Text

Redacted Version of Mit Application for Self-Guarantee
	ML101930104
Person / Time
Site:	07000938, MIT Nuclear Research Reactor
Issue date:	12/22/2009
From:	Dugan R; Massachusetts Institute of Technology (MIT)
To:	Duane Hardesty; Office of Nuclear Material Safety and Safeguards, Division of Policy and Rulemaking
	Hardesty, D NRC/NRR/DPR/PRLB 415-3724
References
	Download: ML101930104 (57)
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MASSACHUSETTS INSTITUTE OF TECHNOLOGY RESEARCH REACTOR LICENSE NO. R-37 DOCKET NO. 50-20

REQUEST AND APPLICATION; SELF GUARANTEE DECOMMISSIONING EXPENSES DATED DECEMBER 22, 2009 REDACTED VERSION*

IN ACCORDANCE WITH 10 CFR 2.390(a)(6)

Redacted text and figures blacked out or denoted by brackets Massachusetts Institute of Technology Via Federal Express Mail December 22, 2009 U.S. Nuclear Regulatory Commission Regina Dugan Associate Counsel/Insurance Manager Office of the General Counsel Building 12-090 Office of Nuclear Material Safety and Safeguards One White Flint North 11555 Rockville Pike Rockville, MD 20852 Attn.: 0-12D3 77 Massachusetts Avenue Cambridge, Massachusetts 02139-4307 Phone 617-253-2823 Fax 617-258-0267 Email dugan@mit.edu Re: Request and Application, Self Guarantee, Decommissioning Expenses -License No. SNM-986, License No. R-37 To Whom It May Concern: In October 2009, Massachusetts Institute of Technology

("MIT") submitted a request to self-guarantee the estimated decommissioning expenses associated with MIT's referenced licensed activities, along with the supportinKexecuted agreement and other required documentation.

At the NRC's request, MIT has revised its Self Guarantee Agreement and supplemented its original application for approval by providing the additional documentation requested.

MIT requests the NRC's approval to self guarantee the required decommissioning assurance for these licensed activities.

The following documents are enclosed for the reconsideration of MIT's application as guarantor of financial assurance for its estimated decommissioning expenses of the NRC licenses:

1. Copy of the Letter from MIT's Chief FinancIal Officer in Support of Self Guarantee (Original provided to the NRC with the October request.).

2. Copy of the Report of MIT's Auditor, PricewaterhouseCoopers (Original provided to the NRC with the October request.).

3. Schedule Reconciling Chief Financial Officer's Letter. 4. Original Executed Revised Self Guarantee Agreement, dated December 17, 2009. 5. Organizational Chart reflecting MIT Corporation and Institutional Officers.

6. Names and Addresses of MIT Institutional Officers.

u.s. Nuclear Regulatory Commission Request for Self Guarantee of Decommissioning Expenses December 21, 2009 Page Two 7. MIT Executive Committee vote, reflecting signing authority for Theresa M. Stone, as Executive Vice President and Treasurer.

8. MIT's Bond Rating information.

9. MIT's most recent audited financials, Report of the Treasurer for the year ended June 30,2009. Please contact me should any additional information be required to complete this process. Thank you for your assistance with this request. Very truly yours, Enclosures cc: Alexander Adams, Jr., U.S. Nuclear Regulatory Commission

,: ** ..... liffice of the Vice President for Finance October 15, 2009 u.s. Nuclear Regulatory Commission Washington, D,C. 20555-0001 Massachusetts Institute of Technology

'!1 fv1as:.ac:\u$ut:s ,t..,v*211U8, i3Lilriinq Nr.:lU 3000 O/:! :39":4307 I am the ChieHincindalOfficerofthe Massachusetts Institute of Technology

("MIT"), a nonprofit Ilniversity.

This letter is in support ofMIT's,useofthesel(-guarantee fii-Iam;ial test to demonstrate finanCial assurance; as ,specified inlO CFR Part30. MIT has noparent company!ioldingmajority control onts voting stOCK, , " . , "MIT guarantees, through

$ubinitledtodemonstrate compliance ,under 10 CFRPart30, tl1e,'decommissiq'ning ofth.e, fol!6'iriJ1g fa¢ilities owned oroperatE!rlbyMIT.

Thecljrrent ,cost' :estim;ltes or certified amounts. for decornmissloningj so guaranteed, are shown for each facility:

',' Name of Facility UcenseNumber

'MrrResearch Reactor 'SNM7986 MIT Research ReactorR-37 Lbtatioriof Facility 77 Massachuserts,AV MJl,02139 138 Alb,my St. . Cambridge; MA 02139 ,Certified Amounts or Current Cost Estimates

$1,125,000.00, $30,000,000,00 I hereby certify that MITis currently a goingconcern an9 that it possesses positive tangible net worth inthe amount of $12,949.6 miliion*.

This fiscal year of this firm ends on June 30. Thefigures for the above item marked with an asterisk are derived from MIT's independently audited, year-end financial statements and footnotes for the latest completed fiscal year, ended June 3D, 2009. 1.' .. ".\ MIT is not required to file a Form 10-K with the U .5. Securities and Exchange Commission for the latest fiscal year.

.... ,,--"",, This firm satisfies the following self-guarantee test: 1. Current bond rating of most recent uninsured, uncollateralized, and unencumbered issuance of this institution:

Rating: Aaa Name Of rating service: Moody's Investors Service 2. Date of issuance of bonds: January 8, 2009 3. Description

& date of maturity of bonds: -1 Description Amount Interest rate Maturity Date $10,000,000 4.00% July),2016 I MHEFA Series 057586ECG4

$78,000,000 5,00% July'l,2016 MHEFA Series 0 57586ECH2

$23;485,000 5,00% Julyl,2026 MHEFA Series. O;;7586ECJ8

,$47,975!000 5.75% July 1,2026 MHEFASeries 057586.ECKS

$42,000;000 5.50% July C 1,2036 MHEFA Series.O 57586ECL3

$65;000,000 6.00% July 1, 2036 MHEFA Series 05}586ECMl

4. Is the ra'ting specified on line INA" or better? Yes I hereby certify that the content of this letter is true a nd correct to the best of my knowledge . ('.,.----1 . . . Ill' Signature

/ "tCVtii..<0tC

... .lh_ ........ ;'(ll'Z-L£')

§ Name: Terry Stone c: 70/\ .. /----, ;/ .L Title: Chief Financial Officer

'(' ...,', .... -r ,. . Report of Independent Accountants To the Board of Trustees of Massachusetts Institute of Technology:

Pdcl.:watt'rhouseCuopl*rs Ll.P 12.; Ilil:1i SI. lle'ston MA. 0211(1 W\\'W,P\\'C,COIll lj1Jehave performed the procedures enumerated below; which were agreed to by Massachusetts Institute of Technology

("the Institute"), NRC MIT licenses SNM-986 and R-37, solely to assist you in complying with the Nuclear Regulatory Commission's financial assurance reguiations, 10 CFR Part 30. Management is. responsible for the Institute's compliance with those regulations.

This proceduresengage.m.entwasconducted in accordance with attestation standards established' by the American Institute of Certified Public Accountants, The sufficiency of these procedures is solely the responsibility of those parties'specified in this report. Consequently, we make:no representation regar(jingthe sufficiency ofthe procedures described below either for the purpose ,for which this,report has been requested or for any other purpose. . . The procedures and associated findings are as follows: *1;, Confirmed that thehetWorth in the "PerFinancial Statements"columricif theaccorripanying schedule agrees with total netassets coritainediri the Institute's firianck31 statements for the year ended June 30, 2009,which we*have audited in accordancewith'auditingstandards' . generally accepted in the United States of America and have issued our.report thereon dated September 16,2009; 2. Confirmed that the tangible net Worth in the "Per CFO's Letter" colurrinaf the accompanying schedule agrees with tangible net wbrthin the CFO'slettefdated October 15, 2009; 3. Inquired of management as to the existence af any reconciling items between Hie CFO's Lette'r and the audited financial stateinents'notingthat there are none; and .. ... '. 4. Mathematically check the totals intheaccompanying schedule, includinglhe current.cost estimates of decommissioning for each facility listed the CFO's Nb exceptions were noted, We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the regulations.

Accordingly, we do not express.such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. . This report is intended solely for the information and use of management and the Board of Trustees of Massachusetts Institute of Technology and the Nuclear Regulatory Commission, and is not intended to be and should not be used by anyone other than these specified parties.

UP October 16, 2009 Schedule Reconciling Amounts Contained nn Executive OfficCi"'S or Chief lFnnancialOfficer's Letter with Amounts in Financial Statements M1IT YEAR E.NDED .DUNE. 30, 2009 (000.000)

.. _--Pcr Fiilancial I Reconcilinl!

ero's Letter Statements Items Net \\'01th $12 949.6 0 $12.949.6

.. " ---Less: Cost in cxcess of value ofiangiblc assets 0 0 0 acquired Net vvorth after cost in excess of value o[tangible

$12.949;6 0 $]22 949.6 acq\lIfcd

" " " -0' -------'----

Accnied decommissionin u -.. costs includedinculTcnt 0 0 0 !iahi1ities

_ .. Tangibknet worth (plus $12.949.6 0 I dcc{)mm issioningcosts)

L-... --(2)

MIT Organization Chart -Corporation and Institutional Officers http://web.mit.edulorgchartlcorporation.html Organization Chart Illii Corporation and Institutional Officers II Iii 1 of 1 EXecutive VP & CEO;: :

"", Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 Notes on the reporting retationships The Chairman, ElO3CutiW Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.

The Alumni Association reports to the Alumni Association Board, and its ElO3CutiW Vice President reports informally to the President The MI T I nws!ment Management Company reports to the IMC Board, which is appointed by the Executiw Comnittee of the MIT Corporation.

The IMC President also reports to the President of MIT. Updated: August 3, 2009 1211 0/2009 11 :09 AM Kirk D. Kolenbrandcr NlASSAClitiSF.lTS INsTITlrrE Of 'H:CHNOLOGY Vice Pi-csid('TI1 jiiT Institute AJJair., and Secretary of tbcCorponJti(J11

---... -.........

_._-... __ ... __ ....... _-_. --,.--. '." '--'-" -..... _-.. _--_.--------. _ .... _------_._---_ ...... _._-.. _--._---_

.....*. -Office of the President 77 i\hssachusctts AVellue, Building 3-2°7 Cambridge, AlA 02139-4307 Phone 7 Septemb(!r 200 7:. Ms. Theresa M. Stone Room r221 MIT DearTeny' I am writing co confirm foryour records that at its meeting on September 5, the Executive

,. Committee VOTED: That, effective on. and after September 6, 2007, the individuals fromtime to time holding the folloWing positions at the Institute are, and each of them acting singly is, hereby authorizeclto sign in the name and on behalf of the Institute any and all contracts, bonds,and-other agreements and documents which any such person acting in such p6sitiondeems'advisable and in the interests of the Institute: . . -Chair of the Corporation o President

EXeClltivcVice President and Treasurer o Vice President and General Counsel o VIce fJrcsidentfor Finance .. Director,Office 6fSponsored Programs; that anyactiontakenonor after September 6,2007 within. the scope of the . authority granted by this vote by any person holding any of the above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by any person holding any of the abovc-:listed positions in order to carry out the purposes orthis vote .. shall bec<mclusive as to the authority of the person so acting_ If you have any questions, please give me a call. iZl' Kirk D. Kolenbrandcr KDKJacb Enclosures cc: Mr. James L Morgan Mr: R Gregory Morgan Ms. Eiizabeth M. Ogar Me. Israel Ruiz Ms. Kathy D. Vitale

," \. SELF-GUARANTEE AGREEMENT Guarantee made this } 7 day of December, 2009, by Massachusetts Institute of Technology

("MIT"), a "non-profit university," organized under the laws of the Commonwealth of Massachusetts, with principal place of administration at 77 Massachusetts Avenue, Cambridge, Massachusetts, herein referred to as "guarantor," to the U.S. Nuclear Regulatory Commission (NRC), beneficiary, on behalf of itself as licensee.

Recitals 1. The guarantor has full authority and capacity to enter into this self-guarantee under its bylaws, articles of incorporation, and the laws of the Commonwealth of Massachusetts.

2. This self-guarantee is being issued to comply with regulations issued by the NRC, an agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Part 70, and Title 10, Chapter I of the Code of Federal Regulations, Part 72, which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 50 and 10 CFR Part 70, provide assurance that funds will be available when needed for required . decommissioning activities.

3. The self-guarantee is issued to provide financial assurance for decommissioning activities for the licenses and facilities set forth in the following schedule and as required by 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30 : License No. License Location and Estimate based on Certified Amounts or Description year 2001 dollars 2009 Cost Estimates R-37 MIT Research $23,000,000, $30,000,000.

Due to Reactor, 138 Albany including a 10% the contingency St., Cambridge MA contingency.

applied in 2001 and 02139; education low to negative and research inflation factors in activities 2001-2007, no changes were made until 2008. The estimate was then adjusted based on separate inflation factors applied against the labor (representing 11 % of the total) costs. Using the NUREG-1307, Rev. 12, Page 0.1, Example 2 (Northeast Region), the respective inflation factors used for the '08 estimate were 1.28 (labor) and 1.42 (burial), to arrive at the estimate of $29,793,000 for 2008, which was rounded up to $30 million for 2009 .. (See calculation below). SNM-986 MIT Research $1,125,000, statutory

$1,125,000.

Reactor and 77 -in accordance with Massachusetts Ave., 10 C.F.R. 70.25(d), Cambridge MA based on the 02139; storage of applicable quantities Special Nuclear of SNM stored at this Materials facility.

Total Estimated

$31,125,000.

Costs Decommissioning Estimate Adjustment Calculation:

_._. ______ .H_.H* .. _ .. _*, ******** ___

__

__ **.H**********HHH****

.. H .. H .. H*_ .. *_W_ .........

_ _ .H** .. ___ ..... H .........

_ ...... _***.** .................

H****H.H.

_______ ...... _._ .........*

H. ... Duke Study 23,000,000.00

%Total NUREG Inflator 29,793,000.00 Inflation Model Labor Portion 20,470,000.00 89% Labor 1.28 26,200,000.00 Burial Portion 2,530,000.00 11% Burial 1.42 3,593,000.00 Inflation figures for 2008, were calculated based upon NUREG-1307, for the years 2002 (year closest to when the Duke study was completed, 11/01) @ 1.862, and 2006 @ 2.21.The calculation for 2008 assumes linear cost increases through 2008: Cost inflator for 2008 = 1.862+ {(2.21-1.862)/(2006-2002) x(2008-2002)}

2.384. The factor for the labor portion of the cost to be applied in 2008 = 2.384/1.862

1.28. The same method was used to develop the burial factor of 1.42. In order to comply with the guarantor's longstanding commitment to being environmentally responsible, the reactor facility will be decontaminated, and spent nuclear materials will be properly 2

'. transported by a licensed carrier to a licensed disposal facility only, to meet the requirements of 10 CFR 20.1402 radiological criteria for unrestricted use. Guarantor may not demolish the building, but the building and subsurface will be analyzed and characterized so that the site meets this criterion and is approved for release for unrestricted use. At the time decommissioning begins, guarantor shall determine the best computer codes and instrumentation for the specific decommissioning activities.

4. The guarantor meets or exceeds the following financial test criteria, as a nonprofit university that issues bonds, and agrees to comply with all notification requirements as specified in 10 CFR Part 50 and 10 CFR Part 70 and Appendix E to 10 CFR Part 30. The guarantor meets the following self-guarantee test: (a) A current rating for its most recent uninsured, uncollateralized, and unencumbered bond issuance of AAA, AA, or A as issued by Standard & Poor's, or Aaa, Aa, or A as issued by Moody's. Specifically, the current rating for guarantor's most recent uninsured, uncollateralized and unencumbered bond issuance is Aaa by Moody's Investors Service. 5. The guarantor does not have a parent company holding majority control of its voting stock. 6. Decommissioning activities as used below refer to the activities required by 10 CFR Part 50 and 10 CFR Part 70, for decommissioning of the facilities identified above. 7. Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to NRC that the guarantor shall: (a) carry out the required decommissioning activities, as required by License No. SNM-986 and License No. R-37 or (b) set up a trust fund in favor of the above identified beneficiary in the amount of the' current cost estimates for these activities.

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8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit.9. The guarantor agrees that if, at the end of any fiscal year before termination of this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.

10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.

11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days.12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of requiredactivities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70.13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.

4 8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit. 9. The guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.

10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.

11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days. 12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70. 13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.

4 8. The guarantor agrees to submit revised financial statements, financial test data, evidence of MIT's bond rating, and reconciling schedule annually within 90 days of the completion of its fiscal year-end audit. 9. The guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, it fails to meet the self-guarantee financial test criteria, it shall send within 90 days of the end of the fiscal year, by certified mail, notice to NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70. Within 120 days after the end of the fiscal year, the guarantor shall establish such financial assurance.

10. The guarantor also agrees to notify the beneficiary promptly if the ownership of the licensed activity is transferred, and to maintain this guarantee until the new licensee provides alternative financial assurance acceptable to the beneficiary.

11. The guarantor agrees that if it determines, at any time other than as described in Recital 9, that it no longer meets the self-guarantee financial test criteria or it is disallowed from continuing as a self-guarantor, it shall establish alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, within 30 days. 12. The guarantor, as well as its successors and assigns, agrees to remain bound jointly and severally under this guarantee notwithstanding any or all of the following:

amendment or modification of the license or NRC-approved decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 50 and 10 CFR Part 70. 13. The guarantor agrees that it shall be liable for all reasonable litigation costs incurred by the beneficiary, NRC, in any successful effort to enforce the agreement against the guarantor.

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14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.

15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.

Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full.16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.

17. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect.18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "A" or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service.5". 14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.

15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.

Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full. 16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.

17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect. 18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "An or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service. 5 ". 14. The guarantor agrees to remain bound under this self-guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50 and 10 CFR Part 70, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.

15. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specified in 10 CFR Part 50 and 10 CFR Part 70, as applicable, and obtain written approval of such assurance from NRC within 90 days after a notice of cancellation by the guarantor is received by NRC from the guarantor, the guarantor shall make full payment under the self-guarantee.

Such payment shall be held in escrow, by NRC, for the estimated decommissioning activities for the previously listed facilities, and shall satisfy guarantor's financial assurance required under 10 CFR Part 50 and 10 CFR Part 70, as may be subject to adjustment to keep such estimate current, until guarantor furnishes evidence of alternative financial assurance in compliance with 10 CFR Part 50 and 10 CFR Part 70. Upon the approval by NRC of such alternative financial assurance, NRC shall return the payment made by guarantor in full. 16. The guarantor waives notice of acceptance of this self-guarantee by NRC. The guarantor expressly waives notice of amendments or modifications of the decommissioning requirements.

17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to NRC during each year in which this self-guarantee is in effect. 18. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceases to be rated in the category of "An or above by either Standard & Poor's or Moody's, it shall provide notice in writing of such fact to NRC within 20 days after publication of the change by the rating service. 5 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.

Effective date: / 12 /02 SELF-GUARANTOR:

Massachusetts Institute of Technology By: I Theresa M. Stone Executive Vice President and Treasurer Signature of witness or notary: ( Notary Public*C '$1/ 3y XoPi F~xe a 6 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.

Effective date: Id 117/0GJ i I SELF-GUARANTOR:

Massachusetts Institute of Technology By: /

Theresa M:StOne Executive Vice President and Treasurer Signature of witness or notary: .-s* "'.lON PINKSTEN , r . , , .. ,. Notary Public : .1 ,WEAlTH OF MAlSACHUIITTS )j My Commission Expires :d. January 31, 2014 6 I hereby certify, under the penalty of perjury, that this self-guarantee is true and correct to the best of my knowledge.

Effective date: Id 117/0GJ i I SELF-GUARANTOR:

Massachusetts Institute of Technology By: /

Theresa M:StOne Executive Vice President and Treasurer Signature of witness or notary: .-s* "'.lON PINKSTEN , r . , , .. ,. Notary Public : .1 ,WEAlTH OF MAlSACHUIITTS )j My Commission Expires :d. January 31, 2014 6 MV I Urganization Chart -Corporatlon anld Institutional UTicers sILLp.ri VS LVII IL L.LAJUI 131 =LLLU*

LI "'~' H"' LILIVI.. 111111~inlium Organization Chart Corporation and Institutional Officers~Corporation i Chairman Pre-idenm~'Eesive VP & CEO Tý VP Institute Affairs ., Executive Vice President Prsidentl, MIT Invstmetittin Alu m'erniAssoeialion F & Corporation Secretary

& Treasurer Management Company JudithCoin talc Kitk tvlentirasnder Theress Slone Seth.Alexander Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for Institute Affairs and Secretary of the Corporation are officers of the MIT Corporation.

The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investment Management Company reports to the IMC Board, which is appointed by the Executive Comnittee of the MIT Corporation.

The IMC President also reports to the President of MIT.Updated: August 3, 2009 Massachusetts Institute of Technology 77 Massachusetts Avenue ." Cambridge, MA 02139-4307 I oflI 12/10/2009 11:09 A]MlT Urgal11zatlon Chart -CorporatIon and ll1sntutIOnal umcers Illlp.! I YY I,...l).lllIl.vU.UI Vl5V1LUt u put. UI.IVlld'I,.UU Illif Organization Chart Corpora tion and Insti tu tional 'Officers 1 of 1 Executive VP & CEO Alumni AssochHion . Judith Col" . Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 MIT Corporation Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for InstiMe Affairs and Secretary of the Corporation are officers of the MIT Corporation.

The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investiment Management Company reports to the IMC Board, which is apPointed by the Executive COmrrittee of the MIT Corporation.

The IMC President also reports to the President of MIT. L\:ldated:

August 3, 2009 12/10/2009 11 :09 AJ MlT Urgal11zatlon Chart -CorporatIon and ll1sntutIOnal umcers Illlp.! I YY I,...l).lllIl.vU.UI Vl5V1LUt u put. UI.IVlld'I,.UU Illif Organization Chart Corpora tion and Insti tu tional 'Officers 1 of 1 Executive VP & CEO Alumni AssochHion . Judith Col" . Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 MIT Corporation Notes on the reporting relationships The Chairman, President, Executive Vice President and Treasurer, and Vice President for InstiMe Affairs and Secretary of the Corporation are officers of the MIT Corporation.

The Alumni Association reports to the Alumni Association Board, and its Executive Vice President reports informally to the President The MIT Investiment Management Company reports to the IMC Board, which is apPointed by the Executive COmrrittee of the MIT Corporation.

The IMC President also reports to the President of MIT. L\:ldated:

August 3, 2009 12/10/2009 11 :09 AJ Massachusetts Institute of Technology Office of the General Counsel Building 10-370 CONFIDENTIAL MIT Institutional Officers (as of December 21,2009)Name: Address: Citizenship:

Office Held: Dana G. Mead USA Chairman of the Corporation Susan Hockfield USA President j Name: Address: IIlii" Citizenship:

Office Held: Name: Address: Citizenship:

Office Held: Theresa M. Stone USA Executive Vice President and Treasurer Judith M. Cole USA Executive Vice President and CEO, Alumni Association Kirk D. Kolenbrander USA Vice President for Institute Affairs and Secretary of the Corporation Seth Alexander USA President, MIT Investment Management Company Massachusetts Institute of Technology Office of the General Counsel Building 10-370 Name: Address: Citizenship:

Office Held: Name: Address: Ci tizenship:

Office Held: Name: Address: Citizenship:

Office Held: DanaG. Mead ' CONFIDENTIAL MIT Institutional Officers (as of December 21,2009) USA Chairman of the Corporation Susan Hockfield USA President Theresa M. Stone USA Executive Vice President and Treasurer Judith M. Cole USA' Executive Vice President and CEO, Alumni Association Kirk D. Kolenbninder USA Vice President for Institute Affairs and Secretary of the Corporation Seth Alexander USA President, MIT Investment Company Massachusetts Institute of Technology Office of the General Counsel Building 10-370 CONFIDENTIAL MIT Institutional Officers (as of December 21,2009) Name: Dana G. Mead Address: Citizenship:

USA Office Held: Chairman of the Corporation Name: Susan Hockfield Address: Citizenship:

USA Office Held: President Name: Theresa M. Stone Address: Citizenship:

USA Office Held: Executive Vice President and Treasurer Name: Judith M. Cole Address: Citizenship:

USA . Office Held: Executive Vice President and CEO, Alumni Association Name: Kirk D. Kolenbninder Address: Citizenship:

USA Office Held: Vice President for Institute Affairs and Secretary of the Corporation Name: Seth Alexander Address: Citizenship:

USA Office Held: President, MIT Investment Company MI ~ ,A Kirk D. Kolenbrander t;SV..T-rs

], ECsrOLVY " .'ce 1P'idýC-l for tzite Ait.'ir: and Secretary of thc Corporatin Office of the President 77 Massachusetts Avemne, Building 3-207 Cambridge, MIA 02139-4307 Phone 617-253-3365 7 September 2007 Ms. Theresa M. Stone Room 3-=2i MIT Dear.Terry I am writing to confirm for your records that at its meeting on September 5, the Executive.

Committee VOTED: That, effective on and after.September 6, 2007, the individuals from time to time holding the following positions at the Institute are, and each of themacting singly is, hereby authorized to sign-in the 6namne and on behalf of the Institute any and all contracts,-bonds, yand other agreements-and documents which any such -person acting in such po'ition deems advisable and in the interests of the Institute:

P Chairoof the Corporation

°'President

-Executive Vice President and Treasurcr-Vice President and General Counsel'Vice President for.Finance..Director, Office.of Sponsored Programs;that any action taken on or after September 6, 2007 within the scope of the autiority granted by this vote by any person holding any of the above-listed positions is hereby ratified as authorized; and that the signing and delivery of any such document in the name and on behalf of the Institute by anny person holding any of the above7listed positions in order to carry out the purpposes of this Vote.shall be conclusive as to the authority of the person so acting.If you have any questions, please give me a call.Kirk D. Kolenbrander KDK/acb Enclosures cc: Mr. James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Kirk D. Kolenbrandcr NlASSACliliSf.n'S OF "iECHNOL()GY Vice Pnsidl.71t forlllrtit71te Ajjtlir.;

and Secn:tary o/tbc Corporation Office of the President 77 A1assachusctts Avenue, Building 3-2°7 Cambridge, i\1A 02139-4307 Phone 617-253-3365 7 September 200 7., Ms. Theresa M. Stone Room3-z21 MIT DearTeny I am writing to confirm for your records that at its meeting on September 5, the Executiv.c Committee VOTED: That; effectiye on and after September 6,2007, the individuals from time to time . holding the folloWing.

positions at the Institute are, and, each of them, acting singly is, hcrebyauthorizedto sign in the name and on behalf of the Institute any andalI coritracts,'bonds,and other agreements'anddocumerits which any .suchpersort acting in such positiondCemsadvisable and in the interests of the Institute:

Chairof,the Corporation . -President

VicePresidcrit and Treasurer

Vice President and General Counsel

foe Finance . -Director, OfficebfSponsored Programs; that any action takerionor after September 6;2007 within the scope of the authority by this vOte by any person holding any oftheabove-:listed positions IS hereby ratified as authorized; and that the signing of any such documenrin the name and' on bchalfof the Institute by any personholding

any oftheabove:1isted positions in order to canyout the purp.oses of this votc. shall beconclusivc as to the authority of the person so acting. If you have any questions, please give me a call. jZ'l Kirk D. Kolenbrandcr KDJ):/acb Enclosures cc: Mr.James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale Kirk D. Kolenbrandcr NlASSACliliSf.n'S OF "iECHNOL()GY Vice Pnsidl.71t forlllrtit71te Ajjtlir.;

and Secn:tary o/tbc Corporation Office of the President 77 A1assachusctts Avenue, Building 3-2°7 Cambridge, i\1A 02139-4307 Phone 617-253-3365 7 September 200 7., Ms. Theresa M. Stone Room3-z21 MIT DearTeny I am writing to confirm for your records that at its meeting on September 5, the Executiv.c Committee VOTED: That; effectiye on and after September 6,2007, the individuals from time to time . holding the folloWing.

positions at the Institute are, and, each of them, acting singly is, hcrebyauthorizedto sign in the name and on behalf of the Institute any andalI coritracts,'bonds,and other agreements'anddocumerits which any .suchpersort acting in such positiondCemsadvisable and in the interests of the Institute:

Chairof,the Corporation . -President

VicePresidcrit and Treasurer

Vice President and General Counsel

foe Finance . -Director, OfficebfSponsored Programs; that any action takerionor after September 6;2007 within the scope of the authority by this vOte by any person holding any oftheabove-:listed positions IS hereby ratified as authorized; and that the signing of any such documenrin the name and' on bchalfof the Institute by any personholding

any oftheabove:1isted positions in order to canyout the purp.oses of this votc. shall beconclusivc as to the authority of the person so acting. If you have any questions, please give me a call. jZ'l Kirk D. Kolenbrandcr KDJ):/acb Enclosures cc: Mr.James L Morgan Mr. R. Gregory Morgan Ms. Elizabeth M. Ogar Mr. Israel Ruiz Ms. Kathy D. Vitale NEW ISSUE- BOOK ENTRY ONLY In the opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel, based .updn. an analysis of existing law ad anssuming among. other" mattersl compliance with certain covenants, interest on :the Bonds is excluded from gros s income for federal, axpurposes under the Internal Revenue Code of 1986. Interest on the. Bond is not a speeifc: prefereneitem for purposes of thefederal individual or corporate alternative minimum taxes, although such interest is included in adjusted current earnings when calculating corporate alternative minimum: taxable income:. Under existing law,. interest on the. Bonds and any profit on: th, sale of the Bords are: exempt from: Massachusetts personal income, taxes and the Bonds are exemptfrom Massachusetts personaliproperty taxes. Bond Counsel expresses noaopinion regarding any.other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on,! the Bonds. See "TAX EXEMPTION" herein.$266,460,000 MASSACHUSETTS HEALTH AND EDUCATIONAL FACILITIES, AUTHORITY REVENUE BONDS, MASSACHUSETTS INSTITUTE OF TECHNOLOGY ISSUE, SERIES 0.(2008)Dated:' Date of delivery Due: July 1, as shown below The Series 0 Bonds (the "Bonds") will be issued only as fully registered bonds without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ("DTC), NewYork,.New York. DTCwill act as securities depository for the Bonds. Purchases of the Bonds will be made inbook-entry form. Purchasers will not receive certificates representing their interests in the Bonds purchased.

So long as Cede &Co,.isthe Bondowner, as nominee of DTC, references herein to theBondowners or registered owners shall mean Cede & Co., as aforesaid, and shall not mean the-beneficial owners of the Bonds. See "THE BONDS -Book-Entry Only System" herein.

.Principal of andinterest on the, Bonds will be paid by The Bank of New York.Mellon Trust Company, N.A., New.York,New York, as Trustee. So long as DTC or its nominee, Cede & Co., is the Bondowner, such payments will be made directlyto'such Bondowner, as. more fully described herei. Interest onthe Bonds .will be payable onfJuly 1,2009, and semiannually thereafter on January 1 and July 1 of each year to the Bondowners of record as of the close of business on the fifteenth day of the month p preceding such interest payment. date.The Bonds are subject to redemption prior to maturity as more fully described herein.The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the "Authority")

T payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank of New York Mellon Trust Company, N.A., New, York, New York, as Trustee, for the account of the Authority by the Massachusetts Institute of Technology (the "Institute") in accordancemwith the provisions of the.Agreement(as defined herein). Such payments pursuant to the Agreement are a general: obligation of the Institute.

Reference is made to this Official giatement forpertLnent Security provisions of the Bonds.THE BONDS SHALL NOT BE DEEMED TO. CONSTITUTE A DEBT OR:LIABILITY OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, ORA PLEDGE OF THE FAITH AND CREDIT OF THE: COMMONWEALTH OF MASSACHUSETTS OR ANY POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDER THE AGREEMENT.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWEROF THE.COMMONWEALTH OR ANY POLITICAL SUBDIVISION:THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS. THE .ACT DOES NOT, IN ANYiWAY.CREATE A SO-CALLED MORAL.OBLIGATION OF THE COMMONWEALTH TO PAY DEBT SERVICE IN THE EVENT OF DEFAULT BY THE INsTITrT.

THE AUTHORITY DOES NOT HAVE TAXING POWER.$10,000,000 4.00% Bonds due July 1, 2016 -Yield 3.60% CUSIP No. 57586ECG4 i $78,000,000 5.00% :Bonds due July 1,2016 -Yield 3.60% CUSIP No. 57586ECH2$23,485,000 5.00% Bonds due July 1, 2026 -Yield 5.28% CUSIP No. 57586ECJ8$47,975,000 5.75% Bonds due July 1, 2026 -Yield 5.28*%9 CUSIP No,: 57586ECK5$42,000,000 5.50% Bonds due-July 1, 2036 -Yield 5.70% CUSIP No. 57586ECL3.$65,000,000 6.00% Bonds due July 1, 2036'- Yield 5.70*% CUSIP No. 57586ECM1 I) The Bonds are offered when, as and ifissued and received-by the Underwriters, subject to prior sale, to withdrawal or modification of the offer without notice,. and to the approvaltof their legality and certain other matters by Edwards Angell Palmer & Dodge LLP, Boston, Massachusetts, Bond Counsel to the Authority.

Certain legal matters will be passed upon for the Institute by its counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.; Boston, Massachusetts.

Certain legal Underwritersby their ,Hemngton

& Sutcliffe LUP, New York New York.t etedth ondsin definitive form will be available for delivery to DTC in New York, New York, on or about January 8,2009.- )CAPITAL Morgan Stanley Dated` December1 0, 2008!*Yield to the July*, 2018 optional redemption date.L NEW ISSUE'"", BOOK ENTRY ONLY In the opiniOn ojEdwaidS AngeU Palmer & Dodge LLP, B,?nd Counsel, basedupdn an anaiysiSoJ existing law a1ul llSS uming,among ot1ieimatters, compliance with certain covenants,intereston'the Bonds is excluded from grosS iftcomefor incometax*puTPoses under the Internal ReVenUe Code Of 1986; IntereSt on the BondS is not a specific PrejerfJi!ce item for purposes oj t!Wjederal individual orcorporateqlternative m.iriimum taxes, although such in adjusted citrrentearnings whenca,Jculating cOTporatealternative minimum taxable incorru;:

'Under existingta,w, intereSt.on iJieBonds awl any proftJ. ontlW sOle ojthe Bonds are e:iempt,from a:rut the Bonds are exemptfrornMassach'li§ettspersOnalprOpertyta:ces,BOrui

Couru;el expresses no opinion' regarding a.ny .other reL4tedt<>the oumership or d1-sPosiii9!L.

oj, or ("I.e' acl:rUfll or receipt oj on,' the Bonds. SeeTAxEXEMFI'IONhereirt,. . '. .... .' .

MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.

AtmIORITY . .. REvEijiJE Dated: Date of delivery Due': July1,as shown.below

'J'heSenes 0

he regiStered bondS whEmissued,willbe regiStered iri' the name of Cede nominee TrUSt Company ("DTC"),Newyork,.New York. . DTCwill 'act assecuritiesdepository for the Bonds. Purchases of the BondS will be madembook-enfry fmID,Purchasers willncit receive certificates l'epreSEmtmgtheir mterestsin the. Bondspurchised; So long as Cede & *CO. is the BondoWner ,as nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not meanthebenefici31 owners of the Bonds: See 'THE BONDS herem. . . Principal of arid interest on the Bonds will be paid by The Bank of New YoikMeUonTruSt Company, N:A,New York,New York; as,Trustee, So lang asDTC orits riommee,Cede

& Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch Bondowner, as II\ore described herein. ,Interest Qnthe Bonds will be payableon'July 1,2009, and serniannuallythere:after on January! and Julylof each year to the Bondowners ofreconl as of the close ofbusil1ess on the. fifteenth day of the month

....... ... .... ... .... .. .. . ' ....... . The!Bondsare

!!ubjecttQ redemptl(mprlor to as more.fully described herein. The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the " AuthoritY")

payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank 9f New-York Mellon TrustCompany;NA, New York, New¥ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology (the "Institute")

in accordance.

with the provisions of the AgreelTlenf(as defined ,herein) .* 8U(:hpaymentS purSuant to tlleAgreement ageneraI obngationof the Institute; " Reference is madeto this security

provisio llS of the . Bonds. . . THE BONDS SHALL N()T BE DEEMED.TO CONSTITUTE A DEBT OR LIABll.ITY OF THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND CREDIT. OF OR ANY POLITICAL SUBDIVISION TIlEREOF,BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDERTHE AGREEMENT.

NEITHER TIlE FAlTHAND CJffiDIT NOR THE TAXING POwER OF THE COMMONwEALTH OR ANY PLEDGED TO THE PAYMENT OF THEPIHNCIP AL OF OR INTEREST ON THE BONDS. TllEACTDOESNOTIN TO PAY'UEBT SERVICE IN TIm ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, " $10,000,000 Bonds due July 1, 2016 ...... Yield 3.60%CUSIPNo.

57586ECG4

$78,000;00.0 5.0()%Boridsdue Juiy 1, ;2016-Yield CUSIP No; 57586ECH2

$23,48:5,000 5;00% Bonds due July 1,2026 -Yield5.28%CUSIP No.5'1586ECJ8' 347;975,QOO 5.75% Bonds due July I, 2026",...Yield 5.28*% .CU!;IPNo;57586ECK5

$42,000,000 July 2036 ,..,.. Yield 5. 70%CUSIP No. 57586ECLs .

6.00%. Borids due July 1, 2036-Yield 57586ECM1 The Bonds are 9ffered whe?t, as an4iJissued and received by the 'Underwriters,Subject w prior sale, wyJithdrawal or. 71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU ?aimer &Dod{jeLLP, B,oswn, Bond COU1'1$ei tl> the Autltority, Certain legal matters willbe passed upon Jor the its counsel, Mintz,Lemn, Cohn, Ferris; GWvsky andPopeo, P.C.; fioston, Massachusetts

.. Certain legal ... ' . . ..' . sectuponJor me UnderufritersbY their counseliornck.HerringtJYn

& Sutcli.lteLLP.

NeWYoric;New York . . His . ':'pected that '. onds in dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on;;;' about Janud:ry8; 2009.. . '. . .' . Morgan Stanley Dated: December 10,2008: *Yield to the July 1,2018 optional redemption date, NEW ISSUE'"", BOOK ENTRY ONLY In the opiniOn ojEdwaidS AngeU Palmer & Dodge LLP, B,?nd Counsel, basedupdn an anaiysiSoJ existing law a1ul llSS uming,among ot1ieimatters, compliance with certain covenants,intereston'the Bonds is excluded from grosS iftcomefor incometax*puTPoses under the Internal ReVenUe Code Of 1986; IntereSt on the BondS is not a specific PrejerfJi!ce item for purposes oj t!Wjederal individual orcorporateqlternative m.iriimum taxes, although such in adjusted citrrentearnings whenca,Jculating cOTporatealternative minimum taxable incorru;:

'Under existingta,w, intereSt.on iJieBonds awl any proftJ. ontlW sOle ojthe Bonds are e:iempt,from a:rut the Bonds are exemptfrornMassach'li§ettspersOnalprOpertyta:ces,BOrui

Couru;el expresses no opinion' regarding a.ny .other reL4tedt<>the oumership or d1-sPosiii9!L.

oj, or ("I.e' acl:rUfll or receipt oj on,' the Bonds. SeeTAxEXEMFI'IONhereirt,. . '. .... .' .

MAsSACHUSETrSHEALTH ANDEDUC.A.TIONALFACILITIES.

AtmIORITY . .. REvEijiJE Dated: Date of delivery Due': July1,as shown.below

'J'heSenes 0

he regiStered bondS whEmissued,willbe regiStered iri' the name of Cede nominee TrUSt Company ("DTC"),Newyork,.New York. . DTCwill 'act assecuritiesdepository for the Bonds. Purchases of the BondS will be madembook-enfry fmID,Purchasers willncit receive certificates l'epreSEmtmgtheir mterestsin the. Bondspurchised; So long as Cede & *CO. is the BondoWner ,as nominee ofOTe, references herein to the Boridowners or regist'eredo\vners shall mean Cede & CO.j 3s aforesaid, and shall not meanthebenefici31 owners of the Bonds: See 'THE BONDS herem. . . Principal of arid interest on the Bonds will be paid by The Bank of New YoikMeUonTruSt Company, N:A,New York,New York; as,Trustee, So lang asDTC orits riommee,Cede

& Co;, is the BondoWner; such payments wlllbemadedirectlyto's'Qch Bondowner, as II\ore described herein. ,Interest Qnthe Bonds will be payableon'July 1,2009, and serniannuallythere:after on January! and Julylof each year to the Bondowners ofreconl as of the close ofbusil1ess on the. fifteenth day of the month

....... ... .... ... .... .. .. . ' ....... . The!Bondsare

!!ubjecttQ redemptl(mprlor to as more.fully described herein. The Bonds shall be special obligations of the Massachusetts Health and Educational Facilities Authority (the " AuthoritY")

payable solely from the Revenues (as hereinafter defined) of the Authority, including payments to The Bank 9f New-York Mellon TrustCompany;NA, New York, New¥ork, as Trustee, for the accOlmt of the Authority by the Massachusetts institUte of Technology (the "Institute")

in accordance.

with the provisions of the AgreelTlenf(as defined ,herein) .* 8U(:hpaymentS purSuant to tlleAgreement ageneraI obngationof the Institute; " Reference is madeto this security

provisio llS of the . Bonds. . . THE BONDS SHALL N()T BE DEEMED.TO CONSTITUTE A DEBT OR LIABll.ITY OF THE COMMONWEALTH OF MASSACHUSETI'S ORANYPOLITICALSUBDIVISIONTBEREOF, ORA PLEDGE OF TIm FAITBAND CREDIT. OF OR ANY POLITICAL SUBDIVISION TIlEREOF,BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES PROVIDED UNDERTHE AGREEMENT.

NEITHER TIlE FAlTHAND CJffiDIT NOR THE TAXING POwER OF THE COMMONwEALTH OR ANY PLEDGED TO THE PAYMENT OF THEPIHNCIP AL OF OR INTEREST ON THE BONDS. TllEACTDOESNOTIN TO PAY'UEBT SERVICE IN TIm ,TImAUTH()RITY DOES NOTHAYETAXING POwEIt, " $10,000,000 Bonds due July 1, 2016 ...... Yield 3.60%CUSIPNo.

57586ECG4

$78,000;00.0 5.0()%Boridsdue Juiy 1, ;2016-Yield CUSIP No; 57586ECH2

$23,48:5,000 5;00% Bonds due July 1,2026 -Yield5.28%CUSIP No.5'1586ECJ8' 347;975,QOO 5.75% Bonds due July I, 2026",...Yield 5.28*% .CU!;IPNo;57586ECK5

$42,000,000 July 2036 ,..,.. Yield 5. 70%CUSIP No. 57586ECLs .

6.00%. Borids due July 1, 2036-Yield 57586ECM1 The Bonds are 9ffered whe?t, as an4iJissued and received by the 'Underwriters,Subject w prior sale, wyJithdrawal or. 71U?diJU;ation oj tlu3 offer witlwlft notice, and. to the approval oj their legalityarul certain other matters by Edwards AngeU ?aimer &Dod{jeLLP, B,oswn, Bond COU1'1$ei tl> the Autltority, Certain legal matters willbe passed upon Jor the its counsel, Mintz,Lemn, Cohn, Ferris; GWvsky andPopeo, P.C.; fioston, Massachusetts

.. Certain legal ... ' . . ..' . sectuponJor me UnderufritersbY their counseliornck.HerringtJYn

& Sutcli.lteLLP.

NeWYoric;New York . . His . ':'pected that '. onds in dejinitive!iJrm Will be availahleJor delivery'toDTCin New York, New York; on;;;' about Janud:ry8; 2009.. . '. . .' . Morgan Stanley Dated: December 10,2008: *Yield to the July 1,2018 optional redemption date, CONTINUING DISCLOSURE The Authority has determined that no financial or operating data concerning the Authority is material to an evaluation of the offering of the Bonds, or to any decision to purchase, hold or sell the Bonds and the Authority.will not provide any such infbrmation.

The Institute has unrdertaken all responsibilities for any .continuing disclosure to owners:of the Bonds asdescribed below, and the Authority shall have no liabilblty.tothe owners of the Bonds or any other person with respect 'to0Securities and Exchange CommissionRule 1562-12.The Institute has covenanted for the benefit of holders and beneficial owners of the Bonds to provide certain financial information relatingto0 the Institute (the "Annual Report") by not laterthan 180 days afterthe end of each fiscal'year, commencing with the report for the 2009 fiscal year, and to provide notices of the occurrence' of certain enumerated .events, if'material.

The Annual Report and -the noticesý of material events will'be.filed by the Institute or a dissemination Agent with each. Nationally Recognized Municipal Securities Information Repository and with the State Repository, if any. These covenants have been made in order to assist the Underwriters in complying with Securities and. Exchange Commission Rule 15c2-12(b)(5) (the "Rule").On the date of delivery of the offered Bonds,:the Institute

and the Trustee will enter into the'Continuing Disclosure Agreement substantially in the form attached hereto as Appendix E -"FORM OF CONTINUING DISCLOSURE AGREEMENT." The Institute has never failed to comply in' all material respects.

with any previous undertakings with regard to the Rule to provide annual reports or notices of material events, .except that the filin g with.'respect to fiscal year 2006 was not made in:a timely manner.COMMONWEALTH NOT LIABLE ON THE BONDS The Bonds shall not be deemed to constitute a debt or liability of the Commonwealth.

or any political:

subdivision thereof,'or a pledge of the faith:and, credit of the:Commonwealth .r any such

subdi vision, but shall be payable solely from the Revenues derived by the Authority undertheAgrieement.

Neither the.faith and credit nor the taxing power of the Commonwealth or of any political subdivision thereof'is pledged-to the.payment of the principal of or interest.-on the Bonds. The Act does not in any way create'a sb-called noral: obligation of the. Commonwealth or-of any'political subdivision thereof to0pay debt service in the event of default by the. Institute.

The Authority does not have 'taxing power.Moody's Investors Service, Inc. and Standr Division:

of the McGraw-Hill:

Companies, Inc.: have assigned'ratings of "Aaa" and "AAA" respectively, to the Bonds. Such ratings reflect only the views of such organizations"aind any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same, at the following addresses:

'Moody's Investors Service, Inc.,, 7 World Trade Center:, 250 Greenwich Street,, New York, New York 10007; and Standard & Poor's, 55 Water Street, New York, New York 1004 1. Generally, a- rating agency basds.Its rating on the information and materials furnished to it. and on investigations, studies-and assumptions of its'own..The above ratings are, not recommendations to buy; sell or own the Bonds, and .-such ratings may be subject to revision or withdrawal at any time by the rating agencies.

Any downward revision or withdrawal of any.or all ratings may have anadverse effect onthe market price of the Bonds.UNDERWRITING:-The, Bonds are being purchased for reoffering by Barclays 'Capital -Inc., as. representative of the Underwriters.

The Underwriters have agreed to purchase the Bonds at an aggregate

'discotunt of S 1,218,273.77 from the public offering prices or yields set forth on"the cover page hereof and will..be reimbursed..for certain'-12-CONTINUING DISCLOSURE The Authority has detem:iined thatno linanciai"oroperating data concerning the Authority IS m'ateria!

to an evaluation of the offering of the Bonds or to any&'cisionto purchase, hold or sell the Bonds'andtheAuthority win not providejiny such informati()n

.. The )Institute has illldertaken aU resporisiljilitics disclosure to owners of the Bonds as described below; arid the AlJthority shall have no liability lothe owners of the Bonds or any otherperson with r(!spest'toSecurities and 15c2.;12. . '. Thefustitute has covenanted for the benefit of holders and beneficialownersoqheBonds to p,fovide certain financial information relating,to

the, the "AIlriuaI Report") by than .180' days after the end . of each fiscal year; cOlllmencirig with the report for the 2009 fiscal year, and to provide notices of the occurrence' of certain enumerated .events, if material.

The Anriual Report' of: rmlterial the Institute or. a disserniriation agent with each.

Recognized Municipal Securities lriformation Repository arid with tlJe State Reposit9ry,if any. These covenants have been. made in order to assi!;tthe Underwriters in complying with Securities and ExchringeComrriissi()1l, Rule 12(b)( 5J(th e "Rule:'). . .. ,ali the date o(deliveryof tb.eo(feied Instiillteand the Trustee will enter jnto the' C()ntinuing Disclosure Agreement substantially in the, form attached, hereto as AppehdixE

-"FORM OF CONTINlJING DISCLOSURE AGREEMENT" . . . .. , . The Institute has never faikd to comply in all material respects with any previous undertakings with to the Ruleto'Pfovide,ann,tlal report's or.noticesofmateTialevcnts,'excep(that'the filiiigwith:respec(to fiscal year 2006 was not made ina timely manner. .... ". . ...... ' .. . COMMQNWEAL TIl NOT LIABLE ON THEsoNi>S' , The Bonds shall not be deemed to constitute a d¢bt .or Iiaqility ofJhe any politIcal subdivjsionthcreof,or

a. pledge of the faitha.nS' , The Bonds shall not be deemed to constitute a d¢bt .or Iiaqility ofJhe any politIcal subdivjsionthcreof,or

