Financial Summary. June 30, The University of Mississippi Medical Center Jackson

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1 Financial Summary June 30, 2014 The University of Mississippi Medical Center Jackson

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3 TABLE OF CONTENTS YEAR END SUMMARY FISCAL YEAR ENDED JUNE 30, 2014 Reference Page Number FINANCIAL SUMMARY Statement A Balance Sheet 1 Statement B Statement of Changes in Fund Balance 4 Statement C Statement of Current Fund Revenues, Additions, Expenditures and Other Changes 7 Summary of Significant Accounting Policies 9 Notes to Financial Summary 11 OTHER FINANCIAL INFORMATION Schedule I Schedule of Current Fund Revenues and Other Additions 14 Schedule II Schedule of Current Fund Expenditures and Transfers 16 Schedule III Schedule of General Fund Expenditures and Transfers 45 Schedule IV Schedule of Unrestricted General Fund Revenues, Additions, Expenditures and Transfer Consolidations 64 Schedule V Schedule of Auxiliary Enterprise Operations 65 Schedule VI Schedule of Designated Funds 67 Schedule VII Schedule of Restricted Funds 80 Schedule VIII Schedule of Loan Funds 111 Schedule IX Schedule of Endowment and Similar Funds 113 Schedule X Schedule of Unexpended Plant Funds 117 Schedule XI Schedule of Renewals and Replacements 122 Schedule XII Schedule of Retirement of Indebtedness 123 Schedule XIII Schedule of Transfers 124 Schedule XIV Schedule of Cash and Investments 125 Schedule XV Schedule of Investments 130 Schedule XVI Schedule of Investment in Plant 140 Schedule XVII Schedule of Land 141 Schedule XVIII Schedule of Buildings 142 Schedule XIX Schedule of Departmental Equipment Inventory 144 Schedule XX Schedule of Improvements Other Than Buildings 155 Schedule XXI Schedule of Library Books 157 Schedule XXII Schedule of Construction in Progress 158 Schedule XXIII Schedule of Leasehold Improvements 159 Schedule XXIV Schedule of Service Area Allocations 160 Schedule XXV Schedule of Balance Sheet Consolidation - Unrestricted General 162 Schedule XXVI Schedule of Long-Term Indebtedness 164 Schedule XXVII Schedule of Residence Hall Operations 165

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5 BALANCE SHEET JUNE 30, 2014 WITH COMPARATIVE FIGURES AT JUNE 30, 2013 STATEMENT A PAGE 1 ASSETS LIABILITIES AND FUND BALANCES June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 CURRENT FUNDS Unrestricted-General CURRENT FUNDS Unrestricted-General Cash & Investments $ 271,891,267 $ 212,997,152 Checks Outstanding in Excess of Accounts Receivable - State Appropriation 574, ,007 Bank Balance $ 48,796,154 $ 39,292,380 Student Accounts Receivable (Less Allowance Accrued Wages 18,165,138 14,720,770 for Doubtful Accounts of $186,039 in 2014 and Accounts Payable 31,008,873 23,615,167 $207,983 in 2013) 3,256,472 2,646,170 Refunds to Students 44,601 96,444 Patient Accounts Receivable (Less Allowances for Unearned Student Fees 5,035,582 4,636,927 Contractual Adjustments, Bad Debt, and Other Accrued Expenses 38,451,499 43,106,757 Free Care of $3,171,645,146 in 2014 Accrued Leave 48,961,677 47,192,483 and $2,951,403,034 in 2013) 112,102, ,046,082 Unearned Revenue 1, Due from Third Party Payors 436,160 - Due to Medicaid 8,403,637 8,403,637 Other Accounts Receivable 7,268,774 17,841,663 Contingent Liability - Third Party Payor 15,138,465 9,049,770 Inventories 22,207,002 21,012,982 Tort Fund Claims Liability 32,265,000 32,464,000 Prepaid Expenditures 3,483,247 2,960,122 Fund Balances: Deposits 903, ,000 Allocated 123,624, ,904,049 Unallocated 52,226,101 26,110,094 Total Unrestricted-General $ 422,122,723 $ 378,593,178 Total Unrestricted-General $ 422,122,723 $ 378,593,178 Unrestricted - Auxiliary Enterprises Unrestricted - Auxiliary Enterprises Cash & Investments $ 9,430,042 $ 8,373,814 Checks Outstanding in Excess of Accounts Receivable (Less Allowance for Bank Balance $ 1,548,168 $ 1,345,981 Doubtful Accounts of $1,439,933 in 2014 and Accrued Wages 40,109 29,473 $1,439,933 in 2013) 4,216 5,230 Accounts Payable 115, ,898 Accounts Receivable - Vendors 142, ,854 Accrued Leave 95,870 83,015 Inventories 1,449,397 1,318,636 Fund Balances: Allocated 653, ,331 Unallocated 8,573,284 7,845,836 Total Unrestricted - Auxiliary Enterprises $ 11,026,593 $ 9,855,534 Total Unrestricted - Auxiliary Enterprises $ 11,026,593 $ 9,855,534 Designated Funds Designated Funds Cash & Investments $ 61,424,167 $ 59,456,576 Accrued Wages $ 64,244 $ 75,380 Accounts Receivable 6,014,468 6,806,880 Accounts Payable 132,217 54,067 Accrued Leave 293, ,227 Fund Balances: Allocated 1,140,208 1,498,133 Unallocated 65,808,478 64,279,649 Total Designated Funds $ 67,438,635 $ 66,263,456 Total Designated Funds $ 67,438,635 $ 66,263,456

