2012 President's Report

’Canes in the Community 2012 President’s Report

M E S S A G E

F R O M

T H E

P R E S I D E N T

Celebrating a Close-Knit Partnership On first glance, 2012 was not a high-profile birthday year for the

University of Miami. Now 87, UM is still something of a youthful upstart

in the venerable world of top-tier academic institutions. On closer look,

however, the past year marked many significant milestones for the

University and our multifaceted relationship with the city that shares

our name. Since our earliest days, innovative, in-depth partnerships

with the community have been an integral part of our DNA—and we’ve

come a very long way together in a relatively short time.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 1

It has been six decades since the founding in 1952 of the Leonard M. Miller School of Medicine, the first medical school in Florida and now a renowned center of biomedical research, topflight clinical care, and innovative education for tomorrow’s health care professionals. One of the Miller School’s most steadfast community partners, The Pap Corps, Champions for Cancer Research, was founded the very same year. With 21,000 volunteers, The Pap Corps is today the largest grassroots organization in the U.S., annually raising up to $4 million for research conducted by Sylvester Comprehensive Cancer Center at the Miller School.

On our Coral Gables campus, 2012 was the 60th anniversary of the Lowe Art Museum. The first art museum in South Florida, the Lowe is a lively venue for high-quality art exhibitions, a bustling center of cultural education, and home to a 17,500-object permanent collection that is one of the region’s most important. This year also marked the 60th anniversary of the Beaux Arts Foundation, which has provided dedicated support for the museum and its varied activities throughout the sister organizations’ shared decades.

Last spring we commemorated the 50th anniversary of the desegregation of the University of Miami and reconfirmed our dedication to diversity in every facet of campus life. And this

fall the University’s flagship Otto G. Richter Library celebrates a half-century of service as one of the most respected scholarly treasures in the southeastern United States. In addition to providing a welcoming physical venue for on-site research and year-round cultural programming, the UM Libraries system embraces cuttingedge digital technologies that are making many of its remarkable and rapidly growing holdings easily accessible to all who seek the rich insights they offer.

Across the University, we are continually expanding and strengthening our relationships with the community. The School of Education and Human Development was renamed this year to reflect its comprehensive approach to improving community well-being. Also in 2012, the University’s Office of Civic and Community Engagement completed its inaugural year. This sweeping initiative links faculty members and students across the University with service-learning experiences that leverage our academic resources to enrich our community while preparing the next generation of civic leaders.

Ensuring that the University is fully engaged with the community is an essential part of the job description for University leaders such as M. Brian Blake, the new dean of our Graduate School. An

Across the University, we are continually expanding and strengthening our relationships with the community. expert administrator and accomplished computer scientist who joined UM in May from the University of Notre Dame, Dr. Blake also serves as vice provost for academic affairs.

This year also saw many new and changed leadership roles at the Miller School as the result of a strategic decision to eliminate unfunded research positions, centralize functions that were duplicated in many departments and divisions, and migrate toward a shared-services model—all while minimizing any impact on patient care and education. This move, unfortunately, mandated a significant number of layoffs and was an extremely difficult process. However, it was necessary to meet the myriad challenges facing large academic medical systems such as ours in today’s rapidly changing health care environment. Ultimately the Miller School’s leaner operating profile will enable us to function more effectively and continue to invest in world-class research, education, and clinical care.

Providing infrastructure and support services for leading-edge research with real-world applications is the purpose of the University of Miami Life Science & Technology Park, which opened its first building last fall. The sophisticated facility is now home to biotech startups as well as the University of Miami Tissue Bank, which this spring received a prestigious award recognizing excellence in the life sciences from the Miami-Dade County Beacon Council.

2 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 3

Biomedical research remains extremely vigorous at UM, where some 1,600 investigations ranging from bench studies to clinical trials obtained more than $129 million in National Institutes of Health funding, maintaining the Miller School of Medicine’s position as the top NIH-funded medical school in the state. Exemplifying our excellence in bench-to-bedside care, the Miller School’s Bascom Palmer Eye Institute was rated the nation’s No. 1 ophthalmology program for the ninth consecutive year in U.S.News & World Report’s annual Best Hospitals rankings.

University-wide, investigators received a total of more than $353 million in sponsored grants and contracts during the past fiscal year. Our vast research enterprise encompasses more than 5,700 graduate students and postdoctoral fellows in more than 2,400 extramurally funded projects. Hundreds of younger students play an important role in the pursuit of new knowledge when they take advantage of the hands-on laboratory experiences we offer on the undergraduate level; many mentor area high school students in bench research, truly paying it forward and perhaps fostering some of tomorrow’s scientists in the process.

The University’s strengths in the humanities and the arts are equally impressive. Through a special initiative called Taking Flight, which kicked off this fall, we will be celebrating UM’s excellence in these disciplines throughout the upcoming academic year.

The varied educational experiences our students enjoy each year also include eye-opening encounters with some of the world’s most distinguished leaders. President Barack Obama selected the University as the location for a major speech on energy policy this spring; while on campus, he toured a government-funded College

4 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

of Engineering program that helps local businesses conserve energy. On Presidents’ Day, students in my U.S. Health Care Crisis class were surprised to receive an unforgettable lecture from a very special substitute teacher: former President Bill Clinton.

This year UM students met luminaries including former U.S. Secretary of State Condoleezza Rice, whose visit was part of the Charles E. Cobb Leadership Lecture Series; Marc Grossman, U.S. ambassador to Afghanistan and Pakistan; Egyptian Ambassador Sameh Shoukry; and Rivka Carmi, president of Ben Gurion University in Israel.

Reflecting the excellence of the educational experience we provide, UM was recently ranked for the fourth year in a row among the top 50 American universities by U.S.News & World Report, retaining its position as the highest-rated school in Florida and solidifying its status as a top-tier national institution. Among the key measures in which UM continued to show marked gains was an SAT average score of 1325 for our freshman class, up from 1220 ten years earlier and the highest in our history.

Yet even such impressive metrics don’t fully convey what makes our students and student life so extraordinary. For that, take a look at the students themselves. They’re creating individualized courses of study, acing double and triple majors and/or minors, participating enthusiastically in campus life, volunteering and conducting research within the community, studying around the world, and making their marks in fields ranging from multimedia music production to marine ecology to biomedical engineering.

To intensify the dynamic intellectual cross-fertilization that characterizes life at UM and its impact on our students,

our community, and the world, the University unveiled a new fundraising campaign, Momentum2, in February. This ambitious initiative seeks to build on our accomplishments of the past decade by garnering $1.6 billion in new contributions toward unprecedented breakthroughs in education, research, and clinical care.

Launched with a magnificent $100 million lead gift from the Diabetes Research Institute Foundation to advance new therapies at the Miller School’s Diabetes Research Institute, Momentum2 has received generous donations from longtime and new friends to fuel academic excellence, recruit and recognize outstanding faculty, and increase scholarships that enhance campus diversity and expand educational opportunities for outstanding students.

Leonard Abess, chair of our Board of Trustees, and his wife, Jayne, are serving as chairs of the University campaign; Stuart Miller, whose family named the Leonard M. Miller School of Medicine in his father’s honor, is leading the Miller School campaign. Momentum2 has attracted many other stellar University supporters to serve in key leadership roles. Further validating our vigilant stewardship of philanthropic support, the University has

been recognized by Charity Navigator for 12 years in a row as one of the nation’s most fiscally responsible nonprofits.

As I write, more than 100,000 individuals and organizations have made gifts approaching $1 billion to Momentum2. The effects of this generosity are being seen and felt in construction projects under way across the University. The Rosenstiel School of Marine and Atmospheric Science Seawater Complex and the Cox Neuroscience Annex, both made possible by a combination of government funding and private donations, will foster the next generation of discovery in these crucial disciplines. Our forthcoming Schwartz Center for Athletic Excellence and Student Activities Center, both made possible by generous gifts from Momentum2 leaders, reflect the inspiring power of philanthropic partnership to transform every aspect of our learning environment.

Dramatically different examples of this transformative potential can be seen on the Miller School of Medicine campus. The Interdisciplinary Stem Cell Institute, which received a $10 million gift from the Starr Foundation, is currently leading more than a dozen clinical trials evaluating the use of stem cells in patients with conditions including congestive heart failure, skin wounds,

The varied educational experiences our students enjoy each year also include eye-opening encounters with some of the world’s most distinguished leaders. burns, and stroke. At The Miami Project to Cure Paralysis, the Christine E. Lynn Clinical Trials Initiative played a vital role in the recent approval by the U.S. Food and Drug Administration for the first-ever human trials of a novel therapy for acute spinal cord injury after more than four decades of brilliant and exquisitely patient research.

We’re understandably fond of touting the varied activities that, while dispersed across three campuses, six continents, and dozens of programs, centers, and initiatives, all fall under the virtual roof of the U. Yet even more significant is what all of these endeavors have in common: a tireless dedication to educating tomorrow’s leaders, expanding opportunity, enhancing human and environmental well-being, and the mutual respect, collaboration, and cooperation that are essential to achieve these goals.

We thank you for your interest in and support of the University of Miami, and we look forward to working closely with you and all of our valued partners to make the community and world we share a better place: year by year, day by day, step by step.

Donna E. Shalala President

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 5

Civically Engaged Through productive partnerships across the community, the University improves our region’s quality of life while providing inspiring, hands-on learning experiences.

Building Community from the Ground Up “What have you done for the world today?”

When UM junior Meera Nagarsheth, who grew up steeped in her family’s strong dedication to service, talks with her father, it’s always his first question.

It’s also a question that Charlton W. Tebeau Associate Professor of History Robin Bachin, who serves as UM’s assistant provost for civic and community engagement and directs a recently launched initiative by the same name, thinks all students should consider. The Office of

Civic and Community Engagement, Bachin says, leverages the University’s intellectual and academic resources and brings together faculty, students, and community organizations “to collaboratively shape solutions for improving civic life and addressing community concerns in Miami.”

Serving as a clearinghouse for servicelearning opportunities, communityUniversity partnerships, and nearly 150 courses with a community component, the initiative also spearheads its own programs.

The inaugural year was devoted to affordable housing; this year’s theme is urban and environmental sustainability.

In her own quest to make a difference, Nagarsheth, an aspiring physician studying microbiology and immunology, completed a summer internship with fellow student Nawara Alawa at Neighborhood Housing Services of South Florida in Miami’s Brownsville neighborhood. The process itself was an education, she says: “We went in with really high hopes about what we’d do, then realized that our first task would be getting the community to trust us. So for six months we just talked to people.”

Among other activities, Nagarsheth and Alawa helped develop a sports program to keep kids off the street and a public health assessment questionnaire to glean insights on area residents’ well-being. Bachin’s office provided insights via “complex conversations about service that helped to shape who I am,” says Nagarsheth, who was named a 2012 Campus Compact Newman Civic Fellow for her community leadership.

Associate Professor Robin Bachin leads the University’s efforts to encourage community involvement among students such as Meera Nagarsheth, who has developed outreach projects in Miami’s Brownsville neighborhood.

6 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Through the School of Education and Human Development’s Kulula project, children in Miami’s West Grove area take part in activities that help build community and cultural identity.

defensive players trying to sack the quarterback. But the area youngsters who turned out at Betty T. Ferguson Park in Miami Gardens were up to the challenge, demonstrating a perfect football stance under Linder’s watchful eye. Linder was one of several UM football players who instructed the youth at parks in MiamiDade and Broward counties this summer, leading them in a series of exercises and teaching them how to play the game safely.

Kindling Cultural Pride At a park in Miami’s West Coconut Grove, a drumbeat beckons youngsters to join hands around a potted plant. One by one, they name people who have influenced their lives, from family members to historical figures to superstar athletes.

Then they water the green shoot, chanting affirmations such as “I’m the bomb! I love myself, and I love you too.”

Inspired by an African ritual, the weekly ceremony is part of Kulula, a community outreach project founded by Marie Guerda Nicolas, an associate professor and chair of educational and psychological studies at UM’s School of Education and Human Development. Through Kulula—a Swahili word that means succeed, achieve, and accomplish—some 60 children learn about their African heritage, participate in group activities, and submit ideas to improve their community.

The youngsters also receive academic tutoring to complement their new self-esteem and leadership abilities with study skills that will help them succeed in school. As one UM student described the rewards of being a Kulula mentor, “It’s like seeing a younger brother or sister grow up and mature.”

Victory Formation At six feet, six inches tall and 310 pounds, Hurricanes offensive lineman Brandon Linder is an immense obstacle for opposing

UM’s student-athletes volunteer extensively in the community; here, Hurricanes offensive lineman Brandon Linder coaches area youngsters in football technique and teamwork.

Legal Aid for Neighbors in Need For more than a year, the University of Miami School of Law’s Human Rights Clinic, working with the Little Haiti-based community group Haitian Women of Miami and other partners, has urged United States officials to halt deportations of U.S. residents of Haitian descent to Haiti. “The stories told by deportees paint a picture of fear, helplessness, and hopelessness,” says law student and clinic participant Drew Aiken.

The clinic is just one of the school’s varied legal and community outreach

programs, which give students practical, hands-on experience while helping underrepresented South Florida residents.

The Legal Corps, a postgraduate fellowship program created by Dean Patricia D. White, funds recent law graduates who have passed the bar exam to work for six months with understaffed public agencies.

In recognition of the school’s efforts to protect the rights of South Florida’s most vulnerable individuals and families, Legal Services of Greater Miami presented its third annual Heart of Giving award to Dean White this year.

Giving Local Nonprofits a Leg Up Aspiring corporate leaders and entrepreneurs entering UM’s School of Business Administration get an early taste of the challenges and responsibilities of the business world as part of the Freshmen Integrity, Responsibility and Success through Teamwork (FIRST) Step program.

The required semester-long course exposes first-year students to business ethics and principles, teamwork, and community engagement. In addition to lectures, networking events, practical workshops, and training sessions, FIRST Step student teams assist local nonprofit organizations in areas such as business plan development, social entrepreneurship, and branding.

And at the School of Communication, through an annual daylong event known as PhilADthropy, communication students provide free advertising and creative services to local nonprofits, from Food for the Poor to Miami Lighthouse for the Blind, within a 24-hour period.

UM School of Law programs such as the Human Rights Clinic provide students with practical, real-world lawyering experience as they help underrepresented area residents.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 7

Healthy Choices Determined to develop effective treatment and prevention strategies for some of the nation’s most complex health challenges, UM clinicians and researchers are working closely with Miami communities.

Lifesaving Partnership Miami’s Little Haiti, the nation’s largest enclave of Haitian-Americans, is a vibrant center of Haitian culture. It is also one of Miami’s poorest neighborhoods. Soon after epidemiologist Erin Kobetz joined the faculty of the Miller School of Medicine in 2004 to lead a health disparities program at Sylvester Comprehensive Cancer Center, she discovered that Little Haiti was afflicted with cervical cancer at four times average regional and national rates. The disease can be avoided with annual Pap smears, but the number of women of Little Haiti who receive the diagnostic screening was extremely low.

To find out why, Kobetz partnered

with organizations in Little Haiti to create a community study based on interviews by specially trained, Creole-speaking local women. The resulting data revealed many reasons for the deadly disparity in diagnostic screenings, such as fear of the Pap smear procedure, mistrust of the medical community, lack of insurance, and deeply held cultural beliefs. Kobetz’s team ultimately developed a successful way to surmount these barriers: providing area women a free device for in-home cervical cancer screening, as well as education about its importance.

This highly effective approach evolved into the collaborative program known

as Patnè in Aksyon (Partners in Action).

Today the organization oversees six initiatives that pursue culturally sensitive strategies to address cervical, breast, and colon cancer in Little Haiti. “For me,” says Kobetz, “the biggest success is that the community has taken on the issue of cervical cancer—they even hold an annual conference about it.”

Partners in Action now serves as a model for programs in other underserved Miami neighborhoods, as well as Haiti itself. Recently named director of the Miller School’s Jay Weiss Center for Social Medicine and Health Equity, Kobetz is now working with Sonjia Kenya, an assistant professor of general medicine, on a new facility that will provide comprehensive services within a grassroots framework to Overtown residents.

“The University has a long tradition of providing health care in the community,” Kobetz says. “We have a responsibility to learn how to deliver health services in ways that people can actually use them.”

The Miller School of Medicine’s Erin Kobetz (center) works with Little Haiti organizations and health care leaders such as Jean Luc Charlot and Larinus “Larry” Pierre to develop culturally sensitive approaches to fighting cancer.

8 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Stubbing Out Smoking While enclosed shared areas such as jets, office buildings, and restaurants are now largely no-smoking zones, making an entire academic campus smoke free is a much bigger challenge. But that’s just the milestone that was achieved at UM-Jackson Medical Center in 2010, when the entire campus became smoke free.