a. pledge of the faitha.n<i credit of the Commonwealth or any such ,politiCal subdivision; but shall Qcpayable,soIeJy from the Revenues derived by the Authority N.either and credit nor. the taxing power of .the Comm()nv.:ealth or of any* political subdivision there.o(is*
pledged,to the payment of the principal of or The Act does not in anywaycreate'h sO:-calledmoral o!Jligation of the.
any' poiltical subdivision thereof to :pay debt iii the by the Institute.
The Authority does not havetaxingpower. . . ..' IV[oody'sIrivestors ServiCe,lnc.and Standard &oor's; (iDivision of the Inc; have assigned:ratingsof"Aaa" respecti..,ely, to Bonds. Such ratings reflect only the views()f such organizations and any desired explanation of the significanc'e of such ratingsshouJd be obtained from the rating agency furnishIng the same, at thefollowirigaddresses:
Moody's Inc.,) W'orIdTradeCenter; 250 Greenwich Street,.New York, New York 10007; and Standard & Poor's, 55 WilterStreet,New York, New York 1004 [Generally, a ratihg ratirig on the iriformatioll and matcriaJsfurriishedtoit and on investigations, studies'lmdassumptions of its own. . ..... .' Th,e above ratings are,no,t recol1llllendatlons tobuy; sell .or own the Bonds; and 'such ratings subject to revision or withdrawaLatany time by the rating agencies .. Any dO\'.-'TIward revision or withdrawal of any or all ratings may have an' adverse effect price of the B.onds. UNDERWRITiNG The Bonds are being purchased forreoffering by BarclaysCapitaf Inc., as representative of the Underwriters.
The Underwriters have ab'Teed to purchase the Bonds at an aggregate discount Of SI,218,273.
77 from the public offering prices or yields set forth on the cover page and \Nill ,be reimbursed for certain . , t " *I: i:
-I Report of the Treasurer for the year ended Massachusetts I irInstitute of June 30, 2009 1U Technology Report of the Treasurer for the year ended June 30, 2009 III--Massachusetts O I Institute of Technology
,/ i 1 Report of the Treasurer for the year ended June 30, 2009 III--Massachusetts O I Institute of Technology
,/ i 1 Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology The Corporation 2008-2009 as ofJune 30, 2009Chairman: Dana G. Mead*President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone*Vice President for Institute Affairs and Secretary: Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A. Jackson; Raymond S., Stata*; David H. Koch; PatrickJ.
McGovern; Robert A. Muh;Denis A. Bovin*; James A. Champy*; Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes;Norman E. Gaut; L. Robert Johnson; Arthur J. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity;Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish;David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula J. Olsiewski; Sanjay K. Rao;Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C.
Kurzweil; Kenneth Wang;David A. Berry; James A. Lash; Paul E Levy; Megan J. Smith; Henri A. Termeer; Chiquita V White*; 0. Reid Ashe, Jr.;John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene;Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor J. Menezes; Peter L. Slavin; Laura D. Tyson;Tony Keng Yam Tan.President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Ir6n6e duPont, Jr.; John C. Haas; Norman B. Leventhal; George P.
Gardner; Mitchell W. Spellman; D. Reid Weedon, Jr.;Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin, Jr.; Louis W Cabot; Christian J. Matthew; Howard W. Johnson;Paul M. Cook; William S. Edgerly; Frank Press; Edward E.
David, Jr.; Emily V Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner;Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P Simmons; Morris Chang; Paul E. Gray;Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; DuWayne J. Peterson, Jr.Members' names are listed in chronological order of election to each category.*member of the Executive Committee The Corporation 2008-2009 as of June 30, 2009 Chairman:
Dana G. Mead* President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone* Vice President for Institute Affairs and Secretary:
Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A.Jackson; Raymond S.,Stata*;
David H. Koch; Patrick].
McGovern; RobertA. Muh; Denis A. Bovin*;James A. Champy*;Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman E. Gaut; L. RobertJohnson; Arthur]. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity; Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T. Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish; David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kenneth Wang; David A. Berry; James A. Lash; Paul F. Levy; Megan]. Smith; Henri A. Termeer; Chiquita V. White*; O. Reid Ashe, Jr.; John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene; Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor]. Menezes; Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan. President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Irenee duPont, Jr.; John C. Haas; Norman B. Leventhal; George P. Gardner; Mitchell W Spellman; D. Reid Weedon, Jr.; Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin,Jr.;
Louis W Cabot; ChristianJ.
Matthew; Howard WJohnson; Paul M. Cook; William S. Edgerly; Frank Press; Edward E. David, Jr.; Emily V. Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P. Simmons; Morris Chang; Paul E. Gray; Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; Du Wayne]. Peterson, Jr. Members' names are listed in chronological order of election to each category.
member of the Executive Committee The Corporation 2008-2009 as of June 30, 2009 Chairman:
Dana G. Mead* President:
Susan Hockfield*
Executive Vice President and Treasurer:
Theresa M. Stone* Vice President for Institute Affairs and Secretary:
Kirk D. Kolenbrander*
Life Members John S. Reed; Shirley A.Jackson; Raymond S.,Stata*;
David H. Koch; Patrick].
McGovern; RobertA. Muh; Denis A. Bovin*;James A. Champy*;Judy C. Lewent; A. Neil Pappalardo*;
Arthur Gelb; Edie N. Goldenberg; Robert M. Metcalfe; Kenan E. Sahin; John K. Castle; Susan E. Whitehead; Charles M. Vest; Brian G. R. Hughes; Norman E. Gaut; L. RobertJohnson; Arthur]. Samberg*.
Members Barrie R. Zesiger*;
Gordon M. Binder; Gururaj Deshpande; Linda C. Sharpe; John A. Thain; Thomas P. Gerrity; Mark P. Gorenberg; Scott P. Marks, Jr.; Marjorie M.T. Yang; James H. Simons; Alan G. Spoon; Lawrence K. Fish; David D. Ho; Abigail P. Johnson; Robert B. Millard*;
Carly S. Fiorina; Anita K. Jones*; Paula]. Olsiewski; Sanjay K. Rao; Milton H. Roye, Jr.; Martin Y. Tang; Robert L. Blumberg; R. Erich Caulfield; Raymond C. Kurzweil; Kenneth Wang; David A. Berry; James A. Lash; Paul F. Levy; Megan]. Smith; Henri A. Termeer; Chiquita V. White*; O. Reid Ashe, Jr.; John W Jarve; Frederick A. Middleton, Jr.; Barun Singh; Diana C. Walsh; Ursula M. Burns; Diane B. Greene; Helen Greiner; Harbo P. Jensen; Marta M. Luczynska; Victor]. Menezes; Peter L. Slavin; Laura D. Tyson; Tony Keng Yam Tan. President of the Association of Alumni and Alumnae Antonia D. Schuman Representatives of the Commonwealth Governor:
Deval L. Patrick Chief Justice of the Supreme Judicial Court: Margaret H. Marshall Secretary of Education:
S. Paul Reville Life Members Emeriti Irenee duPont, Jr.; John C. Haas; Norman B. Leventhal; George P. Gardner; Mitchell W Spellman; D. Reid Weedon, Jr.; Colby H. Chandler; Carl M. Mueller; Joseph G. Gavin,Jr.;
Louis W Cabot; ChristianJ.
Matthew; Howard WJohnson; Paul M. Cook; William S. Edgerly; Frank Press; Edward E. David, Jr.; Emily V. Wade; Angus N. MacDonald; Kenneth H. Olsen; George N. Hatsopoulos; Charles H. Spaulding; Mary Frances Wagley; Michael M. Koerner; Morris Tanenbaum; Breene M. Kerr; W Gerald Austen; Richard P. Simmons; Morris Chang; Paul E. Gray; Alexander W Dreyfoos, Jr.; Ronald A. Kurtz; Du Wayne]. Peterson, Jr. Members' names are listed in chronological order of election to each category.
member of the Executive Committee Table of Contents" Report of theTreasurer
..............................................
5-8" Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statem ents of Financial Position ..............................................
9Statem ents of Activities
.................................................
10-11 Statem ents of C ash Flows ...................................................
12 N otes to Financial Statem ents ............................................
13-32 Report of Independent Auditors .............................................3 3* Additional Information Five-Year Trend Analysis ................................................
34-36 Table of Contents
Report of the Treasurer
..............................................
5-8
Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statements of Financial Position ..............................................
9 Statements of Activities
.................................................
10-11 Statements of Cash Flows ...................................................
12 Notes to Financial Statements
............................................
13-32 Report of Independent Auditors .............................................
33
Additional Information Five-Year Trend Analysis ................................................
34-36 Table of Contents
Report of the Treasurer
..............................................
5-8
Financial Statements The financial statements summarize the finances of MIT for the fiscal years 2008 and 2009 Statements of Financial Position ..............................................
9 Statements of Activities
.................................................
10-11 Statements of Cash Flows ...................................................
12 Notes to Financial Statements
............................................
13-32 Report of Independent Auditors .............................................
33
Additional Information Five-Year Trend Analysis ................................................
34-36 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years.As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan.MIT was also able to secure $610.0 million of tax-exemptfinancing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months.Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009.With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle.In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, andstudents working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission.As we plan for future years, the level of endowment support is an important factor. Our endowment investment returnsfor 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment fundsbefore pledges at June 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of $10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of $12,770.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on investment performance across all invested assets including endowment, working capital, and retirement assets.We are appreciative of the MIT community
-our alumni,donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic:
that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's missionfor the nation and the world.Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
These categories reflect the nature of the restrictions placed on gifts by donors.Permanently restricted net assets represent those giftsfor which the original principal is to be preserved.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
The increase in permanently restricted net assets of $67.0 million, or 3.5 percent, to a total of $1,985.4million, primarily reflects new gifts and pledges made to restricted endowment funds.Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
They require an event or lapse of time to occur before they are available for spending.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds.This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
The decrease in temporarily restricted net assets of $1,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarilyresults from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use.
SUMMARY
5 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years. As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan. MIT was also able to secure $610.0 million of tax-exempt financing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months. Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009. With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle. In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, and students working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission. .As we plan for future years, the level of endowment support is an important factor. Our endowment investment returns for 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment funds before pledges atJune 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of$10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of$12,nO.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on
SUMMARY
investment performance across all invested assets including endowment, working capital, and retirement assets. We are appreciative of the MIT community
-our alumni, donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's mission for the nation and the world. Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
These categories reflect the nature of the restrictions placed on gifts by donors. Permanently restricted net assets represent those gifts for which the original principal is to be preserved.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
The increase in permanently restricted net assets of$67.0 million, or 3.5 percent, to a total of$1,985.4 million, primarily reflects new gifts and pledges made to restricted endowment funds. Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
They require an event or lapse of time to occur before they are available for spending.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds. This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
The decrease in temporarily restricted net assets of $1 ,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarily results from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use. 5 Report of the Treasurer To Members of the Corporation General Fiscal 2009 was a notable year for MIT from a financial perspective.
Guided by the comprehensive financial planning work conducted in 2008, we entered 2009 with a balanced budget for the first time in many years. As the worldwide economic crisis unfolded in the fall, we recognized likely effects on our future support from endowment, as well as possible pressures on gifts and grants to MIT, net tuition (after needed financial aid), and research funding. By carefully managing liquidity and expenses, MIT concluded 2009 with the general Institute budget and consolidated operating results in line with our plan. MIT was also able to secure $610.0 million of tax-exempt financing despite market turbulence and, as a result, will complete construction of three major new buildings, the Koch Institute for Integrative Cancer Research, the Sloan School of Management, and the Media Lab and School of Architecture and Planning, over the next eighteen months. Starting in the fall and through early spring, administrative units and academic departments, labs, and centers focused on strategies to operate with reduced budgets. Projections were developed that indicated a potential need to reduce expenditures by ten to fifteen percent within two to three years. Initial savings have been achieved in 2009. With additional 2010 budgeted savings of at least five percent, about half of the needed reductions will have been achieved.
The majority of units are planning to reach ultimate required reductions in the 2011 budget cycle. In addition to these unit-based efforts, the Institute-wide Planning Task Force, through nine separate working groups, developed recommendations for improvements to MIT's academic, research, and administrative activities aimed at strengthening our ability to fulfill MIT's mission while reducing required funding. The work of this task force, which included close to 200 faculty, staff, and students working in cross-organizational groups, has been an impressive demonstration of MIT's culture of tackling problems and of our community's commitment to the Institute's mission. .As we plan for future years, the level of endowment support is an important factor. Our endowment investment returns for 2009 were down 17.1 percent. When adjusted for planned support to MIT during 2009, endowment funds before pledges atJune 30, 2009 were $7,982.0 million, down 20.7 percent from June 30, 2008 levels of$10,068.8 million. Consolidated net assets at year end were $9,946.4 million as of June 30, 2009, down $2,823.6 million from net assets of$12,nO.0 million in 2008. The decrease in net assets reflects the effect of the economy's impact on
SUMMARY
investment performance across all invested assets including endowment, working capital, and retirement assets. We are appreciative of the MIT community
-our alumni, donors, board members, research partners, faculty and staff, colleagues, and students -for their financial support, advice, and collaboration that were most generously offered as we navigated this challenging year for MIT. We are optimistic that, with their continued involvement, MIT will emerge from this global economic contraction stronger, more flexible, and better equipped to fulfill the Institute's mission for the nation and the world. Following are additional details on MIT's financial position, operating activities, gifts and pledges, investments, endowments, fixed assets, and borrowings.
Financial Position Net assets are presented in three categories to recognize the significant ways in which universities are different from profit-making organizations.
These categories reflect the nature of the restrictions placed on gifts by donors. Permanently restricted net assets represent those gifts for which the original principal is to be preserved.
This category includes gifts and pledges to true endowment together with assets held in trust, such as life income funds, which, when received or matured, will be added to the endowment.
The increase in permanently restricted net assets of$67.0 million, or 3.5 percent, to a total of$1,985.4 million, primarily reflects new gifts and pledges made to restricted endowment funds. Temporarily restricted net assets represent those gifts that ultimately can be used to fund operating or capital expenditures.
They require an event or lapse of time to occur before they are available for spending.
Over 90 percent of the assets in this category are accumulated market gains on permanently restricted endowment funds. This category also includes pledges not permanently restricted, gifts for construction projects that have not been completed and put into use, and life income funds, which, upon maturity, will be available for spending.
The decrease in temporarily restricted net assets of $1 ,364.3 million, or 23.7 percent, to a total of $4,401.0 million, primarily results from the decrease in the market value of assets held in permanently restricted funds. The Commonwealth of Massachusetts requires that all universities located within the Commonwealth report accumulated market gains on both permanently and temporarily restricted net assets as temporarily restricted net assets until appropriated for use. 5 Unrestricted net assets comprise all the remaining economic resources available to MIT This category includes MIT's working capital and those assets designated by MIT as"funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are currentfunds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased$1,526.3 million, or 30.0 percent, to a total of $3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues', payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by
$182.7 million in 2009, due primarily to unspent distributionsfrom the endowment.
In 2008, operating revenues exceeded operating expenses by
$114.2 million.Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenuesand offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent.In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent.Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otherfederal agencies remained close to 2008 levels.
Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent.Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009.Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largestcomponent of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of $121.3 million. Instruction and unsponsored research increased
$39.6 million, or 6.2 6 MIT REPORT OF THE TREASURER 2009 Unrestricted net assets comprise all the remaining economic resources available to MIT. This category includes MIT's working capital and those assets designated by MIT as "funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are current funds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased
$1,526.3 million, or 30.0 percent, to a total of$3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by $182.7 million in 2009, due primarily to unspent distributions from the endowment.
In 2008, operating revenues exceeded operating expenses by $114.2 million. Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenues and offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.
Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent. In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase 6 over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent. Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otller federal agencies remained close to 2008 levels. Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent. Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.
Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largest component of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of$121.3 million. Instruction and unsponsored research increased $39.6 million, or 6.2 MIT REPORT OF THE TREASURER 2009 Unrestricted net assets comprise all the remaining economic resources available to MIT. This category includes MIT's working capital and those assets designated by MIT as "funds functioning as endowment," to be invested over the long term to generate support for MIT's operations and capital projects.
Also included in this category are current funds received from donors for restricted purposes that, under the accounting rules, are categorized as unrestricted if MIT spends an equivalent amount of unrestricted funds for the same purpose. Unrestricted net assets decreased
$1,526.3 million, or 30.0 percent, to a total of$3,559.9 million. The decrease in unrestricted net assets is due to two major factors: first, the decrease in endowment value and second, the net decrease in the overfunded status of retirement plan assets resulting from decreased fair value of plan assets and increased benefit obligations.
During 2009 and 2008, unrestricted net assets were reduced by $24.0 million and $0.3 million respectively, to offset investment losses on permanently restricted net assets where market value dropped below book value. This amount will be restored to unrestricted net assets in-line with subsequent market value increases.
Operations MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
The Statements of Activities, on pages 10 and 11, show that operating revenues exceeded operating expenses by $182.7 million in 2009, due primarily to unspent distributions from the endowment.
In 2008, operating revenues exceeded operating expenses by $114.2 million. Operating revenues increased
$235.5 million, or 9.8 percent, to $2,644.0 million due primarily to increases in distributed net gains on investments and research revenues and offset by a decrease in investment income. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million driven primarily by increases in salaries and wages and supplies and services.
Net tuition revenue decreased
$11.7 million, or 5.1 percent, to $217.4 million. Reflecting MIT's commitment to increasing the affordability of undergraduate education, financial support for undergraduate students from MIT sources grew 12.5 percent. In 2009, MIT experienced a 10.4 percent increase in research revenues, from $1,245.2 million to $1,375.1 million. On-campus research programs are carried out at departments, labs, and centers where research revenue totaled $690.8 million in 2009, an 11.1 percent increase 6 over 2008. Included in the campus figure are Broad Institute research revenues of $166.3 million, which grew 17.0 percent over 2008. At Lincoln Laboratory, research revenue totaled $669.8 million in 2009, an increase of 8.1 percent. Research at the Lincoln Laboratory is funded primarily under a contract with the Department of Defense (Air Force). At the Singapore-MIT Alliance for Research and Technology (SMART), $14.5 million of research revenue was generated during 2009, its second year of operation, for research activities taking place in Singapore.
On MIT's campus, the Department of Health and Human Services (primarily through the National Institutes of Health) was the largest research sponsor, growing $29.6 million, or 13.1 percent over 2008, and providing 37.0 percent of MIT's campus research revenue in 2009. Overall, federal sponsorship of campus research grew 8.0 percent. Federal sponsorship from the Department of Defense grew by $10.2 million, or 11.6 percent. National Aeronautics and Space Administration revenue increased
$1.9 million, or 7.4 percent, while revenue from the National Science Foundation decreased
$3.6 million, or 5.5 percent, over last year. Revenue from Department of Energy and otller federal agencies remained close to 2008 levels. Nonfederal funding for campus research increased by $38.5 million, or 25.9 percent, in 2009 with the greatest increases coming from nonprofit foundations and foreign governments.
Research revenues include reimbursement from sponsors for both direct and indirect (facilities and administration) costs. MIT's modified total direct research expenditures (MTDC or "base"), that form the basis for recovery of indirect costs, increased by $57.8 million, or 8.6 percent. Of this increase, $24.5 million is campus research;
$33.3 million is Lincoln Laboratory and SMART research.
Revenue from fees and services decreased
$5.9 million, or 3.6 percent, to $157.1 million. This was due primarily to decreased revenues from technology licensing, for which 2008 revenue included amounts related to a non-recurring legal settlement.
Investment income, defined as dividends, interest, and rents, decreased
$83.5 million, or 45.3 percent, to $100.6 million, due primarily to declining interest rates and economic conditions.
Net asset reclassifications to operations of $57.8 million primarily reflect payments on unrestricted pledges received and released to operations in 2009. Operating expenses increased
$167.0 million, or 7.3 percent, to a total of $2,461.3 million in 2009. The largest component of the increase was sponsored research expense, which grew $112.6 million, or 10.7 percent. A significant contributor to this expense growth was The Broad Institute, where direct spending for sponsored research grew $23.0 million to a total of$121.3 million. Instruction and unsponsored research increased $39.6 million, or 6.2 MIT REPORT OF THE TREASURER 2009 percent. General and administrative expenses increased$10.6 million, or 2.2 percent. Employee benefits expenses increased
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years.Gifts and Pledges With the successful public launch of the Campaign for Students on October 3, 2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009.Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $386.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in theprevious year. Gifts from foundations represented 40.9percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total,compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total.
Investments Investments at fair value were $9,519.4 million, a decrease of $1,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from
$7,250.5 million to$9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
The financial statements include both realized and unrealized gains and losses on investments. Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of $1,854.4 million in 2009.The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent at June 30, 2008.The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venturecapital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as ofJune 30, 2009.The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spendingin a manner that, over the long term, retains for reinvest-ment an amount at least equal to the anticipated rate of inflation.
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value ofthe units in Pool A.Land, Buildings, and Equipment Fixed assets had a net book value of $2,120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
Major ongoing construction projects include a new163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new 3 67,000-square-foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive.
More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures
SUMMARY
7 percent. General and administrative expenses increased $10.6 million, or 2.2 percent. Employee benefits expenses increased
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years. Gifts and Pledges With the successful public launch of the Campaign for Students on October 3,2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009. Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $3 86.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in the previous year. Gifts from foundations represented 40.9 percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total, compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total. Investments Investments at fair value were $9,519.4 million, a decrease of$I,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from $7,250.5 million to $9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
The financial statements include both realized and unrealized gains and losses on investments.
Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of$I,854.4 million in 2009. The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent atJune 30, 2008.
SUMMARY
The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venture capital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as of June 30, 2009. The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spending in a manner that, over the long term, retains for ment an amount at least equal to the anticipated rate of inflation.
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value of the units in Pool A. Land, Buildings, and Equipment Fixed assets had a net book value of $2, 120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
Major ongoing construction projects include a new 163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive. More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures 7 percent. General and administrative expenses increased $10.6 million, or 2.2 percent. Employee benefits expenses increased
$3.4 million, or 2.0 percent, due primarily to an increase in costs for employee and retiree medical benefits, employment tax, and disability benefits, offset by pension credits resulting from the overfunded status of MIT's defined benefit plan in prior years. Gifts and Pledges With the successful public launch of the Campaign for Students on October 3,2008, the Campaign now stands at a total of $351.3 million, with 70.3 percent of the $500 million goal raised. Gifts support scholarships, fellowships, educational programming, and student life activities.
The MIT Energy Initiative (MITEI) now has 1,154 donors, and has raised $54.1 million as of June 2009. Gifts and pledges for 2009 totaled $303.9 million, a decrease of 21.3 percent from the 2008 total of $3 86.0 million. Gifts from individuals represented 35.6 percent of new gifts and pledges, down from 50.9 percent in the previous year. Gifts from foundations represented 40.9 percent of new gifts and pledges in 2009, up from 35.2 percent in the previous year. Gifts from corporations and other sources represented 23.5 percent, up from 13.9 percent in 2008. New gifts and payments on pledges for unrestricted purposes were 7.7 percent of the total, compared with 3.9 percent in 2008. The largest category of gifts for 2009 was Research and Education, which accounted for 62.0 percent of the total. Investments Investments at fair value were $9,519.4 million, a decrease of$I,789.0 million, or 15.8 percent, from the $11,308.4 million of the previous year. Over the past five years, total invested assets have increased from $7,250.5 million to $9,519.4 million while distributions for expenditures have totaled $2,063.4 million. More specific information is included in Note B to the Financial Statements.
The financial statements include both realized and unrealized gains and losses on investments.
Realized and unrealized gains and losses, including those related to the disposition of fixed assets, decreased from a gain of $154.8 million in 2008 to a loss of$I,854.4 million in 2009. The asset allocation among fixed income, equity, marketable alternatives, and real estate investments remained similiar to 2008 during 2009. Equity, marketable alternatives, and real estate investments at market value were 84.5 percent of the investments as ofJune 30, 2009, as compared to 88.5 percent atJune 30, 2008.
SUMMARY
The Board of Directors of the MIT Investment Management Company (MITIMCo) held four regularly scheduled meetings during the fiscal year. During 2009, MITIMCo, in conjunction with MIT's senior administration, acted defensively to manage liquidity in the turbulent markets while still capturing investment opportunities in the equity and marketable alternative arenas consistent with its investment policies and asset allocation targets. Equities include investments in venture capital and private equity. Marketable alternatives include investments in event arbitrage, distressed debt and hedge funds. The alternative investments are managed by more than one hundred independent organizations primarily through pooled investment partnerships.
Endowment and Similar Funds The market value of investments in the endowment and similar funds totaled $7,982.0 million as of June 30, 2009. The endowment assets are managed to maximize total investment return relative to appropriate risk. Investment income and a portion of gains are distributed for spending in a manner that, over the long term, retains for ment an amount at least equal to the anticipated rate of inflation.
Endowment funds invested in Pool A, MIT's primary investment pool, receive distributions based on the number of units held. Units are valued monthly and new gifts or other funds transferred to Pool A are credited with Pool A units based on the previous month's market value of the units in Pool A. Land, Buildings, and Equipment Fixed assets had a net book value of $2, 120.6 million as of June 30, 2009, an increase of 9.4 percent from $1,938.9 million as of June 30, 2008. The most significant area of increase this past fiscal year was in the area of educational buildings.
Major ongoing construction projects include a new 163,000-square-foot building for the Media Lab and School of Architecture and Planning to be completed in October 2009, a new 217,000-square-foot building for the Sloan School of Management with a three-level, 430-car garage located directly under the new building and scheduled for occupancy in 2010, a new foot laboratory research building for the Koch Institute for Integrative Cancer Research to be completed by December 2010, significant improvements to Vassar Street west of Massachusetts Avenue, various utility and infrastructure improvements, and exterior rehabilitation of the undergraduate dormitory at 305 Memorial Drive. More extensive renovations related to 305 Memorial Drive have been deferred as part of a portfolio of measures 7 designed to preserve financial flexibility.
These projects are part of a new construction initiative that adds state-of-the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 235 Albany Street.Borrowings Total borrowings outstanding increased from $1,335.4 million as of June 30, 2008, to $1,735.8 million as of June 30, 2009, primarily due to the issuance of $610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm ouroptimism for the future.Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 8 MIT REPORT OF THE TREASURER 2009 designed to preserve financial flexibility.
These projects are part of a new construction initiative that adds the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 23 5 Albany Street. Borrowings Total borrowings outstanding increased from $1,335.4 million as ofJune 30, 2008, to $1,735.8 million as ofJune 30,2009, primarily due to the issuance of$610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
8 Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, .we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm our optimism for the future. Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 MIT REPORT OF THE TREASURER 2009 designed to preserve financial flexibility.
These projects are part of a new construction initiative that adds the-art facilities for emerging areas of research, increases educational infrastructure that supports residential and community life, and revitalizes the physical campus. The major project completed during 2009 was the new 540-bed graduate residence at 23 5 Albany Street. Borrowings Total borrowings outstanding increased from $1,335.4 million as ofJune 30, 2008, to $1,735.8 million as ofJune 30,2009, primarily due to the issuance of$610.0 million in new, tax-exempt debt to finance major construction projects currently underway and to replace $203.0 million in line of credit financing.
MIT's publicly held debt continues to be rated AAA by both Moody's and Standard & Poor's. More specific information is included in Note G to the Financial Statements.
8 Summary MIT's full financial statements and footnotes follow, more fully describing our financial position and activities through June 30, 2009. In closing, .we again thank the MIT community for its generous financial support, advice, and collaboration throughout the year and reaffirm our optimism for the future. Respectfully submitted, Theresa M. Stone Executive Vice President and Treasurer September 16, 2009 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars)2009 2008 Assets C ash ......................................................................
A ccounts receivable, net ......................................................
Pledges receivable, net, at fair value .............................................
Contracts in progress, principally U.S. Government
...............................
Deferred charges, inventories and other assets ....................................
Student notes receivable, net ..................................................
Investm ents, at fair value ......................................................
Collateral for securities lending and minority interest ..............................
Retirement plan asset-overfunded status
.........................................
Land, buildings
& equipment, (at cost $2,994,190 forJune 2009; $2,728,805 forJune 2008), net of accum ulated depreciation
................................................
T o tal assets ..............................................................
Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
....................................
Liabilities due under life income fund agreements
.................................
Collateral for securities lending and minority interest ..............................
D eferred revenue and other credits .............................................
A dvance paym ents
...........................................................
B orrow in gs .................................................................
Government advances for student loans ..........................................
Accrued benefit liabilities
.....................................................T otal liabilities ...........................................................
Net Assets: U n restricted
................................................................
Tem porarily restricted
.........................................................
Perm anently restricted
.......................................................T otal net assets ..........................................................Total liabilities and net assets ...............................................
$77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613$ 12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388$ 12,949,552
$ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919$15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 9 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars) Assets Cash ..................................................................... . Accounts receivable, net ..................................................... . Pledges receivable, net, at fair value ............................................ . Contracts in progress, principally U.S. Government
.............................. . Deferred charges, inventories and other assets ................................... . Student notes receivable, net ................................................. . Investments, at fair value ..................................................... . Collateral for securities lending and minority interest ............................. . Retirement plan asset-overfunded status ........................................ . Land, buildings
& equipment, (at cost $2,994,190 for June 2009; $2,728,805 for June 2008), net of accumulated depreciation
............................................... . Total assets ............................................................. . Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
................................... . Liabilities due under life income fund agreements
................................ . Collateral for securities lending and minority interest ............................. . Deferred revenue and other credits ............................................ . Advance payments .......................................................... . Borrowings
................................................................ . Government advances for student loans ......................................... . Accrued benefit liabilities
.................................................... . Total liabilities
.......................................................... . Net Assets: Unrestricted
............................................................... . Temporarily restricted
.......................
'.' .............................. . Permanently restricted
...................................................... . Total net assets ......................................................... . Total liabilities and net assets .............................................. . The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 2009 $ 77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613
$12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388
$12,949,552 2008 $ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919
$ 15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 9 Massachusetts Institute of Technology Statements of Financial Position at June 30, 2009 and 2008 (in thousands of dollars) Assets Cash ..................................................................... . Accounts receivable, net ..................................................... . Pledges receivable, net, at fair value ............................................ . Contracts in progress, principally U.S. Government
.............................. . Deferred charges, inventories and other assets ................................... . Student notes receivable, net ................................................. . Investments, at fair value ..................................................... . Collateral for securities lending and minority interest ............................. . Retirement plan asset-overfunded status ........................................ . Land, buildings
& equipment, (at cost $2,994,190 for June 2009; $2,728,805 for June 2008), net of accumulated depreciation
............................................... . Total assets ............................................................. . Liabilities and Net Assets Liabilities:
Accounts payable, accruals and other liabilities
................................... . Liabilities due under life income fund agreements
................................ . Collateral for securities lending and minority interest ............................. . Deferred revenue and other credits ............................................ . Advance payments .......................................................... . Borrowings
................................................................ . Government advances for student loans ......................................... . Accrued benefit liabilities
.................................................... . Total liabilities
.......................................................... . Net Assets: Unrestricted
............................................................... . Temporarily restricted
.......................
'.' .............................. . Permanently restricted
...................................................... . Total net assets ......................................................... . Total liabilities and net assets .............................................. . The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS 2009 $ 77,387 241,024 464,736 85,821 57,457 48,953 9,519,413 168,306 165,842 2,120,613
$12,949,552
$ 299,565 72,606 168,306 175,070 343,296 1,735,843 33,341 175,137 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388
$12,949,552 2008 $ 81,106 223,790 443,303 67,938 62,316 47,327 11,308,429 363,516 922,338 1,938,919
$ 15,458,982
$ 267,837 78,372 363,516 164,470 315,202 1,335,393 33,057 131,161 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974
$15,458,982 9
Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars)-- Unrestricted