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7 BALANCE SHEET JUNE 30, 2014 WITH COMPARATIVE FIGURES AT JUNE 30, 2013 STATEMENT A PAGE 2 ASSETS LIABILITIES AND FUND BALANCES June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 Restricted Funds Restricted Funds Cash & Investments $ 17,467,805 $ 17,228,824 Accrued Wages $ 733,214 $ 692,158 Accounts Receivable 21,633,847 20,846,439 Accounts Payable 985, ,726 Accrued Leave 2,575,632 2,625,744 Unearned Revenue 7,571,225 7,640,089 Fund Balances: Allocated 17,325,808 8,795,437 Unallocated 9,909,923 17,681,109 Total Restricted Funds 39,101,652 38,075,263 Total Restricted Funds 39,101,652 38,075,263 TOTAL CURRENT FUNDS $ 539,689,603 $ 492,787,431 TOTAL CURRENT FUNDS $ 539,689,603 $ 492,787,431 LOAN FUNDS LOAN FUNDS Cash & Investments $ 1,392,696 $ 2,116,867 Accounts Payable $ 525 $ - Accounts Receivable 342, ,703 Federal Portion of Federal Student Loans 5,498,769 5,856,025 Notes Receivable: Fund Balances: Federal Student Loans (Less Allowance Federal Student Loan Fund 2,543,393 2,595,757 for Doubtful Accounts of $567,868 in 2014 Institutional Student Loan Fund 2,406,955 2,719,877 and $499,760 in 2013) 7,088,254 7,104,371 Institutional Student Loans (Less Allowance for Doubtful Accounts of $1,129,190 in 2014 and $959,934 in 2013) 1,625,817 1,791,718 TOTAL LOAN FUNDS $ 10,449,642 $ 11,171,659 TOTAL LOAN FUNDS $ 10,449,642 $ 11,171,659 ENDOWMENT & SIMILAR FUNDS ENDOWMENT & SIMILAR FUNDS Cash & Investments $ 9,024,657 $ 7,964,353 Other Accrued Expenses $ 27,634 $ - Investments Held by Trustees 155, ,716 Fund Balances: Investments 72,593,079 63,329,191 Endowment Funds - Restricted 37,941,467 33,748,834 Quasi-Endowment Funds - Restricted 43,804,607 37,684,426 TOTAL ENDOWMENT & SIMILAR FUNDS $ 81,773,708 $ 71,433,260 TOTAL ENDOWMENT & SIMILAR FUNDS $ 81,773,708 $ 71,433,260

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9 BALANCE SHEET JUNE 30, 2014 WITH COMPARATIVE FIGURES AT JUNE 30, 2013 STATEMENT A PAGE 3 ASSETS LIABILITIES AND FUND BALANCES June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 PLANT FUNDS PLANT FUNDS Cash & Investments $ 37,321,473 $ 34,245,468 Accounts Payable $ 2,099,647 $ 33,058 Cash - Retirement of Indebtedness 3,014,759 2,678,571 Fund Balances: Accounts Receivable 507, ,057 State of MS Office of Buildings 420, ,000 Prepaid Expenditures - Building Commission 420, ,000 University Funds 35,727,243 34,423,467 Investment in Plant: Retirement of Indebtedness 3,016,344 2,678,571 Land 6,785,095 6,785,095 Investment in Plant 354,774, ,901,630 Buildings (Less Accumulated Depreciation of $82,539,457 for 2014 and $78,078,628 for 2013) 101,469,838 99,793,320 Improvements Other Than Buildings (Less Accumulated Depreciation of $5,787,234 for 2014 and $5,315,797 for 2013) 4,775,875 5,247,313 Leasehold Improvements (Less Accumulated Depreciation of $6,403,109 for 2014 and $4,875,297 for 2013) 56,459,409 56,376,446 Equipment (Less Accumulated Depreciation of $184,882,402 for 2014 and $172,720,330 for 2013) 107,178, ,132,415 Library Books (Less Accumulated Depreciation of $37,032,816 for 2014 and $34,625,164 for 2013) 11,622,614 11,133,197 Capitalized Software (Less Amortization of $13,171,704 for 2014 and $6,939,856 for 2013) 44,090,730 49,860,292 Capitalized Interest - EBC Projects - 371,341 Construction in Progress - Capital Assets 22,014,771 18,506,235 Construction in Progress - Software Implementation 378, ,976 Total Investment in Plant 354,774, ,901,630 Total Fund Balances 393,938, ,423,668 TOTAL PLANT FUNDS $ 396,038,216 $ 393,456,726 TOTAL PLANT FUNDS $ 396,038,216 $ 393,456,726 AGENCY FUNDS AGENCY FUNDS Cash & Investments $ 347,383 $ 2,301,638 Due to Depositors $ 346,665 $ 2,295,759 Accounts Receivable 21,506 31,326 Accrued Wages - 4,966 Accounts Payable Accrued Leave 22,224 32,044 TOTAL AGENCY FUNDS $ 368,889 $ 2,332,964 TOTAL AGENCY FUNDS $ 368,889 $ 2,332,964

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11 STATEMENT OF CHANGES IN FUND BALANCE STATEMENT B PAGE 4 Current Funds Endowment Plant Funds Unrestricted Loan & Similar Retirement of Investment General Auxiliary Designated Restricted Total Funds Funds Unexpended Indebtedness in Plant REVENUES AND OTHER ADDITIONS Tuition and Fees $ 27,196,477 $ - $ - $ - $ 27,196,477 $ - $ - $ - $ - $ - State of Mississippi Appropriations 174,850, ,850, ,636, Education Enhancement Fund 6,888, ,888, Healthcare Expendable Fund 3,780, ,780, Federal Grants and Contracts 9,174, ,783,643 47,957, State Grants and Contracts 5, ,755,899 10,761, Private Gifts, Grants, and Contracts 632, ,187 10,892,224 12,281, ,626, Sales and Services of Educational Departments 800, , Sales and Services of Hospitals 911,051, ,051, Sales and Services of Auxiliary Enterprises - 7,073, ,073, Investment Income 1,023,470-47,079 28,248 1,098, , Net Increase (Decrease) In The Fair Value of Investments 52, ,949-7,933, Endowment Income ,221 1,066,658 1,129,879 9, Interest on Loans Receivable , Additions to Plant Facilities ,940,817 Retirement of Indebtedness Scholarship to Loan Conversion , Other Income 42,041, ,735 1,343,045 44,211,478 7, , TOTAL REVENUES AND OTHER ADDITIONS $ 1,177,497,404 $ 7,073,651 $ 1,694,222 $ 62,869,717 1,249,134,994 $ 125,311 $ 11,559,982 $ 5,136,120 $ - $ 39,940,817