The effort was spearheaded by the UM Area Health Education Center (UMAHEC). Operated by the Miller School’s Office of Community Health, UMAHEC links the school’s resources with medically underserved communities throughout South Florida. Over more than 20 years, the initiative has served some 50,000 people with varied services ranging from dental care for youngsters to fitness tips for the elderly. In recent

Miller School of Medicine student Stefania PrendesAlvarez designed a middle school curriculum to help destigmatize mental health issues among teens.

health professional students and providers with smoking cessation resources, 7,000 schoolchildren with tobacco-prevention education, and more than 20,000 smokers with free cessation services such as nicotine-replacement therapy.

South Florida schoolchildren.

Major Strides in Minority Health Behaviors such as domestic violence, unprotected sex, and substance abuse—and the health issues that stem from them—affect minority communities at higher rates than the population at large. The quest for effective, culturally appropriate prevention and treatment strategies for these behavioral health concerns is the focus of the University of Miami Center of Excellence for Health Disparities Research: El Centro. Based in the School of Nursing and Health Studies, the initiative, launched in 2007 with a grant from the National Institutes of Health, recently received a $7 million NIH grant to fund the project for the next five years.

Originally established to focus on Hispanics, El Centro has broadened its focus to include other groups also affected by these health disparities, including African-Americans and CaribbeanAmericans. The grant also provides funding for three cores to facilitate research, training, and community-academic alliances. “This award,” says Dean Nilda Peragallo, “will allow us to continue to build a program that serves our University, community, and society in advancing the science of eliminating health disparities.”

years, UMAHEC has largely focused on one of society’s most notorious health hazards—smoking.

UMAHEC’s comprehensive tobacco training and cessation program includes a Web page, smokefree.med.miami. edu, which offers detailed information to help smokers kick the habit. Thus far, UMAHEC has provided more than 10,000

Dedicated to Service Accompanying a family friend to a free health fair organized by Miller School of Medicine students was a life-changing experience for Miller School of Medicine student Stefania Prendes-Alvarez. “Seeing so many patients in need of care and their gratitude for the students’ help was overwhelming,” says Prendes-Alvarez, who

The Miller School of Medicine’s smoking cessation resources include tobacco prevention education for

has since earned a master’s degree in public health and plans a residency in psychiatry after graduation.

Since her freshman year, PrendesAlvarez has been actively involved in the free health fairs and student clinics organized and run by the school’s Mitchell Wolfson Sr. Department of Community Service (DOCS), and currently serves as the organization’s executive director. Her exposure to a psychiatry patient during a first-year DOCS clinic inspired a community health initiative she founded in 2009 with Ana E. Campo, associate dean for student affairs and associate professor of psychiatry and behavioral sciences. “Let’s Talk about It,” a ten-week mental-health curriculum that educates eighth-graders on the most prevalent mental illnesses and healthy coping techniques, is now implemented in 17 schools, thanks to support from the American Psychiatric Foundation and UM’s Department of Epidemiology and Public Health.

“I chose to work with adolescents because I believe their emotional wellbeing is not always attended to as it should be,” says Prendes-Alvarez. “Our primary aim is to destigmatize mental illnesses and encourage adolescents to seek mental health care if they need it.”

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 9

Artful Explorations With its intellectual distinction, multicultural spirit, and adventurous creativity, UM is a vibrant center of arts, culture, and humanities scholarship—broadening horizons, expanding possibilities, and building community.

Playing It Forward Music moves us on every level. It stimulates our bodies and evokes our emotions.

Through an outreach program coordinated by the Frost School of Music, it also motivates at-risk teens in Miami to graduate from high school and go to college.

The Frost School’s MusicReach Mentorship Program, a collaborative initiative with the Greater Miami Youth Symphony, links about 40 local seventhgraders with nearly 20 specially trained music majors who provide them with mentorship and music instruction for four years.

“I was always studious, but seeing how people flourish on campus at the University of Miami has reinforced my desire to go to college,” says Relyn Myrthil, a 14-year-old MusicReach participant who has been studying music for the past three years with Frost School student Nika Reguero. While she has been taking music lessons since the age of 6, Myrthil notes that, until MusicReach, she didn’t have a private instructor who gave her the structure she needed to grow as a musician and performer.

Young violinist Relyn Myrthil is improving her skills with the assistance of the MusicReach Mentorship Program.

10 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

“Performance was always what I looked forward to most, but as I got older, I got more nervous,” says Myrthil, who performs with the Greater Miami Youth Symphony or as a

solo violinist about 12 times a year. “Without MusicReach, my skills wouldn’t be what they are today. It picked me up from where I was and has taken me much higher.”

The University of Miami Libraries system is home to an impressive trove of rare items, extensive digital collections, and a busy calendar of educational events.

Extraordinary Resource In the quest for knowledge about topics as diverse as Cuban theatre, the birth of modern aviation, native plants of South Florida, and the history of the U itself, the outstanding resources of University of Miami Libraries lend invaluable support.

Ranked among the top academic research library systems in the United States, UM Libraries serves as a unique community asset.

Its dynamic online interface provides access to numerous books, manuscripts, letters, images, audio, video, oral histories, and other materials—more than 50,000 items in all—within some 70 collections. Among these distinctive troves are the Cuban Heritage Collection, the nation’s most comprehensive repository of materials related to Cuba and the Cuban diaspora.

In addition to continuously building its vast physical, multimedia, and digitally networked holdings, UM Libraries hosts educational presentations, exhibits, and other in-person events that provide provocative food for thought—including its popular Edible Books Festival.

Tears and Laughter When famed director-choreographer Tommy Tune decided to develop his Fifty Four Forever musical in an academic setting, he chose the UM College of Arts and Sciences’ Department of Theatre Arts. The Jerry Herman Ring Theatre on the Coral Gables campus, staffed and performed by the department, delivers about six full-scale productions to South Florida theatergoers each year, including comedies, dramas, and musicals. The college is committed to innovative community partnerships that help make theatre experiences accessible to varied audiences, such as its collaborative production of The House of Bernarda Alba, which was presented last fall at the Adrienne Arsht Center for the Performing Arts.

Dynamic Discussions A world-class university doesn’t just impart information; it challenges beliefs, expands comfort levels, and inspires new ways of thinking. Each year the University of Miami hosts public events that tackle hot-button topics and shed light on societal issues.

This year’s events featured former president of Spain José María Aznar weighing in on recent changes in the Arab world; Egyptian ambassador to the U.S. Sameh Shoukry discussing democracy in Egypt; an expert panel discussion on immigration and American identity; and Rivka Carmi, president of Israel’s Ben Gurion University, discussing academia’s social responsibilities.

Another source of intellectual stimulation is the University’s Ethics Film Series, which screens provocative films on topics ranging from the environment to the economy, followed by lively debate, at the Bill Cosford Cinema on the Coral Gables campus.

permanent collection that includes impressive holdings in the arts of Europe, Asia, and the Americas. The facility displays a stunning $3.5 million glass collection within the Myrna and Sheldon Palley Pavilion for Contemporary Glass and Studio Arts.

In addition to group tours for area students, lectures, and other museumbased educational activities, the Lowe provides free resources for area educators and partners with teachers at select MiamiDade County public schools on arts-based curricula and learning experiences. To enhance access to quality arts education for the community at large, the Lowe also offers free Family Days that provide varied music, dance, storytelling, and hands-on art activities related to the museum’s permanent and temporary exhibitions.

Visual Variety South Florida’s first art museum, the Lowe Art Museum on the Coral Gables campus is a venerable and valued cultural resource.

The Lowe, which recently celebrated its 60th anniversary, is home to a 17,500-object The Lowe Art Museum provides community resources including student tours, arts curricula development, and family days that offer hands-on learning activities.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 11

Environmentally Aware UM faculty, researchers, and students are working intensively to protect South Florida’s magnificent but fragile ecosystem and to advance sustainable food and energy practices for societal well-being.

Protecting a Predator On a quick glance, the 25-foot vessel plying Biscayne Bay one recent Saturday may have been taking its passengers on a fishing trip or pleasure ride. Aboard, however, were middle school students on a unique excursion. Supervised by marine life experts, the students helped to reel in tiger, hammerhead, and whitetip sharks, then tagged these awe-inspiring denizens of the deep with electronic devices so that the predators’ movements could be tracked via satellite.

This unforgettable experience for underserved youth was made possible by the R.J. Dunlap Marine Conservation Program, a joint pilot project of the Rosenstiel School of Marine and Atmospheric Science and the Leonard and Jayne Abess Center for Ecosystem Science and Policy. Among its many activities, the initiative piques youngsters’ interest in science and related subjects through online courses, webinars, workshops, and the ultimate in hands-on learning: sharktagging trips. Parallel programs are also being developed for marine conservation, weather and climate, and natural resources.

Neil Hammerschlag, a research assistant professor at the Rosenstiel School and expert on marine predators who leads these excursions, has been intrigued by

12 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Area students, supervised by marine life experts, experience the ultimate in hands-on learning as they tag sharks through the R.J. Dunlap Marine Conservation Program.

“the diversity, mystery, and myths” of sharks since his boyhood in South Africa.

Prodigiously energetic and clearly fearless, Hammerschlag has studied sharks of California, Honduras, Mozambique, and his native South Africa, including the famous great white of Jaws fame. He has even ridden the back of a 12-foot tiger shark.

As a University of Miami doctoral student, Hammerschlag taught shark education programs for high school and UM students, an effort that helped lay the groundwork for the R.J. Dunlap Program. More than 1,000 people have gone on one of the program’s shark-tagging encounters, including South Florida youngsters such as South Broward High School student Kimberly Mitchell. “Certain life experiences stay embedded in our minds,” she beams, “and attending the shark trips with RJD will always be in mine.”

Eloquent Advocates It’s not every day that a college student serves as an official representative at international environmental conferences, but such events are surprisingly frequent in the life of UM student Chris Stampar. Stampar, a Dickinson Scholar in the College of Arts and Sciences, is director of international partnership development for IDEAS For Us (Intellectual Decisions on Environmental Awareness Solutions), leading the advocacy group’s affiliated sustainable agriculture initiative, nourish9billion.org.

Earlier this year, Stampar was invited by the Swedish government to participate in the 40th anniversary of the Stockholm Conference on the Environment and represented IDEAS For Us at the Rio 20 Earth Summit in Brazil. He has also addressed the United Nations in New York on the evolving trend of linking measures of national well-being with eco-sustainability efforts.

Spearheading improvements in environmental policy is the mission of UM’s Abess Center for Ecosystem Science and Policy, which educates the next generation of environmental leaders. The center also co-sponsors local events as part of Earth Week and takes at-risk youth on educational tours of the Everglades.

The Abess Center’s passionate and accomplished students are also its best

UM international relations student Chris Stampar has attended conferences in Sweden and Brazil and addressed the United Nations in New York on eco-sustainability issues.

ambassadors. One of them, Chris Sanchez, who conducts research on the environmental aspects of urban living, is a 2012 Barry Goldwater Scholar, one of four UM students to earn the honor.

Engineering Energy Conservation When President Barack Obama visited the University of Miami to deliver a speech on energy policy early this year, he preceded his appearance with a tour of the College of Engineering’s Industrial Assessment Center. Shihab Asfour, associate dean of the college and director of the center, and his students demonstrated various assessment procedures to reduce industrial and corporate energy consumption.

Supported by the U.S. Department of Energy for the past 11 years, the center provides free assessments to small- and medium-sized businesses based in South Florida. The center’s more than 220 energy

assessments thus far have reduced its clients’ energy expenses by an average of 25 percent.

“Our program advances knowledge in the area of energy conservation and management and develops a workforce of energyconscious engineers,” says Asfour.

President Obama noted that such efforts “couldn’t be more important.

Figuring out how our buildings can waste less energy is one of the fastest, easiest ways to reduce our dependence on oil and save a lot of money in the process.”

Water Bearers Ask most people what natural resource most needs conserving, and they’re likely to say oil. But access to water is an even more urgent issue for hundreds of millions of people around the world, and a School of Communication endeavor is helping to deliver the message to today’s youth.

The school’s Knight Center for International Media has developed an elementary and secondary-level school curriculum around the topic of water conservation and use that covers such topics as the “Water Cycle,” “Earth’s Drinkable Water,” “Acid Rain,” “The Effects of Damming Rivers,” and more.

The curriculum is backed by a companion website called Knowater.org.

At UM to make an address on energy policy, President Barack Obama (with industrial engineering doctoral student Jason Grant) visited the College of Engineering’s Industrial Assessment Center, noting that its work “couldn’t be more important.”

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 13

An Impact Topping $6 Billion A leading research university making extraordinary contributions to enhance opportunity, expand knowledge, and serve society, the University of Miami also is a major economic engine in the local and tri-county region.

The University of Miami’s remarkable ascent into the top tier of American higher education—the advent of the “New U”—is a testament to those who believe in the University and a success story for all of South Florida. The close and enduring synergism between UM and its community highlighted in this report is also clearly apparent in UM’s economic impact on Miami-Dade County as well as the region

14 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

and state. The University’s investment in premier teaching and research not only yields academic excellence and research breakthroughs—it has dramatically contributed to the economy during a period of economic downturn.

One of the largest employers in Miami-Dade County, the University of Miami has a total economic impact of $5.62 billion on Miami-Dade County

and an impact of $6.1 billion on the tri-county (Miami-Dade, Broward, Palm Beach) region. It is a major engine that contributes widely across the area, with its employment and expenditures driving further economic activity that affects multiple sectors in the economy.

Since the University’s last economic impact study, conducted in 2007, its local (Miami-Dade County) impact has

How the Study Was Conducted In spring 2012 the University of Miami commissioned Bendixen & Amandi International to conduct an independent study of the University’s economic impact. They analyzed detailed data provided by the University in various FY 2011 financial reports—the most recent period of available comprehensive data—and applied it to an economic input-output model to extrapolate total impact. The annual expenditures of the University and its student population are multiplied through additional direct, indirect, and induced economic impacts resulting in increased total economic output, employment, gross domestic product, wages, and state and local tax revenues.

increased more than 24 percent, from $4.5 billion to $5.6 billion.

Coral Gables benefits greatly from the presence of the University within its city limits. University and student expenditures create $1.4 billion in annual economic impact; 5,769 jobs; nearly $600 million in gross city product; $530 million in labor income and wages; and nearly $10 million annually in state and local taxes.

For the city of Miami, the University’s annual expenditures along with annual student spending create more than $2.7 billion in economic impact; 17,803 jobs; nearly $1.6 billion in labor income and wages; almost $1.8 billion in gross city product; and close to $42 million in state and local taxes.

In FY 2011 the University employed 13,070 full-time faculty and staff who were compensated nearly $1.5 billion, and it spent an additional $786 million on operations and capital expenditures.

Accordingly, the University directly contributed nearly $2.275 billion to the local and regional economy. In FY 2011, enrollment was 15,703 students—with 76 percent of undergraduate students and 74 percent of graduate students coming from outside of Miami-Dade County. The University’s reputation, prestige, and quality of education attracted these out-of-the-area students, who pumped an additional $199 million into the local economy.

For Miami-Dade County alone, the University’s and students’ annual expenditures create $5.62 billion in annual economic output, 40,631 jobs, nearly $2.73 billion in

A T

A

labor income and wages, and $126.2 million in revenues to state and local governments.

In the tri-county region (Miami-Dade, Broward, Palm Beach), the University and student annual expenditures create $6.1 billion in annual economic output, 43,703 jobs, $2.88 billion in labor income and wages, and more than $150 million in revenues to state and local governments.

The University’s construction program, which is changing the face of its campuses, also has a considerable impact on MiamiDade County: $200.2 million in economic activity, 1,205 jobs created, $85.5 million in labor income, $104.7 million in gross county product, and $3.7 million in state and local taxes.

These benefits provide a solid foundation for the local and regional economies—and would not exist without the presence of the University of Miami.

In spite of the negative impacts of the worst economic recession since the Great Depression over the past five years, the University of Miami has provided a reliable, consistent, and positive contribution to the South Florida economy.

G L A N C E

Number of full-time University employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,070

$1.5 billion Operations and capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $786 million Direct contributions to local and regional economy . . . . . . . $2.275 billion Student enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,703

Employee total compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

University and student expenditures in Miami-Dade County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.15

billion Total economic impact on Coral Gables . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.4 billion Total economic impact on city of Miami . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.7 billion Total economic impact on Miami-Dade County . . . . . . . . . . . . . . . $5.62 billion Total impact in tri-county area (Miami-Dade, Broward, Palm Beach) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6.1 billion Difference since last report (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24% increase

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 15

Schools and Colleges Across our three campuses and beyond, the past year at the University of Miami was an eventful one, filled with new courses and curricula, influential research, special initiatives, varied outreach activities, prestigious recognitions, and many other noteworthy events. The following narratives provide selected highlights from the University’s individual academic units.

School of Architecture Approaching its 30th year, the School of Architecture continues to burnish its reputation as a center of academic excellence. This past year was stellar: The National Architectural Accrediting Board (NAAB) reported that the school met all the conditions for accreditation with no deficiencies, and DesignIntelligence rated it among the top 20 undergraduate architecture programs in the United States.

The school’s faculty and students continued garnering awards and honors.

