notice - amazon s3...the bonds may be subject to optional and mandatory sinking fund redemption...

NOTICE

$25,275,000*

THE REGENTS OF NEW MEXICO STATE UNIVERSITYconsisting of

$16,865,000* Refunding Revenue Bonds, Series 2019A$8,410,000* Taxable Refunding Revenue Bonds, Series 2019B

Preliminary Official Statement, subject to completion,dated October 16, 2019

The Preliminary Official Statement, dated October 16, 2019 (the “Preliminary Official Statement”),relating to the above-described bonds (the “Bonds”) of the Regents of New Mexico State University (the“Regents”), has been posted on the Internet (available at https://munihub.com) as a matter of convenience. Papercopies of the Preliminary Official Statement are available from the Regents by contacting Erik Harrigan at RBCCapital Markets, LLC, 6301 Uptown Boulevard N.E. #110, Albuquerque, New Mexico 87110 (Telephone (505)872-5992). The posted version of the Preliminary Official Statement has been formatted in Adobe PortableDocument Format. Although this format should replicate the Preliminary Official Statement available from theRegents, appearance may vary for a number of reasons, including electronic communication difficulties orparticular user software or hardware. Using software other than Adobe Acrobat may cause the Preliminary OfficialStatement that you view or print to differ in appearance from the Preliminary Official Statement.

The Preliminary Official Statement and the information contained therein are subject to completion oramendment or other change without notice. Under no circumstances shall the Preliminary Official Statementconstitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds in anyjurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification underthe securities laws of any such jurisdiction.

For purposes of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission, thePreliminary Official Statement alone, and no other document or information on the internet, constitutes the“Official Statement” that the Regents have “deemed final” as of its date in respect of the Bonds, except for certaininformation permitted to be omitted under the Rule.

No person has been authorized to give any information or to make any representations other than thosecontained in the Preliminary Official Statement in connection with the offer and sale of the Bonds and, if given ormade, such information or representations must not be relied upon as having been authorized. The informationand expressions of opinion in the Preliminary Official Statement are subject to change without notice and neitherthe delivery of the Official Statement nor any sale made thereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the Regents since the date of the Preliminary OfficialStatement.

By choosing to proceed and view the electronic version of the Preliminary Official Statement, youacknowledge that you have read and understood this Notice.

Preliminary Official Statement dated October 16, 2019.

* Preliminary; subject to change.

Preliminary Official Statement dated October 16, 2019

NEW ISSUE – Book-Entry Only INSURED RATINGS: S&P Global Ratings: AAUNDERLYING RATINGS: Moody’s: A1

S&P Global Ratings: A+

In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming continuouscompliance with certain covenants set forth in the documents relating to the Tax-Exempt Bonds (defined herein) and certain requirementsof the Internal Revenue Code of 1986, as amended (the “Code”), as described herein, interest on the Tax-Exempt Bonds is (a) excludablefrom gross income of the owners thereof for federal income tax purposes under Section 103 of the Code and (b) will not be included incomputing the federal alternative minimum tax of the owners thereof. The Series 2019B Bonds (defined herein) are not obligationsdescribed in Section 103(a) of the Code; accordingly, interest on the Series 2019B Bonds will be includable in gross income for federalincome tax purposes. Bond Counsel is also of the opinion based on existing laws of the State of New Mexico as enacted and construedthat interest on the Bonds is exempt from all taxation by the State of New Mexico or any political subdivision thereof. Bond Counselexpresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or the accrual or receipt of intereston, the Bonds. See “TAX MATTERS” herein.

$25,275,000*

THE REGENTS OF NEW MEXICO STATE UNIVERSITYconsisting of:


Dated: Date of Delivery Due: As shown on inside front cover

The hereinafter-defined Bonds of the Regents of New Mexico State University (the “Regents”) are special obligations of theRegents and shall not constitute a debt or liability of the State of New Mexico (the “State”) or of any political subdivision thereof withinthe meaning of any State constitutional provision or statutory limitation and shall not constitute a pledge of the faith and credit of the State.The Bonds are issued in two series as the (i) $16,865,000* Refunding Revenue Bonds, Series 2019A (the “Series 2019A Bonds”), and (ii)$8,410,000* Taxable Refunding Revenue Bonds, Series 2019B (the “Series 2019B Bonds” and collectively with the Series 2019A Bonds,the “Bonds”). The Bonds are payable solely from and secured by a pledge of and a first lien (but not an exclusive first lien) on PledgedRevenues, as more fully described herein, representing certain revenues of the Regents after the payment of certain operating andmaintenance expenses. The issuance of the Bonds shall not, directly, indirectly or contingently, obligate the State or any politicalsubdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. The Regents do not have taxingpower.

The Bonds will be issued in fully registered form and will initially be registered only in the name of Cede & Co., as nominee ofThe Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. The Bonds willbe issued in book-entry form only, in denominations of $5,000 and any integral multiple thereof. So long as Cede & Co. is the registeredowner of the Bonds, as nominee for DTC, references herein to the Bondholders or registered owners (other than under the caption “Book-Entry Only System” herein) shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (herein defined) of the Bonds.So long as Cede & Co. is the registered owner of the Bonds, as aforesaid, principal or, premiums, if any, and interest on the Bonds arepayable to Cede & Co., as nominee for DTC.

Interest on the Bonds is payable semiannually on each April 1 and October 1, commencing April 1, 2020. The Bonds will bearinterest at the rates set forth on the pages directly following this cover of the Official Statement.

SEE MATURITY SCHEDULES ON THE PAGES DIRECTLY FOLLOWING THE OFFICIAL STATEMENT

The Bonds are issued to: (a) refund, refinance, discharge and pay certain outstanding obligations of the University; and (b) fundthe costs of issuance associated therewith (collectively, the “Project”).

The Bonds may be subject to optional and mandatory sinking fund redemption prior to maturity as described herein. This coverpage contains information for convenient and quick reference only. It is not a summary of this issue. Investors must read this entireOfficial Statement to obtain information essential and material to the making of an informed investment decision.

The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurancepolicy to be issued concurrently with the delivery of the Bonds by BUILD AMERICA MUTUAL ASSURANCE COMPANY.

BUILD AMERICA MUTUAL


Th

isP

reli

min

ary

Off

icia

lS

tate

men

tan

dth

ein

form

atio

nco

nta

ined

her

ein

are

sub

ject

toco

mpl

etio

no

ram

end

men

t.T

hes

ese

curi

ties

may

not

beso

ld,n

or

may

off

ers

tobu

ybe

acce

pted

,pri

or

toth

eti

me

the

Off

icia

lS

tate

men

tis

del

iver

edin

fin

alfo

rm.

Und

ern

oci

rcu

mst

ance

ssh

all

this

Pre

lim

inar

yO

ffic

ial

Sta

tem

ent

con

stit

ute

ano

ffer

tose

llo

rth

eso

lici

tati

on

of

ano

ffer

tob

uyn

or

shal

lth

ere

be

any

sale

of

thes

ese

curi

ties

inan

yju

risd

icti

onin

wh

ich

such

off

er,

soli

cita

tion

or

sale

wou

ldb

eun

law

ful

pri

or

tore

gis

trat

ion

or

qual

ific

atio

nun

der

the

secu

riti

esla

ws

of

such

juri

sdic

tio

n.

The Bonds are being offered when, as and if issued and delivered by the Regents, subject to the approving legal opinion ofModrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel and Disclosure Counsel, and certain other conditions. Certain legal matterswill be passed upon for the Regents by University Counsel, Roy Collins III, Esq. Certain legal matters will be passed upon by Modrall,Sperling, Roehl, Harris & Sisk, P.A., as Disclosure Counsel. RBC Capital Markets, LLC serves as Municipal Advisor to the Regents.Certain legal matters will be passed upon for the Underwriters by Norton Rose Fulbright US LLP. It is expected that the Bonds will beavailable for delivery through the facilities of DTC on or about November 13, 2019, against payment therefor.

Official Statement dated October _, 2019

J.P. MORGAN

BOFA MERRILL LYNCH

$16,865,000*

THE REGENTS OF NEW MEXICO STATE UNIVERSITYREFUNDING REVENUE BONDS, SERIES 2019A

MATURITY SCHEDULE*

MaturityDate*

(April 1)PrincipalAmount* Interest Rate Yield Price CUSIP(1)

2021202220232024202520262027202820292030

$1,345,0001,405,0001,475,0001,550,0001,630,0001,715,0001,800,0001,890,0001,980,0002,075,000

%

(1) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managedon behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2019 CGS. All rightsreserved. CUSIP® data herein is provided by CGS. This data is not intended to create a database and does not serve inany way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Noneof the Regents nor the Underwriters or their agents or counsel assume any responsibility for the accuracy of suchnumbers.


$8,410,000*

THE REGENTS OF NEW MEXICO STATE UNIVERSITYTAXABLE REFUNDING REVENUE BONDS, SERIES 2019B

MATURITY SCHEDULE*

MaturityDate*

(April 1)PrincipalAmount* Interest Rate Yield Price CUSIP(1)

202020212022202320242025202620272028202920302031203220332034203520362037

$115,000305,000315,000320,000330,000340,000350,000360,000370,000380,000395,000410,000420,000435,000450,000470,000490,000505,000

%

203820392040

530,000550,000570,000

(1) CUSIP® is a registered trademark of the American Bankers Association. CGS is managed on behalf of theAmerican Bankers Association by S&P Global Market Intelligence. Copyright© 2019 CGS. All rights reserved.CUSIP® data herein is provided by CGS. This data is not intended to create a database and does not serve in anyway as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only.None of the Regents nor the Underwriters or their agents or counsel assume any responsibility for the accuracyof such numbers.


NEW MEXICO STATE UNIVERSITY

Hadley Hall, Room 1102850 Weddell Drive

Las Cruces, New Mexico 88003(575) 646-2431www.nmsu.edu

THE REGENTS

Dina Chacón-Reitzel, ChairAmmu Devasthali, Vice Chair

Debra P. Hicks, MemberLuke Sanchez, Secretary/Treasurer

*One regent position remains vacant pending nomination by the Governor.

ADMINISTRATIVE OFFICERS

Dan Arvizu, Ph.D., ChancellorJohn Floros, Ph.D., President

Carol Parker, J.D., Provost & Senior Vice President for Academic AffairsRuth Johnston, Ph.D., Strategic Chief Financial Officer

Andrew J. Burke, Ed.D., Senior Vice President for Administration and FinanceRenay M. Scott, Ph.D., Vice President for Student Success

Luis Cifuentes, Ph.D., Vice President for Research and Dean of the Graduate SchoolRoy Collins III, J.D., General Counsel and Chief Legal Affairs Officer

BOND AND DISCLOSURE COUNSEL

Modrall, Sperling, Roehl, Harris & Sisk, P.A.

ESCROW AGENT

Wells Fargo Bank, National Association

MUNICIPAL ADVISOR

RBC Capital Markets, LLC

UNDERWRITERS

J.P. Morgan Securities LLCBofA Securities, Inc.

UNDERWRITERS’ COUNSEL

Norton Rose Fulbright US LLP

For purposes of compliance with Rule 15c2-12 of the United States Securities and ExchangeCommission, as amended (“Rule 15c2-12”), and in effect on the date of this Preliminary Official Statement,this document constitutes an “official statement” of the University with respect to the Bonds that has been“deemed final” by the University as of its date except for the omission of no more than the informationpermitted by Rule 15c2-12.

No dealer, salesman or any other person has been authorized to give any information or to make anyrepresentation, other than as contained in this Official Statement, in connection with the offering of the Bonds,and, if given or made, such information or representations must not be relied upon as having been authorizedby the Regents or the Underwriters. This Official Statement does not constitute an offer or solicitation in anyjurisdiction in which such offer or solicitation is not authorized or in which any person making such offer orsolicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

The Bonds have not been registered under the Securities Act of 1933 (the “Act”), as amended, inreliance upon exemptions contained in such Act. The registration and qualification of the Bonds inaccordance with applicable provisions of the securities laws of the states in which the Bonds have beenregistered or qualified and the exemption from registration or qualification in other states cannot be regardedas a recommendation thereof. Neither the United States Securities and Exchange Commission nor any otherfederal, state, municipal or other governmental entity, nor any agency or department thereof, has passed uponthe merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to thecontrary may be a criminal offense.

This Official Statement contains statements relating to future results that are “forward-lookingstatements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Whenused in this Official Statement, the words “estimate,” “intend,” “expect” and similar expressions identifyforward-looking statements. Any forward-looking statement is subject to uncertainty and risks that couldcause actual results to differ, possibly materially, from those contemplated in such forward-lookingstatements. Inevitably, some assumptions used to develop forward-looking statements will not be realized orunanticipated events and circumstances may occur. Therefore, investors should be aware that there are likelyto be differences between forward-looking statements and actual results; those differences could be material.

The Underwriters have provided the following sentence for inclusion in this Official Statement: TheUnderwriters have reviewed the information in this Official Statement in accordance with, and as part of,their responsibilities to investors under the federal securities laws as applied to the facts and circumstancesof this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

SUBJECT TO APPLICABLE LEGAL LIMITATIONS, THE PRICES AT WHICH THE BONDSARE OFFERED TO THE PUBLIC BY THE UNDERWRITERS (AND THE YIELDS RESULTINGTHEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES OR YIELDSAPPEARING ON THE INSIDE COVER PAGES HEREOF. IN ADDITION, THE UNDERWRITERSMAY ALLOW LIMITED CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLICOFFERING PRICES TO DEALERS AND OTHERS. IN CONNECTION WITH THE OFFERING OF THEBONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICHSTABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THATWHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IFCOMMENCED, MAY BE DISCONTINUED AT ANY TIME.

None of the University, the Municipal Advisor, Bond Counsel, Disclosure Counsel, or theUnderwriters make any representation or warranty with respect to the information contained in this OfficialStatement regarding The Depository Trust Company (“DTC”) or its Book-Entry-Only System as describedherein (or incorporated by reference) under the caption “DESCRIPTION OF THE BONDS – Book-Entry-Only System”, as such information was provided by DTC, or with respect to any information concerningBuild America Mutual Assurance Company (“BAM”) or its municipal bond guaranty policy as describedherein (or incorporated by reference) under the captions “BOND INSURANCE” and “BOND INSURANCEGENERAL RISKS”, as such information was provided by BAM.

BAM makes no representation regarding the Bonds or the advisability of investing in the Bonds. Inaddition, BAM has not independently verified, makes no representation regarding, and does not accept anyresponsibility for the accuracy or completeness of this Official Statement or any information or disclosurecontained herein, or omitted herefrom, other than with respect to the accuracy of the information regardingBAM, supplied by BAM and presented under the heading “BOND INSURANCE” and “Exhibit G - SpecimenMunicipal Bond Insurance Policy”.

References to website addresses presented herein are for informational purposes only and may be inthe form of hyperlink solely for the reader’s convenience. Unless specified otherwise, such web sites and theinformation or links contained therein are not incorporated into, and are not part of, this Official Statementfor purposes of, and as that term is defined in the Rule 15c2-12.

i

TABLE OF CONTENTS Page

INTRODUCTION ........................................................................................................................................ 1

Purpose of the Official Statement ................................................................................................................. 1

The University .......................................................................................................................................... 2

Parity Bonds and Subordinate Lien Obligations....................................................................................... 2

Purpose of Issue ........................................................................................................................................ 3

Security for the Bonds .............................................................................................................................. 3

Investment Considerations........................................................................................................................ 3

Tax Matters ............................................................................................................................................... 3

Professionals Involved in the Offering ..................................................................................................... 3

Offering and Delivery of the Bonds.......................................................................................................... 4

Forward-Looking Statements.................................................................................................................... 4

Other Information ..................................................................................................................................... 4

APPLICATION OF BOND PROCEEDS .................................................................................................... 5

Sources and Uses of Funds ....................................................................................................................... 5

THE PROJECT............................................................................................................................................. 5

DESCRIPTION OF THE BONDS ............................................................................................................... 6

General...................................................................................................................................................... 6

Book-Entry-Only System.......................................................................................................................... 6

Redemption............................................................................................................................................... 9

Optional Redemption. ........................................................................................................................... 9

Notice of Redemption of Bonds.......................................................................................................... 10

Conditional Redemption. .................................................................................................................... 10

Mandatory Sinking Fund Redemption................................................................................................ 11

Credits Against Mandatory Sinking Fund Requirements. .................................................................. 11

Transferability and Registration.............................................................................................................. 12

Additional Bonds .................................................................................................................................... 12

PRO FORMA TOTAL COMBINED DEBT SERVICE REQUIREMENTS ........................................ 13

INVESTMENT CONSIDERATIONS ....................................................................................................... 14

Factors Affecting Universities ................................................................................................................ 14

Special Obligations ................................................................................................................................. 15

Additional Bonds .................................................................................................................................... 15

Availability of Remedies ........................................................................................................................ 15

Uncertainty of Pledged Revenues........................................................................................................... 15

Future Changes to Law ........................................................................................................................... 16

Lottery Scholarships ............................................................................................................................... 16

Damage to or Destruction of University Facilities ................................................................................. 17

ii

Environmental Regulation ...................................................................................................................... 17

Secondary Market ................................................................................................................................... 17

SECURITY AND SOURCE OF PAYMENT ............................................................................................ 17

Subordinate Lien Obligations ................................................................................................................. 19

Debt Service Reserve Account ............................................................................................................... 19

Rate Covenant......................................................................................................................................... 19

LEGAL MATTERS.................................................................................................................................... 19

CONTINUING DISCLOSURE UNDERTAKING.................................................................................... 19

LITIGATION.............................................................................................................................................. 20

RATINGS ................................................................................................................................................... 20

TAX MATTERS......................................................................................................................................... 21

Original Issue Discount........................................................................................................................... 22

Original Issue Premium .......................................................................................................................... 22

Internal Revenue Service Audit Program ............................................................................................... 22

State of New Mexico Tax Status............................................................................................................. 22

MUNICIPAL ADVISOR ........................................................................................................................... 26

REGISTRATION AND QUALIFICATION OF BONDS FOR SALE ..................................................... 27

UNDERWRITING ..................................................................................................................................... 27

INDEPENDENT ACCOUNTANTS.......................................................................................................... 27

BOND INSURANCE…………………………………………………………………………………..…28

BOND INSURANCE GENERAL RISKS………………………………………………………………..30

VERIFICATION OF CERTAIN MATHEMATICAL COMPUTATIONS............................................... 31

MISCELLANEOUS ................................................................................................................................... 31

APPENDIX A THE UNIVERSITY ORGANIZATION, PROGRAMS AND SUMMARYFINANCIAL INFORMATION ................................................................................................................A-1

APPENDIX B NEW MEXICO STATE UNIVERSITY REPORT ON EXAMINATION OFCOMBINED FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION FOR THE YEARENDED JUNE 30, 2018 ...........................................................................................................................B-1

APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION................C-1

APPENDIX D FORM OF BOND COUNSEL OPINION .......................................................................D-1

APPENDIX E FORM OF CONTINUING DISCLOSURE UNDERTAKING…………………………E-1

APPENDIX F PRINCIPAL PAYDOWN FACTOR TABLE………………………………………… F-1

APPENDIX G SPECIMEN MUNICIPAL BOND INSURANC POLICY…………………………… G-1

1

OFFICIAL STATEMENT

related to

$25,275,000

THE REGENTS OF NEW MEXICO STATE UNIVERSITYRefunding Revenue Bonds, Series 2019

consisting of:


INTRODUCTION

Purpose of the Official Statement

The purpose of this Official Statement, including its cover page, the pages directly followingthe cover containing maturity schedules and appendices, is to provide information in connection withThe Regents of New Mexico State University (the “Regents”), a body corporate created and existingpursuant to Article XII, Section 13 of the Constitution of the State of New Mexico (the “State”) andSections 21-8-1 to 21-8-36, NMSA 1978, issuance and sale of the Regents’ Refunding Revenue Bonds,Series 2019A, in the aggregate principal amount of $16,865,000* (the “Series 2019A Bonds”), andTaxable Refunding Revenue Bonds, Series 2019B, in the aggregate principal amount of $8,410,000*

(the “Series 2019B Bonds” and collectively with the Series 2019A Bonds, the “Series 2019 Bonds” or“Bonds”). The Series 2019 Bonds will be issued in accordance with the provisions of the parametersBond Resolution, adopted by the Regents on September 4, 2019, as supplemented by the SaleCertificate, as reported to the Regents (the parameters Bond Resolution and the Sale Certificate arecollectively referred to herein as the “Bond Resolution”). In addition, the issuance and sale of theSeries 2019 Bonds was approved by a resolution adopted by the State Board of Finance of the State ofNew Mexico (the “State Board of Finance”) on October 15, 2019. The final sale results will be reportedto the State Board of Finance for final approval prior to the Date of Delivery.

During the initial offering period for the Bonds, copies of the Bond Resolution and otherdocuments related to the Bonds will be available for inspection at the Office of the Senior Vice Presidentfor Administration and Finance, Hadley Hall, Room 110, 2850 Weddell Drive, Las Cruces, New Mexico88003, (575) 646-2431.

This Official Statement speaks only as of its date, and the information contained herein issubject to change. A copy of the final Official Statement and the hereinafter-referenced EscrowAgreements will be filed with the Municipal Securities Rulemaking Board (“MSRB”) through itsElectronic Municipal Market Access (“EMMA”) system. See “CONTINUING DISCLOSUREUNDERTAKING” herein for a description of the Regents’ undertaking to provide certain informationon a continuing basis.

The following is a brief description of certain information concerning the Bonds and theUniversity. A more complete description of such information and additional information that may affect

Preliminary; subject to change

2

decisions to invest in the Bonds is contained throughout this Official Statement, which should be readin its entirety. Certain capitalized terms used in the Official Statement which are not otherwise definedare defined in Appendix C “SUMMARY OF CERTAIN PROVISIONS OF THE BONDRESOLUTION.”

The University

New Mexico State University, a State educational institution created pursuant to the StateConstitution, is a fully accredited coeducational university offering associate, undergraduate andgraduate degree-granting programs. The University, a land grant institution of New Mexico, which wasfounded in 1888 near Las Cruces, New Mexico, maintains educational facilities on the main campus inLas Cruces, New Mexico and four branch campuses in the cities of Alamogordo, Carlsbad, Grants andLas Cruces, New Mexico (being Doña Ana Community College). The main campus encompassesapproximately 3,500 acres. The University is classified as a Carnegie “Doctoral Universities: HighResearch Activity” and has earned the Carnegie Foundation’s Community Engagement classification.See “THE UNIVERSITY” and Appendix A of this Official Statement for further information regardingthe University.

Parity Bonds and Subordinate Lien Obligations

The Regents have previously issued certain other bonds payable from and secured by a first lien(but not an exclusive first lien) on the Pledged Revenues on parity with the Series 2019 Bonds. Theseoutstanding parity obligations include: (i) $20,465,000 The Regents of New Mexico State UniversityImprovement Revenue Bonds (Taxable Direct Payment Build America Bonds), Series 2010B (the“Series 2010B Bonds”), (ii) $8,670,000 The Regents of New Mexico State University TaxableImprovement Revenue Bonds, Series 2010C (the “Series 2010C Bonds”), (iii) $850,000 The Regentsof New Mexico State University Refunding Revenue Bonds, Series 2010D, (iv) $12,290,000 TheRegents of New Mexico State University Improvement Revenue Bonds, Series 2013A, (v) $8,890,000The Regents of New Mexico State University Refunding Revenue Bonds, Series 2013B, (vi)$39,435,000 The Regents of New Mexico State University Refunding and Improvement RevenueBonds, Series 2017A; (vii) $17,710,000 The Regents of New Mexico State University TaxableRefunding Revenue Bonds, Series 2017B; and (viii) $13,525,000 The Regents of New Mexico StateUniversity Refunding Revenue Bonds, Series 2017C (Crossover Refunding). The bonds listed in thisparagraph, the Series 2019 Bonds and all other bonds which may hereafter be issued on parity therewithpursuant to the Bond Resolution are hereinafter collectively referred to as “Parity Bonds.” Certainmaturities of the Series 2010B Bonds and the Series 2010C Bonds will be refunded with proceeds fromthe Bonds. See “THE PROJECT – Refunding Bonds” herein for a description of these anticipatedrefundings.

The Regents also have an outstanding obligation with a subordinate lien (but not an exclusivesubordinate lien) on Pledged Revenues subordinate to the lien thereon and pledge thereof securing theParity Bonds, which includes the $11,285,000 The Regents of New Mexico State UniversitySubordinate Lien Improvement Revenue Note, Series 2014 (the “Series 2014 Note”). The Series 2014Note was privately placed with a local bank and the proceeds therefrom used for capital improvementsundertaken pursuant to an energy performance savings contract. The cost savings realized from thesecapital improvements are intended to exceed the annual debt service payments on the Series 2014 Note.

3

Purpose of Issue

The Series 2019 Bonds are issued to: (a) refund, refinance, discharge and pay certainoutstanding maturities of the Series 2010B Bonds and the Series 2010C Bonds (collectively, the“Refunded Bonds”) as discussed herein, planned in accordance with the University’s finance objectives;and (b) fund the costs of issuance associated therewith (collectively, the “Project”).

Security for the Bonds

The Bonds are special obligations of the Regents and shall not constitute a debt or liability ofthe State or of any political subdivision thereof within the meaning of any State constitutional provisionor statutory limitation and shall not constitute a pledge of the faith and credit of the State. The Bondsare payable solely from and secured by a pledge of and a first lien (but not an exclusive first lien) onPledged Revenues. The issuance of the Bonds shall not, directly, indirectly or contingently, obligate theState or any political subdivision thereof to levy any form of taxation therefor or to make anyappropriation for their payment. The Regents do not have taxing power.

For more information with respect to the security for the Bonds, see “SECURITY ANDSOURCE OF PAYMENT.”

Investment Considerations

There are a number of factors affecting institutions of higher education in general, includingthe University, that could have an adverse effect on the University’s ability to make the paymentsrequired under the Bond Resolution. The remedies available upon an event of default under the BondResolution are in many respects dependent upon regulatory, legislative and judicial actions which areoften subject to discretion and delay. Under existing law and judicial decisions the remedies providedfor under the Bond Resolution may not be readily available or may be limited. See “INVESTMENTCONSIDERATIONS.”

Tax Matters

In the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel, under existinglaws, regulations, rulings and judicial decisions and assuming the accuracy of certain representationsand continuing compliance with certain covenants, interest on the Series 2019A Bonds is excludablefrom gross income for federal income tax purposes will not be included in computing the federalalternative minimum tax of the owners thereof. Interest on the Series 2019B Bonds is included in grossincome for federal income tax purposes. In the further opinion of Bond Counsel, assuming the accuracyof certain representations and continuing compliance with certain covenants, interest on all of the Bondsis free and exempt from taxation by the State of New Mexico or any subdivision thereof. For a morecomplete description of such opinions of Bond Counsel, see “TAX MATTERS” herein.

Professionals Involved in the Offering

At the time of the issuance and sale of the Bonds, Modrall, Sperling, Roehl, Harris & Sisk, P.A.,as Bond Counsel, will deliver the bond opinion in substantially the form included as Appendix D hereto.Certain legal matters relating to the University will be passed upon by University Counsel, Roy CollinsIII, Esq. Certain legal matters relating to the Bonds will be passed upon by Modrall, Sperling, Roehl,Harris & Sisk, P.A., as Disclosure Counsel. Certain legal matters will be passed upon for theUnderwriters by Norton Rose Fulbright US LLP. See “LEGAL MATTERS.” RBC Capital Markets,

4

LLC serves as Municipal Advisor to the University. Certain fees that are payable by the Regents withrespect to the Bonds to various counsel, the Underwriters, the Municipal Advisor and the Escrow Agentare contingent upon the issuance and delivery of the Bonds.

Offering and Delivery of the Bonds

The Bonds are offered when, as and if issued, subject to approval of Bond Counsel and certainother conditions. It is anticipated that the Bonds will be delivered in book-entry only form through thefacilities of The Depository Trust Company, New York, New York, on or about November 13, 2019against payment therefor. See “DESCRIPTION OF THE BONDS - Book-Entry Only System.”

Forward-Looking Statements

This Official Statement contains statements relating to future results that are "forward-lookingstatements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this officialstatement, the words "estimate," "forecast," "intend," "expect," "project," "budget," "plan" and similarexpressions identify forward-looking statements.

The achievement of certain results or other expectations contained in such forward-lookingstatements involves known and unknown risks, uncertainties and other factors which may cause actualresults, performance or achievements described to be materially different from any future results,performance or achievements expressed or implied by such forward-looking statements. The Regentsdo not plan to issue any updates or revisions to those forward-looking statements if or when theexpectations, or events, conditions or circumstances, on which such statements are based, occur.

Assumptions related to the foregoing involve judgements with respect to, among other things,future economic, competitive, and market conditions of future business decisions, all of which aredifficult or impossible to predict accurately and many of which are beyond the control of the University.Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate.

Other Information

This Official Statement speaks only as of its date, and the information contained herein issubject to change. The quotations from, and summaries and explanations of the statutes, regulationsand documents contained herein do not purport to be complete, and reference is made to such laws,regulations and documents for full and complete statements of their provisions.

Any statements in this Official Statement involving matters of opinion, whether or not expresslyso stated, are intended as such and not as representations of fact. This Official Statement is not to beconstrued as a contract or agreement between the Regents and the Underwriters or subsequentpurchasers or holders of any of the Bonds.

5

APPLICATION OF BOND PROCEEDS

Sources and Uses of Funds

The proceeds of the Bonds when received by the University are expected to be used for theProject, including to pay the costs of issuing the Bonds, as shown below:

Sources of Funds

Series 2019ABonds

Series 2019BBonds Total

Principal Amount $ $ $

[Net] Reoffering Premium

Total Sources of Funds $ $ $

Uses of Funds

Refunding Project $ $ $

Underwriters’ Discount(1)

Costs of Issuance(2)

Total Uses of Funds $ $ $

(1) See “UNDERWRITING” herein.(2) Includes legal fees, municipal advisor fees, verification agent fees, ratings fees, bond insurance premium fee, printing and posting

costs and miscellaneous costs.