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13 STATEMENT OF CHANGES IN FUND BALANCE STATEMENT B PAGE 5 Current Funds Endowment Plant Funds Unrestricted Loan & Similar Retirement of Investment General Auxiliary Designated Restricted Total Funds Funds Unexpended Indebtedness in Plant EXPENDITURES AND OTHER DEDUCTIONS Educational and General: Instruction $ 122,647,791 $ - $ 1,564,706 $ 1,319,724 $ 125,532,221 $ - $ - $ - $ - $ - Academic Support 19,688,478-1,445, ,371 22,005, Student Services 1,161, , ,947 1,411, Institutional Support 103,067,671-3,299,511 4,075, ,443, Operation and Maintenance of Physical Plant 31,376, ,376, Public Service ,967 13,334,900 13,748, Research 25,996-2,330,741 36,219,169 38,575, Scholarships and Fellowships - - 6,660 9,600,844 9,607, Total Educational and General 277,968,550-9,177,149 65,555, ,701, Hospital Instruction 36,895, ,895, Other Hospital Services 807,861, ,861, Auxiliary Enterprises - 5,443, ,443, Principal and Interest Write-Offs , Loan Fund Expenses , Expended for Capital Outlay ,658, Expended for Repairs and Maintenance ,343, Retirement of Indebtedness-MCEBC ,960,000 - Interest Expense-MCEBC ,386,582 - Provision for Uncollectible Accounts , Depreciation Expense ,754,603 Other Deductions , ,810 1,312,862. Total Expenditures and Other Deductions 1,122,726,016 5,443,603 9,177,149 65,555,798 1,202,902, ,856-11,001,393 17,367,392 41,067,465

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15 STATEMENT OF CHANGES IN FUND BALANCE STATEMENT B PAGE 6 Current Funds Endowment Plant Funds Unrestricted Loan & Similar Retirement of Investment General Auxiliary Designated Restricted Total Funds Funds Unexpended Indebtedness in Plant TRANSFERS AMONG FUNDS Mandatory: Transfer to Retire Debt - Bond Interest $ 12,630,517 $ 61,665 $ - $ - $ 12,692,182 $ - $ - $ - $ (12,692,182) $ - Transfer to Retire Debt - Bond Principal 4,854, , ,975, (4,975,833) - Loan Match Fund 13, (13,325) Remarketing / Transfer Fee 36, , (37,150) - Total Mandatory 17,535, ,230 - (13,325) 17,705, (17,705,165) - Non-Mandatory: Equipment 135,532 71,401 (71,401) - 135, (135,532) - - Renovations and Repairs 129,898 - (126,717) - 3, (3,181) - - Indirect Costs 3,172,467 - (3,172,467) Other 9,521, ,437 (5,122,811) (3,431,941) 1,120, ,741 1,247,168 (2,508,501) - - Capital Outlay Non-Equipment 4,439, ,500 (160,435) - 4,521, (4,521,835) - - Total Non-Mandatory 17,399, ,338 (8,653,831) (3,431,941) 5,781, ,741 1,247,168 (7,169,049) - - Total Transfers 34,934, ,568 (8,653,831) (3,445,266) 23,486, ,741 1,247,168 (7,169,049) (17,705,165) - TOTAL EXPENDITURES, TRANSFERS AND OTHER DEDUCTIONS 1,157,660,850 6,094, ,318 62,110,532 1,226,388, ,597 1,247,168 3,832,344 (337,773) 41,067,465 NET INCREASE FOR THE YEAR 19,836, ,480 1,170, ,185 22,746,123 (365,286) 10,312,814 1,303, ,773 (1,126,648) FUND BALANCE - JUNE 30, 2013 PREVIOUSLY REPORTED 153,894,520 8,247,167 65,777,782 26,476, ,396,015 11,171,659 71,433,260 34,765,090 2,678, ,057,306 PRIOR PERIOD ADJUSTMENT (Note 16) 2,119, ,119,623 (5,856,025) - 78,377 - (1,155,676) FUND BALANCE - JUNE 30, 2013 RESTATED 156,014,143 8,247,167 65,777,782 26,476, ,515,638 5,315,634 71,433,260 34,843,467 2,678, ,901,630 FUND BALANCE - JUNE 30, 2014 $ 175,850,697 $ 9,226,647 $ 66,948,686 $ 27,235,731 $ 279,261,761 $ 4,950,348 $ 81,746,074 $ 36,147,243 $ 3,016,344 $ 354,774,982

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17 STATEMENT OF CURRENT FUND REVENUES, ADDITIONS, EXPENDITURES AND OTHER CHANGES WITH COMPARATIVE FIGURES AT JUNE 30, 2013 STATEMENT C PAGE 7 Revenues and Other Additions Current Year Prior Year Unrestricted Restricted Total Total Tuition and Fees $ 27,196,477 $ - $ 27,196,477 $ 23,387,794 State of Mississippi Appropriations 174,850, ,850, ,748,542 Education Enhancement Fund 6,888,029-6,888,029 6,888,033 Healthcare Expendable Fund 3,780,431-3,780,431 2,380,431 Federal Grants and Contracts 9,174,169 38,783,643 47,957,812 43,505,364 State Grants and Contracts 5,304 10,755,899 10,761,203 10,225,147 Private Gifts, Grants and Contracts 1,389,698 10,892,224 12,281,922 16,077,102 Endowment Income 63,221 1,066,658 1,129,879 1,024,350 Net Increase (Decrease) In The Fair Value of Investments 52,949-52,949 (1,278,031) Investment Income 1,070,549 28,248 1,098,797 4,619,602 Educational Activities 800, , ,778 Auxiliary Activities 7,073,651-7,073,651 6,808,093 Sales and Services of Hospitals 911,051, ,051, ,261,628 Other Income 42,868,433 1,343,045 44,211,478 42,833,603 Total Revenues and Other Additions 1,186,265,277 62,869,717 1,249,134,994 1,138,320,436 Expenditures and Mandatory Transfers Educational and General: Instruction 124,212,497 1,319, ,532, ,083,103 Academic Support 21,133, ,371 22,005,227 23,887,419 Student Services 1,277, ,947 1,411,936 1,264,827 Institutional Support 106,367,182 4,075, ,443,025 87,362,183 Operation and Maintenance of Plant 31,376,811-31,376,811 28,459,475 Public Service 413,967 13,334,900 13,748,867 18,385,148 Research 2,356,737 36,219,169 38,575,906 37,154,413 Scholarships and Fellowships 6,660 9,600,844 9,607,504 8,536,865 Total Educational and General Expenditures 287,145,699 65,555, ,701, ,133,433 Mandatory Transfers: Loan Match Funds 13,325 (13,325) - - Remarketing/Transfer Fees 9,254-9,254 5,590 Transfers to Retire Debt - Bond Interest - MCEBC 4,242,281-4,242,281 1,795,013 Transfers to Retire Debt - Bond Principal - MCEBC 332, , ,661 Total Educational and General 291,743,377 65,542, ,285, ,332,697