Dean Elizabeth Plater-Zyberk was named vice chair of the U.S. Commission of Fine Arts. Three faculty won American Institute of Architects design awards. Allan Shulman was named president of the AIA Miami Chapter. Joachim Perez received a grant from the National Council of Architectural

16 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Registration Boards for a new course he is teaching this fall. Jorge Hernandez was named vice chair of the Board of Trustees of the National Trust for Historic Preservation. Among student honors, a student team placed in the national American Institute of Architecture Students “CrisisReady Stadium” competition; another team won the Gina Tirinnanzi Memorial Scholarship for New Urbanism from the American Planning Association; and Seiji Anderson was the first UM architecture student to place in the prestigious Lyceum Competition.

The school’s vital outreach activities continue both locally and nationally. The Master in Real Estate Development and Urbanism Program capstone project studied the Miami Beach Convention Center and other city-owned properties, working with Miami Beach city staff. Faculty assistance

in rebuilding activities in Haiti continues with design and construction visits to a new schoolhouse in Lacolline. The Alumni Studio marshaled Miami alumni to assist

in the design of the facility and of a bakery for a Port-au-Prince orphanage.

Advances outside the classroom were paralleled by growth in academic offerings and research activity. Building on faculty expertise, eight areas of the curriculum provide students with academic experience that enables them to stand out in the job market: classical architecture, health care design, historic preservation, new urbanism, real estate development, mid-century modern

architecture, tropical and sub-tropical architecture, and design/build. This year’s design/build studio produced an eco-tent for Everglades National Park, providing an educational experience that combined design, technical research and implementation, and community engagement.

College of Arts and Sciences The College of Arts and Sciences fosters understanding, engagement, and discovery though critical inquiry and creative expression. Whether conducting research, studying on campus or abroad, or pushing the boundaries in art and performance, students in the college are challenged to pursue their intellectual passions while engaging with their communities.

Exemplary students continued to build upon the college’s legacy of excellence. One in 18 freshmen entering the college in 2011 earned a perfect score on either the math or verbal portion of the SAT. Three students were awarded a Barry M. Goldwater Scholarship, which honors outstanding sophomores and juniors in math, science,

and engineering. Five undergraduates and one graduate student also were named Fulbright Scholars. In a comprehensive National Research Council assessment of U.S. doctoral programs, three of the college’s programs—sociology, psychology, and philosophy—were ranked in the top quartile of their disciplines nationwide, and several others were in the top half.

The college expanded innovative academic offerings such as Freshman Seminars, which emphasize faculty interaction and collaborative learning in a small-class setting. Accelerated master’s programs in biology and computer science were launched, allowing students to earn both undergraduate and advanced degrees in just five years of course work.

Minors in Arabic studies and lesbian, gay, bisexual, transgendered, and queer studies were added to meet growing demand for language skills and cultural understanding in these areas.

The college also embarked on a strategic planning process to analyze its needs and set goals for the future.

The Studio Arts Complex opened in April, uniting painting, sculpture, glass,

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 17

and ceramics programs in a single facility with state-of-the-art equipment. The college broke ground on the 37,700-squarefoot Cox Neuroscience Annex. Upon the building’s completion in 2013, interdisciplinary teams of neuroscientists will use its advanced technology to research brain function and develop treatments for neurological diseases.

Among the new professors who joined the college are distinguished scholars in sociology, math, chemistry, and English.

College faculty received more than $23 million in research grants. Faculty research appeared in leading journals and the news media, and professors amassed impressive accolades. Distinguished Professor Maxim Kontsevich was awarded the Shaw Prize for the Mathematical Sciences and is the only mathematician awarded the inaugural Fundamental Physics Prize.

The college’s educational mission extends far beyond the classroom. More than 50 public lectures featured faculty and renowned scholars, including evolutionary biologist and ethologist Richard Dawkins, Fields Medalist Shing-Tung Yau, and Pulitzer Prize-winning playwright Nilo Cruz. Legendary director and choreographer Tommy Tune launched his new musical Fifty Four Forever in collaboration with the Department of Theatre Arts, bringing the excitement of Broadway to the Ring Theatre.

School of Business Administration The vision of the School of Business Administration is to become a premier learning community focused on global management, especially in emerging markets and particularly in Latin America.

To attain this vision, the school seeks to distinguish itself by producing breakthrough research, offering extraordinary learning opportunities, and fostering distinctive areas of excellence.

Over the past year, the school attracted new faculty from such premier institutions as Yale University and Carnegie Mellon

18 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

University. It produced transformative management research published in the world’s leading journals and partnered with the community to improve business practice through advances such as the movement of hospital “smart bed” technology from innovation to practice.

The school strengthened programs in strategic areas such as health sector management and policy, real estate, and entrepreneurship. It partnered with the Florida Chapter of the Healthcare Financial Management Association and the Puerto Rico Chamber of Commerce to deliver thought-provoking discussions on U.S. health care reform legislation and other key issues affecting the business of health care. It launched an accelerated M.B.A. program in real estate, providing students experience in commercial real estate through two industry internships. And it hosted, along with the School of Architecture, the University’s first Real Estate Impact Conference, headlined by industry titan Sam Zell and drawing 300 leaders.

The school continued to leverage its location at the gateway to two continents.

Dean Eugene Anderson and other school representatives joined Florida Governor Rick Scott for a trade mission to Brazil, strengthening the school’s ties with that nation’s academic and business communities. The dean also visited Moscow to build relationships with Russian universities and businesses.

Teams of M.B.A. students spent eight weeks consulting for corporations in Brazil, Japan, and Thailand. Undergraduates spent four weeks in Italy, gaining insights into European business practices through on-site visits to production plants for such companies as Ducati and Lamborghini.

Looking forward, the school aims to ensure that all its students have opportunities to connect with others living, working, doing business, and studying in emerging markets.

Community and teamwork were high on the agenda over the past year as well. Members of the school’s Hyperion Council, through which students work with low-income business communities, were involved in projects in Miami’s Overtown neighborhood and in Jamaica.

And through the FIRST Step program, freshmen offered varied types of assistance to nearly 30 nonprofit organizations, including the March of Dimes and the Girl Scouts of South Florida.

School of Communication Last year the School of Communication reaffirmed its vision to become the best such school in the country as it carried out its mission of building student proficiency in all forms of media and the global perspective that will allow students to make a positive difference in their communities and around the world. To lead the charge, the school welcomed Dean Gregory J. Shepherd, a distinguished communication faculty member and administrator for nearly 30 years.

Both students and faculty continued to produce substantive, relevant research and creative work. In February advertising and public relations students, guided by faculty, used the skills they learned in the classroom to create vibrant and impactful campaigns for nonprofit organizations during PhilADthropy, an annual event that provides creative services to charitable

organizations at no cost. In just 24 hours, students produced inspiring ads, viral videos, branded merchandise, newsletters, websites, and more for nonprofits that cannot afford these services. Organizations they helped include the Salvation Army, the Gift of Life Bone Marrow Foundation, and Jody’s Couture for the Cancer Cure.

Many of those same students competed against students from more than 150 schools around the country in the American Advertising Federation’s National Student Advertising Competition. The UM team produced an extensive high-tech campaign with market research and a media plan for J.C. Penney, an effort that placed them first in the nation.

Over spring break, Motion Picture graduate students traveled to Guatemala to create films about social issues in the country, including education and the environment. The trip benefited the students while fostering responsible global citizenship. “Bringing graduate students into a third-world country and having them shoot documentaries to create social change not only broadens their experience and vision, but makes them better narrative filmmakers,” said Cinema Department Chair Ed Talavera.

Across the globe, Sanjeev Chatterjee, an award-winning filmmaker and professor of electronic media, spent six months working with students at Jadavpur University in India to produce multimedia stories and videos about the plight of the East Kolkata Wetlands. This vital natural resource—which provides clean water through a natural wastewater treatment system, supplies thousands of tons of fish and vegetables daily, and supports the livelihoods of more than 50,000 people—has become endangered in recent years by encroaching urban development. Chatterjee received a Fulbright-Nehru Research Scholar Award to pursue the project.

School of Education and Human Development To better communicate its expanded academic mission and scope of activity, the school was renamed last year: It is now the School of Education and Human Development. The name encompasses the outstanding work of the school’s three departments: Teaching and Learning, Educational and Psychological Studies, and Kinesiology and Sport Sciences, as well as the Dunspaugh-Dalton Research Center for Community and Educational WellBeing (CEW). During the past year the school continued to progress as a nationally esteemed center of excellence in the study, promotion, and integration of educational, psychological, and physical well-being in multicultural communities.

The school was ranked highly in U.S.News & World Report, and its programs were recognized in the top tier of those ranked nationally by Academic Analytics for faculty publishing and productivity. It graduated initial cohorts in Human and Social Development and Community and Social Change and experienced strong enrollment in the counseling, athletic training, and exercise physiology programs.

The third cohort was enrolled in the master’s degree program in Education and

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 19

Contribution to Theory and Research Award, the John Kalafat Practitioner Award in Applied Community Psychology, and 2011 Social Justice Award from the Counseling Psychology Division; the Elizabeth Hurlock Beckman Trust Award; and the National Academy of Education/ Spencer Postdoctoral Fellow award.

College of Engineering

Social Change, which is a successful option for Teach For America teachers and others seeking to expand their understanding and effectiveness in the classroom and community. There also has been growth in the master’s and Ph.D. programs in Higher Education.

A five-year $1.5 million National Institute of Education grant provided resources to develop a model teacher preparation curriculum that produces graduates eligible for dual certification in special education and general education. An Institute of Education Sciences grant of more than $1.5 million is funding a Language in Math intervention. The CEW research center maintains approximately 30 community and 10 institutional partnerships; new relationships were established with City Year Miami and the Peace Corps. The school’s faculty maintains an active research portfolio in excess of $7 million.

Another major initiative was the establishment of the first Education and Community Leadership Scholar. David Lawrence Jr., nationally known early childhood education advocate and former newspaper editor and publisher, was named to the position, in which he will serve as guest lecturer and assist the dean with strategic priorities.

20 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

The school’s faculty continued to receive national honors that include the naming of two American Educational Research Association fellows; the American Psychological Association’s Distinguished

From vital outreach activities and notable honors to major philanthropic gifts and a visit from the nation’s chief executive, 2011-12 was a year of continued dynamic progress for the College of Engineering.

The college officially launched its innovative Virtual Academic Computing (ViAComp) cloud computing platform, developed by Khaled Zakaria, assistant scientist in the Department of Industrial Engineering, and Associate Dean Shihab Asfour. It allows students and faculty to access more than 40 software packages from anywhere at any time.

Engineer and entrepreneur Roger Koch made a $1 million gift to the College of Engineering. Half of this generous donation is in the form of a scholarship endowment that helps more African-Americans study engineering at UM; the remainder will support varied programs and initiatives at the college.

Leonard Pinchuk, research professor in biomedical engineering, was elected to the prestigious National Academy of Engineering (NAE), making him the fourth member of the college’s distinguished faculty to be an elected an NAE member and the tenth UM faculty member elected to one of the three National Academies.

In February, before giving a national speech on energy policy at the University Fieldhouse, President Barack Obama visited the Industrial Assessment Center, headed by Associate Dean Asfour. (To learn more about the center, see the story on page 13.) President Obama praised the college’s research and educational efforts and publicly declared that “we need more engineers.”

Throughout the year, the college’s students, faculty, and staff conducted a wide range of outreach activities that support the community and increase awareness of the importance of engineering. The annual Society of Women Engineers Introduce a Girl to Engineering during the national Engineers Week coincided with the presidential visit; more than 200 students attended this year’s event. Director of Admissions David Poole and the Engineering Student Ambassadors provided middle school and high school students with hands-on demonstrations and tours. Student organizations such as the Society of Hispanic Engineers volunteered as mentors and judges for many local science competitions.

The college also has been actively collaborating with its sister schools and colleges. It helped the Rosenstiel School of Marine and Atmospheric Science secure a $15 million federal grant toward construction of the Marine Technology and Life Sciences

Seawater Complex and the Miller School of Medicine secure a $7.5 million naming gift for its Dr. John T. Macdonald Foundation Biomedical Nanotechnology Institute.

Frost School of Music The Phillip and Patricia Frost School of Music’s ongoing commitment to musical innovation was exemplified this year with the full implementation of its interactive undergraduate Frost Experiential Music Curriculum, a revamped and newly accredited Digital Arts and Sound Design graduate composition degree, and capacity enrollment in a Master of Music and Juris Doctor (M.M./J.D.) program, jointly offered with the School of Law. The Frost School is hastening its ascent to the top tier of music schools through increased student selectivity and the recruitment of award-winning performing musicians, researchers, and composers.

With the retirement of many long-serving faculty, the school recently hired 21 new faculty members, including Prix du Rome-

winning composer Charles Mason, Van Cliburn silver medal winner Santiago Rodriguez, and Grammy Award-winning trumpet artist Brian Lynch.

In undergraduate student recruitment, Frost has become highly selective in its auditions and incoming academic requirements.

Incoming freshman SAT scores at the school rose 248 points in five years to 1328 in 2012, playing a significant role in the University of Miami’s rapid ascent to the top 50 “Best Colleges” in U.S.News & World Report.

At the graduate level, the Frost School remains a center of excellence. It reports 100 percent placement of 2012 Ph.D. graduates from its Music Education program at major peer institutions, as well as 100 percent placement of its Music Engineering graduate students at top corporations. Two Frost students received Fulbright Awards to study abroad in 2011-2012, and a third was awarded a Fulbright for 2012-2013.

A three-year, $500,000 grant from the John S. and James L. Knight Foundation, matched by UM trustee Adrienne Arsht, provides funding for new graduate fellowships and community engagement

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 21

programs for students in the Henry Mancini Institute (HMI) at Frost. A new $500,000 pledge from philanthropist Ginny Mancini will also help support the artistic director position of the HMI Orchestra.

Student recruitment has become more effective through increased merit scholarship funding from private sources. The Weeks Endowed Music Scholarship Fund provides tuition assistance to 35 talented vocalists and instrumentalists, and the Stamps Family Charitable Foundation’s Music Scholarship Fund generously supports 19 top undergraduate recruits with full tuition, room, and board for four years each.

To complement the intense focus on new curriculum and faculty and student recruitment, Dean Shelton G. Berg secured philanthropic support for new facilities including the Patricia L. Frost Studios

22 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Building, which will feature more than 100 teaching studios and chamber music classrooms. The construction of several additional buildings is a key Momentum2 campaign goal for the school.

School of Law The University of Miami School of Law provides a stellar legal education and all the advantages of being on the doorstep of vibrant legal and business communities.

Miami Law prepares students for careers in a wide range of fields, including corporate, international, and intellectual property law. Students benefit from diversity and professionalism in a wide array of clinical programs and learning opportunities.

The J.D. program, LL.M. programs, and joint-degree programs are enriched by

an exciting list of public interest programs, clinics, projects, and other professional training opportunities. Through the Career Development Office, students are offered services that encourage and create success in the classroom and beyond. Legal Corps, a groundbreaking postgraduate fellowship program, helps graduates find employment in a challenging economy. Meanwhile, more than 20,000 of the school’s alumni are standouts in the legal profession, practicing in varied fields such as immigration, business, ethics, race relations, and economic development.

Many of the school’s faculty members are well-known leaders in their areas of expertise, which include taxation, arbitration, Internet law, criminal law, property law, and bankruptcy. Miami Law’s Litigation Skills Program is unmatched in its pretrial training. Two top-notch offerings, the triple-degree J.D./M.B.A./LL.M. in taxation and the innovative international Law Without Walls program, have recently drawn considerable attention. The triple-degree program in taxation is the first of its kind, enabling outstanding students who received undergraduate business degrees to earn this powerful combination of three degrees in four years.

Law Without Walls, founded at Miami Law, is a collaborative academic course that involves the talents of faculty and students from 12 law schools and business schools around the world—from as far as Australia, China, and Britain. The objective is to discover how law will be taught and practiced in the future; the program is designed to help those engaged in the education and practice of law to understand and embrace the impact of the globalizing world on shared legal enterprise.

Miami Law’s award-winning clinics are exceptional training grounds that provide legal assistance to needy and underrepresented individuals in Miami and the rest of South Florida. They are the Bankruptcy Assistance Clinic, the Death Penalty Clinic, the Children and Youth Law Clinic, the Federal Appellate Clinic, the Human Rights Clinic,

the Immigration Clinic, the Investor Rights Clinic, the Innocence Clinic, the Tenants’ Rights Clinic, and the Health Rights Clinic: A Medical-Legal Partnership.

Miller School of Medicine The Leonard M. Miller School of Medicine and the University of Miami Health SystemUHealth continued gaining national prominence as a center of excellence in education, translational research, and patient care.

The flagship University of Miami Hospital (UMH) earned designation as the tenth statutory teaching hospital in Florida. Home to UHealth Sports Medicine, the only academic sports medicine program in South Florida, UMH is at the forefront of minimally invasive aortic valve replacement techniques and stem cell therapies for heart failure. UHealth expanded its clinical practice, offering a full array of services at the new UHealth Plantation facility in Broward County.

