FY 2005 - University of Missouri System

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 4When adjusted for inflation, total expenditures over five years decreased 3.5%. We expect this trend to continue infiscal year 2006.The University of Missouri Health System continues to improve its financial position ending fiscal year 2005 witha 6.3% excess margin providing approximately $30 million for capital projects and other initiatives. This improvedperformance was reflected in the change in the credit outlook from negative to positive by Moody’s Investor Services inApril 2005. In fiscal year 2006, the Health System must manage the financial impact of reductions in the state Medicaidprogram. The record hiring of specialty physicians and continuing increases in patient census, surgical volumes anddeliveries are projected to bolster performance.The University continues to strengthen and diversify its funding sources through effective endowment management,increased private giving and record high external research funding. The University of Missouri-Columbia campusrecently announced that it was extending its capital campaign goal to $1.0 billion after reaching the original goal of$600 million six months early. External research funding is at an all time high with a 20% increase in Federal fundingon the Columbia campus. With the addition of economic development as a fourth mission of the University, PresidentElson Floyd recently appointed a vice president for research and economic development to foster partnerships withthe state of Missouri and the private sector in support of economic initiatives that build on the University’s researchstrength.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 ia 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 13