2011 Annual Report - USNH Financial Services - University System ...

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USNH 2011 ANNUAL REPORTTable 4: Major Construction ProjectsTotalProject CostCampus Name of Project Primary Purpose ($ in millions) Primary Sources of FundsFiscal year completed:2008 UNH Kingsbury Hall renovation and expansion Academic & research 56 State appropriations, gifts & cashUNH Southern Underpass Infrastructure 8 State appropriations, grants & cashPSU Mary Lyon Hall renovation Student residential 16 NHHEFA bonds & cash2009 UNH Southeast Residential Community Student residential 51 NHHEFA bondsUNH DeMeritt Hall renovation Academic & research 19 State appropriations & giftsUNH Fairchild Hall renovation Student residential 9 NHHEFA bondsUNH Stillings Hall renovation Student dining 2 CashUNH Chase Hall addition Academic & research 2 GrantsUNH Main Street reconstruction project Infrastructure 2 State and local grants & cashUNH Philbrook Hall expansion Student dining 6 NHHEFA bonds & cashPSU Central Campus Infrastructure improvements Energy & other infrastructure 7 State appropriations & cashKSC Pondside III Apartments Student residential 17 NHHEFA bondsKSC Fiske Hall renovation Student residential & administrative 9 NHHEFA bonds & cash2010 UNH ECOLine Landfill Gas project Energy infrastructure 50 NHHEFA bonds & cashUNH Marine Pier Infrastructure 14 GrantsUNH James Hall renovation Academic & research 33 State appropriations & giftsUNH NH Hall renovation Academic & research 5 CashUNH Residential safety improvements Student residential 1 NHHEFA bonds & cashKSC Central Heating/Cogeneration facility Energy infrastructure 9 State appropriations & cashKSC KSC Huntress Hall renovation Student residential 6 NHHEFA bonds & cash2011 UNH Wind Turbulence facility Academic & research 3 Grants, state appropriations & cashUNH Recreation facilities renovation Student recreation 1 NHHEFA bondsUNH Whittemore Arena renovation Student recreation 2 NHHEFA bondsUNH Main Street West reconstruction Infrastructure 1 Grants & cashUNH Smith Hall renovation Administrative 1 Cash & state appropriationsUNH New England Center West Tower conversion Student residential 2 CashPSU ALLWell Ice Arena Student recreation 16 NHHEFA bonds, grants & cashKSC KSC Alumni Center renovation Administrative 7 Cash & state appropriationsNHPB Digital Transmission conversion Other infrastructure 3 State appropriations and grantsIn progress at June 30, 2011, at budgeted amounts:UNH Parsons Hall renovation Academic & research 59 State appropriations, gifts & cashUNH Peter T. Paul Business Building Academic & research 50 Gifts & cashPSU Museum of the White Mountains Academic & research 2 CashKSC Adams Tech, Design & Safety Building Academic & research 15 Cashdepreciation and the balance of related debt outstanding. Restricted netassets include funds already expended or committed, such as loan fundsand endowments and similar funds, where assets are restricted as topurpose or assets are required to be invested in perpetuity.Net assets that are not subject to externally imposed restrictionsgoverning their use are classified as unrestricted net assets on theStatement of Net Assets. Unrestricted net assets include unrestrictedcurrent fund balances, balances in unrestricted loan funds, unrestrictedfunds functioning as endowment, unexpended plant funds, andunrestricted funds held by affiliated entities. Substantially all unrestrictednet assets are committed for goods and services not yet received, capitalprojects in various stages of planning and completion, normal workingcapital for departmental activities, or designated for specific futurepurposes. (See Note 11 for further details on net asset balances.)Capital and Debt ActivitiesExpenditures for property and equipment are recorded as asset additionson the Statement of Net Assets with the related depreciation recordedon the Statement of Revenues, Expenses and Changes in Net Assets.Interest on the related debt service (net of amounts capitalized duringconstruction and interest income earned on bond proceed accounts)is recorded as nonoperating expense in the Statement of Revenues,Expenses and Changes in Net Assets, whereas required principalpayments are recorded as a reduction of the corresponding liability.(See Notes 5 and 8 for further information on capital and debt activities,respectively.)Academic FacilitiesThe KEEP-NH legislation signed into law in July 2001 resulted in an initial$100 million appropriation from the state to fund the renovation andexpansion of teaching and research facilities at all campuses. The firstKEEP-NH appropriation funded renovation projects completed between2002 and 2007. All the projects using the first phase of funding werecompleted on-time and on-budget.The state approved a second appropriation of $109.5 million to completethe KEEP-NH plan by 2013. Infrastructure projects on the residentialcampuses have been completed along with ground-up renovations ofthe Demeritt and James Hall buildings at UNH. The remaining fundsare being used to provide similar renovations for UNH’s Parsons Hall. All20
