlaterwithatleast25yearsofcreditedservice.Atretirement,upto30%ofthevalueoftheretirementannuitycanbetakeninalumpsum;alsothesinglelifeannuitycanbeexchangedforanactuariallyequivalentannuityoption(electedfromanarrayofannuitieswithjointandsurvivor,periodcertain,andguaranteedannualincreasefeatures) .

Vestedemployeeswhoterminatepriortoeligibilityforretirementmayelecttohave100%oftheactuarialequivalentoftheirbenefittransferredtoanIndividualRetirementAnnuityorintoanotheremployer’squalifiedplanthatacceptssuchrollovers.Iftheactuarialequivalentislessthan$20,000,itmaybetakenintheformofalumpsumpayment.

ThevalueoftheaccruedbenefittoavestedemployeeatterminationoratretirementissubjecttoaminimumvalueasprovidedbythePlan’scashbalancefeature.Thisfeaturecomputesanaccrualequalto5%oftheemployee’seligiblecompensationinvestedat7.5%perannum.

ThePlanincludesaprovisionallowingvestedemployees,whobecomedisabled,tocontinuetoaccrueservicecredituntiltheyretire,andaprovisionwhichprescribesapre-retirementdeathbenefitforvestedemployees.

Contributions – The University’s contributions to the Plan are equal to the actuarially determined contributionrequirement, as apercentofpayroll,whichaveraged6.4%and6.7%for theyears ended June30,2005and2004,respectively.ThePlanisfunded100%byUniversitycontributionsanddoesnotrequireemployeecontributions.Thecontributionrateisupdatedannually,atthebeginningoftheUniversity’sfiscalyearonJuly1,toreflecttheactuariallydeterminedfundingrequirementfromthemostrecentvaluation,asoftheprecedingOctober1,andtheadoptionofanyPlanamendmentsduringtheinterim .

TheannualrequiredcontributionfortheyearendedJune30,2005,wasdeterminedaspartoftheOctober1,2003,actuarialvaluation,usingtheentryagenormalactuarialcostmethod .

TheannualrequiredcontributionfortheyearendedJune30,2004,wasdeterminedaspartoftheOctober1,2002,actuarialvaluation,usingtheentryagenormalactuarialcostmethod .

SChEDULE OF EMPLOYER CONTRIBUTIONS Required Supplementary Information - Unaudited


AnnualRequiredContributionFiscalYear

As%ofPayroll InDollars

PercentageContributed

NetPensionObligation

2000 5.8% $37,036 100% $02001 4.4% 29,272 100% 02002 3.6% 25,319 100% 02003 2.6% 17,962 100% 02004 6.7% 48,521 100% 02005 6.4% 49,075 100% 0

SChEDULE OF EMPLOYER CONTRIBUTIONS Required Supplementary Information - Unaudited


AnnualRequiredContributionFiscalYear

As%ofPayroll InDollars

PercentageContributed

NetPensionObligation

2000 5.8% $37,036 100% $02001 4.4% 29,272 100% 02002 3.6% 25,319 100% 02003 2.6% 17,962 100% 02004 6.7% 48,521 100% 02005 6.4% 49,075 100% 0



SignificantassumptionsusedinthevaluationsfortheyearsendedJune30,2005and2004were:

TheactuarialvalueofassetsisbasedonthecostofthePlan’sunderlyingassets .AlthoughanetpensionobligationdidnotexistasofJune30,2005,anyfutureliabilitiesincurredwouldbeamortizedover20yearsusingtheleveldollarmethodonanopenbasis .

Thescheduleoffundingprogressisasfollows:

16. OThER POSTEMPLOYMENT BENEFITS

InadditiontothepensionbenefitsdescribedinNote15,theUniversityprovidespostretirementmedical,dentalandlifeinsurancebenefitstoemployeeswhoretirefromtheUniversityafterattainingage55andbeforereachingage60withtenormoreyearsofservice,or,whoretireafterattainingage60withfiveormoreyearsofservice.AsofJune30,2005and2004,5,475retireesmetthoseeligibilityrequirements.