THE PROJECT

Refunding Bonds

Proceeds of the Series 2019A Bonds will be used to advance refund, on a tax-exempt basis, atpar the Series 2010B Bonds maturing on and after April 1, 2020 in the principal amount of $18,915,000,plus accrued interest, on the earliest optional redemption date of April 1, 2020. The University isundertaking the advance refunding of the Series 2010B Bonds for economic savings.

Proceeds of the Series 2019B Bonds will be used to advance refund, on a taxable basis, theSeries 2010C Bonds outstanding in the principal amount of $8,080,000. The Series 2010C Bondssubject to the taxable refunding are callable at the option of the University on or after April 1, 2020, theearliest optional redemption date. The University is undertaking the advance refunding of the Series2010B Bonds for economic savings.

Proceeds from the sale of the Series 2019A Bonds and the Series 2019B Bonds will bedeposited to Escrow Accounts held by the Escrow Agent under separate Escrow Agreements. Moneysdeposited in the Escrow Accounts will be invested in non-callable direct general obligations of, orobligations the payment of the principal of and interest on which is unconditionally guaranteed by, theUnited States of America (“Governmental Obligations”). Principal of and interest on the GovernmentalObligations will be used, together with any cash balance (the “Cash Deposits”) in the EscrowAgreements, to redeem the Refunded Bonds on the first optional redemption date therefor at aredemption price equal to the par amount thereof plus accrued interest to the redemption date. Upondeposit of the Governmental Obligations and Cash Deposits in the Escrow Accounts, the Universitywill have effected the legal defeasance of the Series 2010B Bonds and Series 2010C Bonds.

6

Verification of the accuracy of the mathematical computations of the adequacy of cash andsecurities to be held in the Escrow Accounts, together with the interest to be earned thereon, to pay theprincipal of, premium, if any, and interest on the Refunded Bonds according to the schedule establishedin the Escrow Agreements, and the computations supporting the conclusion of Bond Counsel that theSeries 2010B Bonds and Series 2010C Bonds are not "arbitrage bonds" within the meaning of Section148 of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgatedthereunder, will be verified by Causey Demgen & Moore Inc., Denver, Colorado, certified publicaccountants.

The Series 2010B Bonds were issued as direct pay subsidy “Build America Bonds” under theCode. The University has covenanted in the Resolution that upon delivery of the Bonds on November13, 2019, the University will neither request nor accept direct pay subsidy payments from the UnitedStates Treasury, from such date of delivery, in support of the payment of debt service on such Series2010B Bonds prior to their date of early redemption on April 1, 2020, including the discontinuance ofall filings with the Internal Revenue Service (the “IRS”) of Forms 8038-CP requesting such payments.

DESCRIPTION OF THE BONDS

General

The Bonds will be issued only as registered bonds without coupons in the denomination of$5,000 principal amount or any integral multiple thereof. The Bonds will be dated the date of delivery,and the Bonds will accrue interest from such date. Interest on the Bonds will be payable semiannuallyon each April 1 and October 1 (each an “Interest Payment Date”), commencing April 1, 2020. TheBonds will mature on the dates and bear interest at the rates set forth on the inside front cover hereof.

Book-Entry-Only System

The following information concerning The Depository Trust Company, New York, New York(“DTC”) and the DTC book-entry only system was obtained from DTC and believed to be reliable;however, the Regents are not responsible for DTC’s relationship with the Participants or for therelationships to their customers or the Participant’s rules and procedures. Neither the Regents nor theUnderwriters are responsible DTC’s rules and procedures, or the information provided below.

DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registeredbonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as maybe requested by an authorized representative of DTC. One fully-registered Bond certificate will beissued for the Bonds, each in the aggregate principal amount of such issue, and will be deposited withDTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organizedunder the New York Banking Law, a “banking organization” within the meaning of the New YorkBanking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaningof the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to theprovisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides assetservicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debtissues, and money market instruments (from over 100 countries) that DTC’s participants (“DirectParticipants”) deposit with DTC. DTC also facilitates the post-trade settlement among DirectParticipants of sales and other securities transactions in deposited securities, through electroniccomputerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates

7

the need for physical movement of bonds certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain otherorganizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and FixedIncome Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the usersof its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. andnon-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clearthrough or maintain a custodial relationship with a Direct Participant, either directly or indirectly(“Indirect Participants”). DTC has S&P Global Ratings’ rating of AA+. The DTC Rules applicable toits Participants are on file with the Bonds and Exchange Commission. More information about DTCcan be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants,which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actualpurchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and IndirectParticipants’ records. Beneficial Owners will not receive written confirmation from DTC of theirpurchase. Beneficial Owners are, however, expected to receive written confirmations providing detailsof the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participantthrough which the Beneficial Owner entered into the transaction. Transfers of ownership interests in theBonds are to be accomplished by entries made on the books of Direct and Indirect Participants actingon behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing theirownership interests in Bonds, except in the event that use of the book-entry system for the Bonds isdiscontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC areregistered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may berequested by an authorized representative of DTC. The deposit of Bonds with DTC and their registrationin the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership.DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only theidentity of the Direct Participants to whose accounts such Bonds are credited, which may or may not bethe Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping accountof their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by DirectParticipants to Indirect Participants, and by Direct Participants and Indirect Participants to BeneficialOwners will be governed by arrangements among them, subject to any statutory or regulatoryrequirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are beingredeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant insuch issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respectto Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Underits usual procedures, DTC mails an Omnibus Proxy to the University as soon as possible after the recorddate. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participantsto whose accounts Bonds are credited on the record date (identified in a listing attached to the OmnibusProxy).

8

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede& Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’spractice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detailinformation from the University or the Paying Agent (defined herein), on payable date in accordancewith their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Ownerswill be governed by standing instructions and customary practices, as is the case with Bonds held forthe accounts of customers in bearer form or registered in “street name,” and will be the responsibilityof such Participant and not of DTC, the Paying Agent, or the University, subject to any statutory orregulatory requirements as may be in effect from time to time. Payment of redemption proceeds,distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by anauthorized representative of DTC) is the responsibility of the University or the Paying Agent,disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct and IndirectParticipants.

DTC may discontinue providing its services as depository with respect to the Bonds at any timeby giving reasonable notice to the University or the Paying Agent. Under such circumstances, in theevent that a successor depository is not obtained, Bond certificates are required to be printed anddelivered.

The University may decide to discontinue use of the system of book-entry-only transfersthrough DTC (or a successor securities depository). In that event, bond certificates will be printed anddelivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has beenobtained from sources that the University and the Underwriters believe to be reliable, but neither theUniversity nor the Underwriters take any responsibility for the accuracy thereof.

THE UNIVERSITY WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONTO THE DTC PARTICIPANTS OR BENEFICIAL OWNERS.

SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OFTHE BONDS, REFERENCES HEREIN TO THE BONDHOLDERS OF THE BONDS WILL MEANCEDE & CO., AND WILL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.

When reference is made to any action which is required or permitted to be taken by theBeneficial Owners, such reference only relates to those permitted to act by statute, regulation orotherwise on behalf of such Beneficial Owners for such purposes. When notices are given, they are tobe sent to DTC, and the University does not have responsibility for distributing such notices to theBeneficial Owners.

The University does not have any responsibility or obligation to the DTC Participants or theBeneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any DTCParticipant; (b) the payment by DTC or any DTC Participant of any amount due to any Beneficial Ownerin respect of the principal of and premium, if any, and interest on the Bonds; (c) the selection of theBeneficial Owners to receive payment in the event of any partial redemption of the Bonds; (d) anyconsent given or other action taken by DTC, or its nominee, Cede & Co., as Bond Owner; or (e) thedistribution by DTC to DTC Participants or Beneficial Owners of any notices received by DTC asregistered owner of the Bonds.

9

Redemption

Optional Redemption.

The Series 2019A Bonds. The Series 2019A Bonds maturing on and after April 1, 20__ shallbe subject to redemption prior to maturity, at the option of the Regents, at any time on or after April 1,20__, in whole or in part, and if in part, the Series 2019A Bonds to be prepaid or redeemed shall beselected in order of maturities as the Regents shall determine and if less than all of the Series 2019ABonds of a particular maturity are to be redeemed, then by lot in such manner as the PayingAgent/Registrar shall determine, at a price equal to the principal amount being redeemed plus accruedinterest to the redemption date.

The Series 2019B Bonds. Redemption Option. The Series 2019B Bonds maturing on and afterApril 1, 20__ are subject to redemption prior to maturity, at the option of the Regents, at any time on orafter April 1, 20__, in whole or in part.

Selection of Series 2019B Bonds to be Redeemed. If less than all of the Series 2019B Bondsare to be redeemed, the particular maturities of Series 2019B Bonds to be redeemed at the option of theUniversity will be determined by the University in its sole discretion.

If the Series 2019B Bonds are registered in book-entry only form and so long as DTC or asuccessor securities depository is the sole registered owner of such Series 2019B Bonds, if less than allof the Series 2019B Bonds of a maturity are called for prior redemption, the particular Series 2019BBonds or portions thereof to be redeemed shall be allocated on a pro rata pass-through distribution ofprincipal basis in accordance with DTC procedures, provided that, so long as the Series 2019B Bondsare held in book-entry form, the selection for redemption of such Series 2019B Bonds shall be made inaccordance with the operational arrangements of DTC then in effect, and, if the DTC operationalarrangements do not allow for redemption on a pro rata pass-through distribution of principal basis, theSeries 2019B Bonds will be selected for redemption, in accordance with DTC procedures, by lot.

The University intends that redemption allocations made by DTC be made on a pro rata pass-through distribution of principal basis as described above. However, neither the University nor theUnderwriters can provide any assurance that DTC, DTC’s direct and indirect participants or any otherintermediary will allocate the redemption of Series 2019B Bonds on such basis.

In connection with any repayment of principal, including payments of scheduled mandatorysinking fund payments, the Paying Agent/Registrar will direct DTC to make a pass-through distributionof principal to the holders of the Series 2019B Bonds. A Pro Rata Pass-Through Distribution of Principaltable is included as Appendix F to this Official Statement and reflects the current schedule of mandatorysinking fund redemptions applicable to the Series 2019B Bonds and the factors applicable to suchredemption amounts and remaining bond balances, which is subject to change upon certain optionalredemptions. See “APPENDIX F – Principal Paydown Factor Table – Pro Rata Pass-ThroughDistribution of Principal.”

For purposes of calculation of the “pro rata pass-through distribution of principal,” “pro rata”means, for any amount of principal to be paid, the application of a fraction to each denomination of therespective Series 2019B Bonds where (a) the numerator of which is equal to the amount due to the

Preliminary; subject to change

10

respective bondholders on a payment date, and (b) the denominator of which is equal to the total originalpar amount of the respective Series 2019B Bonds.

If the Series 2019B Bonds are no longer registered in book-entry-only form, each owner willreceive an amount of Series 2019B Bonds equal to the original face amount then beneficially held bythat owner, registered in such investor’s name. Thereafter, any redemption of less than all of the Series2019B Bonds of any maturity will continue to be paid to the registered owners of such Series 2019BBonds on a pro-rata basis, based on the portion of the original face amount of any such Series 2019BBonds to be redeemed.

Notice of Redemption of Bonds.

Notice of redemption shall be given by the Paying Agent/Registrar by sending a copy of suchnotice by electronic means or by first-class, postage prepaid mail at least thirty (30) days prior to theredemption date to the registered owner of each Bond, or portion thereof, to be redeemed at the addressshown as of the close of business of the Paying Agent/Registrar on the 45th day prior to the redemptiondate. Except for Bonds to be redeemed pursuant to the sinking fund provisions, if any, of the SaleCertificate, the University shall give the Paying Agent/Registrar written instructions to give notice ofredemption to the owners of the bonds to be redeemed at least forty-five (45) days prior to suchredemption date. Neither the University's failure to give such notice nor the Paying Agent/Registrar'sfailure to give such notice to the registered owner of any Bond, or any defect therein, shall affect thevalidity of the proceedings for the redemption of any Bonds for which proper notice was given. Noticesof redemption shall specify the maturity dates and the number or numbers of the Bonds to be redeemed(if less than all are to be redeemed) and if less than the full amount of any Bond is to be redeemed, theamount of such Bonds to be redeemed, the date fixed for redemption, and that on such redemption datethere will become and be due and payable upon each Bond to be redeemed at the office of the PayingAgent/Registrar the principal amount to be redeemed plus accrued interest to the redemption date andthat from and after such date interest will cease to accrue on such amount. Notice having been given inthe manner hereinbefore provided, the Bond or Bonds so called for redemption shall become due andpayable on the redemption date so designated and if an amount of money sufficient to redeem all Bondscalled for redemption shall on the redemption date be on deposit with the Paying Agent/Registrar, theBonds to be redeemed shall be deemed not outstanding and shall cease to bear interest from and aftersuch redemption date. Upon presentation of the Bonds to be redeemed at the office of the PayingAgent/Registrar, the Paying Agent/Registrar will pay the Bond or Bonds so called for redemption withfunds deposited with the Paying Agent/ Registrar by the University.

Conditional Redemption.

If money or Government Obligations sufficient to pay the optional redemption price of theBonds to be called for optional redemption are not on deposit with the Paying Agent/Registrar prior tothe giving of notice of optional redemption pursuant to the provisions hereof, such notice shall statesuch Bonds will be redeemed in whole or in part on the optional redemption date in a principal amountequal to that part of the optional redemption price received by the Paying Agent/Registrar by 2:00 p.m.on the applicable optional redemption date. If the full amount of the optional redemption price is notreceived as set forth in the preceding sentence, the notice shall be effective only for those Bonds forwhich the optional redemption price is on deposit with the Paying Agent/Registrar. If all of the Bondscalled for optional redemption cannot be redeemed, the Bonds to be redeemed shall be selected in amanner deemed reasonable and fair by the University and the Paying Agent/Registrar shall give notice,in the manner in which the original notice of optional redemption was given, that such money was not

11

received. In that event, the Paying Agent/Registrar shall promptly return to the Owners thereof theBonds or certificates which it has received evidencing the part thereof which have not been redeemed.

Mandatory Sinking Fund Redemption.

The Series 2019A Bonds maturing on April 1, 20____ are subject to mandatory sinking fundredemption, by lot, and shall be redeemed on April 1 in the years set forth below in the amount of thecorresponding sinking fund requirement for such Series 2019A Bonds at a redemption price of theprincipal amount of such Series 2019A Bonds called for redemption plus interest accrued to the datefixed for redemption, as follows:

$__________ Term Bonds Due April 1, 20____

Year Sinking Fund Requirement

The Series 2019B Bonds maturing on April 1, 20__ are subject to mandatory sinking fundredemption, on a pro rata pass-through distribution of principal basis, and shall be redeemed on April 1in the years set forth below in the amount of the corresponding mandatory sinking fund requirement forsuch Series 2019B Bonds at a redemption price of the principal amount of such Series 2019B Bondscalled for redemption plus interest accrued to the date fixed for redemption, as follows:

$__________ Term Bonds Due April 1, 20____

Year Sinking Fund Requirement

The Paying Agent/Registrar shall proceed to select for redemption (by lot in such manner asthe Paying Agent/Registrar may determine) from all Series 2019A Bonds outstanding a principalamount of Series 2019A Bonds equal to the aggregate principal amount of Series 2019A Bondsredeemable with the required mandatory sinking fund payment, shall call such Series 2019A Bonds orportions thereof ($5,000 or any integral multiple thereof) for such redemption on such mandatorysinking fund redemption date, and shall give notice of such call.

In connection with any payments of scheduled mandatory sinking fund payments, the PayingAgent/Registrar will direct DTC to make a pro rata pass-through distribution of principal basis to theholders of the Series 2019B Bonds in accordance with the DTC procedures. If the DTC operationalarrangements do not allow for the redemption of the Series 2019B Bonds on a pro rata pass-throughdistribution of principal basis, then the Series 2019B Bonds will be selected for redemption, inaccordance with the DTC procedures, by lot.

Credits Against Mandatory Sinking Fund Requirements.

At the option of the Regents to be exercised by delivery of a written certificate to the Registraron or before the sixtieth day next preceding any sinking fund redemption date, the Regents may (i)deliver to the Registrar for cancellation Bonds in an aggregate principal amount desired by the Regents,

12

or (ii) specify a principal amount of Bonds subject to mandatory redemption on such sinking fundredemption date which prior to said date have been redeemed (otherwise than through the operation ofthe sinking fund) and cancelled by the Registrar at the request of the Regents and not theretofore appliedas a credit against any sinking fund redemption obligation for any Bonds maturing on the same date.Each Bond so delivered or previously redeemed shall be credited by the Registrar at the principalamount thereof against the obligation of the Regents on such sinking fund redemption date for the Bondsand any excess over such amount shall be credited against such other sinking fund obligation, if any,for the Bonds of such maturity as designated by the Regents. In the event the Regents shall availthemselves of the provisions of clause (i) of the first sentence of this paragraph, the certificate requiredby the first sentence of this paragraph shall be accompanied by the Bonds or portions thereof to becancelled.

Transferability and Registration

So long as DTC acts as the depository for the Bonds, Beneficial Owners may only transfer theirinterests in the Bonds through entries made on the books of DTC Participants.

Any Bond may be transferred at the principal office of the Registrar, by surrender of such Bondaccompanied by an assignment in form satisfactory to the Registrar duly executed by the registeredowner or his attorney duly authorized in writing. Thereupon, the Registrar will authenticate and deliverin the name of the transferee or transferees a new Bond or Bonds of like aggregate principal amountand of the same maturity.

The Registrar shall not be required to transfer or exchange (i) any Bond during the fifteen-dayperiod preceding the mailing of notice calling Bonds for redemption; and (ii) any Bond called forredemption.

The registered owner of any Bond shall be deemed and regarded as the absolute owner of suchBond for the purpose of making payment thereof (except as otherwise provided in the Bond Resolutionwith respect to interest payments) and for all other purposes. All payments of or on account of interestor principal to any registered owner of any Bonds will be valid and effectual to discharge the liabilityupon such Bond to the extent of the sum or sums paid.

If any Bond shall be lost, stolen, destroyed or mutilated, the Registrar shall, upon receipt ofsuch evidence, information or indemnity relating thereto as it or the Regents may reasonably require,and upon payment of all expenses in connection therewith, authenticate and deliver a replacement Bondor Bonds of a like aggregate principal amount and of the same maturity. If such lost, stolen, destroyedor mutilated Bond shall have matured or shall have been called for redemption, the Paying Agent maypay such Bond in lieu of replacement.

Whenever any bond shall be surrendered to the Paying Agent upon payment thereof, or to theRegistrar for transfer, exchange or replacement, such bond shall be promptly cancelled by the PayingAgent or Registrar.

Additional Bonds

The Regents may issue Additional Parity Bonds for the purpose of extending, enlarging,expanding, bettering or otherwise improving the System, payable from the Pledged Revenues andconstituting a lien on the Pledged Revenues on a parity with, but not prior or superior to, the lien ofthe Series 2019 Bonds, nor to prevent the issuance of bonds or other obligations refunding all or a

13

part of the Series 2019 Bonds. The payment of principal of and interest on any Parity Bonds hereafterissued may be made on any date established by the Regents. Before any Additional Parity Bonds areauthorized or actually issued (excluding refunding bonds or refunding obligations which refund ParityBonds but including parity refunding bonds and obligations which refund subordinate obligations) allof the following conditions are required to be met:

(a) The senior financial officer of the University shall sign a written certificate tothe effect that the Regents are not in default in any covenant, condition, or obligation relatingto any outstanding Parity Bonds, and the resolutions authorizing the issuance thereof, and thatthe Interest and Retirement Fund contains the amount then required to be on deposit therein.

(b) The senior financial officer of the University shall sign a written certificate tothe effect that, during either the University's Fiscal Year immediately preceding the date of theadoption of the resolution authorizing the Parity Bonds proposed to be issued or a twelveconsecutive calendar month period, ending not more than ninety days prior to the passage ofthe resolution authorizing the issuance of the proposed Parity Bonds, the Pledged Revenues,after deducting Operating and Maintenance Expenses for such Fiscal Year or twelve monthperiod, actually received by the Regents were at least equal to 175 percent of the average annualprincipal and interest requirements on all outstanding Parity Bonds, but excluding the ParityBonds proposed to be issued.

(c) The senior financial officer of the University shall sign a written certificate tothe effect that during each Fiscal Year of the University (commencing with the Fiscal Yearwhich includes the date of the adoption of the resolution authorizing the issuance of theproposed Parity Bonds), while any Parity Bonds, including the proposed Parity Bonds, arescheduled to be outstanding, the Pledged Revenues reasonably estimated by such officer to bereceived during each of said Fiscal Years (after deducting estimated Operating and MaintenanceExpenses for each such Fiscal Year), respectively, will be at least equal to 175 percent of theannual principal and interest requirements on all then outstanding Parity Bonds, including theproposed Parity Bonds, during such Fiscal Year.

The Regents may issue bonds or other obligations payable from the Pledged Revenues havinga lien thereon subordinate, inferior and junior to the lien of the Series 2019 Bonds and the Parity Bondsin accordance with the resolutions authorizing the issuance of the outstanding Subordinate LienObligations. The Regents may not issue bonds or other obligations payable from the revenues of theSystem having a lien thereon prior and superior to the Series 2019 Bonds and the other Parity Bonds.

With respect to the issuance of additional refunding bonds payable from Pledged Revenues,see "APPENDIX C—CERTAIN PROVISIONS FROM THE BOND RESOLUTION—RefundingBonds" herein.

PRO FORMA TOTAL COMBINED DEBT SERVICE REQUIREMENTS*

The following table presents debt service requirements for the University, including the Series2019 Bonds and the refunding of the Series 2010B Bonds and the Series 2010C Bonds, and pro formadebt service coverage ratios based on Fiscal Year ended June 30, 2018 Pledged Revenues of$173,959,149 and 2019 Pledged Revenues available for debt service of $139,280,877 (PledgedRevenues after deducting Operating and Maintenance Expenses, as defined in the Bond Resolution).Coverage ratios are based on assumptions that may not be realized.

14

PeriodEnding30-June

Outstanding ParityBonds(1)

Series2019 Bonds*

Total ParityDebt Service

Requirements(1)

OutstandingSubordinate

Obligations (1)

Total DebtService

Requirements(1)

Gross PledgedRevenues

Debt ServiceCoverage(2)*

NetPledged

RevenuesParity Debt

ServiceCoverage(3)*

GrossPledged

RevenuesDebt

ServiceCoverage(2)*

Net PledgedRevenues

Debt ServiceCoverage(3)*

2020 $12,691,260 $550,259 $13,241,519 $1,291,450 $14,532,968 $173,959,149 $139,280,877 11.97x 9.58x2021 9,609,703 2,782,680 12,392,383 1,332,438 13,724,821 173,959,149 139,280,877 12.67x 10.15x2022 7,849,308 2,777,759 10.627,067 1,376,278 13,404,826 173,959,149 139,280,877 12.98x 10.39x2023 7,499,165 2,774,389 10,273,554 1,417,815 13,047,942 173,959,149 139,280,877 13.33x 10.67x2024 7,896,657 2,777,139 10,673,796 1,457,049 12,130,845 173,959,149 139,280,877 14.34x 11.48x2025 7,877,221 2,780,545 10,657,766 1,503,981 12,161,747 173,959,149 139,280,877 14.30x 11.45x2026 6,977,950 2,784,297 9,762,247 1,548,304 11,310,550 173,959,149 139,280,877 15.38x 12.31x2027 5,092,735 2,783,162 7,875,897 1,595,017 10,659,059 173,959,149 139,280,877 16.32x 13.07x2028 6,278,492 2,782,010 9,060,502 1,643,967 10,714,469 173,959,149 139,280,877 16.24x 13.01x2029 6,276,883 2,775,677 9,052,559 9,052,559 173,959,149 139,280,877 19.22x 15.39x2030 6,276,573 2,774,335 9,050,907 9,050,907 173,959,149 139,280,877 19.22x 15.39x2031 6,272,540 597,360 6,869,900 6,869,900 173,959,149 139,280,877 25.32x 20.27x2032 6,273,203 593,346 6,866,549 6,866,549 173,959,149 139,280,877 25.33x 20.28x2033 6,277,388 593,655 6,871,042 6,871,042 173,959,149 139,280,877 25.32x 20.27x2034 5,156,300 593,221 5,749,521 5,749,521 173,959,149 139,280,877 30.26x 24.22x2035 5,160,583 597,030 5,757,612 5,757,612 173,959,149 139,280,877 30.21x 24.19x2036 5,156,790 597,863 5,754,653 5,754,653 173,959,149 139,280,877 30.23x 24.20x2037 5,159,870 592,881 5,752,751 5,752,751 173,959,149 139,280,877 30.24x 24.21x2038 2,233,250 597,287 2,830,537 2,830,537 173,959,149 139,280,877 61.46x 49.21x2039 2,230,750 595,674 2,826,424 2,826,424 173,959,149 139,280,877 61.55x 49.28x2040 2,234,000 593,245 2,827,245 2,827,245 173,959,149 139,280,877 61.53x 49.26x2041 2,232,500 2,232,500 2,232,500 173,959,149 139,280,877 77.92x 62.39x2042 2,231,250 2,231,250 2,231,250 173,959,149 139,280,877 77.96x 62.42x

TOTAL $124,357,598 $34,293,811 $158,651,409 $13,166,299 $171,817,708

*Preliminary, subject to change. Does not take into account any subsidy payments received from tax credit obligations.(1) Assumes no optional redemption.(2) Pro forma using 2018 Pledged Revenues of $173,959,149. Pledged Revenues may change in the future. See “INTRODUCTION -

Forward-Looking Statements” herein.(3) Pro forma using 2018 Pledged Revenues available for debt service of $139,280,877. Calculated based on Pledged Revenues after

deducting Operating and Maintenance Expenses. Pledged Revenues and Operating and Maintenance Expenses may change in the future.See “INTRODUCTION - Forward-Looking Statements” herein.

Source: RBC Capital Markets, LLC and New Mexico State University.

INVESTMENT CONSIDERATIONS

Factors Affecting Universities

There are a number of factors affecting institutions of higher education in general, includingthe University, that could have an adverse effect on the University’s financial position and its ability togenerate Pledged Revenues and to make the payments required under the Bond Resolution. Thesefactors include, but are not limited to: the continuing rising costs of providing higher education services;rising tuition costs and fees resulting in higher student loan debt; a decline in the number of college-agepersons in the country; a decline in enrollment; competition for students from other institutions of higherand post-secondary education, including junior colleges and trade/vocational schools; limitedemployment opportunities available post-graduation; the failure to maintain or increase in the future thefunds obtained by the University from various sources, including gifts and contributions from donors,grants or appropriations from governmental bodies and income from investment of endowment funds;adverse results from the investment of endowment funds; increasing costs of compliance with federalor State regulatory laws or regulations, including, without limitation, laws or regulations concerningenvironmental quality, work safety and accommodating the handicapped; changes in federal

15

governmental policy relating to the reimbursement of overhead costs of government contracts; anyfurther unionization of the University’s work force with consequent impact on wage scales andoperating costs of the University; and legislation or regulations which may affect student aid and otherprogram funding. Specific factors affecting the University include a decline in the State’s population,State fiscal fluctuations, lottery scholarship funding (see “Lottery Scholarships” herein), and decliningfederal support for research and competition for available awards. The University cannot assess orpredict the ultimate effect of these factors on its operations or financial results of operations.

Special Obligations

The Bonds are special obligations of the Regents and shall not constitute a debt or liability ofthe State or of any political subdivision thereof within the meaning of any State constitutional provisionor statutory limitation and shall not constitute a pledge of the faith and credit of the State. The Bondsare payable solely from and secured by a pledge of and a first lien (but not necessarily an exclusive firstlien) on Pledged Revenues (which represent certain revenues of the University after the payment ofcertain operating and maintenance expenses). The issuance of the Bonds shall not, directly, indirectlyor contingently, obligate the State or any political subdivision thereof to levy any form of taxationtherefor or to make any appropriation for their payment. The Regents do not have taxing power.

Additional Bonds

The Regents have the right, subject to specified conditions in the Bond Resolution, to issueadditional Parity Bonds payable from the Pledged Revenues on parity with the lien of the Series 2019Bonds. Bonds payable from the Pledged Revenues on a superior basis to the lien of the Series 2019Bonds may not be issued by the Regents. The Regents may also issue additional Subordinate LienObligations, in accordance with the resolutions authorizing the outstanding Subordinate Obligations.

Availability of Remedies

The remedies available upon an event of default under the Bond Resolution are in many respectsdependent upon regulatory and judicial actions which are often subject to discretion and delay. Underexisting law and judicial decisions the remedies provided for under the Bond Resolution may not bereadily available or may be limited. The Bonds are subject to general principles of equity which maypermit the exercise of judicial discretion; are subject to the reasonable exercise in the future by the Stateand its governmental bodies of the police power inherent in the sovereignty of the State; are subject, inpart, to the provisions of the United States Bankruptcy Code and other applicable bankruptcy,insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement ofcreditors’ rights generally, now or hereafter in effect; and are subject to the exercise by the United Statesof America of the powers delegated to it by the federal constitution. The various legal opinions to bedelivered concurrently with the delivery of the Bonds will be qualified to the extent that theenforceability of certain legal rights related to the Bonds is subject to limitations imposed bybankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generallyand by equitable remedies and proceedings generally.