With two prestigious grants, the National Institutes of Health elevated UM to a full-fledged Center for AIDS Research— the only one in Florida—and established the Miami Clinical and Translational Science Institute, a hub for speeding scientific discoveries into evidence-based practices.

Ranked 39th in NIH funding, the Miller School’s research revenue from the NIH and other sources topped $254 million.

Propelling South Florida’s evolution as a biomedical research powerhouse and medical destination, the Life Science & Technology Park opened 202,000 square feet of wet labs, offices, and shared facilities for established and spin-off companies. The University’s biomedical nanotechnology enterprise received a $7.5 million boost—and a new name—from the Dr. John T. Macdonald Foundation. The Dr. John T. Macdonald Foundation Biomedical Nanotechnology Institute at the University of Miami is poised to pioneer tools and therapies at the nanoscale—less than one-millionth of a millimeter—that will detect diseases early,

deliver customized treatment, and restore tissue function.

For the ninth consecutive year, Bascom Palmer Eye Institute was ranked the nation’s No. 1 ophthalmology program in U.S.News & World Report’s annual Best Hospitals survey.

Stephen D. Nimer, among the world’s premier leukemia and stem cell transplant researchers, was named director of Sylvester Comprehensive Cancer Center.

He helped to open Alex’s Place, the first pediatric oncology clinic to merge research and clinical care with technology to alleviate anxiety among young patients.

The medical school welcomed its second class of M.D./M.P.H. students, whose course of study leads to both degrees in four years, and launched another dualdegree program with the School of Law, allowing students to earn an M.D. and J.D. in six years.

The school’s partnership with Jackson Memorial Hospital remains strong, with UM faculty and JMH staff delivering the

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 23

best trauma, transplant, neonatal, and other tertiary care in the region. The Miller School also was chosen as a medical provider for Clear Health Alliance, a holistic Medicaid plan for HIV-infected patients provided by Simply Healthcare Plans and NBA legend and HIV patient Earvin “Magic” Johnson’s Magic Johnson Enterprises.

School of Nursing and Health Studies The School of Nursing and Health Studies continues to raise the bar in global health care education. For more than 64 years, the school has demonstrated an innovative and committed approach to academic excellence. In fall 2012 the school launched the first Bachelor of Science in Public Health in Southeast Florida, which will help address the most pressing public health challenges of the 21st century.

The school sets the highest academic and clinical preparation standards. Defin-

24 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

ing accomplishments of 2011 include a 100 percent certification rate for master’s program graduates, a 95 percent-plus NCLEX-RN first-try pass rate for B.S.N. program graduates, and maximum accreditation granted to the school’s academic programs by the Commission on Collegiate Nursing Education.

New faculty hires over the past year strengthened one of the state’s most experienced academic health care leadership teams—excellence that continues to be recognized with foundation funding. In addition to being selected as a third-time recipient of the Robert Wood Johnson Foundation New Careers in Nursing Scholarship Program, the school received a $500,000 grant from the Helene Fuld Health Trust, the nation’s largest private funder devoted exclusively to nursing students and education. The school remains committed to increasing scholarship support, which is vital to recruiting a diverse and talented student body.

The research portfolio remains

impressive, ranked No. 1 in Florida and 24th in the nation among schools of nursing for National Institutes of Health funding. The NIH awarded the school more than $7 million to continue the work of its Center of Excellence for Health Disparities Research: El Centro. This award recognizes research accomplishments of the last five years in advancing the science of addressing and eliminating health disparities and improving the health outcomes of minority groups.

A number of international initiatives have consolidated the school’s strong global orientation. As part of its expanded commitment to international health care education and research, faculty and student exchange agreements are in place with hospitals and universities in Spain, Chile, Mexico, Haiti, Brazil, Taiwan, and Australia. The school continues to hold its elite designation as a Pan American Health Organization/World Health Organization Collaborating Centre for Nursing Human Resources Development and Patient Safety,

one of only 11 nursing-related WHO centers in the U.S. and 19 in the Americas.

In September 2012 the school served as the host site for the XIII Pan American Nursing Research Colloquium, the first time this prestigious biennial international conference has been held in the U.S.

Rosenstiel School of Marine and Atmospheric Science Research, education, and outreach are at the heart of the Rosenstiel School of Marine and Atmospheric Science—and successful efforts to recruit and retain the best faculty, staff, and students and modernize the school’s campus are fueling progress in these key areas.

Rosenstiel School scientists continue to secure major funding to support research that deepens humanity’s understanding of the environment. A $15 million grant from the National Institute of Standards and Technology, plus generous support from donors, enabled groundbreaking on a new seawater research complex. The facility will feature a wind-wave-storm surge simulator capable of generating Category 5 hurricaneforce winds in a 3-D test environment and house a Marine Life Sciences Center with space for studying living marine animals.

A team led by Professor Tamay Özgökmen received a $15 million grant from the Gulf Research Initiative to study the transport of hydrocarbons during and after the Deepwater Horizon oil spill. The school’s collaborative effort with NOAA, the Cooperative Institute for Marine and Atmospheric Studies, was renewed for five years.

Research and outreach capabilities have been greatly expanded through the school’s Broad Key Research Station. The island is a fertile learning ground for high school students from a wide range of socioeconomic backgrounds to study the subtropical marine environment, including those from the Miami Science Museum’s IMPACT program.

Students and groups involved in the R.J.

Dunlap Marine Conservation Program use it as a base for shark-tagging trips.

On the school’s Virginia Key campus, community events including Exploring Marine Science Day and the Fairchild Challenge’s Environmental Immersion Day provided students with a glimpse into marine and atmospheric science careers.

On the Coral Gables campus, Ocean Kids allowed inner-city elementary school students to interact with marine science students and participate in events fostering ocean and environmental awareness.

By all academic measures, the school is achieving unprecedented heights, with undergraduate applicants’ SAT scores continuing to climb and Ph.D. student

recruits displaying rising GRE scores. The newly implemented Master of Professional Science, with about 50 students in 12 different tracks, is the fastest-growing segment of the student body.

Rosenstiel School students are taught by some of the best faculty in their fields, who continue to receive major accolades. Kenny Broad was named National Geographic Explorer of the Year; Frank Millero was named a fellow of the American Academy for the Advancement of Science and received the prestigious V. M. Goldschmidt Award from the Geochemical Society; and Bruce Albrecht and Nick Shay were named American Meteorological Society fellows.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 25

R E P O R T

O N

B U S I N E S S

A N D

F I N A N C E

Repositioning for Future Growth Fiscal 2012 was challenging on many fronts. The health care business became more challenging, investment returns on Growth Pool and pension assets were modestly negative, and historically low interest rates negatively impacted our defined benefit pension plan. The University took the opportunity to restructure its operations, making targeted investments in people and facilities while reducing costs in unfunded research and administration at the Miller School of Medicine. As a result, the University is well positioned to improve its financial performance in fiscal 2013 and continue to advance in the ranks of the nation’s finest private research institutions.

Unrestricted net assets from operating activities decreased by $28.0 million, due largely to restructuring charges and other one-time adjustments. Unrestricted net assets from non-operating activities decreased by $49.7 million, due primarily to a 4.4 percent negative return on endowment/Growth Pool investments.

Post-retirement benefits-related changes (other than net periodic benefit cost) were negative $167.0 million, due to actuarial changes in the defined benefit pension plan.

Overall net assets decreased by $240.5 million to $1.3 billion.

Operating revenues increased by $62.5 million, or 2.7 percent.

Tuition revenue increased $31.4 million, or 7.8 percent. Student demand remained strong, with nearly 28,000 applicants for fall freshman enrollment.

Patient care revenue, which accounts for slightly more than half of total operating revenues, increased $59.8 million, or 5.1 percent, with the University of Miami Hospital, Sylvester Comprehensive Cancer Center and its clinics, and the Anne Bates Leach Eye

26   UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

OPERATING REVENUES – $2,403.5

TOTAL REVENUES (in millions)

(in millions)

$2,500

Hospitals and Clinics $814.7 (33.9%) Auxiliary Enterprises, net $105.5 (4.4%) Gifts and Trusts $80.3 (3.3%) Other Sources $29.2 (1.2%)

2,000

Investment Return $33.7 (1.4%)

2,465

2,291

1,822

1,797

2008

2009

2,358

1,500

Tuition and Fees, net $432.6 (18.0%)

1,000

500

Medical Professional Practice $415.3 (17.3%)

Grants and Contracts $492.2 (20.5%)

Hospital increasing operating revenues by 10 percent, 8 percent, and 9 percent, respectively. Medical professional practice revenue declined less than 1 percent due to reductions in clinical volumes at Jackson Memorial Hospital and challenges associated with implementation of the Epic electronic medical record and billing system.

Grants and contracts decreased by $26.6 million, or 5.1 percent, due to reductions in funding from Jackson and the State of Florida.

Revenues from auxiliary services, including athletics, dining halls, and campus retail, increased $6.3 million, or 6.4 percent.

Gifts and trusts revenue for use in operations was up $8.1 million, or 15.4 percent.

Operating expenses increased $104.5 million, or 4.5 percent, including the impact of $14 million in restructuring charges. In May the medical school reduced about 600 positions, generating projected annual savings of about $40 million. Much of the savings resulted from centralization or creation of shared-services organizations for functions such as human resources, marketing, information technology, research administration, and certain financial functions. These changes will reduce costs and improve controls, efficiency, and responsiveness.

The medical school is well into negotiations with its partners at Jackson Memorial Hospital, the county facility that has long hosted some of the University’s most prestigious clinical programs and graduate medical education, to define an annual operating agreement (AOA) that meets the future needs of both organizations in a rapidly changing health care environment. An AOA agreement for fiscal 2013 has been signed, and both partners are focused on redefining key service lines by the middle of the fiscal year.

Significant benefits have resulted from consolidating UHealth clinical scheduling resources from 19 separate departments into a state-of-the-art call center. Scheduled appointments have increased, and customer satisfaction is near the top of applicable benchmarks.

For the first time, UHealth management has data to match clinical capacity with demand, thereby ensuring timely appointment setting.

The UHealth Plantation outpatient clinic opened in March, bringing imaging, cancer care, ophthalmology, sports medicine,

0

2010

2011

2012

physical therapy, ENT, and many other medical practices to southwest Broward County.

Pension assets in the defined benefit Employees Retirement Plan (ERP), with a slightly more conservative asset allocation than the Growth Pool, returned negative 1.8 percent. The unfunded liability of the Plan, which has been closed to new participants since June 2007, increased by $148.9 million to $394.8 million, due primarily to a 100 basis point reduction in the discount rate used to calculate plan liabilities. In 2012 the University contributed $48.4 million to the plan.

Gifts and trusts from operating and non-operating sources totaled $109.3 million, up 3.9 percent from the prior year. In February 2012 the University launched Momentum2: The Breakthrough Campaign for the University of Miami, with a goal of $1.6 billion. By fiscal year-end 2012, more than $934 million had been committed by generous supporters of the University.

Several important facility projects are under way on the Coral Gables and Rosenstiel School campuses. Set for opening in fall 2013 is the iconic, 118,000-square-foot Student Activities Center, which will house the student-run Rathskeller restaurant, retail, and offices and meeting rooms for student organizations. Also under construction are the 38,000-square-foot Interdisciplinary Neuroscience and Health Annex, the 32,000-square-foot expansion to the Hecht Athletic Center, and an 86,000-square-foot Marine Technology and Life Sciences Seawater Complex for the Rosenstiel School of Marine and Atmospheric Science. Coming next summer are renovations to residence dining halls, the food court, and other student dining facilities, to be funded primarily by our dining partners at Chartwells.

Providing state-of-the-art technology for students, patients, faculty, and staff is a priority of the University. A series of new and replacement projects began with implementation of the Epic electronic medical record and billing system throughout UHealth clinical operations. The Epic software was accompanied by significant organizational change that will improve quality and efficiency, including creation of a central business office to handle functions

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 27

TOTAL ASSETS (in millions) $3,500

3,240 2,912

3,000

3,005

3,186

3,180

2011

2012

2,500

2,000

1,500

1,000

500

0

2008

2009

2010

ENDOWMENT FUNDS (in millions) $800

historically performed within individual UHealth departments.

The implementation of this comprehensive and complex system has been challenging, with many improvements and benefits still to come. A major emphasis has been placed on training to ensure that all employees involved in the revenue cycle are prepared to provide extraordinary service to UHealth patients.

Also under way is the implementation of Oracle/PeopleSoft’s Campus Solutions software for student needs—from inquiry to application and enrollment, class scheduling, registration, and billing. In the months to come, a recommendation will be made to the University’s Board of Trustees for replacement systems for human resources, payroll, and financial systems.

Another major focus has been strengthening internal controls and compliance throughout the University. This is in recognition of the changing regulatory environment and risks inherent in a growing, decentralized organization. Several actions have been taken or are in process. Recruitment of a chief compliance officer, who will report directly to the president, is in its latter stages. Processes have been launched to systematically evaluate risk profiles and separation of duties throughout our operations. The ’Cane Watch hotline, hosted

by EthicsPoint, was launched as a confidential option for employees and others to report—by phone or online—concerns about ethics or business practices. Information Technology formed the Office of Data Security, designed to safeguard sensitive information stored on University computing systems.

Let me close by thanking faculty, staff, and members of the Board of Trustees for their tireless efforts on behalf of the University and the South Florida community. The University is critical to the future of South Florida in so many ways—from the young people we educate, to the patients we care for, to discoveries made in our labs. The University’s total economic impact on South Florida in fiscal 2011 was estimated to be $6.1 billion, responsible for 43,700 jobs and $2.9 billion of compensation. That’s a heavy responsibility and something University faculty and staff take very

28 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

736

720

700

679

618 600

539

500 400 300 200 100 0

2008

2009

2010

2011

2012

ENROLLMENT (FTE) 20,000

15,000

14,811

14,685

14,854

14,991

2008

2009

2010

2011

15,432

10,000

5,000

0

2012

seriously. Our community depends upon us—and we depend upon it. It’s that synergistic relationship that makes the University of Miami a special place to teach and study, conduct research, and provide and receive top-quality clinical care.

Joe Natoli Senior Vice President for Business and Finance and Chief Financial Officer

R E P O R T

O N

T H E

E N D O W M E N T

Amid Volatility, Focus Remains on Maximizing Return over Next Decade The past fiscal year was characterized by continued geopolitical and macroeconomic uncertainty and high volatility across many markets. The University of Miami adheres to a long-term investment policy and does not trade for short-term gains; therefore, there will be periods when the Growth Pool fails to generate positive performance, as was the case for the past fiscal year. For the 12 months ending May 31, 2012, the Growth Pool realized a loss of -4.4 percent. Given the complexity of the economic environment, periodic losses are to be expected within the context of strong gains. Including fiscal 2012 losses, the Growth Pool has gained just over 10 percent per year over the last three years.

While we were disappointed by last year’s negative returns, we do note that the Growth Pool outperformed its portfolio benchmark of -5.9 percent, but trailed the University’s long-term goal of earning 5 percent-plus-inflation annually. The University’s allocation to non-U.S. equity was the main reason for the disappointing absolute performance. Although the non-U.S. allocation outperformed foreign indices, the portfolio could not avoid the poor absolute performance created by the continuing European sovereign debt crisis and fears over slowing global growth.

Unlike the previous fiscal year, when the Growth Pool’s hedge funds detracted from relative performance, this year ended with hedge funds positively contributing to performance. This is a return to form for the hedge funds, which have generated long-term outperformance; for the five, seven, and ten years ending May 31, hedge funds outperformed their benchmark by a range of 320 to 510 basis points per annum. In addition, the portfolio benefited from the performance of its fixed-income and private investments.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 29

At the beginning of the new fiscal year, we were faced with persistent concerns over Europe and the long-term viability of the European Union. With the potential for a Greek exit from the Euro and the need for more bailouts among the struggling EU members, the European Central Bank continues to work on plans to help alleviate the uncertainty. Outside of Europe, global growth has slowed, and the United States has not been exempt as the outlook for growth in 2012 has deteriorated. In response, the Federal Reserve extended Operation Twist, which is designed to lower long-term interest rates, through the end of the year.

The Board of Trustees’ Investments Committee and administration spent a significant amount of time during the year discussing the challenges of investing under the existing circumstances and reviewing asset allocation. After making minor changes to the asset allocation the previous year, we stayed the course in 2012. The chart on this page depicts the Growth Pool’s asset allocation through May 31, 2012.

The Investments Committee also reviews the pool’s performance against custom benchmarks and peer institutions. Individual manager performance is reviewed on a regular basis, and all managers are subject to the University’s rigid due diligence process.

While the absolute performance of the previous fiscal year was well below our expectations, our focus remains on maximizing risk-adjusted return over the next ten years. We don’t expect significant near-term shifts in the investment landscape as we continue to operate in a challenging period, with shorter and more volatile business cycles combined with an ever-changing macroeconomic landscape. The Growth Pool is designed to invest with all of these issues in mind, while maintaining a long-term outlook with a continued emphasis on generating solid gains over multi-year periods.