-- I r- Temporarily Restricted 2009 2008 2009 2008 Operating Activities Operating Revenues: Tuition and similar revenues, net of discount of$214,383 in 2009 and $192,131 in 2008 ............Research revenues:
D irect ........................................
In direct ......................................
Total research revenues ..........................
Gifts and bequests for current use ....................
Fees and services ..................................
O ther program s ...................................
Investm ent incom e ................................
Net gains on investments, distributed
.................
Auxiliary enterprises
...............................
Net asset reclassification and transfers
.................
Total operating revenue ............................
Operating Expenses: Salaries and w ages .................................
Em ployee benefits .................................Supplies and services ...............................
Subrecipient agreem ents ............................
U tilities, rent, and repairs ...........................
D epreciation
.....................................
Interest expense ...................................
Total operating expenses ............................
Results of operations
...............................
Non-Operating Revenues, Gains and Losses P ledges ..........................................
G ifts and bequests .................................
Investm ent Incom e ................................
Net (loss) gain on investments and other assets ..........
Distribution of accumulated investment gains ...........
Net change in life income funds ......................
Pension-related charges other than netperiodic pension (cost) ..........................
Net asset reclassifications and transfers ................
Total non-operating activities
........................(Decrease) Increase in net assets ......................
Net assets at the beginning of the year ................
Net assets at the end of the year ......................
The accompanying notes are an integral part of the financial statements.
$ 217,389 1,153,620 221,452 1,375,072 100,072 157,110 86,133 100,624 455,680 94,041 57,837 2,643,958 967,383 173,616 872,725 85,550 181,264 125,018 55,730 2,461,286 182,672$ 229,099 1,038,998 206,172 1,245,170 122,091 162,994 93,268 184,119 228,403 91,190 52,094 2,408,428 896,145 170,266 822,953 68,944 177,308 111,611 47,020 2,294,247 114,181$-$(686,881)(151,590)1,775 (825,440)(46,881)(1,709,017)
(1,526,345) 5,086,270$ 3,559,925 65,515 (78,579)(1,053)(188,325)(42,313)(244,755)(130,574)5,216,844$ 5,086,270 92,836 2,730 5,084 (1,143,063)
(304,090)(4,669)(13,115)(1,364,287)
(1,364,287) 5,765,302$ 4,401,015 146,116 9,967 6,384 81,041 (151,306)396 (11,302)81,296 81,296 5,684,006$ 5,765,302 10 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars) Unrestricted r----Temporarily Restricted 2009 2008 2009 2008 Operating Activities Operating Revenues:
Tuition and similar revenues, net of discount of $214,383 in 2009 and $192,131 in 2008 ............
$ 217,389 $ 229,099 $ $ Research revenues:
Direct ........................................
1,153,620 1,038,998 Indirect ......................................
221,452 206,172 Total research revenues ..........................
1,375,072 1,245,170 Gifts and bequests for current use ....................
100,072 122,091 Fees and services ..................................
157,110 162,994 Other programs ...................................
86,133 93,268 Investment income ................................
100,624 184,119 Net gains on investments, distributed
.................
455,680 228,403 Auxiliary enterprises
...............................
94,041 91,190 Net asset reclassification and transfers
.................
57,837 52,094 Total operating revenue ............................
2,643,958 2,408,428 Operating Expenses:
Salaries and wages. : ...............................
967,383 896,145 Employee benefits .................................
173,616 170,266 Supplies and services ............................... 872,725 822,953 Subrecipient agreements
............................
85,550 68,944 Utilities, rent, and repairs ...........................
181,264 177,308 Depreciation
.....................................
125,018 111,611 Interest expense ...................................
55,730 47,020 Total operating expenses ............................
2,461,286 2,294,247 Results of operations
...............................
182,672 114,181 Non-Operating Revenues, Gains and Losses Pledges ..........................................
92,836 146,116 Gifts and bequests .................................
2,730 9,967 Investment Income ................................
5,084 6,384 Net (loss) gain on investments and other assets ..........
(686,881) 65,515 (1,143,063) 81,041 Distribution of accumulated investment gains ...........
(151,590)
(78,579) (304,090)
(151,306)
Net change in life income funds ......................
1,775 (1,053) (4,669) 396 Pension-related charges other than net periodic pension (cost) .......................... (825,440) (188,325)
Net asset reclassifications and transfers
................ (46,881) (42,313)
(13,115) (11,302) Total non-operating activities
........................
(1,709,017)
(244,755)
(1,364,287) 81,296 (Decrease)
Increase in net assets ......................
(1,526,345)
(130,574)
(1,364,287) 81,296 Net assets at the beginning of the year ................
5,086,270 5,216,844 5,765,302 5,684,006 Net assets at the end of the year. .....................
$ 3,559,925
$ 5,086,276
$ 4,401,015
$ 5,765,302 The accompanying notes an an integral pal?: of the financial statements.
10 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars) Unrestricted r----Temporarily Restricted 2009 2008 2009 2008 Operating Activities Operating Revenues:
Tuition and similar revenues, net of discount of $214,383 in 2009 and $192,131 in 2008 ............
$ 217,389 $ 229,099 $ $ Research revenues:
Direct ........................................
1,153,620 1,038,998 Indirect ......................................
221,452 206,172 Total research revenues ..........................
1,375,072 1,245,170 Gifts and bequests for current use ....................
100,072 122,091 Fees and services ..................................
157,110 162,994 Other programs ...................................
86,133 93,268 Investment income ................................
100,624 184,119 Net gains on investments, distributed
.................
455,680 228,403 Auxiliary enterprises
...............................
94,041 91,190 Net asset reclassification and transfers
.................
57,837 52,094 Total operating revenue ............................
2,643,958 2,408,428 Operating Expenses:
Salaries and wages. : ...............................
967,383 896,145 Employee benefits .................................
173,616 170,266 Supplies and services ............................... 872,725 822,953 Subrecipient agreements
............................
85,550 68,944 Utilities, rent, and repairs ...........................
181,264 177,308 Depreciation
.....................................
125,018 111,611 Interest expense ...................................
55,730 47,020 Total operating expenses ............................
2,461,286 2,294,247 Results of operations
...............................
182,672 114,181 Non-Operating Revenues, Gains and Losses Pledges ..........................................
92,836 146,116 Gifts and bequests .................................
2,730 9,967 Investment Income ................................
5,084 6,384 Net (loss) gain on investments and other assets ..........
(686,881) 65,515 (1,143,063) 81,041 Distribution of accumulated investment gains ...........
(151,590)
(78,579) (304,090)
(151,306)
Net change in life income funds ......................
1,775 (1,053) (4,669) 396 Pension-related charges other than net periodic pension (cost) .......................... (825,440) (188,325)
Net asset reclassifications and transfers
................ (46,881) (42,313)
(13,115) (11,302) Total non-operating activities
........................
(1,709,017)
(244,755)
(1,364,287) 81,296 (Decrease)
Increase in net assets ......................
(1,526,345)
(130,574)
(1,364,287) 81,296 Net assets at the beginning of the year ................
5,086,270 5,216,844 5,765,302 5,684,006 Net assets at the end of the year. .....................
$ 3,559,925
$ 5,086,276
$ 4,401,015
$ 5,765,302 The accompanying notes an an integral pal?: of the financial statements.
10 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars)r- Permanently Restricted--
r- Total 2009 2008 2009 2008$-$ 217,389-1,153,620-221,452-1,375,072-100,072-157,110-86,133-100,624-455,680-94,041-57,837-2,643,958-967,383-173,616-872,725-85,550-181,264-125,018-55,730-2,461,286-182,672$ 229,099 1,038,998 206,172 1,245,170 122,091 162,994 93,268 184,119 228,403 91,190 52,094 2,408,428 896,145 170,266 822,953 68,944 177,308 111,611 47,020 2,294,247 114,181 205,972 57,889 9,935 154,765 (228,403)750 (188,325)(52,094)(39,511)74,670 12,695,304
$ 12,769,974 Operating Activities Operating Revenues: Tuition and similar revenues, net of discount of$214,383 in 2009 and $192,131 in 2008 Research revenues: Direct Indirect Total research revenues Gifts and bequests for current useFees and services Other programs Investment income Net gains on investments, distributed Auxiliary enterprises Net asset reclassifications and transfers Total operating revenues Operating Expenses: Salaries and wagesEmployee benefits Supplies and services Subrecipient agreements Utilities, rent, and repairs Depreciation Interest expense Total operating expenses Results of operationsNon-Operating Revenues, Gains and Losses Pledges Gifts and bequests Investment income Net (loss) gain on investments and other assets Distribution of accumulated investment gains Net change in life income funds Pension-related charges other than net periodic pension income (cost)Net asset reclassifications and transfers Total non-operating activities (Decrease)
Increase in net assets Net assets at the beginning of the year Net assets at the end of the year 35,028 73,224 4,046 (24,436)(22,975)2,159 67,046 67,046 1,918,402$ 1,985,448 59,856 47,922 3,551 8,209 1,482 1,407 1,521 123,948 123,948 1,794,454$ 1,918,402 127,864 75,954 9,130 (1,854,380)
(455,680)(25,869)(825,440)(57,837)(3,006,258)
(2,823,586) 12,769,974
$ 9,946,388The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS it Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars) r---Permanently Restricted Total 2009 2008 2009 2008 Operating Activities Operating Revenues:
Tuition and similar revenues, net of discount of $ $ $ 217,389 $ 229,099 $214,383 in 2009 and $192,131 in 2008 Research revenues: 1,153,620 1,038,998 Direct 221,452 206,172 Indirect 1,375,072 1,245,170 Total research revenues 100,072 122,091 Gifts and bequests for current use 157,110 162,994 Fees and services 86,133 93,268 Other programs 100,624 184,119 Investment income 455,680 228,403 Net gains on investments, distributed 94,041 91,190 Auxiliary enterprises 57,837 52,094 Net asset reclassifications and transfers 2,643,958 2,408,428 Total operating revenues Operating Expenses:
967,383 896,145 Salaries and wages 173,616 170,266 Employee benefits 872,725 822,953 Supplies and services 85,550 68,944 Subrecipient agreements 181,264 177,308 Utilities, rent, and repairs 12\018 111,611 Depreciation 55,730 47,020 Interest expense 2,461,286 2,294,247 Total operating expenses 182,672 114,181 Results of operations Non-Operating Revenues, Gains and Losses 35,028 59,856 127,864 205,972 Pledges 73,224 47,922 75,954 57,889 Gifts and bequests 4,046 3,551 9,130 9,935 Investment income (24,436) 8,209 (1,854,380) 154,765 Net (loss) gain on investments and other assets 1,482 (455,680)
(228,403)
Distribution of accumulated investment gains (22,975) 1,407 (25,869) 750 Net change in life income funds Pension-related charges other than net periodic (825,440)
(188,325) pension income (cost) 2,159 1,521 (57,837) (52,094)
Net asset reclassifications and transfers 67,046 123,948 (3,006,258)
(39,511) Total non-operating activities 67,046 123,948 (2,823,586) 74,670 (Decrease)
Increase in net assets 1,918,402 1,794,454 12,769,974 12,695,304 Net assets at the beginning of the year $ 1,985,448
$ 1,918,402
$ 9,946,388
$12,769,974 Net assets at the end of the year Tbe accompanying notes m*e an integral pm-r of tbe financial statemellts.
FINANCIAL STATEMENTS 11 Massachusetts Institute of Technology Statements of Activities for the years ended June 30, 2009 and 2008 (in thousands of dollars) r---Permanently Restricted Total 2009 2008 2009 2008 Operating Activities Operating Revenues:
Tuition and similar revenues, net of discount of $ $ $ 217,389 $ 229,099 $214,383 in 2009 and $192,131 in 2008 Research revenues: 1,153,620 1,038,998 Direct 221,452 206,172 Indirect 1,375,072 1,245,170 Total research revenues 100,072 122,091 Gifts and bequests for current use 157,110 162,994 Fees and services 86,133 93,268 Other programs 100,624 184,119 Investment income 455,680 228,403 Net gains on investments, distributed 94,041 91,190 Auxiliary enterprises 57,837 52,094 Net asset reclassifications and transfers 2,643,958 2,408,428 Total operating revenues Operating Expenses:
967,383 896,145 Salaries and wages 173,616 170,266 Employee benefits 872,725 822,953 Supplies and services 85,550 68,944 Subrecipient agreements 181,264 177,308 Utilities, rent, and repairs 12\018 111,611 Depreciation 55,730 47,020 Interest expense 2,461,286 2,294,247 Total operating expenses 182,672 114,181 Results of operations Non-Operating Revenues, Gains and Losses 35,028 59,856 127,864 205,972 Pledges 73,224 47,922 75,954 57,889 Gifts and bequests 4,046 3,551 9,130 9,935 Investment income (24,436) 8,209 (1,854,380) 154,765 Net (loss) gain on investments and other assets 1,482 (455,680)
(228,403)
Distribution of accumulated investment gains (22,975) 1,407 (25,869) 750 Net change in life income funds Pension-related charges other than net periodic (825,440)
(188,325) pension income (cost) 2,159 1,521 (57,837) (52,094)
Net asset reclassifications and transfers 67,046 123,948 (3,006,258)
(39,511) Total non-operating activities 67,046 123,948 (2,823,586) 74,670 (Decrease)
Increase in net assets 1,918,402 1,794,454 12,769,974 12,695,304 Net assets at the beginning of the year $ 1,985,448
$ 1,918,402
$ 9,946,388
$12,769,974 Net assets at the end of the year Tbe accompanying notes m*e an integral pm-r of tbe financial statemellts.
FINANCIAL STATEMENTS 11 Massachusetts Institute of Technology Statements of Cash Flows for the years ended June 30, 2009 and 2008 (in thousands of dollars)2009 2008 Cash Flow from Operating Activities: (D ecrease) increase in net assets ................................................
Adjustments to reconcile change in net assets to net cash provided by operating activities:
N et loss (gain) on investm ents ..............................................
Change in retirement plan asset, net of change in accrued benefit liability..
D epreciation
...................................................
G ifts of securities ...............................................
N et loss on life incom e funds ......................................
Amortization of bond premiums and discounts and other adjustments
.....Change in operating assets and liabilities:
...............................
Pledges receivable
.........................................
.....A ccounts receivable
..............................................C ontracts in progress ............................................
Deferred charges, inventories and other assets ........................
Accounts payable, accruals and other liabilities, excluding building and equipm ent accruals ...........................................
Liabilities due under life income fund agreements
.....................
Deferred revenue and other credits .................................
A dvance paym ents ........................................................
Reclassify investm ent incom e ..................................................
Reclassify contributed securities received as payment on pledges ...................
Reclassify contributions restricted for long-term investment
.........................
Net cash (used in) provided by operating activities
...........................
Cash Flow from Investing Activities:
Purchase of land, buildings and equipment
.......................................
Purchases of investm ents .....................................................Proceeds from sale of investments, including contributed securities ...................
Student notes issued ..................................................
......Collections from student notes .................................................
N et cash used in investing activities
.......................................
Cash Flow from Financing Activities:
Proceeds from contributions restricted for: Investm ent in endowm ent .................................................
Investm ent in plant and other ..............................................
Less: contributed securities, gifts for endowment, plant and other .................Total proceeds from contributions
.........................................
Increase in investment income for restricted purposes ..............................
Proceeds from borrowings and re-marketing of swap related to borrowings
............
Repaym ent of borrowings
.....................................................
Increase in government advances for student loans .................................
Net cash provided by financing activities
...................................
N et decrease in cash .........................................................
Cash at the beginning of the year ...............................................
C ash at the end of the year ....................................................
$ (2,823,586) 1,854,380 800,472 125,018 (1,894)38,230 (2,838)(21,433)(17,234)(17,883)4,859 22,928 (5,766)10,600 28,094 (9,130)(22,479)(75,954)(113,616)(299,049)(21,221,423) 21,105,189 (16,016)14,019 (417,280)73,224 2,730 (2,145)73,809 9,130 649,150 (205,196)284 527,177 (3,719)81,106$ 77,387$ 74,670 (154,765)179,589 111,611 (5,554)12,174 (2,039)(111,860)(16,455)(14,793)(1,536)(830)3,711 2,050 36,452 (9,935)(34,535)(57,889)10,066 (285,877)(65,738,595) 65,687,444 (15,673)17,599 (335,102)47,922 9,967 (13,457)44,432 9,935 261,815 (2,085)301 314,398 (10,638)91,744 81,106$The accompanying notes are an integral part of the financial statements.
12 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Cash Flows for the years ended June 30, 2009 and 2008 (in thousands of dollars) Cash Flow from Operating Activities: (Decrease) increase in net assets ............................................... . Adjustments to reconcile change in net assets to net cash provided by operating activities:
Net loss (gain) on investments
............................................. . Change in retirement plan asset, net of change in accrued benefit liability
.......... . Depreciation
........................................................... . Gifts of securities
....................................................... . Net loss on life income funds .............................................. . Amortization of bond premiums and discounts and other adjustments
.......... , .. . Change in operating assets and liabilities:
....................................... . Pledges receivable
.........................................
............. . Accounts receivable
...................................................... . Contracts in progress .................................................... . Deferred charges, inventories and other assets ................................ . Accounts payable, accruals and other liabilities, excluding building and equipment accruals ................................................... . Liabilities due under life income fund agreements
............................. . Deferred revenue and other credits ......................................... . Advance payments ....................................................... . Reclassify investment income ................................................. . Reclassify contributed securities received as payment on pledges . ; .................. . Reclassify contributions restricted for long-term investment
........................ . Net cash (used in) provided by operating activities
.......................... . Cash Flow from Investing Activities:
Purchase of land, buildings and equipment
...................................... . Purchases of investments
.................................................... . Proceeds from sale of investments, including contributed securities
.................. . Student notes issued ..................................................
..... . Collections from student notes ................................................ . Net cash used in investing activities
...................................... . Cash Flow from Financing Activities:
Proceeds from contributions restricted for: Investment in endowment
................................................ . Investment in plant and other ............................................. . Less: contributed securities, gifts for endowment, plant and other ................ . Total proceeds from contributions
........................................ . Increase in investment income for restricted purposes ............................. . Proceeds from borrowings and re-marketing of swap related to borrowings
........... . Repayment of borrowings
.................................................... . Increase in government advances for student loans ................................ . Net cash provided by financing activities
.................................. . Net decrease in cash ........................................................ . Cash at the beginning of the year. ............................................. . Cash at the end of the year ................................................... . The accompanying notes are an integral part of the financial statements.
2009 $ (2,823,586) 1,854,380 800,472 125,018 (1,894) 38,230 (2,838) (21,433) (17,234)
(17,883) 4,859 22,928 (5,766) 10,600 28,094 (9,130) (22,479) (75,954) (113,616)
(299,049)
(21,221,423) 21,105,189 (16,016) 14,019 (417,280) 73,224 2,730 (2,145) 73,809 9,130 649,150 (205,196) 284 527,177 (3,719) 81,106 $ 77,387 2008 $ 74,670 (154;765) 179,589 111,611 (5,554) 12,174 (2,039) (111,860)
(16,455) (14,793) (1,536) (830) 3,711 2,050 36,452 (9,935) (34,535)
(57,889) 10,066 (285,877)
(65,738,595) 65,687,444 (15,673) 17,599 (335,102) 47,922 9,967 (13,457) 44,432 9,935 261,815 (2,085) 301 314,398 (10,638) 91,744 $ 81,106 12 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Statements of Cash Flows for the years ended June 30, 2009 and 2008 (in thousands of dollars) Cash Flow from Operating Activities: (Decrease) increase in net assets ............................................... . Adjustments to reconcile change in net assets to net cash provided by operating activities:
Net loss (gain) on investments
............................................. . Change in retirement plan asset, net of change in accrued benefit liability
.......... . Depreciation
........................................................... . Gifts of securities
....................................................... . Net loss on life income funds .............................................. . Amortization of bond premiums and discounts and other adjustments
.......... , .. . Change in operating assets and liabilities:
....................................... . Pledges receivable
.........................................
............. . Accounts receivable
...................................................... . Contracts in progress .................................................... . Deferred charges, inventories and other assets ................................ . Accounts payable, accruals and other liabilities, excluding building and equipment accruals ................................................... . Liabilities due under life income fund agreements
............................. . Deferred revenue and other credits ......................................... . Advance payments ....................................................... . Reclassify investment income ................................................. . Reclassify contributed securities received as payment on pledges . ; .................. . Reclassify contributions restricted for long-term investment
........................ . Net cash (used in) provided by operating activities
.......................... . Cash Flow from Investing Activities:
Purchase of land, buildings and equipment
...................................... . Purchases of investments
.................................................... . Proceeds from sale of investments, including contributed securities
.................. . Student notes issued ..................................................
..... . Collections from student notes ................................................ . Net cash used in investing activities
...................................... . Cash Flow from Financing Activities:
Proceeds from contributions restricted for: Investment in endowment
................................................ . Investment in plant and other ............................................. . Less: contributed securities, gifts for endowment, plant and other ................ . Total proceeds from contributions
........................................ . Increase in investment income for restricted purposes ............................. . Proceeds from borrowings and re-marketing of swap related to borrowings
........... . Repayment of borrowings
.................................................... . Increase in government advances for student loans ................................ . Net cash provided by financing activities
.................................. . Net decrease in cash ........................................................ . Cash at the beginning of the year. ............................................. . Cash at the end of the year ................................................... . The accompanying notes are an integral part of the financial statements.
2009 $ (2,823,586) 1,854,380 800,472 125,018 (1,894) 38,230 (2,838) (21,433)
(17,234)
(17,883) 4,859 22,928 (5,766) 10,600 28,094 (9,130) (22,479) (75,954) (113,616)
(299,049)
(21,221,423) 21,105,189 (16,016) 14,019 (417,280) 73,224 2,730 (2,145) 73,809 9,130 649,150 (205,196) 284 527,177 (3,719) 81,106 $ 77,387 2008 $ 74,670 (154;765) 179,589 111,611 (5,554) 12,174 (2,039) (111,860)
(16,455) (14,793) (1,536) (830) 3,711 2,050 36,452 (9,935) (34,535)
(57,889) 10,066 (285,877)
(65,738,595) 65,687,444 (15,673) 17,599 (335,102) 47,922 9,967 (13,457) 44,432 9,935 261,815 (2,085) 301 314,398 (10,638) 91,744 $ 81,106 12 MIT REPORT OF THE TREASURER 2009 Notes to Financial Statements A. Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. The financial statements include MIT and its wholly owned subsidiaries.
Net assets, revenues, expenses, gains and losses are classi-fied into three categories based on the existence or absence of donor-imposed restrictions.
The categories are perma-nently restricted, temporarily restricted and unrestricted net assets. Unconditional promises to give (pledges) are recorded as receivables and revenues within the appropriate net asset category.Permanently restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that are required by donors to be permanently retained.Pledges, trusts and remainder interests are reported at their estimated fair values.Temporarily restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that can be expended but for which restrictions have not yet been met. Such restrictions include purpose restrictions where donors have specified the purpose for which the net assets are to be spent, or time restrictions imposed by donors or implied by the nature of the gift (capital projects, pledges to be paid in the future, life income funds) or by interpretations of law (net gains on permanently restricted gifts, which have not been appropriated for spending).
Net unrealized losses on permanently restricted endowment funds for which the book value exceeds market value are recorded as a reduction to unrestricted net assets.Unrestricted net assets are all the remaining net assets of MIT. Donor-restricted gifts and unexpended restricted endowment income that are received and either spent, or the restriction is otherwise met within the same year, are reported as unrestricted revenue. Gifts of long-lived assets are reported as unrestricted revenue. Gifts specified for the acquisition or construction of long-lived assets are reported as temporarily restricted net assets until the monies are expended and the buildings are put into use, at which point they are reclassified to unrestricted net assets.Net asset reclassifications and transfers consist primarily of payments on unrestricted pledges and use of building funds in accordance with donor restrictions.
Expirations of temporary restrictions on net assets and the release of per-manent restrictions by a donor are also reported as reclas-sifications of net assets from temporarily or permanently restricted net assets to unrestricted net assets.MIT administers its various funds, including endowments, funds functioning as endowments, school or departmental funds and related accumulated gains in accordance with the principles of "Fund Accounting." Gifts are recorded in fund accounts and investment income is distributed to funds annually.
Income distributed to funds may be a combination of capital appreciation and yield pursuant to MIT's total return investment and spending policies. Each year, the Executive Committee of the Corporation approves the rates of distribution of investment return to the funds from MIT's investment pools. See Note K for further information on income distributed to funds.MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
Results of operations are displayed in the Statements of Activities.
MIT is a nonprofit organization that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, originally recognized in October 1926, with the most recent affirma-tion letter dated July 2001.Cash Current banking arrangements do not require outstand-ing checks and wires to be funded until actually presented for payment. Outstanding checks and wires in the amount of $22.6 million and $21.4 million in 2009 and 2008, respectively, are recorded in accounts payable until they are presented to our banks for payment. Certain cash balances, totaling $42.1 million and $41.0 million in 2009 and 2008, respectively, are restricted for use in connection with gov-ernment research.Sponsored ResearchRevenue associated with contracts and grants is recognized as related costs are incurred.
The capital costs of buildings and equipment are depreciated over their estimated life cycle and the sponsored research recovery allowance for depreciation is treated as indirect research revenue.
MIT has recorded reimbursement of indirect costs relating to sponsored research at negotiated fixed billing rates. The income generated by the negotiated rates is adjusted each fiscal year to reflect any variance between the negotiated fixed rates and rates based on actual cost. The actual cost rate is audited by the Defense Contract Audit Agency (DCAA) and a final fixed-rate agreement is signed by the NOTES TO FINANCIAL STATEMENTS 13 Notes to Financial Statements A. Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. The financial statements include MIT and its wholly owned subsidiaries.
Net assets, revenues, expenses, gains and losses are fied into three categories based on the existence or absence of donor-imposed restrictions.
The categories are nently restricted, temporarily restricted and unrestricted net assets. Unconditional promises to give (pledges) are recorded as receivables and revenues within the appropriate net asset category.
Permanently restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that are required by donors to be permanently retained.
Pledges, trusts and remainder interests are reported at their estimated fair values. Temporarily restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that can be expended but for which restrictions have not yet been met. Such restrictions include purpose restrictions where donors have specified the purpose for which the net assets are to be spent, or time restrictions imposed by donors or implied by the nature of the gift (capital projects, pledges to be paid in the future, life income funds) or by interpretations of law (net gains on permanently restricted gifts, which have not been appropriated for spending).
Net unrealized losses on permanently restricted endowment funds for which the book value exceeds market value are recorded as a reduction to unrestricted net assets. Unrestricted net assets are all the remaining net assets of MIT. Donor-restricted gifts and unexpended restricted endowment income that are received and either spent, or the restriction is otherwise met within the same year, are reported as unrestricted revenue. Gifts oflong-lived assets are reported as unrestricted revenue. Gifts specified for the acquisition or construction of long-lived assets are reported as temporarily restricted net assets until the monies are expended and the buildings are put into use, at which point they are reclassified to unrestricted net assets. Net asset reclassifications and transfers consist primarily of payments on unrestricted pledges and use of building funds in accordance with donor restrictions.
Expirations of temporary restrictions on net assets and the release of manent restrictions by a donor are also reported as sifications of net assets from temporarily or permanently restricted net assets to unrestricted net assets. NOTES TO FINANCIAL STATEMENTS MIT administers its various funds, including endowments, funds functioning as endowments, school or departmental funds and related accumulated gains in accordance with the principles of "Fund Accounting." Gifts are recorded in fund accounts and investment income is distributed to funds annually.
Income distributed to funds may be a combination of capital appreciation and yield pursuant to MIT's total return investment and spending policies.
Each year, the Executive Committee of the Corporation approves the rates of distribution of investment return to the funds from MIT's investment pools. See Note K for further information on income distributed to funds. MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
Results of operations are displayed in the Statements of Activities.
MIT is a nonprofit organization that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, originally recognized in October 1926, with the most recent tion letter dated July 2001. Cash Current banking arrangements do not require ing checks and wires to be funded until actually presented for payment. Outstanding checks and wires in the amount of $22.6 million and $21.4 million in 2009 and 2008, respectively, are recorded in accounts payable until they are presented to our banks for payment. Certain cash balances, totaling $42.1 million and $41.0 million in 2009 and 2008, respectively, are restricted for use in connection with ernment research.
Sponsored Research Revenue associated with contracts and grants is recognized as related costs are incurred.
The capital costs of buildings and equipment are depreciated over their estimated life cycle and the sponsored research recovery allowance for depreciation is treated as indirectresearch revenue. MIT has recorded reimbursement of indirect costs relating to sponsored research at negotiated fixed billing rates. The income generated by the negotiated rates is adjusted each fiscal year to reflect any variance between the negotiated fixed rates and rates based on actual cost. The actual cost rate is audited by the Defense Contract Audit Agency (DCAA) and a final fixed-rate agreement is signed by the 13 Notes to Financial Statements A. Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. The financial statements include MIT and its wholly owned subsidiaries.
Net assets, revenues, expenses, gains and losses are fied into three categories based on the existence or absence of donor-imposed restrictions.
The categories are nently restricted, temporarily restricted and unrestricted net assets. Unconditional promises to give (pledges) are recorded as receivables and revenues within the appropriate net asset category.
Permanently restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that are required by donors to be permanently retained.
Pledges, trusts and remainder interests are reported at their estimated fair values. Temporarily restricted net assets include gifts, pledges, trusts and remainder interests, and income and gains that can be expended but for which restrictions have not yet been met. Such restrictions include purpose restrictions where donors have specified the purpose for which the net assets are to be spent, or time restrictions imposed by donors or implied by the nature of the gift (capital projects, pledges to be paid in the future, life income funds) or by interpretations of law (net gains on permanently restricted gifts, which have not been appropriated for spending).
Net unrealized losses on permanently restricted endowment funds for which the book value exceeds market value are recorded as a reduction to unrestricted net assets. Unrestricted net assets are all the remaining net assets of MIT. Donor-restricted gifts and unexpended restricted endowment income that are received and either spent, or the restriction is otherwise met within the same year, are reported as unrestricted revenue. Gifts oflong-lived assets are reported as unrestricted revenue. Gifts specified for the acquisition or construction of long-lived assets are reported as temporarily restricted net assets until the monies are expended and the buildings are put into use, at which point they are reclassified to unrestricted net assets. Net asset reclassifications and transfers consist primarily of payments on unrestricted pledges and use of building funds in accordance with donor restrictions.
Expirations of temporary restrictions on net assets and the release of manent restrictions by a donor are also reported as sifications of net assets from temporarily or permanently restricted net assets to unrestricted net assets. NOTES TO FINANCIAL STATEMENTS MIT administers its various funds, including endowments, funds functioning as endowments, school or departmental funds and related accumulated gains in accordance with the principles of "Fund Accounting." Gifts are recorded in fund accounts and investment income is distributed to funds annually.
Income distributed to funds may be a combination of capital appreciation and yield pursuant to MIT's total return investment and spending policies.
Each year, the Executive Committee of the Corporation approves the rates of distribution of investment return to the funds from MIT's investment pools. See Note K for further information on income distributed to funds. MIT's operations include tuition, research revenues, unrestricted gifts and bequests for current use, fees and services, other programs, investment income, the portion of net investment gains distributed to funds under MIT's spending policy, auxiliary revenues, payments on pledges for unrestricted gifts, and operating expenditures.
Results of operations are displayed in the Statements of Activities.
MIT is a nonprofit organization that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, originally recognized in October 1926, with the most recent tion letter dated July 2001. Cash Current banking arrangements do not require ing checks and wires to be funded until actually presented for payment. Outstanding checks and wires in the amount of $22.6 million and $21.4 million in 2009 and 2008, respectively, are recorded in accounts payable until they are presented to our banks for payment. Certain cash balances, totaling $42.1 million and $41.0 million in 2009 and 2008, respectively, are restricted for use in connection with ernment research.
Sponsored Research Revenue associated with contracts and grants is recognized as related costs are incurred.
The capital costs of buildings and equipment are depreciated over their estimated life cycle and the sponsored research recovery allowance for depreciation is treated as indirectresearch revenue. MIT has recorded reimbursement of indirect costs relating to sponsored research at negotiated fixed billing rates. The income generated by the negotiated rates is adjusted each fiscal year to reflect any variance between the negotiated fixed rates and rates based on actual cost. The actual cost rate is audited by the Defense Contract Audit Agency (DCAA) and a final fixed-rate agreement is signed by the 13 A. Accounting Policies (continued)
U.S. Government and MIT. The variance between the negotiated fixed rate and the final audited rate results in a carry-forward (over or under recovery).
The carry-forwardwill be included in the calculation of negotiated fixed billing rates in future years. Any adjustment in the rate is chargedor credited to unrestricted net assets.Land, Buildings and Equipment Land, buildings and equipment are shown at cost or fair value as of the date of a gift, net of accumulated deprecia-tion. When expended, costs associated with the construc-tion of new facilities are shown as construction in progress until such projects are completed.
Depreciation is com-puted on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings, 3 to 25 years for equipment, and 4 to 6 years for software.
Fully depreciated assets were removed from the financial statements in the amount of$42.5 million and $52.3 million during 2009 and 2008, respectively.
Land, buildings and equipment at June 30, 2009 are shown in Table 1 below.Depreciation expense was $125.0 million in 2009 and$111.6 million in 2008. Net interest expense of $10.5 million and $4.8 million was capitalized during 2009 and 2008, respectively, in relation to MIT's construction projects.Tuition and Financial Aid Tuition and similar revenues, shown in Table 2 below, include tuition and fees in degree programs as well as tuition and fees for executive and continuing educationprograms at MIT.Table 2. Tuition and Similar Revenues (in thousands of dollars) 2009 2008 Tuition revenue ........ $
409,195 $ 387,803 Executive and continuing education revenues ..... 22,577 33,427 Total ................
431,772 421,230 Less: tuition discount ... (214,383)
(192,131)Net tuition ...........
$ 217,389 $ 229,099 Tuition support is awarded to undergraduate students by MIT based on need. Graduate students are provided with tuition support in connection with research assistance, teaching assistance and fellowship appointments.
Total financial aid granted to students was $376.1 million and$349.5 million in 2009 and 2008, respectively.
Of that amount, $118.7 million in 2009 and $117.6 million in 2008,was aid from sponsors.
Tuition support from MIT sources is displayed as tuition discount.
Components of financial aid are detailed in Table 3.Table 1. Land, Buildings and Equipment (in thousands of dollars)2009 2008 L and .................
Educational buildings
...Equipment
............
Software ..............
Total ................
Less: accumulated depreciation
...........
Construction in progress ..............
Software projects in progress ..............Land, buildings and equipment
...........
$ 51,944 2,372,275 220,709 33,084 2,678,012$ 51,944 2,181,649 187,670 43,273 2,464,536 (873,577)
(7891886)309,468 6,710$2,120,613 260,991 3,278$1,938,919 Table 3. Financial Aid (in thousands of dollars) I 2009 I I 2008 Institute External Total Institute External Total Sources Sponsors Financial Aid Sources Sponsors Financial Aid Tuition support ............
$ 214,383 $ 51,883 $ 266,266 $ 192,131 $ 52,873 $ 245,004 Stipends .................
15,566 11,943 27,509 13,418 12,229 25,647 Student salaries ...........
27,374 54,913 82,287 26,421 52,471 78,892 Total ..................
$257,323 $ 118,739 $ 376,062 $ 231,970 $ 117,573 $ 349,543 14MIT REPORT OF THE TREASURER 2009 A. Accounting Policies (continued)
U.S. Government and MIT. The variance between the negotiated fixed rate and the final audited rate results in a carry-forward (over or under recovery).
The carry-forward will be included in the calculation of negotiated fixed billing rates in furure years. Any adjustment in the rate is charged or credited to unrestricted net assets. Land, Buildings and Equipment Land, buildings and equipment are shown at cost or fair value as of the date of a gift, net of accumulated tion. When expended, costs associated with the tion of new facilities are shown as construction in progress until such projects are completed.
Depreciation is puted on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings, 3 to 25 years for equipment, and 4 to 6 years for software.
Fully depreciated assets were removed from the financial statements in the amount of $42.5 million and $52.3 million during 2009 and 2008, respectively.
Land, buildings and equipment at June 30, 2009 are shown in Table 1 below. Table 1. Land, Buildings and Equipment (in thousands of dollars) 2009 2008 Land ................ . $ 51,944 $ 51,944 Educational buildings
.. . 2,372,275 2,181,649 Equipment
........... . 220,709 187,670 SofnNare ............. . 33,084 43,273 TotaL .............. . 2,678,012 2,464,536 Less: accumulated depreciation
.......... . (873,577)
(789,886)
Construction in progress ............. . 309,468 260,991 Software projects in progress ............. . 6,710 3,278 Land, buildings and equipment. . . . . . . . . . .
$2,120,613
$1,938,919 Table 3. Financial Aid (in thousands of dollars) 2009 Institute External Sources Sponsors Tuition support ...........
$ 214,383 $ 51,883 Stipends .................
15,566 11,943 Srudent salaries ...........
27,374 54,913 Total. .................