Uncertainty of Pledged Revenues

The future availability of Pledged Revenues and the ability of the Regents to make principaland interest payments on their Parity Bonds, and other obligations depends on the continued operationof the University, which receives substantial funding in the form of State appropriations that are notpledged to the payment of the Bonds. The ability of the University to continue operation is contingent

16

upon, among other things, the receipt of sufficient annual appropriations by the State Legislature. ForFY19, the overall state appropriation for the university system increased by 4.73% from the originalFY18 allocation. Within the last five years, the State Higher Education Department (“HED”) revisedthe funding formula used for higher education institutions. The foundation of the new formula movesfrom an input to an output based allocation philosophy. The University believes that, over time, currentfunding levels will remain constant and may even increase under the new formula as it has severalstudent success initiatives underway that are expected to increase student enrollment.

New Mexico Opportunity Scholarship

In September 2019, Governor Michelle Lujan Grisham announced the New Mexico OpportunityScholarship (the “Scholarship”), an initiative which would offer free tuition for State residents attendingpublic institutions within the State beginning in the fall of 2020 including first year students (which isnot covered by the Lottery Scholarships discussed below). State officials calculate the plan would costbetween $25 and $35 million and the funding would be drawn from the State’s general fund, which hasrecently seen revenue boosts due to oil production in the Permian Basin that stretches across parts ofWest Texas and southeastern portion of the State. The Scholarship must receive legislative approvalprior to implementation. The University makes no representation as to the success of the Scholarship’slegislation, its funding source, or any events related thereto.

Future Changes to Law

Future changes to the Securities Act of 1933 (the “Act”) and other statutes by which theUniversity is governed could be adverse to the financial interests of the Regents and could adverselyimpact the security for the Bonds. There can be no assurance given by the Regents or the Underwritersthat the Act and other statutes by which the University is governed will not in the future be amended ina manner which is adverse to the interests of the owners of the Bonds.

Lottery Scholarships

The Lottery Tuition Fund was established by the New Mexico Legislature in 1996 and received50 percent of net lottery proceeds from sales in New Mexico until legislation was passed in 2001dedicating 100 percent of net lottery proceeds to lottery scholarships. Lottery tuition scholarships aremade available to New Mexico residents graduating from New Mexico high schools or receiving a GEDwho enroll in a New Mexico public college or university within a 16-month grace period aftergraduating high school. If a lottery tuition scholarship recipient maintains a 2.5 GPA and meets othercriteria, the scholarship may continue for up to seven consecutive semesters. Receiving a lotteryscholarship does not mean that the recipient attends college free of charge because the lotteryscholarship does not cover the full cost of attendance. New Mexico lottery’s contribution to the LotteryTuition Fund is subject to fluctuation and volatility in any given year. Although recent adjustments tothe Lottery Tuition Fund improved solvency, the Lottery Tuition Fund’s growth has not kept pace withrising tuition costs of institutions of higher education. The scholarship award amount is determined bythe HED on an annual basis based on the expected level of scholarship funding for the upcomingacademic year. For academic year 2018-2019, the lottery scholarship amount for University students(main campus) is equal to 77 percent of tuition only which covers approximately 25 percent of the totalcost of attendance at the University. A total of 4,792 students at the University received lottery tuitionscholarships during FY19. For the academic year 2019-2020 the HED estimates that the lotteryscholarship funding will cover approximately 72 percent of tuition only.

17

Damage to or Destruction of University Facilities

The Regents insure University facilities against certain risks through the State’s riskmanagement program. There can be no assurance that the amount of insurance obtained with respectto University facilities will be adequate or that the cause of any damage or destruction to Universityfacilities will be as a result of a risk which is insured. Further, there can be no assurance of the ongoingfinancial stability of the State’s risk management program for property losses. Damage or destructionof the University facilities could impair the Regents’ ability to generate Pledged Revenues sufficient topay principal of and interest on Parity Bonds and other obligations.

Environmental Regulation

The University facilities are subject to various federal, state and local laws and regulationsgoverning health and the environment. In general, these laws and regulations could result in liability tothe Regents as the owner of the University facilities for remediating adverse environmental conditionson or relating to the University facilities, whether arising from preexisting conditions or conditionsarising as a result of the activities conducted in connection with the ownership and operation of theUniversity facilities. Costs incurred by the Regents with respect to environmental remediation orliability could adversely impact the University’s financial condition and its ability to operate and toproduce Pledged Revenues sufficient to pay principal of and interest on Parity Bonds and otherobligations.

Secondary Market

There is no guarantee that a secondary market will develop for the Series 2019 Bonds.Consequently, prospective purchasers of the Series 2019 Bonds should be prepared to hold theirSeries 2019 Bonds to maturity or prior redemption. Subject to applicable securities laws andprevailing market conditions, the Underwriters intend but are not obligated to make a market in theSeries 2019 Bonds.

SECURITY AND SOURCE OF PAYMENT

Under the Bond Resolution, the Regents have pledged a first lien (but not an exclusive firstlien) for the payment of Parity Bonds on the revenues received from the operation of revenue-producingfacilities of the University subject to certain reservations and the exclusion of certain revenues,including State appropriations. The Pledged Revenues include the following receipts of the Universityand the Regents:

(a) The gross income and revenues of whatever nature derived from the operationor ownership of the System, except as may be excluded from the System by the Regents ashereafter described.

(b) All gross proceeds of student tuition and fees of every nature collected fromstudents at the University, except (i) the fees now known as "Student Activity Fees," the"Bus Fees" and "Equipment Maintenance Fees" and (ii) fees expressly imposed for the useor availability of buildings, structures or facilities excluded from the System under thedefinition thereof.

(c) The gross amounts received by the University from the Income from thePermanent Fund and the Income from the Income Fund.

18

(d) The proceeds of Debt Service Grants and the proceeds of any interestsubsidy with respect to the Parity Bonds (to the extent any such Debt Service Grant orinterest subsidy is applicable with respect to a series of Parity Bonds) paid for or on accountof the Regents or the University by any governmental body or agency.

(e) All other income or revenues received by the University from proprietaryactivities carried on by the University, but excluding: (i) the proceeds of ad valorem taxes, (ii)State appropriations and (iii) the proceeds of any University appropriations, gifts, contracts,grants and endowments, whether from or with public, private or governmental sources, whichare restricted as to use. If the pledge of any one or more sources of other income or revenue tothe payment of the Parity Bonds shall ever be held by final decision of a court of competentjurisdiction to be invalid or to make the Parity Bonds invalid because of constitutionalrestrictions on State indebtedness, the income or revenue derived from such other source orsources shall no longer be part of the Pledged Revenues. There is not included in the otherincome or revenue which is the subject of this paragraph any income or revenue excluded underthe provisions of paragraphs (a) or (b) above.

The System consists of all housing facilities (student and other) and all other buildings,structures, improvements and facilities located on any campus of the University from the use andavailability of which income or revenue (including in the term "income or revenue" the proceeds ofstudent tuition and fees, other than the fees now known as Student Activity Fees, EquipmentMaintenance Fees and Bus Fees) is produced, present and future, owned or operated by the Universityor the Regents, including, without limitation, dormitories, student unions, auditoriums, dining halls,bookstores, stadiums, golf courses, swimming pools, hospitals or infirmaries, utility facilities andprinting plants owned or operated by the University or the Regents (the "System"); provided that asadditional housing and other facilities are acquired by the University or the Regents from time to timeand as existing facilities in the System are improved or extended, such additional, improved orextended facilities shall become part of the System; except that the Regents retain the right to acquire,construct, improve or extend any one or more such facilities and to provide by resolution that anysuch facility so acquired, constructed, improved or extended shall not become a part of the System,and any such facility so excepted shall not become a part of the System and the income and revenuesderived therefrom shall not be part of the Pledged Revenues.

The holders of the Parity Bonds have a first lien (but not an exclusive first lien) on PledgedRevenues to secure the payment of the principal of and premium, if any, and interest on the ParityBonds. The future availability of Pledged Revenues is dependent upon the continued operation of theUniversity, which is substantially financed by State appropriations which are not pledged to the paymentof the Parity Bonds. The ability of the University to make principal and interest payments on the ParityBonds is contingent upon sufficient annual State appropriations to continue the operations of theUniversity. See "INTRODUCTION—Investment Considerations" herein.

THE BONDS AND THE INTEREST THEREON SHALL CONSTITUTE SPECIALOBLIGATIONS OF THE REGENTS, PAYABLE SOLELY FROM PLEDGED REVENUES. THEBONDS AND THE INTEREST THEREON SHALL NOT CONSTITUTE A DEBT OR LIABILITYOF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANINGOF ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION AND SHALLNOT CONSTITUTE A PLEDGE OF THE FAITH AND CREDIT OF THE STATE BUT SHALL BEPAYABLE BY THE REGENTS SOLELY FROM THE FUNDS PROVIDED IN THE BONDRESOLUTION. THE ISSUANCE OF THE BONDS SHALL NOT, DIRECTLY, INDIRECTLY ORCONTINGENTLY, OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO

19

LEVY ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FORTHEIR PAYMENT. THE REGENTS DO NOT HAVE TAXING POWER.

Subordinate Lien Obligations

The Regents reserve the right to issue bonds or other obligations without limitation as to amountpayable from Pledged Revenues having a lien thereon subordinate and junior to the lien of the Bondsand the Parity Bonds and on a parity with the outstanding Subordinate Lien Obligations.

Debt Service Reserve Account

There will be no debt service reserve account funded for the Series 2019 Bonds.

Rate Covenant

The Regents have covenanted in the Bond Resolution and in the resolutions authorizing theissuance of the outstanding Parity Bonds (collectively, the "Prior Resolutions") that they will at alltimes impose and collect rates and charges for the use of all buildings and facilities comprising theSystem and for all commodities and services sold or supplied therein or furnished thereby, and willimpose and collect such student tuition and fees for the use and availability of the System, as willbe fully sufficient, together with the other income and revenue of the University received fromsources other than (a) sources excluded from the System; (b) the proceeds of ad valorem taxation;(c) State appropriations; or (d) the proceeds of any University appropriations, gifts, contracts, grantsand endowments, whether from or with public, private or governmental sources, which arerestricted as to use, to permit the performance of all the covenants in and requirements of the BondResolution and the Prior Resolutions, including the prompt payments required to be made into theSenior Lien Debt Service Account, Subordinate Lien Debt Service Account, the Renewal andReplacement Fund, the Rebate Fund and the payment of the Operating and Maintenance Expenses.

LEGAL MATTERS

The Regents have engaged Modrall, Sperling, Roehl, Harris & Sisk, P.A., as Bond Counsel,and the opinion of Bond Counsel will be delivered at the time of delivery of the Bonds. Certain legalmatters will be passed on for the Regents by University Counsel, Roy Collins III, Esq. Certain legalmatters will be passed upon by Modrall, Sperling, Roehl, Harris & Sisk, P.A., as Disclosure Counsel.Certain legal matters will be passed upon for the Underwriters by Norton Rose Fulbright US LLP.

CONTINUING DISCLOSURE UNDERTAKING

The Regents will agree, by means of a Continuing Disclosure Undertaking to be delivered tothe purchaser of the Bonds at closing, for the benefit of owners of the Bonds, to provide certain annualfinancial information on or before March 31 of each year beginning in 2020, and to provide notices ofoccurrence of certain enumerated events. The Regents will further agree in the Continuing DisclosureUndertaking that if its audited financial statements are not provided as part of the annual financialinformation, the Regents will provide such audited statements when available. The annual financialinformation and audited financial statements (when available) will be filed by the Regents with theMunicipal Securities Rulemaking Board. The form of the Continuing Disclosure Undertaking isattached as Appendix E hereto.

The Continuing Disclosure Undertaking is being executed by the Regents to assist in complyingwith Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission under the Securities

20

Exchange Act of 1934 (the “Rule”). The Regents' management believes that they have appropriatestaffing levels and previously adopted written policies and associated procedures to assure postissuance compliance with future continuing disclosure filings under the Rule.

The Continuing Disclosure Undertaking will be in effect from and after the issuance and deliveryof the Bonds and shall extend to the earliest of: (i) the date the principal and interest on the Bonds ispaid or deemed paid; (ii) the date the Regents are no longer an “obligated person” with respect to theBonds within the meaning of the Rule; or (iii) the date on which those portions of the Rule which requirethe Continuing Disclosure Undertaking are held invalid or repealed.

During the past five years, the University has complied in all material respects with allcontinuing disclosure agreements made by it in accordance with the Rule.

Any failure of the Regents to provide such information will not cause a default under theBond Resolution.

LITIGATION

At the time of the original delivery of the Series 2019 Bonds, the Regents will deliver a no-litigation certificate to the effect that no litigation or administrative action or proceeding is pending or,to the knowledge of the appropriate University officials, threatened, restraining or enjoining, or seekingto restrain or enjoin, the issuance and delivery of the Series 2019 Bonds, the effectiveness of the BondResolution, or contesting or questioning the proceedings and authority under which the Series 2019Bonds have been authorized and are to be issued, sold, executed or delivered, or the validity of theSeries 2019 Bonds.

The University is a party to various legal proceedings seeking damages or injunctive relief andgenerally incidental to its operations. These proceedings are unrelated to the Series 2019 Bonds, theproceedings relating to the issuance of the Series 2019 Bonds or the security therefor. The ultimatedisposition of such proceedings is not presently determinable, but will not, in the opinion of counsel forthe University, have a material adverse effect on the Series 2019 Bonds or the security for the Series2019 Bonds.

RATINGS

S&P Global Ratings (“S&P”) is expected to assign the Series 2019 Bonds an insured rating of“AA” with the understanding that upon delivery of the Bonds a policy insuring the payment when dueof the principal of and interest on the Bonds will be issued by Build America Mutual AssuranceCompany. Moody’s Investors Services, Inc. (“Moody’s”) and S&P have assigned underlying municipalbond ratings of “A1” and “A+”, respectively, to the Series 2019 Bonds. Such ratings reflect only theviews of such organizations. An explanation of the significance of such ratings may be obtained fromMoody’s at 7 World Trade Center, 250 Greenwich Street, New York, New York 10007 and S&P at 55Water Street, New York, New York 10041. The ratings are not a recommendation to buy, sell or holdthe Series 2019 Bonds and there is no assurance that such ratings will continue for any given period oftime or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if,in their judgment, circumstances so warrant. Any downward revision or withdrawal of the ratings givento the Series 2019 Bonds may have any adverse effect on the market price of the Series 2019 Bonds.The Regents have not undertaken any responsibility, other than the Continuing Disclosure Undertaking,to bring to the attention of the owners of the Series 2019 Bonds any proposed revision or withdrawal ofthe ratings on the Series 2019 Bonds, or to oppose any such proposed revision or withdrawal.

21

On October 14, 2019, S&P downgraded the University’s long-term underlying rating as relatesto its revenue obligations, including the Bonds, from “AA-” to A+”. The University filed a materialevent notice of this rating downgrade with EMMA on October 16, 2019.

TAX MATTERS

Tax Matters Related to the Series 2019A Bonds

In the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Bond Counsel, to be deliveredat the time of original issuance of the Bonds, under existing laws, regulations, rulings and judicialdecisions, and assuming compliance with covenants described herein, interest on the Series 2019ABonds is excludable from gross income for federal income tax purposes and will not be included incomputing the federal alternative minimum tax for the owners thereof.

The Code imposes various restrictions, conditions and requirements relating to the exclusionfrom gross income for federal tax purposes of interest on obligations such as the Series 2019A Bonds.The Regents have made various representations and warranties with respect to, and has covenanted inthe Bond Resolution, and other certificates to comply with the applicable provisions of the Code toassure that interest on the Series 2019A Bonds will remain excludable from gross income. Failure tocomply with these covenants or the inaccuracy of these representations and warranties may result ininterest on the Series 2019A Bonds being included in gross income from the date of issue of the Series2019A Bonds. The opinion of Bond Counsel assumes compliance with the covenants and the accuracyof such representations and warranties.

Although Bond Counsel has opined that interest on the Series 2019A Bonds is not a specificpreference item for purposes of the alternative minimum tax provisions contained in the Code, intereston the Series 2019A Bonds will be included in the adjusted current earnings of certain corporations, andsuch corporation’s adjusted current earnings over its alternative minimum taxable income (determinedwithout regard to this adjustment and prior to reduction for certain net operating losses).

Although Bond Counsel has rendered an opinion that interest on the Series 2019A Bonds isexcludable from gross income for federal income tax purposes, the accrual or receipt of interest on theSeries 2019A Bonds may otherwise affect the federal income tax liability of the recipient. The extentof these other tax consequences will depend upon the recipient’s particular tax status or other items ofincome or deduction. Bond Counsel expresses no opinion regarding any such consequences.Purchasers of the Series 2019A Bonds, particularly purchasers that are corporations (including Scorporations and foreign corporations operating branches in the United States), property or casualtyinsurance companies, banks, thrifts or other financial institutions, certain recipients of Social Securityor Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit ortaxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations are advised to consult their tax advisors as to the tax consequences of purchasing orowning the Series 2019 Bonds.

The opinions expressed by Bond Counsel are based upon existing law as of the date of issuanceand delivery of the Series 2019 Bonds, and Bond Counsel expresses no opinion as of any datesubsequent thereto or with respect to any pending national or State legislation.

22

Original Issue Discount

The Series 2019A Bonds may be offered at a discount (“original issue discount”) equalgenerally to the difference between public offering price and principal amount. For federal income taxpurposes, original issue discount on a bond accrues periodically over the term of the bond as interestwith the same tax exemption and alternative minimum tax status as regular interest. The accrual oforiginal issue discount increases the holder’s tax basis in the bond for determining taxable gain or lossfrom sale or from redemption prior to maturity. Holders of Series 2019A Bonds offered at an originalissue discount should consult their tax advisors for an explanation of the accrual rules.

Original Issue Premium

The Series 2019A Bonds may be offered at a premium (“original issue premium”) over theirprincipal amount. For federal income tax purposes, original issue premium is amortizable periodicallyover the term of a bond through reductions in the holders’ tax basis in the bond for determining taxablegain or loss from sale or from redemption prior to maturity. Amortizable premium is accounted for asreducing the tax-exempt interest on the bond rather than creating a deductible expense or loss. Holdersof Series 2019A Bonds offered at an original issue premium should consult their tax advisors for anexplanation of the amortization rules.

Internal Revenue Service Audit Program

The Internal Revenue Service (the “Service”) has an ongoing program auditing tax-exemptobligations to determine whether, in the view of the Service, interest on such tax-exempt obligations isincludible in the gross income of the owners thereof for federal income tax purposes. No assurancescan be given as to whether the Service will commence an audit of the Series 2019A Bonds. If an auditis commenced, under current procedures the Service will treat the Regents as the taxpayer and the Series2019A Bond owners will have no right to participate in such procedure. Neither the Underwriters ofthe Series 2019A Bonds nor Bond Counsel is obligated to defend the tax-exempt status of the Series2019A Bonds. The Regents have covenanted in the Bond Resolution not to take any action that wouldcause the interest on the Series 2019A Bonds to lose its exclusion from gross income except to theextent described above for the owners thereof for federal income tax purposes. None of the Regents,the Underwriters or Bond Counsel is responsible to pay or reimburse the costs of any Series 2019ABond owner with respect to any audit or litigation relating to the Series 2019A Bonds.

State of New Mexico Tax Status

Bond Counsel is also of the opinion based on existing laws of the State of New Mexico asenacted and construed that interest on the Bonds is exempt from all taxation by the State of New Mexicoor any political subdivision thereof for present State of New Mexico income tax purposes.

Tax Matters Related to the Series 2019B Bonds

General. The following is a general summary of the United States federal income taxconsequences of the purchase and ownership of the Series 2019B Bonds. The discussion is basedupon the Code, United States Treasury Regulations, rulings and decisions now in effect, all of whichare subject to change (possibly, with retroactive effect) or possibly differing interpretations. Noassurances can be given that future changes in the law will not alter the conclusions reached herein.The discussion below does not purport to deal with United States federal income tax consequencesapplicable to all categories of investors. Further, this summary does not discuss all aspects of UnitedStates federal income taxation that may be relevant to a particular investor in the Series 2019B Bonds

23

in light of the investor’s particular personal investment circumstances (for example, persons subject toalternative minimum tax) or to certain types of investors subject to special treatment under UnitedStates federal income tax laws (including insurance companies, tax-exempt organizations, financialinstitutions, brokers-dealers, persons who have hedged the risk of owning the Series 2019B Bonds,traders in securities that elect to use a mark-to-market method of accounting, thrifts, regulatedinvestment companies, pension and other employee benefit plans, partnerships and other pass-throughentities, certain hybrid entities and owners of interests therein, persons who acquire Series 2019BBonds in connection with the performance of services, or persons deemed to sell Series 2019B Bondsunder the constructive sale provisions of the Code). The discussion below also does not discuss anyaspect of State, local, or foreign law or United States federal tax laws other than United States federalincome tax law. The summary is therefore limited to certain issues relating to initial investors whowill hold the Series 2019B Bonds as “capital assets” within the meaning of section 1221 of the Code,and acquire such Series 2019B Bonds for investment and not as a dealer or for resale. This summaryaddresses certain federal income tax consequences applicable to Beneficial Owners of the Series2019B Bonds who are United States persons within the meaning of Section 7701(a)(30) of the Code(“United States persons”) and, except as discussed below, does not address any consequences to personsother than United States persons. Prospective investors should note that no rulings have been or willbe sought from the Service with respect to any of the United States federal income tax consequencesdiscussed below, and no assurance can be given that the Service will not take contrary positions.

INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMININGTHE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TOTHEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES 2019BBONDS.

Payments of Stated Interest on the Series 2019B Bonds. The stated interest paid on the Series2019B Bonds will be included in the gross income, as defined in section 61 of the Code, of theBeneficial Owner thereof and be subject to United States federal income taxation when received oraccrued, depending on the tax accounting method applicable to the Beneficial Owner thereof asordinary income for federal income tax purposes at the time it is paid or accrued, depending on the taxaccounting method applicable to the Beneficial Owner thereof. Subject to certain exceptions, thestated interest on the Series 2019B Bonds will be reported to the Service. Such information will befiled each year with the Service on Form 1099 which will reflect the name, address, and taxpayeridentification number (“TIN”) of the Beneficial Owner. A copy of Form 1099 will be sent to eachBeneficial Owner of a Series 2019B Bond for federal income tax purposes.

Original Issue Discount. If the first price at which a substantial amount of the Series 2019BBonds of any stated maturity is purchased at original issuance for a purchase price (the “Issue Price”)that is less than their stated redemption price at maturity (increased in certain cases by interest accruedbut not paid for more than a year) by more than one quarter of one percent times the number ofcomplete years to maturity, the Series 2019B Bonds of such maturity will be treated as being issuedwith “original issue discount.” The amount of the original issue discount will equal the excess of theprincipal amount payable on such Series 2019B Bonds at maturity over its Issue Price, and the amountof the original issue discount on the Series 2019B Bonds will be amortized over the life of the Series2019B Bonds using the “constant yield method” provided in the Treasury Regulations. As the originalissue discount accrues under the constant yield method, the Beneficial Owner of the Series 2019BBonds, regardless of their regular method of accounting, will be required to include such accruedamount in their gross income as interest. This can result in taxable income to the Beneficial Owner ofthe Series 2019B Bonds that exceeds actual cash distributions to the Beneficial Owner in a taxable year.

24

The amount of the original issue discount that accrues on the Series 2019B Bonds eachtaxable year will be reported annually to the Service and to the Beneficial Owner. The portion of theoriginal issue discount included in each Beneficial Owner’s gross income while the Beneficial Ownerholds the Series 2019B Bonds will increase the adjusted tax basis of the Series 2019B Bonds in thehands of such Beneficial Owner.

Premium. If a Beneficial Owner purchases a Series 2019B Bond for an amount that is greaterthan its stated redemption price at maturity, such Beneficial Owner will be considered to havepurchased the Series 2019B Bonds with “amortizable certificate premium” equal in amount to suchexcess. A Beneficial Owner may elect to amortize such premium using a constant yield method overthe remaining termof the Series 2019B Bonds and may offset interest otherwise required to be includedin respect of the Series 2019B Bonds during any taxable year by the amortized amount of such excessfor the taxable year. The Series 2019B Bonds premium on a Series 2019B Bond held by a BeneficialOwner that does not make such an election will decrease the amount of gain or increase the amountof loss otherwise recognized on the sale, exchange, redemption or retirement of a Series 2019B Bond.However, if the Series 2019B Bonds may be optionally redeemed after the Beneficial Owner acquiresit at a price in excess of its stated redemption price at maturity, special rules would apply under theTreasury Regulations which could result in a deferral of the amortization of some certificate premiumuntil later in the term of the Series 2019B Bonds. Any election to amortize certificate premium appliesto all taxable debt instruments held by the Beneficial Owner on or after the first day of the first taxableyear to which such election applies and may be revoked only with the consent of the Service.

Defeasance. Persons considering the purchase of a Series 2019B Bond should be aware that adefeasance of a Series 2019B Bond by the University could result in the realization of gain or lossby the Beneficial Owner of the Series 2019B Bonds for federal income tax purposes, without anycorresponding receipts of monies by the Beneficial Owner. Such gain or loss generally would besubject to recognition for the tax year in which such realization occurs, as in the case of a sale orexchange. Beneficial owners are advised to consult their own tax advisers with respect to the taxconsequences resulting from such events.

Medicare Contribution Tax. Pursuant to Section 1411 of the Code, the Medicare ContributionTax is 3.8 percent of the lesser of (1) net investment income (defined as gross income from interest,dividends, net gain from disposition of property not used in a trade or business, and certain other listeditems of gross income), or (2) the excess of “modified adjusted gross income” of the individual over$200,000 for unmarried individuals ($250,000 for married couples filing a joint return and a survivingspouse). Holders of the Series 2019B Bonds should consult with their tax advisor concerning thisadditional tax, as it may apply to interest earned on the Series 2019B Bonds as well as gain on thesale of a Series 2019B Bond.

Disposition of Series 2019B Bonds and Market Discount. A Beneficial Owner of Series 2019BBonds will generally recognize gain or loss on the redemption, sale or exchange of a Certificateequal to the difference between the redemption or sales price (exclusive of the amount paid for accruedinterest) and the Beneficial Owner’s adjusted tax basis in the Series 2019B Bonds. Generally, theBeneficial Owner’s adjusted tax basis in the Series 2019B Bonds will be the Beneficial Owner’sinitial cost, increased by the original issue discount previously included in the Beneficial Owner’sincome to the date of disposition and decreased by any amortized bond premium. Any gain or lossgenerally will be capital gain or loss and will be long-term or short-term, depending on the BeneficialOwner’s holding period for the Series 2019B Bonds.

25

Under current law, a purchaser of Series 2019B Bonds who did not purchase the Series 2019BBonds in the initial public offering (a “subsequent purchaser”) generally will be required, on thedisposition of the Series 2019B Bonds, to recognize as ordinary income a portion of the gain, ifany, to the extent of the accrued “market discount.” Market discount is the amount by which theprice paid for the Series 2019B Bonds by a subsequent purchaser is less than the sum of Issue Priceand the amount of original issue discount previously accrued on the Series 2019B Bonds. The Codealso limits the deductibility of interest incurred by a subsequent purchaser on funds borrowed toacquire Series 2019B Bonds with market discount. As an alternative to the inclusion of marketdiscount in income upon disposition, a subsequent purchaser may elect to include market discount inincome currently as it accrues on all market discount instruments acquired by the subsequent purchaserin that taxable year or thereafter, in which case the interest deferral rule will not apply. The re-characterization of gain as ordinary income on a subsequent disposition of Series 2019B Bondscould have a material effect on the market value of the Series 2019B Bonds.

Backup Withholding. Under section 3406 of the Code, a Beneficial Owner of the Series 2019BBonds who is a United States person, as defined in section 7701(a)(30) of the Code, may, under certaincircumstances, be subject to “backup withholding” on payments of current or accrued interest onthe Series 2019B Bonds. This withholding applies if such Beneficial Owners of Series 2019B Bonds:(1) fails to furnish the payor such Beneficial Owner’s social security number or other TIN; (2) furnishesthe payor an incorrect TIN; (3) fails to report properly interest, dividends, or other “reportablepayments” as defined in the Code; or (4) under certain circumstances, fails to provide the payor witha certified statement, signed under penalty of perjury, that the TIN provided to the payor is correctand that such Beneficial Owner is not subject to backup withholding. To establish status as an exemptperson, a Beneficial Owner will generally be required to provide certification on Service Form W-9(or substitute or replacement form).

Backup withholding will not apply, however, with respect to payments made to certainBeneficial Owners of the Series 2019B Bonds. Beneficial owners of the Series 2019B Bonds shouldconsult their own tax advisors regarding their qualification for exemption from backup withholdingand the procedures for obtaining such exemption. The backup withholding tax is not an additional taxand taxpayers may use amounts withheld as a credit against their federal income tax liability or mayclaim a refund as long as they timely provide certain information to the Service.

Withholding on Payments to Nonresident Alien Individuals and Foreign Corporations. Undersections 1441 and 1442 of the Code, nonresident alien individuals and foreign corporations are generallysubject to withholding at the rate of 30 percent on periodic income items arising from sourceswithin the United States, provided such income is not effectively connected with the conduct of aUnited States trade or business. Assuming the interest received by the Beneficial Owner of the Series2019B Bonds is not treated as effectively connected income within the meaning of section 864 of theCode, such interest will be subject to 30 percent withholding, or any lower rate specified in an incometax treaty, unless such income is treated as portfolio interest. Interest will be treated as portfolio interestif: (1) the Beneficial Owner provides a statement to the pay or certifying, under penalties of perjury, thatsuch Beneficial Owner is not a United States person and providing the name and address of suchBeneficial Owner; (2) such interest is treated as not effectively connected with the Beneficial Owner’sUnited States trade or business; (3) interest payments are not made to a person within a foreign countrywhich the Service has included on a list of countries having provisions inadequate to prevent UnitedStates tax evasion; (4) interest payable with respect to the Series 2019B Bonds is not deemedcontingent interest within the meaning of the portfolio debt provision; (5) such Beneficial Owner isnot a controlled foreign corporation, within the meaning of section 957 of the Code; and (6) suchBeneficial Owner is not a bank receiving interest on the Series 2019B Bonds pursuant to a loan

26

agreement entered into in the ordinary course of the bank’s trade or business. The treatment describedunder this section may have been modified by an applicable tax treaty.