John R. Shipley Vice President of Finance and Treasurer

30 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Time Period

Growth Pool Returns

Benchmark Returns May 31, 2012

Total Portfolio

S&P 500

Barclay’s Aggregate Bond Index

CPI Increase Rate

10 Year

5.0%

4.4%

4.1%

5.7%

5 Year

-0.2%

-0.9%

-0.9%

6.7%

2.4% 1.9%

3 Year

10.2%

9.5%

14.9%

7.1%

2.4%

1 Year

-4.4%

-5.9%

-0.4%

7.1%

1.5%

GROWTH POOL STRATEGIC ASSET ALLOCATION May 2012

Allocation (%)

Asset Class

Policy Target

May 2012

U.S. Large/Mid Cap Equity

16.0

19.5

U.S. Small Cap Equity

4.0

5.4

International Equity

17.5

15.1

Emerging Markets Equity

7.5

6.9

Global Fixed Income

5.0

5.6

US TIPs

5.0

3.7

Hedge Funds

30.0

29.1

Private Equity

5.0

5.6

Real Assets

10.0

9.1

ENDOWMENT GROWTH AT MARKET (in millions)

One Year

Five Years

Ten Years

Fifteen Years

Beginning Balance Return, including unrealized appreciation (depreciation) Distributions to operations, etc.* Gifts and other net additions Net increase (decrease)

$719.9

$741.4

$427.0

$347.7

(32.4)

(26.1)

245.2

380.4

(30.1)

(160.4)

(278.1)

(373.4)

123.8 (62.7)

284.6 251.7

324.0 331.0

Ending Balance

$678.7

$678.7

$678.7

21.3 (41.2)

$678.7

*This is pursuant to University policy, which is to distribute 5 percent of the three-year moving average market value of the corpus of most endowment accounts.

Independent Auditor’s Report

To the Board of Trustees University of Miami We have audited the accompanying statements of financial position of the University of Miami (the University) as of May 31, 2012 and 2011, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the University’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the University of Miami as of May 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Fort Lauderdale, Florida August 29, 2012

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 31

STATEMENTS OF FINANCIAL POSITION As of May 31, 2012 and 2011 (in millions)

May 2012

May 2011

Assets Cash and cash equivalents $ 215.6 $ 162.3 Accounts and loans receivable 345.1 359.3 Contributions receivable 102.5 96.4 Other assets 91.0 103.3 Investments 817.0 869.2 Property and equipment 1,465.2 1,442.9 Trusts held by others 43.6 52.0 Intangible assets 100.3 100.3 Total Assets

$ 3,180.3

$ 3,185.7

Liabilities Accounts payable and accrued expenses $ 190.3 $ Deferred revenues and other deposits 82.7 Accrued pension and postretirement benefit costs 398.1 Other liabilities 161.9 Actuarial liability of annuities payable 8.2 Reserves for medical self-insurance 104.8 Government advances for student loans 22.6 Bonds and notes payable 878.6

175.0 72.4 247.9 133.8 8.5 106.5 22.7 845.3

Total Liabilities 1,847.2

1,612.1

Net Assets Unrestricted Temporarily restricted Permanently restricted

787.0 146.5 399.6

1,031.7 156.5 385.4

Total Net Assets 1,333.1

1,573.6

Total Liabilities and Net Assets

The accompanying notes are an integral part of these financial statements.

32   UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

$ 3,180.3

$ 3,185.7

STATEMENTS OF ACTIVITIES For the years ended May 31, 2012 and 2011 (in millions)

May 2012

May 2011

Changes in unrestricted net assets Operating activities Operating revenues Tuition and fees, net $ 432.6 $ Grants and contracts 492.2 Medical professional practice 415.3 Hospitals and clinics 814.7 Gifts and trusts 60.7 Net assets released from restrictions 19.6 Endowment spending distribution 30.1 Investment return 3.6 Auxiliary enterprises, net 105.5 Other sources 29.2

401.2 518.8 418.4 751.8 52.6 31.9 31.1 9.2 99.2 26.8

Total operating revenues 2,403.5 2,341.0 Operating expenses Compensation and benefits 1,468.7 1,407.5 Supplies and services 540.2 505.3 Depreciation and amortization 124.8 125.6 Utilities and maintenance 60.4 54.3 Interest 38.0 39.1 Other 199.4 195.2 Total operating expenses 2,431.5 2,327.0 Change in unrestricted net assets from operating activities

(28.0)

14.0

Non-Operating activities Endowment, annuity and other investment return Gifts and trusts Net gain (loss) on sale, disposal, and exchange of property and equipment Net assets released from restrictions Transfer to permanently restricted net assets

(70.4) 4.7 1.8 16.5 (2.3)

101.3 3.5 (1.6) 6.7 (.2)

Change in unrestricted net assets from non-operating activities

(49.7)

109.7

Postretirement benefits related changes other than net periodic benefit cost

(167.0)

78.0

(Decrease) increase in unrestricted net assets

(244.7)

201.7

Endowment, annuity and other investment return Gifts and trusts Changes in value of annuities payable and trusts held by others Net assets released from restrictions Transfer to permanently restricted net assets

(.5) 32.2 (1.3) (36.1) (4.3)

1.8 37.7 1.2 (38.6) -

(Decrease) increase in temporarily restricted net assets

(10.0)

2.1

Endowment, annuity and other investment return Gifts and trusts Transfer from unrestricted and temporarily restricted net assets

(4.1) 11.7 6.6

.1 11.4 .2

Increase in permanently restricted net assets

14.2

11.7

(Decrease) increase in total net assets

(240.5)

215.5

Beginning of year 1,573.6

1,358.1

Changes in temporarily restricted net assets

Changes in permanently restricted net assets

Net Assets End of year

$ 1,333.1

$ 1,573.6

The accompanying notes are an integral part of these financial statements.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT   33

STATEMENTS OF CASH FLOWS For the years ended May 31, 2012 and 2011 (in millions)

May 2012

May 2011

Cash flows from operating activities (Decrease) increase in total net assets $ (240.5) $ 215.5 Adjustments to reconcile (decrease) increase in total net assets to net cash provided by operating activities Net realized and unrealized losses (gains) on investments and other assets 54.6 (125.2) Gifts and trusts (36.3) (43.9) Depreciation and amortization 124.8 125.6 Provision for doubtful accounts 108.3 97.7 Net (gain) loss on sale, disposal, and exchange of property and equipment (1.8) 1.6 Present value adjustment on annuities payable and trusts held by others 1.3 (1.2) Amortization of debt premiums and discounts (1.6) (1.8) Change in operating assets and liabilities Decrease (increase) in Accounts and loans receivable (96.1) (145.4) Contributions receivable, net 13.2 25.5 Other assets 11.9 16.4 Increase (decrease) in Accounts payable and accrued expenses 15.3 14.3 Deferred revenues, annuities payable and other liabilities 37.5 10.0 Accrued pension and postretirement benefit costs 150.2 (63.0) Reserves for medical self-insurance (1.7) 2.8 Government advances for student loans (.1) (.3) Net cash provided by operating activities

139.0

128.6

(153.2) 165.4 (152.9)

(149.5) 182.6 (123.1)

(3.9) 5.9

(5.1) 5.5

Net cash used in investing activities

(138.7)

(89.6)

Cash flows from financing activities Gifts for plant expansion and endowment Proceeds from the issuance of debt Payments to retire bonds and notes payable

18.1 62.5 (27.6)

14.4 15.9 (26.0)

Net cash provided by financing activities

53.0

4.3

Cash and cash equivalents Net increase Beginning of year

53.3 162.3

43.3 119.0

End of year

$

215.6

$

162.3

Supplemental data for noncash investing and financing activities: Conversion of accounts receivable to other assets

$

-

$

73.9

Conveyance of property in exchange for debt

$

-

$

12.9

Cash flows from investing activities Purchases of investments Proceeds from the sales and maturities of investments and sales of property and equipment Capital expenditures for property and equipment Student and shared appreciation mortgage loans: New loans made Principal collected

The accompanying notes are an integral part of these financial statements.

34   UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

1. Organization The University of Miami (the University) is a private not-for-profit institution located in South Florida. Founded in 1925, the University owns and operates educational and research facilities as well as a health care system.

Its mission is to educate and nurture students, to create knowledge through innovative research programs, to provide service to our community and beyond, and to pursue excellence in health care.

These financial statements include the accounts of all entities in which the University has a significant financial interest, and over which the University has control, including its hospitals and clinics. All significant intercompany accounts and transactions have been eliminated in the preparation of these statements.

2. Summary of Significant Accounting Policies and Reporting Practices Basis of Presentation

The financial statements of the University, including its hospitals and clinics, have been prepared on the accrual basis of accounting and in conformity with accounting principles generally accepted in the United States of America for not-for-profit organizations.

The three net asset categories as reflected in the accompanying financial statements are as follows: Unrestricted - Net assets which are free of donor-imposed restrictions.

It includes the University’s investment in property and equipment and amounts designated by management for support of operations, programs, and facilities expansion. The University has determined that any donorimposed restrictions for current or developing programs and activities are generally met within the operating cycle of the University and, therefore, the University’s policy is to record these net assets as unrestricted.

This category includes all revenues, expenses, gains and losses that are not changes in permanently or temporarily restricted net assets. It also includes realized and unrealized gains on endowment and other longterm investments, even though the University’s policy is to reinvest such earnings for future growth and to use these earnings in accordance with donor stipulations.

Unrestricted non-operating activities reflect transactions of a longterm investment or capital nature including net realized and unrealized investment gains not used to support current operations as well as contributions to be used for facilities and equipment.

Temporarily Restricted - Net assets whose use by the University is limited by donor-imposed stipulations that either expire with the passage of time or that can be fulfilled or removed by actions of the University pursuant to those stipulations. These net assets are available for program purposes, i.e., education, research, public service, and scholarships, as well as for buildings and equipment.

Permanently Restricted - Net assets whose use by the University is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or otherwise removed by actions of the University. These net assets are invested in perpetuity, the income from which is expended for program purposes, i.e., education, research, public service, and scholarships.

Use of Estimates

The preparation of these financial statements requires management of the University to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Income Taxes

The University is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code. Accordingly, no provision for income taxes is made in the financial statements. At May 31, 2012, there were no

uncertain tax positions. The University files tax returns with U.S. federal and other tax authorities for which the statute of limitations may go back to the year ended May 31, 2009.

Cash Equivalents

All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

Investments

Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See note 5 for fair value measurements.

The University’s investments include various types of investment securities which are exposed to various risks such as interest rate, market, and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is possible that changes in risks in the near term could materially affect the amounts reported in the financial statements.

Revenue Recognition

Tuition and fees revenue is reported in the fiscal year in which educational programs are primarily conducted. Scholarships and fellowships awarded to students for tuition, fees, and room and board are based upon need and merit, and are netted against tuition and fees, and auxiliary enterprises revenue in the statements of activities as follows (in millions):

2012

2011

Scholarships and fellowships: Institutionally funded $ Externally funded - gifts and grants

163.9 $ 10.2

Total amount netted against tuition and fees revenue

$

174.1

Amount netted against auxiliary enterprises revenue

$

11.7

154.2 11.9

$ 166.1 $

11.2

Gifts of cash, property and marketable securities are recorded as revenue when received. Unconditional pledges (note 4) are recognized as revenue based on the estimated present value of the future cash flows, net of allowances, when the commitment is received. Pledges made and collected in the same reporting period are recorded when received in the appropriate net asset category. Conditional pledges are recorded as revenue only when donor stipulations are substantially met.

Grants and contracts revenue is recognized as expenses are incurred.

Medical professional practice, and hospitals and clinics revenue (patient care revenue) are recorded based upon established billing rates less allowances for contractual adjustments. Revenues are recorded in the period the services are provided based upon the estimated amounts due from the patients and third-party payors, including federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies and employers. Estimates of contractual allowances represent the difference between established rates for services and amounts reimbursed by third-party payors based upon the payment terms specified in the related contractual agreements. Third party payors’ contractual payment terms are generally based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates.

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount.

The estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined. In the opinion of management, adequate provisions for adjustments that may result from such reviews and audits have been made through May 31, 2012, in the accompanying financial statements. The impact of such

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 35

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

2. Summary of Significant Accounting Policies and Reporting Practices (continued) Revenue Recognition (continued)

adjustments to operating revenues for the year ended May 31, 2012 was a decrease of $11.5 million.

Revenue received before it is earned is deferred.

Annuities Payable and Trusts Held by Others

Certain gift annuities, charitable lead and remainder annuity trust agreements have been entered into with donors. Assets held under these agreements are valued at fair value based on either the present value of expected cash flows or the value of the University’s share of the underlying assets.

These assets are included in trusts held by others on the statements of financial position, except for gift annuities which are included in investments. Gift annuities included in investments totaled $18.4 and $19.2 million at May 31, 2012 and 2011, respectively. Generally, revenue from gift annuities and trusts is recognized at the date the agreements are established net of liabilities for the present value of the estimated future payments to donors and/or other beneficiaries.

The liabilities are adjusted during the term of the trusts for changes in the value of the assets, accretion of the discount, and other changes in the estimates of future benefits.

The University is also the beneficiary of certain perpetual trusts which are also included in trusts held by others on the statements of financial position. The fair value of the trusts, which are based on either the present value of the estimated future cash receipts or the fair value of the assets held in the trust, are recognized as assets and gift and trust revenue as of the date the University is notified of the establishment of the trust. Distributions from the trusts are recorded as gift and trust revenue, and the carrying value of the assets is adjusted for changes in fair value.

Medical School

Faculty physicians, in addition to teaching and conducting research, engage in the practice of medicine, which generates patient care revenue. Revenues and expenses, including compensation and administrative operations from the practice of medicine, are reflected as University revenues and expenses.

The net assets of patient care activities are designated for medical school programs.

The University and the Public Health Trust of Miami-Dade County, Florida (PHT), owner and operator of Jackson Memorial Hospital (JMH), have entered into an affiliation agreement related to their independent missions within the designated land and facilities that comprise the Jackson Memorial Medical Center. Pursuant to that agreement, the PHT provides clinical facilities for the teaching of the University’s medical students. Medical education of its students is the sole responsibility of the University. In addition, the University has agreed to permit its faculty to apply for privileges at JMH to train and supervise JMH house staff (interns, residents, and fellows) and to treat hospital patients in their capacity as members of JMH’s attending medical staff. All such treatment and training is the sole responsibility of the PHT in its capacity as the legal owner and operator of the Jackson Health System’s public hospitals and clinics and its statutory teaching hospital (JMH). The affiliation agreement provides the terms for the mutual reimbursement of services provided.

Insurance

The University manages property and liability risks through a combination of commercial insurance policies and self-insurance.

The University is self-insured for medical professional liability and maintains commercial excess loss coverage within specified limits. Provisions for medical professional liability claims and related costs are based on several factors, including an annual actuarial study using a discount rate of 3% at May 31, 2012 and 2011.

36 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. Depreciation is not recorded on land and art objects. Leasehold improvements are amortized over the lesser of the lease term or the useful life.

Intangible Assets

The University’s goodwill relates to the excess of the purchase price over the fair value of the identifiable net assets of the University of Miami Hospital. The University is required to assess goodwill for impairment annually at March 31, or more frequently if circumstances indicate impairment may have occurred. The University assesses goodwill for such impairment by comparing the carrying value of the hospital to its estimated fair value.

The fair value of the hospital is determined utilizing discounted cash flows, comparative market multiples and other factors. In its determination of fair value, the University incorporates assumptions that it believes marketplace participants would utilize (note 9).

Facilities and Administrative Cost Recovery

The Federal government reimburses the University for facilities and administrative costs incurred in connection with research grants and contracts based on provisional rates through 2012. Facilities and administrative cost recovery from government and private sources included in grant and contract revenues totaled $72.3 and $72.5 million during the years ended May 31, 2012 and 2011, respectively.

Accounting Change due to New Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued Update No. 2010-06 to Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures-Improving Disclosures About Fair Value Measurements, which requires new disclosures and reasons for transfers between Level 1 and Level 2 measurements under the fair value hierarchy.

The amendment clarifies that the reconciliation of Level 3 measurements should separately present purchases, sales, issuances and settlements instead of netting these changes. This portion of the amendment is effective for years beginning on or after December 15, 2010. The University adopted this portion of the amendment for the fiscal year ended May 31, 2012.

In December 2010, the FASB issued Update No. 2010-28—Intangibles— Goodwill and Other to ASC 350: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this Update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The University adopted this amendment for the fiscal year ended May 31, 2012.

Impairment of Long-Lived Assets

ASC 360 (formerly SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets) requires that long-lived assets to be held by an entity, including intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No asset impairments were recorded by the University in fiscal years 2012 or 2011.

Subsequent events

The University evaluated events and transactions occurring subsequent to May 31, 2012, through August 29, 2012, the date of issuance of the financial statements. During this period, there were no subsequent events requiring recognition in the financial statements.