ForemployeesretiringpriortoSeptember1,1990,theUniversitycontributestowardpremiumsatthesamerateasforactiveemployees;2/3ofthepremiumformedicalbenefitsand1/2ofthedentalplanpremium.ForemployeeswhoretiredunderthetermsoftheRetirementandDeathBenefitPlanonSeptember1,1990orthereafter,theUniversitycontributestowardpremiumsonthebasisoftheemployee’slengthofserviceandageatretirement .

TheUniversitymakesavailable twogroup term life insuranceoptions.OptionAcoverage isequal to the retiree’ssalary at thedateof retirement andgradedadjustments in coveragemadeat the attainmentof specific age levels.Thiscoverage ispaid in fullby theUniversity.OptionBcoverage isequal to two times the retiree’s salaryat thedateofretirementwithgradedadjustmentsincoveragemadeattheattainmentofspecificagelevels.TheUniversitypaysapproximately91%ofthecostofOptionBcoverage.CoverageforgrouptermlifeinsuranceendsonJanuary1followingtheretiree’s70thbirthday .

Postemploymentmedical,dentalandlifeinsurancebenefitsarealsoprovidedtothoselong-termdisabilityclaimantswhowerevestedintheUniversity’sretirementplanatthedatetheirdisabilitybegan,providedtheonsetdateoftheirdisabilitywasonorafterSeptember1,1990.AsofJune30,2005and2004,228and214long-termdisabilityclaimantsmetthoseeligibilityrequirements.

2005 2004AssumedAnnualRateofReturnonInvestments 8.0% 8.0%ProjectedAnnualAverageSalaryIncreasesforAcademicandAdministrativeEmployees 5.2% 5.2%ProjectedAnnualAverageSalaryIncreasesforClericalandServiceEmployees 4.5% 4.5%FutureRetireeAdHocIncreasesorCostofLivingAdjustments 0.0% 0.0%

2005 2004AssumedAnnualRateofReturnonInvestments 8.0% 8.0%ProjectedAnnualAverageSalaryIncreasesforAcademicandAdministrativeEmployees 5.2% 5.2%ProjectedAnnualAverageSalaryIncreasesforClericalandServiceEmployees 4.5% 4.5%FutureRetireeAdHocIncreasesorCostofLivingAdjustments 0.0% 0.0%

SChEDULE OF FUNDING PROGRESS Required Supplementary Information - Unaudited


Date

ActuarialValueofAssets

ActuarialAccruedLiability

FundingExcess/

(UnfundedLiability)

FundedRatio

CoveredPayroll

FundingExcess/(UnfundedLiability)asa%ofCovered

Payroll10/1/99 $1,740,756 $1,531,205 $209,551 113.7% $623,318 33.5%10/1/00 1,906,678 1,686,684 219,994 113.0% 646,198 34.0%10/1/01 2,119,047* 1,813,018 306,029 116.9% 696,163 44.0%10/1/02 1,949,794 1,937,617 12,177 100.6% 654,575 1.9%10/1/03 2,067,727 2,030,613 37,114 101.8% 687,681 5.4%10/1/04 2,075,032 2,144,738 (69,706) 96.8% 753,266 (9.3)%

* the actuarial value of asset methodology changes effective october 1, 2001, from the book value method, adjusted, if necessary, to be within 20% of market, to the expected return asset valuation method, adjusted, if necessary, to be within 20% of market.

SChEDULE OF FUNDING PROGRESS Required Supplementary Information - Unaudited


Date

ActuarialValueofAssets

ActuarialAccruedLiability

FundingExcess/

(UnfundedLiability)

FundedRatio

CoveredPayroll

FundingExcess/(UnfundedLiability)asa%ofCovered

Payroll10/1/99 $1,740,756 $1,531,205 $209,551 113.7% $623,318 33.5%10/1/00 1,906,678 1,686,684 219,994 113.0% 646,198 34.0%10/1/01 2,119,047* 1,813,018 306,029 116.9% 696,163 44.0%10/1/02 1,949,794 1,937,617 12,177 100.6% 654,575 1.9%10/1/03 2,067,727 2,030,613 37,114 101.8% 687,681 5.4%10/1/04 2,075,032 2,144,738 (69,706) 96.8% 753,266 (9.3)%

* the actuarial value of asset methodology changes effective october 1, 2001, from the book value method, adjusted, if necessary, to be within 20% of market, to the expected return asset valuation method, adjusted, if necessary, to be within 20% of market.