Assuming payments on the Series 2019B Bonds are treated as portfolio interest within themeaning of sections 871 and 881 of the Code, then no backup withholding under section 1441 and1442 of the Code and no backup withholding under section 3406 of the Code is required with respectto Beneficial Owners or intermediaries who have furnished Form W-8 BEN, Form W-8 EXP or FormW-8 IMY, as applicable, provided the payor does not have actual knowledge that such person is a UnitedStates person.

Foreign Account Tax Compliance Act. Sections 1471 through 1474 of the Code impose a 30percent withholding tax on certain types of payments made to a foreign financial institution, unless theforeign financial institution enters into an agreement with the United States Treasury to, among otherthings, undertake to identify accounts held by certain United States persons or United States-ownedentities, annually report certain information about such accounts, and withhold 30 percent onpayments to account holders whose actions prevent it from complying with these and other reportingrequirements, or unless the foreign financial institution is otherwise exempt from those requirements.In addition, the Foreign Account Tax Compliance Act (“FATCA”) imposes a 30 percent withholdingtax on the same types of payments to a non-financial foreign entity unless the entity certifies that it doesnot have any substantial United States owners or the entity furnishes identifying information regardingeach substantial United States owner. Failure to comply with the additional certification,information reporting and other specified requirements imposed under FATCA could result in the 30percent withholding tax being imposed on payments of interest and principal under the Series 2019BBonds and sales proceeds of Series 2019B Bonds held by or through a foreign entity. In general,withholding under FATCA currently applies to payments of United States source interest (includingoriginal issue discount) and will apply to (1) gross proceeds from the sale, exchange or retirementof debt obligations paid after December 31, 2016 and (2) certain “pass-thru” payments no earlierthan January 1, 2017. Prospective investors should consult their own tax advisors regarding FATCAand its effect on them.

The preceding discussion of certain United States federal income tax consequences is forgeneral information only and is not tax advice. Accordingly, each investor should consult its own taxadvisor as to particular tax consequences to it of purchasing, owning, and disposing of the Series 2019BBonds, including the applicability and effect of any state, local, or foreign tax laws, and of any proposedchanges in applicable laws.

MUNICIPAL ADVISOR

RBC Capital Markets, LLC ("RBC") is employed as Municipal Advisor to the University inconnection with the issuance of the Bonds. The Municipal Advisor’s fee for services rendered withrespect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. RBC, in itscapacity as Municipal Advisor, has not verified and does not assume any responsibility for the possibleimpact of any present, pending or future actions taken by any legislative or judicial bodies. TheMunicipal Advisor is not obligated to undertake, and has not undertaken to make, an independentverification of, or assume responsibility for, the accuracy, completeness, or fairness of the informationin this Official Statement. The Municipal Advisor may also receive a fee for conducting a competitivebidding process regarding the investment of certain proceeds of the Bonds.

27

REGISTRATION AND QUALIFICATION OF BONDS FOR SALE

The sale of the Bonds of either series has not been registered under the federal Securities Actof 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); nor havethe Bonds been qualified under the securities acts of any other jurisdiction. The University assumes noresponsibility for qualification of the Bonds under the securities laws of any jurisdiction in which theBonds may be sold, assigned, pledged, hypothecated, or otherwise transferred. This disclaimer ofresponsibility for qualification for sale or other disposition of the Bonds must not be construed as aninterpretation of any kind with regard to the availability of any exemption from securities registrationprovisions.

It is the obligation of the Underwriters to register or qualify the sale of the Bonds under thesecurities laws of any jurisdiction which so requires. The University has agreed to cooperate, at theUnderwriters’ written request and sole expense, in registering or qualifying the Bonds or in obtainingan exemption from registration or qualification in any state where such action is necessary; provided,however, that the Underwriters shall not be required to qualify as a foreign corporation or to execute ageneral or special consent to service of process in any jurisdiction.

UNDERWRITING

J.P. Morgan Securities LLC, for itself and as representative of BofA Securities, Inc., as co-manager (collectively, the “Underwriters”) have agreed, subject to certain conditions, to purchase theSeries 2019 Bonds from the Regents pursuant to a Bond Purchase Agreement (the “Bond PurchaseAgreement”) at a price of $__________ (being the par amount of the Series 2019 Bonds, plus a [net]reoffering premium of $__________ and less an Underwriters’ discount of $__________) and noaccrued interest. The Bond Purchase Agreement provides that the Underwriters will purchase all of theSeries 2019 Bonds if any are purchased. The prices at which the Series 2019 Bonds are offered to thepublic (and the yields resulting therefrom) may vary from the initial public offering prices appearing onthe initial inside pages of this Official Statement. In addition, the Underwriters may allow commissionsor discounts from such initial prices to dealers and others.

J.P. Morgan Securities LLC ("JPMS"), the Senior and Book Running Manager of theUnderwriters of the Bonds, has entered into negotiated dealer agreements (each, a "Dealer Agreement")with each of Charles Schwab & Co., Inc. ("CS&Co.") and LPL Financial LLC (“LPL”) for the retaildistribution of certain securities offerings at the original issue prices. Pursuant to each DealerAgreement, each of CS&Co. and LPL may purchase Bonds from JPMS at the original issue price lessa negotiated portion of the selling concession applicable to any Bonds that such firm sells.

BofA Securities, Inc., one of the underwriters of the Series 2019 Bonds, has entered into adistribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorporated(“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S,which may in turn distribute such securities to investors through the financial advisor network ofMLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealerfor their selling efforts with respect to the Series 2019 Bonds.

INDEPENDENT ACCOUNTANTS

The University’s Financial Statements for the Fiscal Year ended June 30, 2018, were auditedby KPMG LLP, Certified Public Accountants. The audit for the Fiscal Year ended June 30, 2018 isattached as Appendix B hereto. Such financial statements are the most recently audited financial

28

statements available at this time. KPMG LLP has been engaged to perform, and has not performedsince June 30, 2018, any procedures on the financial statements shown in the excerpt. Further, KPMGLLP has not been engaged to perform and has not performed any procedures relating to financialinformation or any other information contained in this Official Statement.

BOND INSURANCE

Bond Insurance Policy

Concurrently with the issuance of the Bonds, Build America Mutual Assurance Company(“BAM”) will issue its Municipal Bond Insurance Policy for the Bonds (the “Policy”). The Policyguarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in theform of the Policy included as an exhibit to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under NewYork, California, Connecticut or Florida insurance law.

Build America Mutual Assurance Company

BAM is a New York domiciled mutual insurance corporation and is licensed to conductfinancial guaranty insurance business in all fifty states of the United States and the District of Columbia.BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAMwill only insure obligations of states, political subdivisions, integral parts of states or politicalsubdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S.Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM.

The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, NewYork, New York 10281, its telephone number is: 212-235-2500, and its website is located at:www.buildamerica.com.

BAM is licensed and subject to regulation as a financial guaranty insurance corporation underthe laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law.

BAM’s financial strength is rated “AA/Stable” by S&P Global Ratings, a business unit ofStandard & Poor's Financial Services LLC (“S&P”). An explanation of the significance of the ratingand current reports may be obtained from S&P at www.standardandpoors.com. The rating of BAMshould be evaluated independently. The rating reflects the S&P’s current assessment of thecreditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating isnot a recommendation to buy, sell or hold the Bonds, and such rating is subject to revision or withdrawalat any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Anydownward revision or withdrawal of the above rating may have an adverse effect on the market priceof the Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable bythe issuer of the Bonds on the date(s) when such amounts were initially scheduled to become due andpayable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee themarket price or liquidity of the Bonds, nor does it guarantee that the rating on the Bonds will not berevised or withdrawn.

29

Capitalization of BAM

BAM’s total admitted assets, total liabilities, and total capital and surplus, as of June 30, 2019and as prepared in accordance with statutory accounting practices prescribed or permitted by the NewYork State Department of Financial Services were $525 million, $114 million and $411 million,respectively.

BAM is party to a first loss reinsurance treaty that provides first loss protection up to amaximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certainlimitations and restrictions.

BAM’s most recent Statutory Annual Statement, which has been filed with the New York StateInsurance Department and posted on BAM’s website at www.buildamerica.com, is incorporated hereinby reference and may be obtained, without charge, upon request to BAM at its address provided above(Attention: Finance Department). Future financial statements will similarly be made available whenpublished.

BAM makes no representation regarding the Bonds or the advisability of investing in the Bonds.In addition, BAM has not independently verified, makes no representation regarding, and does notaccept any responsibility for the accuracy or completeness of this Official Statement or any informationor disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of theinformation regarding BAM, supplied by BAM and presented under the heading “BONDINSURANCE”.

Additional Information Available from BAM

Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a briefCredit Insights video that provides a discussion of the obligor and some of the key factors BAM’sanalysts and credit committee considered when approving the credit for insurance. The Credit Insightsvideos are easily accessible on BAM's website at buildamerica.com/creditinsights/. (The precedingwebsite address is provided for convenience of reference only. Information available at such address isnot incorporated herein by reference.)

Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM mayprepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide informationabout the sector designation (e.g. general obligation, sales tax); a preliminary summary of financialinformation and key ratios; and demographic and economic data relevant to the obligor, if available.Subsequent to closing, for any offering that includes bonds insured by BAM, any pre-sale Credit Profilewill be updated and superseded by a final Credit Profile to include information about the gross parinsured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessibleon BAM's website at buildamerica.com/obligor/. BAM will produce a Credit Profile for all bondsinsured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (Thepreceding website address is provided for convenience of reference only. Information available at suchaddress is not incorporated herein by reference.)

Disclaimers. The Credit Profiles and the Credit Insights videos and the information containedtherein are not recommendations to purchase, hold or sell securities or to make any investmentdecisions. Credit-related and other analyses and statements in the Credit Profiles and the CreditInsights videos are statements of opinion as of the date expressed, and BAM assumes no responsibilityto update the content of such material. The Credit Profiles and Credit Insight videos are prepared by

30

BAM; they have not been reviewed or approved by the issuer of or the underwriter for the Bonds, andthe issuer and underwriter assume no responsibility for their content.

BAM receives compensation (an insurance premium) for the insurance that it is providing withrespect to the Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase,any of the Bonds, whether at the initial offering or otherwise.

BOND INSURANCE GENERAL RISKS

The information contained or referred to in this Official Statement relating to BAM (the“Insurer”) and the Policy has been provided by the Insurer. Such information has not been independentlyverified by the University or the Underwriters and is not guaranteed as to completeness or accuracy bythe University or the Underwriters and is not to be construed as a representation of the University or theUnderwriters. Reference is made to the specimen of the Insurer’s policy attached hereto.

In the event of default of the payment of principal or interest with respect to the Bonds whenall or some becomes due, any owner of the Bonds shall have a claim under the Policy for such payments.The Policy does not insure against redemption premium, if any. The payment of principal and interestin connection with mandatory or optional prepayment of the Bonds by the University which is recoveredby the University from the owner as a voidable preference under applicable bankruptcy law is coveredby the insurance policy, however, such payments will be made by the Insurer at such time and in suchamounts as would have been due absent such prepayment by the University unless the Insurer choosesto pay such amounts at an earlier date.

Under most circumstances, default of payment of principal and interest does not obligateacceleration of the obligations of the Insurer without appropriate consent. The Insurer may direct andmust consent to any remedies and the Insurer’s consent may be required in connection with amendmentsto any applicable bond documents.

In the event the Insurer is unable to make payment of principal and interest as such paymentsbecome due under the Policy, the Bonds are payable solely from the moneys pledged pursuant to theResolution. In the event the Insurer becomes obligated to make payments with respect to the Bonds, noassurance is given that such event will not adversely affect the market price of the Bonds or themarketability (liquidity) for the Bonds.

The long-term ratings on the Bonds are dependent in part on the financial strength of the Insurerand its claim paying ability. The Insurer’s financial strength and claims paying ability are predicatedupon a number of factors which could change over time. No assurance is given that the long-termratings of the Insurer and of the ratings on the Bonds insured by the Insurer will not be subject todowngrade and such event could adversely affect the market price of the Bonds or the marketability(liquidity) for the Bonds. See “RATINGS” herein.

The obligations of the Insurer are contractual obligations and in an event of default by theInsurer, the remedies available may be limited by applicable bankruptcy law or state law related toinsolvency of insurance companies.

Neither the University or Underwriters have made independent investigation into the claimspaying ability of the Insurer and no assurance or representation regarding the financial strength orprojected financial strength of the Insurer is given. Thus, when making an investment decision, potentialinvestors should carefully consider the ability of the University to pay principal and interest on theBonds and the claims paying ability of the Insurer, particularly over the life of the investment.

31

VERIFICATION OF CERTAIN MATHEMATICAL COMPUTATIONS

The mathematical accuracy of (i) the computations of the adequacy of the principal amountsand the interest thereon of the Federal Securities and other funds to be deposited in the Escrow Fund,to provide for the payment, of the principal of and interest on the Refunded Bonds when due or uponearly redemption thereof, and (ii) the computations made supporting the conclusion that the yield on theFederal Securities held pursuant to each Escrow Agreement is less than the yield on the Series 2019ABonds for federal income tax purposes, will be verified by Causey Demgen & Moore, P.C., Denver,Colorado. Such verification will be based, in part, upon information supplied to the certified publicaccountant and consultant by the Municipal Advisor and will be used to support Bond Counsel’s opinionthat the interest on the Series 2019A Bonds will be excludable from gross income for federal incometax purposes.

MISCELLANEOUS

The references herein to the Bond Resolution, statutes, resolutions and contracts are brief outlinesor partial excerpts of certain provisions thereof. Such outlines or excerpts do not purport to be complete,and reference is made to such documents for full and complete statements of such provisions.

The execution and delivery of the Official Statement by the Senior Vice President forAdministration and Finance has been duly authorized by the Regents.

THE REGENTS OF NEW MEXICO STATEUNIVERSITY

BySenior Vice President for Administration andFinance

A-1

APPENDIX A

NEW MEXICO STATE UNIVERSITY ORGANIZATION, PROGRAMSAND SUMMARY FINANCIAL INFORMATION

Mission

The mission of the New Mexico State University System is to serve the diverse needs of the statethrough comprehensive programs of education, research, extension and outreach, and public service. Asthe State’s land-grant and space-grant university, and as a Hispanic Serving institution, the Universityfosters learning, inquiry, diversity and inclusion, social mobility and service to the broader community.

The Regents

The Regents are empowered to issue obligations for the benefit of the University under authority grantedby Sections 6-17-1 through 6-17-19, NMSA 1978, as amended, and are charged with administering theUniversity. The Regents direct the disposition of funds belonging to or appropriated to the University andestablish rules and regulations necessary for the control and management of the University.

The State legislation establishing the Regents provides for five members (excluding ex-officio members),no more than three of whom shall be of the same political party. Members must be residents of the State and areappointed by the Governor, with the consent of the Senate, for six-year terms. A student Regent is appointed for atwo-year term. Members may serve more than one term.

The members of the Regents, the dates of expiration of their terms as members, their occupationsand their places of residence are as follows:

Term

Members Expires Occupation Residence

Dina Chacón-Reitzel, Chair 12/31/2024Executive Director, NM

Beef CouncilAlbuquerque, New Mexico

Ammu Devasthali, Vice Chair 12/31/2022 Business Woman Las Cruces, New Mexico

Debra P. Hicks, Member 12/31/2020 Business Woman Hobbs, New Mexico

Luke Sanchez,Secretary/Treasurer

12/31/2020 Student Las Cruces, New Mexico

* One regent position remains vacant pending nomination by Governor.

Executive Officers of the University

The authority for the governance of the corporate affairs of the University is vested in its Regents.The University’s administrative officers are selected by the Chancellor as authorized by the Regents.

The persons listed below are currently the executive officers of the University.

Dan Arvizu, Chancellor; Ph.D. 1982, Stanford University. He joined the University as Chancellorof the New Mexico State University System in 2018. Dr. Arvizu has served in executive positions at SandiaNational Labs and CH2M Hill, as Lab Director at the National Renewable Energy Laboratory, and as CTOand Sr. Advisor at Emerson Collective. He is a member of the National Academy of Engineers and serveson various boards and advisory panels.

A-2

John Floros, President; Ph.D. 1988, University of Georgia. Dr. Floros began his career as a foodscientist working in food processing facilities in Greece. He started his academic career at PurdueUniversity in 1988, where he rose through the academic ranks to become a Professor of Food ProcessEngineering and Packaging in 1998. In 2000, he moved to Pennsylvania State University as Head of theDepartment of Food Science, and in 2012, he moved to Kansas State University as Dean of the College ofAgriculture. In July of 2018, he joined New Mexico State University as the University’s 28th President.

Carol Parker, Provost & Senior Vice President for Academic Affairs; J.D. Wayne StateUniversity Law School, Master’s degree in Information Science from the University of Michigan and aBachelor’s degree in Humanities from Michigan State University’s Honors College. Dr. Parker joined theUniversity in July 2019. Dr. Parker was most recently the Provost at the University of Texas at El Pasofrom 2017 to 2019. She was the Senior Vice Provost for Academic Affairs at the University of New Mexicofrom 2013-2017. Before that, she was an Associate Dean and Director at the University of New MexicoSchool of Law.

Ruth Johnston; Strategic Chief Financial Officer; Ph.D. 1994 Union Institute. Dr. Johnstonserves as the University’s strategic chief financial officer to help set system-wide strategy, define financialobjectives of individual entities within the university and drive operational effectiveness, while creating aclimate of accountability. Dr. Johnston serves as first vice president on the Western Association of College& University Business Officers board of directors and recently joined the board of the National Associationof College & University Business Officers. Dr. Johnston has extensive experience in administrative,financial, facilities, IT, human resource operations and governmental & community relations.

Andrew J. Burke, Senior Vice President for Administration and Finance; Ed.D. 2017, MAcc1989, New Mexico State University. Dr. Burke served 30 years at NMSU, Doña Ana Community College(“DACC”) from 1984 to 2014, mostly as Vice President for Business and Finance. He was Interim Presidentfrom 2013 to 2014 and served as the Interim Campus Director from 1997 to 1999. Dr. Burke returned tomain campus in 2017, after a brief retirement, to serve at the Senior Vice President for Administration andFinance.

Renay M. Scott, Vice President for Student Success; Ph.D. 1995, Wayne State University. Dr.Scott is a recognized instructor and scholar; whose research includes the application of instructional designprinciples applied to history education, dual enrollment and assessment practices in higher education. Dr.Scott served as President of DACC, and previously served as Provost at Owens Community College inOhio as well as department chair and professor at Central Michigan University.

Luis Cifuentes, Vice President for Research and Dean of the Graduate School; Ph.D. 1987,University of Delaware. Dr. Cifuentes joined the University in July 2018. He has over 30 years of extensiveand progressive academic and leadership experience ranging from Professor, Vice President for Research,Commercialization and Outreach, and Special Assistant to the President at Texas A&M University-CorpusChristi. Dr. Cifuentes has been a leader on research grants totaling more than $5 million and has numerousproducts from peer-reviewed publications, journals, book chapters, abstracts and presentations.

Roy Collins III, General Counsel and Chief Legal Affairs Officer; Hired July 2019. J.D.University of Houston Law Center. Previously served as Associate General Counsel and Interim GeneralCounsel at the University of Hartford. Collins is a graduate of Southern University in MechanicalEngineering and holds a Master of Laws degree in the Intellectual Property from the John Marshall LawSchool.

A-3

Academic Programs

Provided below are the University’s colleges, a listing of the major fields of study available anddegrees awarded within these colleges.

College of Agricultural, Consumer and Environmental Sciences.

(a) Bachelor of Science in Agriculture. Majors in Agricultural Biology; AgriculturalEconomics and Agricultural Business; Agricultural and Extension Education;Agriculture and Community Development; Soil Science; Animal Science;General Agriculture; Horticulture; Natural Resource Economics and Policy;Rangeland Resources; Turfgrass Science and Management; Agronomy; AnimalScience; Family and Consumer Sciences; Horticulture; Range Science; WaterScience and Management**; Molecular Biology**; Fisheries and WildlifeScience; and Programs in Preveterinary Medicine and Preforestry;

(b) Bachelor of Science in Family and Consumer Sciences. Majors in Family andConsumer Science Education; Clothing, Textiles and Fashion Merchandising andDesign; Human Nutrition and Dietetic Sciences; and Family and Child Science;

(c) Bachelor of Science in Environmental Science;

(d) Bachelor of Science in Food Science and Technology. Majors in Culinary Science;Meat Science; and Science, Technology and Engineering;

(e) Bachelor of Science in Genetics;

(f) Bachelor of Science in Hotel, Restaurant and Tourism Management;

(g) Master of Science. Majors in Agricultural Biology; Agricultural Economics*;Animal Science; and Family and Consumer Sciences; Fish, Wildlife andConservation Ecology; Horticulture; Plant and Environmental Sciences; WaterScience and Management;

(h) Master of Arts. Major in Agricultural and Extension Education;

(i) Master of Agriculture. Specialization in Agribusiness; Specialization in DomesticAnimal Biology;

(j) Doctor of Philosophy. Majors in Animal Science; Plant and EnvironmentalScience; Range Science; Water Science and Management**; and

(k) Doctor of Economic Development*.

Additional Degree Program

MBA with an Emphasis in Agribusiness, also a joint program with the College of Business*Joint with Department of Economics, College of Business**Joint with other colleges

A-4

College of Arts and Sciences.

(a) Bachelor of Arts. Majors in Anthropology; Art; Biology; Chemistry;Communication Studies; Computer Science; Economics; English; ForeignLanguages; Gender and Sexuality Studies; Justice, Political Philosophy and Law,Government; History; Journalism and Media Studies; Philosophy; Psychology;Sociology; Theatre Arts; and Physics;

(b) Bachelor of Creative Media. Majors in Animation and Visual Effects; and DigitalFilm Making;

(c) Bachelor of Science in Conservation Ecology;

(d) Bachelor of Science in Genetics;

(e) Bachelor of Science. Majors in Biology; Biochemistry; Chemistry; ComputerScience; Geography; Geology; Mathematics; Microbiology; and Physics;

(f) Designated Bachelor’s Degree. Majors in Conservation Ecology; Creative Media;Criminal Justice; Fine Arts; Genetics; Music; and Music Education;

(g) Bachelor of Individualized Studies;

(h) Bachelor of Applied Studies;

(i) Master of Arts. Majors in Anthropology; Art; Communication Studies; English;Government; History; Experimental Psychology; Sociology; and Spanish;

(j) Master of Computational Data Analytics;

(k) Master of Science. Majors in Astronomy; Biology; Bioinformatics; Chemistry;Computer Science; Geology; Mathematics; Molecular Biology; and Physics;

(l) Master of Fine Arts in Studio Art;

(m) Master of Fine Arts in Creative Writing;

(n) Master of Applied Geography;

(o) Master of Music;

(p) Master of Public Administration;

(q) Master of Criminal Justice;

(r) Professional Master of Financial Mathematics; and

(s) Doctor of Philosophy. Majors in Astronomy; Biology; Chemistry; ComputerScience; Mathematics; Molecular Biology; Physics; Experimental Psychology;Rhetoric and Professional Communication.

A-5

College of Business.

(a) Two-Year Associate Degree. Associate degree in Prebusiness;

(b) Bachelor of Accountancy;

(c) Bachelor of Arts in Economics;

(d) Bachelor of Business Administration. Majors in Information Systems; Economics;Finance; General Business; International Business; Management; and Marketing;

(e) Master of Accountancy;

(f) Master of Business Administration;

(g) Master of Arts. Major in Economics;

(h) Master of Science. Major in Applied Statistics;

(i) Doctor of Philosophy. Major in either Marketing or Management; and

(j) Doctor of Economic Development.

College of Education.

(a) Bachelor of Arts in Dance;

(b) Bachelor of Science in Education. Majors in Communication Disorders; SpecialEducation; Elementary Education; Secondary Education (with endorsements inBilingual Education; Foreign Languages; General Science; Language Arts;Mathematics; Social Studies;) and Early Childhood Education;

(c) Bachelor of Science in Counseling & Community Psychology;

(d) Bachelor of Science in Kinesiology;

(e) Bachelor of Science in Athletic Training;

(f) Bachelor of Science in Educational Leadership;

(g) Bachelor of Applied Studies – concentration in Zero to Four;

(h) Master of Arts. Majors in Education; Educational Administration; CommunicationDisorders; Special Education; Clinical Mental Health Counseling;

(i) Master of Arts in Teaching;

(j) Master of Science. Major in Clinical Psychopharmacology;

(k) Specialist in Education. School Psychology;

(l) Doctor of Philosophy. Majors in Counseling Psychology; Curriculum andInstruction; Educational Administration; Kinesiology; and School Psychology;

A-6

(m) Doctor of Education. Major in Educational Administration;

College of Engineering.

(a) Two-Year Associate Degree. Associate of Science in Engineering Technology;

(b) Bachelor of Science. Designated degrees in Aerospace Engineering; ChemicalEngineering; Civil Engineering; Electrical Engineering; Industrial Engineering;Engineering Physics; Mechanical Engineering; Engineering Technology; andGeomatics;

(c) Bachelor of Information and Communication Technology;

(d) Master of Science. Designated degrees in Chemical Engineering; CivilEngineering; Electrical Engineering; Environmental Engineering; IndustrialEngineering; Mechanical Engineering; and Aerospace Engineering; and

(e) Doctor of Philosophy. Majors in Engineering; Chemical Engineering; CivilEngineering; Electrical Engineering; Industrial Engineering; MechanicalEngineering; and Aerospace Engineering.

College of Health and Social Services.

(a) Bachelor of Science in Nursing;

(b) Bachelor of Social Work;

(c) Bachelor of Public Health;

(d) Master of Science in Nursing;

(e) Master of Public Health;

(f) Master of Social Work;

(g) Joint Master of Public Health; Master of Social Work;

(h) Doctor of Philosophy-Nursing; and

(i) Doctor in Nursing Practice.

Graduate School. (see Colleges for all graduate programs)

(a) Interdisciplinary Doctor of Philosophy; and

(b) Interdisciplinary Master’s Degree including the Master of Art and Master ofScience.

Accreditation

The University is accredited by the Higher Learning Commission (“HLC”) regional accreditingbody. The main campus (NMSU-Las Cruces) and its four community colleges – three of which are

A-7

independently accredited by HLC – are in good standing with the HLC. The University’s accreditation waslast reaffirmed in 2018, with no required interim monitoring or reporting to the HLC.The next Reaffirmationof Accreditation will occur in 2027-2028. In addition, the University’s main campus maintains oversightof approximately 53 specialized/professional accreditations system-wide.

LEADS 2025

In 2018, the NMSU System’s Chancellor and University’s President began the process ofimplementing a new long-range strategic plan, known as NMSU LEADS 2025. The strategic goals outlinedin the plan reflect the University’s mission and vision and are vital to NMSU’s success. These includeadvancing student success; elevating research and creativity; amplifying extension and outreach; andbuilding a robust NMSU System. Within this plan, the NMSU System is to engage in action items todiversify, optimize, and increase NMSU System-wide enrollment. The strategic goals are designed to bebroad enough for each unit within the university system to find a way to contribute. Additionally, theUniversity will focus on a number of grand challenges facing the state and communities around the globe.These include creating healthy borders, modernizing critical infrastructure, and transforming education inNew Mexico.

Embodied in the strategic plan are the values of leadership, excellence, access, diversity andinclusion, and student-centered (LEADS). These values are encapsulated as: BE BOLD. Shape the future.A collective community of tremendously talented faculty, staff and students are empowered to create afuture for NMSU that benefits from our unique geography, cultures, and knowledge.

Faculty

For the 2018-2019 academic year, the University’s main campus had a distinguished faculty of624, of whom 70 percent have tenure. Approximately 515 faculty members hold doctorate degrees in theirrespective fields of study.

The University continues to build inter-disciplinary research teams and provide faculty incentivesfor engaging and cultivating research generated from these teams.

Employees

As of September 2019, the University employed approximately 3,496 regular and temporary full-time and part-time staff and faculty, excluding student assistants. Of these employees, 665 are members ofthe American Federation of State, County and Municipal Employees collective bargaining union, whichrecently extended its collective bargaining agreement with the University through June 30, 2022.

A-8

Land, Buildings and Improvements

The University’s campuses in Las Cruces, New Mexico encompass approximately 3,500 acres andconsist of more than 200 academic, research and auxiliary buildings and more than 400 individual stand-alone housing buildings, individual apartments and group complexes. The library general holdings containsin excess of 1,839,200 volumes of books (including government documents); 1,494,052 volumes ofmicroforms; and 17,838 of audio/visual units. The value of the University’s plant (including branchcampuses) for the past five fiscal years ended June 30 was as follows:

YearLand and

Improvements BuildingsEquipment andFurnishings(1)

LibraryBooks

Constructionin Progress(2) Total (3)

2019(4) $97,171,784 $786,594,082 $130,754,221 $92,216,727 $39,540,446 $1,146,277,260

2018 96,389,352 772,848,615 128,917,094 88,960,312 15,995,430 1,103,110,803

2017 93,838,772 761,856,800 143,082,291 85,833,188 12,267,687 1,096,878,738

2016 90,917,139 738,367,241 140,759,674 82,618,969 16,951,174 1,069,614,197

2015 87,838,836 697,528,475 140,354,682 79,509,070 35,997,464 1,041,228,528

(1) Includes Software. In 2018, NMSU removed from its detail of equipment those items having an original cost under $5,000. The cost of

this equipment totaled $13.7 million, with a net book value of $31,647.(2) Includes Software Implementation in Progress.(3) All assets are valued at cost or acquisition value, if donated, as of the date of acquisition.(4) Unaudited.