$ 257,323 $ 118,739 14 $ $ Depreciation expense was $125.0 million in 2009 and $111.6 million in 2008. Net interest expense of $1 0.5 million and $4.8 million was capitalized during 2009 and 2008, respectively, in relation to MIT's construction projects.
Tuition and Financial Aid Tuition and similar revenues, shown in Table 2 below, include ruition and fees in degree programs as well as ruition and fees for executive and continuing education programs at MIT. Table 2. Tuition and Similar Revenues (in thousands of dollar'S) 2009 2008 Tuition revenue ........ $ 409,195 $ 387,803 Executive and continuing education revenues ..... 22,577 33,427 Total ................
431,772 421,230 Less: ruition discount ... (214,383) (192,131)
Net tuition ...........
$ 217,389 $ 229,099 Tuition support is awarded to undergraduate srudents by MIT based on need. Graduate srudents are provided with tuition support in connection with research assistance, teaching assistance and fellowship appointments.
Total financial aid granted to srudents was $376.1 million and $349.5 million in 2009 and 2008, respectively.
Of that amount, $118.7 million in 2009 and $117.6 million in 2008, was aid from sponsors.
Tuition support from MIT sources is displayed as ruition discount.
Components of financial aid are detailed in Table 3. 2008 Total Institute External Total Financial Aid Sources Sponsors Financial Aid 266,266 $ 192,131 $ 52,873 $ 245,004 27,509 13,418 12,229 25,647 82,287 26,421 52,471 78,892 376,062 $ 231,970 $ 117,573 $ 349,543 MIT REPORT OF THE TREASURER 2009 A. Accounting Policies (continued)
U.S. Government and MIT. The variance between the negotiated fixed rate and the final audited rate results in a carry-forward (over or under recovery).
The carry-forward will be included in the calculation of negotiated fixed billing rates in furure years. Any adjustment in the rate is charged or credited to unrestricted net assets. Land, Buildings and Equipment Land, buildings and equipment are shown at cost or fair value as of the date of a gift, net of accumulated tion. When expended, costs associated with the tion of new facilities are shown as construction in progress until such projects are completed.
Depreciation is puted on a straight-line basis over the estimated useful lives of 25 to 50 years for buildings, 3 to 25 years for equipment, and 4 to 6 years for software.
Fully depreciated assets were removed from the financial statements in the amount of $42.5 million and $52.3 million during 2009 and 2008, respectively.
Land, buildings and equipment at June 30, 2009 are shown in Table 1 below. Table 1. Land, Buildings and Equipment (in thousands of dollars) 2009 2008 Land ................ . $ 51,944 $ 51,944 Educational buildings
.. . 2,372,275 2,181,649 Equipment
........... . 220,709 187,670 SofnNare ............. . 33,084 43,273 TotaL .............. . 2,678,012 2,464,536 Less: accumulated depreciation
.......... . (873,577)
(789,886)
Construction in progress ............. . 309,468 260,991 Software projects in progress ............. . 6,710 3,278 Land, buildings and equipment. . . . . . . . . . .
$2,120,613
$1,938,919 Table 3. Financial Aid (in thousands of dollars) 2009 Institute External Sources Sponsors Tuition support ...........
$ 214,383 $ 51,883 Stipends .................
15,566 11,943 Srudent salaries ...........
27,374 54,913 Total. .................
$ 257,323 $ 118,739 14 $ $ Depreciation expense was $125.0 million in 2009 and $111.6 million in 2008. Net interest expense of $1 0.5 million and $4.8 million was capitalized during 2009 and 2008, respectively, in relation to MIT's construction projects.
Tuition and Financial Aid Tuition and similar revenues, shown in Table 2 below, include ruition and fees in degree programs as well as ruition and fees for executive and continuing education programs at MIT. Table 2. Tuition and Similar Revenues (in thousands of dollar'S) 2009 2008 Tuition revenue ........ $ 409,195 $ 387,803 Executive and continuing education revenues ..... 22,577 33,427 Total ................
431,772 421,230 Less: ruition discount ... (214,383) (192,131)
Net tuition ...........
$ 217,389 $ 229,099 Tuition support is awarded to undergraduate srudents by MIT based on need. Graduate srudents are provided with tuition support in connection with research assistance, teaching assistance and fellowship appointments.
Total financial aid granted to srudents was $376.1 million and $349.5 million in 2009 and 2008, respectively.
Of that amount, $118.7 million in 2009 and $117.6 million in 2008, was aid from sponsors.
Tuition support from MIT sources is displayed as ruition discount.
Components of financial aid are detailed in Table 3. 2008 Total Institute External Total Financial Aid Sources Sponsors Financial Aid 266,266 $ 192,131 $ 52,873 $ 245,004 27,509 13,418 12,229 25,647 82,287 26,421 52,471 78,892 376,062 $ 231,970 $ 117,573 $ 349,543 MIT REPORT OF THE TREASURER 2009 A. Accounting Policies (continued)
Gifts and Pledges Gifts and pledges are recognized when received.
Gifts of securities are recorded at their fair value at the date of con-tribution.
Gifts of equipment received from manufacturers and other donors during 2009 and 2008 were put into use and recorded by MIT at fair value.
Gifts of equipment totaled $2.0 million and $0.6 million in 2009 and 2008, respectively.
Pledges in the amount of $464.7 million and$443.3 million are recorded as receivables with the revenue assigned to the appropriate classification of restriction for 2009 and 2008, respectively.
Pledges consist of unconditional written promises to contribute to MIT in the future and are recorded after discounting the future cash flows to the present value.MIT records items of collections as a gift at nominal value.They are received for educational purposes and generally displayed throughout MIT They are not disposed of forfinancial gain or otherwise encumbered in any manner.Advance Payments Amounts received by MIT from the U.S. Government, cor-porations, industrial sources, foundations and other non-MIT sponsors under the terms of agreements that generally require the exchange of assets, rights, or privileges between MIT and the sponsor are recorded as advance payments.Revenue is recognized when MIT fulfills the terms of the agreement.
Life Income Funds MIT's life income fund agreements with donors consist primarily of irrevocable charitable gift annuities, pooled income funds, and charitable remainder trusts for which MIT serves as trustee. Assets are invested and payments are made to donors and other beneficiaries in accordance with the respective agreements.
MIT records the assets that are associated with each life income fund at fair value and records as liabilities the present value of the estimated future payments at current interest rates to be made to the donors and beneficiaries under these agreements.
Life income fund liabilities are classified as Level 3 under the valuation hierarchy disclosed in Note B.Recently Adopted Accounting Pronouncements SFAS No. 157 MIT adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), as of July 1, 2008. SEAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
SIAS No.157 applies to fair value measurements that are already required or permitted by other accounting standards and does not require any new fair value measurements.
The statement defines fair value as "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." MIT adopted FASB Staff Position 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP 157-3), as of July 1, 2008. FSP 157-3 amends SEAS No. 157 to clarify the application of fair value in inactive markets and allows for the use of management's internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of SIAS No. 157 has not changed and continues to be the determination of the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP 157-3 did not have a material effect on MIT's results of operations, financial position or liquidity.
MIT adopted the provisions of FASB Staff Position 157-4, Determining Fair Value flWhen the Volume and Level ofActivity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4), as ofJuly 1, 2008, and applied them prospectively in 2009.FSP 157-4 provides additional guidance for estimating fair value in accordance with SEAS No. 157 when the volume and level of activity for the asset or liability havesignificantly decreased and re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SIAS No. 157. The scope of this FSP does not include assets and liabilities measured under Level 1 inputs (quoted prices in active markets for identical assets).SFAS No. 159 In conjunction with SIAS No. 157, FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
-including an Amendment of FASB Statement No. 115 (SIAS No. 159).SIAS No. 159 allows an entity the irrevocable option to elect fair value to measure certain financial assets and liabilities under an instrument-by-instrument election, and establishes additional disclosure requirements.
MIT elected the fair value option under the provisions of SEAS No.159 in accounting for pledges receivable and life income fund liabilities as ofJuly 1, 2008. The adoption of SEAS No. 159 did not have a material impact on MIT's financial statements.
NOTES TO FINANCIAL STATEMENTS 15 A. Accounting Policies (continued)
Gifts and Pledges Gifts and pledges are recognized when received.
Gifts of securities are recorded at their fair value at the date of tribution.
Gifts of equipment received from manufacturers and other donors during 2009 and 2008 were put into use and recorded by MIT at fair value. Gifts of equipment totaled $2.0 million and $0.6 million in 2009 and 2008, respectively.
Pledges in the amount of $464.7 million and $443.3 million are recorded as receivables with the revenue assigned to the appropriate classification of restriction for 2009 and 2008, respectively.
Pledges consist of unconditional written promises to contribute to MIT in the future and are recorded after discounting the future cash flows to the present value. MIT records items of collections as a gift at nominal value. They are received for educational purposes and generally displayed throughout MIT. They are not disposed of for financial gain or otherwise encumbered in any manner. Advance Payments Amounts received by MIT from the U.S. Government, porations, industrial sources, foundations and other MIT sponsors under the terms of agreements that generally require the exchange of assets, rights, or privileges between MIT and the sponsor are recorded as advance payments.
Revenue is recognized when MIT fulfills the terms of the agreement.
Life Income Funds MIT's life income fund agreements with donors consist primarily of irrevocable charitable gift annuities, pooled income funds, and charitable remainder trusts for which MIT serves as trustee. Assets are invested and payments are made to donors and other beneficiaries in accordance with the respective agreements.
MIT records the assets that are associated with each life income fund at fair value and records as liabilities the present value of the estimated future payments at current interest rates to be made to the donors and beneficiaries under these agreements.
Life income fund liabilities are classified as Level 3 under the valuation hierarchy disclosed in Note B. Recently Adopted Accounting Pronouncements SFAS No. 157 MIT adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), as of July 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands NOTES TO FINANCIAL STATEMENTS disclosures about fair value measurements.
SFAS No. 157 applies to fair value measurements that are already required or permitted by other accounting standards and does not require any new fair value measurements.
The statement defines fair value as "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." MIT adopted FASB Staff Position 157-3, Determining the Fair Value of a Financial Asset When the Mm"ket fo7* That Asset Is Not Active (FSP 157-3), as ofJuly 1, 2008. FSP 157-3 amends SFAS No. 157 to clarify the application of fair value in inactive markets and allows for the use of management's internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of SFAS No.157 has not changed and continues to be the determination of the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP 157-3 did not have a material effect on MIT's results of operations, financial position or liquidity.
MIT adopted the provisions of FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Dw"eased and IdentifYing Transactions That Are Not Orderly (FSP 157-4), as ofJuly 1, 2008, and applied them prospectively in 2009. FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased and re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SFAS No. 157. The scope of this FSP does not include assets and liabilities measured under Level 1 inputs (quoted prices in active markets for identical assets). SFAS No. 159 In conjunction with SFAS No. 157, FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
-including an Amendment ofFASB Statement No. 115 (SFAS No. 159). SFAS No. 159 allows an entity the irrevocable option to elect fair value to measure certain financial assets and liabilities under an instrument-by-instrument election, and establishes additional disclosure requirements.
MIT elected the fair value option under the provisions of SFAS No. 159 in accounting for pledges receivable and life income fund liabilities as of July 1, 2008. The adoption of SFAS No. 159 did not have a material impact on MIT's financial statements.
15 A. Accounting Policies (continued)
Gifts and Pledges Gifts and pledges are recognized when received.
Gifts of securities are recorded at their fair value at the date of tribution.
Gifts of equipment received from manufacturers and other donors during 2009 and 2008 were put into use and recorded by MIT at fair value. Gifts of equipment totaled $2.0 million and $0.6 million in 2009 and 2008, respectively.
Pledges in the amount of $464.7 million and $443.3 million are recorded as receivables with the revenue assigned to the appropriate classification of restriction for 2009 and 2008, respectively.
Pledges consist of unconditional written promises to contribute to MIT in the future and are recorded after discounting the future cash flows to the present value. MIT records items of collections as a gift at nominal value. They are received for educational purposes and generally displayed throughout MIT. They are not disposed of for financial gain or otherwise encumbered in any manner. Advance Payments Amounts received by MIT from the U.S. Government, porations, industrial sources, foundations and other MIT sponsors under the terms of agreements that generally require the exchange of assets, rights, or privileges between MIT and the sponsor are recorded as advance payments.
Revenue is recognized when MIT fulfills the terms of the agreement.
Life Income Funds MIT's life income fund agreements with donors consist primarily of irrevocable charitable gift annuities, pooled income funds, and charitable remainder trusts for which MIT serves as trustee. Assets are invested and payments are made to donors and other beneficiaries in accordance with the respective agreements.
MIT records the assets that are associated with each life income fund at fair value and records as liabilities the present value of the estimated future payments at current interest rates to be made to the donors and beneficiaries under these agreements.
Life income fund liabilities are classified as Level 3 under the valuation hierarchy disclosed in Note B. Recently Adopted Accounting Pronouncements SFAS No. 157 MIT adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), as of July 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands NOTES TO FINANCIAL STATEMENTS disclosures about fair value measurements.
SFAS No. 157 applies to fair value measurements that are already required or permitted by other accounting standards and does not require any new fair value measurements.
The statement defines fair value as "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." MIT adopted FASB Staff Position 157-3, Determining the Fair Value of a Financial Asset When the Mm"ket fo7* That Asset Is Not Active (FSP 157-3), as ofJuly 1, 2008. FSP 157-3 amends SFAS No. 157 to clarify the application of fair value in inactive markets and allows for the use of management's internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of SFAS No.157 has not changed and continues to be the determination of the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP 157-3 did not have a material effect on MIT's results of operations, financial position or liquidity.
MIT adopted the provisions of FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Dw"eased and IdentifYing Transactions That Are Not Orderly (FSP 157-4), as ofJuly 1, 2008, and applied them prospectively in 2009. FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157 when the volume and level of activity for the asset or liability have significantly decreased and re-emphasizes that regardless of market conditions the fair value measurement is an exit price concept as defined in SFAS No. 157. The scope of this FSP does not include assets and liabilities measured under Level 1 inputs (quoted prices in active markets for identical assets). SFAS No. 159 In conjunction with SFAS No. 157, FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
-including an Amendment ofFASB Statement No. 115 (SFAS No. 159). SFAS No. 159 allows an entity the irrevocable option to elect fair value to measure certain financial assets and liabilities under an instrument-by-instrument election, and establishes additional disclosure requirements.
MIT elected the fair value option under the provisions of SFAS No. 159 in accounting for pledges receivable and life income fund liabilities as of July 1, 2008. The adoption of SFAS No. 159 did not have a material impact on MIT's financial statements.
15 A. Accounting Policies (continued)
UPMIFA and FSP 117-1 SFAS No. 165 In July 2009, the Commonwealth of Massachusetts enacted a version of the Uniform Prudent Management ofInstitutional Funds Act of 2006 (UPMIFA), which replaced Chapter 180A, Massachusetts Attorney General's June 1995 statement of position, the Uniform Management Institutional Funds Act (UMIFA). The new law, which has an effective date of June 30, 2009, eliminates the historical dollar threshold and establishes prudent spending guidelines that consider both the duration and preservation of the fund. As a result of this enactment, subject to the donor's intent as expressedin a gift agreement or similar document, a Massachusetts charitable organization may now spend the amount of the principal and income of an endowment fund, even from an underwater fund, after considering the factors listed in the Act.MIT adopted 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 (FSP 117-1), as of July 1, 2008. FSP 117-1 provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of UPMIFA. The adoption of FSP 117-1 had no impact on the way that MIT classifies donor-restricted endowment funds, but does require additional financial statement disclosures about MIT's endowment funds. The additional disclosures are included in Note K.MIT adopted FASB Statement of Financial Accounting Standards No. 165, Subsequent Events (SIAS No. 165), as of June 30, 2009. SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of SFAS No.165 did not have a material impact on MIT's financial statements.
MIT has evaluated subsequent events through September 16, 2009, the date of financial statement issuance.Non-Cash Items Non-cash transactions excluded from the Statements of Cash Flows include the (decrease) increase in collateral for securities lending and minority interest of ($195.2)million and $35.5 million, as well as $30.3 million and $21.5 million of accrued liabilities related to plant and equipment purchases, for 2009 and 2008, respectively.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
ReclassificationsCertain June 30, 2008 balances previously reported have been reclassified to conform to the June 30, 2009 presentation.
B. Investments Investment transactions are accounted for on the trade date.Realized gains and losses are recorded by MIT using the average cost basis. Premiums and discounts on securities purchased and securities sold short are amortized using the effective yield method over the life of the respective security when cash collection is expected and included in interest income (long investments) or interest expense (short investments).
Dividend income is recorded on the ex-dividend date.Cash equivalents include money market funds, commercial paper, banker acceptances and negotiable certificates of deposit.MIT may utilize various derivative instruments, such as forwards, futures, interest rate, total return or currency swaps or forward contracts to increase or decrease its exposure to changes in the level of interest rates, underlying asset values or to partially offset exchange rate movements.
Derivative instruments are recorded at fair value. As of June 30, 2009, MIT had entered into several interest rate swap contracts.
Certain of the contracts were executed to manage the interest rate risk associated with its Massachusetts Health and Educational Facilities Authority (MIHEFA)variable rate debt portfolios; others were to manage overall interest rate risk of the portfolio.
The interest-rate swap agreements were recorded at an estimated market value 16 MIT REPORT OF THE TREASURER 2009 A. Accounting Policies (continued)
UPMIFA and FSP 117-1 In July 2009, the Commonwealth of Massachusetts enacted a version of the UnifOt711 Prudent Management of Institutional Funds Act of2006 (UPMIFA), which replaced Chapter 180A, Massachusetts Attorney General's June 1995 statement of position, the Uniform Management Institutional Funds Act (UMIFA). The new law, which has an effective date of June 30,2009, eliminates the historical dollar threshold and establishes prudent spending guidelines that consider both the duration and preservation of the fund. As a result of this enactment, subject to the donor's intent as expressed in a gift agreement or similar document, a Massachusetts charitable organization may now spend the amount of the principal and income of an endowment fund, even from an underwater fund, after considering the factors listed in the Act. MIT adopted FASB Staff Position 117-1, Endowments of Not-for-Profit Organizations:
Net Asset Classification of Funds Subject to an Enacted Version of the Unifol711 Pntdent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds (FSP 117-1), as of July 1,2008. FSP 117-1 provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of UPMIFA. The adoption of FSP 117-1 had no impact on the way that MIT classifies donor-restricted endowment funds, but does require additional financial statement disclosures about MIT's endowment funds. The additional disclosures are included in Note K. B. Investments Investment transactions are accounted for on the trade date. Realized gains and losses are recorded by MIT using the average cost basis. Premiums and discounts on securities purchased and securities sold short are amortized using the effective yield method over the life of the respective security when cash collection is expected and included in interest income (long investments) or interest expense (short investments).
Dividend income is recorded on the ex-dividend date. Cash equivalents include money market funds, commercial paper, banker acceptances and negotiable certificates of deposit. 16 SFAS No. 165 MIT adopted FASB Statement of Financial Accounting Standards No. 165, Subsequent Events (SFAS No. 165), as of June 30, 2009. SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of SFAS No.165 did not have a material impact on MIT's financial statements.
MIT has evaluated subsequent events through September 16, 2009, the date of financial statement issuance.
Non-Cash Items Non-cash transactions excluded from the Statements of Cash Flows include the (decrease) increase in collateral for securities lending and minority interest of ($195 .2) million and $35.5 million, as well as $30.3 million and $21.5 million of accrued liabilities related to plant and equipment purchases, for 2009 and 2008, respectively.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications Certain June 30, 2008 balances previously reported have been reclassified to conform to the June 30, 2009 presentation.
MIT may utilize various derivative instruments, such as forwards, futures, interest rate, total return or currency swaps or forward contracts to increase or decrease its exposure to changes in the level of interest rates, underlying asset values or to partially offset exchange rate movements.
Derivative instruments are recorded at fair value. As ofJune 30,2009, MIT had entered into several interest rate swap contracts.
Certain of the contracts were executed to manage the interest rate risk associated with its Massachusetts Health and Educational Facilities Authority (MHEFA) variable rate debt portfolios; others were to manage overall interest rate risk of the portfolio.
The interest-rate swap agreements were recorded at an estimated market value MIT REPORT OF THE TREASURER 2009 A. Accounting Policies (continued)
UPMIFA and FSP 117-1 In July 2009, the Commonwealth of Massachusetts enacted a version of the UnifOt711 Prudent Management of Institutional Funds Act of2006 (UPMIFA), which replaced Chapter 180A, Massachusetts Attorney General's June 1995 statement of position, the Uniform Management Institutional Funds Act (UMIFA). The new law, which has an effective date of June 30,2009, eliminates the historical dollar threshold and establishes prudent spending guidelines that consider both the duration and preservation of the fund. As a result of this enactment, subject to the donor's intent as expressed in a gift agreement or similar document, a Massachusetts charitable organization may now spend the amount of the principal and income of an endowment fund, even from an underwater fund, after considering the factors listed in the Act. MIT adopted FASB Staff Position 117-1, Endowments of Not-for-Profit Organizations:
Net Asset Classification of Funds Subject to an Enacted Version of the Unifol711 Pntdent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds (FSP 117-1), as of July 1,2008. FSP 117-1 provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of UPMIFA. The adoption of FSP 117-1 had no impact on the way that MIT classifies donor-restricted endowment funds, but does require additional financial statement disclosures about MIT's endowment funds. The additional disclosures are included in Note K. B. Investments Investment transactions are accounted for on the trade date. Realized gains and losses are recorded by MIT using the average cost basis. Premiums and discounts on securities purchased and securities sold short are amortized using the effective yield method over the life of the respective security when cash collection is expected and included in interest income (long investments) or interest expense (short investments).
Dividend income is recorded on the ex-dividend date. Cash equivalents include money market funds, commercial paper, banker acceptances and negotiable certificates of deposit. 16 SFAS No. 165 MIT adopted FASB Statement of Financial Accounting Standards No. 165, Subsequent Events (SFAS No. 165), as of June 30, 2009. SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of SFAS No.165 did not have a material impact on MIT's financial statements.
MIT has evaluated subsequent events through September 16, 2009, the date of financial statement issuance.
Non-Cash Items Non-cash transactions excluded from the Statements of Cash Flows include the (decrease) increase in collateral for securities lending and minority interest of ($195 .2) million and $35.5 million, as well as $30.3 million and $21.5 million of accrued liabilities related to plant and equipment purchases, for 2009 and 2008, respectively.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications Certain June 30, 2008 balances previously reported have been reclassified to conform to the June 30, 2009 presentation.
MIT may utilize various derivative instruments, such as forwards, futures, interest rate, total return or currency swaps or forward contracts to increase or decrease its exposure to changes in the level of interest rates, underlying asset values or to partially offset exchange rate movements.
Derivative instruments are recorded at fair value. As ofJune 30,2009, MIT had entered into several interest rate swap contracts.
Certain of the contracts were executed to manage the interest rate risk associated with its Massachusetts Health and Educational Facilities Authority (MHEFA) variable rate debt portfolios; others were to manage overall interest rate risk of the portfolio.
The interest-rate swap agreements were recorded at an estimated market value MIT REPORT OF THE TREASURER 2009 B. Investments (continued) of ($9.8) million and ($25.0) million at June 30, 2009 and 2008, respectively, and the change in market value of ($6.9)million and ($10.6) million for 2009 and 2008 was included in non-operating net gain or loss on investments and other assets. Pending spot and forward currency contracts totaled$0.6 million atJune 30, 2009 and $1.8 million atJune 30, 2008.As discussed in Note A, as of July 1, 2008, MIT adopted SEAS No. 157 and has valued its investments in accordance with the principles of this standard.SEAS No. 157 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity's own assumptions about how market participants would value an asset or liability based on the best information available.
Valuation techniques used to measure fair value under SEAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. SEAS No. 157 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value.
The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by MIT for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:* Level 1 -Quoted prices in active markets for identical assets or liabilities.
Market price data is generally obtained from relevant exchange or dealer markets.-Level 2 -Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.
Inputs are obtained from various sources including market participants, dealers, and brokers.* Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Table 4 below presents MIT's investments at fair value as of June 30, 2009, grouped by the SEAS No. 157 valuation hierarchy as defined above.Table 4. Investments Quoted prices in active markets (Level 1)2009Significant other observable inputs (Level 2)2008 Significant un-observable inputs (Level 3)(in thousands of dollars)Total fair value Total fair value Cash equivalents ............
$Fixed income ...............E quities ...................
Marketable Alternatives
......Real estate .................Perpetual trusts
.............
Interest rate swaps ..........
741,008 13,954 607,585$ 10,915 602,656 3 65,524 4,445,655 2,203,965 790,348 47,618$7,553,110
$ 751,923 682,134 5,053,243 2,203,965 790,348 47,618 (9,818)$ 9,519,413$ 433,989 828,555 6,305,729 2,898,174 800,054 66,912 (24,984)$ 11,308,429 Total investments
...........
$ 1,362,547 (9,818)$ 603,756 NOTES TO FINANCIAL STATEMENTS 17 B. Investments (continued) of ($9.8) million and ($25.0) million atJune 30, 2009 and 2008, respectively, and the change in market value of ($6.9) million and ($10.6) million for 2009 and 2008 was included in non-operating net gain or loss on investments and other assets. Pending spot and forward currency contracts totaled $0.6 million atJune 30, 2009 and $1.8 million atJune 30, 2008. As discussed in Note A, as ofJuly 1, 2008, MIT adopted SFAS No. 157 and has valued its investments in accordance with the principles of this standard.
SFAS No. 157 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace.
Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity's own assumptions about how market participants would value an asset or liability based on the best information available.
Valuation techniques used to measure fair value under SFAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS No. 157 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by MIT for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:
Level 1 -Quoted prices in active markets for identical assets or liabilities.
Market price data is generally obtained from relevant exchange or dealer markets.
Level 2 -Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.
Inputs are obtained from various sources including market participants, dealers, and brokers.
Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Table 4 below presents MIT's investments at fair value as ofJune 30, 2009, grouped by the SFAS No. 157 valuation hierarchy as defined above. Table 4. Investments I 2009 2008 Quoted prices in Significant other Significant un-active markets observable inputs observable inputs (in thousands of doltan) (Level 1) (Level 2) (Level 3) Total fair value Total fair value Cash equivalents
............
$ 741,008 $ 10,915 $ 751,923 $ 433,989 Fixed income. ___ ...........
13,954 602,656 65,524 682,134 828,555 Equities ...................
607,585 3 4,445,655 5,053,243 6,305,729 Marketable Alternatives
...... 2,203,965 2,203,965 2,898,174 Real estate .................
790,348 790,348 800,054 Perpetual trusts .............
47,618 47,618 66,912 Interest rate swaps ..........
(9,818) (9,818) (24,984) Total investments
...........
$ 1,362,547
$ 603,756 $ 7,553,110
$ 9,519,413
$ 11,308,429 NOTES TO FINANCIAL STATEMENTS 17 B. Investments (continued) of ($9.8) million and ($25.0) million atJune 30, 2009 and 2008, respectively, and the change in market value of ($6.9) million and ($10.6) million for 2009 and 2008 was included in non-operating net gain or loss on investments and other assets. Pending spot and forward currency contracts totaled $0.6 million atJune 30, 2009 and $1.8 million atJune 30, 2008. As discussed in Note A, as ofJuly 1, 2008, MIT adopted SFAS No. 157 and has valued its investments in accordance with the principles of this standard.
SFAS No. 157 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace.
Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity's own assumptions about how market participants would value an asset or liability based on the best information available.
Valuation techniques used to measure fair value under SFAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS No. 157 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by MIT for financial instruments measured at fair value on a recurring basis. The three levels of inputs are as follows:
Level 1 -Quoted prices in active markets for identical assets or liabilities.
Market price data is generally obtained from relevant exchange or dealer markets.
Level 2 -Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities.
Inputs are obtained from various sources including market participants, dealers, and brokers.
Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Table 4 below presents MIT's investments at fair value as ofJune 30, 2009, grouped by the SFAS No. 157 valuation hierarchy as defined above. Table 4. Investments I 2009 2008 Quoted prices in Significant other Significant un-active markets observable inputs observable inputs (in thousands of doltan) (Level 1) (Level 2) (Level 3) Total fair value Total fair value Cash equivalents
............
$ 741,008 $ 10,915 $ 751,923 $ 433,989 Fixed income. ___ ...........
13,954 602,656 65,524 682,134 828,555 Equities ...................
607,585 3 4,445,655 5,053,243 6,305,729 Marketable Alternatives
...... 2,203,965 2,203,965 2,898,174 Real estate .................
790,348 790,348 800,054 Perpetual trusts .............
47,618 47,618 66,912 Interest rate swaps ..........
(9,818) (9,818) (24,984) Total investments
...........
$ 1,362,547
$ 603,756 $ 7,553,110
$ 9,519,413
$ 11,308,429 NOTES TO FINANCIAL STATEMENTS 17 B. Investments (continued)
Investments included in Level 3 primarily consist of MIT's ownership in alternative investments (principally limited partnership interests in hedge, private equity, realestate, and other similar funds). Securities held by limited partnerships that do not have readily determinable fair values are determined by the general partner and are based on appraisals, or other estimates that require varying degrees of judgment.
If no public market exists for the investment securities, the fair value is determined by the general partner taking into consideration, among other things, the cost of the securities, prices of recent significant placements of securities of the same issuer, and subsequent developments concerning the companies to which the securities relate. MIT has performed due diligence around its alternative investments to ensure they are recorded atfair value as of June 30, 2009 and 2008.Interest rate swaps are valued using observable inputs, such as quotations received from the counterparty, dealersor brokers, whenever available and considered reliable.In instances where models are used, the value of the interest rate swap depends upon the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inputs. Such inputs include market prices for reference securities, yield curves, credit curves, measures of volatility, prepayment rates, and correlations of such inputs. The interest rate swap arrangements have inputs which can generally be corroborated by market data and therefore are generally classified within Level 2.Perpetual trusts held by third parties are valued at the present value of the future distributions expected to be received over the term of the agreement.
The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while MIT believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.Table 5 below is a rollforward of the investments classified by MIT within Level 3 of the fair value hierarchy defined on page 17.Table 5. Rollforward of Level 3 Investments Marketable Perpetual Total (in thousands of dollars) Fixed income Equities alternatives Real estate trusts investments Fair value, July 1, 2008 .... $ 57,679 $ 4,915,258
$ 2,898,174
$ 800,055 $ 66,912 $ 8,738,078 Realized gains (losses) ..... -(62,307) (45,793) 91 -(108,009)Unrealized losses ........ -(972,258)
(522,800)
(184,807)
(19,850) (1,699,715)
Net purchases, sales, and settlements
...........
7,845 564,962 (125,616) 175,009 556 622,756 Fair Value, June 30,.2009...
$ 65,524 $ 4,445,655
$ 2,203,965
$ 790,348 $ 47,618 $ 7,553,110 All net realized and unrealized gains and losses relating to financial instruments held by MIT shown in Table 5 are reflected in the Statements of Activities.
Unrealized gains related to Level 3 investments totaled $582.6 million atJune 30, 2009 and$2,262.5 million atJune 30, 2008.18 MIT REPORT OF THE TREASURER 2009 B. Investments (continued)
Investments included in Level 3 primarily consist of MIT's ownership in alternative investments (principally limited partnership interests in hedge, private equity, real estate, and other similar funds). Securities held by limited partnerships that do not have readily determinable fair values are determined by the general partner and are based on appraisals, or other estimates that require varying degrees of judgment.
If no public market exists for the investment securities, the fair value is determined by the general partner taking into consideration, among other things, the cost of the securities, prices of recent significant placements of securities of the same issuer, and subsequent developments concerning the companies to which the securities relate. MIT has performed due diligence around its alternative investments to ensure they are recorded at fair value as ofJune 30, 2009 and 2008. Interest rate swaps are valued using observable inputs, such as quotations received from the counterparty, dealers or brokers, whenever available and considered reliable.
In instances where models are used, the value of the interest rate swap depends upon the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inpu.ts. Such inputs include market prices for reference securities, yield curves, credit curves, measures of volatility, prepayment rates, and correlations of such inputs. The interest rate swap arrangements have inputs which can generally be corroborated by market data and therefore are generally classified within Level 2. Perpetual trusts held by third parties are valued at the present value of the future distributions expected to be received over the term of the agreement.
The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while MIT believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Table 5 below is a roll forward of the investments classified by MIT within Level 3 of the fair value hierarchy defined on page 17. Table 5. Rollforward of Level 3 Investments Marketable Perpetual Total (in thousands of dollars) Fixed income Equities alternatives Real estate trusts investments Fair value, July 1, 2008 .... $ 57,679 $ 4,915,258
$ 2,898,174
$ 800,055 $ 66,912 $ 8,738,078 Realized gains (losses) ..... (62,307) (45,793) 91 (108,009)
Unrealized losses ........ (972,258) (522,800) (184,807)
(19,850) (1,699,715)
Net purchases, sales, and settlements
...........
7,845 564,962 (125,616) 175,009 556 622,756 Fair Value, June 30, 2009 ... $ 65,524 $ 4,445,655
$ 2,203,965
$ 790,348 $ 47,618 $ 7,553,110 All net realized and unrealized gains and losses relating to financial instruments held by MIT shown in Table 5 are reflected in the Statements of Activities.
Unrealized gains related to Level 3 investments totaled $582.6 million atJune 30, 2009 and $2,262.5 million atJune 30, 2008. 18 MIT REPORT OF THE TREASURER 2009 B. Investments (continued)
Investments included in Level 3 primarily consist of MIT's ownership in alternative investments (principally limited partnership interests in hedge, private equity, real estate, and other similar funds). Securities held by limited partnerships that do not have readily determinable fair values are determined by the general partner and are based on appraisals, or other estimates that require varying degrees of judgment.
If no public market exists for the investment securities, the fair value is determined by the general partner taking into consideration, among other things, the cost of the securities, prices of recent significant placements of securities of the same issuer, and subsequent developments concerning the companies to which the securities relate. MIT has performed due diligence around its alternative investments to ensure they are recorded at fair value as ofJune 30, 2009 and 2008. Interest rate swaps are valued using observable inputs, such as quotations received from the counterparty, dealers or brokers, whenever available and considered reliable.
In instances where models are used, the value of the interest rate swap depends upon the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inpu.ts. Such inputs include market prices for reference securities, yield curves, credit curves, measures of volatility, prepayment rates, and correlations of such inputs. The interest rate swap arrangements have inputs which can generally be corroborated by market data and therefore are generally classified within Level 2. Perpetual trusts held by third parties are valued at the present value of the future distributions expected to be received over the term of the agreement.
The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while MIT believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Table 5 below is a roll forward of the investments classified by MIT within Level 3 of the fair value hierarchy defined on page 17. Table 5. Rollforward of Level 3 Investments Marketable Perpetual Total (in thousands of dollars) Fixed income Equities alternatives Real estate trusts investments Fair value, July 1, 2008 .... $ 57,679 $ 4,915,258
$ 2,898,174
$ 800,055 $ 66,912 $ 8,738,078 Realized gains (losses) ..... (62,307) (45,793) 91 (108,009)
Unrealized losses ........ (972,258) (522,800) (184,807)
(19,850) (1,699,715)
Net purchases, sales, and settlements
...........
7,845 564,962 (125,616) 175,009 556 622,756 Fair Value, June 30, 2009 ... $ 65,524 $ 4,445,655
$ 2,203,965
$ 790,348 $ 47,618 $ 7,553,110 All net realized and unrealized gains and losses relating to financial instruments held by MIT shown in Table 5 are reflected in the Statements of Activities.
Unrealized gains related to Level 3 investments totaled $582.6 million atJune 30, 2009 and $2,262.5 million atJune 30, 2008. 18 MIT REPORT OF THE TREASURER 2009 C. Collateral for Securities Lending and Other Assets MIT has an agreement with a major financial institutionto lend its securities in exchange for a fixed annual fee less a contractual rebate on the cash collateral received.
All securities are returnable on demand and are collateralized by daily cash deposits based on the market value of the securities loaned. MIT manages the investment process for all cash collateral received and is indemnified against borrower default by the financial institution.
MIT did not have any investment securities on loan as of June 30, 2009 and had $162.9 million on loan at June 30, 2008.Cash collateral under management related to the securities lending program was $164.9 million at June 30, 2008. As of June 30, 2009 and 2008, MIT also recorded $168.3 million and $198.6 million, respectively, of minority interest inprivately held investments.
The cash collateral received under the securities lending program and minority interest are shown as assets and liabilities in the Statements of Financial Position.D. Pledges Receivable Table 6 below shows the time periods in which pledges receivable atJune 30, 2009 are expected to be realized.Table 6. Pledges Receivable (in thousands of dollars) 2009 2008 In one year or less ...... $ 152,686 $ 117,979 Between one year and five years .............
195,033 200,849 More than five years .... 168,897 173,175 Less: allowance for unfulfilled pledges ...... (51,880) (48,700)Pledges receivable, net .................
$ 464,736 $ 443,303 A review of pledges is periodically made with regard to collectability.