TheUniversitymakesavailabletwolong-termdisabilityoptionstoitsemployees.OptionAcoverageisequalto60%oftheemployee’ssalaryonthedatethedisabilitybegan,withfullintegrationwithbenefitsfromothersources.OptionBcoverageisequalto662/3%oftheemployee’ssalary,integratedwithotherbenefitssothatbenefitsfromallsourceswillnotexceed85%oftheemployee’ssalary.Bothoptionshavea149-daywaitingperiodandprovidebenefitstoage65.TheUniversitypaysforthefullcostofOptionAcoverage;employeesenrolledinOptionBpayfortheadditionalcostofOptionBoverOptionA .

The terms and conditions governing the postemployment benefits towhich employees are entitled are in the soleauthorityanddiscretionoftheUniversity’sBoardofCurators.

Postemploymentbenefitcosts,otherthanlong-termdisability,arefundedonacurrentbasisandtheamountsrecordedasexpenseof$14,805,000and$16,647,000fortheyearsendedJune30,2005and2004,respectively,areonapay-as-you-gobasis .Long-termdisabilitycostsarerecognizedduringtheperiodinwhichtheemployeebecomeseligibletoreceivedisabilitybenefitsandamountedto$1,182,000and$4,380,000fortheyearsendedJune30,2005and2004,respectively .

17. SEGMENT INFORMATION

Asegmentisanidentifiableactivityreportedwithinastand-aloneentityforwhichoneormorerevenuebondsareoutstanding.Asegmenthasaspecificidentifiablerevenuestreampledgedinsupportofrevenuebondsandhasrelatedexpenses,gainsandlosses,assetsandliabilitiesthatarerequiredbyanexternalpartytobeaccountedforseparately.TheUniversityhastwosegmentsthatmeetthereportingrequirementsofGASBStatementNo.37.

The outstanding debt of theUniversity consists of SystemFacilityRevenueBonds andHealth FacilitiesRevenueBonds . The System Facility Revenue Bonds are issued in accordance with a Resolution adopted by the Board ofCuratorsinOctober1993 .TheResolutionprovidesthatthebondsarepayablefromthegrossincomeandrevenuesderivedfromtherelatedfacilitiesincludingstudentfees,housing,dining,bookstoreandparkingrevenuesandvariousotherUniversityrevenues.

TheHealthFacilitiesRevenueBondsare limitedobligationbonds securedby revenuesof theHealthSystem .TheHealthSystemconsistsoftheUniversityofMissouriHospitalsandClinics,whichincludestheUniversityofMissouriHospital,EllisFischelCancerCenter,RuskRehabilitationCenterandtheChildren’sHospital;theUniversityPhysiciansMedicalPracticePlan,whichincludesfacultyoftheUniversityofMissouri-ColumbiaSchoolofMedicine;andtheMissouriRehabilitationCenter .



SummaryfinancialinformationfortheSystemFacilityandtheHealthFacilitiesRevenueBondsasofJune30,2005and2004,isasfollows(inthousandsofdollars):

SystemFacilityRevenueBonds

HealthFacilitiesRevenueBonds

2005 2004 2005 2004Condensed Statements of Net AssetsAssets:CurrentAssets $69,160 $118,525 $157,521 $119,305CapitalAssets,Net 470,679 423,599 232,862 218,700NoncurrentAssets 9,380 10,940 118,637 140,013TotalAssets $549,219 $553,064 $509,020 $478,018

Liabilities:CurrentLiabilities $32,322 $31,006 $52,572 $51,689NoncurrentLiabilities 392,186 401,832 227,554 231,070TotalLiabilities 424,508 432,838 280,126 282,759

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 67,429 47,332 60,328 42,700Restricted-Nonexpendable 555 543Expendable 1,857 8,447 2,919 2,918Unrestricted 55,425 64,447 165,092 149,098TotalNetAssets 124,711 120,226 228,894 195,259TotalLiabilitiesandNetAssets $549,219 $553,064 $509,020 $478,018