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19 STATEMENT OF CURRENT FUND REVENUES, ADDITIONS, EXPENDITURES AND OTHER CHANGES WITH COMPARATIVE FIGURES AT JUNE 30, 2013 STATEMENT C PAGE 8 Current Year Unrestricted Restricted Total Total Auxiliary Enterprises: Expenditures $ 5,443,603 $ - $ 5,443,603 $ 4,225,720 Mandatory Transfers: Remarketing / Trustee Fees ,199 Transfer to Retire Debt - Bond Interest - MCEBC 61,665-61, ,684 Transfer to Retire Debt - Bond Principal - MCEBC 121, , ,531 Total Auxiliary Enterprises 5,626,833-5,626,833 4,535,134 Hospital: Expenditures 844,757, ,757, ,465,621 Mandatory Transfers: Remarketing / Trustee Fees 27,396-27,396 23,861 Transfer to Retire Debt - Bond Interest - MCEBC 8,388,236-8,388,236 5,561,075 Transfer to Retire Debt - Bond Principal - MCEBC 4,521,950-4,521,950 4,310,558 Total Hospital 857,695, ,695, ,361,115 Total Expenditures and Mandatory Transfers 1,155,065,258 65,542,473 1,220,607,731 1,115,228,946 Other Transfers - Additions (Deductions): Equipment (135,532) - (135,532) (4,900,420) Renovations and Repairs (3,181) - (3,181) (962,068) Indirect Costs Other (4,552,533) 3,431,941 (1,120,592) 1,265,449 Capital Outlay Non-Equipment (4,521,835) - (4,521,835) (12,824,897) Total Other Transfers - Additions (Deductions) (9,213,081) 3,431,941 (5,781,140) (17,421,936) NET CHANGE IN FUND BALANCE $ 21,986,938 $ 759,185 $ 22,746,123 $ 5,669,554

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21 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PAGE 9 The significant accounting policies followed by the University of Mississippi Medical Center are described below to enhance the usefulness of the financial schedules to the reader. (1) Basis of Accounting. The financial schedules have been prepared generally in accordance with the accounting principles outlined in College and University Business Administration, and the American Institute of Certified Public Accountants Industry Audit Guide on Audits of Colleges and Universities. A significant portion of the University's operations are those of the University Hospital. Thus, the amounts included in these financial schedules for the hospital do not purport to present the results of operations following generally accepted accounting principles for hospitals. The accompanying financial schedules have been prepared generally on the accrual basis with the following exceptions, which are common practices in colleges and universities: A. To the extent that Current Funds are used to finance plant assets, the amounts so provided are accounted for as: (a) expenditures, in the case of normal acquisition and/or replacement of moveable equipment and library books; (b) mandatory transfers, in the case of required provisions for debt amortization and interest, and equipment renewals and replacement; and (c) transfers of a non-mandatory nature for all other cases. B. Interest on student loans is recorded only when received. C. Interest expense on debt is recorded when paid. Gifts, grants and pledges are generally recorded when received or when billable. Property, buildings and equipment are stated at cost at the date of acquisition or fair market value at date of donation. Improvements made as part of repair and renovation projects are capitalized based upon engineering estimates which approximate cost. Public domain (infrastructure) fixed assets consisting of certain improvements other than buildings, such as roads, bridges, sidewalks, drainage systems, lighting systems and similar assets that are immovable and of value only to the institution are capitalized. Inventories consist of various hospital inventories, dental school gold, central supply inventories, auxiliary inventories, printing, and storeroom inventories. These inventories are generally valued at lower of cost or market, on either the first-in, firstout ( FIFO ) basis or the average cost basis. All revenues and related expenditures incurred in connection with the current school sessions ending after June 30 are deferred until the following year. Encumbrances represent outstanding purchase orders for goods or services not yet delivered or received and are reflected as an allocation of the General and Hospital Fund Balances. The related expenditures will be recorded in (2) Fund Accounting. In order to insure observance of limitations and restrictions placed on the use of the resources available, the accounts of the institution are maintained in accordance with the accounting practice known as "fund accounting." This accounting practice is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial schedules, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group.

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23 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PAGE 10 The Current Funds are used primarily to account for transactions which are expended in performing the primary and support objectives of the institution. Current Funds consist of the following: A. The Unrestricted Fund which is used to account for; 1. The appropriated budget as approved by the Mississippi State Legislature and the Board of Trustees of State Institutions of Higher Learning. 2. The unrestricted resources designated for specific purposes by the institution's administration. 3. The transactions of substantially self-supporting activities that primarily provide services for students, faculty and staff. B. The Restricted Fund which is used to account for Current Funds expended for operating purposes but restricted by donors or other outside agencies as to the specific purpose for which they may be expended. Other funds consist of the following: A. The Loan Funds are used to account for loans to students. Resources to provide loans are derived primarily from the federal government. Provisions of the federal loan program stipulate that; 1. The institution matches one-ninth of the federal contributions from Health and Human Services ("HHS"). The institution matched 25% of federal contributions from the Office of Education ("OE"). 2. A portion of the loan principal and interest (maximum of 30% per year) will be canceled and absorbed by the federal government, if the recipient completes certain employment requirements. B. Endowment Funds are subject to the restrictions of donor gift instruments requiring that the principal be invested in perpetuity and that only the income be utilized. Funds functioning as endowments are used to report resources that the Medical Center, rather than the donor, has determined are to be retained and managed like endowments where the principal and income may be utilized at the discretion of the Medical Center. C. The Plant Funds which are used to account for the transactions relating to institution physical properties include; 1. The Unexpended Plant Fund which is comprised of amounts which have been appropriated or designated for the purchase of institution physical properties or the repair and maintenance of such physical properties. 2. The Renewals and Replacements Plant Fund which represents reserves to provide for maintenance and equipment replacement established primarily pursuant to terms of bond indentures. 3. The Retirement of Indebtedness Plant Fund which represents resources held for the retirement of the interest on debt and includes sinking funds established under bond indentures and note and lease amortization payments accumulated, but not yet due. 4. The Investment in Plant Fund which represents the total physical properties in service by the institution and all construction in progress as well as any associated liabilities. D. Agency Funds account for assets held by the institution as custodian or fiscal agent for others. Consequently, the transactions of these funds do not affect the statement of changes in fund balances.