As a result, the allowance for pledges that may not be fulfilled is adjusted, and some pledges have been canceled and are no longer recorded in the financial state-ments. In addition, pledges are discounted in the amount of$89.5 million and $95.0 million in 2009 and 2008, respec-tively. MIT has gross conditional pledges, not recorded, for the promotion of education and research in the amount of$114.0 million and $150.2 million as ofJune 30, 2009 and 2008, respectively.
As discussed in Note A, MIT adopted SEAS No. 159 in accounting for pledges receivable.
Pledges receivable are classified as Level 3 under the valuation hierarchy as defined by SEAS No. 157 and disclosed in Note B. Table 7 below is a rollforward of the pledges receivable for 2009.Table 7. Rollforward of Pledges Receivable (in thousands of dollars)Pledges receivable, June 30, 2008 .........
$ 443,303 N ew pledges ...........................
125,502 Pledge payments received ................
(106,431)Decrease in pledge discount ..............
5,542Increase in reserve for unfulfilled pledges .... (3,180)Pledges receivable, June 30, 2009 .... $ 464,736 NOTES TO FINANCIAL STATEMENTS 19 C. Collateral for Securities Lending and Other Assets MIT has an agreement with a major financial institution to lend its securities in exchange for a fixed annual fee less a contractual rebate on the cash collateral received.
All securities are returnable on demand and are collateralized by daily cash deposits based on the market value of the securities loaned. MIT manages the investment process for all cash collateral received and is indemnified against borrower default by the financial institution.
MIT did not have any investment securities on loan as ofJune 30, D. Pledges Receivable Table 6 below shows the time periods in which pledges receivable at June 30, 2009 are expected to be realized.
Table 6. Pledges Receivable (in thousands of dollars) 2009 2008 In one year or less ...... $ 152,686 $ 117,979 Between one year and five years .............
195,033 200,849 More than five years .... 168,897 173,175 Less: allowance for unfulfilled pledges ...... (51,880) (48,700) Pledges receivable, net .................
$ 464,736 $ 443,303 A review of pledges is periodically made with regard to collectability.
As a result, the allowance for pledges that may not be fulfilled is adjusted, and some pledges have been canceled and are no longer recorded in the financial ments. In addition, pledges are discounted in the amount of $89.5 million and $95.0 million in 2009 and 2008, tively. MIT has gross conditional pledges, not recorded, for the promotion of education and research in the amount of $114.0 million and $150.2 million as ofJune 30, 2009 and 2008, respectively.
NOTES TO i'lNANCIAL STATEMENTS 2009 and had $162.9 million on loan atJune 30, 2008. Cash collateral under management related to the securities lending program was $164.9 million atJune 30, 2008. As of June 30, 2009 and 2008, MIT also recorded $168.3 million and $198.6 million, respectively, of minority interest in privately held investments.
The cash collateral received under the securities lending program and minority interest are shown as assets and liabilities in the Statements of Financial Position.
As discussed in Note A, MIT adopted SFAS No. 159 in accounting for pledges receivable.
Pledges receivable are classified as Level 3 under the valuation hierarchy as defined by SFAS No. 157 and disclosed in Note B. Table 7 below is a rollforward of the pledges receivable for 2009. Table 7. Rollforward of Pledges Receivable (in thousands of dollars) Pledges receivable, June 30, 2008 .........
$ New pledges .......................... . Pledge payments received ............... . Decrease in pledge discount ............. . Increase in reserve for unfulfilled pledges ... . 443,303 125,502 (106,431) 5,542 (3,180) Pledges receivable, June 30, 2009 $ 464,736 19 C. Collateral for Securities Lending and Other Assets MIT has an agreement with a major financial institution to lend its securities in exchange for a fixed annual fee less a contractual rebate on the cash collateral received.
All securities are returnable on demand and are collateralized by daily cash deposits based on the market value of the securities loaned. MIT manages the investment process for all cash collateral received and is indemnified against borrower default by the financial institution.
MIT did not have any investment securities on loan as ofJune 30, D. Pledges Receivable Table 6 below shows the time periods in which pledges receivable at June 30, 2009 are expected to be realized.
Table 6. Pledges Receivable (in thousands of dollars) 2009 2008 In one year or less ...... $ 152,686 $ 117,979 Between one year and five years .............
195,033 200,849 More than five years .... 168,897 173,175 Less: allowance for unfulfilled pledges ...... (51,880) (48,700) Pledges receivable, net .................
$ 464,736 $ 443,303 A review of pledges is periodically made with regard to collectability.
As a result, the allowance for pledges that may not be fulfilled is adjusted, and some pledges have been canceled and are no longer recorded in the financial ments. In addition, pledges are discounted in the amount of $89.5 million and $95.0 million in 2009 and 2008, tively. MIT has gross conditional pledges, not recorded, for the promotion of education and research in the amount of $114.0 million and $150.2 million as ofJune 30, 2009 and 2008, respectively.
NOTES TO i'lNANCIAL STATEMENTS 2009 and had $162.9 million on loan atJune 30, 2008. Cash collateral under management related to the securities lending program was $164.9 million atJune 30, 2008. As of June 30, 2009 and 2008, MIT also recorded $168.3 million and $198.6 million, respectively, of minority interest in privately held investments.
The cash collateral received under the securities lending program and minority interest are shown as assets and liabilities in the Statements of Financial Position.
As discussed in Note A, MIT adopted SFAS No. 159 in accounting for pledges receivable.
Pledges receivable are classified as Level 3 under the valuation hierarchy as defined by SFAS No. 157 and disclosed in Note B. Table 7 below is a rollforward of the pledges receivable for 2009. Table 7. Rollforward of Pledges Receivable (in thousands of dollars) Pledges receivable, June 30, 2008 .........
$ New pledges .......................... . Pledge payments received ............... . Decrease in pledge discount ............. . Increase in reserve for unfulfilled pledges ... . 443,303 125,502 (106,431) 5,542 (3,180) Pledges receivable, June 30, 2009 $ 464,736 19 E. Student Notes Receivable Table 8 below details the components of student notes $33.3 million and $33.1 million at June 30, 2009 and receivable atJune 30, 2009 and 2008. 2008, respectively, are ultimately refundable to the U.S.Perkins student notes receivable are funded by the U.S. Government and are classified as liabilities.
Due to the Government and by MIT to the extent required by the nature and terms of the student loans, which are subject to Perkins National Direct Student Loan Program. Funds significant restrictions, it is not feasible to determine the fair value of such loans.
advanced by the U.S. Government for this program, Table 8. Student Notes Receivable (in thousands of dollars) 2009 2008 Institute-funded student notes receivable
.....................................
$ 18,188 $ 19,974 Perkins student notes receivable
............................................ 33,765 30,353 Total student notes receivable
........................................
51,953 50,327 Less: allowance for doubtful accounts .......................................
(3,000) (3,000)Student notes receivable, net ..........................................
$ 48,953 $ 47,327 F Accounts Payable, Accruals and Other Liabilities MIT's accounts payable, accruals and other liabilities at June 30, 2009 are shown in Table 9. below.Table 9. Accounts Payable, Accruals and Other Liabilities (in thousands of dollars) 2009 2008 Accounts payable and accruals .............................................
$ 249,445 $ 220,107 Accrued vacation .........
...............................................
50,120 47,730 Total .............................................................
$ 299,565 $ 267,837 20 MIT REPORT OF THE TREASURER 2009 E. Student Notes Receivable Table 8 below details the components of student notes receivable atJune 30, 2009 and 2008. Perkins student notes receivable are funded by the U.S. Government and by MIT to the extent required by the Perkins National Direct Student Loan Program. Funds advanced by the U.S. Government for this program, $33.3 million and $33.1 million atJune 30, 2009 and 2008, respectively, are ultimately refundable to the U.S. Government and are classified as liabilities.
Due to the nature and terms of the student loans, which are subject to significant restrictions, it is not feasible to determine the fair value of such loans. Table 8. Student Notes Receivable (in thousands of dollars) Institute-funded student notes receivable
.................................... . Perkins student notes receivable
........................................... . Total student notes receivable
....................................... . Less: allowance for doubtful accounts ...................................... . Student notes receivable, net ........................................ . F. Accounts Payable, Accruals and Other Liabilities 2009 $ 18,188 $ 33,765 51,953 (3,000) $ 48,953 $ MIT's accounts payable, accruals and other liabilities atJune 30, 2009 are shown in Table 9 below. Table 9. Accounts Payable, Accruals and Other Liabilities (in thousands of dollars) Accounts payable and accruals ............................................ . Accrued vacation ........ : .............................................. . Total ............................................................ . 2009 $ 249,445 $ 50,120 $ 299,565 $ 2008 19,974 30,353 50,327 (3,000) 47,327 2008 220,107 47,730 267,837 20 MIT REPORT OF THE TREASURER 2009 E. Student Notes Receivable Table 8 below details the components of student notes receivable atJune 30, 2009 and 2008. Perkins student notes receivable are funded by the U.S. Government and by MIT to the extent required by the Perkins National Direct Student Loan Program. Funds advanced by the U.S. Government for this program, $33.3 million and $33.1 million atJune 30, 2009 and 2008, respectively, are ultimately refundable to the U.S. Government and are classified as liabilities.
Due to the nature and terms of the student loans, which are subject to significant restrictions, it is not feasible to determine the fair value of such loans. Table 8. Student Notes Receivable (in thousands of dollars) Institute-funded student notes receivable
.................................... . Perkins student notes receivable
........................................... . Total student notes receivable
....................................... . Less: allowance for doubtful accounts ...................................... . Student notes receivable, net ........................................ . F. Accounts Payable, Accruals and Other Liabilities 2009 $ 18,188 $ 33,765 51,953 (3,000) $ 48,953 $ MIT's accounts payable, accruals and other liabilities atJune 30, 2009 are shown in Table 9 below. Table 9. Accounts Payable, Accruals and Other Liabilities (in thousands of dollars) Accounts payable and accruals ............................................ . Accrued vacation ........ : .............................................. . Total ............................................................ . 2009 $ 249,445 $ 50,120 $ 299,565 $ 2008 19,974 30,353 50,327 (3,000) 47,327 2008 220,107 47,730 267,837 20 MIT REPORT OF THE TREASURER 2009 G. Borrowings Table 10. Borrowings (in thousands of dollars / due dates are calendar based)2009 2008 EDUCATIONAL PLANT Massachusetts Health and Educational Facilities Authority (MHEFA)
Series I, 4.75%-5.20%, due 2028, par value $59,200 ..........................
Series J-1, variable rate, due 2031 .........................................
Series J-2, variable rate, due 2031 .........................................
Series K, 5.25%-5.50%, due 2012-2032, par value $230,000 ...................
Series L, 3.0%-5.25%, due 2004-2033, par value $184,860
.....................
Series M , 5.25%, due 2014-2030, par value $131,110
.........................
Series N, 3.5%-5.0%, due 2014-2038, par value $325,195 .....................
Series 0, 4.0%-6.0%, due 2016-2036, par value $266,460 .....................
Total MHEFA ...................................................
Medium Term Notes Series A, 7.125%, due 2026 ............................
Medium Term Notes Series A, 7.25%, due 2096 .............................
Notes payable to bank, variable rate, due 2011 ...............................
Total educational plant .............................................
STUDENT LOANS Notes payable to bank, variable rate, due 2011 ...............................
OTHER Notes payable to bank, variable rate, due 2011 ...............................
$ 59,663 125,000 125,000 243,804 188,616 145,998 333,991 274,475 1,496,547 17,347 45,440 48,033$59,688 125,000 125,000 244,624 191,804 146,981 893,097 17,343 45,438 251,039 1,607,367 1,206,9175,0005,000 123,476 123,476 Total Borrowings
.$ 1,735,843
$ 1,335,393 The aggregate amount of debt payments and sinking fund requirements for each of the next five fiscal years is shown in Table 11 below.Table 11. Debt Obligations (in thousands of dollars)2010 ..................
$ 2,260 2011 ..................
178,879 2012 ..................
2,490 2013 ..................
26,5002014 ..................
26,000 Cash paid for interest on long-term debt in 2009 and 2008 was $47.4 million and $46.7 million, respectively.
In 2009, fair value of the outstanding debt is approximately 3 percent greater than the carrying value. In 2008, the carrying value of the outstanding debt approximates fair value. Carrying value is based on estimates using current interest rates available for similarly rated debt of the sameremaining maturities.
MIT maintains a line of credit with a major financial institution for an aggregate commitment of $500.0 million. As of June 30, 2009, $323.5 million was available under this line of credit. The line of credit expires on March 28, 2011.Variable interest rates at June 30, 2009 are shown in Table 12 below.Table 12. Variable Interest Rates (in thousands of dollars) Amount Rate MHEFA Series J-l ....... $ 125,000 0.17%MHEFA Series J-2 ....... 125,000 0.10%Notes payable to bank ..... 176,509 0.37%In the event that MIT receives notice of any optional tender on its Series J-1 and Series J-2 variable-rate bonds, or if these bonds become subject to mandatory tender, the purchase price of the bonds will be paid from the remarketing of such bonds. However, if the remarketing proceeds are insufficient, MIT will be obligated to purchase the bonds tendered.NOTES TO FINANCIAL STATEMENTS 21 G. Borrowings Table 10. Borrowings (in thousands of dollan / due dates are calendar based) 2009 2008 EDUCATIONAL PLANT Massachusetts Health and Educational Facilities Authority (MHEFA) Series I, 4.75%-5.20%, due 2028, par value $59,200 ......................... . $ 59,663 $ 59,688 SeriesJ-1, variable rate, due 2031 ........................................ . 125,000 125,000 Series J-2, variable rate, due 2031 ........................................ . 125,000 125,000 Series K, 5.25%-5.50%, due 2012-2032, par value $230,000 .................. . 243,804 244,624 Series L, 3.0%-5.25%, due 2004-2033, par value $184,860 .................... . 188,616 191,804 Series M, 5.25%, due 2014-2030, par value $131,110 ........................ . 145,998 146,981 Series N, 3.5%-5.0%, due 2014-2038, par value $325,195 .................... . 333,991 Series 0, 4.0%-6.0%, due 2016-2036, par value $266,460 .................... . 274,475 Total MHEFA ................................................... . 1,496,547 893,097 Medium Term Notes Series A, 7.125%, due 2026 ........................... . 17,347 17,343 Medium Term Notes Series A, 7.25%, due 2096 ............................ . 45,440 45,438 Notes payable to bank, variable rate, due 2011 .............................. . 48,033 251,039 Total educational plant ............................................ . 1,607,367 1,206,917 STUDENT LOANS Notes payable to bank, variable rate, due 2011 .............................. . 5,000 5,000 OTHER Notes payable to bank, variable rate, due 2011 .............................. . 123,476 123,476 Total Borrowings
................................................ . $ 1,735,843
$ 1,335,393 The aggregate amount of debt payments and sinking fund requirements for each of the next five fiscal years is shown in Table 11 below. of$500.0 million. As ofJune 30, 2009, $323.5 million was available under this line of credit. The line of credit expires on March 28, 2011. Table 11. Debt Obligations (in thousands of dollan) 2010 2011 2012 2013 2014 ................. . $ 2,260 178,879 2,490 26,500 26,000 Cash paid for interest on long-term debt in 2009 and 2008 was $47.4 million and $46.7 million, respectively.
In 2009, fair value of the outstanding debt is approximately 3 percent greater than the carrying value. In 2008, the carrying value of the outstanding debt approximates fair value. Carrying value is based on estimates using current interest rates available for similarly rated debt of the same remaining maturities.
MIT maintains a line of credit with a major financial institution for an aggregate commitment NOTES TO FINANCIAL STATEMENTS Variable interest rates atJune 30, 2009 are shown in Table 12 below. Table 12. Variable Interest Rates (in thousands of dollars) MHEFA SeriesJ-1
...... . MHEFA SeriesJ-2
...... . Notes payable to bank .... . Amount $ 125,000 125,000 176,509 Rate 0.17% 0.10% 0.37% In the event that MIT receives notice of any optional tender on its SeriesJ-1 and SeriesJ-2 variable-rate bonds, or if these bonds become subject to mandatory tender, the purchase price of the bonds will be paid from the remarketing of such bonds. However, if the remarketing proceeds are insufficient, MIT will be obligated to purchase the bonds tendered.
21 G. Borrowings Table 10. Borrowings (in thousands of dollan / due dates are calendar based) 2009 2008 EDUCATIONAL PLANT Massachusetts Health and Educational Facilities Authority (MHEFA) Series I, 4.75%-5.20%, due 2028, par value $59,200 ......................... . $ 59,663 $ 59,688 SeriesJ-1, variable rate, due 2031 ........................................ . 125,000 125,000 Series J-2, variable rate, due 2031 ........................................ . 125,000 125,000 Series K, 5.25%-5.50%, due 2012-2032, par value $230,000 .................. . 243,804 244,624 Series L, 3.0%-5.25%, due 2004-2033, par value $184,860 .................... . 188,616 191,804 Series M, 5.25%, due 2014-2030, par value $131,110 ........................ . 145,998 146,981 Series N, 3.5%-5.0%, due 2014-2038, par value $325,195 .................... . 333,991 Series 0, 4.0%-6.0%, due 2016-2036, par value $266,460 .................... . 274,475 Total MHEFA ................................................... . 1,496,547 893,097 Medium Term Notes Series A, 7.125%, due 2026 ........................... . 17,347 17,343 Medium Term Notes Series A, 7.25%, due 2096 ............................ . 45,440 45,438 Notes payable to bank, variable rate, due 2011 .............................. . 48,033 251,039 Total educational plant ............................................ . 1,607,367 1,206,917 STUDENT LOANS Notes payable to bank, variable rate, due 2011 .............................. . 5,000 5,000 OTHER Notes payable to bank, variable rate, due 2011 .............................. . 123,476 123,476 Total Borrowings
................................................ . $ 1,735,843
$ 1,335,393 The aggregate amount of debt payments and sinking fund requirements for each of the next five fiscal years is shown in Table 11 below. of$500.0 million. As ofJune 30, 2009, $323.5 million was available under this line of credit. The line of credit expires on March 28, 2011. Table 11. Debt Obligations (in thousands of dollan) 2010 2011 2012 2013 2014 ................. . $ 2,260 178,879 2,490 26,500 26,000 Cash paid for interest on long-term debt in 2009 and 2008 was $47.4 million and $46.7 million, respectively.
In 2009, fair value of the outstanding debt is approximately 3 percent greater than the carrying value. In 2008, the carrying value of the outstanding debt approximates fair value. Carrying value is based on estimates using current interest rates available for similarly rated debt of the same remaining maturities.
MIT maintains a line of credit with a major financial institution for an aggregate commitment NOTES TO FINANCIAL STATEMENTS Variable interest rates atJune 30, 2009 are shown in Table 12 below. Table 12. Variable Interest Rates (in thousands of dollars) MHEFA SeriesJ-1
...... . MHEFA SeriesJ-2
...... . Notes payable to bank .... . Amount $ 125,000 125,000 176,509 Rate 0.17% 0.10% 0.37% In the event that MIT receives notice of any optional tender on its SeriesJ-1 and SeriesJ-2 variable-rate bonds, or if these bonds become subject to mandatory tender, the purchase price of the bonds will be paid from the remarketing of such bonds. However, if the remarketing proceeds are insufficient, MIT will be obligated to purchase the bonds tendered.
21 H. Commitments and Contingencies Federal Government Funding MIT receives funding or reimbursement from Federal Government agencies for sponsored research under Government grants and contracts.
These grants and con-tracts provide for reimbursement of indirect costs based on rates negotiated with the Office of Naval Research (ONR), MIT's cognizant Federal agency. MIT's indirect cost reimbursements have been based on fixed rates with carry-forward of under or over recoveries, except in 2008, during which fixed rates were negotiated without carry-forward for most on and off-campus research activity.
At June 30, 2008, MIT recorded a net under-recovery of $5.8 million resulting primarily from activity in its specialized service facility, where carry-forward arrangements were still in place. At June 30, 2009, MIT recorded a net over-recovery of $2.4 million.The DCAA is responsible for auditing both direct and indirect charges to grants and contracts in support of ONR's negotiating responsibility.
MIT has final audited rates through 2007. MIT's 2009 research revenues of$1,375.1 million include reimbursement of indirect costs of $221.5 million, which includes the adjustment for the variance between the indirect cost income determined by the fixed rates and actual costs for 2009. In 2008, research revenues were $1,245.2 million, which included reimbursement of indirect costs of $206.2 million.Leases At June 30, 2009, there were no capital lease obligations.
MIT is committed under certain operating (rental) leases.Rent expense incurred under operating lease obligations was $65.5 million and $62.3 million in 2009 and 2008, respectively.
Some of the leases expiring in 2010 are subject to renewal. Future minimum payments under operating leases are shown in Table 13 below.Table 13. Lease Obligations (in thousands of dollars)2010 ..................
$ 54,747 2011 ..................
49,467 2012 ..................
44,171 2013 ..................
40,959 2014 ..................
33,900 Investments As of June 30, 2009, MIT is committed to invest approximately
$2,342.6 million with equity managers andwith private partnerships for hedge funds, private equity and other alternative investments.
This compares to$3,352.5 million as of June 30, 2008. As of June 30, 2009,$42.6 million of investments were pledged as collateral to various supplier and government agencies, the largest beingto the Nuclear Regulatory Commission and for self-insured workers' compensation insurance.
Future Construction MIT has contracted for educational plant in the amount of $214.1 million atJune 30, 2009. It is expected that the resources to satisfy these commitments will be provided from unexpended plant funds, anticipated gifts, unrestricted funds and future borrowings.
MIT will be committing additional resources to planned major construction projects and improvements to the current infrastructure over the next several years.Related Entities MIT has entered into agreements, including collaborations with third-party not-for-profit and for-profit entities for education, research and technology transfers.
Some of these agreements involve funding from foreign governments.
These agreements subject MIT to greater financial risk thando its normal operations.
In the opinion of management, the likelihood of realization of increased financial risks by MIT under these agreements is remote.General MIT is subject to certain other legal proceedings and claims that arise in the normal course of operations.
In the opinion of management, the ultimate outcome of these actions will not have a material effect on MIT's financial position.22 MIT REPORT OF THE TREASURER 2009 H. Commitments and Contingencies Federal Government Funding MIT receives funding or reimbursement from Federal Government agencies for sponsored research under Government grants and contracts.
These grants and tracts provide for reimbursement of indirect costs based on rates negotiated with the Office of Naval Research (ONR), MIT's cognizant Federal agency. MIT's indirect cost reimbursements have been based on fixed rates with forward of under or over recoveries, except in 2008, during which fixed rates were negotiated without carry-forward for most on and off-campus research activity.
AtJune 30, 2008, MIT recorded a net under-recovery of $5.8 million resulting primarily from activity in its specialized service facility, where carry-forward arrangements were still in place. AtJune 30, 2009, MIT recorded a net over-recovery of $2.4 million. The DCAA is responsible for auditing both direct and indirect charges to grants and contracts in support of ONR's negotiating responsibility.
MIT has final audited rates through 2007. MIT's 2009 research revenues of $1,375.1 million include reimbursement of indirect costs of $221.5 million, which includes the adjustment for the variance between the indirect cost income determined by the fixed rates and acrual costs for 2009. In 2008, research revenues were $1,245.2 million, which included*
reimbursement of indirect costs of $206.2 million. Leases AtJune 30, 2009, there were no capital lease obligations.
MIT is committed under certain operating (rental) leases. Rent expense incurred under operating lease obligations was $65.5 million and $62.3 million in 2009 and 2008, respectively.
Some of the leases expiring in 2010 are subject to renewal. Furure minimum payments under operating leases are shown in Table 13 below. Table 13. Lease Obligations (in thousands of dollars) 22 2010 2011 2012 2013 2014 $ 54,747 49,467 44,171 40,959 33,900 Investments As of June 30, 2009, MIT is committed to invest approximately
$2,342.6 million with equity managers and with private partnerships for hedge funds, private equity and other alternative investments.
This compares to $3,352.5 million as ofJune 30, 2008. As of June 30, 2009, $42.6 million of investments were pledged as collateral to various supplier and government agencies, the largest being to the Nuclear Regulatory Commission and for self-insured workers' compensation insurance.
Future Construction MIT has contracted for educational plant in the amount of $214.1 million atJune 30, 2009. It is expected that the resources to satisfy these commitments will be provided from unexpended plant funds, anticipated gifts, unrestricted funds and furure borrowings.
MIT will be committing additional resources to planned major construction projects and improvements to the current infrastrucrure over the next several years. Related Entities MIT has entered into agreements, including collaborations with third-party not-for-profit and for-profit entities for education, research and technology transfers.
Some of these agreements involve funding from foreign governments.
These agreements subject MIT to greater financial risk than do its normal operations.
In the opinion of management, the likelihood of realization of increased financial risks by MIT under these agreements is remote. General MIT is subject to certain other legal proceedings and claims that arise in the normal course of operations.
In the opinion of management, the ultimate outcome of these actions will not have a material effect on MIT's financial position.
MIT REPORT OF THE TREASURER 2009 H. Commitments and Contingencies Federal Government Funding MIT receives funding or reimbursement from Federal Government agencies for sponsored research under Government grants and contracts.
These grants and tracts provide for reimbursement of indirect costs based on rates negotiated with the Office of Naval Research (ONR), MIT's cognizant Federal agency. MIT's indirect cost reimbursements have been based on fixed rates with forward of under or over recoveries, except in 2008, during which fixed rates were negotiated without carry-forward for most on and off-campus research activity.
AtJune 30, 2008, MIT recorded a net under-recovery of $5.8 million resulting primarily from activity in its specialized service facility, where carry-forward arrangements were still in place. AtJune 30, 2009, MIT recorded a net over-recovery of $2.4 million. The DCAA is responsible for auditing both direct and indirect charges to grants and contracts in support of ONR's negotiating responsibility.
MIT has final audited rates through 2007. MIT's 2009 research revenues of $1,375.1 million include reimbursement of indirect costs of $221.5 million, which includes the adjustment for the variance between the indirect cost income determined by the fixed rates and acrual costs for 2009. In 2008, research revenues were $1,245.2 million, which included*
reimbursement of indirect costs of $206.2 million. Leases AtJune 30, 2009, there were no capital lease obligations.
MIT is committed under certain operating (rental) leases. Rent expense incurred under operating lease obligations was $65.5 million and $62.3 million in 2009 and 2008, respectively.
Some of the leases expiring in 2010 are subject to renewal. Furure minimum payments under operating leases are shown in Table 13 below. Table 13. Lease Obligations (in thousands of dollars) 22 2010 2011 2012 2013 2014 $ 54,747 49,467 44,171 40,959 33,900 Investments As of June 30, 2009, MIT is committed to invest approximately
$2,342.6 million with equity managers and with private partnerships for hedge funds, private equity and other alternative investments.
This compares to $3,352.5 million as ofJune 30, 2008. As of June 30, 2009, $42.6 million of investments were pledged as collateral to various supplier and government agencies, the largest being to the Nuclear Regulatory Commission and for self-insured workers' compensation insurance.
Future Construction MIT has contracted for educational plant in the amount of $214.1 million atJune 30, 2009. It is expected that the resources to satisfy these commitments will be provided from unexpended plant funds, anticipated gifts, unrestricted funds and furure borrowings.
MIT will be committing additional resources to planned major construction projects and improvements to the current infrastrucrure over the next several years. Related Entities MIT has entered into agreements, including collaborations with third-party not-for-profit and for-profit entities for education, research and technology transfers.
Some of these agreements involve funding from foreign governments.
These agreements subject MIT to greater financial risk than do its normal operations.
In the opinion of management, the likelihood of realization of increased financial risks by MIT under these agreements is remote. General MIT is subject to certain other legal proceedings and claims that arise in the normal course of operations.
In the opinion of management, the ultimate outcome of these actions will not have a material effect on MIT's financial position.
MIT REPORT OF THE TREASURER 2009 I. Functional Expense Classification MIT's expenditures on a functional basis are shown in Table 14 below.Table 14. Expenditures by Functional Classification (in thousands of dollars)2009 2008 General and administrative
................................................
$ 497,043 $ 486,444 Instruction and unsponsored research .......................................
.680,848 641,241 Sponsored research ......................................................
1,167,036 1,054,474 Auxiliary enterprises
.....................................................
104,443 100,545 Operation of alumni association ............................................
11,916 11,543 Total operating expense .............................................
$2,461,286
$2,294,247 J. Retirement Benefits MIT offers a defined benefit plan and a defined con-tribution plan to its employees.
The plans cover substan-tially all of MIT's. employees.
MIT also provides retiree welfare benefits (certain health care and life insurance benefits) for retired employees.
Substantially all of MIT's employees may become eligible for those benefits if they reach a qualifying retirement age whileworking for MIT. Retiree health plans are paid for in part by retirees and covered retirees, their covered dependents and beneficiaries. Benefits are provided through various insurance companies whose charges are based either on the benefits and administrative expenses paid during the year or annual insured premiums.
Retiree life insurance plans are non-contributory and cover the retiree only. MIT maintains a trust to pay for retiree welfare benefits.MIT contributes to the defined benefit plan amounts that are actuarially determined to provide the retirement plan with sufficient assets to meet future benefit requirements.
There were no contributions to the defined benefit plan in 2009 or 2008.For purposes of calculating net periodic pension cost for the defined benefit plan, plan amendments are amortized on a straight line basis over the average future service to expected retirement of active participants at the date of the amendment.
Cumulative gains and losses (including changes in assumptions) in excess of 10 percent of the greater of the projected benefit obligation and the market related value of assets are amortized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million.During 2008, MIT amended its defined benefit plan to provide participants with immediate vesting of their accrued benefits.
The Pension Protection Act required a change from five-year vesting to three-year vesting for MIT's defined benefit plan; this change has been treated as mandatory and the impact has been reflected as an actu, arial loss. The change from three-year vesting to immediate vesting was reflected as a plan amendment.
The amount contributed and expenses recognized during 2009 and 2008 related to the defined contribution plan were$40.3 million and $37.8 million, respectively.
For purposes of calculating net periodic postretirement benefit cost, a portion of the current obligation, related to the transition to SFAS No. 106, is being amortized on a straight line basis over 20 years from the date of adoption of that statement in 1994. Plan amendments are amortized on a straight line basis over the average future service to full eligibility of active participants at the date of amendment.
Cumulative gains and losses (including changes in assump-tions) in excess of 10 percent of the greater of the plan's obligation and the market related value of assets are amor-tized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million.NOTES TO FINANCIAL STATEMENTS 23 I. Functional Expense Classification MIT's expenditures on a functional basis are shown in Table 14 below. Table 14. Expenditures by Functional Classification (in thousands of dollars) 2009 2008 General and administrative
............................................... . $ 497,043 $ 486,444 Instruction and unsponsored research ...................................... . 680,848 641,241 Sponsored research ..................................................... . 1,167,036 1,054,474 Auxiliary enterprises
.................................................... . 104,443 100,545 Operation of alumni association
........................................... . 11,916 11,543 Total operating expense ............................................ . $2,461,286
$2,294,247 J. Retirement Benefits MIT offers a defined benefit plan and a defined tribution plan to its employees.
The plans cover tially all of MIT's employees.
MIT also provides retiree welfare benefits (certain health care and life insurance benefits) for retired employees.
Substantially all of MIT's employees may become eligible for those benefits if they reach a qualifying retirement age while working for MIT. Retiree health plans are paid for in part by retirees and covered retirees, their covered dependents and beneficiaries.
Benefits are provided through various insurance companies whose charges are based either on the benefits and administrative expenses paid during the year or annual insured premiums.
Retiree life insurance plans are non-contributory and cover the retiree only. MIT maintains a trust to pay for retiree welfare benefits.
MIT contributes to the defined benefit plan amounts that are actuarially determined to provide the retirement plan with sufficient assets to meet future benefit requirements.
There were no contributions to the defined benefit plan in 2009 or 2008. For purposes of calculating net periodic pension cost for the defined benefit plan, plan amendments are amortized on a straight line basis over the average future service to expected retirement of active participants at the date of the amendment.
Cumulative gains and losses (including changes in assumptions) in excess of 10 percent of the greater of the projected benefit obligation and the market related value of assets are amortized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million. NOTES TO FINANCIAL STATEMENTS During 2008, MIT amended its defined benefit plan to provide participants with immediate vesting of their accrued benefits.
The Pension Protection Act required a change from five-year vesting to three-year vesting for MIT's defined benefit plan; this change has been treated as mandatory and the impact has been reflected as an arialloss.
The change from three-year vesting to immediate vesting was reflected as a plan amendment.
The amount contributed and expenses recognized during 2009 and 2008 related to the defined contribution plan were $40.3 million and $37.8 million, respectively.
For purposes of calculating net periodic postretirement benefit cost, a portion of the current obligation, related to the transition to SFAS No. 106, is being amortized on a straight line basis over 20 years from the date of adoption of that statement in 1994. Plan amendments are amortized on a straight line basis over the average future service to full eligibility of active participants at the date of amendment.
Cumulative gains and losses (including changes in tions) in excess of 10 percent of the greater of the plan's obligation and the market related value of assets are tized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million. 23 I. Functional Expense Classification MIT's expenditures on a functional basis are shown in Table 14 below. Table 14. Expenditures by Functional Classification (in thousands of dollars) 2009 2008 General and administrative
............................................... . $ 497,043 $ 486,444 Instruction and unsponsored research ...................................... . 680,848 641,241 Sponsored research ..................................................... . 1,167,036 1,054,474 Auxiliary enterprises
.................................................... . 104,443 100,545 Operation of alumni association
........................................... . 11,916 11,543 Total operating expense ............................................ . $2,461,286
$2,294,247 J. Retirement Benefits MIT offers a defined benefit plan and a defined tribution plan to its employees.
The plans cover tially all of MIT's employees.
MIT also provides retiree welfare benefits (certain health care and life insurance benefits) for retired employees.
Substantially all of MIT's employees may become eligible for those benefits if they reach a qualifying retirement age while working for MIT. Retiree health plans are paid for in part by retirees and covered retirees, their covered dependents and beneficiaries.
Benefits are provided through various insurance companies whose charges are based either on the benefits and administrative expenses paid during the year or annual insured premiums.
Retiree life insurance plans are non-contributory and cover the retiree only. MIT maintains a trust to pay for retiree welfare benefits.
MIT contributes to the defined benefit plan amounts that are actuarially determined to provide the retirement plan with sufficient assets to meet future benefit requirements.
There were no contributions to the defined benefit plan in 2009 or 2008. For purposes of calculating net periodic pension cost for the defined benefit plan, plan amendments are amortized on a straight line basis over the average future service to expected retirement of active participants at the date of the amendment.
Cumulative gains and losses (including changes in assumptions) in excess of 10 percent of the greater of the projected benefit obligation and the market related value of assets are amortized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million. NOTES TO FINANCIAL STATEMENTS During 2008, MIT amended its defined benefit plan to provide participants with immediate vesting of their accrued benefits.
The Pension Protection Act required a change from five-year vesting to three-year vesting for MIT's defined benefit plan; this change has been treated as mandatory and the impact has been reflected as an arialloss.
The change from three-year vesting to immediate vesting was reflected as a plan amendment.
The amount contributed and expenses recognized during 2009 and 2008 related to the defined contribution plan were $40.3 million and $37.8 million, respectively.
For purposes of calculating net periodic postretirement benefit cost, a portion of the current obligation, related to the transition to SFAS No. 106, is being amortized on a straight line basis over 20 years from the date of adoption of that statement in 1994. Plan amendments are amortized on a straight line basis over the average future service to full eligibility of active participants at the date of amendment.
Cumulative gains and losses (including changes in tions) in excess of 10 percent of the greater of the plan's obligation and the market related value of assets are tized over the average future service of active participants.
The annual amortization shall not be less than the total amount of unrecognized gains and losses up to $1 million. 23 J. Retirement Benefits (continued)
Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets Table 15 summarizes the components of net periodic benefit (income) cost recognized in the Statement of Activities and other amounts recognized in unrestricted net assets for the years ended June 30, 2009 and 2008.Table 15. Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets (in thousands of dollars)Pension Benefits 9- Other Benefits 2009 2008 2009 2008 Components of net periodic benefit (income) cost Service cost ...............................
...Interest cost ...................................
Expected return on plan assets ....................
Amortization of transition amount .................
Amortization of net actuarial (gain) loss .............
Amortization of prior service cost .................
One-time specific termination benefits (FAS 88) ......Net periodic benefit (income) cost ..............
Other amounts recognized in unrestricted net assets Current year actuarial loss .......................
Amortization of actuarial gain (loss) ................
Current year prior service cost ....................
Amortization of prior service cost ..................Amortization of transition obligation
...............
Total recognized in unrestricted net assets .......$ 54,344 134,080 (215,752)(31,172)2,180 1,143 (55,177)728,482 31,172 (2,180)757,474$47,122 127,332 (201,487)(7,802)2,103 (32,732)120,884 7,802 3,598 (2,103)130,181$ 15,009 25,137 (20,647)4,776 2,380 3,555 30,210 78,677 (2,380)$13,335 21,084 (19,756)4,775 1,000 3,557 23,995 67,476 (1,000)(3,555) (3,557)
(4,776) (4,775)67,966 58,144 Total recognized in net periodic benefit (income)cost and unrestricted net assets ................
$ 702,297 $ 97,449 $ 98,176 $ 82,139 The estimated net actuarial gain and prior service cost for the defined benefit plan that will be amortized from unre-stricted net assets into net periodic benefit income during the next fiscal year are $29.5 million and $2.2 million, respectively.
The estimated net actuarial loss, prior service cost and transition obligation for the other postretirement plans that will be amortized from unrestricted net assets into net periodic benefit cost during the next fiscal year are$4.4 million, $3.6 million and $4.8 million, respectively.
24 MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets Table 15 summarizes the components of net periodic benefit (income) cost recognized in the Statement of Activities and other amounts recognized in unrestricted net assets for the years ended June 30, 2009 and 2008. Table 15. Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets (in thousands of dollars) Components of net periodic benefit (income) cost Service cost ...................................
Interest cost ...................................
Expected return on plan assets ....................
Amortization of transition amount .................
Amortization of net actuarial (gain) loss .............
Amortization of prior service cost .................
One-time specific termination benefits (FAS 88) ...... Net periodic benefit (income) cost ..............
Other amounts recognized in unrestricted net assets Current year actuarial loss .......................