Condensed Statements of Revenues, Expenses and Changes in Net AssetsOperatingRevenues:NetPatientRevenue $- $- $542,150 $473,168NetTuitionandFees 12,414 8,928Bookstore 50,422 44,373HousingandRelatedFoodService 57,668 53,419Parking 12,975 12,189OtherOperatingRevenue 1,368 1,121 14,789 14,892TotalOperatingRevenues 134,847 120,030 556,939 488,060OperatingExpenses:Depreciation 13,707 11,045 26,121 24,552AllOtherOperatingExpenses 105,181 99,100 508,233 444,018TotalOperatingExpenses 118,888 110,145 534,354 468,570OperatingIncome(Loss) 15,959 9,885 22,585 19,490NonoperatingRevenues(Expenses) (10,392) (10,776) 15,652 15,990Income(Loss)BeforeTransfers 5,567 (891) 38,237 35,480Transfer(To)FromOtherUniversityUnits (1,082) 14,310 (4,602) (9,101)Increase(Decrease)inNetAssets 4,485 13,419 33,635 26,379NetAssets,BeginningofYear 120,226 106,807 195,259 168,880NetAssets,EndofYear $124,711 $120,226 $228,894 $195,259

Condensed Statements of Cash FlowsNetCashFlowsProvidedbyOperatingActivities $28,356 $21,280 $36,171 $19,408NetCashFlowsProvidedby(UsedIn)InvestingActivities 4,432 (1,752) 18,869 (12,390)NetCashFlowsProvidedby(UsedIn)CapitalandRelatedFinancingActivities (83,003) 15,733 (55,800) (29,653)NetCashFlowsProvidedby(UsedIn)NoncapitalFinancingActivities 17,375 14,257NetIncrease(Decrease)inCashandCashEquivalents (50,215) 35,261 16,615 (8,378)CashandCashEquivalents,BeginningofYear 105,499 70,238 16,255 24,633

CashandCashEquivalents,EndofYear $55,284 $105,499 $32,870 $16,255

SystemFacilityRevenueBonds

HealthFacilitiesRevenueBonds

2005 2004 2005 2004Condensed Statements of Net AssetsAssets:CurrentAssets $69,160 $118,525 $157,521 $119,305CapitalAssets,Net 470,679 423,599 232,862 218,700NoncurrentAssets 9,380 10,940 118,637 140,013TotalAssets $549,219 $553,064 $509,020 $478,018

Liabilities:CurrentLiabilities $32,322 $31,006 $52,572 $51,689NoncurrentLiabilities 392,186 401,832 227,554 231,070TotalLiabilities 424,508 432,838 280,126 282,759

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 67,429 47,332 60,328 42,700Restricted-Nonexpendable 555 543Expendable 1,857 8,447 2,919 2,918Unrestricted 55,425 64,447 165,092 149,098TotalNetAssets 124,711 120,226 228,894 195,259TotalLiabilitiesandNetAssets $549,219 $553,064 $509,020 $478,018

Condensed Statements of Revenues, Expenses and Changes in Net AssetsOperatingRevenues:NetPatientRevenue $- $- $542,150 $473,168NetTuitionandFees 12,414 8,928Bookstore 50,422 44,373HousingandRelatedFoodService 57,668 53,419Parking 12,975 12,189OtherOperatingRevenue 1,368 1,121 14,789 14,892TotalOperatingRevenues 134,847 120,030 556,939 488,060OperatingExpenses:Depreciation 13,707 11,045 26,121 24,552AllOtherOperatingExpenses 105,181 99,100 508,233 444,018TotalOperatingExpenses 118,888 110,145 534,354 468,570OperatingIncome(Loss) 15,959 9,885 22,585 19,490NonoperatingRevenues(Expenses) (10,392) (10,776) 15,652 15,990Income(Loss)BeforeTransfers 5,567 (891) 38,237 35,480Transfer(To)FromOtherUniversityUnits (1,082) 14,310 (4,602) (9,101)Increase(Decrease)inNetAssets 4,485 13,419 33,635 26,379NetAssets,BeginningofYear 120,226 106,807 195,259 168,880NetAssets,EndofYear $124,711 $120,226 $228,894 $195,259