Reclassifications

Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

3. Accounts and Loans Receivable

5. Fair Value of Financial Instruments

At May 31, accounts and loans receivable consist of the following (in millions):

2012

2011

Accounts and loans receivable, net: Patient care $ 200.6 $ 210.4 Grants, contracts and other 61.1 64.6 Shared appreciation mortgages 47.6 49.6 Student 6.9 5.1 Student loans, net 28.9 29.6 Total

$ 345.1

$ 359.3

Accounts and loans receivable, and student loans receivable are net of allowances for doubtful accounts of $128.8 and $.9 million, respectively, for 2012 and $123.9 and $1.0 million, respectively, for 2011.

Shared appreciation mortgages were provided as part of a program to attract and retain excellent faculty and senior administrators through home mortgage financing assistance. Shared appreciation notes amounting to $50.1 and $52.1 million (net of $2.5 million allowance for doubtful accounts) at May 31, 2012 and 2011, respectively, from University faculty and senior administrators are collateralized by second mortgages on residential properties. The program was suspended effective December 31, 2008 with limited exceptions.

Student loans are made primarily pursuant to federal programs and availability of funding. The related receivables have significant government restrictions as to marketability, interest rates, and repayment terms. Their fair value is not readily determinable.

4. Contributions Receivable (Pledges) Unconditional pledges are recorded at the present value of their future cash flows using a discount rate commensurate with the risk involved. They are expected to be realized in the following periods at May 31, (in millions):

In one year or less $ Between one year and five years More than five years

Discount of $17.3 and allowance of $10.4 for 2012 and $17.5 and $9.6 for 2011, respectively Total

2012

2011

31.7 $ 59.4 39.1

29.0 53.5 41.0

130.2

123.5

(27.7)

(27.1)

$ 102.5

$

96.4

The valuation methodologies used for other investment instruments measured at fair value consisted of: Variable Rate Swap Agreement

The University entered into an interest rate swap agreement on October 25, 2004 to manage the market risk associated with outstanding variable-rate debt. The swap agreement provides that the University receive a variable rate based on 3-month LIBOR and pay a fixed rate of 4.2%. Parties to the interest rate swap agreement are subject to market risk for changes in interest rates as well as risk of credit loss in the event of nonperformance by the counterparty. The University deals only with high quality counterparties that meet rating criteria for financial stability and creditworthiness. The estimated cumulative fair value loss of the swap agreement was $6.0 and $3.7 million for the years ended May 31, 2012 and 2011, respectively, and is included in other investments in the tables that follow. Changes in the fair value, which for fiscal 2012 and 2011 amounted to an unrealized loss of $2.3 and $.9 million, respectively, are recorded as non-operating activities in the statements of activities. The notional amount was $19.0 and $19.5 million for fiscal 2012 and 2011, respectively.

Fair Value Measurements Investments

The fair market value of investments at May 31, 2012 and 2011 amounted to $817.0 and $869.2 million, with a cost basis of $767.0 and $742.9 million, respectively. Short term investments consist primarily of commercial paper with maturities in excess of three months. Amounts included in limited partnerships and limited liability companies - other, represent alternative investments which are valued at the net asset value of the entities as determined by the fund. The majority of investments are combined in investment pools with each individual account subscribing to or disposing of shares on the basis of the fair value per share. At May 31, 2012 and 2011, the fair value of the University’s primary investment pool (the Growth Pool) amounted to $770.6 and $816.3 million, with a cost basis of $723.5 and $695.1 million, respectively. The Growth Pool is managed by multiple investment managers with asset allocation per the University’s investment policy. The total net unrealized (loss) gain on investments for the year ended May 31, 2012 and 2011 was $(75.7) and $97.8 million, respectively.

FASB ASC 820 provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by the University for investments measured at fair value: Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Inputs to the valuation methodologies include unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2 — Valuations for assets traded in less active dealer or broker markets. Inputs to the valuation methodologies include quoted prices from third party pricing services for identical or similar assets in active and/or inactive markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 37

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

5. Fair Value of Financial Instruments (continued)

Fair Value Measurements (continued)

Level 3 — Valuations for assets that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Inputs to the valuation methodologies incorporate certain assumptions and projections in determining the fair value assigned to such assets.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level of any input that is significant to the fair value measurement. The University utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the methodologies used at May 31, 2012.

The following tables set forth by level, within the fair value hierarchy, the University’s assets at fair value (in millions):

Total

Assets: Short term investments $ Corporate bonds Debt securities: US Treasury & other government agencies Publicly traded stocks: Large-mid cap Small cap Mutual funds: Equities: Emerging markets International Large-mid cap Small cap Fixed Income Balanced Limited partnerships and limited liability companies: Equities: Emerging markets International Large-mid cap Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate Other investments Total investments Trusts held by others Total assets

At May 31, 2012 Level 1

Level 2

Level 3

15.7 $ .6

- $ -

15.7 $ .6

-

5.3

5.3

-

-

70.2 20.6

70.2 20.6

- -

-

23.2 3.4 10.7 21.6 36.5 9.3

- - - - - -

23.2 3.4 10.7 21.6 36.5 1.6

7.7

29.7 116.6 76.5 86.5 43.4

- - - - -

29.7 116.6 76.5 43.2 -

43.3 43.4

73.2 107.8

- -

- 85.8

73.2 22.0

42.3 26.8 (2.9)

- - 1.4

41.4 - (4.3)

.9 26.8 -

97.5 502.2 - -

217.3 43.6

817.0 43.6

$ 860.6

$ 97.5

38 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

$ 502.2

$ 260.9

At May 31, 2011

Total

Assets: Short term investments $ Corporate bonds Debt securities: US Treasury & other government agencies Publicly traded stocks: Large-mid cap Small cap Mutual funds: Equities: Emerging markets International Large-mid cap Small cap Fixed Income Balanced Limited partnerships and limited liability companies: Equities: Emerging markets International Large-mid cap Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate Other investments

Level 1

16.4 $ .8

Level 2

Level 3

- $ 16.4 $ - .8

-

5.4

5.4

-

-

87.7 24.1

87.7 24.1

- -

-

8.1 3.9 11.2 24.0 50.4 8.9

- - - - - -

8.1 3.9 11.2 24.0 50.4 .6

8.3

23.6 163.0 73.7 83.3 50.0

- - - - -

23.6 163.0 73.7 41.2 -

42.1 50.0

72.7 97.4

- -

- 74.0

72.7 23.4

34.9 23.8 5.9

- - 7.7

33.3 - (1.8)

1.6 23.8 -

124.9 522.4 - -

221.9 52.0

Total investments 869.2 Trusts held by others 52.0 Total assets

$ 921.2

$ 124.9

$ 522.4

$ 273.9

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

5. Fair Value of Financial Instruments (continued) Fair Value Measurements (continued)

The following tables set forth a summary of changes in the fair value of the University’s level 3 assets: For the year ended May 31, 2012 (in millions):

May 31, 2011

Mutual funds - balanced $ Limited partnerships and limited liability companies: Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate Total investments Trusts held by others Total assets

Purchases

Sales

(.3)

.1

.2

(.6)

42.1 50.0

- 4.9

- (14.4)

1.5 .7

- 5.1

(.3) (2.9)

- -

43.3 43.4

72.7 23.4

- -

- -

2.1 (.4)

(.7) 1.1

(.9) (2.1)

- -

73.2 22.0

1.6 23.8 3.6

(.6) (3.5)

- .7

- .7

(.1) 1.5

- -

.9 26.8

(18.8) (4.3)

4.7 -

6.4 -

(5.4) (4.1)

- -

217.3 43.6

4.7

6.4

(9.5)

-

221.9 52.0

May 31, 2010

Total investments Trusts held by others Total assets

May 31, 2012

-

$ 273.9

Mutual funds - balanced $ Limited partnerships and limited liability companies: Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate

Transfers in and/or out of level 3

8.3

8.5 -

$

8.5

$ (23.1)

$

For the year ended May 31, 2011 (in millions):

Total net gains (losses) included in changes in net assets

Realized Unrealized

Net Income Reinvested

Purchases, sales, issuances, settlements, net

$

$

$

Total net gains (losses) included in changes in net assets

Realized Unrealized

Net Income Reinvested

-

$

$ 260.9

Transfers in and/or out of level 3

May 31, 2011

7.4

(.4)

.4

-

.9

49.6 45.6

(12.0) (4.2)

1.7 1.1

(1.0) 3.6

3.8 3.9

- -

42.1 50.0

66.3 33.5

- (13.3)

4.6 (.7)

(4.4) 1.9

6.2 2.0

- -

72.7 23.4

1.7 16.9

(.1) 3.5

- (.1)

- .4

- 3.1

- -

1.6 23.8

221.0 52.0

(26.5) (1.1)

7.0 -

.5 -

19.9 1.1

- -

221.9 52.0

(27.6)

7.0

21.0

-

273.9

$ 273.0

$

$

Sales amounts presented above for the years ended May 31, 2012 and 2011 for trusts held by others represent settlement transactions. There were no other issuances and settlements for the years ended May 31, 2012 and 2011.

The total level 3 change in net unrealized (losses) gains for the years relating to those investments still held at May 31, 2012 and 2011 total $(5.4) and $19.9 million, respectively, and are reflected as part of investment return

$

.5

$

$

-

7.7

$

$

8.3

in the statements of activities. The total level 3 change in value related to trusts held by others at May 31, 2012 and 2011 total $(4.1) and $1.1 million, respectively, and are reflected as part of investment return and changes in value of annuities payable and trusts held by others in the statements of activities.

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 39

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

5. Fair Value of Financial Instruments (continued) Fair Value Measurements (continued)

The following tables summarize the University’s assets whose fair value is estimated using net asset value per share (in millions):

Fair Value

At May 31, 2012 Future Commitments

Redemption Frequency

Days Notice

Assets: Limited partnerships and limited liability companies: Equities: Emerging markets $ International Large-mid cap Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate Other investments

29.7 $ 116.6 76.5 86.5 43.4

- (M) - (M) - (Q) - (M), (A) 17.8 *

30 days 5-15 days 60 days 10-90 days N/A

73.2 107.8 42.3 26.8 (2.9)

- (Q) - (M), (Q), (A) - (M), (Q) 8.0 * - N/A

65-90 days 45-90 days 10-60 days N/A N/A

Total investments Trusts held by others

599.9 43.6

25.8 -

Total assets

643.5

25.8

$

Fair Value

Assets: Limited partnerships and limited liability companies: Equities: Emerging markets $ International Large-mid cap Fixed income Private equity Other: Event arbitrage Long-short composite Real assets related securities Real estate Other investments

$

N/A

Redemption Frequency

Days Notice

At May 31, 2011 Future Commitments

23.6 $ 163.0 73.7 83.3 50.0

- (M) - (M), (Q) - (M), (Q) - (M), (A) 22.7 *

30 days 5-15 days 60 days 10-90 days N/A

72.7 97.4 34.9 23.8 5.9

- (Q) - (Q), (A) - (M), (S) 11.4 * - N/A

65-90 days 45 days 10 days, 6 months N/A N/A

Total investments Trusts held by others

628.3 52.0

34.1 -

Total assets

680.3

34.1

$

N/A

$

N/A

N/A

Redemption Frequency: (A) Annually, (S) Semi-annually, (Q) Quarterly, (M) Monthly (*) The expected liquidation date for these assets range from 2015 to 2025 and are based on a combination of the inception date of the fund and the expected life of the fund as outlined in the partnership agreement inclusive of the manager’s ability to extend the fund’s life.

The University’s investment policy and strategy for its investments, as established by the Investment Committee (the Committee) of the Board of Trustees (the Board) and ratified by the Executive Committee of the Board, is to provide for growth of capital with a moderate level of volatility by investing assets based on its target allocations. The weighted average target allocations for University assets is 45% equity securities, 10% fixed income, and 45% other investments. The Committee rebalances its invest-

40 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

ments periodically to meet established target allocations. In addition, the Committee reviews its investment policy and target allocations periodically and effects changes when required, to ensure that strategic objectives are achieved. Equity securities include investments in large-mid cap and small-cap companies primarily located in the United States, as well as international companies. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, and

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

5. Fair Value of Financial Instruments (continued)

7. Other Assets

Fair Value Measurements (continued)

Other assets primarily represent prepaid expenses and inventories. During September 2010, the University entered into a tri-party agreement with the Public Health Trust (PHT) and Miami-Dade County wherein the receivable associated with the annual operating agreement was converted to a prepaid asset. The value of the receivable at September 30, 2010 was $73.9 million, and included a long-term land lease with a discounted value of $14.1 million. The University will receive goods, rentals, and services in the normal course of business with the PHT until the prepaid asset is exhausted. At May 31, 2012 and 2011, the remaining prepaid asset under this agreement, after application of purchased services for the twelve months ended 2012 and for the months of October 2010 through May 2011 for the year ended 2011 was $42.6 and $60.2 million, respectively. Based on the repayment terms of the agreement, the balance of the prepaid asset should be exhausted by March 1, 2014, with the exception of the long-term land lease which extends through 2080.

U.S. Treasuries. Other investments include private equity funds, real estate funds, and hedge funds that pursue multiple strategies to diversify risks and reduce volatility. These investments, which at May 31, 2012 consist of investments similar to those of the HFRI Fund of Funds, S&P 500, Russell 2000, DJ/UBS Commodity, NCREIF Property and MSCI Indexes, are made with the intention of raising portfolio return and lowering total volatility.

Investment Return

The University’s endowment spending distribution policy is to distribute five percent of the three-year moving average fair market value of the endowment investment pool. This policy is designed to protect the purchasing power of the endowment and to minimize the effect of capital market fluctuations on operating budgets.

The components of total investment return as reflected in the statements of activities are as follows (in millions):

2012

2011

Operating: Endowment spending distribution $ Investment return

30.1 $ 3.6

31.1 9.2

Total operating investment return

33.7

40.3

(62.4)

85.7

(8.0)

15.6

Total unrestricted non-operating investment return Temporarily restricted investment return Permanently restricted investment return

(70.4) (.5) (4.1)

101.3 1.8 .1

Total non-operating investment return

(75.0)

103.2

Total investment return

(41.3) $

143.5

Non-Operating: Unrestricted Endowment interest and dividend income, realized and unrealized (losses) gains, net of endowment spending distribution Other net realized and unrealized (losses) gains

$

6. Fair Value of Other Financial Instruments The carrying amounts of cash and cash equivalents, patient, student and other receivables, accounts payable and accrued expenses approximate fair value due to the short maturity of these financial instruments. The carrying amounts of notes payable with variable interest rates approximate their fair value since the variable rates reflect current market rates for notes with similar maturities and credit quality. The fair value of bonds payable with fixed interest rates is based on rates assumed to be currently available for bond issues with similar terms and average maturities. The estimated fair value of these bonds payable at May 31, 2012 and 2011 approximated $804.1 and $756.8 million, respectively. The carrying amounts of these bonds payable at May 31, 2012 and 2011 approximated $761.1 and $781.3 million, respectively.

8. Property and Equipment Property and equipment and related accumulated depreciation and amortization at May 31 consist of the following (in millions):

Useful Lives

2012

2011

Land Land improvements Buildings and building improvements Leasehold improvements Construction in progress Moveable equipment Library materials Art objects

- $ 20 years

93.9 $ 88.1

94.9 87.6

8 to 50 years 1,544.1 1,506.2 1 to 50 years 38.6 32.5 - 94.0 47.7 3 to 20 years 557.0 528.9 12 years 113.4 110.8 - 52.4 51.8

2,581.5 2,460.4 Accumulated depreciation and amortization (1,116.3) (1,017.5) Total

$ 1,465.2

$ 1,442.9

Interest on borrowings to finance facilities is capitalized during construction, net of any investment income earned through the temporary investment of project borrowings. Net interest expense of $2.1 and $.2 million was capitalized for the years ended May 31, 2012 and 2011, respectively.

9. Intangible Assets On December 1, 2007, the University acquired certain assets and liabilities of a general acute care hospital. As part of the transaction, intangible assets were recorded amounting to $105.2 million. In addition, the University acquired a physician practice and recorded $1.7 million as an intangible asset for the year ended May 31, 2010. In accordance with ASC 350 (formerly SFAS No. 142, Intangibles – Goodwill and Other), amortization of intangible assets ceased at May 31, 2010.

Intangible assets recorded are as follows (in millions):

2012

Amortized intangible assets Goodwill at gross carrying value $ Accumulated amortization through May 31, 2010 Indefinite lived intangible assets Total

2011

105.8 $ (6.6) 1.1

$ 100.3

105.8 (6.6) 1.1

$ 100.3

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 41

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

10. Endowment

Endowment net assets consist of the following (in millions):

In August 2008, the FASB issued ASC 958-205-50 (formerly FASB Staff Position 117-1, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds).