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25 NOTES TO FINANCIAL SUMMARY PAGE 11 (1) Financial Reporting Entity The University of Mississippi Medical Center ("the Medical Center") is the Jackson campus of the University of Mississippi. The financial schedules include the hospital and the schools of medicine, dentistry, nursing and health related professions and their related service organizations. The assets, liabilities and fund balances related to the parent institution, the University of Mississippi, and the alumni fund are not included. (2) Component Unit The Medical Center Educational Building Corporation (The Corporation) is a non-profit corporation, incorporated on June 26, 1991, in the State of Mississippi with the approval of the Board of Trustees of State Institutions of Higher Learning for the State of Mississippi. The purpose of the Corporation is for the acquisition, construction, and equipping of facilities and land for the Medical Center. The Board of Directors of the Corporation is composed of designated institutional officers of the Medical Center. The assets, liabilities, and fund balances of the Corporation are not included in the accompanying financial schedules of the Medical Center. The condensed financial schedules of the Corporation are as follows: Medical Center Educational Building Corporation Condensed Statement of Net Position June 30, 2014 Unrestricted Plant Total Fund Funds Funds _ Assets Current Assets $ - $ 5,241,565 $ 5,241,565 Capital Lease Receivable 1,018, ,436, ,455,124 Noncurrent Assets - 61,509,842 61,509,842 Total Assets $ 1,018,757 $ 262,187,774 $ 263,206,531 Deferred Outflows of Resources Deferred Amount on Refunding $ - $ 4,754,560 $ 4,754,560 Total Assets and Deferred Outflows of Resources $1,018,757 $266,942,334 $267,961,091 Liabilities Current Liabilities $ - $ 6,746,117 $ 6,746,117 Revenue Bonds - 258,095, ,095,000 Noncurrent liabilities - 4,526,059 4,526,059 Total Liabilities - 269,367, ,367,176 Net Position 1,018,757 (2,424,842) (1,406,085) Total Liabilities and Net Position $ 1,018,757 $ 266,942,334 $ 267,961,091 Condensed Statement of Changes in Net Position Year Ended June 30, 2014 Unrestricted Plant Fund Funds _ Revenues $ 17,357,960 $ 14,314,568 Expenditures Operating and Other 14,726 10,884,042 Debt Service - 20,162,310 Transfers 17,352,666 (17,352,666) Net Increase (Decrease) (9,432) 620,882 Net Position (Deficits) at June 30, ,028,189 (910,311) Net Position deduction at June 30, (2,135,413) Net Position at June 30, 2014 $ 1,018,757 $ (2,424,842) Complete financial schedules of the Corporation may be obtained by contacting: Secretary - Treasurer Medical Center Educational Building Corporation 2500 North State Street Jackson, Mississippi (3) Appropriations-General Operations The Medical Center is a state supported institution that receives annual appropriations for operations from the state of Mississippi. The laws of the state and the policies and procedures specified by the state for state agencies and institutions are applicable to the activities of the institution. (4) Accrued Personal Leave Full-time staff, faculty and employees and certain part-time employees can earn personal leave up to twenty-seven days per year, based on length of continuous employment. Personal leave is payable upon termination for accumulated time up to thirty days. Accrued personal leave at June 30, 2014 and 2013 amounted to $51,948,891 and $50,289,513, respectively. (5) Current Restricted Fund Revenues In the attached financial schedule, current restricted fund revenues are recognized only to the extent of expenditures and transfers of the fund. The amount recognized for the year ended June 30, 2014, was $62,869,717, as reported on the Schedule of Current Fund Revenues. Total current restricted fund revenues and additions as reported on the Statement of Changes in Fund Balance amounted to $62,869,717.