Condensed Statements of Cash FlowsNetCashFlowsProvidedbyOperatingActivities $28,356 $21,280 $36,171 $19,408NetCashFlowsProvidedby(UsedIn)InvestingActivities 4,432 (1,752) 18,869 (12,390)NetCashFlowsProvidedby(UsedIn)CapitalandRelatedFinancingActivities (83,003) 15,733 (55,800) (29,653)NetCashFlowsProvidedby(UsedIn)NoncapitalFinancingActivities 17,375 14,257NetIncrease(Decrease)inCashandCashEquivalents (50,215) 35,261 16,615 (8,378)CashandCashEquivalents,BeginningofYear 105,499 70,238 16,255 24,633

CashandCashEquivalents,EndofYear $55,284 $105,499 $32,870 $16,255



18. OPERATING ExPENSES BY FUNCTION

TheoperatingexpensesoftheUniversityarepresentedbasedonnaturalexpenditureclassifications.TheUniversity’soperatingexpensesbyfunctionalclassificationareasfollows:

For the Year Ended june 30, 2005(inthousandsofdollars)

FunctionalClassification

Salariesand

WagesStaff

Benefits

Supplies,Services

andOtherOperatingExpenses

Scholarshipsand

Fellowships Depreciation TotalInstruction $307,880 $67,272 $49,924 $- $- $425,076Research 100,890 20,082 79,066 200,038PublicService 69,608 17,024 54,809 141,441AcademicSupport 66,679 16,197 27,344 110,220StudentServices 36,744 8,215 20,738 65,697InstitutionalSupport 79,771 19,932 (4,964) 94,739OperationandMaintenanceofPlant 28,932 7,487 20,971 57,390AuxiliaryEnterprises 296,736 70,760 348,507 716,003ScholarshipsandFellowships 30,783 30,783Depreciation 102,414 102,414 Total Operating Expenses $987,240 $226,969 $ 596,395 $ 30,783 $ 102,414 $ 1,943,801



Salariesand

WagesStaff

Benefits

Supplies,Services


Scholarshipsand




Salariesand

WagesStaff

Benefits

Supplies,Services


Scholarshipsand




Salariesand

WagesStaff

Benefits

Supplies,Services


Scholarshipsand




19. DISCRETELY PRESENTED COMPONENT UNITS

TheDiscretelyPresentedComponentUnitscolumnsinthefinancialstatementsincludethefinancialdataoftheMedicalAllianceandMissouriCareL .C .

TheMedicalAlliance,anot-for-profitcorporation,providesanintegratedhealthcaredeliverysystemformid-Missouribyestablishingaffiliationswithvariousmedicalfacilities.CapitalRegionMedicalCenterinJeffersonCity,Missouri,operatesasanaffiliateoftheMedicalAllianceandprovidesinpatient,outpatientandemergencycareservicestothesurroundingcommunity .

MissouriCareL.C.isanot-for-profithealthmaintenanceorganizationwhichprovidesservicestopatientsincentralMissouriunderacertificationfromtheMissouriDepartmentofSocialServices.MissouriCareL.C.hascontractedwiththeUniversityofMissouriHealthcareSystemasamajorproviderofhealthcareservicestotheorganization’smembers .

The amounts shown in the Discretely Presented Component Units columns of the Statements of Net Assets andStatementsofRevenues,ExpensesandChangesinNetAssetsrelatetotheMedicalAlliance,includingCapitalRegionMedicalCenter,andMissouriCareL .C .IntheStatementsofNetAssets,MedicalAllianceispresentedasofJune30,2005and2004andMissouriCareL.C.asofDecember31,2004,tocoincidewithitscalendaryearend,andasofJune30,2004asreportedintheUniversity’sfinancialstatementsforfiscalyearendedJune30,2004.IntheStatementsofRevenues,ExpensesandChangesinNetAssets,MedicalAllianceispresentedfortheyearsendedJune30,2005and2004andMissouriCareL .C .forthesixmonthsendedDecember31,2004andforthetwelvemonthsendedJune30,2004asreportedintheUniversity’sfinancialstatementsforfiscalyearendedJune30,2004.TheCondensedStatementsofNetAssets andCondensedStatementsofRevenues,ExpensesandChanges inNetAssets for theseperiodsareshownbelow(inthousandsofdollars):