This standard provides guidance on the net asset classification of donorrestricted endowment funds for a nonprofit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA). This standard also requires additional disclosures about an organization’s endowment funds, whether or not the organization is subject to UPMIFA. The disclosure requirements of this standard are reflected below. On June 17, 2011, the State of Florida enacted a version of UPMIFA which is effective July 1, 2012. Generally, the law governs conduct in the management and investment of institutional funds, the expenditure or accumulation of endowment funds, and the release or modification of restrictions on the management or investment of institutional funds. The new law will result in the reclassification of amounts currently classified as unrestricted net assets to temporarily restricted net assets.

Application of Relevant Law

As discussed above, the State of Florida has now enacted UPMIFA which is effective July 1, 2012. The current law, known as the Uniform Management of Institutional Funds Act (UMIFA) requires preservation of the fair value of the original gift as of the gift date, absent explicit donor stipulations to the contrary. Therefore, the University classifies as permanently restricted net assets (a) the original value of gifts donated where the donor has stipulated that the principal is to be maintained in perpetuity with only the income from the gift to be expended, (b) the original value of subsequent similar type gifts, and (c) accumulations to the fund made in accordance with the direction of the applicable donor gift instrument. Endowments are classified as temporarily restricted where the donor has stipulated that the principal of the gift may be released from inviolability to permit all or part of the principal to be expended, and as unrestricted endowments where the Board, rather than a donor, decides to retain and invest the principal with only the income available to be expended. The Board has the right at any time to expend the principal of unrestricted endowments.

Spending Policy

The University’s endowment spending distribution policy in support of its programs is to distribute five percent of the three-year moving average fair market value of the endowment investment pool. New endowments must be received prior to December 31 in order to activate the spending distribution for the next fiscal year. In addition, no distribution is made from an endowment until its funding reaches, by December 31, the level stipulated by policy. Further, endowments to establish Chairs and Professorships have an additional delay of one year before distributions are made.

Return Objectives and Risk Parameters

The University has adopted investment and spending policies to protect the purchasing power of the endowment and to minimize the effect of capital market fluctuations on operating budgets.

The intent of the University’s policy for its primary investment pool (the Growth Pool), as approved by the Board, is to achieve a rate of return equal to or greater than the respective benchmark, while assuming a moderate level of risk. To satisfy its long-term rate-of-return objectives, the University relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The University targets a diversified asset allocation that places a greater emphasis on equity based investments to achieve its long-term return objectives within prudent risk constraints. The current long-term return objective is to earn a return of at least the Consumer Price Index plus 5%, net of fees. Actual returns in any given year may vary from this amount.

42 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

At May 31, 2011: Donor restricted endowment funds $ 196.4 $ 29.4 $ 326.5 $ 552.3 Quasi endowment funds 167.6 - - 167.6 Total

$ 364.0

$ 29.4

$ 326.5

$ 719.9

At May 31, 2012: Donor restricted endowment funds $ 150.9 $ 29.2 $ 345.7 $ 525.8 Quasi endowment funds 152.9 - - 152.9 Total

$ 303.8

$ 29.2

$ 345.7

$ 678.7

Donor restricted endowment funds included in unrestricted endowment net assets represent the unappropriated appreciation of endowment funds, net of deficiencies in the market value of certain endowment related assets which fell below the donor required level to retain funds in perpetuity.

At May 31, 2012 and 2011, this deficiency amounted to $9.9 and $2.9 million, respectively, and resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently restricted contributions, as well as continued appropriations for certain programs deemed prudent by the University.

Quasi endowment funds are resources segregated for long term investment and include gains and losses on unrestricted investments, and other resources designated by the Board for future programs and operations.

Changes in endowment net assets for the fiscal years ended May 31, 2012 and 2011 consist of (in millions):

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

Balance, May 31, 2010

$ 276.2

$ 29.3

$ 312.7

$ 618.2

Investment return Investment income Net appreciation (realized and unrealized)

11.3

-

(.1)

11.2

105.5

-

-

105.5

Total investment return 116.8 Gifts and Trusts 1.4 Endowment spending distribution for programs (31.1) Net transfers from quasi endowment funds (2.0) Other 2.7

- .3

(.1) 13.7

116.7 15.4

-

-

(31.1)

- (.2)

- .2

(2.0) 2.7

29.4 326.5

719.9

Balance, May 31, 2011 364.0 Investment return Investment income Net depreciation (realized and unrealized)

10.0

-

(.1)

9.9

(42.3)

-

-

(42.3)

Total investment return (32.3) Gifts and Trusts .1 Endowment spending distribution for programs (30.1) Net transfers from quasi endowment funds (.6) Other 2.7

- .2

(.1) 17.0

(32.4) 17.3

-

-

(30.1)

- (.4)

- 2.3

(.6) 4.6

Balance, May 31, 2012

$ 303.8

$ 29.2

$ 345.7

$ 678.7

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

11. Pension and Other Postretirement Benefit Plans The University has two non-contributory retirement plans, the Faculty Retirement Plan and the Employee Retirement Plan. These two plans were closed to employees hired after May 31, 2007. Effective June 1, 2007 a new retirement plan was established, the Retirement Savings Plan.

The University also sponsors an unfunded, defined benefit postretirement health plan that covers all full-time and part-time regular employees who elect coverage and satisfy the plan’s eligibility requirements when they retire. The plan is contributory with retiree contributions established as a percentage of the total cost for retiree health care and for the health care of their dependents. The University pays all benefits on a current basis.

The Retirement Savings Plan (Savings Plan) is a defined contribution plan in which the University makes an automatic core contribution of 5% of pay with a dollar-for-dollar match on voluntary contributions up to an additional 5% of pay once the employee meets certain eligibility requirements. Eligible employees can begin making voluntary contributions to the Savings Plan at any time. Participation is limited to faculty and staff hired on or after June 1, 2007 or who elected, prior to June 1, 2007, to transfer to this plan from the Faculty Retirement Plan or from the Employee Retirement Plan. Core and matching contributions to the Savings Plan for 2012 and 2011 were $33.4 and $29.0 million, respectively.

The Retirement Savings Plan II (Savings Plan II) is a defined contribution plan the University established, effective January 1, 2008, that covers substantially all employees of the University of Miami Hospital (UMH).

The plan is available to employees who meet certain eligibility requirements and requires that UMH match certain percentages of participants’ contributions up to certain maximum levels. Eligible employees can begin making voluntary contributions to the Savings Plan II at any time. Core and matching contributions to the Savings Plan II were $5.6 and $4.9 million for the years ended May 31, 2012 and 2011, respectively.

Faculty Retirement Plan (Faculty Plan) is a defined contribution plan for eligible faculty hired between September 30, 1977 and May 31, 2007, and certain faculty hired on or before September 30, 1977, who ceased participation in the Employee Retirement Plan. Under the terms of the Faculty Plan, the University makes contributions to individual retirement accounts for each eligible faculty member. Payment from the retirement account commences when the faculty member has separated from service and elects to begin distributions in accordance with plan provisions.

Contributions to the Faculty Plan are based upon a combination of compensation, tenure status, length of service, and other factors and are funded as accrued. These contributions were $24.1 million for the years ended May 31, 2012 and 2011. In addition to the above noted plans, there are deferred compensation arrangements for certain employees, principally clinical faculty, the liability for which is included in other liabilities.

The Employee Retirement Plan (Employee Plan) is a defined benefit plan primarily for full-time non-faculty employees hired before June 1, 2007. Employee Plan assets are held by a Trustee. The benefit is based on the higher of two formulas: a formula based on years of service and the employee’s compensation for the consecutive five year period of employment that produces the highest average; and a cash balance benefit formula determined each year based on compensation and investment earnings.

At May 31, 2009, a proposed Employee Plan amendment was approved by the Internal Revenue Service which enables the plan to offer lump sum distribution options to participants who retired on or after January 1, 2001 and met the Rule of 70 (combination of age and service).

The measurement date for the Employee Plan and postretirement health plan is May 31 for fiscal years 2012 and 2011.

The following benefit payments, which reflect expected future service, are expected to be paid, for the fiscal years ending May 31 (in millions):

Pension Benefits

2013 $ 2014 2015 2016 2017 2018-2022

Postretirement Benefits

.2 .2 .2 .2 .2 1.1

36.0 $ 37.2 38.1 40.8 41.7 235.4

The University expects to contribute $57.9 million to the Employee Plan and $.2 million to its postretirement health plan during the fiscal year ending May 31, 2013.

The tables that follow provide a reconciliation of the changes in the plans’ projected benefit obligations, fair value of assets and funded status (in millions):

Pension Benefits

2012

2011

772.3

$ 755.9

Change in Benefit Obligation Benefit obligation at beginning of year $ Service cost – benefits attributed to employee service during period and administrative expenses Interest costs accrued to measure benefit obligation at present value Plan participant contributions Actuarial loss (gain) Benefits paid and administrative expenses

Postretirement Benefits

2012

$

2.0

2011

$

3.4

20.0

20.6

.2

.2

42.9

42.0

.2

.1

- 124.6

- (13.9)

.7 .8

.7 (1.4)

(32.3)

(32.3)

(.6)

(1.0)

Benefit obligation at end of year 927.5 772.3

3.3

2.0

-

-

-

-

(.6) - .6

(1.0) .3 .7

-

-

Change in Plan Assets Employee Plan assets at fair value at beginning of year 526.4 448.4 Investment return on Employee Plan assets (9.8) 79.4 Benefits paid and Employee Plan expenses (32.3) (32.3) Employer contributions 48.4 30.9 Plan participant contributions - - Employee Plan assets at fair value at end of year 532.7 526.4 Funded status Accrued pension and postretirement benefit costs recognized on the statements of financial position

$ (394.8) $ (245.9) $

(3.3) $

(2.0)

Amounts recognized in unrestricted net assets consist of: Net actuarial loss (gain) $ 381.5 $ 215.9 $ Prior service credit (4.5) (5.1) Transition obligation - -

(1.4) $ (.7) .1

(2.2) (.8) .2

(2.0) $

(2.8)

$ 377.0

$ 210.8

$

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 43

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

11. Pension and Other Postretirement Benefit Plans (continued)

The net actuarial loss (gain), prior service cost (credit), and transition amount expected to be recognized in net periodic benefit cost over the next fiscal year are as follows (in millions):

At May 31, 2012 and 2011, the accumulated benefit obligation of the Employee Plan was $876.0 and $731.9 million, respectively, $343.3 and $205.5 million, respectively, in excess of Employee Plan assets.

The following table provides the components of net periodic pension cost for the plans (in millions):

Pension Benefits

2012

2011

$ 20.0

$ 20.6

Service cost: Benefits attributed to employee service during periods and administrative expenses

Total Interest costs accrued to measure benefit obligation at present value Expected return on Employee Plan assets Amortization of prior service cost/(credit) includes changes in pension formula and cost of Employee Plan amendments Amortization of transition obligation Recognized net actuarial loss (gain) Net periodic benefit cost $

Net actuarial loss (gain) $ Prior service credit Transition obligation

2012

$

.2

2011

.2

$

20.6

.2

.2

42.9

42.0

.2

.1

(43.8)

(36.4)

-

-

27.1 $ (.6) -

(.1) (.1) .1

A 10% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2012. The rate is assumed to decrease 1% per year until reaching the ultimate 5.5% in 2018. Assumed health care cost trend rates have an effect on the amounts reported for the health care plan. A 1% change in assumed health care cost trend rates would have the following effect (in millions):

(.6)

(.1)

(.1)

-

-

.1

.1

12.7

20.3

(.1)

(.1)

Effect on total of service and interest cost components of net periodic postretirement health care benefit cost

.3

.2

$

1% Decrease

.1

$

$

.5

(.1)

(.4)

The following weighted-average assumptions were used for the above calculations:

$

1% Increase

Effect on the health care component of the accumulated postretirement benefit obligation

(.6)

$ 45.9

Postretirement Benefits

Postretirement Benefits

20.0

31.2

Pension Benefits

Pension Benefits 2012

Discount rate for benefit obligation 4.55% Discount rate for net periodic benefit cost 5.55% Expected return on Employee Plan assets 8.25% Rate of compensation increase 3.70%/4.20%

2011

Postretirement Benefits

2012

2011

5.55% 4.65% 5.55% 5.65% 5.55% 5.65% 8.25%

N/A

N/A

4.20%

N/A

N/A

The rate of compensation increase assumption related to the net periodic benefit cost is 3.70% for fiscal 2012 to 2016, and 4.20% thereafter. To develop the expected long-term rate of return for the Employee Plan assets, the University considered the historical returns of the major market indicators relating to the target asset allocation, as well as the current economic and financial market conditions.

Employee Plan Assets

The investment policy and strategy, as established by the University, is to provide for growth of capital with a moderate level of volatility by investing assets based on its target allocations. The weighted average target allocations for plan assets of the Employee Plan is 34.0% equity securities, 35.0% fixed income, and 31.0% other investments. The University rebalances its investments periodically to meet the target allocations. The University also reviews its investment policy periodically to determine if the policy or allocations require change. Equity securities include investments in largemid cap and small-cap companies primarily located in the United States, as well as international companies. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, and U.S. Treasuries. Other types of investments include investments in hedge funds and private equity funds that follow several different strategies.

These investments, which at May 31, 2012 consist of investments similar to

44   UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

11. Pension and Other Postretirement Benefit Plans (continued)

Employee Plan Assets (continued)

Common stocks: Large-mid cap $ Small cap Registered mutual funds: Equities emerging markets Fixed Income Unregistered limited partnerships and limited liability companies: Equities: Emerging markets International Large-mid cap Private equity Other Event artbitrage Long-short composite Real estate Money market accounts Common collective trusts: Equities - international Real assets related securities 103-12 Investment entities: Equities: International Small cap Fixed income Other investments: Private equity Long-short composite Fixed income Real assets related securities

those of the HFRI Fund of Funds, S&P 500, Dow Jones, AIG Commodity, MCSI and NCREIF Property Indexes, are made with the intention of raising portfolio return and lowering total volatility. See note 5 for fair value measurement narrative disclosures.

The Employee Plan’s investments, by level, within the fair value hierarchy are as follows (in millions):

Common stocks: Large-mid cap $ Small cap Registered mutual funds: Equities emerging markets Fixed Income Unregistered limited partnerships and limited liability companies: Equities: Emerging markets International Large-mid cap Private equity Other: Event arbitrage Long-short composite Real estate Real assets related securities Money market accounts Common collective trusts: Equities - international Real assets related securities 103-12 Investment entities: Equities: International Small cap Fixed income Other investments: Private equity Long-short composite Fixed income Real assets related securities Total

At May 31, 2012

Total

Level 1

Level 2

35.7 $ 35.7 $ 16.7 16.7

Level 3

- $ -

-

3.0 94.0

- -

3.0 94.0

-

9.9 7.1 49.2 17.6

- - - -

9.9 7.1 49.2 -

17.6

31.2 26.9 15.9

- - -

- 16.7 -

31.2 10.2 15.9

9.6 3.2

- 3.2

9.6 -

-

10.5

-

10.5

-

12.9

-

12.9

-

40.8 17.5 100.8

- - -

40.8 17.5 92.9

7.9

3.4 15.7 10.6

- - -

- 15.6 -

3.4 .1 10.6

.6

-

-

.6

$ 532.8

$ 55.6

$ 379.7

Total

At May 31, 2011

Total

Level 1

Level 2

36.8 $ 36.8 $ 19.4 19.4

Level 3

- $ -

-

4.1 71.9

- -

4.1 71.9

-

11.8 9.5 47.3 20.4

- - - -

11.8 9.5 47.3 -

20.4

31.1 23.1 14.3 6.0

- - - 6.0

- 12.2 - -

31.1 10.9 14.3 -

12.5

-

12.5

-

27.6

-

27.6

-

50.5 19.3 91.0

- - -

50.5 19.3 80.5

10.5

18.0 .1 10.5

- - -

13.7 - -

4.3 .1 10.5

1.0

-

-

1.0

$ 526.2

$ 62.2

$ 360.9

$ 103.1

The tables on the following page set forth a summary of changes in the fair value of the Employee Plan’s Level 3 investments.

$ 97.5

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 45

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

11. Pension and Other Postretirement Benefit Plans (continued) Employee Plan Assets (continued)

Unregistered limited partnerships and limited liability companies: Private equity $ Other: Event arbitrage Long-short composite Real estate 103-12 Investment entities: Fixed income Other investments: Private equity Long-short composite Fixed income Real assets related securities Total

For the year ended May 31, 2012 (in millions)

May 31, 2011

$

Purchases

Total net gains (losses) included

in changes in net assets

Realized Unrealized

Sales

Transfers in and/or out of level 3

May 31, 2012

20.4

3.2

(6.8)

1.9

(1.1)

-

31.1 10.9 14.3

.9 (.1) 2.7

- - (2.2)

1.2 .6 .4

(2.0) (1.2) .7

- - -

31.2 10.2 15.9

10.5

.9

(3.0)

(.5)

-

-

7.9

4.3 .1 10.5 1.0

.1 - - .2

(.8) - - (.6)

- - - -

(.2) - .1 -

- - - -

3.4 .1 10.6 .6

-

97.5

103.1

$

7.9

$

(13.4)

3.6

$

(3.7)

$

$

17.6

For the year ended May 31, 2011 (in millions)

May 31, 2010

Unregistered limited partnerships and limited liability companies: Private equity $ Other: Event arbitrage Long-short composite Real estate 103-12 Investment entities: Fixed income Other investments: Private equity Long-short composite Fixed income Real assets related securities Total

$

$

$

Total net gains (losses) included in changes in net assets

Realized Unrealized

Purchases, sales, issuances, and settlements, net

Transfers in and/or out of level 3

May 31, 2011

18.1

(1.0)

1.5

1.8

-

28.3 9.3 10.3

1.0 (.4) 1.7

(.3) .9 .1

2.1 1.1 2.2

- - -

31.1 10.9 14.3

9.1

.9

-

.5

-

10.5

3.8 9.4 9.9 1.1

.1 (9.1) - (.1)

- (.2) - -

.4 - .6 -

- - - -

4.3 .1 10.5 1.0

(6.9)

2.0

8.7

-

99.3

$

$

$

$

$

$

20.4

103.1

There were no issuances and settlements for the years ended May 31, 2012 and 2011.