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27 NOTES TO FINANCIAL SUMMARY PAGE 12 (6) Cash and Investments All state funds on deposit with banks in Mississippi are collateralized based upon a state agency collateral pool. These banks pledge securities according to statutory requirements based upon the daily deposit summaries. The State Treasury compares the deposit summaries to the Securities Inventory System maintained by the State Treasury to verify that each institution has adequate collateral pledged in accordance with Section , Mississippi code of 1972, Annotated. (7) Endowment Fund Investments The investments of most endowment funds and funds functioning as endowments are invested and administered in a common pool with income from such investments being distributed to the participating funds on the basis of fund balances. Investments are recorded at their fair market value with all investment income, including changes in the fair market value of investments, reported as revenue in the financial schedules. (8) Notes Receivable - Loan Funds Notes receivable bear interest primarily at 5% and are payable in installments over a five-to-ten year period, commencing three to twelve months from the date of separation from the institution. Unpaid Balance June 30, 2014 Notes receivable, less allowance of $1,697,059 $ 8,714,071 (9) Operating Leases Operational leases have been issued to cover rental of floor space at the Jackson Medical Mall and various other locations in the Jackson, Grenada, Meridian, and Gulfport areas. The spaces are used as patient care facilities and administrative offices. The following is a schedule by year of the future minimum rental payments required under those operating leases: Year Ending June 30 Amount 2015 $ 11,480, ,115, ,603, ,582, ,361, ,586, ,586, ,034,480 Total Minimum Payments Required $ 165,350,206 were renewed, for the fiscal year ending June 30, 2014 was $11,345,099. (10) Construction In Progress As of June 30, 2014, the Medical Center has construction in progress related to capital assets totaling $22,014,771 with estimated expenses to complete these projects totaling $79,711,406. All of the funding for our present construction in progress is provided by University funds. (11) Pension Plan Plan description The State of Mississippi Institutions of Higher Learning (IHL) participates in either the Public Employees Retirement System of Mississippi (PERS), a cost-sharing multipleemployer defined benefit pension plan or the Optional Retirement Plan (ORP), a multipleemployer defined contribution plan established in PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state law and may be amended only by the State of Mississippi Legislature. PERS issues a publicly available financial report that includes financial statements and required supplementary information. That information may be obtained by writing to the Public Employees Retirement System, PERS Building, 429 Mississippi Street, Jackson, MS or by calling (601) or PERS. Vesting Period In 2007, the Mississippi Legislature amended the PERS Plan to change the vesting period from four to eight years for members who entered the System after July 1, A member who entered the System prior to July 1, 2007 is still subject to the four year vesting period provided that the member does not subsequently refund their account balance. Funding Policy PERS members are required to contribute 9.00% of their annual salary and the institution is required to contribute at an actuarially determined rate. The actuarially determined rate was 12.00% of annual covered payroll as of July 1, The rate increased to 12.93% effective January 1, 2012, to 14.26% effective July 1, 2012, and to 15.75% effective July 1, The contribution requirement of PERS members are established and may be amended only by the State of Mississippi Legislature. The institutional contributions to PERS for the years ending June 30, 2014, 2013 and 2012 were $65,137,935, $56,750,800, and $51,884,405, respectively. Such contributions equaled the required contributions for each respective year. The membership of the ORP is composed of teachers and administrators of the IHL appointed or employed on or after July 1, 1990, who elect to participate in ORP and reject membership in PERS. Membership in ORP is offered as a recruitment tool for the IHL. The Medical Center s contributions to ORP for the years ending June 30, 2014, 2013, and 2012 were $21,411,984, $17,745,403, and $14,247,007, respectively. Such contributions equaled the contributions for each respective year. (12) Income Tax Status The Medical Center has a tax determination letter from the Internal Revenue Service stating that it qualifies under the provisions of section 501(c)(3) of the Internal Revenue Code and is exempt from Federal income taxes. The total rental expense for all operating leases, except those with terms of a month or less that

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29 NOTES TO FINANCIAL SUMMARY PAGE 13 (13) Hospital Reimbursement The University Hospitals and Health System (UHHS) Medicare cost reports have been audited and settled by the fiscal intermediary through the cost reports filed for the year ended June 30, During FY 2009, UHHS received notification that Medicare had designated the Recovery Audit Contractor (RAC) for the region that includes the State of Mississippi. The RAC program is intended to identify and recover improper Medicare payments made to health care providers as far back as three years from the current date. While UHHS believe all claims submitted to Medicare are supported by the services provided, the RAC could make adjustments based on differing interpretation of the regulations. Audits of Medicare claims began in FY 2010 and are expected to continue in the future. Based on recent audit experiences and reviews of planned future audit activities, the reserve balance at the end of fiscal year 2014 was held at $9.0 million, consistent with previous years. Over five years ago, the Division of Medicaid (DOM) notified all providers in the State of Mississippi of a change in the methodology used to reimburse outpatient services. DOM had adopted a payment methodology for outpatient services at a fixed cost to charge ratio that was increased each year by an inflationary index. At that time, DOM issued letters to all providers of an updated reimbursement percentage based on more current cost data. They also stated they intend to apply the revised methodology back to October 1, As a result of this change, UHHS recorded a reserve in the amount of $12.7 million as of June 30, 2008, as an estimate of potential outpatient claims adjustments to be made by DOM. Other reserves have been established each fiscal year for anticipated adjustments to estimated versus final payment rates for both inpatient and outpatient services. During fiscal years 2009, 2010, and 2011, UHHS repaid approximately $10.9, $5.5, and $4.2 million, respectively to DOM for these and other claims adjustments. At June 30, 2014, UHHS maintains a reserve of approximately $6.3 million for Medicaid rate recalculations and other adjustments for prior fiscal years. (16) Audit and Prior Period Adjustments For the year ended June 30, 2013, the Medical Center restated June 30, 2013 financials to reflect the following audit adjustment and reclassification: June 30, 2013 Audit adjustment for the Tort Claims fund $ 2,198,000 Record the liability for the Federal Portion of Federal Student Loans (5,856,025) Record depreciation expense for Leasehold Improvements previously shown on the Educational Building Corporation books (1,155,676) $ (4,813,701) (14) University Physicians University Physicians is the state s largest medical group including more than 500 physicians and representing more than 125 specialties. On September 1, 2012, the Medical Center consolidated the business operations related to University Physicians under the Medical Center umbrella. The assets and liabilities related to University Physicians prior to the date of the consolidation date remained in University Physicians PLLC, a separate legal entity, and the assets and liabilities generated after the consolidation date are included in these financial statements. (15) Grenada Lake Medical Center Grenada Lake Medical Center is a 156 bed community hospital owned by Grenada County, MS and located in Grenada, MS. On January 1, 2014 the Medical Center entered into a lease agreement to lease the Grenada Lake Medical Center from the Grenada County Board of Supervisors. The initial term of the lease agreement is for twenty years and will be automatically renewed for three additional terms of ten years each unless either party provides one year advance written notice. The monetary terms require the Medical Center to make monthly debt service payments to retire the debt owed by Grenada Lake Medical Center. Total rental payments for the year ended June 30, 2014 was $1,264,611.