2005 2004MedicalAlliance

MissouriCareL .C . Total

MedicalAlliance


Condensed Statements of Net Assets

Assets:CurrentAssets $22,064 $14,423 $36,487 $25,405 $11,440 $36,845CapitalAssets,Net 66,567 66,567 57,069 57,069NoncurrentAssets 45,965 1,027 46,992 44,785 1,031 45,816TotalAssets $134,596 $15,450 $150,046 $127,259 $12,471 $139,730

Liabilities:CurrentLiabilities $14,937 $9,712 $24,649 $13,775 $7,814 $21,589NoncurrentLiabilities 38,990 38,990 39,954 39,954TotalLiabilities 53,927 9,712 63,639 53,729 7,814 61,543

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 27,199 27,199 17,260 17,260Restricted-Expendable 1,640 1,640 3,844 1,031 4,875Unrestricted 51,830 5,738 57,568 52,426 3,626 56,052TotalNetAssets 80,669 5,738 86,407 73,530 4,657 78,187

TotalLiabilitiesandNetAssets $134,596 $15,450 $150,046 $127,259 $12,471 $139,730



MedicalAlliance


Condensed Statements of Net Assets

Assets:CurrentAssets $22,064 $14,423 $36,487 $25,405 $11,440 $36,845CapitalAssets,Net 66,567 66,567 57,069 57,069NoncurrentAssets 45,965 1,027 46,992 44,785 1,031 45,816TotalAssets $134,596 $15,450 $150,046 $127,259 $12,471 $139,730

Liabilities:CurrentLiabilities $14,937 $9,712 $24,649 $13,775 $7,814 $21,589NoncurrentLiabilities 38,990 38,990 39,954 39,954TotalLiabilities 53,927 9,712 63,639 53,729 7,814 61,543

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 27,199 27,199 17,260 17,260Restricted-Expendable 1,640 1,640 3,844 1,031 4,875Unrestricted 51,830 5,738 57,568 52,426 3,626 56,052TotalNetAssets 80,669 5,738 86,407 73,530 4,657 78,187

TotalLiabilitiesandNetAssets $134,596 $15,450 $150,046 $127,259 $12,471 $139,730



20. 2004 RESTATEMENT

SubsequenttotheissuanceoftheUniversity’s2004financialstatements,theUniversity’smanagementdeterminedthatmisstatementshadoccurredinrecordingcertainpledgesreceivableandtherelatedrevenue,summeracademicsessiondeferredtuitionrevenueandrelatedprepaidexpenses,timingofrecordingpayablesrelatedtoconstructioninprogressandthedepreciationoflibrarybookacquisitions.

InaccordancewiththeprovisionsofGASBStatementNo .33,“AccountingandFinancialReportingforNonexchangeTransactions”,pledgesreceivablearerecordedandrevenueisrecognizedwhenapledgeisreceivedandalleligibilityrequirements,includingtimerequirements,aremet.Infiscalyear2004,pledgesreceivablewererecordedandrevenuewasrecognizedforcertainpledgesreceivedduringfiscalyear2004forwhichalleligibilityrequirementshadnotbeenmet.Therevenuerecognitionforthesepledgeswilloccurinsubsequentfiscalyearswhenalleligibilityrequirementsaremet .

Inaccordancewithgenerallyacceptedaccountingprinciples,revenuesshouldberecordedintheperiodsearnedandapplicableexpensesshouldberecordedintheperiodsincurred .ThedeferredrevenuesforsummersessionstudentfeesandrelatedexpenditureshavebeenrestatedtorecordtheportionofsummersessionstudentfeesearnedandrelatedexpendituresincurredpriortoJune30inthecurrentfiscalyearandtheportionafterJune30inthefollowingfiscalyear .