The total level 3 change in net unrealized (losses) gains for the years relating to those investments still held at May 31, 2012 and 2011 total $(3.7) and $8.7 million, respectively, and are included in net (depreciation) appreciation in fair value of investments in the Employee Plan’s statement of changes in net assets available for benefits.

46 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

12. Bonds and Notes Payable Bonds and notes payable at May 31 consist of the following (in millions):

Miami-Dade County, Florida Educational Facilities Authority Notes payable to banks and others Notes payable to banks and others

Series

Final Maturity

2007A to 2008B - -

2015 to 2038 2013 to 2030 2013 to 2035

2012 Interest Rate

2012

4.0% to 6.1% $ 2.38% to 6.5% Variable

2011

733.9 $ 38.2 87.2

751.8 37.0 35.5

Par amount of bonds and notes payable Net unamortized premium

859.3 19.3

824.3 21.0

Total

878.6

845.3

The annual maturities for bonds and notes payable at May 31, 2012 are as follows (in millions): 2013 $ 99.1 2014 27.8 2015 26.0 2016 24.6 2017 25.0 Thereafter 656.8 Total

$

859.3

Effective December 31, 2010, the University renewed its line of credit arrangement which carries a maximum possible balance of $150.0 million.

This line of credit has a variable interest rate equal to the LIBOR Daily Floating Rate plus 0.65% per annum, and has a maturity date of December 31, 2012. The outstanding balance under this line of credit at May 31, 2012 was $68.5 million.

In November 2011, the University borrowed $10.0 million from a bank to fund the Employees’ Retirement Plan. The loan has a fixed interest rate of 2.38% per annum, and has a maturity date of August 5, 2015. The outstanding balance at May 31, 2012 was $10.0 million.

In July 2011, the University entered into a second line of credit arrangement for $100.0 million, which was renewed in June 2012. This line of credit has a variable interest equal to the LIBOR rate for dollar deposits with a one-month maturity plus 0.75% per annum, and has a maturity date of June 29, 2013. There was no outstanding balance under this line of credit at May 31, 2012.

Total interest paid on all bonds and notes was $41.7 and $42.0 million for the years ended May 31, 2012 and 2011, respectively.

13. Net Assets Unrestricted net assets consist of the following at May 31 (in millions):

2012

2011

Designated for operations, programs, facilities expansion and student loans $ 73.4 $ Cumulative pension and postretirement benefits related changes other than net periodic benefit cost (375.0) Invested in plant facilities 784.8 Endowment and similar funds 303.8 Total unrestricted net assets

126.4 (208.0) 749.3 364.0

$ 787.0 $ 1,031.7

Temporarily restricted net assets consist of the following at May 31 (in millions):

Gifts for programs and facilities expansion $ Contributions (pledges) and trusts Life income and annuity funds Endowment and similar funds Total temporarily restricted net assets

2012

2011

14.9 $ 92.2 10.2 29.2

26.9 89.5 10.7 29.4

$ 146.5

$

$

$

Permanently restricted net assets consist of the following at May 31 (in millions):

2012

2011

Contributions (pledges) and trusts $ 53.9 $ 58.9 Endowment and similar funds 345.7 326.5 Total permanently restricted net assets

$ 399.6 $ 385.4

14. Gifts and Trusts The University’s Advancement Office (Advancement) reports total gifts and trusts based on the Management Reporting Standards issued by the Council for Advancement and Support of Education (CASE). Gifts, trusts, and pledges (gifts and trusts) reported for financial statement purposes are recorded on the accrual basis.

The table below summarizes gifts and trusts received for the years ended May 31, 2012 and 2011, reported in the statements of activities as well as the CASE standards as reported by Advancement (in millions):

2012

Unrestricted gifts and trusts in support of programs $ Unrestricted gifts and trusts for plant expansion Temporarily restricted gifts and trusts for programs and plant expansion Permanently restricted endowment gifts and trusts Total gifts and trusts, per statements of activities Increases (decreases) to reflect gifts and trusts per CASE standards: Pledges, net Non-government grants, included in grants and contracts revenue Differences in valuation/recording: Funds held in trust by others Annuity Timing Gift-in-kind recorded under CASE standards only Donations to supporting organizations recorded under CASE standards only Total gifts and trusts as reported

by Advancement

60.7

2011

$

52.6

4.7

3.5

32.2

37.7

11.7

11.4

109.3

105.2

(6.1)

2.6

49.9

40.3

(5.4) .3 8.5

4.5 .2 4.2

7.4

6.4

.6

8.7

$ 164.5

$

172.1

156.5

UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT 47

NOTES TO FINANCIAL STATEMENTS May 31, 2012 and 2011

15. Functional Expenses Operating expenses are reported in the statements of activities in natural categories. Functional expenses for fiscal 2012 and 2011 are shown below (in millions):

2012

2011

Instruction $ 459.5 $ 461.8 Research 233.1 229.5 Public service 154.2 157.5 Patient care 1,123.8 1,040.1 Auxiliary enterprises 143.1 145.0 Academic support 154.6 146.5 Student services 39.4 38.5 Institutional support 123.8 108.1 Total

$ 2,431.5

$ 2,327.0

Facilities related expenses have been allocated across applicable functional expense categories in the statements of activities based on space usage (in millions):

2012

2011

Depreciation and amortization $ 124.8 $ 125.6 Interest 38.0 39.1 Operations and maintenance 120.2 120.2 Total

$ 283.0 $ 284.9

16. Commitments and Contingencies The University had contractual obligations of approximately $121.9 million at May 31, 2012 for various construction projects and purchases of equipment. The University has also entered into professional service agreements with Hospital Corporation of America, Inc. (HCA, Inc) and various HCA, Inc. affiliates. Future minimum commitments under these agreements range from $3.1 to $24.3 million per year over the next six years, totaling $91.2 million.

In February 2008, the University entered into a five year Innovation Incentive Funding Agreement with the State of Florida (the State), Office

48 UNIVERSITY OF MIAMI 2012 PRESIDENT’S REPORT

of Tourism, Trade and Economic Development. The agreement created the Miami Institute for Human Genomics, now known as the John P. Hussman Institute for Human Genomics (the Institute) and a program and infrastructure that supports and benefits its operations. The agreement calls for the State to fund $80.0 million with a University pledge for $100.0 million towards the financial support of the Institute. At May 31, 2012, the University has received $59.6 million from the State and has spent $70.2 million in matching funds.

The University, in its normal operations, is a defendant in various legal actions. Additionally, amounts received and expended under various federal and state programs are subject to audit by governmental agencies. Management is of the opinion that the outcome of these matters would not have a material effect on the University’s financial position or results of operations.

In March 2010, President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law. PPACA will result in sweeping changes across the health care industry, including how care is provided and paid for. Given that the final regulations and interpretive guidelines have yet to be published, the University is unable to fully predict the impact of PPACA on its operations and financial results. Management of the University is studying and evaluating the anticipated impacts and developing strategies needed to prepare for implementation, and is preparing to work cooperatively with other constituents to optimize available reimbursement.

The University leases certain real property. These leases are classified as operating leases and have lease terms ranging up to seventy five years.

Total lease expense for the years ended May 31, 2012 and 2011 was $28.7 and $24.1 million, respectively. Future minimum lease payments under noncancelable operating leases at May 31, 2012 are as follows (in millions): 2013 $ 9.9 2014 9.1 2015 7.2 2016 7.0 2017 5.4 Thereafter 170.1 Total

$

208.7

U N I V E R SI T Y

O F

Leonard Abess 1, 2, 3

Chair Chairman and Chief Executive Officer ThinkLAB Ventures

Wayne E. Chaplin 1

Vice Chair President and Chief Operating Officer Southern Wine & Spirits of America, Inc.

Stuart A. Miller 1

Vice Chair Chief Executive Officer Lennar Corporation

William L. Morrison 1

Vice Chair President and Chief Operating Officer Northern Trust Corporation

M I A M I

B OA R D

O F

T R U ST E E S

President Hollywood Media Corp.

Donna E. Shalala

Thomas D. Wood

H. T. Smith Jr., Esq. 3

Thomas J. LeBlanc

Chairman Thomas D. Wood and Company

NATIO NAL TRUSTEES

Adrienne Arsht Nicholas A. Buoniconti Steven J. Green Managing Director Greenstreet Partners

H. T. Smith, P.A.

Steven Sonberg, Esq. Managing Partner Holland & Knight, L.L.P.

E. Roe Stamps, IV

2

Founding Managing Partner Summit Partners

Kartik Telukuntla EX OFFICIO ME MBE RS

Carlos M. Gutierrez

S EN IO R T RU ST E E S

Michael I. Abrams

Lois Pope

President Leaders in Furthering Education, Inc.

President, Citizens Board Partner Carlton Fields

Alex E. Rodriguez

John E. Calles

President Arkin Consulting, Inc.

Jose P. Bared

Chairman (Retired) Farm Stores/Gardner’s Super Market

Fred Berens

Managing Director - Investments Wells Fargo Advisors, LLC

M. Anthony Burns 3 Chairman Emeritus Ryder System, Inc.

Charles E. Cobb

Senior Managing Director and Chief Executive Officer Cobb Partners, Limited

Nicholas A. Crane Edward A. Dauer 1

President Florida Medical Services, Inc.

Carlos M. de la Cruz, Sr. 2 Chairman of the Board and Chief Executive Officer CC1 Companies, LLC

George Feldenkreis

Chairman and Chief Executive Officer Perry Ellis International

Phillip Frost

Chairman Ladenburg Thalmann Financial Services, Inc.

Phillip T. George 1 Chairman Brava, L.L.C.

Thelma V. A. Gibson

President Emeritus Theodore R. Gibson Memorial Fund

Rose Ellen Greene Arthur H. Hertz 3

Immediate Past President, Alumni Association

Steven J. Brodie, Esq.

President-elect, Alumni Association President Calles Financial

TRUSTEES

Hilarie Bass, Esq. 1, 3

Global Operating Shareholder Greenberg Traurig, P.A.

Jon Batchelor

Executive Vice President The Batchelor Foundation

Tracey P. Berkowitz Joaquin F. Blaya 2 Marc A. Buoniconti 2 1

President The Miami Project to Cure Paralysis

Alfred R. Camner 2

Dany Garcia 2

President, Alumni Association Founder and President The Garcia Companies

Peggy M. Hollander 2

Bernyce Adler

David L. Epstein

Managing Partner Presidential Capital Partners

Richard D. Fain 1

Chairman and Chief Executive Officer Royal Caribbean Cruises, Ltd.

Barbara Hecht Havenick

Executive Vice Chairman Adler Group, Inc.

Paul L. Cejas

Chairman and Chief Executive Officer PLC Investments, Inc.

Victor E. Clarke

President and Chief Executive Officer Gables Engineering, Inc.

Edward W. Easton

Chairman and Chief Executive Officer The Easton Group

Gloria Estefan

Estefan Enterprises, Inc.

Managing Partner and Chairman Intercap Institutional Investors LLC

Barbara A. Weintraub

Mark Diaz

Vice President for Budget and Planning

Rudy Fernandez

Vice President for Government Affairs

Jonathan “Jack” T. Lord

Vice President for Medical Administration and Chief Operating and Strategy Officer, Leonard M. Miller School of Medicine and University of Miami Health System

Larry D. Marbert

Vice President for Real Estate and Facilities Vice President for University Communications

Nerissa E. Morris John R. Shipley

Vice President of Finance and Treasurer

Aileen M. Ugalde

Vice President, General Counsel, and Secretary of the University

Patricia A. Whitely

Vice President for Student Affairs

Theresa L. Ashman

Associate Vice President and Controller

Leslie Dellinger Aceituno Assistant Secretary

DEAN S

Elizabeth Plater-Zyberk School of Architecture

Leonidas Bachas

College of Arts and Sciences

School of Education and Human Development

T. Kendall Hunt 3

Chairman and Chief Executive Officer VASCO Data Security International

Bernard J. Kosar Jr. Jayne Sylvester Malfitano Robert A. Mann Judi Prokop Newman Jorge M. Perez

Founder, Chairman and Chief Executive Officer The Related Group

Aaron S. Podhurst 2 Senior Partner Podhurst Orseck, P.A.

Steven J. Saiontz M. Christine Schwartz

Eugene W. Anderson

School of Business Administration

Gregory J. Shepherd Isaac Prilleltensky

Senior United States Circuit Judge United States Court of Appeals, Eleventh Circuit

James M. Tien

David I. Fuente

M. Brian Blake

President, Chief Executive Officer and Founder Horizon Media, Inc.

David R. Weaver

Vice President for Information Technology and Chief Information Officer

Peter T. Fay

David Kraslow

General Partner Toppel Partners

Steve Cawley

School of Communication

Partner Holland & Knight, L.L.P.

M. Lee Pearce

Robert C. Strauss Patricia W. Toppel

Senior Vice President for University Advancement and External Affairs

Chairman and Chief Executive Officer Fanjul Corp. and Florida Crystals Corporation

Alfonso Fanjul

William A. Koenigsberg

President The Comprehensive Companies

Sergio M. Gonzalez

Marilyn J. Holifield, Esq.

Executive Vice President (Retired) Dow Chemical Company/Guidant Corporation

Gold Coast Beverage Distributors

Eduardo M. Sardiña Ronald G. Stone

Senior Vice President for Business and Finance and Chief Financial Officer

President and CEO Flagler Greyhound Track and Magic City Casino General Partner Hecht Properties, Ltd.

Board Member Office Depot, Inc.

President Arva Parks & Company

Joseph T. Natoli

Enrique C. Falla, Sr. 2, 3

Manuel Kadre, Esq. 1, 2

Arva Parks McCabe

Senior Vice President for Medical Affairs and Dean, Leonard M. Miller School of Medicine

Vice President for Human Resources and Affirmative Action

President University of Miami

Laura G. Coulter-Jones Paul J. DiMare 1

Chief Executive Officer Deloitte LLP

Pascal J. Goldschmidt

Donna E. Shalala 1, 2, 3

Camner Lipsitz, P.A.

Joseph J. Echevarria 3

Executive Vice President and Provost

Jacqueline R. Menendez

E ME R ITI ME MBE RS

President DiMare Homestead, Inc.

President

Immediate Past President, Citizens Board Managing Partner The Succession Group

Chairman of the Board and Chief Executive Officer Wometco Enterprises, Inc. Vice President (Retired) Cox Newspapers

C OR PORATE OF FICERS

Laurie S. Silvers, Esq. 1

Chairman and Chief Executive Officer Williamson Automotive Group

Patrick K. Barron

Betty G. Amos Stanley H. Arkin

A D M I N IST RAT IO N

G. Ed Williamson II

Vice Chairman Institutional Clients Group Citi

Co-Chairman, National Government Affairs and Public Policy Practice Group Akerman Senterfitt

A N D

Private Investor

Fredric G. Reynolds Frank Scruggs, Esq. Attorney Berger Singerman

Marilyn Segal Robert H. Simms

College of Engineering Graduate School

Patricia D. White School of Law

William D. Walker University Libraries

Roni Avissar

Rosenstiel School of Marine and Atmospheric Science

Pascal J. Goldschmidt

Leonard M. Miller School of Medicine

President and Chief Executive Officer Bob Simms Associates, Inc.

Shelton G. Berg

Gonzalo F. Valdes-Fauli

Nilda P. Peragallo

Chairman Broadspan Capital

Marta S. Weeks Frances L. Wolfson Charles J. Zwick

Phillip and Patricia Frost School of Music School of Nursing and Health Studies

William Scott Green Undergraduate Education *As of October 8, 2012 Members of board committees authorized to conduct business and financial affairs of the University: 1 2 3

Member of Executive Committee Member of Finance Committee Member of Audit and Compliance Committee

To learn more about the University’s broad spectrum of community outreach activities, visit the ’Canes in the Community website: www.miami.edu/canesinthecommunity.

An Equal Opportunity/Affirmative Action Employer UNIVERSITY COMMUNICATIONS 11-336