Amortization of actuarial gain (loss) ................
Current year prior service cost ....................
Amortization of prior service cost ................. .Amortization of transition obligation
...............
Total recognized in unrestricted net assets ....... Total recognized in net periodic benefit (income) cost and unrestricted net assets . . . . . . . . . . . . . . . .
The estimated net actuarial gain and prior service cost for the defined benefit plan that will be amortized from stricted net assets into net periodic benefit income during the next fiscal year are $29.5 million and $2.2 million, respectively.
The estimated net actuarial loss, prior service 24 r---Pension Benefits Other Benefits_
2009 2008 2009 2008 $ 54,344 $ 47,122 $ 15,009 $ 13,335 134,080 127,332 25,137 21,084 (215,752) (201,487) (20,647) (19,756) 4,776 4,775 (31,172) (7,802) 2,380 1,000 2,180 2,103 3,555 3,557 1,143 (55,177) (32,732) 30,210 23,995 728,482 120,884 78,677 67,476 31,172 7,802 (2,380) (1,000) 3,598 (2,180) (2,103) (3,555)
(3,557) (4,776) (4,775) 757,474 130,181 67,966 58,144 $ 702,297 $ 97,449 $ 98,176 $ 82,139 cost and transition obligation for the other postretirement plans that will be amortized from unrestricted net assets into net periodic benefit cost during the next fiscal year are $4.4 million, $3.6 million and $4.8 million, respectively.
MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets Table 15 summarizes the components of net periodic benefit (income) cost recognized in the Statement of Activities and other amounts recognized in unrestricted net assets for the years ended June 30, 2009 and 2008. Table 15. Components of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Unrestricted Net Assets (in thousands of dollars) Components of net periodic benefit (income) cost Service cost ...................................
Interest cost ...................................
Expected return on plan assets ....................
Amortization of transition amount .................
Amortization of net actuarial (gain) loss .............
Amortization of prior service cost .................
One-time specific termination benefits (FAS 88) ...... Net periodic benefit (income) cost ..............
Other amounts recognized in unrestricted net assets Current year actuarial loss .......................
Amortization of actuarial gain (loss) ................
Current year prior service cost ....................
Amortization of prior service cost ................. .Amortization of transition obligation
...............
Total recognized in unrestricted net assets ....... Total recognized in net periodic benefit (income) cost and unrestricted net assets . . . . . . . . . . . . . . . .
The estimated net actuarial gain and prior service cost for the defined benefit plan that will be amortized from stricted net assets into net periodic benefit income during the next fiscal year are $29.5 million and $2.2 million, respectively.
The estimated net actuarial loss, prior service 24 r---Pension Benefits Other Benefits_
2009 2008 2009 2008 $ 54,344 $ 47,122 $ 15,009 $ 13,335 134,080 127,332 25,137 21,084 (215,752) (201,487) (20,647) (19,756) 4,776 4,775 (31,172) (7,802) 2,380 1,000 2,180 2,103 3,555 3,557 1,143 (55,177) (32,732) 30,210 23,995 728,482 120,884 78,677 67,476 31,172 7,802 (2,380) (1,000) 3,598 (2,180) (2,103) (3,555)
(3,557) (4,776) (4,775) 757,474 130,181 67,966 58,144 $ 702,297 $ 97,449 $ 98,176 $ 82,139 cost and transition obligation for the other postretirement plans that will be amortized from unrestricted net assets into net periodic benefit cost during the next fiscal year are $4.4 million, $3.6 million and $4.8 million, respectively.
MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
Benefit Obligations and Fair Value of Assets Table 16 summarizes the funded status, benefit obligations, amounts recognized in the Statements of Financial Position, and amounts recognized in unrestricted net assets for the MIT's benefit plans. MIT uses a June 30 measurement date for its pension and postretirement benefit plans.Table 16. Benefit Obligations and Fair Value of Assets (in thousands of dollars) I -Pension Benefits -- ] i Other Benefits 2009 2008 2009 2008 Change in benefit obligation Benefit obligation at beginning of year .............
Service cost ...................................
Interest cost ...................................
Retiree contributions
............................
Plan am endm ent ...............................
Net benefit payments and transfers
................
Assumption changes and actuarial net loss (gain) .....Special termination benefits ......................
Benefit obligation at end of year ...............
Change in plan assets Fair value of plan assets at beginning of year .........Actual return on plan assets ......................Employer contributions
.........................
Retiree contributions
............................
Net benefit payments and transfers
................
Fair value of plan assets at end of year ...........Funded (unfunded) status at end of year .........Amounts recognized in the statements of financial position consist of: Benefit assets ..................................
Benefit liability
................................
T otal ......................................
Amounts recognized in unrestricted net assets consist of: N et actuarial loss (gain) ..........................
Prior service cost ...............................
Transition liability
..............................
T otal ......................................
$ 2,066,978 54,344 134,080 (111,972)(25,596)1,143 2,118,977 2,989,316 (538,325)(54,200)(111,972)2,284,819$ 165,842$ 2,042,729 47,122 127,332 3,598 (107,757)(46,046)2,066,978$ 382,845 15,009 25,137 3,105 (22,043)5,685 409,738$334,436 13,335 21,084 2,914 3,062,516 251,684 34,557 (52,345)-54,200-3,105(107,757) (22,043) 2,989,316 234,601$ 922,338 $ (175,137)(23,544)34,620 382,845 285,414 (13,100)2,914 (23,544)251,684$ (131,161.)
$ 165,842 $ 922,338 $$$ 165,842-(175,137)
(131,161)$ 922,338 $ (175,137)
$ (131,161)$ (20,371) $ (780,024)11,182$ (9,189)13,362$ (766,662)$ 148,942 S 72,645 7,113 10,668 19,103 23,879$ 175,158 $ 107,192 NOTES TO FINANCIAL STATEMENTS2 5 J. Retirement Benefits (continued)
Benefit Obligations and Fair Value of Assets Table 16 summarizes the funded status, benefit obligations, amounts recognized in the Statements of Financial Position, and amounts recognized in unrestricted net assets for the MIT's benefit plans. MIT uses a June 30 measurement date for its pension and postretirement benefit plans. Table Benefit Obligations and Fair Value of Assets (in thousands of dollars) r---Pension Benefits Other Benefits 2009 2008 2009 2008 Change in benefit obligation Benefit obligation at beginning of year .............
$ 2,066,978
$ 2,042,729
$ 382,845 $ 334,436 Service cost ...................................
54,344 47,122 15,009 13,335 Interest cost ...................................
134,080 127,332 25,137 21,084 Retiree contributions
............................
3,105 2,914 Plan amendment
...............................
3,598 Net benefit payments and transfers
................
(111,972)
(107,757) (22,043) (23,544)
Assumption changes and actuarial net loss (gain) ..... (25,596) (46,046) 5,685 34,620 Special termination benefits ......................
1,143 Benefit obligation at end of year ............... 2,118,977 2,066,978 409,738 382,845 Change in plan assets Fair value of plan assets at beginning of year. ........ 2,989,316 3,062,516 251,684 285,414 Actual return on plan assets ......................
(538,325) 34,557 (52,345) (13,100)
Employer contributions
.........................
(54,200) 54,200 Retiree contributions
............................
3,lO5 2,914 Net benefit payments and transfers
................
(111,972)
(107,757)
(22,043) (23,544) Fair value of plan assets at end of year ........... 2,284,819 2,989,316 234,601 251,684 Funded (unfunded) status at end of year .........
$ 165,842 $ 922,338 $ (175,137)
$ (131,161)
Amounts recognized in the statements of financial position consist of: Benefit assets ..................................
$ 165,842 $ 922,338 $ $ Benefit liability
................................
(175,13 7) (131,161)
Total. .....................................
$ 165,842 $ 922,338 $ (175,137)
$ (131,161)
Amounts recognized in unrestricted net assets consist of: Net actuarial loss (gain) ..........................
$ (20,371) $ (780,024)
$ 148,942 $ 72,645 Prior service cost ...............................
11,182 13,362 7,113 10,668 Transition liability
..............................
19,1O3 23,879 Total. .....................................
$ (9,189) $ (766,662)
$ 175,158 $ 107,192 NOTES TO FINANCIAL STATEMENTS 25 J. Retirement Benefits (continued)
Benefit Obligations and Fair Value of Assets Table 16 summarizes the funded status, benefit obligations, amounts recognized in the Statements of Financial Position, and amounts recognized in unrestricted net assets for the MIT's benefit plans. MIT uses a June 30 measurement date for its pension and postretirement benefit plans. Table Benefit Obligations and Fair Value of Assets (in thousands of dollars) r---Pension Benefits Other Benefits 2009 2008 2009 2008 Change in benefit obligation Benefit obligation at beginning of year .............
$ 2,066,978
$ 2,042,729
$ 382,845 $ 334,436 Service cost ...................................
54,344 47,122 15,009 13,335 Interest cost ...................................
134,080 127,332 25,137 21,084 Retiree contributions
............................
3,105 2,914 Plan amendment
...............................
3,598 Net benefit payments and transfers
................
(111,972)
(107,757) (22,043) (23,544)
Assumption changes and actuarial net loss (gain) ..... (25,596) (46,046) 5,685 34,620 Special termination benefits ......................
1,143 Benefit obligation at end of year ............... 2,118,977 2,066,978 409,738 382,845 Change in plan assets Fair value of plan assets at beginning of year. ........ 2,989,316 3,062,516 251,684 285,414 Actual return on plan assets ......................
(538,325) 34,557 (52,345) (13,100)
Employer contributions
.........................
(54,200) 54,200 Retiree contributions
............................
3,lO5 2,914 Net benefit payments and transfers
................
(111,972)
(107,757)
(22,043) (23,544) Fair value of plan assets at end of year ........... 2,284,819 2,989,316 234,601 251,684 Funded (unfunded) status at end of year .........
$ 165,842 $ 922,338 $ (175,137)
$ (131,161)
Amounts recognized in the statements of financial position consist of: Benefit assets ..................................
$ 165,842 $ 922,338 $ $ Benefit liability
................................
(175,13 7) (131,161)
Total. .....................................
$ 165,842 $ 922,338 $ (175,137)
$ (131,161)
Amounts recognized in unrestricted net assets consist of: Net actuarial loss (gain) ..........................
$ (20,371) $ (780,024)
$ 148,942 $ 72,645 Prior service cost ...............................
11,182 13,362 7,113 10,668 Transition liability
..............................
19,1O3 23,879 Total. .....................................
$ (9,189) $ (766,662)
$ 175,158 $ 107,192 NOTES TO FINANCIAL STATEMENTS 25 J. Retirement Benefits (continued)
The accumulated benefit obligation for MIT's defined benefit pension plan was $2,011.3 million and $1,966.5 million atJune 30, 2009 and 2008, respectively.Defined benefit plan funding rules are set forth under the Pension Protection Act of 2006 (PPA). On a PPA basis, the funded position of a plan is measured by comparing the actuarial value of assets with the funding target. The actuarial value of assets is an average of the fair market value over a three-year period adjusted for cash flow and expected earnings, but not greater than 110 percent of the fair market value. The funding target is the present value of benefits accrued or earned as of the valuation date (January 1). As of January 1, 2009 (the plan's valuation date), the MIT definedbenefit pension plan was 129.7 percent funded on a PPA basis. This is based on a funding target of
$1,957.2 millionand an actuarial value of assets of $2,538.5 million.Under accounting rules set forth in Statement of Financial Accounting Standards No. 87 Employers'Accounting for Pension (SFAS No. 87), the funded position of the plan is measured by comparing the fair value of assets with the accumulated benefit obligation (ABO) or the projectedbenefit obligation (PBO).
The ABO equals the present value of benefits as of the end of the fiscal year (June 30).The PBO equals the ABO adjusted for the effect of futureexpected pay increases.
As of June 30, 2009, the MIT defined benefit pension plan was 113.6 percent funded onan ABO basis. This is based on an ABO of $2,011.3 million and the fair value of assets of $2,284.8 million.The ABO and PPA funded percentages differ primarily dueto the difference in plan assets and economic conditions (and therefore plan valuation assumptions) between January 1, 2009 and June 30, 2009.MIT has recognized the effect of the expected Medicare subsidy by reducing its accumulated postretirement benefit obligation by $67.8 million and $64.0 million as ofJune 30, 2009 and 2008, respectively.
This initial reduction was recognized as an actuarial gain. Additionally, the service and interest cost components of postretirement benefits cost were reduced in 2009 and future periods.Table 17. Assumptions and Health Care Cost Trend Rates F-----Pension Benefits I -Other Benefits-----
2009 2008 2009 2008 Assumptions used to determine benefit obligation as of June 30: Discount rate ..................................
6.25% 6.50% 6.25% 6.50%Rate of compensation increase ....................
4.00%W 4.00%Assumptions used to determine net periodic benefit (income) cost for year ended June 30: Discount rate ..................................
6.50% 6.25% 6.50% 6.25%Expected long-term return on plan assets ...........
8.00% 8.25% 7.00% 7.50%
Rate of compensation increase .................... 4.00% 4.00%
Assumed health care cost trend rates: Health care cost trend rate assumed for next year ..... 8.00% 8.50%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) .........................
5.00% 5.00%Year that the rate reaches the ultimate trend rate ..... 2015 2015 The average rate ofsalagy increase is assumed to be 2% for 2010 and 2011, 3%for 2012, and 4% thereafter The expected long-term rate of return assumptionrepresents the expected average rate of earnings on thefunds invested or to be invested to provide for the benefits included in the benefit obligation.
The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, histori-cal plan return data, plan expenses andthe potential to outperform market index returns.26MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
The accumulated benefit obligation for MIT's defined benefit pension plan was $2,011.3 million and $1,966.5 million atJune 30, 2009 and 2008, respectively.
Defined benefit plan funding rules are set forth under the Pension Protection Act of 2006 (PPA). On a PPA basis, the funded position of a plan is measured by comparing the actuarial value of assets with the funding target. The actuarial value of assets is an average of the fair market value over a three-year period adjusted for cash flow and expected earnings, but not greater than 110 percent of the fair market value. The funding target is the present value of benefits accrued or earned as of the valuation date aanuary 1). As of January 1, 2009 (the plan's valuation date), the MIT defined benefit pension plan was 129.7 percent funded on a PPA basis. This is based on a funding target of$1,957.2 million and an actuarial value of assets of $2,538.5 million. Under accounting rules set forth in Statement of Financial Accounting Standards No. 87 Employers' AccountingfoT Pension (SFAS No. 87), the funded position of the plan is measured by comparing the fair value of assets with the accumulated benefit obligation (ABO) or the projected benefit obligation (PBO). The ABO equals the present value of benefits as of the end of the fiscal year aune 30). The PBO equals the ABO adjusted for the effect of future expected pay increases.
As of June 30, 2009, the MIT defined benefit pension plan was 113.6 percent funded on an ABO basis. This is based on an ABO of $2,011.3 million and the fair value of assets of $2,284.8 million. The ABO and PPA funded percentages differ primarily due to the difference in plan assets and economic conditions (and therefore plan valuation assumptions) between January 1,2009 and June 30, 2009. MIT has recognized the effect of the expected Medicare subsidy by reducing its accumulated postretirement benefit obligation by $67.8 million and $64.0 million as ofJune 30,2009 and 2008, respectively.
This initial reduction was recognized as an actuarial gain. Additionally, the service and interest cost components of postretirement benefits cost were reduced in 2009 and future periods. Table 17. Assumptions and Health Care Cost Trend Rates Assumptions used to determine benefit obligation as ofJune 30: Discount rate ................................. . Rate of compensation increase ................... . Assumptions used to determine net periodic benefit (income) cost for year ended June 30: Discount rate ................................. . Expected long-term return on plan assets .......... . Rate of compensation increase ................... . Assumed health care cost trend rates: Health care cost trend rate assumed for next year. .... Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ........................ . Year that the rate reaches the ultimate trend rate .... . c= Pension Benefits c== Other 2009 6.25% 4.00%1 6.50% 8.00% 4.00% 2008 6.50% 4.00% 6.25% 8.25% 4.00% 2009 6.25% 6.50% 7.00% 8.00% 5.00% 2015 2008 6.50%
6.25% 7.50% 8.50% 5.00% 2015 1 The average rate afsalmy increase is assumed to be 2% fin' 20] 0 and 2011, 3% for 2012, and 4% the7'eafte1:
The expected long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligation.
The long-term rate of return assumption is determined based on a number 26 of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, cal plan return data, plan expenses and,the potential to outperform market index returns. MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
The accumulated benefit obligation for MIT's defined benefit pension plan was $2,011.3 million and $1,966.5 million atJune 30, 2009 and 2008, respectively.
Defined benefit plan funding rules are set forth under the Pension Protection Act of 2006 (PPA). On a PPA basis, the funded position of a plan is measured by comparing the actuarial value of assets with the funding target. The actuarial value of assets is an average of the fair market value over a three-year period adjusted for cash flow and expected earnings, but not greater than 110 percent of the fair market value. The funding target is the present value of benefits accrued or earned as of the valuation date aanuary 1). As of January 1, 2009 (the plan's valuation date), the MIT defined benefit pension plan was 129.7 percent funded on a PPA basis. This is based on a funding target of$1,957.2 million and an actuarial value of assets of $2,538.5 million. Under accounting rules set forth in Statement of Financial Accounting Standards No. 87 Employers' AccountingfoT Pension (SFAS No. 87), the funded position of the plan is measured by comparing the fair value of assets with the accumulated benefit obligation (ABO) or the projected benefit obligation (PBO). The ABO equals the present value of benefits as of the end of the fiscal year aune 30). The PBO equals the ABO adjusted for the effect of future expected pay increases.
As of June 30, 2009, the MIT defined benefit pension plan was 113.6 percent funded on an ABO basis. This is based on an ABO of $2,011.3 million and the fair value of assets of $2,284.8 million. The ABO and PPA funded percentages differ primarily due to the difference in plan assets and economic conditions (and therefore plan valuation assumptions) between January 1,2009 and June 30, 2009. MIT has recognized the effect of the expected Medicare subsidy by reducing its accumulated postretirement benefit obligation by $67.8 million and $64.0 million as ofJune 30,2009 and 2008, respectively.
This initial reduction was recognized as an actuarial gain. Additionally, the service and interest cost components of postretirement benefits cost were reduced in 2009 and future periods. Table 17. Assumptions and Health Care Cost Trend Rates Assumptions used to determine benefit obligation as ofJune 30: Discount rate ................................. . Rate of compensation increase ................... . Assumptions used to determine net periodic benefit (income) cost for year ended June 30: Discount rate ................................. . Expected long-term return on plan assets .......... . Rate of compensation increase ................... . Assumed health care cost trend rates: Health care cost trend rate assumed for next year. .... Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ........................ . Year that the rate reaches the ultimate trend rate .... . c= Pension Benefits c== Other 2009 6.25% 4.00%1 6.50% 8.00% 4.00% 2008 6.50% 4.00% 6.25% 8.25% 4.00% 2009 6.25%
6.50% 7.00% 8.00% 5.00% 2015 2008 6.50%
6.25% 7.50% 8.50% 5.00% 2015 1 The average rate afsalmy increase is assumed to be 2% fin' 20] 0 and 2011, 3% for 2012, and 4% the7'eafte1:
The expected long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligation.
The long-term rate of return assumption is determined based on a number 26 of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, cal plan return data, plan expenses and,the potential to outperform market index returns. MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
As an indicator of sensitivity, a one percentage point change in the assumed health care cost trend rate would effect 2009 as shown in Table 18 below.Table 18. Health Care Cost Trend Rate Sensitivity (in thousands of dollars) 1% point increase 1% point decreaseEffect on 2009 post-retirement service and interest cost ...................
$ 5,963 $ (4,941)Effect on post-retirement benefit obligation as of June 30, 2009 .............
$$46,870 $ (39,67.4)Plan Assets Target allocations and weighted-average asset allocations of the investment portfolio for the MIT defined benefit plan andother postretirement benefit plans at June 30, 2009 and 2008 are shown in Table 19 below.Table 19. Plan Assets Pension Benefits Other Benefits Plan Assets as of June 30 Plan Assets as of June 30 Target Target Allocation 2009 2008 Allocation 2009 2008 Cash .......................
-4% --2% -Equity securities
.............
73% 71% 79% 75% 77% 75%Fixed income securities
........ 8% 8% 13% 20% 18% 24%Real estate .................. 19% 17% 8% 5% 3% 1%Total ..................... 100% 100% 100% 100% 100% 100%The investment objectives for the assets of the plans are to minimize expected funding contributions and to meet or exceed the rate of return assumed for plan funding pur-poses over the long term. The nature and duration of ben-efit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters.
Risk management practices include the use of external investment managers and the maintenance of a portfolio diversified by asset class" invest-ment approach and security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due. In 2008, the defined benefit plan participated in securities lending programs in order to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The defined benefit plan had no outstanding securities lending arrangements atJune 30, 2009.Contributions MIT does not expect to contribute to its defined benefit pension plan, and expects to contribute approximately
$36.8 million to its other postretirement benefit plan in 2010.These contributions have been estimated based on the same assumptions used to measure MIT's benefit obligation at June 30, 2009.In 2009, under provision of Section 420 of the Internal Revenue Code, the MIT defined benefit plan transferred
$54.2 million of excess pension assets to the postretirement welfare benefit plan. The Internal Revenue Code permitstransfers annually of an amount not to exceed actual expenditures on retiree health care benefits.
The transfer resulted in a negative contribution of
$54.2 million for the defined benefit plan and a positive contribution of $54.2 million to the postretirement welfare benefit plan.NOTES TO FINANCIAL STATEMENTS 27 J. Retirement Benefits (continued)
As an indicator of sensitivity, a one percentage point change in the assumed health care cost trend rate would effect 2009 as shown in Table 18 below. Table 18. Health Care Cost Trend Rate Sensitivity (in thousands of dollan) 1 % point increase 1 % point decrease Effect on 2009 post-retirement service and interest cost .................. . $ 5,963 $ 46,870 $ (4,941) $ (39,674) Effect on post-retirement benefit obligation as of June 30, 2009 ............ . Plan Assets Target allocations and weighted-average asset allocations of the investment portfolio for the MIT defined benefit plan and other postretirement benefit plans atJune 30, 2009 and 2008 are shown in Table 19 below. Table 19. Plan Assets Pension Benefits Other Benefits Plan Assets as of June 30 Plan Assets as of June 30 Target Allocation 2009 Cash .......................
4% Equity securities
.............
73% 71% Fixed income securities
........ 8% 8% Real estate ..................
19% 17% Total. ..........*.........
100% 100% The investment objectives for the assets of the plans are to minimize expected funding contributions and to meet or exceed the rate of return assumed for plan funding poses over the long term. The nature and duration of efit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters.
Risk management practices include the use of external investment managers and the maintenance of a portfolio diversified by asset class: ment approach and security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due. In 2008, the defined benefit plan participated in securities lending programs in order to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The defined benefit plan had no outstanding securities lending arrangements atJune 30, 2009. NOTES TO FINANCIAL STATEMENTS Target 2008 Allocation 2009 2008 2% 79% 75% 77% 75%
13% 20% 18% 24% 8% 5% 3% 1% 100% 100% 100% 100%
Contributions MIT does not expect to contribute to its defined benefit pension plan, and expects to contribute approximately
$36.8 million to its other postretirement benefit plan in 2010. These contributions have been estimated based on the same assumptions used to measure MIT's benefit obligation at June 30, 2009. In 2009, under provision of Section 420 of the Internal Revenue Code, the MIT defined benefit plan transferred
$54.2 million of excess pension assets to the postretirement welfare benefit plan. The Internal Revenue Code permits transfers annually of an amount not to exceed actual expenditures on retiree health care benefits.
The transfer resulted in a negative contribution of $54.2 million for the defined benefit plan and a positive contribution of $54.2 million to the postretirement welfare benefit plan. 27 J. Retirement Benefits (continued)
As an indicator of sensitivity, a one percentage point change in the assumed health care cost trend rate would effect 2009 as shown in Table 18 below. Table 18. Health Care Cost Trend Rate Sensitivity (in thousands of dollan) 1 % point increase 1 % point decrease Effect on 2009 post-retirement service and interest cost .................. . $ 5,963 $ 46,870 $ (4,941) $ (39,674) Effect on post-retirement benefit obligation as of June 30, 2009 ............ . Plan Assets Target allocations and weighted-average asset allocations of the investment portfolio for the MIT defined benefit plan and other postretirement benefit plans atJune 30, 2009 and 2008 are shown in Table 19 below. Table 19. Plan Assets Pension Benefits Other Benefits Plan Assets as of June 30 Plan Assets as of June 30 Target Allocation 2009 Cash .......................
4% Equity securities
.............
73% 71% Fixed income securities
........ 8% 8% Real estate ..................
19% 17% Total. ..........*.........
100% 100% The investment objectives for the assets of the plans are to minimize expected funding contributions and to meet or exceed the rate of return assumed for plan funding poses over the long term. The nature and duration of efit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters.
Risk management practices include the use of external investment managers and the maintenance of a portfolio diversified by asset class: ment approach and security holdings, and the maintenance of sufficient liquidity to meet benefit obligations as they come due. In 2008, the defined benefit plan participated in securities lending programs in order to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The defined benefit plan had no outstanding securities lending arrangements atJune 30, 2009. NOTES TO FINANCIAL STATEMENTS Target 2008 Allocation 2009 2008 2% 79% 75% 77% 75%
13% 20% 18% 24% 8% 5% 3% 1% 100% 100% 100% 100%
Contributions MIT does not expect to contribute to its defined benefit pension plan, and expects to contribute approximately
$36.8 million to its other postretirement benefit plan in 2010. These contributions have been estimated based on the same assumptions used to measure MIT's benefit obligation at June 30, 2009. In 2009, under provision of Section 420 of the Internal Revenue Code, the MIT defined benefit plan transferred
$54.2 million of excess pension assets to the postretirement welfare benefit plan. The Internal Revenue Code permits transfers annually of an amount not to exceed actual expenditures on retiree health care benefits.
The transfer resulted in a negative contribution of $54.2 million for the defined benefit plan and a positive contribution of $54.2 million to the postretirement welfare benefit plan. 27 J. Retirement Benefits (continued)
Expected Future Benefit Payments Table 20 reflects total expected benefit payments for the defined benefit and other postretirement benefit plans, as well as expected receipt of the federal subsidy.
These payments have been estimated based on the same assumptions used to measure MIT's benefit obligation at year end.Table 20. Expected Future Benefit Payments Pension Other Federal (in thousands of dollars) Benefits Benefits' Subsidy 2 2010 ............................................
117,270 $ 28,759 $ 2,893 2011 ...........................................
125,361 31,154 3,176 2012 ...........................................
128,446 33,044 3,498 2013 ...........................................
131,426 34,870 3,814 2014 ...........................................
134,532 36,595 4,122 2015-2019
......................................
729,805 208,258 24,886'Other benefits reflect the total net benefits expected to be paid from the plans and exclude the participants' share of the cost, which is funded by participant contributions to the plans, and does not reflect any subsidy expected to be received from the government for MIT's retiree prescription drug coverage.2 Federal subsidy reflects the amount MIT is expected to receive from the government and reflects MIT's expected drugs claims experience.
28MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
Expected Future Benefit Payments Table 20 reflects total expected benefit payments for the defined benefit and other postretirement benefit plans, as well as expected receipt of the federal subsidy. These payments have been estimated based on the same assumptions used to measure MIT's benefit obligation at year end. Table 20. Expected Future Benefit Payments Pension Other Federal (in thousands of dollars) Benefits Benefits 1 Subsidy2 2010 ................... , ....................... . $ 117,270 $ 28,759 $ 2,893 2011 .......................................... . 125,361 31,154 3,176 2012 .......................................... . 128,446 33,044 3,498 2013 ........................................... . 131,426 34,870 3,814 2014 .......................................... . 134,532 36,595 4,122 2015-2019
..................................... . 729,805 208,258 24,886 10 t her benefits reflect the total net benefits expected to be paid from the plans and exclude the participants' share of the cost, which is funded by participant contributions to the plans, and does not reflect any subsidy expected to be received from the government for MIT's retiree prescription drug coverage.
2 Federal subsidy reflects the amount MIT is expected to receive from the government and reflects MIT's expected drugs claims experience.
28 MIT REPORT OF THE TREASURER 2009 J. Retirement Benefits (continued)
Expected Future Benefit Payments Table 20 reflects total expected benefit payments for the defined benefit and other postretirement benefit plans, as well as expected receipt of the federal subsidy. These payments have been estimated based on the same assumptions used to measure MIT's benefit obligation at year end. Table 20. Expected Future Benefit Payments Pension Other Federal (in thousands of dollars) Benefits Benefits 1 Subsidy2 2010 ................... , ....................... . $ 117,270 $ 28,759 $ 2,893 2011 .......................................... . 125,361 31,154 3,176 2012 .......................................... . 128,446 33,044 3,498 2013 ........................................... . 131,426 34,870 3,814 2014 .......................................... . 134,532 36,595 4,122 2015-2019
..................................... . 729,805 208,258 24,886 10 t her benefits reflect the total net benefits expected to be paid from the plans and exclude the participants' share of the cost, which is funded by participant contributions to the plans, and does not reflect any subsidy expected to be received from the government for MIT's retiree prescription drug coverage.
2 Federal subsidy reflects the amount MIT is expected to receive from the government and reflects MIT's expected drugs claims experience.
28 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment Table 21 below presents the three categories of net assets by purpose as of June 30, 2009. The amounts listed in the unrestricted column labeled Endowment Funds Principal are those gifts received over the years that MIT designated as funds functioning as endowment and invested with the endowment funds. A large component of temporarily restricted net assets is pledges, the majority of which will be reclassified to unrestricted net assets when cash is received.Table 21. Fund Category 2009 Temporarily Permanently I 2008 (in thousands of dollars) Unrestricted Restricted Restricted Total Total Endowment funds principal General purpose ....................
Departments and research ..............
L ibrary ............................
Salaries and wages ...................
Graduate general ....................
Graduate departments
.................
Undergraduate
......................P rizes .............................
M iscellaneous .......................
Investment income held for distribution
.Endowment funds before pledges .......P ledges ............................
Total endowment funds .............
Other invested funds Student loan funds ...................
Building funds ......................
Designated purposes: .................
-Departments and research ...........
-Other purposes ....................
Reserve funds .......................
Real estate gifts held for sale ...........
Life income funds ...................
Pledges ............................
Other funds available for current expenses Funds expended for educational plant ...Total other funds ...................
Total net assets at fair value
............
$ 594,998 325,179 7,883 285,788 47,580 55,309 142,731 4,780 668,552 246,190 2,378,990 2,378,990 19,889 58,258 258,747 51,440 98,316 7,908 6,179 254,780 425,418 1,180,935$ 3,559,925$ 707,929 562,495 12,781 1,559,674 72,129 171,312 629,330 15,278 127,935 3,858,863 3,858,863$ 214,524 383,533 7,799 571,340 69,981 159,681 286,449 17,167 33,694 1,744,168 169,784 1,913,952$ 1,517,451 1,271,207 28,463 2,416,802 189,690 386,302 1,058,510 37,225 830,181 246,190 7,982,021 169,784 8,151,805$ 1,929,726 1,597,782 36,031 3,062,843 210,750 478,012 1,333,218 47,583 1,056,514 316,328 10,068,787 165,713 10,234,500 36,900 185,771 246,194 47,038 3,777 7,653 122,457 277,590 1,154,847 453,247 2,535,474$12,769,974 17,536 37,425 205,881 147,623 39,273 294,953 60,303-258,747-51,440-98,316-7,908 53,960 99,412-294,953-315,083-425,418 542,152$ 4,401,015 71,496$ 1,985,448 1,794,583$ 9,946,388 NOTES TO FINANCIAL STATEMENTS 29 K. Components of Net Assets and Endowment Table 21 below presents the three categories of net assets by purpose as ofJune 30, 2009. The amounts listed in the unrestricted column labeled Endowment Funds Principal are those gifts received over the years that MIT designated as funds functioning as endowment and invested with the endowment funds. A large component of temporarily restricted net assets is pledges, the majority of which will be reclassified to unrestricted net assets when cash is received.
Table 21. Fund Category 2009 Temporarily Permanently 2008 (in thousands of dollars) Unrestricted Restricted Restricted Total Total Endowment funds principal General purpose ....................
$ 594,998 $ 707,929 $ 214,524 $ 1,517,451
$ 1,929,726 Departments and research .............
325,179 562,495 383,533 1,271,207 1,597,782 Library ............................
7,883 12,781 7,799 28,463 36,031 Salaries and wages ...................
285,788 1,559,674 571,340 2,416,802 3,062,843 Graduate general ....................
47,580 72,129 69,981 189,690 210,750 Graduate departments
................
55,309 171,312 159,681 386,302 478,012 Undergraduate
......................
142,731 629,330 286,449 1,058,510 1,333,218 Prizes .............................
4,780 15,278 17,167 37,225 47,583 Miscellaneous
.......................
668,552 127,935 33,694 830,181 1,056,514 Investment income held for distribution . 246,190 246,190 316,328 Endowment funds before pledges ....... 2,378,990 3,858,863 1,744,168 7,982,021 10,068,787 Pledges ............................ 169,784 169,784 165,713 Total endowment funds .............
2,378,990 3,858,863 1,913,952 8,151,805 10,234,500 Other invested funds Student loan funds ...................
19,889 17,536 37,425 36,900 Building funds ......................
58,258 147,623 205,881 185,771 Designated purposes:
.................
-Departments and research ...........
258,747 258,747 246,194 -Other purposes ....................
51,440 51,440 47,038 Reserve funds .......................
98,316 98,316 3,777 Real estate gifts held for sale ...........
7,908 7,908 7,653 Life income funds ...................
6,179 39,273 53,960 99,412 122,457 Pledges ............................
294,953 294,953 277,590 Other funds available for current expenses 254,780 60,303 315,083 1,154,847 Funds expended for educational plant ... 425,418 425,418 453,247 Total other funds ...................
1,180,935 542,152 71,496 1,794,583 2,535,474 Total net assets at fair value ............
$ 3,559,925
$ 4,401,015
$ 1,985,448
$ 9,946,388
$12,769,974 NOTES TO FINANCIAL STATEMENTS 29 K. Components of Net Assets and Endowment Table 21 below presents the three categories of net assets by purpose as ofJune 30, 2009. The amounts listed in the unrestricted column labeled Endowment Funds Principal are those gifts received over the years that MIT designated as funds functioning as endowment and invested with the endowment funds. A large component of temporarily restricted net assets is pledges, the majority of which will be reclassified to unrestricted net assets when cash is received.
Table 21. Fund Category 2009 Temporarily Permanently 2008 (in thousands of dollars) Unrestricted Restricted Restricted Total Total Endowment funds principal General purpose ....................
$ 594,998 $ 707,929 $ 214,524 $ 1,517,451
$ 1,929,726 Departments and research .............
325,179 562,495 383,533 1,271,207 1,597,782 Library ............................
7,883 12,781 7,799 28,463 36,031 Salaries and wages ...................
285,788 1,559,674 571,340 2,416,802 3,062,843 Graduate general ....................
47,580 72,129 69,981 189,690 210,750 Graduate departments
................
55,309 171,312 159,681 386,302 478,012 Undergraduate
......................
142,731 629,330 286,449 1,058,510 1,333,218 Prizes .............................
4,780 15,278 17,167 37,225 47,583 Miscellaneous
.......................
668,552 127,935 33,694 830,181 1,056,514 Investment income held for distribution . 246,190 246,190 316,328 Endowment funds before pledges ....... 2,378,990 3,858,863 1,744,168 7,982,021 10,068,787 Pledges ............................ 169,784 169,784 165,713 Total endowment funds .............
2,378,990 3,858,863 1,913,952 8,151,805 10,234,500 Other invested funds Student loan funds ...................
19,889 17,536 37,425 36,900 Building funds ......................
58,258 147,623 205,881 185,771 Designated purposes:
.................
-Departments and research ...........
258,747 258,747 246,194 -Other purposes ....................
51,440 51,440 47,038 Reserve funds .......................
98,316 98,316 3,777 Real estate gifts held for sale ...........
7,908 7,908 7,653 Life income funds ...................
6,179 39,273 53,960 99,412 122,457 Pledges ............................
294,953 294,953 277,590 Other funds available for current expenses 254,780 60,303 315,083 1,154,847 Funds expended for educational plant ... 425,418 425,418 453,247 Total other funds ...................
1,180,935 542,152 71,496 1,794,583 2,535,474 Total net assets at fair value ............
$ 3,559,925
$ 4,401,015
$ 1,985,448
$ 9,946,388
$12,769,974 NOTES TO FINANCIAL STATEMENTS 29 K. Components of Net Assets and Endowment (continued)
MIT's endowment consists of approximately 3,000 individual funds established for a variety of purposes and includes both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments.
As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions.
The Board of Trustees of MIT has interpreted the Massachusetts enacted version of Uniform Prudent Management of Institutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument.Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Board of Trustees.
As a result of this interpretation, MIT has not changed the way permanently restricted net assets are classified.
See note A for further information on net asset classification.
The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Board of Trustees considers the following factors in making a determination to appropriate or accumulate endowment funds: i. the duration and preservation of the fund ii. the purposes of MIT and the endowment fund iii. general economic conditions iv. the possible effect of inflation and deflation v. the expected total return from income and the appreciation of investments vi. other resources of MIT vii. the investment policies of MIT Fiscal Year 2009 Table 22. Endowment Net Asset Composition by Type of Fund as of June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Donor-restricted endowment funds ................ $ -$ 3,858,863
$ 1,913,952
$ 5,772,815 Board-designated endowment funds ...............
2,378,990
--2,378,990 Total endowment funds ......................
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 Table 23. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............
$ 3,091,110
$5,320,317
$1,823,073
$10,234,500 Investment return: Investment income ...........................
21,970 48,094 4,046 74,110 Net depreciation (realized and unrealized)
........ (618,016)
(1,143,356) (24,337) (1,785,709)
Total investment return ..........................
(596,046)
(1,095,262)
(20,291) (1,711,599)
Contributions
.................................
4,650 -108,155 112,805 Appropriation of endowment assets for expenditure... (153,545) (364,402)
-(517,947)Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
MIT's endowment consists of approximately 3,000 individual funds established for a variety of purposes and includes.
both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments.
As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions.
The Board of Trustees of MIT has interpreted the Massachusetts enacted version of Uniform Prudent Management ofInstitutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument.
Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Board of Trustees.
As Fiscal Year 2009 a result of this interpretation, MIT has not changed the way permanently restricted net assets are classified.
See note A for further information on net asset classification.
The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Board of Trustees considers the following factors in making a determination to appropriate or accumulate endowment funds: 1. the duration and preservation of the fund II. the purposes of MIT and the endowment fund Ill. general economic conditions IV. the possible effect of inflation and deflation
v. the expected total return from income and the appreciation of investments VI. other resources of MIT VII. the investment policies of MIT Table 22. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2009 (in thousands of dollan) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 2,378,990
$ 2,378,990 Temporarily Restricted
$ 3,858,863
$ 3,858,863 Permanently Restricted
$ 1,913,952
$ 1,913,952 Total $ 5,772,815 2,378,990
$ 8,151,805 Table 23. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............
$ 3,091,110
$5,320,317
$1,823,073
$10,234,500 Investment return: Investment income ...........................
21,970 48,094 4,046 74,110 Net depreciation (realized and unrealized)
........ (618,016)
(1,143,356)
(24,337) (1,785,709)
Total investment return ..........................
(596,046)
(1,095,262)
(20,291) (1,711,599)
Contributions
.................................
4,650 108,155 112,805 Appropriation of endowment assets for expenditure
... (153,545)
(364,402)
(517,947)
Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
MIT's endowment consists of approximately 3,000 individual funds established for a variety of purposes and includes.