MedicalAlliance


Condensed Statements of Revenues, Expenses and Changes in Net Assets

Operating Revenues:NetPatientRevenue $123,745 $- $123,745 $112,448 $- $112,448OtherOperatingRevenue 37,202 37,202 41,314 41,314 Total Operating Revenues 123,745 37,202 160,947 112,448 41,314 153,762

Operating Expenses:SalariesandWages 46,952 46,952 44,246 44,246StaffBenefits 12,018 12,018 10,692 10,692Supplies,ServicesandOtherOperatingExpenses 51,244 36,121 87,365 46,007 41,355 87,362Depreciation 7,758 7,758 7,251 45 7,296 Total Operating Expenses 117,972 36,121 154,093 108,196 41,400 149,596

Operating Income (Loss) 5,773 1,081 6,854 4,252 (86) 4,166

Nonoperating Revenues (Expenses):InvestmentIncome 1,024 1,024 300 300PrivateGifts 42 42 203 203InterestExpense (1,340) (1,340) (1,236) (1,236)OtherNonoperatingRevenues(Expenses) 1,640 1,640

Net Nonoperating Revenues (Expenses) 1,366 1,366 (733) (733)

Increase (Decrease) in Net Assets 7,139 1,081 8,220 3,519 (86) 3,433

Net Assets, Beginning of Year 73,530 4,657 78,187 70,011 4,743 74,754

Net Assets, End of Year $ 80,669 $ 5,738 $ 86,407 $ 73,530 $ 4,657 $ 78,187



MedicalAlliance


Condensed Statements of Revenues, Expenses and Changes in Net Assets

Operating Revenues:NetPatientRevenue $123,745 $- $123,745 $112,448 $- $112,448OtherOperatingRevenue 37,202 37,202 41,314 41,314 Total Operating Revenues 123,745 37,202 160,947 112,448 41,314 153,762

Operating Expenses:SalariesandWages 46,952 46,952 44,246 44,246StaffBenefits 12,018 12,018 10,692 10,692Supplies,ServicesandOtherOperatingExpenses 51,244 36,121 87,365 46,007 41,355 87,362Depreciation 7,758 7,758 7,251 45 7,296 Total Operating Expenses 117,972 36,121 154,093 108,196 41,400 149,596

Operating Income (Loss) 5,773 1,081 6,854 4,252 (86) 4,166

Nonoperating Revenues (Expenses):InvestmentIncome 1,024 1,024 300 300PrivateGifts 42 42 203 203InterestExpense (1,340) (1,340) (1,236) (1,236)OtherNonoperatingRevenues(Expenses) 1,640 1,640

Net Nonoperating Revenues (Expenses) 1,366 1,366 (733) (733)

Increase (Decrease) in Net Assets 7,139 1,081 8,220 3,519 (86) 3,433

Net Assets, Beginning of Year 73,530 4,657 78,187 70,011 4,743 74,754

Net Assets, End of Year $ 80,669 $ 5,738 $ 86,407 $ 73,530 $ 4,657 $ 78,187



TheUniversityhaspreviouslycapitalizedlibrarybooksasinexhaustibleassetsthathavenotbeensubjecttodepreciation.Intherestatedfinancialstatements,libraryholdingsaretreatedasexhaustibleassetsandaredepreciatedonastraight-linebasisoveranestimatedusefullifeof20years .

Theimpactofthesemisstatementsandtherelatedrestatementsaresummarizedinthefollowingtable:

Inaddition,accruedliabilitiesforCapitalRegionMedicalCenter,anaffiliateoftheMedicalAllianceincludedinthe2004combinedfinancialstatements,havebeenrestatedtoincreaseclaimsincurredbutnotreportedforthemedicalprofessionalliabilitybasedonathird-partyactuarialanalysis .Theeffectsoftherestatementaresummarizedinthefollowingtable:

2004asPreviously

Reported Adjustments2004

asRestated

AtJune30:CurrentPledgesReceivable,Net $22,749 $(15,035) $7,714PrepaidExpensesandOtherCurrentAssets 22,387 (9,313) 13,074PledgesReceivable,Net 47,905 (31,634) 16,271CapitalAssets,Net 1,807,986 (107,662) 1,700,324AccountsPayable 86,272 2,076 88,348DeferredRevenue 51,451 (14,962) 36,489

FortheYearEndingJune30:OperatingLossbeforeStateAppropriationsandNonoperatingRevenue (414,402) (8,459) (422,861)NetOtherNonoperatingRevenuesbeforeTransfers 265,121 (40,625) 224,496NetAssets,BeginningofYear:InvestedinCapitalAssets,NetofRelatedDebt 1,177,275 (102,690) 1,074,585Restricted–Expendable 323,442 (6,044) 317,398Unrestricted 535,500 7,060 542,560IncreaseinNetAssets 272,068 (49,084) 222,984NetAssets,EndofYear:InvestedinCapitalAssets,NetofRelatedDebt 1,257,210 (109,738) 1,147,472Restricted–Expendable 352,325 (46,669) 305,656Unrestricted 635,901 5,649 641,550