Admissions

The following table summarizes undergraduate applications, admissions and actual enrollments forthe University’s main campus for the fall semesters of the last five academic years:

Admissions (1)

Fall ApplicationsAccepted forAdmission (2) Enrolled (3)

2019 13,457 7,409 2,7442018 11,235 7,275 2,8022017 9,725 6,202 2,5712016 10,490 6,635 2,4272015 9,176 5,979 2,653

____________________(1) Each column includes all new degree-seeking undergraduate admissions’ categories (new and transfer).(2) In the current academic year, the University accepted approximately 55% of the applicants who applied as entering Freshmen.(3) Approximately 76% of the University’s undergraduate students are from the State of New Mexico (8,847). The remainingstudents are from 41 other states (including DC), and two U.S. Territories (<1%), and from 40 foreign countries (2.5%).

A-9

Enrollment

The following table, based on fall semester registration, sets forth full-time enrollments,part-time enrollments and full-time equivalent enrollments for the University for the last fiveacademic years:

Main Campus–Head Count (1) Total All CampusesUndergraduate Graduate Head

CountFull-Time

Equivalent (3)Fall FT (2) PT FT PT

2019 9,852 1,810 1,360 1,257 24,024 18,2762018 9,814 1,793 1,426 1,256 24,010 18,4262017 9,808 1,818 1,478 1,328 24,580 18,7692016 9,992 1,941 1,507 1,412 25,312 19,2422015 10,557 1,888 1,567 1,478 25,951 19,687

____________________(1) Post-baccalaureate students are reported with the graduate students.(2) Full-Time/Part-Time status is based on all hours enrolled in the NMSU system.(3) Full-Time Equivalent equals the total number of credit hours divided by 15 hours for undergraduate students and 12 hoursfor graduate students.

See “LEADS 2025” for a description of the University’s plan to enhance and increase enrollment.Additionally, the University engaged a consultant to assist in recruitment, enrollment and retentionefforts.

Beginning Freshman Class Profile

The following table sets forth the average American College Test (“ACT”) composite score of thebeginning undergraduate freshman class of the University for the past five fall semesters:

Fall 2019 Fall 2018 Fall 2017 Fall 2016 Fall 2015

ACT Composite Score 20.7 20.5 20.9 21.0 20.9

Admission Criteria

The University requires that freshman applicants graduate from any high school oracademy in the United States accredited by a regional accrediting association or approved by aState department of education or State universities. They must also meet the following standardsfor admission:

Freshman Admission Requirements

The following high school unit requirements became effective with the class of 2017:

English 4 units*

Mathematics 4 units**

Science 3 units (2 w/lab)Foreign languages or fine arts 1 unit

*Must include at least 2 units of writing-intensive courses, one of which must be a junior or

A-10

senior-level course.**From Algebra 1, Geometry, Algebra 2, and one additional math course.

Students meeting the minimum high school course requirements listed above, must meetone of the following criteria below in order to be admissible:

Cumulative high school grade point average of at least 2.75 Ranked in the top 20 percent of their graduating class ACT composite score of 21 or SAT score of 1060

An applicant not meeting the admission requirements may also apply to participate in theAggie Pathway to the Baccalaureate program at any of the NMSU community colleges. AggiePathway students may transition to the Las Cruces campus after successful completion of 24credits, in addition to any required developmental courses, with a 2.5 cumulative college GPA.Additionally, a first-time freshman who does not meet the requirements can be offered admissionif the review of additional information indicates that the student would be successful at theUniversity. When reviewing the admissibility of these students, the University considers manyfactors, including high school GPA, test scores, dual-credit coursework, leadership experience,community involvement and other accomplishments. Applicants may be asked for academic lettersof recommendation in support of their application as well.

Tuition and Fees

The University meets the costs of its educational programs primarily through tuition, feesand State appropriations. The following table sets forth the base tuition and fees charged eachsemester to undergraduate full-time and part-time students on the basis of residency, 135 Mile Ruleand non-residency for five years:

Full-Time StudentSemester Rate

Part-Time StudentHourly Rate(3)

New Mexico 135 Non- New Mexico 135 Non-

Residents Mile Rule(1) Residents(2) Residents Mile Rule(1) Residents(2)

2019-20 $3,543.60 $3,836.40 $11,538.00 $295.30 $319.70 $961.50

2018-19 3,343.20 3,619.20 10,885.20 278.6 301.6 907.1

2017-18 3,230.40 3,496.80 10,510.80 269.2 291.4 875.9

2016-17 3,046.80 3,295.20 9,825.60 253.9 274.6 818.8

2015-16 3,046.80 3,236.40 9,825.60 253.9 269.7 818.8

(1)Texas residents living within 135 miles of the main campus are required to pay a slightly higher price for tuition and

fees than resident students. For reporting purposes they are classified as non-residents.(2) Rate applies to non-resident students registered for 7-14 credit hours. Non-resident students enrolling in six or fewer

credits will pay 1.25 times the resident tuition rate per credit hour.(3) Hourly rates for 1-14 credit hours. Flat rate assessed for 15 credits hours and above.

A-11

Tuition & Fees for 2018-19 Compared with Peer InstitutionsUndergraduate Rates for Academic Year

Institution Resident Non-Resident

University of Arizona – Tucson $12,467 $36,366Colorado State University – Fort Collins 11,707 29,608Washington State University – Pullman 11,484 25,820Oregon State University – Corvallis 11,166 30,141Kansas State University – Manhattan 10,383 25,887Texas Tech University – Lubbock 9,080 19,040Oklahoma State University – Stillwater 9,019 24,539Iowa State University – Ames 8,988 23,932University of Nevada – Reno 7,599 22,236The University of Texas – El Paso 8,198 22,629University of Idaho – Moscow 7,864 25,500University of New Mexico – Albuquerque 7,633 22,586Utah State University – Logan 8,138 22,316Montana State University – Bozeman 7,277 24,993New Mexico State University 6,686 21,770University of Wyoming – Laramie 5,400 17,490

Peer Average without NMSU 9,094 24,872

NMSU as % of Peer Average 73.5% 87.5%

Source: Integrated Post-secondary Education Data System (IPEDS)

Financial Aid

In the 2018-2019 academic year, approximately 68.09% of the students in the University systemreceived some form of financial aid in the aggregate amount of $136,214,325. Of this amount $44,193,463was provided in the form of scholarships, $44,408,056 was provided in the form of grants, $46,038,841in the form of loans, $1,573,965 in the form of work-study, graduate fellowships and other aid. Studentemployees not receiving work-study awards and students receiving in-state tuition waivers are notincluded in these counts.

There can be no assurance that financial aid will be available at the same levels in the future andany change in the availability of such aid may affect the University’s enrollment.

The New Mexico Lottery was established in 1996 and currently receives 100 percent of the netproceeds from lottery sales. Lottery Tuition Scholarships are made available to New Mexico residentsgraduating from a New Mexico high school or receiving a New Mexico GED who enroll in a New Mexicopublic college or university. In the 2017 Legislative session, Senate Bill 420 which was passed and signedby the Governor granted students a 16-month grace period to qualify for the Legislative Lottery TuitionScholarship. If a lottery tuition scholarship recipient maintains a 2.5 GPA and meets other criteria, thescholarship may continue for up to seven consecutive semesters. The scholarship award amount isdetermined by the Higher Education Department on an annual basis based on the expected level ofscholarship funding for the upcoming academic year. For academic year 2018-2019, the lotteryscholarship amount for University students (main campus) was equal to 77% of tuition only. A total of4,792 unduplicated students at the University received lottery tuition scholarships during FY19.

A-12

Number of Lottery Scholarship Recipients and Total Amounts Received2018-2019 Academic Year

Students Total Amount

NMSU Main Campus 3,731 $12,681,987Alamogordo Branch 86 60,580Carlsbad Branch 81 51,981Doña Ana Branch 846 618,310Grants Branch 48 26,458

Student Housing and Board Plans

The University seeks to improve its position in the higher education market through enhancedacademic programs, strengthened admission requirements, and improved graduation rates. As part of thisstrategic plan focused on student success, the Regents approved a first year residency requirement forfreshmen effective Fall 2017. The requirement offers exemptions to first year students living in a structuredfamily environment, as well as other exemptions. As part of the residency requirement, the University hasfocused on enhancing residential life to support first year students and identified facility improvements.The First Year Residential Experience is designed to assist first year students successfully transition to theUniversity and develop meaningful experiences with faculty and students by providing:

Staffing for enhanced residential experience

Living Learning Communities (LLCs)

Faculty in Residence

Faculty Fellows

Teaching courses in residence halls

The recent improvement projects support the strategic goals of student success which allowed forthe construction of a new residence hall and several renovations within the existing campus housingportfolio to better meet the programmatic facility needs for students. See “Occupancy Statistics” hereinfor further information regarding the percentage of students occupying these housing facilities.

Effective Fall 2019 the University has four traditional residence halls and three apartment facilitiesthat provide housing for single student occupancy. The University also maintains 332 units available forstudents with families. The University’s demand for housing is affected by the availability and cost of offcampus rental facilities as well as housing facilities provided by the University’s social fraternities andsororities. Students electing to live in residence halls and apartment units designed for single studentoccupancy are required to sign a University housing agreement for one academic year. Prior to January 1,2016 student family housing leases were month-to-month; effective January 1, 2016, students may chooseeither a 6, 9 or 12 month lease term.

Student family housing remains open during the summer. Some of the single student housing areasare operated in the summer in connection with regular academic and special programs sponsored by theUniversity. The other housing areas are utilized intermittently during the summer by specially arrangedinstitutes, workshops and conventions. Currently all of campus housing is operated and maintained solelyby the University. The dates of construction and capacity of the housing facilities are as follows:

A-13

Residence Halls, Student Apartments and Student Family Housing

Facility Year Built

Year ofMajor

RenovationResidenceHalls Beds

Single StudentsApartments

Beds*

StudentFamily

HousingUnits*Juniper 2019 301

Pinon Hall 2006 307

Garcia Hall 1967 2000 884

Rhodes/Garrett/Hamiel1941, '42,'55

1990,2019 262

Chamisa 2007, 2012 2019 615

Vista delMonte/Cervantes 1983 - 1995 2019 608 37

Tom Fort Village 1959 101Sutherland Village 1958 194

1,754 1,223 332*Bed and Unit counts reflect current year configuration for Fall 2019

The majority of University dining facilities are managed by Sodexo America, LLC. Participationin a meal plan offered through Sodexo is required for all residence hall students and optional for all otherstudents, of which the University experienced an increase in participation due to the first year residencyrequirement.

The semester contract rate for room and board may be paid in full at the beginning of a semesteror on an installment basis throughout the semester. Student family housing rent is payable in advance on amonthly basis.

A-14

Single Student Housing Charges (1)

Group Housing(2) Juniper Hall(4) Rhodes / Garrett / Hamiel (3)

Academic Double Single Double Double Double Single

Year Occupancy Occupancy Occupancy Occupancy as Single Occupancy

Occupancy

2019-20 n/a n/a $2,000 $2,000 $3,200 $3,200

2018-19 n/a n/a n/a 1,950 3,120 3,120

2017-18 n/a n/a n/a 1,850 2,960 2,960

2016-17 $1,506 $2,177 n/a 1,823 2,917 2,248

2015-16 1,434 2,074 n/a 1,737 2,779 2,141

Garcia Hall Pinon Chamisa

Academic Double Single Double Four Two One

Year Occupancy Occupancy Occupancy Bedroom Bedroom Bedroom

2019-20 $2,250 $3,038 $2,675 $2,950 $3,375 $3,813

2018-19 2,200 2,970 2,600 2,875 3,275 3,700

2017-18 2,200 2,970 2,500 2,800 3,200 3,600

2016-17 2,144 3,431 2,386 2,710 3,096 3,484

2015-16 2,042 3,267 2,272 2,581 2,949 3,318

Vista del Monte Cervantes

Academic Two Four Two Efficiency

Year Bedroom Bedroom Bedroom

2019-20 $2,575 $2,160 $2,160 $2,575

2018-19 2,500 2,115 2,115 2,500

2017-18 2,250 2,070 2,070 2,430

2016-17 2,504 2,212 2,342 2,418

2015-16 2,385 2,107 2,231 2,303

(1) All rates are semester rates for single student occupancy.(2) Group Housing (Greek West and Greek East) is no longer occupied. Greek students housing has moved to Cervantes Two

and Four Bedroom.(3) Rhodes/Garrett/Hamiel doubles and singles above reflect community bath rates. Suite bath rates are $1,500 for

triples, 2,250 for doubles and $3,600 for singles.(4) Juniper Hall was brought online fall 2019

A-15

Student Family Housing Charges (1)

Academic Two Four GraduateYear Bedroom Bedroom Student

Community(2)

2019-20 $695 $925 n/a

2018-19 695 925 n/a2017-18 680 899 n/a

2016-17 662 899 n/a2015-16 630 856 $8622014-15 630 856 862

(1) All rates are monthly.(2) Monthly rates for graduate students are no longer being offered effective Fall semester 2016.

Occupancy Statistics (1)

AcademicSingle Student

Housing

StudentApartments

Student FamilyHousing

Group StudentHousing (2)

Year Fall Spring Fall Spring Fall Spring Fall Spring

2018-19 98.8% 93.3% 93.9% 78.2% 42.7% 42.7% n/a n/a2017-18 97.5 84.2 93.6 87.7 67.2 56.1 n/a n/a

2016-17 79.6 72.2 83.4 75.0 44.9 45.1 46.6 56.62015-16 86.5 72.4 86.1 77.4 66.5 51.1 40.6 68.32014-15 91.1 76.0 92.7 90.0 73.4 71.0 61.4 67.9

(1) Occupancy statistics reflect full occupancy for rooms with double-occupancy configuration rented at a higher single-

student rate.(2) Group Housing includes eight houses through Fall 2015. Group Student Rate not offered beginning Fall 2017.

In Fall 2018, on-campus housing was at 91% overall occupancy. The University contracted withBrailsford and Dunlavey (B&D) in 2015 to update the Housing Master Plan and perform a Residential LifeAnalysis. Supported by the plan recommendations, the University identified housing facility changesincluding the new residence hall, renovations and reconfigurations to better meet the needs of students andalign demand with capacity. Cole Village and group housing (Greek East and Greek West) have been takenoff-line effective Fall 2017.

Approximately 18% of the University’s undergraduate and graduate students live in Universityhousing. The average charge per student for a double room and meal plan for the 2019-2020 academic yearwas $9,538 (Fall and Spring semesters). During April 2017, the Regents approved a four-year, tiered rentalrate structure phasing the rate growth over a stabilization period necessary to support operations whileavoiding drastic rate adjustments in a single year.

Bookstore

On December 1, 2008 the University contracted with Barnes & Noble College Booksellers, Inc. tomanage and operate all campus bookstores. Barnes & Noble primarily sells textbooks and other educationrelated merchandise to the University students, faculty and staff. The bookstore also sells school and officesupplies, trade books, computer products, insignia clothing, souvenirs, gifts and convenience items toUniversity departments, students and the general public. The main campus store includes a Barnes & Noblecafé as well. Barnes & Noble operates physical stores at the Dona Ana and Carlsbad Community Colleges

A-16

and provides a virtual store for the Alamogordo and Grants Community College. Revenues from theseoperations for the University’s fiscal year ended June 30, 2019 comprise commissions paid to the Universityon sales for the Las Cruces Campus $576,867, Dona Ana Community College $146,773, AlamogordoCommunity College $26,270 and Carlsbad Community College $49,950.

Food Services

The University’s Las Cruces campus contracted with Sodexo America, LLC in fiscal year 2012 tostaff and operate the majority of its dining facilities which includes fast food, specialty food, student diningfacility, concessions and catering functions. Sodexo hires and pays all of its own employees, which includesUniversity students. Gross revenues received from Sodexo for the Las Cruces campus food services for thefiscal year ended June 30, 2019 were $1,606,572.

Aggie Health and Wellness Center

The Aggie Health & Wellness Center (the “Center”) is a comprehensive integrated health carefacility providing medical, laboratory, pharmacy, diagnostic X-ray, and mental health counseling servicesto University students. The Center is nationally accredited by the AAAHC, and the APA for excellence inmedical, counseling, and training opportunities for students. The Center also provides the campus withhealth education programming through WAVE (Wellness, Alcohol, Violence, Education) which utilizes apeer education approach to harm reduction, healthy lifestyles, and physical and mental health wellness. TheCenter provides practicum education and work experiences to students in the fields of nursing, pharmacy,counseling, and kinesiology. The Center is an integral component to the health and wellness services oncampus that also include recreational sports, outdoor recreation, aquatic, and fitness programming, classes,and activities for students.

FINANCIAL INFORMATION CONCERNING THE UNIVERSITY

The operating revenues for the University are derived from appropriations made to the Universityby the state, federal and local governments, sales and services of auxiliary operations, tuition and fees, self-funded activities, federal, state and local government grants and contracts, private gifts, grants and contractsand other miscellaneous sources.

Budget Process

The University operates on an annual budget with a fiscal year beginning on July 1. However,the budget and resource allocation process is a multi-year activity, which assures that funding from allsources is continuously consistent with long-range policies, programmatic goals and specific campusroles and objectives of the University. The budget process is based on criteria established by the HED forthe purpose of ensuring consistency in the development and reporting of budget information among Stateinstitutions of higher education.

Per HED requirements, the University submitted the FY2020 operating budget to the HED on May1, 2019 and received subsequent approval from the Board of Regents on May 10, 2019.

In general, the University prepares the following types of budgets: (a) unrestricted current fundsbudgets; (b) restricted current funds budgets; and (c) capital construction budgets supported by State capitalconstruction appropriations and University funds. Unrestricted current funds budgets are funded by Stateappropriations, tuition, sales, and other sources. Restricted current funds budgets are funded by federal,private, and state grants and contracts, and other sources. The State appropriated operating budgets includeappropriations for instruction and related support, certain research activities, libraries, and other items. Non-appropriated operating activities include sponsored programs paid for by federal, State, and private grantsand contracts, student financial assistance, and certain self-funding and auxiliary enterprises, includinghousing and food services.

A-17

Operating budgets are submitted annually for approval to the Regents, HED, and the New MexicoDepartment of Finance and Administration - State Budget Division (“DFA”). These State agencies developconsolidated funding recommendations for all higher education institutions which are considered forappropriation during the annual legislative sessions. In accordance with State legislation, unexpended Stateappropriations to the University generally do not revert at the end of each fiscal year. All state appropriationsare accounted for separately in the accounting system.

The legal level of budgetary control is at the fund type and functional level, in accordance withNew Mexico Annotated Code Section 5.3.4.10. A budget compliance finding was indicated for fiscal year2018 where the budget authority was exceeded in relation to the retirement of indebtedness budget line itemin accordance with the state audit rule. There were no violations in fiscal years 2017 and 2016. The modifiedaccrual basis of accounting is used for budgetary comparison. If expenditures by budgetary control line bycampus are expected to exceed the approved budget, the University is required to submit a budgetadjustment request for approval by the Regents to the HED which is subsequently forwarded to the DFA.

For budgetary purposes only, resources for various purposes are classified for accounting andreporting purposes into funds that are in accordance with specified activities or objectives. Separateaccounts are maintained for each fund; however, funds that have similar characteristics have been combinedinto fund groups. Within each fund group, fund balances restricted by outside sources are so indicated andare distinguished from unrestricted funds allocated to specific purposes by action of the governing board.Accordingly, all financial transactions are initially recorded in one of the following fund groups:

(a) Current Funds—Unrestricted. Use of funds is controlled by the Regents forspecific operating purposes.

(b) Current Funds—Restricted. Resources restricted by an external entity to a specificcurrent operating institutional purpose are recorded in this fund group.

(c) Loan Funds. Resources which are available to lend to students and student loansoutstanding.

(d) Endowment and Similar Funds. Endowment funds are subject to the restrictions ofgift instruments requiring in perpetuity that the principal be invested and only theincome be utilized. While quasi-endowment funds have been established by theRegents for the same purposes as endowment funds, any portion of quasi-endowment funds may be expended.

(e) Plant Funds. Four separate fund subgroups make up the fund group Plant funds.These subgroups are described below:

(i) Unexpended Plant Funds account for unexpended resources received fromvarious sources to finance the acquisition or construction of plant assets.

(ii) Renewal and Replacement Funds are used to record resources accumulatedand expended to renew or replace plant assets.

(iii) Retirement of Indebtedness Funds account for the resources accumulatedto retire University debt incurred for the acquisition or construction ofplant assets.

(iv) Investment in Plant Funds include the University’s investment in plantassets, construction in progress, the associated liabilities and other non-current liabilities.

A-18

(f) Agency Funds are resources held by the University in a custodial or agencycapacity.

The HED conducts special verifications of the institutions of higher education. The verificationsinclude enrollments, fund balances, compliance with legislation, comparison of expenditures to budgets andother areas to be determined by the HED. Reports on the verifications are made annually to the DFA andthe Legislative Finance Committee. The HED considers the verification findings in making its annualrecommendations to the executive and legislature for higher education funding.

Leases

The University has acquired various types of equipment under capital lease agreements. As of June30, 2018, the carrying value of the equipment was $956,350 and the present value of the net minimum leasepayments related to the assets was $512,077. Total future minimum payments required under such capitalleases were $546,323 as of June 30, 2018.

Obligations Outstanding

The Regents may not issue general obligation indebtedness, although the Regents may issuerevenue bonds payable from revenues pledged on behalf of the University. Revenues have historically beensufficient to meet such obligations. The following table contains a schedule of the Outstanding Bondspayable from Pledged Revenues as of June 30, 2019.

Schedule of Outstanding Obligations PayableFrom the University’s Pledged Revenues as of June 30, 2019

Name of Issue Issue DateOriginal

Issue SizeAmount

Outstanding

Refunding and Improvement RevenueBonds, Series 2010B-D February 3, 2010 $78,670,000 $43,990,000

Refunding and Improvement Revenue Bonds,Series 2013A-B April 17, 2013 56,200,000 21,180,000

Subordinate Lien Improvement RevenueNote, Series 2014 April 21, 2014 15,865,000 11,285,000

Refunding and Improvement Revenue Bonds,Series 2017A-C July 13, 2017 73,240,000 70,670,000

$223,975,000 $147,125,000

A-19

Annual Aggregate Debt Service Requirements for Outstanding Bonds

Payable From the University’s Pledged Revenues as of June 30, 2019(2)

FYE June 30 Principal Interest(1) Total

2020 $7,075,000 $6,572,799 $13,647,799

2021 9,165,000 6,256,308 15,421,308

2022 9,180,000 5,827,102 15,007,102

2023 9,175,000 5,383,314 14,558,314

2024 8,615,000 4,927,817 13,542,817

2025 8,965,000 4,498,523 13,463,523

2026 8,450,000 4,050,670 12,500,670

2027 8,120,000 3,614,558 11,734,558

2028 8,465,000 3,191,749 11,656,749

2029 8,825,000 2,748,026 11,573,026

2030 9,210,000 2,283,607 11,493,607

2031 4,475,000 1,797,540 6,272,540

2032 4,670,000 1,603,203 6,273,203

2033 4,870,000 1,407,388 6,277,388

2034 3,955,000 1,201,300 5,156,300

2035 4,135,000 1,025,583 5,160,583

2036 4,315,000 841,790 5,156,790

2037 4,510,000 649,870 5,159,870

2038 1,750,000 483,250 2,233,250

2039 1,835,000 395,750 2,230,750

2040 1,930,000 304,000 2,234,000

2041 2,025,000 207,500 2,232,500

2042 2,125,000 106,250 2,231,250

TOTAL $135,840,000 $59,377,897 $195,217,897

(1) Represents gross debt service and is not net of the Federal Direct Payments expected to be received with respectto the University’s outstanding debt obligations with a tax credit component.(2) Includes the Refunded Bonds and excludes the Series 2019 Bonds.

State Appropriations

Appropriations for areas outside of Instruction and General are provided through a line-itembudgeting process. For the University, these items include several significant research and public serviceprograms related to the University’s role as a land grant institution. The University administration presentsa prioritized set of proposals in these areas to the Regents for their consideration and approval. Theproposals endorsed by the Regents are submitted to the HED, which then provides its recommendations tothe legislative and executive branch fiscal offices.

Final appropriation decisions for both instruction and general funding and special line-itemprograms are normally made during the State’s annual legislative sessions. A significant amount of theUniversity’s current funds revenue is derived from State Appropriations. Such appropriations are notpledged to the repayment of indebtedness of the University or the Regents of the University. The State isnot obligated to provide a specific level of appropriation, if any, in any year. The annual appropriation is

A-20

distributed to the University in monthly installments. Additional line item appropriations were distributedwith a single payment to the University for fiscal year 2019.

The following table sets forth five years of State appropriations for the fiscal years ended June 30th

as indicated.

State Appropriations Total

FiscalYear

Instructionand General Other Total

CurrentUnrestricted

Revenues

State Appropriationsas a % of CurrentUnrestricted Revenues

2019 $151,373,875 $48,554,825 $199,928,700 $398,677,247 50.2%

2018 147,070,207 43,823,549 190,893,756 375,737,833 50.8

2017 148,746,312 44,768,688 193,515,000 375,185,575 51.6

2016 159,530,401 48,038,187 207,568,588 393,923,458 52.7

2015 158,953,384 47,840,805 206,794,190 397,164,942 52.1

In addition to the appropriations for operations listed above, the State has provided the University,through the sale of General Obligation and Severance Tax Bonds and other capital appropriations, fundingfor the capital outlay projects listed below for years 2015 through 2019. The dates listed indicate the yearthe State approved the funding and not the year that the funds were available for expenditures.

Capital Outlay Projects Funded by the Legislature

2019 $30,338,297

2018 31,770,000

2017 -0-

2016 27,695,000

2015 5,920,624

Total $95,723,921

The following list outlines the capital requests for the New Mexico State University system,including NM Department of Agriculture, as approved by the Board of Regents in May 2019 and reviewedduring the capital outlay process with the state. As a result of the annual NM Higher Education DepartmentSummer Hearings process, the Five Year Capital Project Funding plans were revised and resubmitted. Therequests for the NMSU system are incorporated in the Infrastructure Capital Improvement Plan (ICIP)prioritized planning report completed on-line. NMDA was included in the presentations to HED and theICIP Agency Certification signed by the Chancellor and Chair of the Board of Regents. HED will makerecommendations to the Department of Finance Administration (DFA) and the Legislative FinanceCommittee (LFC). DFA will prioritize the requests for the Governor. In November 2019, the requests areconsolidated into a capital outlay funding request on behalf of all New Mexico higher education institutions.The Capital Outlay Committee meets in January 2020. During the Legislature session (short session,General Obligation Bonds), the legislators will review, and the supported projects will be part of theElection on the ballot for the GOB in November 2020. There can be no assurance that any or all of thefunding requests will be granted by the State legislature or supported by the voters.

A-21

2020-2021 Capital Outlay Requests

Las Cruces Campus Agricultural Modernization and Educational Facilities

Phase 2 w/ open multidisciplinary labs Milton Hall Data Center Infrastructure Upgrades and replacement Ag Science Center Improvements per assessment Athletics facilities: ADA improvements; roof replacement; stadium lighting

and press box; and stadium directors suite

New Mexico Department of Agriculture Building Renovations, staging, moving and furnishings Phase 2

Alamogordo Campus Physical Plant Renovations (no roof, no new SF) Mechanical ductwork and boiler feed lines Classroom Building

Carlsbad Campus Site, parking, and infrastructure improvements Art and Music Rooms Renovation

Dona Ana Campus Creative Campus Media Building Safe Campus Improvements and Infrastructure (Bldg, System, IT)

Upgrades and Replacements

Grants Campus Martinez Hall Renovations, including Exterior Stucco Martinez Hall Roof Replacement

$25,000,000

3,991,0003,000,0001,760,000

$2,000,000

$900,000500,000

$1,500,000500,000

$1,500,0001,450,000

$1,800,0001,200,000

Tuition and Fees

Another major source of revenue to the University is student tuition and fees. The Regents establishtuition rates and fees. See “Tuition and Fees” as previously discussed. Revenue from tuition and feesconstituted the following approximate percentages of total current unrestricted revenues for the fivepreceding fiscal years ended June 30:

2019 28.58%

2018 28.91%

2017 28.59%

2016 28.29%

2015 28.57%

See “INVESTMENT CONSIDERATIONS – New Mexico Opportunity Scholarship” herein for adiscussion related to the legislative proposal for free tuition for State residents.

Auxiliary and Self-Funded Activities

A-22

The University operates various auxiliary enterprises that serve the student population. Amongthese enterprises are student housing, dining halls, student center, student health center, athletics, recreationfacilities and organized student activities. Revenue from such enterprises includes dormitory and otherfacility rentals, food and book sales, student fees and other miscellaneous items.

Other Sources of Funds/Reporting

Other sources of revenue include interest income, earnings on investments of the University, salesand services of the educational departments, endowment, land and permanent fund income, indirect costrecovery, sale of assets and public service fees.

Effective July 1, 2016, the State of New Mexico (State) changed its policy regarding thepresentation of the Land Grant Permanent Fund (LGPF) within State’s Comprehensive Annual FinancialReport (CAFR). The State’s institutions of higher education have a beneficial interest in the LGPF.Previously, the State presented the University’s LGPF beneficial interest as an asset in the educationalinstitution enterprise fund. Consistent with this presentation, the University recorded its LGPF beneficialinterest as an asset in its stand-alone financial statements. The presentation of the LGPF as an asset in theeducational institution enterprise fund and as an asset on the University’s stand-alone financial statementsis an acceptable presentation in accordance with U.S. generally accepted accounting principles (GAAP).However, with the adoption of the State’s new policy on July 1, 2016, the University’s beneficial interestin the LGPF will now be presented within a special revenue fund in the State CAFR and will no longer bepresented in the educational institution enterprise fund. GAAP requires consistency between the StateCAFR presentation and the presentation in the University’s stand-alone financial statements. As a result,this change in policy will no longer permit institutions of higher education to record their respectivebeneficial interests in the LGPF as an asset within their stand-alone financial statements. Accordingly, theUniversity has removed its respective beneficial interest in the LGPF as of July 1, 2016. The Universitywill continue to receive and report income from their proportional share of the assets.