USNH 2011 ANNUAL REPORTthree buildings house science instruction andresearch facilities.During 2011 UNH also began constructionon the Peter T. Paul College of Business andEconomics. With $25 million donated byalumnus Peter Paul and matching funds fromUNH, alumni and other supporters, this $50million facility is expected to open in the springof 2013. The new building will accommodatenearly 3,000 students and a 200 seat auditoriumalong with dedicated space for the hospitalitymanagement program, career services andsupport functions to meet the long-termneeds of the school. The facility is expected toshowcase UNH’s commitment to Leadership inEnergy and Environmental Design (LEED), and isdesigned to the LEED Gold standard.Residential Life FacilitiesIn 2005, each of the three residential campuseshoused approximately 55% of their traditionalage undergraduate populations. The longtermstrategic goal of each campus is to houseapproximately 60% of its undergraduates. Tomeet this goal USNH issued an additional $210million in revenue bonds during 2005 and 2006.All projects have been completed includingZorn Dining Hall and the Butler Court, Fiske andPondside III Residence Halls at KSC; the Grafton,Langdon Woods and Mary Lyon ResidenceHalls at PSU; and the Philbrook Dining Hall,Fairchild Residence Hall, Gables Apartments andSoutheast Residential Community at UNH.In 2009 USNH issued $24 million of additionalbonds to finance the construction of theALLWell Arena and Welcome Center at PSU,renovate the Huntress Residence Hall atKSC, and upgrade fire safety systems in UNHdormitories. The ALLWell Arena opened in July,2010 and has been commended as a stateof-the-artfacility. USNH also issued another$6 million of bonds in 2011 to fund smallrenovation projects in student housing, diningand recreation facilities at the three residentialcampuses. These projects are expected to becompleted in 2012.UNH Energy Infrastructure FacilitiesDuring 2004, USNH entered into a constructioncontract for replacement of the centralheating plant at UNH, including an electricitycogeneration facility. The project cost totaled$30 million of which $19 million was financedby a 20-year capital lease, with the balancecoming from USNH funds. The facility wentonline in early fiscal 2008. This facility is ableto burn multiple fuels and has significantlyreduced the risks of volatile utility prices.Building on the success of the cogenerationfacility, the Trustees approved ECOLine, a$50 million project designed to pipe purifiedmethane gas from a landfill in Rochester, NHto the Durham campus. The work includedTable 5: Endowment Activity for the Years Ended June 30($ in millions)CampusesAffiliated EntitiesUNH FoundationKEAPooled Other Pooled Other Other TotalFair value, June 30, 2008 $167) $15) $121) $5) $4 $312)New gifts 12) ) 4) 16)Quasi endowment additions& other changes 16) 16)Total return (loss) (45) (2) (20) (1) (68)Total distribution (6) (1) (6) (13)Fair value, June 30, 2009 144) 12) 99) 4) 4 263)New gifts 5) ) 3) 8)Quasi endowment additions& other changes 4) 4)Total return (loss) 14) 1) 12) 27)Total distribution (5) (1) (6) (12)Fair value, June 30, 2010 162) 12) 108) 4) 4 290)New gifts 5) ) 3) 1 9)Quasi endowment additions )& other changes 22) 22)Total return (loss) 31) 3) 23) 1) 2 60)Total distribution (6) (1) (6) (13)Fair value, June 30, 2011 $214) $14) $128) $5) $7 $368)construction of a methane gas processing plant at the landfill and a 12-mile underground pipelineto transport the processed gas to the cogeneration facility, where an additional turbine was installedto generate electricity. NHHEFA bonds were issued in 2008 to fund the majority of the project. TheECOLine project was successfully completed allowing UNH to derive the majority of its heating,cooling, and electricity from a renewable, carbon-neutral resource, and sell excess electricity to thegrid.Major capital projects for the past four years and construction in progress as of June 30, 2011 are listedin Table 4 on the previous page.Endowment and Similar InvestmentsEndowment gifts are invested in various assets depending on whether the donor contributed toone of the campuses, the UNH Foundation (UNHF), or the Keene Endowment Association (KEA).Most endowments are invested in one of two internally-managed investment pools: the USNHConsolidated Endowment Pool (CEP) for the benefit of several campuses or the UNHF endowmentpool for the benefit of UNH only. The investment pools are managed to provide the highest rateof return over the long term given an acceptable level of risk as determined by the responsiblefiduciaries. The USNH Board of Trustees has fiduciary responsibility for the CEP, whereas the separateboards of UNHF and KEA have their own investment policies and are separately responsible for thoseinvestments. Table 5 shows the summarized endowment investments activity for the years endedJune 30, 2011, 2010 and 2009.USNH is continuing to build the endowment through three strategies: investing endowment assets togenerate improved total returns while managing risk; reducing dependence on endowment returnsused in operations; and working to foster philanthropic interest to support the endowment with newgiving. (See Notes 4 and 12 for further information on endowment and similar investments.)B. Statement of Revenues, Expenses and Changes in Net AssetsThe total change in USNH net assets for the year is reported in the Statement of Revenues, Expensesand Changes in Net Assets. This statement reports total operating revenues, operating expenses,other revenues and expenses, and other changes in net assets, as prescribed and defined by theGovernmental Accounting Standards Board (GASB). Table 6 shows summary information derivedfrom the Statement of Revenues, Expenses and Changes in Net Assets for the five years ended June30, 2011.There are three major components which management considers separately when analyzing thechange in total net assets: net income from recurring activities (also referred to as operating margin);capital appropriations and other plant changes; and endowment gifts and unutilized total returns.21
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