2004asPreviously


asRestated

AtJune30:CurrentPledgesReceivable,Net $22,749 $(15,035) $7,714PrepaidExpensesandOtherCurrentAssets 22,387 (9,313) 13,074PledgesReceivable,Net 47,905 (31,634) 16,271CapitalAssets,Net 1,807,986 (107,662) 1,700,324AccountsPayable 86,272 2,076 88,348DeferredRevenue 51,451 (14,962) 36,489

FortheYearEndingJune30:OperatingLossbeforeStateAppropriationsandNonoperatingRevenue (414,402) (8,459) (422,861)NetOtherNonoperatingRevenuesbeforeTransfers 265,121 (40,625) 224,496NetAssets,BeginningofYear:InvestedinCapitalAssets,NetofRelatedDebt 1,177,275 (102,690) 1,074,585Restricted–Expendable 323,442 (6,044) 317,398Unrestricted 535,500 7,060 542,560IncreaseinNetAssets 272,068 (49,084) 222,984NetAssets,EndofYear:InvestedinCapitalAssets,NetofRelatedDebt 1,257,210 (109,738) 1,147,472Restricted–Expendable 352,325 (46,669) 305,656Unrestricted 635,901 5,649 641,550

2004asPreviously


asRestated

AtJune30:AccruedLiabilities $7,678 $1,457 $9,135

FortheYearEndingJune30:NetAssets,BeginningofYear-Unrestricted 17,896 (1,457) 16,439

2004asPreviously


asRestated

AtJune30:AccruedLiabilities $7,678 $1,457 $9,135

FortheYearEndingJune30:NetAssets,BeginningofYear-Unrestricted 17,896 (1,457) 16,439



21. SUBSEQUENT EVENTS

OnJuly1,2005,theUniversitysold$80,000,000ofcapitalprojectnotesataneffectiveinterestrateof2.6%.ThenoteswillberepaidinfullbyJune30,2006 .ProceedsfromtheissuanceofthecapitalprojectnoteswillbeusedtofundvariousconstructionprojectsoftheUniversity.

InOctober2005,theBoardofCuratorsapprovedtheissueofnewbonds.InJanuary2006,theUniversityexpectstoissueSystemFacilitiesRevenueBonds,Series2006,intheamountof$350million.ProceedsfromtheissuanceoftheSeries2006bondswillbeusedtofinanceconstructionofnewhousingfacilitiesandrenovationsandimprovementstoexistinghousingfacilitiesontheColumbiaandSt .Louiscampusesandvariousotherprojects,advancerefundingofpreviouslyissuedseriesofrevenuebonds,paymentofcapitalizedinterestonaportionoftheSeries2006Bonds,andpaymentofcostsofissuanceoftheSeries2006Bonds .

OnOctober3,2005,theCircuitCourtofSt.LouisCounty,MissouriapprovedthesettlementofacasefiledinJanuary1998relatingtochargingtuitionbytheUniversityforundergraduateeducation,asdiscussedinNote14.Thejudgment,orderanddecree(the“order”)whichapprovedthissettlementwasscheduledtobecomefinal30daysafterthedateoftheorderandanadditional10daysthereafterforpossiblenoticeofappeal.Anyappealoftheorderwasrequiredtobefiledwithinthis30-daytimeperiodorwithin10daysafterthedateonwhichtheorderbecomesfinal.OnNovember7,2005,withinthetimeperiodforfilingatimelyNoticeofAppeal,oneof theclassmemberswhoobjectedtothesettlementandsoughttointervenefiledaNoticeofAppeal.OnDecember22,2005,theappealwasdismissedwithprejudiceandthelitigationhasreachedaconclusion.TheUniversitywillproceedtoestablishthescholarshipfundcalledforinthesettlementagreement .

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Documents

GOVERNING BOARD AND ADMINISTRATIVE STAFF · Stephen C . Knorr,Vice President for Government Relations Natalie Krawitz, Vice President for Finance and Administration James H. Ross,