both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments.
As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor imposed restrictions.
The Board of Trustees of MIT has interpreted the Massachusetts enacted version of Uniform Prudent Management ofInstitutional Funds Act (UPMIFA) as allowing MIT to appropriate for expenditure or accumulate so much of an endowment fund as MIT determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, subject to the intent of the donor as expressed in the gift instrument.
Unless stated otherwise in the gift instrument, the assets in an endowment fund shall be donor-restricted assets until appropriated for expenditure by the Board of Trustees.
As Fiscal Year 2009 a result of this interpretation, MIT has not changed the way permanently restricted net assets are classified.
See note A for further information on net asset classification.
The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Board of Trustees considers the following factors in making a determination to appropriate or accumulate endowment funds: 1. the duration and preservation of the fund II. the purposes of MIT and the endowment fund Ill. general economic conditions IV. the possible effect of inflation and deflation
v. the expected total return from income and the appreciation of investments VI. other resources of MIT VII. the investment policies of MIT Table 22. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2009 (in thousands of dollan) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 2,378,990
$ 2,378,990 Temporarily Restricted
$ 3,858,863
$ 3,858,863 Permanently Restricted
$ 1,913,952
$ 1,913,952 Total $ 5,772,815 2,378,990
$ 8,151,805 Table 23. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2009 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2008 ..............
$ 3,091,110
$5,320,317
$1,823,073
$10,234,500 Investment return: Investment income ...........................
21,970 48,094 4,046 74,110 Net depreciation (realized and unrealized)
........ (618,016)
(1,143,356)
(24,337) (1,785,709)
Total investment return ..........................
(596,046)
(1,095,262)
(20,291) (1,711,599)
Contributions
.................................
4,650 108,155 112,805 Appropriation of endowment assets for expenditure
... (153,545)
(364,402)
(517,947)
Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
(23,984) 23,984 4,587 4,587 Net asset reclassifications and transfers to create board-designated endowment funds ..............
56,805 (25,774) (1,572) 29,459 Endowment net assets, June 30, 2009 ...........
$ 2,378,990
$ 3,858,863
$ 1,913,952
$ 8,151,805 30 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as ofJune 30, 2008 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Donor-restricted endowment funds ................
$ -$ 5,320,317
$ 1,823,073
$ 7,143,390 Board-designated endowment funds ...............
3,091,110
--3,091,110 Total endowment funds ......................
$ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Table 25. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2008 Temporarily Permanently (in thousands of dollars) Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2007 ..............
$ 3,147,258
$5,273,222
$1,695,909
$10,116,389 Investment return: Investment income ...........................
46,960 107,261 3,551 157,772 Net depreciation (realized and unrealized)
........ 86,065 131,332 8,209 225,606 Total investment return ..........................
133,025 238,593 11,760 383,378 Contributions
.................................
15,242 -106,129 121,371 Appropriation of endowment assets for expenditure...
(116,874)
(275,788)
-(392,662)Other changes: Underwater gain adjustment and fundsheld for reinvestment
.........................
(329) 329 1,482 1,482 Net asset reclassifications and transfers to create board-designated endowment funds ..............
(87,212) 83,961 7,793 4,542 Endowment net assets, June 30, 2008 ...........
$ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Underwater Endowment Funds From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (underwater).
When underwater endowment funds exist, they are classified as a reduction of unrestricted net assets. Total underwater endowment funds reported in unrestricted net assets were $24.3 million and $0.3 million as ofJune 30, 2009 and 2008, respectively.
The underwater status of these funds resulted from unfavorable market fluctuations.
Investment and Spending Policies MIT maintains its investments primarily in two investment pools: Pool A, principally for endowment and funds functioning as endowment, and Pool C, principally for investment of current funds of MIT's schools and departments and MIT's operating funds. Pool A operates asa mutual fund with units purchased and redeemed based on the previous month's unit market value of Pool A. The total market value of Pool A was $8,143.7 million at June 30, 2009 and $10,292.5 million in 2008. The total value of Pool A includes Pool C investments of $323.7 million atJune 30, 2009 and $416.0 million in 2008. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $162.1 million as of June 30 2009 and $192.3 million in 2008.NOTES TO FINANCIAL STATEMENTS 31 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as of June 30, 2008 (in thousands of dollars) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 3,091,110
$ 3,091,110 Temporarily Restricted
$ 5,320,317
$ 5,320,317 Permanently Restricted
$ 1,823,073
$ 1,823,073 Total $ 7,143,390 3,091,110
$10,234,500 Table 25. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2008 (in thousands of dollars) Endowment net assets, June 30, 2007 ..............
Investment return: Investment income ...........................
Net depreciation (realized and unrealized)
........ Total investment return ..........................
Contributions
.................................
Appropriation of endowment assets for expenditure
... Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
Net asset reclassifications and transfers to create board-designated endowment funds ..............
Endowment net assets, June 30, 2008 ...........
Underwater Endowment Funds From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (underwater).
When underwater endowment funds exist, they are classified as a reduction of unrestricted net assets. Total underwater endowment funds reported in unrestricted net assets were $24.3 million and $0.3 million as ofJune 30, 2009 and 2008, respectively.
The underwater status of these funds resulted from unfavorable market fluctuations.
NOTES TO FINANCIAL STATEMENTS Temporarily Permanently Unrestricted Restricted Restricted Total $ 3,l47,258
$5,273,222
$1,695,909
$10,116,389 46,960 107,261 3,551 157,772 86,065 131,332 8,209 225,606 133,025 238,593 11,760 383,378 15,242 106,129 121,371 (116,874)
(275,788)
(392,662)
(329) 329 1,482 1,482 (87,212) 83,961 7,793 4,542 $ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Investment and Spending Policies MIT its primarily in two investment pools: Pool A, principally for endowment and funds functioning as endowment, and Pool C, principally for investment of current funds of MIT's schools and departments and MIT's operating funds. Pool A operates as a mutual fund with units purchased and redeemed based on the previous month's unit market value of Pool A. The total market value of Pool A was $8,143.7 million atJune 30, 2009 and $10,292.5 million in 2008. The total value of Pool A includes Pool C investments of$323.7 million atJune 30,2009 and $416.0 million in 2008. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $162.1 million as ofJune 302009 and $192.3 million in 2008. 31 K. Components of Net Assets and Endowment (continued)
Fiscal Year 2008 Table 24. Endowment Net Asset Composition by Type of Fund as of June 30, 2008 (in thousands of dollars) Donor-restricted endowment funds ............... . Board-designated endowment funds .............. . Total endowment funds ..................... . Unrestricted
$ 3,091,110
$ 3,091,110 Temporarily Restricted
$ 5,320,317
$ 5,320,317 Permanently Restricted
$ 1,823,073
$ 1,823,073 Total $ 7,143,390 3,091,110
$10,234,500 Table 25. Changes in Endowment Net Assets for the Fiscal Year ended June 30, 2008 (in thousands of dollars) Endowment net assets, June 30, 2007 ..............
Investment return: Investment income ...........................
Net depreciation (realized and unrealized)
........ Total investment return ..........................
Contributions
.................................
Appropriation of endowment assets for expenditure
... Other changes: Underwater gain adjustment and funds held for reinvestment
.........................
Net asset reclassifications and transfers to create board-designated endowment funds ..............
Endowment net assets, June 30, 2008 ...........
Underwater Endowment Funds From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts (underwater).
When underwater endowment funds exist, they are classified as a reduction of unrestricted net assets. Total underwater endowment funds reported in unrestricted net assets were $24.3 million and $0.3 million as ofJune 30, 2009 and 2008, respectively.
The underwater status of these funds resulted from unfavorable market fluctuations.
NOTES TO FINANCIAL STATEMENTS Temporarily Permanently Unrestricted Restricted Restricted Total $ 3,l47,258
$5,273,222
$1,695,909
$10,116,389 46,960 107,261 3,551 157,772 86,065 131,332 8,209 225,606 133,025 238,593 11,760 383,378 15,242 106,129 121,371 (116,874)
(275,788)
(392,662)
(329) 329 1,482 1,482 (87,212) 83,961 7,793 4,542 $ 3,091,110
$ 5,320,317
$ 1,823,073
$10,234,500 Investment and Spending Policies MIT its primarily in two investment pools: Pool A, principally for endowment and funds functioning as endowment, and Pool C, principally for investment of current funds of MIT's schools and departments and MIT's operating funds. Pool A operates as a mutual fund with units purchased and redeemed based on the previous month's unit market value of Pool A. The total market value of Pool A was $8,143.7 million atJune 30, 2009 and $10,292.5 million in 2008. The total value of Pool A includes Pool C investments of$323.7 million atJune 30,2009 and $416.0 million in 2008. Certain assets are also maintained in separately invested funds. Separately invested funds totaled $162.1 million as ofJune 302009 and $192.3 million in 2008. 31 K. Components of Net Assets and Endowment (continued)
MIT has adopted endowment investment and spending policies designed to provide a predictable stream of funding to programs supported by its endowment while maintaining the purchasing power of endowment assets. Under this policy, the return objective for the endowment assets is to attain an average, annual, real total return of at least 6 percent over the long term. Real total return is the sum of capital appreciation (or depreciation) and current income adjusted for inflation by the Higher Education Price Index (HEPI). An additional investment goal is to maximize return relative to appropriate risk such that performance exceeds appropriate benchmark returns at the total pool, asset class and individual manager levels.To achieve its long-term rate of return objectives, MIT relies on a total return strategy in which investment returns are realized through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends).
MIT targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.
The Executive Committee of the Corporation votes to distribute funds for operational support from general investments.
In accordance with MIT's spending policy, these distributions are funded from both investment income and market appreciation.
In 2009, the distribution rate was $69.21 per Pool A unit, up 30.6 percent from $53.00 in 2008. The increase in the distribution per unit from 2008 to 2009 is the result of a planned increase consistent with the comprehensive financial framework developed in 2008. The financial framework addressed a long term structural imbalance in the funding of operations, bringing MIT's operating revenues into alignment with planned operating expenses in 2009, including adjusting the annual endowment spending.In 2009, the amount distributed for spending from Pool A and Pool C totaled $582.8 million, compared to$443.5 million distributed in the prior year. In 2009, the distribution included $455.7 million from investment gains, or 78.2 percent of the total distributed to funds. In 2008,the comparable amount distributed included $244.8 million, or 54.9 percent, from investment gains. During 2009, distributions from separately invested funds were$3.3 million, compared to $3.9 million in 2008. The incomeearned in Pool C, or currently invested funds, was fully distributed.
In addition to the aforementioned distributions, there was also a special distribution of $24.0 million from gains in Pool C in 2009 and $5.0 million in 2008.L. Subsequent Events The Broad Institute On July 1, 2009, The Broad Institute, previously a unit of MIT, became a separately incorporated entity. The Broad Institute is a research center located adjacent to the MIT campus. Before July 1, 2009, MIT administered The Broad Institute as a collaboration among MIT, Harvard University and its affiliated hospitals, and The Whitehead Institutefor Biomedical Research.
Following the separation, The Broad Institute is a self-administered collaboration of MIT, Harvard University, and affiliated hospitals.
The separation was enabled by a $400 million gift pledged by Los Angeles philanthropists Eli and Edythe Broad to The Broad Institute.
The gift serves to create an endowment to transform The Broad Institute from a 10-year experiment, as it was conceived when founded in 2004 with a $100 million gift of operating funds to MIT, into a permanent entity.The Broad Institute's assets and liabilities reflected in MIT's Statements of Financial Position as of June 30, 2009 were$199.5 million and $106.2 million, respectively.
Assets consist primarily of equipment, leasehold improvements, accounts receivable, grants and contracts in progress, cash, investments, and inventory.
Liabilities include sponsor advances, agency funds held, and deferred landlord financed leasehold improvements.
At separation on July 1, 2009, MIT transferred these assets and liabilities to the separately incorporated Broad Institute.
The Broad Institute's revenues as reflected in MIT's Statement of Activities in 2009 totaled $206.0 million; expenses were $215.4 million.32 MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
MIT has adopted endowment investment and spending policies designed to provide a predictable stream of funding to programs supported by its endowment while maintaining the purchasing power of endowment assets. Under this policy, the return objective for the endowment assets is to attain an average, annual, real total return of at least 6 percent over the long term. Real total return is the sum of capital appreciation (or depreciation) and current income adjusted for inflation by the Higher Education Price Index (HEP!). An additional investment goal is to maximize return relative to appropriate risk such that performance exceeds appropriate benchmark returns at the total pool, asset class and individual manager levels. To achieve its long-term rate of return objectives, MIT relies on a total return strategy in which investment returns are realized through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends).
MIT targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its term objectives within prudent risk constraints.
The Executive Committee of the Corporation votes to distribute funds for operational support from general investments.
In accordance with MIT's spending policy, these distributions are funded from both investment income and market appreciation.
In 2009, the distribution rate L. Subsequent Events The Broad Institute OnJuly 1, 2009, The Broad Institute, previously a unit of MIT, became a separately incorporated entity. The Broad Institute is a research center located adjacent to the MIT campus. Before July 1, 2009, MIT administered The Broad Institute as a collaboration among MIT, Harvard University and its affiliat.ed hospitals, and The Whitehead Institute for Biomedical Research.
Following the separation, The Broad Institute is a self-administered collaboration of MIT, Harvard University, and affiliated hospitals.
The separation was enabled by a $400 million gift pledged by Los Angeles philanthropists Eli and Edythe Broad to The Broad Institute.
The gift serves to create an endowment to transform The Broad Institute from a 10-year experiment, as it was conceived when founded in 2004 with a $100 million gift of operating funds to MIT, into a permanent entity. 32 was $69.21 per Pool A unit, up 30.6 percent from $53.00 in 2008. The increase in the distribution per unit from 2008 to 2009 is the result of a planned increase consistent with the comprehensive financial framework developed in 2008. The financial framework addressed a long term structural imbalance in the funding of operations, bringing MIT's operating revenues into alignment with planned operating expenses in 2009, including adjusting the annual endowment spending.
In 2009, the amount distributed for spending from Pool A and Pool C totaled $582.8 million, compared to $443.5 million distributed in the prior year. In 2009, the distribution included $455.7 million from investment gains, or 78.2 percent of the total distributed to funds. In 2008, the comparable amount distributed included $244.8 million, or 54.9 percent, from investment gains. During 2009, distributions from separately invested funds were $3.3 million, compared to $3.9 million in 2008. The income earned in Pool C, or currently invested funds, was fully distributed.
In addition to the aforementioned distributions, there was also a special distribution of $24.0 million from gains in Pool C in 2009 and $5.0 million in 2008. The Broad Institute's assets and liabilities reflected in MIT's Statements of Financial Position as ofJune 30, 2009 were $199.5 million and $106.2 million, respectively.
Assets consist primarily of equipment, leasehold improvements, accounts receivable, grants and contracts in progress, cash, investments, and inventory.
Liabilities include sponsor advances, agency funds held, and deferred landlord financed leasehold improvements.
At separation on July 1, 2009, MIT transferred these assets and liabilities to the separately incorporated Broad Institute.
The Broad Institute's revenues as reflected in MIT's Statement of Activities in 2009 totaled $206.0 million; were $215.4 million. MIT REPORT OF THE TREASURER 2009 K. Components of Net Assets and Endowment (continued)
MIT has adopted endowment investment and spending policies designed to provide a predictable stream of funding to programs supported by its endowment while maintaining the purchasing power of endowment assets. Under this policy, the return objective for the endowment assets is to attain an average, annual, real total return of at least 6 percent over the long term. Real total return is the sum of capital appreciation (or depreciation) and current income adjusted for inflation by the Higher Education Price Index (HEP!). An additional investment goal is to maximize return relative to appropriate risk such that performance exceeds appropriate benchmark returns at the total pool, asset class and individual manager levels. To achieve its long-term rate of return objectives, MIT relies on a total return strategy in which investment returns are realized through both capital appreciation (realized and unrealized gains) and current yield (interest and dividends).
MIT targets a diversified asset allocation that places greater emphasis on equity-based investments to achieve its term objectives within prudent risk constraints.
The Executive Committee of the Corporation votes to distribute funds for operational support from general investments.
In accordance with MIT's spending policy, these distributions are funded from both investment income and market appreciation.
In 2009, the distribution rate L. Subsequent Events The Broad Institute OnJuly 1, 2009, The Broad Institute, previously a unit of MIT, became a separately incorporated entity. The Broad Institute is a research center located adjacent to the MIT campus. Before July 1, 2009, MIT administered The Broad Institute as a collaboration among MIT, Harvard University and its affiliat.ed hospitals, and The Whitehead Institute for Biomedical Research.
Following the separation, The Broad Institute is a self-administered collaboration of MIT, Harvard University, and affiliated hospitals.
The separation was enabled by a $400 million gift pledged by Los Angeles philanthropists Eli and Edythe Broad to The Broad Institute.
The gift serves to create an endowment to transform The Broad Institute from a 10-year experiment, as it was conceived when founded in 2004 with a $100 million gift of operating funds to MIT, into a permanent entity. 32 was $69.21 per Pool A unit, up 30.6 percent from $53.00 in 2008. The increase in the distribution per unit from 2008 to 2009 is the result of a planned increase consistent with the comprehensive financial framework developed in 2008. The financial framework addressed a long term structural imbalance in the funding of operations, bringing MIT's operating revenues into alignment with planned operating expenses in 2009, including adjusting the annual endowment spending.
In 2009, the amount distributed for spending from Pool A and Pool C totaled $582.8 million, compared to $443.5 million distributed in the prior year. In 2009, the distribution included $455.7 million from investment gains, or 78.2 percent of the total distributed to funds. In 2008, the comparable amount distributed included $244.8 million, or 54.9 percent, from investment gains. During 2009, distributions from separately invested funds were $3.3 million, compared to $3.9 million in 2008. The income earned in Pool C, or currently invested funds, was fully distributed.
In addition to the aforementioned distributions, there was also a special distribution of $24.0 million from gains in Pool C in 2009 and $5.0 million in 2008. The Broad Institute's assets and liabilities reflected in MIT's Statements of Financial Position as ofJune 30, 2009 were $199.5 million and $106.2 million, respectively.
Assets consist primarily of equipment, leasehold improvements, accounts receivable, grants and contracts in progress, cash, investments, and inventory.
Liabilities include sponsor advances, agency funds held, and deferred landlord financed leasehold improvements.
At separation on July 1, 2009, MIT transferred these assets and liabilities to the separately incorporated Broad Institute.
The Broad Institute's revenues as reflected in MIT's Statement of Activities in 2009 totaled $206.0 million; were $215.4 million. MIT REPORT OF THE TREASURER 2009 PRCEWATERHOUsECOOPERS M PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 Telephone (617).530 5000 Facsimile (617) 530 5001 Report of Independent Auditors To the Audit Committee of the Massachusetts Institute of Technology In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of activities and cash flows present fairly, in all material respects, the financial position of the Massachusetts Institute of Technology (the "Institute")
at June 30, 2009 and 2008, 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. These financial statements are the responsibility of the Institute's management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements 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 financialstatements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.As described in Note A to the accompanying consolidated financial statements, as of July 1, 2008, the Institute adopted Financial Accounting Standards Board (FASB)
Statement No. 157, Fair Value Measurements.
September 16, 2009 REPORT OF INDEPENDENT AUDITORS 33 Report of Independent Auditors To the Audit Committee of the Massachusetts Institute of Technology PricewaterflouseCoopers LLP 125 High Street Boston MA02110 Telephone (617)530 5000 Facsimile (617) 530 5001 In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of activities and cash flows present fairly, in all material respects, the financial position of the Massachusetts Institute of Technology (the "Institute")
at June 30, 2009 and 2008, 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 These financial statements are the responsibility of the Institute's management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements 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 evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. As described in Note A to the accompanying consolidated financial statements, as of July 1, 2008, the Institute adopted Financial Accounting Standards Board (FASB) Statement No. 157, Fair Value Measurements.
uP September 16,2009 REPORT OF INDEPENDENT AUDITORS 33 Report of Independent Auditors To the Audit Committee of the Massachusetts Institute of Technology PricewaterflouseCoopers LLP 125 High Street Boston MA02110 Telephone (617)530 5000 Facsimile (617) 530 5001 In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of activities and cash flows present fairly, in all material respects, the financial position of the Massachusetts Institute of Technology (the "Institute")
at June 30, 2009 and 2008, 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 These financial statements are the responsibility of the Institute's management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements 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 evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. As described in Note A to the accompanying consolidated financial statements, as of July 1, 2008, the Institute adopted Financial Accounting Standards Board (FASB) Statement No. 157, Fair Value Measurements.
uP September 16,2009 REPORT OF INDEPENDENT AUDITORS 33 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights(Dollars in thousands) 2009 2008 2007 2006 2005 Financial Position: Investments, at fair value
...............
Land, buildings, and equipment,at cost less accumulated depreciation..
Borrow ings ..........................
Total assets ..........................
Total liabilities
.......................
Unrestricted net assets, at market ........Temporarily restricted net assets, at market Permanently restricted net assets, at market Total net assets .......................
Market value of endowment funds .......Principal Sources of Revenue: Tuition and other income ..............
Research revenues: Cam pus direct ....................
Campus indirect ..................
Lincoln Laboratory direct ...........
Lincoln Laboratory indirect .........SM ART direct ....................
SM ART indirect ..................Gifts, bequests and pledges .............
Net (losses) gains on investments and other assetsInvestment distribution
................
Principal Purposes of Expenditures:
Total operating expenditures
............
General and administrative
.............
Instruction and unsponsored research ....Direct cost of sponsored research
-current dollars ....................
Direct cost of sponsored research -constant dollars (2005 = 100) ........Scholarships and fellowships
............
$ 9,519,413 2,120,613 1,735,843 12,949,552 3,003,164 3,559,925 4,401,015 1,985,448 9,946,388 7,982,021 431,772 497,493 193,289 642,101 27,667 14,026 496 303,890 (1,854,380) 603,907$ 2,461,286 497,043 680,848$ 11,308,429 1,938,919 1,335,393 15,458,982 2,689,008 5,086,270 5,765,302 1,918,402 12,769,974 10,068,787
$ 11,061,142 1,743,203 1,078,234 14,946,369 2,251,065 5,216,844 5,684,006 1,794,454 12,695,304 9,980,409$ 421,230 $
394,652$ 9,500,178 1,687,835 1,278,489 12,362,451 2,302,676 3,732,539 4,699,881 1,627,355 10,059,775 8,368,066$ 373,309 419,144 163,340 602,426 33,968 232,472 1,432,552 329,375$ 2,175,913 485,306 548,256 448,065 173,455 587,076 32,611 3,857 106 385,952 154,765 456,154 407,650 163,148 573,696 32,234 332,874 1,673,275 355,848$ 8,022,655 1,608,719 1,249,591 10,856,158 2,230,588 3,277,741 3,792,029 1,555,800 8,625,570 6,712,436$ 362,299 400,345 159,359 579,915 31,210 177,305 885,605 318,067$ 2,032,517 424,770 503,901 996,943 996,943 165,458$ 2,294,247 486,444 641,241$ 2,201,696 482,527 608,4231,167,036 1,054,474 1,001,144 1,035,417 1,042,176 214,383 954,803 192,131 940,104 185,399 997,433 174,140 34 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-Year Trend Analysis -Financial Highlights (Dollar's in thousands) 2009 2008 2007 2006 2005 Financial Position:
Investments, at fair value ...............
$ 9,519,413
$ 11,308,429
$11,061,142
$ 9,500,178
$ 8,022,655 Land, buildings, and equipment, at cost less accumulated depreciation
.. 2,120,613 1,938,919 1,743,203 1,687,835 1,608,719 Borrowings
.......................... 1,735,843 1,335,393 1,078,234 1,278,489 1,249,591 Total assets ..........................
12,949,552 15,458,982 14,946,369 12,362,451 10,856,158 Total liabilities
.......................
3,003,164 2,689,008 2,251,065 2,302,676 2,230,588 Unrestricted net assets, at market. ....... 3,559,925 5,086,270 5,216,844 3,732,539 3,277,741 Temporarily restricted net assets, at market 4,401,015 5,765,302 5,684,006 4,699,881 3,792,029 Permanently restricted net assets, at market 1,985,448 1,918,402 1,794,454 1,627,355 1,555,800 Total net assets .......................
9,946,388 12,769,974 12,695,304 10,059,775 8,625,570 Market value of endowment funds ....... 7,982,021 10,068,787 9,980,409 8,368,066 6,712,436 Principal Sources of Revenue: Tuition and other income ..............
$ 431,772 $ 421,230 $ 394,652 $ 373,309 $ 362,299 Research revenues:
Campus direct ....................
497,493 448,065 407,650 419,144 400,345 Campus indirect ..................
193,289 173,455 163,148 163,340 159,359 Lincoln Laboratory direct ...........
642,101 587,076 573,696 602,426 579,915 Lincoln Laboratory indirect .........
27,667 32,611 32,234 33,968 31,210 SMART direct. ...................
14,026 3,857 SMART indirect ..................
496 106 Gifts, bequests and pledges .............
303,890 385,952 332,874 232,472 177,305 Net Oosses) gains on investments and other assets (1,854,380) 154,765 1,673,275 1,432,552 885,605 Investment distribution
................
603,907 456,154 355,848 329,375 318,067 Principal Purposes of Expenditures:
Total operating expenditures
............
$ 2,461,286
$ 2,294,247
$ 2,201,696
$ 2,175,913
$ 2,032,517 General and administrative
.............
497,043 486,444 482,527 485,306 424,770 Instruction and unsponsored research .... 680,848 641,241 608,423 548,256 503,901 Direct cost of sponsored research -current dollars ....................
1,167,036 1,054,474 1,001,144 1,035,417 996,943 Direct cost of sponsored research -constant dollars (2005 = 100) ........ 1,042,176 954,803 940,104 997,433 996,943 Scholarships and fellowships
............
214,383 192,131 185,399 174,140 165,458 34 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-Year Trend Analysis -Financial Highlights (Dollar's in thousands) 2009 2008 2007 2006 2005 Financial Position:
Investments, at fair value ...............
$ 9,519,413
$ 11,308,429
$11,061,142
$ 9,500,178
$ 8,022,655 Land, buildings, and equipment, at cost less accumulated depreciation
.. 2,120,613 1,938,919 1,743,203 1,687,835 1,608,719 Borrowings
.......................... 1,735,843 1,335,393 1,078,234 1,278,489 1,249,591 Total assets ..........................
12,949,552 15,458,982 14,946,369 12,362,451 10,856,158 Total liabilities
.......................
3,003,164 2,689,008 2,251,065 2,302,676 2,230,588 Unrestricted net assets, at market. ....... 3,559,925 5,086,270 5,216,844 3,732,539 3,277,741 Temporarily restricted net assets, at market 4,401,015 5,765,302 5,684,006 4,699,881 3,792,029 Permanently restricted net assets, at market 1,985,448 1,918,402 1,794,454 1,627,355 1,555,800 Total net assets .......................
9,946,388 12,769,974 12,695,304 10,059,775 8,625,570 Market value of endowment funds ....... 7,982,021 10,068,787 9,980,409 8,368,066 6,712,436 Principal Sources of Revenue: Tuition and other income ..............
$ 431,772 $ 421,230 $ 394,652 $ 373,309 $ 362,299 Research revenues:
Campus direct ....................
497,493 448,065 407,650 419,144 400,345 Campus indirect ..................
193,289 173,455 163,148 163,340 159,359 Lincoln Laboratory direct ...........
642,101 587,076 573,696 602,426 579,915 Lincoln Laboratory indirect .........
27,667 32,611 32,234 33,968 31,210 SMART direct. ...................
14,026 3,857 SMART indirect ..................
496 106 Gifts, bequests and pledges .............
303,890 385,952 332,874 232,472 177,305 Net Oosses) gains on investments and other assets (1,854,380) 154,765 1,673,275 1,432,552 885,605 Investment distribution
................
603,907 456,154 355,848 329,375 318,067 Principal Purposes of Expenditures:
Total operating expenditures
............
$ 2,461,286
$ 2,294,247
$ 2,201,696
$ 2,175,913
$ 2,032,517 General and administrative
.............
497,043 486,444 482,527 485,306 424,770 Instruction and unsponsored research .... 680,848 641,241 608,423 548,256 503,901 Direct cost of sponsored research -current dollars ....................
1,167,036 1,054,474 1,001,144 1,035,417 996,943 Direct cost of sponsored research -constant dollars (2005 = 100) ........ 1,042,176 954,803 940,104 997,433 996,943 Scholarships and fellowships
............
214,383 192,131 185,399 174,140 165,458 34 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued)(Dollars in thousands) 2009 2008 2007 2006 2005 Research Revenues:(A)
Campus: Federal government sponsored:
Health and Human Services ............
Department of Defense ................
Department of Energy ................
National Science Foundation
...........
National Aeronautics and Space Administration
..............
O ther federal ........................
Total federal .........................
Non-federal sponsored:
State/local/foreign governments
.........N on-profits
.........................
Industry ............................
Total non-federal
.....................
Total federal & non-federal
.............
F&A and other adjustments
............
Total cam pus ........................
Lincoln Laboratory:
Federal government sponsored
..........
Non-federal sponsored
................
F&A and other adjustments
............
Total Lincoln Laboratory
..............
SMART.(B)Non-federal sponsored
................
Total SM ART .......................
Total Research Revenues ............
$ 255,896 $ 226,307 $ 201,557 $ 195,573 $ 180,682 97,528 65,773 61,386 27,358 14,559 522,500 27,145 60,538 99,219 186,902 709,402 (18,620)690,782 87,370 65,611 64,973 25,479 14,169 483,909 18,549 47,695 82,194 148,438 632,347 (10,827)621,520 90,571 64,899 65,057 27,889 14,431 464,404 13,055 32,200 79,725 124,980 589,384 (18,586)570,798 607,270 4,602 (5,942)605,930 89,552 67,265 65,163 31,228 15,570 464,351 15,137 24,833 72,743 112,713 577,064 5,420 582,484 631,292 5,102 636,394 86,096 69,927 66,768 32,170 11,954 447,597 17,912 19,744 65, 108 102,764 550,361 9,343 559,704 675,329 2,989 (8,550)669,768 606,850 3,602 9,235 619,687 606,441 4,684 611,125 14,522 14,522 3,963 3,963$ 1,375,072 $1,245,170$1,176,728
$1,218,878
$1,170,829 (4) The aniounts in this table reflect revenues fion the original source of filnds.(B) The amounts represent research that has taken place in Singapore.
ADDITIONAL INFORMATION 35 Massachusetts Institute of Technology Five-Year Trend Analysis -Financial Highlights (continued) (Dollars in thousands) 2009 2008 Research Revenues:(A)
Campus: Federal government sponsored:
Health and Human Services ............
$ 255,896 $ 226,307 Department of Defense ................
97,528 87,370 Department of Energy ................ 65,773 65,611 National Science Foundation
...........
61,386 64,973 National Aeronautics and Space Administration
..............
27,358 25,479 Other federal ........................ 14,559 14,169 Total federal .........................
522,500 483,909 Non-federal sponsored:
State/local/foreign governments
.........
27,145 18,549 Non-profits
.........................
60,538 47,695 Industry ............................
99,219 82,194 Total non-federal
.....................
186,902 148,438 Total federal & non-federal.
............
709,402 632,347 F&A and other adjustments
............
(18,620) (10,827) Total campus ........................
690,782 621,520 Lincoln Laboratory:
Federal government sponsored
..........
675,329 606,850 Non-federal sponsored
................
2,989 3,602 F&A and other adjustments
............
(8,550) 9,235 Total Lincoln Laboratory
..............
669,768 619,687 SMART: (B) Non-federal sponsored
................
14,522 3,963 Total SMART .......................
14,522 3,963 Total Research Revenues ............
$ 1,375,072
$ 1,245,170
(.4) The amounts in this table reflect revenues from tbe original source of fil11ds. (B) Tbe amounts l'epresent resem-cb tbat bas taken place in Singapore.
ADDITIONAL INFORMATION 2007 2006 2005 $ 201,557 $ 195,573 $ 180,682 90,571 89,552 86,096 64,899 67,265 69,927 65,057 65,163 66,768 27,889 31,228 32,170 14,431 15,570 11,954 464,404 464,351 447,597 13,055 15,137 17,912 32,200 24,833 19,744 79,725 72,743 65,108 124,980 112,713 102,764 589,384 577,064 550,361 (18,586) 5,420 9,343 570,798 582,484 559,704 607,270 631,292 606,441 4,602 5,102 4,684 (5,942) 605,930 636,394 611,125 $1,176,728
$ 1,218,878
$ 1,170,829 35 Massachusetts Institute of Technology Five-Year Trend Analysis -Financial Highlights (continued) (Dollars in thousands) 2009 2008 Research Revenues:(A)
Campus: Federal government sponsored:
Health and Human Services ............
$ 255,896 $ 226,307 Department of Defense ................
97,528 87,370 Department of Energy ................ 65,773 65,611 National Science Foundation
...........
61,386 64,973 National Aeronautics and Space Administration
..............
27,358 25,479 Other federal ........................ 14,559 14,169 Total federal .........................
522,500 483,909 Non-federal sponsored:
State/local/foreign governments
.........
27,145 18,549 Non-profits
.........................
60,538 47,695 Industry ............................
99,219 82,194 Total non-federal
.....................
186,902 148,438 Total federal & non-federal.
............
709,402 632,347 F&A and other adjustments
............
(18,620) (10,827) Total campus ........................
690,782 621,520 Lincoln Laboratory:
Federal government sponsored
..........
675,329 606,850 Non-federal sponsored
................
2,989 3,602 F&A and other adjustments
............
(8,550) 9,235 Total Lincoln Laboratory
..............
669,768 619,687 SMART: (B) Non-federal sponsored
................
14,522 3,963 Total SMART .......................
14,522 3,963 Total Research Revenues ............
$ 1,375,072
$ 1,245,170
(.4) The amounts in this table reflect revenues from tbe original source of fil11ds. (B) Tbe amounts l'epresent resem-cb tbat bas taken place in Singapore.
ADDITIONAL INFORMATION 2007 2006 2005 $ 201,557 $ 195,573 $ 180,682 90,571 89,552 86,096 64,899 67,265 69,927 65,057 65,163 66,768 27,889 31,228 32,170 14,431 15,570 11,954 464,404 464,351 447,597 13,055 15,137 17,912 32,200 24,833 19,744 79,725 72,743 65,108 124,980 112,713 102,764 589,384 577,064 550,361 (18,586) 5,420 9,343 570,798 582,484 559,704 607,270 631,292 606,441 4,602 5,102 4,684 (5,942) 605,930 636,394 611,125 $1,176,728
$ 1,218,878
$ 1,170,829 35 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued) 2009 2008 2007 2006 2005 Students: Undergraduate Full-tim e ........................
Part-tim e ........................
Undergraduate Applications Applicants.....................
A ccepted ........................
Acceptance rate ...................
E nrolled .........................
Y ield ............................
Freshmen ranking in the top 10%of their class ...................
Average SAT scores (math and verbal) ...............
Graduate Full-tim e ........................
Part-tim e ........................
Graduate applicationsApplicants .......................Accepted ..................
.....Acceptance rate ...................
E nrolled .........................
Y ield ............................
4,118 35 13,396 1,589 12%1,048 66%97%1,453 5,991 155 17,325 3,215 19%1,955 61%4,119 53 12,445 1,553 13%1,067 69%97%1,458 5,837 211 16,208 3,058 19%1,825 60%4,068 59 11,374 1,514 13%1,002 66%97%1,460 5,924 202 15,968 3,002 19%1,857 62%4,014 52 10,440 1,494 14%996 67%97%1,461 5,865 275 14,958 3,115 21%1,876 60%4,078 58 10,466 1,665 16%1,077 65%97%1,471 5,907 277 15,015 3,159 21%1,782 56%Student Financial Aid: (in thousands of dollars)Undergraduate tuition support.Graduate tuition support
......Fellowship stipends ..........
Student loans ...............
Student employment
.........Total financial assistance
.............
Tuition (in dollars): Tuition and fees ......................
Average room and board ...............Faculty and staff: Faculty .............................Staff ...............................
$ 78,534 187,732 27,509 9,641 82,287$ 385,703$ 36,390 10,860 1,009 13,320$ 70,157 174,847 25,647 8,766 78,892$ 358,309$ 65,529 172,021 25,020 8,962 77,732$ 349,264$ 57,963 167,297 32,440 9,542 78,503$ 345,745$ 54,649 161,384 31,717 11,052 75,917$ 334,719$34,986 10,400 1,008 12,832$33,600 9,950 998 12,453$32,300 9,500 992 11,970$30,800 9,100 983 11,490 36MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued) 2009 2008 2007 2006 2005 Students:
Undergraduate Full-time
........................
4,118 4,119 4,068 4,014 4,078 Part-time
........................
35 53 59 52 58 Undergraduate Applications Applicants
.......................
13,396 12,445 11,374 10,440 10,466 Accepted ........................
1,589 1,553 1,514 1,494 1,665 Acceptance rate ...................
12% 13% 13% 14% 16% Enrolled .........................
1,048 1,067 1,002 996 1,077 Yield ............................ 66% 69% 66% 67%
65% Freshmen ranking in the top 10% of their class ................... 97% 97% 97% 97% 97% Average SAT scores (math and verbal) ...............
1,453 1,458 1,460 1,461 1,471 Graduate Full-time
........................
5,991 5,837 5,924 5,865 5,907 Part-time
........................
155 211 202 275 277 Graduate applications Applicants
.......................
17,325 16,208 15,968 14,958 15,015 Accepted ..................
..... 3,215 3,058 3,002 3,115 3,159 Acceptance rate ................... 19% 19% 19% 21% 21% Enrolled .........................
1,955 1,825 1,857 1,876 1,782 Yield ............................ 61% 60% 62% 60%
56% Student Financial Aid: (in thousands of dollars) Undergraduate tuition support ..........
$ 78,534 $ 70,157 $ 65,529 $ 57,963 $ 54,649 Graduate tuition support ...............
187,732 174,847 172,021 167,297 161,384 Fellowship stipends ...................
27,509 25,647 25,020 32,440 31,717 Student loans ........................
9,641 8,766 8,962 9,542 11,052 Student employment
..................
82,287 78,892 77,732 78,503 75,917 Total financial assistance
......... ' .... $ 385,703 $ 358,309 $ 349,264 $ 345,745 $ 334,719 Tuition (in dollars):
Tuition and fees ......................
$ 36,390 $ 34,986 $ 33,600 $ 32,300 $ 30,800 Average room and board ...............
10,860 10,400 9,950 9,500 9,100 Faculty and staff: Faculty .............................
1,009 1,008 998 992 983 Staff ...............................
13,320 12,832 12,453 11,970 11,490 36 MIT REPORT OF THE TREASURER 2009 Massachusetts Institute of Technology Five-YearTrend Analysis -Financial Highlights (continued) 2009 2008 2007 2006 2005 Students:
Undergraduate Full-time
........................
4,118 4,119 4,068 4,014 4,078 Part-time
........................
35 53 59 52 58 Undergraduate Applications Applicants
.......................
13,396 12,445 11,374 10,440 10,466 Accepted ........................
1,589 1,553 1,514 1,494 1,665 Acceptance rate ...................
12% 13% 13% 14% 16% Enrolled .........................
1,048 1,067 1,002 996 1,077 Yield ............................ 66% 69% 66% 67%
65% Freshmen ranking in the top 10% of their class ................... 97% 97% 97% 97% 97% Average SAT scores (math and verbal) ...............
1,453 1,458 1,460 1,461 1,471 Graduate Full-time
........................
5,991 5,837 5,924 5,865 5,907 Part-time
........................
155 211 202 275 277 Graduate applications Applicants
.......................
17,325 16,208 15,968 14,958 15,015 Accepted ..................
..... 3,215 3,058 3,002 3,115 3,159 Acceptance rate ................... 19% 19% 19% 21% 21% Enrolled .........................
1,955 1,825 1,857 1,876 1,782 Yield ............................ 61% 60% 62% 60%
56% Student Financial Aid: (in thousands of dollars) Undergraduate tuition support ..........
$ 78,534 $ 70,157 $ 65,529 $ 57,963 $ 54,649 Graduate tuition support ...............
187,732 174,847 172,021 167,297 161,384 Fellowship stipends ...................
27,509 25,647 25,020 32,440 31,717 Student loans ........................
9,641 8,766 8,962 9,542 11,052 Student employment
..................
82,287 78,892 77,732 78,503 75,917 Total financial assistance
......... ' .... $ 385,703 $ 358,309 $ 349,264 $ 345,745 $ 334,719 Tuition (in dollars):
Tuition and fees ......................
$ 36,390 $ 34,986 $ 33,600 $ 32,300 $ 30,800 Average room and board ...............
10,860 10,400 9,950 9,500 9,100 Faculty and staff: Faculty .............................
1,009 1,008 998 992 983 Staff ...............................
13,320 12,832 12,453 11,970 11,490 36 MIT REPORT OF THE TREASURER 2009 Report of the Treasurer for the year ended June 30, 2009 N 11Ml Massachusetts IIl nstitute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology Report of the Treasurer for the year ended June 30, 2009 Massachusetts Institute of Technology

v t e Letter Sequence Request
TAC:ME3002, (Open)
Initiation Request, Request Acceptance, Acceptance Administration Questions 6 April 2010 Answers Results Approval... Other: ML100070108, ML102710002
MONTHYEAR2010-05-11 [Table View]

ML101930104

Text

2.384. The factor for the labor portion of the cost to be applied in 2008 = 2.384/1.862

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