The New Mexico Land Grant Permanent Fund was established by the Congress and made the lawof New Mexico by its reference in the New Mexico Constitution, which specifies the beneficiaries thereof.The University’s proportional share, consisting of approximately 0.37% of the $18.1 billion corpus as ofApril 1, 2019, is not subject to legislative appropriation or reduction, nor are they shared with otherinstitutions.

Although not pledged to the payment of Bonds, the endowment funds managed by the New MexicoState University Foundation, Inc. (“Foundation”) had a value of $181.9 million at June 30, 2019 includingboth the University endowment funds of $44.6 million and the Foundation endowment funds of $137.3million. In the event of dissolution of the Foundation, all assets pass to the University. The endowmentfunds are invested by the Foundation under a revocable trust agreement between the two entities.

The University is almost 94% through a capital campaign effort to raise $125 million. The publicportion of the campaign began April 28, 2017; as of September 2, 2019, 94% or $117 million had beenraised.

Retirement Programs and Pension Liability

The University offers three retirement programs. All eligible employees working more than 25%full-time equivalent are required to participate in either the public employee retirement system authorizedunder the Educational Retirement Act or the Alternative Retirement Program established by the State ofNew Mexico. Student employees do not participate in these plans. For additional information regarding theretirement programs and pension liabilities, please refer to the notes attached to the audited financialstatements of the University. Changes in legislation, actuarial assumptions, and investment assumptionsmay impact future pension fund liabilities of the University.

A-23

Revenues and Expenses for Fiscal Years 2014 through 2018The following schedule presents the University’s Statements of Revenues, Expenses, and Changes

in Net Position for the years ended June 30, 2014 through 2018.New Mexico State University

Statements of Revenues, Expenses, and Changes in Net PositionFor the Years Ended June 30,

2018 2017 2016 2015 2014

REVENUES

Operating Revenues:Student Tuition and Fees (Gross) $108,816,066 $107,477,271 $111,641,792 $113,694,414 $113,342,683Less: Scholarship Allowances (42,295,668) (40,352,088 (40,347,585) (41,290,643) (40,892,554)Student Tuition and Fees (Net) 66,520,398 67,125,183 71,294,207 72,403,771 72,450,129

Federal Appropriations, Grants and Contracts 82,542,027 89,478,461 90,637,831 106,972,461 108,974,862State Grants and Contracts 11,387,324 16,508,697 14,590,177 12,947,408 12,926,663Local Appropriations, Grants and Contracts 2,712,130 2,898,663 2,784,153 2,852,054 2,849,118Non-governmental Grants and Contracts 9,023,251 9,060,235 10,087,186 8,682,660 10,682,840Sales and Services 6,106,044 5,429,962 6,269,111 5,067,442 6,569,931Auxiliary Enterprises (Net of scholarship allow) 14,733,291 14,637,719 15,191,890 16,687,867 16,258,209Other Operating Revenues 14,872,592 16,566,675 15,538,726 14,333,950 15,245,273

Total Operating Revenues $207,897,057 $221,705,585 $226,393,281 $239,947,613 $245,957,025EXPENSES

Operating Expenses:Instruction $164,630,659 $147,433,569 $151,325,381 $149,097,948 $147,827,726Research 92,298,663 86,441,908 92,090,234 106,274,698 107,812,478Public Service 59,650,388 53,831,021 49,141,698 44,691,313 43,404,876Academic Support 30,182,089 27,494,971 29,133,346 28,392,918 26,764,580Student Services 19,623,830 15,372,147 16,851,902 16,482,314 18,102,595Institutional Support 37,007,447 31,711,240 32,780,883 33,307,526 31,100,622Operation & Maintenance of Plant 38,522,138 36,537,879 41,135,221 51,735,020 39,613,150Scholarships & Fellowships 27,490,837 29,942,054 29,997,863 33,738,190 38,912,214Auxiliary Enterprises 23,052,121 21,195,218 21,475,142 23,490,860 25,093,890Independent Operations 19,447,085 17,699,739 17,322,820 16,937,428 16,317,665Intercollegiate Athletics 20,450,904 17,947,564 18,640,460 17,651,165 16,726,036Student Social and Cultural 4,007,265 3,863,536 4,115,692 4,249,672 3,901,094Loan Administration 1,214,656 2,867,905 (347,703) (262,921) 49,770Depreciation 34,515,035 35,473,782 35,546,359 34,125,832 32,580,328

Total Operating Expenses $572,093,117 $527,812,533 $539,209,298 $559,911,963 $548,207,024Net Operating Income (Loss) ($364,196,060) ($306,106,948) ($312,816,017) ($319,964,350) ($302,249,999)NON-OPERATING REVENUES (EXPENSES)

State Appropriations $190,893,756 $193,515,000 $207,568,589 $206,794,189 $196,281,497Federal Pell Grants 41,162,544 39,587,298 40,989,904 44,817,564 48,374,401State Lottery Scholarship 9,983,665 15,641,172 16,197,814 17,687,420 18,949,314Local Tax Levy Revenue 14,440,619 12,941,281 12,465,269 12,552,912 11,683,868Gifts and Non-Exchange Grants 9,292,924 9,066,256 13,826,990 10,657,397 6,896,381Investment Income (Loss) 1,825,340 3,009,469 (707,953) 1,055,525 11,281,107Land lease and permanent fund revenue 4,321,577 3,110,115Building Fees 4,815,669 4,126,169 3,964,856 3,723,460 5,201,950(Loss) on Disposal of Plant (1,698,579) (405,298) (305,658) (1,009,093) (621,833)Gain on sale of land 2,455,510Gain (Loss) on Quasi Endowments 78,786 151,320 156,213 189,119 81,076Interest and Other (Expenses) on Capital Asset-Related Debt (6,457,869) (4,948,886 (5,218,715) (5,419,966) (5,187,328)Other Non-Operating Income (Expense) (651,669) 493,981 (130,419) (5,810,184) 2,810,680

Net Non-Operating Revenues (Expenses) 268,006,763 278,743,387 288,806,890 285,238,343 295,751,113Income (Loss) Before Other Revenues, Expenses, Gains or (Losses) (96,189,297) (27,363,561) (24,009,127) (34,726,007) (6,498,886)

Capital Appropriations 7,633,119 18,620,802 36,412,972 19,108,869 6,721,993Capital Grants, Gifts and Other Income 2,694,375 2,550,164 3,347,485 6,176,799 12,475,187Gain on Sale of LandGain (Loss) on Permanent Endowments 2,600,444 2,196,737 2,889,958 1,245,581 7,669,500

Increase/(Decrease) in Net Position (83,261,359) (3,995,858) 18,641,288 (8,194,758) 20,367,794NET POSITIONBeginning of Year $92,369,778 $158,825,979 $140,184,691 $148,379,449 $572,855,401Change in accounting principal(1) (101,073,969) (62,369,778)

End of Year $91,965,550 $92,369,778 $158,825,979 $140,184,691 $593,223,195

(1) In fiscal year 2018, the University Adopted GASB 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (“GASB 75”), whichresulted in a change in accounting principle and related reduction of Net Position. The University expects a negative net position for the fiscal year end 2019, primarily dueto the implementation of accounting guidance such as GASB 75. The University does not believe its financial performance will be impacted. In fiscal year 2017, the Stateof New Mexico changed its policy regarding the presentation of the Land Grant Permanent Fund, which required all beneficiaries of the fund to remove the balances of theirbeneficial interests so these can be reported within a special revenue fund in the State’s Comprehensive Annual Financial Report.

(2) Due to the University’s adoption of GASB Statement No. 68, Accounting and Reporting for Pensions. Adoption of GASB 68, as amended by GASB Statement No. 71 PensionTransition for Contributions Made Subsequent to the Measurement Date, requiring a prior period adjustment to report the effect of GASB 68 retroactively.

A-24

Historical Pledged Revenues

The following table shows the historical pledged revenues for the past five fiscal years.

2019(unaudited) 2018 2017 2016 2015

Total Revenues $615,598,274 $560,428,101 $589,563,855 $ 603,852,963 $605,247,091

Less Excluded Revenues

Federal Appropriations, Grants and Contracts $128,983,514 $123,704,571 $129,065,759 $131,627,735 $151,790,025

State Grants and Contracts 22,991,132 21,370,989 32,149,869 30,787,991 30,634,828

State Appropriations 199,928,700 190,893,756 193,515,000 207,568,589 206,794,189

Local Appropriations, Grants and Contracts 21,528,373 17,152,749 15,839,944 15,249,422 15,404,966

Non-Governmental, Grants and Contracts 7,514,905 9,023,251 9,060,235 10,087,186 8,682,660

Gifts and Non-Exchange Grants 11,643,583 9,292,924 9,066,256 13,826,990 10,657,397

Capital Grants, Gifts and Other Income 10,913,002 2,694,375 2,550,164 3,347,485 6,176,799

Capital Appropriations 22,482,681 7,633,119 18,620,802 36,412,972 19,108,869

Additions (Loss) to Permanent Endowment 401,789 2,679,230 2,348,057 3,046,171 1,434,700

Other Excluded Revenues 1,877,718 2,023,988 2,284,057 2,360,396 2,621,120

Total Excluded Revenues 428,265,397 386,468,952 414,500,911 $454,314,937 $453,305,553

Pledged Revenues $187,332,877 $173,959,149 $175,062,944 $149,538,026 $151,941,538

Historical Revenues and Operating and Maintenance Expenses of the University

Pledged Revenues and Revenues Available for Debt Service for each of the past five fiscal yearsended June 30 are set forth in the following table.

2019(unaudited)

2018 2017 2016 2015

Pledged Revenues $187,332,877 $173,959,149 $175,062,944 $149,538,026 $151,941,538

Operating Expenses ofAuxiliary Enterprises:

Housing $7,216,639 $7,186,215 $7,313,523 $7,243,627 $8,769,961Bookstore 286,945 402,171 527,530 678,489 838,835Dining Facilities 834,223 779,367 929,337 868,912 1,268,167Student Health Center 2,609,697 2,495,167 2,706,417 2,787,961 2,777,631Golf Course 2,014,917 1,919,104 1,906,689 1,905,565 1,923,722Aquatic Center 458,492 469,279 459,003 527,207 515,305Tennis Center 101,090 122,719 118,370 112,028 89,441Special Events 1,858,646 2,090,962 2,425,455 2,063,540 2,333,546Corbett Center 1,554,689 1,666,901 1,663,801 1,515,006 1,656,885Other 3,349,026 3,194,784 2,977,019 3,571,042 3,916,340Intercollegiate 15,470,874 14,351,603 14,073,932 14,264,201 13,764,894

Total OperatingExpenditures 35,755,238 34,678,272 35,101,076 35,537,578 37,854,727

Revenues Available ForDebt Service $151,577,639 $139,280,877 $139,961,868 $114,000,448 $114,086,811

A-25

The following table indicates the coverage of maximum annual debt service, based on an estimatedmaximum annual debt service requirement for the University’s Parity Bonds of $15,421,308 in fiscal year2020 by Pledged Revenues and by Revenues Available for Debt Service, defined to be Pledged Revenuesnet of operating and maintenance costs, for each of the past five fiscal years ended June 30.

Debt Service Coverage

2019 2018 2017 2016 2015

Coverage of Maximum AnnualDebt Service Requirement by Pledged Revenues

12.15x 11.28x 11.35x 9.70x 9.85x

Coverage of Maximum Annual Debt Service Required byRevenues Available for Debt Service

9.83x 9.03x 9.08x 7.39x 7.40x

The estimated maximum annual debt service requirement of $15,421,308 has never included theannual debt service requirement of any irrevocable junior and subordinate lien on the University’s PledgedRevenues.

The following table indicates the coverage of maximum annual debt service, based on an estimatedmaximum annual debt service requirement for the University’s Parity Bonds and the Subordinate Lien Noteof $16,753,746 in fiscal year 2020 by Pledged Revenues and by Revenues Available for Debt Service, foreach of the past five fiscal years ended June 30.

Debt Service Coverage

2019 2018 2017 2016 2015

Coverage of Maximum AnnualDebt Service Requirement by Pledged Revenues

11.18x 10.38x 10.45x 8.93x 9.07x

Coverage of Maximum Annual Debt Service Requirement byRevenues Available for Debt Service

9.05x 8.31x 8.35x 6.80x 6.81x

A-26

Insurance and Risk Management

The University is covered by the State’s self-funded insurance program. This program iscreated by State statute and is commonly known as the New Mexico Tort Claim Act, Sections 41-4-1et seq., NMSA 1978, as amended (the “Insurance Act”). The Insurance Act sets the limits of tort liabilityfor judgment actions against the University and other state agencies. These limits are currently:

Type of Coverage Limit of Liability/Coverage

Liabilitya) General Liability, Automobile Liability, Law

Enforcement and Civil Rights

Statutory Limit §41-4-19 NMSA 1978

Propertya) Auto Physical Damage

$550,000,000.00 LimitActual Cash Value (ACV)

Medical Malpractice Statutory Limit §41-4-19 NMSA 1978Workers Compensation Statutory Limit §52-1-1 et seq. NMSA 1978Fine Arts $300,000,000.00 Limit

Boiler and Machinery $100,000,000.00 Limit

The program is administered by the State of New Mexico General Services Department, RiskManagement Division. The program provides comprehensive property, workers’ compensation andliability coverage for all state agencies and institutions of higher learning at set limits per legislativeaction. Personal property and real property losses are compensated at replacement cost with a $2,500deductible per occurrence, unless due to theft, for which the deductible is $5,000 per occurrence or theaffected property is “fine arts” as defined by the Risk Management Division, for which the deductibleis $25,000.

New item on Applicable Deductible is Unmanned Aerial Systems (Drones) includingattachments. The Deductible is greater than 15% of Actual Cash Value or $2,500.00

B-1

APPENDIX B

NEW MEXICO STATE UNIVERSITY REPORT ON EXAMINATION OF COMBINEDFINANCIAL STATEMENTS AND ADDITIONAL INFORMATION FOR THE YEAR

ENDED JUNE 30, 2018

NMSU does not discriminate on the basis of age, ancestry, color, disability, gender identity, genetic information, nationalorigin, race religion, retaliation, serious medical condition, sex (including pregnancy), sexual orientation, spousalaffiliation, or protected veteran status in its programs and activities, including employment, admissions and educationalprograms and activities. Inquiries may be directed to the Executive Director of the Office of Institutional Equity, Title IXand Section 504 Coordinator, O'Loughlin House, 1130 E. University Avenue, Las Cruces, NM 88003; 575-646-3536;[email protected].

New Mexico State University For the Years Ended June 30, 2018 and 2017

Table of Contents

Financial Statements and SchedulesJune 30, 2018 and 2017

Official Roster................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1

Chancellor’s Letter (unaudited)................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2

Independent Auditors’ Report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3

Management’s Discussion and Analysis (unaudited)................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6

Basic Financial Statements

Statements of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................17Statements of Revenues, Expenses, and Changes in Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................19Statements of Cash Flow................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................21

Notes to the Financial Statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................23

Supplemental Schedules

Schedule 1 - Combining Statements of Net Position for the Years Ended June 30, 2018 and 2017for the Primary Institution................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................72

Schedule 2 - Combining Statements of Revenues, Expenses, and Changes in Net Position for theYears Ended June 30, 2018 and 2017................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................74

Schedule 3 - Budgetary Comparison Schedules for the Year Ended June 30, 2018................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................76Schedule 4 - Bank Balances, Pledged Collateral Requirements, and Pledged Collateral by Financial Institution - June 30, 2018 ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................80

Required Supplementary Information (unaudited)

Schedule 5- Schedule of Changes in Net Other Post-Employment Benefits liability and Related Ratios................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................82Schedule 6- Schedule of Proportionate Share of Net Pension Liability and Employer Contributions................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................83

Single Audit Information

Schedule 7- Schedule of Expenditures of Federal Awards................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................84

Report of Independent Auditors on Internal Control Over Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................94

Report of Independent Auditors on Compliance for Each Major Program and Report on Internal Control OverCompliance Required by the Uniform Guidance................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................96

Schedule of Findings and Questioned Costs................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................98

Summary Schedule of Prior Audit Findings................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................104

Exit Conference ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................105

New Mexico State University Official Roster For the Year Ended June 30, 2018

Board of Regents

Debra P. HicksChair

Kari Mitchell Jerean Camúñez HutchinsonVice Chair Secretary-Treasurer

Christopher Saucedo Margie Vela Member Member

Ex-Officio Members

Susana Martinez Barbara DamronGovernor Secretary of Higher Education

Advisory Members

Becky CorranFaculty Senate Chair

Monica Dunivan Emerson MorrowEmployee Council Chair President, ASNMSU

Executive Officers

Dan Arvizu John FlorosChancellor President

Andrew J. Burke Lizbeth G. EllisSenior Vice President for Chief Legal Affairs OfficerAdministration and Finance

Business Affairs Officials

D’Anne Stuart Norma NoelAssociate Vice President for University ControllerAdministration and Finance

Diane Madrid Kimberly RumfordInterim Business Services Officer Chief Budget Officer

Nancy Ritter Ross JustusBursar Associate Controller

Carolina Muñoz Tina HalesManager of Accounting and Director of Sponsored ProjectsFinancial Reporting Accounting

Kathy Agnew Pamela RoggowDirector of Purchasing and Director of Human ResourcesMaterials Management Operations

1

New Mexico State University Chancellor's Letter For the Year Ended June 30, 2018

�October 19, 2018

It is my pleasure to share the annual financial report of New Mexico State University (the University) for the fiscal years

(FYs) ended June 30, 2017 and 2018. I could not be more pleased nor inspired to be returning to my Alma Mater where I

have so many fond memories and where the foundation was laid for my professional journey. I come with a great deal of

Aggie pride and spirit.

The accompanying financial statements of the University are prepared in accordance with generally accepted accounting

principles established by the Governmental Accounting Standards Board. KPMG LLP, independent auditors, has

examined the financial statements, and their unmodified opinion is presented beginning on page 3 of the report. The

financial and physical resource management of the University is guided by its top-level priorities.

As a land-grant Hispanic serving institution, our top-level priorities are to improve student success, elevate research and

creativity and to amplify our outreach and economic development – a set of metrics will guide these priorities. As we

continue our sound fiscal management we will consider further efficiencies and productivity improvements as needed, and

additional structural or organizational changes to reallocate funds and continue to effectively utilize our extensive

resources. Our strategic intent is that we will be a student-centric university, known for excellence in scholarship and to be

a catalyst for economic development and place-based innovation.

Our Aggie pride and spirit is apparent all over our beautiful campuses as we continue to enhance the learning experiences

of students through world-class facilities. A new arts complex, Devasthali Hall and new 300 bed freshman residence hall

are under construction with planned openings for fall 2019.

New Mexico’s economic situation has changed significantly over the past year, the state appropriation for FY 2019

increased $2.5 million for operations and $2.9 million for compensation to allow for a 2% increase in faculty and staff

salaries. The outlook in the future is even more promising. In August 2018 the New Mexico Legislative Finance Committee

indicated favorable revenue projections for the state of New Mexico due to the oil and gas industry, projecting a $1.2 billion

increase in available funding for FY 2020.

I want to ensure stakeholders that we will properly prioritize, leverage our assets, and put us on a sustainable path to make

the NMSU System more efficient, effective, and the exemplar for others to follow nationally and globally. We will do so at

the highest levels of achievement, impacting lives in the communities we serve.

Sincerely,

Dan E. Arvizu, Ph.D.

Chancellor

2

KPMG�LLP�is�a�Delaware�limited�liability�partnership�and�the�U.S.�member�firm�of�the�KPMG�network�of�independent�member�firms�affiliated�with��KPMG�International�Cooperative�(�KPMG�International�),�a�Swiss�entity.�

KPMG�LLPTwo�Park�Square,�Suite�7006565�Americas�Parkway,�N.E.Albuquerque,�NM�87110�8179

Independent Auditors¶ Report

Board of Regents New Mexico State University andMr. Wayne Johnson, New Mexico State Auditor:

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities, and the discretely presented component unit of New Mexico State University (the University), as of and for the years ended June 30, 2018 and 2017, and the related notes to the financial statements, which collectively comprise the University¶s basic financial statements as listed in the table of contents.

Management¶s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors¶ Responsibility

Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors¶ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity¶s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity¶s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, and the discretely presented component unit of New Mexico State University, as of June 30, 2018 and 2017, and the respective changes in financial position, and where applicable, cash flows thereof for the years then ended in accordance with U.S. generally accepted accounting principles.

3

Emphasis of Matter

Adoption of New Accounting Standard

As discussed in Note 2 to the financial statements, effective July 1, 2017, the University adopted new accounting guidance Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter.

Only Presents Financial Information for the University

As discussed in Note 2, the financial statements of the University are intended to present the financial position, the changes in financial position and, where applicable, cash flows of only that portion of the business-type activities of the State of New Mexico that is attributable to the transactions of the University. They do not purport to, and do not, present fairly the financial position of the State of New Mexico as of June 30, 2018 and 2017, the changes in its financial position, or, where applicable, its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. Our opinions are not modified with respect to this matter.

Other Matters

Required Supplementary Information

U.S. generally accepted accounting principles require that the Management¶s Discussion and Analysis, the Schedule of Changes in Net Other Post-Employment Benefits liability and Related Ratios (schedule 5) and the Schedule of Proportionate Share of Net Pension Liability and Employer Contributions (schedule 6), as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management¶s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the University¶s basic financial statements. The accompanying Chancellor¶s Letter, Combining Statement of Net Position (schedule 1), Combining Statement of Revenues, Expenses, and Changes in Net Position (schedule 2) Budgetary Comparison Schedules (schedule 3), Bank Balances, Pledged Collateral Requirements, and Pledged Collateral by Financial Institution (schedule 4), and Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (schedule 7), are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The accompanying Combining Statement of Net Position (schedule 1), Combining Statement of Revenues, Expenses, and Changes in Net Position (schedule 2) Budgetary Comparison Schedules (schedule 3), Bank Balances, Pledged Collateral Requirements, and Pledged Collateral by Financial Institution (schedule 4), and Schedule of Expenditures of Federal Awards (schedule 7) are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such

4

information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining Statement of Net Position (schedule 1), Combining Statement of Revenues, Expenses, and Changes in Net Position (schedule 2) Budgetary Comparison Schedules (schedule 3), Bank Balances, Pledged Collateral Requirements, and Pledged Collateral by Financial Institution (schedule 4), and Schedule of Expenditures of Federal Awards (schedule 7) are fairly stated in all material respects in relation to the basic financial statements as a whole.

The Chancellor¶s Letter has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2018 on our consideration of the University¶s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University¶s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University¶s internal control over financial reporting and compliance.

Albuquerque, New Mexico December 12, 2018

5

New Mexico State University Management's Discussion and Analysis (unaudited) For the Years Ended June 30, 2018 and 2017

Management’s Discussion and Analysis For the Years Ended June 30, 2018 and 2017

(Unaudited)

Overview of Financial Statements and Financial Analysis

Management’s Discussion and Analysis is designed to provide an easily readable analysis of New Mexico State

University’s (the University) financial activities for the fiscal years ended June 30, 2018 and 2017. This overview is based

on facts, decisions and conditions known as of the date of the independent auditors’ report. There are three financial

statements presented: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position;

and the Statement of Cash Flows. Please read this analysis in conjunction with the University’s financial statements and

accompanying notes to the financial statements. Separately issued component unit financial statements are available as

detailed in Note 11.

Using This Annual Report

The Statement of Net Position provides information about the University’s financial condition at fiscal year end. It presents

both a current year synopsis and a longer-term view of the University’s assets, liabilities and net position. Readers of the

Statement of Net Position have the information to determine the assets available to continue the operations of the

University. They can also determine how much the University owes to vendors, investors and lending institutions. Finally,

the Statement of Net Position outlines the net position (assets minus liabilities) available to the University and defines that

availability.

The Statement of Revenues, Expenses, and Changes in Net Position should be used to review the results of the current

year’s operations. Changes in total net position, as presented in the Statement of Net Position, are based on the activities

presented in this statement. The purpose of the statement is to present the revenues earned by the University and the

expenses incurred by the University and any other revenues, expenses, gains and losses earned or incurred by the

University. Non-operating revenues include state appropriations revenue, federal Pell grant revenue, state lottery

scholarship revenue, local tax levy revenue, gift revenue, and interest earned on operating balances. The line item entitled

“Loss before other revenues” may give a more complete picture of the results of the University’s operations during the

year, including income resulting from non-exchange transactions. A non-exchange transaction is one in which the

University receives value or benefit from a third party without directly providing equal value in exchange, such as in receipt

of a donation.

The final statement presented is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information

about the cash activity of the University during the fiscal year. The statement is divided into five sections. The first section

deals with operating cash flows and shows the net cash used by operating activities. The second section includes cash

flows from non-capital financing activities. It includes the cash received and spent for non-operating, non-investing and

non-capital financing purposes. The third section includes cash flows from capital and related financing activities. This

section includes the cash used for the acquisition and construction of capital and related items. The fourth section includes

the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities.

The fifth and final section reconciles the net cash used for operations to the operating loss reflected on the Statement of

Revenues, Expenses, and Changes in Net Position.

Footnote information provides additional detail on the University’s overall accounting practices and individual statement

line items, including a natural classification report of operating expenses.

Additional information may be obtained by contacting the Office of the Senior Vice President for Administration and Finance

at 575-646-2431 or [email protected].

6


Condensed Net Position June 30, 2018 June 30, 2017 June 30, 2016

ASSETS

Current assets 126,048$ 103,736$ 109,860$

Capital assets, net 494,320 502,900 504,968

Other non-current assets 192,913 163,784 226,784

TOTAL ASSETS 813,281 770,420 841,612

DEFERRED OUTFLOWS OF RESOURCES 246,880 70,110 45,437

LIABILITIES

Current liabilities 60,994 63,591 65,229

Pension liability 750,674 507,688 473,733

Other non-current liabilities 298,413 152,032 166,387

TOTAL LIABILITIES 1,110,081 723,311 705,349

DEFERRED INFLOWS OF RESOURCES 42,046 24,850 22,874

NET POSITION

Net investment in capital assets 386,310 396,577 390,726

Restricted 58,270 64,187 134,608

Unrestricted (536,546) (368,394) (366,508)

TOTAL NET POSITION (91,966)$ 92,370$ 158,826$

Condensed Revenues, Expenses, and Changes in Net Position OPERATING REVENUES

Federal appropriations, grants, and contracts 82,542$ 89,478$ 90,638$

Student tuition and fees (net) 66,520 67,125 71,294

Other operating revenues 58,835 65,103 64,461

TOTAL OPERATING REVENUES 207,897 221,706 226,393

OPERATING EXPENSES

Instruction 164,631 147,434 151,325

Research 92,299 86,442 92,090

Other operating expenses 315,164 293,937 295,794

TOTAL OPERATING EXPENSES 572,094 527,813 539,209

Net operating loss (364,197) (306,107) (312,816)

Non-operating revenues and expenses 268,007 278,743 288,807

Loss before other revenues (96,190) (27,364) (24,009)

Other revenues 12,928 23,368 42,650

Increase (Decrease) in net position (83,262) (3,996) 18,641

Net position at beginning of year 92,370 158,826 140,185

Net Effect of Change In Accounting Principle (101,074) (62,460) -

Beginning of year, as restated (8,704) 96,366 140,185

Net position at end of year (91,966)$ 92,370$ 158,826$

For the years ended June 30, 2018, 2017 and 2016, the University's financial position was as follows: (In thousands)

7


General Overview for 2018 and 2017

In fiscal year 2018, total assets of the institution increased by $43 million primarily related to investments of bond proceeds

and deferred outflows increased by $177 million, due to the changes in assumptions related to the pension liability. Total

liabilities increased by $387 million and deferred inflows increased by $17 million. The Governmental Accounting

Standards Board (GASB) Statement No. 75, which replaced the requirements of GASB No. 45, was implemented in fiscal

year 2018, and resulted in the recognition of the total Other Post Employment Benefit (OPEB) liability as opposed to an

amortized portion and the annual OPEB expense replaced the Annual Required Contribution (ARC).

The more significant changes in the Statement of Net Position include:

Increases in the pension liability of $243 million, and the related changes in deferred outflows and deferred inflows.

These items are related to the adjustments made to the pension liability as required by GASB 68.

Increase in the other post-employment benefit liability of $100 million, and the related change in deferred inflows.

Increase in investments of $47 million and long term bonds and contracts liabilities of $43 million.

The operations discussed below contributed to the decrease in net position. Additional information related to these

changes is discussed in more detail later in this section.

Primary components that added to the $83.8 million net decrease in net position from the prior year before the net effect

of the change in accounting principle include:

An increase in pension expense of $67.4 million

A decrease in capital revenues of $10.8 million.

Decrease in state appropriations of $2.6 million.

The decreases were offset in part by the following:

Decrease in instruction expense, prior to the allocated pension expense, of $9.2 million.

Increase in Federal Pell grants of $1.5 million.

The Statement of Cash Flows shows a net increase in cash. The largest source of cash from operating activities was from

grant and contract revenues, followed by tuition and fees, while the largest source of cash from non-capital financing

activities was from state appropriations and proceeds from bond issuance. The most significant uses of cash were for

payments to employees and for employee benefits and payments to suppliers.

8


General Overview for 2017 and 2016

In fiscal year 2017, total assets of the institution decreased by $71.2 million primarily related to the removal of the Land

Grant and Permanent Fund (LGPF) of $62.5 million as a result of a State of New Mexico policy change regarding the

University’s beneficial interest in the LGPF within the State’s Comprehensive Annual Financial Report. Deferred outflows

increased by $24.7 million, liabilities increased by $18.6 million and deferred inflows increased by $2.0 million.

The more significant changes in the Statement of Net Position include:

Decrease in the investments held by others of $55 million, due primarily to the removal of the Land Grant

Permanent Fund.