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31 OTHER FINANCIAL INFORMATION

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33 SCHEDULE OF CURRENT FUND REVENUES AND OTHER ADDITIONS WITH COMPARATIVE FIGURES AT JUNE 30, 2013 SCHEDULE I PAGE 14 Unrestricted Auxiliary 6/30/14 6/30/13 General Enterprise Designated Subtotal Restricted Current Current Funds Funds Funds Unrestricted Funds Funds Funds Student Tuition $ 26,598, $ - $ - $ 26,598, $ - $ 26,598, $ 22,786, Other Student Fees Out-of-State Fees 183, , , , Out-of-State Fees - Graduate Students 379, , , , Thesis Binding 2, , , , Diploma Fees 26, , , , Instrument Fees 2, , , , Miscellaneous 2, , , , State of Mississippi Appropriations Total Other Student Fees 597, , , , Total Tuition & Fees 27,196, ,196, ,196, ,387, State Appropriations 174,850, ,850, ,850, ,748, Education Enhancement Fund 6,888, ,888, ,888, ,888, Healthcare Expendable Fund 3,780, ,780, ,780, ,380, Federal Appropriations Total State of Mississippi Appropriations 185,518, ,518, ,518, ,017, Federal-PHS-NIH 8,686, ,686, ,359, ,046, ,543, Other Federal 487, , ,423, ,911, ,961, Total Federal Appropriations 9,174, ,174, ,783, ,957, ,505, State Grants & Contracts 5, , ,755, ,761, ,225, Private Gifts, Grants & Contracts Voluntary Health Agencies 109, , , , ,062, ,050, Industries 345, , ,334, ,679, ,977, Foundations 107, , ,102, ,209, ,667, Private Donations , , ,819, ,841, ,069, Laboratory & Testing Fees , , , , , Other 70, , , ,689, ,376, ,155, Total Private Gifts, Grants & Contracts 632, , ,389, ,892, ,281, ,077,101.59

34 SCHEDULE OF CURRENT FUND REVENUES AND OTHER ADDITIONS WITH COMPARATIVE FIGURES AT JUNE 30, 2013 SCHEDULE I PAGE 15 Unrestricted Auxiliary 6/30/14 6/30/13 General Enterprise Designated Subtotal Restricted Current Current Funds Funds Funds Unrestricted Funds Funds Funds Sales & Services of Educational Departments Sales & Services - Dental Clinic Income $ 800, $ - $ - $ 800, $ - $ 800, $ 838, Sales & Services of Hospitals Patient Revenues 3,073,928, ,073,928, ,073,928, ,667,237, LESS: Deduction from Patient Revenues for Contractual Adjustments, Bad Debt and Free Care (2,269,219,983.66) - - (2,269,219,983.66) - (2,269,219,983.66) (1,953,540,610.73) Patient Revenue 804,708, ,708, ,708, ,697, DSH 74,621, ,621, ,621, ,199, UPL 31,722, ,722, ,722, ,365, Total Sales & Services of Hospitals 911,051, ,051, ,051, ,261, Investment Income Investment Income 1,023, , ,133, ,094, ,228, ,643, Net Increase (Decrease) In The Fair Value of Investments 52, , , (1,278,031.42) Auxiliary Enterprises Total Investment Income 1,076, , ,186, ,094, ,281, ,365, Bookstore - 2,388, ,388, ,388, ,533, Giftshop , Printing - 1,130, ,130, ,130, ,104, Parking - 706, , , , Laboratory Animal Facilities - 1,297, ,297, ,297, ,247, Surplus Property - 16, , , , Student Union Fees - 214, , , , Vending - 183, , , , University Pavilion - 598, , , ,157, Biostatistics - 236, , , , Farmers Market - 37, , , , School of Pharmacy - 264, , , , Other Income Total Auxiliary - 7,073, ,073, ,073, ,808, Income from Allocation 242, , , , Dental Hygiene Fees 21, , , , Allocated Tort Fund Reserves 5,000, ,000, ,000, ,000, Electronic Health Record Incentive Income 5,841, ,841, ,841, ,888, Cafeteria 3,060, ,060, ,060, Pharmacy 20,835, ,835, ,835, ,358, Miscellaneous 7,039, , ,866, ,343, ,209, ,409, Total Other Income 42,041, , ,868, ,343, ,211, ,833, TOTAL REVENUES AND OTHER ADDITIONS $ 1,177,497, $ 7,073, $ 1,694, $ 1,186,265, $ 62,869, $ 1,249,134, $ 1,138,320,435.80

35 SCHEDULE OF CURRENT FUND EXPENDITURES AND TRANSFERS SCHEDULE II PAGE 16 General Designated Restricted Total Salaries & Wages Fringe Benefits Travel Contractual Services Commodities Capital Outlay Transfers Service Area Instruction SER-Assoc VC Academic Affairs $ - $ - $ 6, $ 6, $ - $ - $ 1, $ $ 4, $ - $ (19,421.00) SER-Academic Information Svc (7,772.00) Total Instruction - - 6, , , , (27,193.00) Research SER-Office-Vice Chancellor , SER-Cancer Institute - 29, ,901, ,931, ,004, , , , , , (292,429.54) SER-Div Res & Sponsored Proj - 188, , , , , , , , , ,274, SER-Assoc VC Academic Affairs , , , , , , , , Total Research - 218, ,462, ,680, ,511, , , , , , ,983, Public Service SER-Office-Vice Chancellor , , , , , , , , SER-Ctr for Emergency Services - - 1,310, ,310, , , , , , , SER-Cancer Institute - - 3, , , SER-Div Res & Sponsored Proj - - (256.48) (256.48) - (256.48) SER-Assoc VC Academic Affairs - - 1, , , SER-Academic Information Svc , , , , , Total Public Service - - 1,828, ,828, , , , , , , Academic Support SER-Office of Development - 299, , , , , SER-Assoc VC Academic Affairs 1,929, , ,453, ,467, , , , , , SER-GWIMS 4, , , , SER-Continuing Health Prof Ed 798, , , , , , SER-Institutional Support Prog 4,297, , ,093, , , (9,016.79) 4,002, , , (3,332,919.84) SER-Biomed Illustration Svcs 492, , , , , , , SER-Audiovisual Services 227, , , , , , , SER-Academic Information Svc 4,176, , ,207, , , , , ,856, , SER-Student Union (5.79) , SER-Laboratory Animal Facility 1,110, ,110, , , , , SER-Multicultural Affairs 654, , , , , , , SER-Debt Retirement ,822, SER-Simulation Center 267, , , , , , , , Total Academic Support 13,957, ,130, , ,612, ,518, ,507, , ,337, , ,732, (46,649.57) Student Services SER-Accounting Department , , , , , SER-Office of Medical Educ - 1, , , SER-Office of Financial Aid 388, , , , , , , , SER-Student Services & Records 773, , , , , , , Total Student Services 1,161, , , ,297, , , , , , , , Institutional Support SER-Office-Vice Chancellor 4,773, ,773, ,482, , , , , , Chief Administrative Officer 198, , , (211.17) - 167, , , , SER-Fin Affairs-Budget Office 831, , (12,669.82) 1,176, , , , , , ,241, SER-Office of the Comptroller 120, ,343, , ,506, ,152, , , , (1,070,123.41) SER-Accounting Department 2,838, ,838, ,988, , , , , SER-Accounts Payable Dept SER-Payroll Office 424, , , , , , SER-Decision Support 157, , , , SER-Office of Medical Educ 28, , , , SER-Supervision 56, , , SER-Property Control 499, , , , , , SER-Property Control Surplus SER-Human Resources 5,267, ,267, ,361, , , , , , SER-HR-UP (43.89) - - (43.89) (43.89) SER-HR-Academics & Research 149, , , , SER-HR-Employee Relations 180, , , , SER-HR-Total Rewards 263, , , , SER-HR-Workforce Plan/Recruit 6, , , , SER-HR-Talent Acquisition 150, , , , (101.00) SER-HR-Org Dev & Mngmnt Cnslt 7, , , , SER-Legal 2,134, , ,236, ,107, , , , , , (102,250.00)

36 SCHEDULE OF CURRENT FUND EXPENDITURES AND TRANSFERS SCHEDULE II PAGE 17 General Designated Restricted Total Salaries & Wages Fringe Benefits Travel Contractual Services Commodities Capital Outlay Transfers Service Area (Cont.) Institutional Support (cont.) SER-Chief Medical Officer-CMO $ 1,297, $ - $ (45,144.53) $ 1,252, $ 975, $ 253, $ 1, $ 20, $ $ 1, $ SER-Medical Staff Services 1, , , SER-Office of Development 1,885, , , ,401, ,510, , , , , , (880,401.31) SER-Internal Auditor 324, , , , , , SER-Ctr for Emergency Services 589, , , , SER-Campus Police 3,863, ,863, ,732, , , , SER-DIS-Core 30,218, ,218, ,759, ,364, , ,213, , ,758, , SER-DIS-Core Projects 441, , , , , (58,363.34) SER-DIS-Core-Ed & Rsrch Proj (3,750.00) - - (3,750.00) (3,750.00) SER-DIS-Hospital 28,681, ,681, ,432, ,612, , ,517, , ,703, , SER-DIS-Hospital Projects 448, , , , , (5,697.70) SER-DIS-Hospital-EPIC SER-Environ Health & Safety 833, , , , , , , SER-Employee Health Service 1,157, ,157, , , , , , SER-Transportation & Parking 784, , , , , , SER-Integrity & Compliance 1,190, ,190, , , , , , (109.99) SER-Alumni Activities (28,483.02) - - (28,483.02) (23,735.85) (4,747.17) SER-Public Affairs 1,235, , ,257, , , , , , , SER-Cancer Institute 115, ,526, ,641, ,601, ,025, , , , (20,945.50) SER-Assoc VC-Strat Rsrch Alli 13, , , , SER-Div Res & Sponsored Proj 1,391, , ,522, ,094, , , , , , SER-DRSP-Office of Research (1,033.70) - - (1,033.70) (918.41) (115.29) SER-DRSP-Cardiovasc Rnl Rsrch 25, , , , , , SER-Chief Financial Officer (32,196.05) - - (32,196.05) (26,724.46) (5,471.59) SER-Contracts Administration 899, , , , , , , SER-Special Projects , SER-Marketing 4,321, ,321, , , , ,500, , , SER-Grenada Lake Due Diligence 30, , , , SER-Roll-Internal Auditor SER-Roll-Employee Health Svcs SER-Roll-Div Res & Spons Proj 18, , , SER-Roll-Assoc VC Acad Affrs 4, , , , SER-Roll-ContinuingHlthProf Ed 58, , , , , SER-Roll-Academic Infor Svcs 79, , , , , , SER-Manning Project 16, , , SER-Government Relations SER-CRRC SER-Assoc VC Academic Affairs - 360, , , , , , , , SER-Institutional Support Prog - (2,800.50) - (2,800.50) (2,654.90) (145.60) Total Institutional Support 97,950, ,311, ,033, ,295, ,723, ,893, , ,938, ,309, ,990, (2,102.09) Operation & Maint of Plant SER-Div of Physical Facilities 795, , , , , (198,184.68) 8, , SER-Power Plant 13,998, ,998, , , ,096, , (408,589.97) SER-Building Maintenance 10,985, ,985, ,059, ,416, , ,370, ,137, SER-Ground Expense 50, , , , , SER-Bldg Maint-Carpenter Shop 47, , , , SER-Bldg Maint-Paint Shop 36, , , , SER-Bldg Maint-Plumbing Shop 47, , , , SER-Bldg Maint-Electric Shop 6, , , , SER-Bldg Maint-Refrig Shop 8, , , , SER-Bldg Maint-Machinist Shop 60, , , , SER-Environmental Services 3,801, ,801, ,449, ,046, , , SER-Phys Fac Storeroom Charges 44, , , SER-Office of Planning 1,492, ,492, ,072, , , , , , , Total Operation & Maint of Plant 31,376, ,376, ,012, ,222, , ,401, ,563, , (218,589.97) Scholarships & Fellowships SER-Div Res & Sponsored Proj - - (2,484.00) (2,484.00) - (2,484.00) SER-Office of Financial Aid - - 7,509, ,509, ,509, (1,918,450.08) SER-Student Services & Records , , , Total Scholarships & Fellowships - - 7,538, ,538, (2,484.00) - 7,540, (1,918,450.08)