Decrease in cash and cash equivalents of approximately $6.7 million.

Decrease in long-term liabilities of $7.8 million, due primarily to principal payments made on outstanding revenue

bonds.

Increases in the pension liability of $34 million, and changes in deferred outflows and deferred inflows as mentioned

above. These items are related to the adjustments made to the pension liability as required by GASB 68.

The operations discussed below contributed to the decrease in net position. Additional information related to these

changes is discussed in more detail later in this section.

Primary components that added to the $22.6 million net decrease in net position from the prior year before the net effect

of the change in accounting principal related to the removal of the land grant and permanent fund of $62.5 million include:

A decrease in capital revenues of $18.4 million.

Decrease in state appropriations of $14.1 million.

Decrease in gifts and non-exchange grants of $4.8 million resulting from the previous year’s recognition of deferred

revenues.

Decrease in Federal Pell grants of $1.4 million.

The decreases were offset in part by the following:

A reduction in the net operating loss of $6.7 million.

Increases in investment income of $6.8 million and gain on sale of land of $2.5 million.

The Statement of Cash Flows shows a net decrease in cash. The largest source of cash from operating activities was from

grant and contract revenues, followed by tuition and fees, while the largest source of cash from non-capital financing

activities was from state appropriations. The most significant uses of cash were for payments to employees and for

employee benefits and payments to suppliers.

9


The following graph illustrates the comparison of net position (in millions) by category for fiscal years 2018, 2017 and 2016.

The effect of the implementation of GASB 68 related to the net unfunded pension liability has been excluded from the

graph to provide a clearer picture of the unrestricted net position. The significant drop in Unrestricted in fiscal year 2018

was due to the recognition of additional OPEB liability for GASB 75. The decrease in Restricted – Non-expendable in fiscal

years 2018 and 2017 was due to the removal of the Land Grant Permanent Fund.

Operating Revenues for 2018 and 2017

Net operating revenues declined by $13.8 million in fiscal year 2018 compared to 2017. The main contributor to the loss

was a decrease in federal appropriations, grants and contracts one of the larger operating revenue sources, which

decreased by approximately $7 million or 7.8%.

Other changes in operating revenues were as follows:

Decrease in state grants and contracts of $5.1 million (31%) related to the New Mexico LEAD, SSIG Leap Awards

and State Workstudy.

Decrease in other operating revenues of $1.7 million, which can be attributed to Athletics game guarantees.

Net investment inCapital Assets

Unrestricted,excluding Unfunded

Pension

Restricted - Non-expendable

Restricted -Expendable

FY 2018 $386.3 $5.5 $28.1 $30.2

FY 2017 $396.6 $93.9 $28.1 $36.0

FY 2016 $390.7 $84.5 $90.6 $44.0

$-

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

Net�Position,�excluding�Unfunded�Pension

10


Operating Revenues for 2017 and 2016

Net operating revenues declined by $4.7 million in fiscal year 2017 compared to 2016. The main contributor to the loss

was a decrease in student tuition and fees (net), one of the larger operating revenue sources, which decreased by

approximately $4.2 million or 5.8%.

Other changes in operating revenues were as follows:

Increase in state grants and contracts of $1.9 million (13.1%) related to the New Mexico LEAD and CORE RDA

grants.

Decrease in federal appropriations, grants and contracts of $1.1 million, which is attributed to the Department of

Defense.

A decrease in non-governmental grants and contracts of $1 million related to the GO Teacher Noncredit Certificate

Program and Sagrapa Extension Project.

The net operating loss for fiscal year 2017 was $306.1 million and was less than the fiscal year 2016 operating loss of

$312.8 million by $6.7 million.

The following graph illustrates a comparison of operating revenues (in millions) by type for fiscal years 2018, 2017 and

2016.

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

Mil

lio

ns

of

Do

lla

rs

Operating�Revenues

FY 2018

FY 2017

FY 2016

11


Operating Expenses for 2018 and 2017

Operating expenses increased by $44.3 million in fiscal year 2018 from the prior year. The increase in pension expense

$67.4 million over the prior year is a significant change in overall operating expenses. Although pension expense is

allocated to the various expense functions based on salary expense, for purposes of this analysis, it has been removed in

order to analyze the remaining expenses. After removing the pension expense allocation for both years, operating

expenses declined by $24 million. The largest dollar changes in operating expense, excluding pension expense, were as

follows:

A decrease in instruction expense of $9.3 million, primarily related to payments to employees for salary and fringe

benefits of $4.7 million.

A decrease in research expense of $6.4 million, primarily related to the reduction of Department of Defense awards.

A decrease in loan administration of $1.7 million, due primarily to the Perkins Loans payback.

A decrease in scholarships and fellowships of $2.6 million.

Operating Expenses for 2017 and 2016

Operating expenses decreased by $11.4 million in fiscal year 2017 from the prior year. The increase in pension expense

and change in deferred inflows and outflows of $4.5 million over the prior year is a significant change in overall operating

expenses. Although pension expense is allocated to the various expense functions based on salary expense, for purposes

of this analysis, it has been removed to better analyze the remaining expenses. After removing the pension expense

allocation, the largest dollar changes in operating expense were as follows:

A decrease in research expense of $5.8 million, primarily related to the reduction of Department of Defense awards.

A decrease in operation and maintenance of plant expense of $5.6 million largely attributed to the University’s

energy performance contract.

A decrease in instruction expense of $5.4 million, primarily related to payments to employees for salary and fringe

benefits.

An increase in public service of $4.6 million, due primarily to the NM LEAD grant in the Business College and the Collaborating for Outstanding Readiness in Education – Results Driven Accountability grant in the Education College.

12


The following graph illustrates a comparison of operating expense (in millions) by function, excluding depreciation and

loan administration, for fiscal years 2018, 2017 and 2016.

The Statement of Revenues, Expenses, and Changes in Net Position reflects a net loss before other revenues of $96.8

million, $27.3 million and $24.0 million in fiscal years 2018, 2017 and 2016, respectively.

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

Millio

ns o

f D

ollars

Operating�Expenses(Excluding�Depreciation�and�Loan�Administration)

FY 2018 FY 2017 FY 2016

13


The following graphs reflect the University’s sources of revenue available to meet current operating costs for fiscal years

2018, 2017 and 2016.

Net Tuition & Fees; 14%

Aux, Sales & Services; 4%

Other Revenues;

3%

Appropriations, Grants & Contracts;

22%

Other Non-Operating

Revenues, Net; 4

Gifts & Non-Exchange Grants;

13%

State Appropriation; 40%

Non-Operating Revenues;

57%

2018 Operating and Net Non-Operating Revenues



Other Revenues;

3%


24%

Other Non-Operating

Revenues, Net; 4%


13%

State Appropriations;

39%Net Non-Operating

Revenues;56%


14


Capital Asset and Debt Administration

During fiscal year 2018, net capital assets decreased (1.7%), due to lower levels of construction and renovation activities,

combined with the recording of annual depreciation expense and retirements. The projects that increased capital assets

included current period expenditures for the Grants Child Development Center of $3.6 million, construction of the new art

building of $2.6 million, construction on the new housing facility of $2.3 million, and Corbett Center exterior improvements

of $2.2 million. In addition to construction costs, there were increases in capital assets related to capital equipment

purchases of $5.4 million and capital library purchases of $3.3 million, which were offset by total depreciation expense of

$34.5 million. Debt from bonds and contracts increased by $44.2 million in 2018 due to issuance of revenue bonds for

capital projects and refunding of prior bonds. Previous debt of $27.2 million were refunded from the current issuance.

During fiscal year 2017, net capital assets decreased slightly (.4%). The projects which increased capital assets included

current period expenditures for construction at Jett Hall of $7.8 million, Rentfrow Hall of $2.5 million, and renovation and

improvements at DACC Central and East Mesa campuses totaling $3.5 million and $1.4 million respectively. In addition to

construction costs there were increases in capital assets related to capital equipment purchases of $6.5 million and capital

library purchases of $3.3 million, which were offset by equipment, library, and software retirements of $4.3 million, and net

accumulated depreciation of $29.3 million.

Budget Comparison

In comparing the total original budgeted revenue to the revised budgeted revenue for fiscal year 2018, there was a net

increase of approximately $15.6 million, and an increase of approximately $24.5 million in revised budgeted expenditures.

The significant changes to the revenue budget were in other sources of revenue and private gifts revenue, offset by

reduction in tuition and fees revenue. The increase in projected revenues for other sources is primarily as a result of

increases in capital outlay projects related to anticipated progress on capital projects. Projections indicated an increase

in private gifts revenue. The offsetting revenue decrease was projected for tuition and fees as a result of a moderate

decline in enrollment.

Actual revenues earned in fiscal year 2018 were lower than the revised budget by $32 million and actual expenditures

were lower than the revised budget by $53.6 million. The main contributors to the revenue budget variance were federal



Other Revenues;

3%


23%

Other Non-Operating

Revenues, Net; 2%


14%

State Appropriations;

40%Net Non-Operating

Revenues;56%


15


revenue and other sources (93% of the variance) and the main contributors to the expense budget variance were in the

instruction; Student Aid, Grants & Stipends; and capital outlay (53% of the variance). Because the University budgets

capital projects in their entirety, multi-year projects may result in mismatches of budget to actual revenues and expenses

in any one year. Total operating expenditures were less than revenues, resulting in an increase in the overall fund balance

of $4.8 million. As the decline in revenues was offset by a decline in expenses, the primary contributing factor to the fund

balance was a decline in capital outlay and renewal and replacement expenditures offset by an increase in retirement of

indebtedness expenditures.

Factors Impacting Future Periods

The University’s future has several promising financial factors. While the University’s state appropriation was reduced the

previous two fiscal years (FYs); for FY 2019 the state appropriation increased $2.5 million for operations and $2.9 million

for compensation that will allow for a 2% increase in faculty and staff salaries.

In August 2018, the New Mexico Legislative Finance Committee indicated favorable revenue projections for the state of

New Mexico due to oil and gas revenue, projecting as much as a $1.2 billion increase in funding for FY 2020. This

favorable economic outlook for New Mexico will likely result in additional state appropriations to higher education during

the spring 2019 legislative session for FY 2020. The state will also have the opportunity to address the New Mexico

Educational Retirement Board’s unfunded pension liability, which could result in a decrease in the University’s net pension

liability for FY 2020.

While the University has experienced declining enrollment over the past several years, student enrollment for Fall 2017

and again in Fall 2018 reflected improvement in first time freshmen, with increases of 11% and 10%, respectively. Fall

2017 marked the University’s largest increase in this group of students in more than 17 years.

16

New Mexico State UniversityStatements of Net PositionAs of June 30, 2018

UniversityDiscrete

Component Unit

ASSETSCurrent assets

Cash and cash equivalents $ 17,637,246 $ 14,989,030Restricted cash and cash equivalents 9,887,363 -Cash and cash equivalents held in trust by component unit for NMSU 4,521,307 4,521,307Cash and cash equivalents held in trust by others 3,048,643 -Short-term investments 31,446,089 332,068Accounts receivable, net 50,224,749 10,781,211Due from component unit 2,132,358 -Inventories 2,484,382 -Prepaid expenses 3,710,978 323,188Loans receivable - current portion, net 954,389 -

Total current assets 126,047,504 30,946,804Non-current assets

Unrestricted cash and cash equivalents 41,773,187 4,859,321Restricted cash and cash equivalents 6,223,907 -Investments held by others - 2,788,205Investments held in trust by component unit for NMSU 42,816,242 42,816,242Investments held in trust for others - 359,055Restricted long-term investments 14,665,449 -Other long-term investments 77,920,571 131,888,080Loans receivable, net 9,514,499 -Capital assets, net 494,319,652 105,643

Total non-current assets 687,233,507 182,816,546

TOTAL ASSETS 813,281,011 213,763,350

DEFERRED OUTFLOWS OF RESOURCES 246,879,669 -

LIABILITIESCurrent liabilities

Accounts payable 13,389,927 125,539Due to NMSU - 2,132,358Other accrued liabilities 14,813,839 -Accrued interest payable 1,800,459 -Held in trust for NMSU - 4,521,307Unearned revenue 9,759,659 414,367Held in trust by NMSU 5,319,195 -Long-term liabilities - current portion 15,910,776 190,871

Total current liabilities 60,993,855 7,384,442Non-current liabilities

Accrued benefit reserves 659,630 -Held in trust for NMSU - 42,816,242Other long-term liabilities 169,377,298 2,298,202Net pension liability 750,673,749 -Other post-employment benefit liability 128,375,207 -

Total non-current liabilities 1,049,085,884 45,114,444

TOTAL LIABILITIES 1,110,079,739 52,498,886

DEFERRED INFLOWS OF RESOURCES 42,046,491 -

NET POSITIONNet investment in capital assets 386,309,799 105,643Restricted for:

Non-expendable:Endowments 28,109,389 99,699,881

Expendable:Endowments 1,964,539 57,541,225General activities 6,296,810 -Federal student loans 12,783,937 -Capital projects 8,039,238 -Related entity activities 1,077,105 -

Unrestricted (536,546,367) 3,917,715

TOTAL NET POSITION $ (91,965,550) $ 161,264,464

The notes to the financial statements are an integral part of the financial statements. 17

New Mexico State UniversityStatements of Net PositionAs of June 30, 2017

UniversityDiscrete

Component Unit

ASSETSCurrent assets

Cash and cash equivalents $ 9,666,705 $ 11,875,784Restricted cash and cash equivalents 10,144,470 -Cash and cash equivalents held in trust by component unit for NMSU 6,339,259 6,339,259Cash and cash equivalents held in trust by others 6,619,165 -Short-term investments 10,036,594 385,307Accounts receivable, net 52,806,103 9,791,044Due from component unit 1,500,977 -Inventories 2,289,331 -Prepaid expenses 3,235,303 312,501Student loans receivable - current portion, net 1,103,696 -

Total current assets 103,741,603 28,703,895Non-current assets

Unrestricted cash and cash equivalents 38,274,357 -Restricted cash and cash equivalents 6,319,877 11,410,763Investments held by others - 2,881,114Investments held in trust by component unit for NMSU 39,071,502 39,071,502Investments held in trust for others - 364,501Other long-term investments 70,179,403 116,852,875Student loans receivable, net 9,933,269 -Capital assets, net 502,900,397 59,610

Total non-current assets 666,678,805 170,640,365

TOTAL ASSETS 770,420,408 199,344,260

DEFERRED OUTFLOWS OF RESOURCES 70,110,135 -

LIABILITIESCurrent liabilities

Accounts payable 10,409,306 66,879Due to NMSU - 1,500,977Other accrued liabilities 17,696,040 -Accrued interest payable 1,715,659 -Held in trust for NMSU - 6,339,259Unearned revenue 8,466,772 430,356Held in trust by NMSU 6,052,135 -Long-term liabilities - current portion 19,251,356 196,882

Total current liabilities 63,591,268 8,534,353Non-current liabilities

Accrued benefit reserves 659,630 -Held in trust for NMSU - 39,071,502Other long-term liabilities 123,417,156 2,518,601Net pension liability 507,687,518 -Other post-employment benefit liability 27,955,000 -

Total non-current liabilities 659,719,304 41,590,103

TOTAL LIABILITIES 723,310,572 50,124,456

DEFERRED INFLOWS OF RESOURCES 24,850,193 -

NET POSITIONNet investment in capital assets 396,576,507 59,610Restricted for:

Non-expendable:Endowments 28,142,453 94,406,368

Expendable:Endowments 1,906,228 51,720,227General activities 6,762,073 -Federal student loans 14,302,898 -Capital projects 12,277,620 -Related entity activities 795,809 -

Unrestricted (368,393,810) 3,033,599

TOTAL NET POSITION $ 92,369,778 $ 149,219,804


New Mexico State UniversityStatements of Revenues, Expenses and Changes in Net PositionFor the Year Ended June 30, 2018

UniversityDiscrete

ComponentUnit

REVENUESOperating revenues:

Student tuition and fees (gross) $ 108,816,066 $ -Less: scholarship allowances (42,295,668) -

Student tuition and fees (net) 66,520,398 -Federal appropriations, grants and contracts 82,542,027 -State grants and contracts 11,387,324 -Local appropriations, grants and contracts 2,712,130 -Non-governmental grants, contracts and gifts 9,023,251 15,492,458Sales and services 6,106,044 1,791,008Auxiliary enterprises (net of scholarship allowances) 14,733,291 -Other operating revenues 14,872,592 -

Total operating revenues 207,897,057 17,283,466

EXPENSESOperating expenses:

Instruction 164,630,659 -Research 92,298,663 -Public service 59,650,388 -Academic support 30,182,089 -Student services 19,623,830 -Institutional support 37,007,447 -Operation and maintenance of plant 38,522,138 -Scholarships and fellowships 27,490,837 -Auxiliary enterprises 23,052,121 -Independent operations 19,447,085 -Intercollegiate athletics 20,450,904 -Student social and cultural 4,007,265 -Loan administration (net) 1,214,656 -Depreciation 34,515,035 28,882Other operating expenses - 14,065,753

Total operating expenses 572,093,117 14,094,635

Net operating income (loss) (364,196,060) 3,188,831

Non-operating revenues (expenses):State appropriations 190,893,756 -Federal Pell grants 41,162,544 -State lottery scholarship 9,983,665 -Local tax levy revenue 14,440,619 -Gifts and non-exchange grants 9,292,924 -Investment income (loss) 1,825,340 9,127,770Land lease and permanent fund revenue 4,321,577 -Building fees 4,815,669 -Loss on disposal of plant (1,698,579) -Additions to quasi endowments 78,786 -Interest and other expenses on capital asset-related debt (6,457,869) -Other non-operating revenues (expenses) (651,669) (271,941)

Net non-operating revenues 268,006,763 8,855,829

Income (loss) before other revenues (96,189,297) 12,044,660Capital appropriations 7,633,119 -Capital grants, gifts, and other income 2,694,375 -Additions to permanent endowments 2,600,444 -

Increase (decrease) in net position (83,261,359) 12,044,660

NET POSITIONBeginning of year, as previously reported 92,369,778 149,219,804Change in accounting principle (Note 2) (101,073,969)

Beginning of year, as restated (8,704,191)

End of year $ (91,965,550) $ 161,264,464


New Mexico State UniversityStatements of Revenues, Expenses and Changes in Net PositionFor the Year Ended June 30, 2017

UniversityDiscrete

ComponentUnit


Student tuition and fees (gross) $ 107,477,271 $ -Less: scholarship allowances (40,352,088) -

Student tuition and fees (net) 67,125,183 -Federal appropriations, grants and contracts 89,478,461 -State grants and contracts 16,508,697 -Local appropriations, grants and contracts 2,898,663 -Non-governmental grants, contracts and gifts 9,060,235 9,769,845Sales and services 5,429,962 1,349,831Auxiliary enterprises (net of scholarship allowances) 14,637,709 -Other operating revenues 16,566,675 -

Total operating revenues 221,705,585 11,119,676

EXPENSESOperating expenses:

Instruction 147,433,569 -Research 86,441,908 -Public service 53,831,021 -Academic support 27,494,971 -Student services 15,372,147 -Institutional support 31,711,240 -Operation and maintenance of plant 36,537,879 -Scholarships and fellowships 29,942,054 -Auxiliary enterprises 21,195,218 -Independent operations 17,699,739 -Intercollegiate athletics 17,947,564 -Student social and cultural 3,863,536 -Loan administration (net) 2,867,905 -Depreciation 35,473,782 89,551Other operating expenses - 12,419,017

Total operating expenses 527,812,533 12,508,568

Net operating loss (306,106,948) (1,388,892)

Non-operating revenues (expenses):State appropriations 193,515,000 -Federal Pell grants 39,587,298 -State lottery scholarship 15,641,172 -Local tax levy revenue 12,941,281 -Gifts and non-exchange grants 9,066,256 -Investment income (loss) 3,009,469 13,599,859Land lease and permanent fund revenue 3,110,115 -Building fees 4,126,169 -Loss on disposal of plant (405,298) -Gain on sale of land 2,455,510 -Additions to quasi endowments 151,320 -Interest and other expenses on capital asset-related debt (4,948,886) -Other non-operating expenses 493,981 (272,165)

Net non-operating revenues (expenses) 278,743,387 13,327,694

Loss before other revenues (27,363,561) 11,938,802Capital appropriations 18,620,802 -Capital grants, gifts, and other income 2,550,164 -Additions to permanent endowments 2,196,737 5,666,195

Increase (decrease) in net position (3,995,858) 17,604,997

NET POSITIONBeginning of year, as previously reported 158,825,979 131,614,807Change in accounting principle (Note 2) (62,460,343) -

Beginning of year, as restated 96,365,636 131,614,807

End of year $ 92,369,778 $ 149,219,804


New Mexico State UniversityStatement of Cash FlowsFor the Year Ended June 30, 2018

University

CASH FLOWS FROM OPERATING ACTIVITIESTuition and fees and other student payments received $ 67,305,168Grants and contracts received 108,454,156Payments to suppliers (89,079,809)Payments for travel (12,475,335)Payments to employees and for employee benefits (320,909,822)Disbursement of net aid to students (33,345,062)Receipts from sales, services, and auxiliary enterprises 21,102,924Other operating revenues 13,508,271

Net cash used by operating activities (245,439,509)CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES

State appropriations 190,893,756Gifts and grants for other than capital purposes 60,439,133Tax levy revenue 14,440,619Private gifts for endowment 1,852,815Other non-operating expenses (651,669)

Net cash provided by non-capital financing activities 266,974,654CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Proceeds from capital debt and leases 79,076,250Capital gifts, grants and contracts 10,406,280Purchases/construction/renovation of capital assets (27,632,869)Principal paid on capital debt and leases (34,857,474)Interest and fees paid on capital debt and leases (6,985,333)Building fees received from students 4,815,669

Net cash used by capital and related financing activities 24,822,523CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales and maturities of investments 21,706,527Proceeds held in trust by NMSU Foundation (1,817,952)Interest on investments 6,356,206Purchase of investments (66,874,629)

Net cash provided by investing activities (40,629,848)Net increase in cash and cash equivalents 5,727,820Cash and cash equivalents - beginning of year 77,363,833Cash and cash equivalents - end of year $ 83,091,653

Reconciliation of operating loss to net cash used by operating activities:Operating loss $ (364,196,060)

Adjustments to reconcile operating loss to net cash used by operating activities:Depreciation expense 34,515,035Change in assets and liabilities:Decrease in accounts receivable 1,913,515Increase in prepaid expenses (481,621)Increase in inventory (195,051)Decrease in loans receivable 568,077Decrease in accounts payable and other accrued liabilities (1,500,794)Decrease in unearned revenue 1,292,887Decrease in held in trust by NMSU (732,940)Increase in net pension/OPEB liability and related deferred inflows/outflows of resources 83,377,443

Net cash used by operating activities $ (245,439,509)


New Mexico State UniversityStatement of Cash FlowsFor the Year Ended June 30, 2017

University

CASH FLOWS FROM OPERATING ACTIVITIESTuition and fees and other student payments received $ 67,709,914Grants and contracts received 117,480,559Payments to suppliers (114,416,113)Payments for travel (12,480,702)Payments to employees and for employee benefits (317,637,165)Disbursement of net aid to students (36,452,901)Receipts from sales, services, and auxiliary enterprises 22,220,736Other operating revenues 15,651,629

Net cash used by operating activities (257,924,043)CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES

State appropriations 193,515,000Gifts and grants for other than capital purposes 59,167,497Tax levy revenue 12,941,281Private gifts for endowment 1,899,390Other non-operating expense 493,984

Net cash provided by non-capital financing activities 268,017,152CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Proceeds from capital debt and leases 158,714Proceeds from sale of capital assets 2,489,349Proceeds held by NM Finance Authority - general obligation bonds 6,619,165Capital gifts, grants and contracts 14,551,801Purchases/construction/renovation of capital assets (33,844,949)Principal paid on capital debt and leases (9,877,354)Interest and fees paid on capital debt and leases (5,246,795)Building fees received from students 4,126,169

Net cash provided by capital and related financing activities (21,023,900)CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales and maturities of investments 23,550,000Proceeds held in trust by NMSU Foundation 512,806Interest on investments 9,485,654Purchase of investments (29,323,317)

Net cash provided by investing activities 4,225,143Net decrease in cash and cash equivalents (6,705,648)Cash and cash equivalents - beginning of year 84,069,481Cash and cash equivalents - end of year $ 77,363,833

Reconciliation of operating loss to net cash used by operating activities: Operating loss $ (306,106,948)

Adjustments to reconcile operating loss to net cash used by operating activities:Depreciation expense 35,473,782Change in assets and liabilities:

Increase in accounts receivable 2,317,768Increase in prepaid expenses 1,933,751Decrease in inventory 290,165Decrease in loans receivable 1,571,552Increase in accounts payable and other accrued liabilities (3,700,794)Decrease in unearned revenue 485,385Decrease in held in trust by NMSU (1,445,900)Increase in net pension liability and related deferred inflows and outflows of resources 11,257,196

Net cash used by operating activities $ (257,924,043)


New Mexico State University Notes to Financial Statements For the Years Ended June 30, 2018 and 2017

Note 1 – Organization

New Mexico State University (the University) was created under Section 21-8-1 New Mexico StatutesAnnotated (NMSA), Article XII, Section 11, of the New Mexico State Constitution (Constitution). UnderArticle XII, Section 13 of the Constitution, the University is governed by the Board of Regents, a groupof five members, one of whom is a student, appointed by the Governor of New Mexico. Members mayserve more than one term. The Chancellor of the University acts as Chief Executive Officer.

The University was founded in 1888, and in 1889 was established as a land-grant college, inaccordance with the provisions of the Morrill Act of 1862. As such, the University provides a liberal andpractical education for students and sustains programs of research, extension education, and publicservice. The University offers a broad program of instruction at the undergraduate and advanceddegree levels in Agricultural, Consumer and Environmental Sciences, Arts and Sciences, Business,Education, Engineering, and Health and Social Services. Other programs include IntercollegiateAthletics, the Agricultural Experiment Stations, the Physical Science Laboratory for contract research,the Cooperative Extension Service, the New Mexico Department of Agriculture, and community collegesat Alamogordo, Carlsbad, Doña Ana County, and Grants.

New Mexico State University Foundation, Inc. (Foundation), is the “Discrete Component Unit” referredto throughout this document. The Foundation is a not-for-profit corporation established to acquire andmanage charitable gifts, including endowed funds, to be used solely for the benefit of the University.

Note 2 – Summary of Significant Accounting Policies

Reporting Entity. The Governmental Accounting Standards Board’s (GASB) Statement No. 39,Determining Whether Certain Organizations are Component Units, GASB Statement No. 61, FinancialReporting Entity: Omnibus – an amendment of GASB Statements No. 14 and No. 34 and GASBStatements No. 80, Blending Requirements for Certain Component Units - and amendment of GASBStatement No. 14, provide additional guidance to determine whether certain organizations, for which theprimary government is not financially accountable, should be reported as component units, based onthe nature and significance of their relationship with the primary government.

Under GASB 39 and GASB 61 criteria, the Foundation meets the criteria for discrete component unitpresentation. The Foundation is a nonprofit corporation which provides financial benefit to the Universityby acquiring and managing charitable gifts, including endowed funds, to be used solely for the benefit ofthe University. Under GASB 39 and GASB 80 criteria, Arrowhead Center, Inc. meets the criteria forblended presentation. Arrowhead Center Inc. provides a financial benefit to the University and wasestablished to foster economic development within the State through the development of research parksand University real property as well as to protect, license, and market intellectual property developed byfaculty, staff and students of the University, as well as members of the community. The University andits blended component unit are shown as the University column in the financial statements. Thecomponent units have separately audited financial statements, which can be obtained at theiradministrative offices. Aggie Development Inc. is a blended component unit that did not require auditedfinancial statements and therefore its activity is included in the NMSU audited financial statements, butits information is not included in Note 11 - Component Units. The mailing addresses for each of thecomponent units are included in Note 11.

Basis of Accounting. The accompanying financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America (GAAP), as prescribed by theGASB and the American Institute of Certified Public Accountants’ (AICPA) guide.

For financial reporting purposes, the University is considered a special-purpose government engagedonly in business-type activities. Accordingly, the University’s financial statements have been presentedin a single column using the economic resources measurement focus and the accrual basis of

23


accounting. Under the accrual basis, revenues are recognized when earned and expenses arerecorded when an obligation has been incurred. Eliminations are not performed between the Universityand the Foundation. The University is an enterprise fund of the State of New Mexico and, as such, isincluded in the State of New Mexico’s Comprehensive Annual Financial Report. The University'sfinancial statements are intended to present the financial position, the changes in financial position and,where applicable, cash flows of only that portion of the business-type activities of the State of NewMexico that is attributable to the transactions of the University.

Current Assets. Current assets consist of unrestricted assets which are available for currentoperations or which will be available within one year and restricted assets that will be used in currentoperations. All other assets are classified as non-current assets.

Cash and Investments. Cash and cash equivalents consist of cash on hand and current investments,which are defined as investments that are readily convertible to cash or which have an original maturitydate of three months or less.

The University accounts for its investments at fair value in accordance with GASB Statement No.72(Fair Value Measurement and Application). Changes in the unrealized gain (loss) on the carrying valueof investments are reported as a component of investment income (loss) in the Statement of Revenues,Expenses, and Changes in Net Position.

The University and the Foundation record purchased marketable securities at cost and marketablesecurities received by gift at estimated fair value on the date of donation. Marketable securities arecarried at fair value based on quoted market prices, except for certain alternative investments for whichquoted market prices are not available. The estimated fair value of these alternative investments isbased on the most recent valuations provided by the external investment managers. The University andthe Foundation believe the carrying amount of these financial instruments is a reasonable estimate ofthe fair value. Because alternative investments are not readily marketable, their estimated value issubject to uncertainty and therefore may differ from the value that would have been used had a readymarket for such investments existed. Third-party investment managers administer substantially allmarketable securities. Gains and losses resulting from securities transactions are recorded ininvestment income.

The Foundation manages a Common Endowment Pool (Pool), consisting of assets invested to supportprograms of the University. A portion of these assets belongs to the University and is shown in theUniversity’s Statements of Net Position as Investments held in trust by Component Unit for NMSU. TheFoundation owns the remainder, which consists of endowments and charitable gift annuities. These areincluded in other long-term investments in the Foundation’s financial statements. The liabilities relatedto the charitable gift annuities are included in the Foundation’s other long-term liabilities.

Disbursements of the net appreciation of investments in donor restricted endowments are permitted inaccordance with the New Mexico Uniform Prudent Management of Institutional Funds Act (UPMIFA),except where a donor has specified otherwise. The Investment Committee of the Foundationestablishes a target investment allocation designed to support distributions from the Pool and to protectthe purchasing power of the endowment principal. The Foundation Investment Committee sets theannual distribution rate. Actual distributions may be adjusted as directed by some of the individualendowment agreements. The amount of funds available for distribution from the Pool to the individualendowments participating in the fund that benefit colleges, departments, units and programs duringeach fiscal year is determined using a weighted average of two numbers: 1) The target spending basedon the current endowment value, and 2) last year’s spending adjusted for inflation. A 20-percentweighting is given to the policy rate applied to the Pool’s market value at the end of each fiscal quarter,and an 80-percent weighting is given to the last year’s spending adjusted for inflation as measured bythe most recent published Higher Education Price Index. This amount is then distributed at the end ofeach fiscal year. The distribution of the annual calculation is based on the unitized system ownership of

24


each fund.

Accounts Receivable. Accounts receivable primary categories are: 1) Tuition and fees; 2) Amountsdue for auxiliary enterprise services provided to students, faculty and staff; and, 3) Amounts due fromfederal, state, local governments, and others in connection with reimbursement of allowableexpenditures made pursuant to the University’s sponsored awards. Accounts receivable are recordednet of estimated uncollectible amounts.

Inventories. Inventories are generally stated at the lower of cost or market. Cost is determined by theaverage cost method, which approximates the first-in-first-out method. Inventories consist of items thatare available for resale to individuals and/or other University departments, including research suppliesand livestock items. Departmental inventories comprised of items such as classroom and laboratorysupplies, teaching materials, and office supply items, which are consumed in the teaching andadministrative process, are expensed when purchased.

Investments Held in Trust. Trust assets held by the Foundation are measured at fair value as of thedate of receipt. The corresponding trust liability, included in other long-term liabilities, is measured at thepresent value of expected future cash flows to be paid to the beneficiary. Upon death of the incomebeneficiary, substantially all of the principal balance passes to the Foundation to be used in accordancewith the donor’s wishes.

The Foundation holds several irrevocable charitable remainder trusts and a pooled income fund; theseinstruments are shown in the accompanying financial statements as investments held in trust for others.Charitable remainder trusts designate the Foundation as both trustee and remainder beneficiary. TheFoundation is required to pay to the donor, or another donor-designated income beneficiary, either afixed amount or the lesser of a fixed percentage of the fair market value of the trust’s assets or thetrust’s income during the beneficiary’s life.

The pooled income fund was formed with contributions from several donors. The contributed assets areinvested and managed by the Foundation. Each donor, or designated beneficiary, periodically receives,during his or her life, a share of the income earned on the fund proportionate to the value of thecontribution to the fund. Upon death of the income beneficiary, substantially all of the principal balancepasses to the Foundation to be used in accordance with the donor’s wishes. Contribution revenue ismeasured at the fair value of the assets received, discounted for a term equal to the life expectancy ofthe beneficiary.

Capital Assets. Capital assets are recorded at cost as of the date of acquisition, or in the case of gifts,acquisition value as of the date of donation. The University’s capitalization threshold for equipment andSoftware is $5,000. Infrastructure and land improvements that significantly increase the value,productivity, or extend the useful life of the structure are capitalized at $50,000. Routine repairs andmaintenance are charged to operating expense in the year in which the expense was incurred.

The University’s depreciation is computed using the straight-line method. Land and land improvementsare not depreciated. Estimated useful lives for major asset classes are as follows:

Category Useful LifeSoftware 5 or 10 years Equipment 6 or 15 yearsInfrastructure 10 to 20 yearsComponentized buildings 12 to 50 yearsLibrary books 15 yearsNon-componentized buildings 25 or 40 years

As an institute of higher education in existence for over 100 years, New Mexico State University hasacquired significant collections of art, rare books, historical treasures and other special collections. The

25


purpose of these collections is for public exhibition, education or research in furtherance of publicservice rather than financial gain. They are protected and preserved, and subject to the Regents’policies regarding accessioning and de-accessioning. However, because of their invaluable andirreplaceable nature, these collections have not been capitalized and are therefore not presented in theaccompanying Statement of Net Position.

The Foundation’s capital assets are stated at cost, except for works of art that the Foundation intends tohold indefinitely, which are recorded at fair value on the date of donation. Additions and majorimprovements are capitalized and repairs and maintenance are charged to expense as incurred.

Current Liabilities. Current liabilities include accounts payable, other accrued liabilities and accruedinterest payable. Other accrued liabilities include accrued current payroll and fringe benefits and currentportion of unclaimed property. The benefits included consist of the employee and employer portions oftaxes, insurance, retirement and other compensation related withholdings. Also included in currentliabilities is the current portion of long-term debt and unearned revenue. Unearned revenue representsrevenue collected but not earned as of June 30, 2018 and 2017. This amount is primarily composed ofrevenue for grants and contracts, prepaid student tuition and fees and special events. The Universitydid not have any outstanding short-term debt for the years ended June 30, 2018 and 2017.

Non-Current Liabilities. Non-current liabilities, within other long-term liabilities, includes principalamounts of revenue bonds payable, contracts payable, other post employment benefits, the non-currentportion of accrued compensated absences and unclaimed property, and other liabilities. Also included ispension liability.

The Foundation’s other long-term liabilities consist of the liabilities related to charitable gift annuities andcharitable remainder unitrusts for which the Foundation serves as trustee. These liabilities are recordedat the present value of anticipated payments to the income beneficiaries. These are computed using theestimated life of each income beneficiary at June 30 each year and the applicable IRS discount interestrates.

Annual and Sick Leave Policies.

Annual leave: Regular full-time exempt and non-exempt employees hired prior to July 1, 2016, earn

annual leave at a rate of 22 working days per year. The maximum annual leave that can be earned by

employees hired after July 1, 2016 changed to 20 days per year. Annual leave accrual will be based

on the employee’s period of continuous service of employment at the University. Leave is prorated for

regular employees working at least half-time. University policy allows employees to accumulate a

maximum of 30 unused annual leave days. Accumulated annual leave is paid upon termination.

Sick leave: Regular full-time exempt and non-exempt employees earn sick leave at a rate of 12

working days per year. Employees may carry forward up to 100 days (800 hours) of sick leave. Prior

to July 1, 2016, employees were paid for earned sick leave over 600 hours (not to exceed 200 hours)

upon termination. Effective July 1, 2016, the sick leave payout benefit upon termination was

discontinued; however, employees with sick leave balances of greater than 600 hours on that date will

receive a grandfathered benefit. Upon termination, they will be paid for the number hours over 600

(not to exceed 200 hours) that they had on July 1, 2016 or the number that they have upon

termination, whichever is less. The sick leave payment is made at a rate of 50 percent of the

employee’s straight-time hourly salary.

Faculty care leave: The University provides regular nine-month faculty with a paid leave benefit that

can be used for any qualifying event under the federal Family and Medical Leave Act (FMLA). This

benefit is referred to as “Faculty Care Leave”. All regular nine-month faculty are eligible to participate

26


in the benefit. No payment will be provided for accrued Faculty Care Leave balances upon separation

from the University nor upon death.

Net Position. The University’s net position is classified as follows:

Net investment in capital assets – Represents the University’s total capital assets, net of accumulated

depreciation, outstanding debt obligations related to those capital assets and debt related deferred

inflows and outflows. Debt that has been incurred but not yet expended for capital assets is not

included as a component of net investment in capital assets.

Restricted net position, non-expendable – Consists of endowment and similar type assets for which

donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal

is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and

future income.

Restricted net position, expendable – Includes resources which the University is legally or

contractually obligated to spend in accordance with restrictions imposed by external third parties.

Unrestricted net position – Represents all other resources, including those derived from student tuition

and fees, state appropriations, sales and services, unexpended plant, renewal and replacement and

quasi endowments. These resources are used for transactions relating to the educational and general

operations of the University and may be used at the discretion of the governing board to meet current

expenses for any purpose. These resources also include auxiliary enterprises, which are substantially

self-supporting activities that provide services for students, faculty, and staff. Unrestricted net position

of the Component Unit represents resources that may be used at the discretion of the governing board

of the Component Unit to meet current expenses for any purpose.

When an expense is incurred that can be paid using either restricted or unrestricted resources, theUniversity’s policy is to first apply the expense towards restricted resources, and then towardsunrestricted resources.

Elimination Entries. Eliminations have been made in the Statement of Revenues, Expenses, andChanges in Net Position to remove the effect of internal charges incurred for service activities in excessof the cost of providing those services and for revenue recognized by the Auxiliary Service departmentsfor sales to other University departments. Elimination entries are not recorded between the Universityand the Discrete Component Unit.

Income Taxes. The income generated by the University as an instrumentality of the State of NewMexico is generally excluded from federal income taxes under section 115(a) of the Internal RevenueCode. However, the University is subject to taxation on income derived from business activities notsubstantially related to the University’s exempt function (unrelated business income under InternalRevenue Code Section 511); such income is taxed at the normal corporate rate. Contributions to theUniversity are deductible by donors as provided under Section 170 of the Internal Revenue Code.

The Foundation is exempt from federal income taxes under Internal Revenue Code section 501 (a) asan organization described in section 501(c)(3).

Classification of Revenues. The University classifies its revenues as either operating or non-operatingrevenues according to the following criteria:

Operating revenues: Operating revenues of the University include activities that have the

characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship

27


discounts and allowances; (2) sales and services of auxiliary enterprises; (3) certain federal, state and

local grants and contracts and federal appropriations; and (4) interest on institutional student loans.

Operating revenues of the Discrete Component Unit consist of gifts, grants, and fundraising activities

in support of Foundation and University programs.

Non-operating revenues: Non-operating revenues of the University include activities that have the

characteristics of non-exchange transactions, such as gifts and contributions, state appropriations,

certain grants, tax levy revenue, investment income, and other revenue sources that are defined as

non-operating revenues by GASB 9, Reporting Cash Flows Proprietary and Non-expendable Trust

Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB 34, Basic

Financial Statements – And Management’s Discussion and Analysis – For State and Local

Governments. These revenue streams are recognized under GASB 33, Accounting and Financial

Reporting for Non-exchange Transactions. Revenues are recognized when all applicable eligibility

requirements have been met. Non-operating revenues of the Discrete Component Unit consists of

investment income.

Classification of Expenses. The University classifies its expenses as either operating or non-operatingexpenses according to the following criteria:

Operating expenses: Operating expenses include activities such as (1) employee salaries, benefits,

and related expenses; (2) scholarships and fellowships, net of scholarship discounts and allowances;

(3) utilities, supplies, and other services; (4) professional fees; and (5) depreciation expenses related

to property, plant, and equipment.

Non-operating expenses: Non-operating expenses include activities such as interest on capital asset-

related debt and other expenses that are defined as non-operating expenses by GASB 9 and GASB

34.

Scholarship Discounts and Allowances. Student tuition and fee revenues and certain other revenuesfrom students are reported net of scholarship discounts and allowances in the Statements of Revenues,Expenses, and Changes in Net Position. Scholarship discounts and allowances are the differencebetween the stated charge for goods and services provided by the University and the amount that ispaid by students and/or third parties making payments on the student’s behalf. To the extent thatrevenues such as federal Pell grants and state lottery scholarships are used to satisfy tuition and feesand other student charges, the University has recorded scholarship discount and allowance as a contra-revenue. A pro rata share of the discounts and allowances are allocated to Auxiliary Enterprises.

Budgetary Process. Operating budgets are submitted annually for approval to the Board of Regents,the New Mexico Higher Education Department (HED), and the New Mexico Department of Finance andAdministration - State Budget Division (DFA). These state agencies develop consolidated fundingrecommendations for all higher education institutions which are considered for appropriation during theannual legislative sessions. In accordance with House Bill 2, in general, unexpended stateappropriations to the University do not revert at the end of each fiscal year. All state appropriations areaccounted for separately in the accounting system.

The legal level of budgetary control is at the fund type and functional level, in accordance with NMAC5.3.4.10. The modified accrual basis of accounting is used for budgetary comparison. If expenditures bybudgetary control line by campus are expected to exceed the approved budget, the University isrequired to submit a budget adjustment request which has been approved by the Board of Regents tothe HED which is subsequently forwarded to the DFA.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires

28


management to make estimates and assumptions that affect the reported amount of assets andliabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, andthe reported amounts of revenues and expenses during the reporting period. Actual results could differfrom those estimates.

Loans Receivable. Loans receivable are shown net of allowance for doubtful accounts in theaccompanying Statements of Net Position. Federal Perkins Loans make up approximately 91% and99% of the student loans receivable at June 30, 2018 and 2017, respectively. Loans receivable fromstudents are generally repayable in installments to the University over a 10 year period commencing 6or 9 months after the date of separation from the University. Collections on these student loans areprimarily handled through a third party servicer. Under this program, the federal government providedfunds for approximately 75% of the total contribution for student loans, with the University providing thebalance. The school's revolving Perkins loan fund is replenished by ongoing activities, such ascollections by the school on outstanding Perkins loans made by the school and reimbursements fromthe Department of Education for the cost of certain statutory loan cancellation provisions. Perkinsborrowers are eligible for loan cancellation for teacher service at low-income schools and under certainother circumstances specified in the Higher Education Act. Students may defer repayment of the loanwhile enrolled (at least half-time) at a postsecondary school. A borrower who has difficulty repaying aPerkins Loan may be eligible for a deferment or forbearance based on economic hardship or othercircumstances. Under federal law, the authority for schools to make new Perkins loans endedSeptember 30, 2017, and final disbursements were permitted through June 30, 2018. As a result,students can no longer receive Perkins Loans.

Pensions. For purposes of measuring the net pension liability, deferred outflows of resources anddeferred inflows of resources related to pensions, and pension expense, information about the fiduciarynet position of the Educational Retirement Board (ERB) and additions to/deductions from ERB’sfiduciary net position have been determined on the same basis as they are reported by ERB, on theeconomic resources measurement focus and accrual basis of accounting. For this purpose, benefitpayments (including refunds of employee contributions) are recognized when due and payable inaccordance with the benefit terms. Investments are reported at fair value.

Other Post Employment Benefits (OPEB). For purposes of measuring the net OPEB liability, deferredoutflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, theUniversity contracts with external actuaries on the economic resource measurement focus. For thispurpose, benefit payments are recognized when due and payable in accordance with the benefit terms.

Deferred Outflow of Resources. Consumption of net assets by the University that is applicable to afuture reporting period.

Deferred Inflow of Resources. Acquisition of net assets by the University that is applicable to a futurereporting period.

Amounts reported as deferred outflows of resources and deferred inflows of resources are as follows:

2018 2017Deferred Outflows of Resources

Related to net pension liability $ 246,363,940 $ 70,110,135Net loss on defeasance 515,729 -

Total deferred outflows of resources 246,879,669 70,110,135

Deferred Inflows of ResourcesRelated to net pension liability $ 37,623,158 $ 24,659,101Related to net OPEB liability 4,332,832 -Unamortized bond premiums 90,501 191,092

Total deferred inflows of resources $ 42,046,491 $ 24,850,193

29


Reclassifications. Certain amounts in the 2017 financial statements and notes thereto have beenreclassified to conform to 2018 financial statement presentation.

Change in Accounting Principle

GASB 75. Effective July 1, 2017, The University adopted GASB Statement No. 75, Accounting andFinancial Reporting for postemployment benefits other than pensions. This statement establishesstandards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows ofresources, and expenses/expenditures related to OPEB. As a result of the implementation of GASBStatement 75, the University restated net position as of July 1, 2017. This restatement was a decrease of$101,073,969 to unrestricted net position as of July 1, 2017. The implementation of GASB 75 alsoresulted in the recognition at July 1, 2017 of $134,552,969 in OPEB liability, an increase from the$33,479,000 in OPEB liability prior to fiscal year 2018.

University Reconciliation of Net Position

Total Net Position

Net position at July 1, 2017, as previously reported $ 92,369,778Adjustment:

Impact of change in accounting principle (101,073,969)

Net position at July 1, 2017, restated for change in accounting principle $ (8,704,191)

Land Grant Permanent Fund. Effective July 1, 2016, the State of New Mexico (State) changed itspolicy regarding the presentation of the Land Grant Permanent Fund (LGPF) within State’sComprehensive Annual Financial Report (CAFR). The State’s institutions of higher education have abeneficial interest in the LGPF. Previously, the State presented the University’s LGPF beneficialinterest as an asset in the educational institution enterprise fund. Consistent with this presentation, theUniversity recorded its LGPF beneficial interest as an asset in its stand-alone financial statements. Thepresentation of the LGPF as an asset in the educational institution enterprise fund and as an asset onthe University’s stand-alone financial statements is an acceptable presentation in accordance with U.S.generally accepted accounting principles (GAAP). However, with the adoption of the State’s new policyon July 1, 2016, the University’s beneficial interest in the LGPF will now be presented within a specialrevenue fund in the State CAFR and will no longer be presented in the educational institution enterprisefund. GAAP requires consistency between the State CAFR presentation and the presentation in theUniversity’s stand-alone financial statements. As a result, this change in policy will no longer permitinstitutions of higher education to record their respective beneficial interests in the LGPF as an assetwithin their stand-alone financial statements. Accordingly, the University has removed its respectivebeneficial interest in the LGPF as of July 1, 2016.

The following table presents the impact of the change in accounting principle on the University’s netposition:

University Reconciliation of Net Position

Total Net Position

Net position at July 1, 2016, as previously reported $ 158,825,979Adjustment:

Impact of change in accounting principle (62,460,343)

Net position at July 1, 2016, restated for change in accounting principle $ 96,365,636

30


This change in presentation does not impact the University’s beneficial interest in the LGPF assets andthe University will continue to receive its beneficial interest in the earnings of the LGPF as required bylaw. See Note 3 - Cash and Investments for additional disclosures regarding the University’s beneficialinterest in the LGPF.

Other Significant Accounting Policies. Other significant accounting policies are set forth in thefollowing notes.

Note 3 - Cash and Investments

The University is authorized by the Board of Regents to invest all available University cash in short-terminvestments and other long-term investments. The classification “Cash and cash equivalents” includescash in banks (deposits), cash on hand, petty cash change funds, and money market funds.

The Foundation (see Note 11) invests endowment and similar funds for the benefit of the Universityunder the terms of a revocable agreement. These assets are invested in a common pool and as of June30, 2018 and 2017, the University owned 309,259 and 321,360 shares which represented 25.56% and25.90% of the total shares in the pool, respectively. The fair value per share as of June 30, 2018 and2017 was $144.49 and $134.42, respectively.

Cash. The University’s deposits are in demand and time deposit accounts at local financial institutions.The University requires a minimum of 50 percent collateralization of all uninsured funds deposited witha financial institution, with the exception of overnight repurchase agreements, which require 102 percentcollateralization. All collateral is held in third-party safekeeping in the name of the University. Themajority of the total deposits were invested in interest bearing accounts at June 30, 2018 and 2017.

For cash flow purposes the net change in cash does not include cash and cash equivalents held in trustby the component unit and others.

Investments. The Senior Vice President for Administration and Finance, the Controller, the AssociateController, and the Banking, Investment and Tax Manager are authorized to purchase and to sellinvestments of the University. Investments are required to be made in a prudent manner so as toensure an acceptable yield with a minimum risk within the guidelines of the University’s investmentpolicy, which requires investment in securities or other financial instruments which are not contrary toSection 6-10-10 and 46-9A-1 through 46-9A-10 NMSA 1978, existing bond covenants, or otherexternally placed restrictions. At June 30, 2018 and 2017, all investments are either held in the name ofthe University by its agent, or held by the University. Investments that will mature in less than one yearare considered short-term. The investments not held by the Foundation consisted of U.S. agencysecurities, U.S. treasury notes, municipal securities, brokered negotiable certificates of deposit with anoriginal maturity of two to five years, and corporate stocks and bonds at June 30, 2018 and 2017. TheFoundation’s short-term investments in marketable securities consisted entirely of U.S Government andAgency securities at June 30, 2018 and 2017.

Endowment investments were $42,816,242 and $39,071,502 at June 30, 2018 and 2017, respectively,and represent longer term investments in debt and equity securities, including, but not limited to, pooledor common trust funds holding such types of securities, subject to any specific limitation set forth in theapplicable gift instrument.

31


At June 30, 2018 and 2017, the investments of the University and its Discrete Component Unitconsisted of the following:

2018 2017Fair Value Fair Value

UniversityU.S. Agency and Treasury Securities $ 84,891,857 $ 75,422,734Municipal Securities 29,028,277 -Certificates of Deposit 4,477,370 4,269,311Domestic Equity Securities 5,634,605 523,952Pooled Investments Held by Others

Corporate Stocks and Bonds 29,338,321 26,314,475U.S. Government and Agency Securities 294,596 441,016Mortgage Backed Securities 1,357,209 1,515,793Limited Partnerships - Alternative 11,028,644 10,100,918Real Estate Holdings 797,472 699,300

Total Investments $ 166,848,351 $ 119,287,499

FoundationCorporate Stocks and Bonds $ 92,635,480 $ 80,354,970U.S Government and Agency Securities 834,027 1,230,891Mortgage Backed Securities 3,952,687 4,336,691Limited Partnerships - Alternative 32,119,416 28,898,765Other Investments 2,678,538 2,416,865

Total Investments $ 132,220,148 $ 117,238,182

Investments held in trust by the Foundation for the University are shown in the University section of thetable above and not in the Foundation section. Investments held in trust for others by the Foundationare not included in this note.

Beneficial Interest. The New Mexico Land Grant Permanent Fund (LGPF) was originally establishedpursuant to the Enabling Act for New Mexico passed by the U.S. Congress on June 20, 1910 (whichencompassed the Ferguson Act of 1898) and was made the law of New Mexico by its reference in theNew Mexico Constitution. The Enabling Act (and its acceptance in the New Mexico Constitution) setforth certain parcels of land granted by the United States in trust to the State for the purposes ofestablishing a permanent fund which could only be used for the purposes set out in the Enabling Act,namely, the funding of schools and state institutions throughout New Mexico. Highly restrictive criteriagoverning permitted uses of the assets of the LGPF are specifically prescribed in the New MexicoConstitution. The beneficiaries of the LGPF are also specifically prescribed in the New MexicoConstitution and in state statute. The University is one of the specific entities identified that has abeneficial interest in the LGPF.

On July 1, 2016 the State of New Mexico (State) changed its policy regarding the presentation of theUniversity’s beneficial interest in the LGPF within the State’s Comprehensive Annual Financial Report(CAFR). As a result of the State’s change in policy the University no longer presents its beneficialinterest in the LGPF in its stand-alone Statements of Net Position. The income received from thebeneficial interest by the University continues to be presented in its stand-alone Statements ofRevenue, Expenses, and Changes in Net Position.

32


As an entity with a beneficial interest, the University receives monthly distributions of income from theLGPF as required by law. The University’s beneficial interest and income received from this beneficialinterest as of and for the years ending June 30, 2018 and 2017 are as follows:

2018 2017Balance of the University's beneficial interest as of June 30 $71,291,552 $67,587,571

Income received from the University's beneficial interest in the LGPFfor the period ending June 30 $ 2,840,940 $ 2,716,981

Assets held by the Foundation for the University. The following is a schedule of the makeup ofpooled cash and investments held by the Discrete Component Unit for the University at June 30, 2018

and 2017.

2018 2017Equities %82 %78Fixed income %3 %4Cash and cash equivalents %13 %16Investments not securities %2 %2

%100 %100

Collateralization of Deposits. At June 30, 2018 and 2017, the recorded values of the University’s cashand time deposits with financial institutions were $21,623,453 and $55,327,464, respectively. Bankbalances, which differ from the reported values due to reconciling items, are categorized and presentedin the following table:

2018 2017University

Amount insured by the Federal Deposit Insurance Corporation (FDIC) $ 553,089 $ 829,085Amount collateralized with securities held by the pledging

financial institution 22,712,172 57,407,165Uncollateralized 2,380,848

Total cash and time deposit bank balances 25,646,109 58,236,250Reconciling Items:Add: cash equivalents 53,898,250 9,077,945Add: cash equivalents held by others 7,569,950 12,958,424Less: other reconciling items (4,022,656) (2,908,786)

Total reported cash balance $83,091,653 $77,363,833

FoundationAmount insured by the FDIC $ 500,000 $ 500,000Amount in excess of FDIC, Lloyd's of London and Security

Investor Protection Corporation (SIPC) 16,948,351 20,386,547Amount at Merrill Lynch insured by SIPC, Lloyd's of

London and the FDIC 2,400,000 2,400,000

Total reported cash balance $19,848,351 $23,286,547

33


The following table provides information on the University’s cash and cash equivalents at June 30,2018:

Account Type of Account

FinancialInstitutionBalance Reconciling Items

BookBalance

First National Bank of Alamogordo Operational Debt Service 471,294 - 471,294

Wells Fargo Bank of New Mexico

Operational Checking - (4,009,505) (4,009,505)

Operational Student ACH - 3,435 3,435

Operational General - 141,309 141,309

Operational Payroll - (277,433) (277,433)

Operational Credit Card - 67,602 67,602

Operational Debt Service 3,717,638 - 3,717,638

Operational Deposit - 2,525 2,525

Operational Money Market (WFS) 48,000,000 - 48,000,000

Operational Cash Management 21,404,088 - 21,404,088

Operational Money Market (Trust) 1,082,876 - 1,082,876

Western Commerce Bank of Carlsbad

Operational Deposit 21,973 - 21,973

Cash on Hand

Cash on hand Cash - 49,411 49,411

Citizen's Bank of Las Cruces

Certificate of deposit Time Deposit 31,116 - 31,116

New Mexico Finance Authority

General obligation bond proceeds Money Market 3,048,643 - 3,048,643

Federated Investment Manager

Dividend reinvestment Money Market 4,815,374 - 4,815,374

New Mexico State University Foundation, Inc.

NMSU endowments Cash 4,521,307 - 4,521,307

Total Cash and Cash Equivalents $ 87,114,309 $ (4,022,656) $ 83,091,653

34


The following table provides information on the University’s cash and cash equivalents at June 30,2017:



BookBalance

First National Bank of Alamogordo Operational Checking $ 63,923 $ - $ 63,923

Operational Debt Service 451,856 - 451,856

Grants State Bank

Operational Checking 22,551 - 22,551


Operational Checking - (2,726,755) (2,726,755)

Operational Student ACH - 9,132 9,132

Operational General - 20,629 20,629

Operational Payroll - (305,563) (305,563)

Operational Credit Card - 50,005 50,005

Operational Debt Service 4,749,134 - 4,749,134

Operational Deposit - 1,245 1,245

Project Funds Savings-2014 Note 145,671 - 145,671

Operational Savings 37,798,261 - 37,798,261

Operational Cash Management 14,948,321 - 14,948,321

Operational Money Market 2,751,817 - 2,751,817

Western Commerce Bank of Carlsbad

Operational Checking 21,157 - 21,157

Operational Deposit 4,263 210 4,473

Cash on Hand

Cash on hand Cash - 42,311 42,311

Citizen's Bank of Las Cruces

Certificate of deposit Time Deposit 31,113 - 31,113

New Mexico Finance Authority

General obligation bond proceeds Money Market 6,619,165 - 6,619,165

Federated Investment Manager

Dividend reinvestment Money Market 6,326,128 - 6,326,128


NMSU endowments Cash 6,339,259 - 6,339,259

Total Cash and Cash Equivalents $ 80,272,619 $ (2,908,786) $ 77,363,833

35


The following table provides information on the the University's investments, including reconciling items,at June 30, 2018.


FinancialInstitutionBalance

ReconcilingItems

BookBalance

FTN FinancialU.S. agency securities Investment 28,293,179 - 28,293,179

FTN Financial

Certificate of deposit Investment 1,500,009 - 1,500,009

Wells Fargo Advisors

Domestic equity securities Investment 253,697 - 253,697

Raymond James

U.S. agency securities Investment 19,881,084 - 19,881,084

Raymond James

Domestic equity securities Investment 5,075,995 - 5,075,995

Wells Fargo Securities


Wells Fargo Securities


Wells Fargo Trust

U.S. treasury securities Investment 28,967,490 - 28,967,490

Wells Fargo Trust


Sandia Motorsports Park, Inc.


Eberhardt Memorial


Principal Funds


Franklin Templeton


Legacy Treasury Direct

U.S. treasury Securities Investment 60,787 - 60,787

Innovation



NMSU endowments Investment 42,816,242 - 42,816,242

Total Investments $ 166,848,351 $ - $166,848,351

36


The following table provide information on the the University's investments, including reconciling items,at June 30, 2017.


FinancialInstitutionBalance

ReconcilingItems

BookBalance

FTN FinancialU.S. agency securities Investment 28,600,429 - 28,600,429

Wells Fargo Advisors


Raymond James


Wells Fargo


Wells Fargo


Wells Fargo

Sandia Motorsports Park, Inc.


Eberhardt Memorial


Principal Funds


Franklin Templeton


Legacy Treasury Direct

U.S. treasury securities Investment 62,995 - 62,995


NMSU endowments Investment 39,071,502 - 39,071,502


37


Information on the Foundation's cash and cash equivalents and deposit accounts and investments,including reconciling items, at June 30, 2018, is provided below:



BookBalance


Operations Checking $ 477,246 $ (43,944) $ 433,302

Program ACH 218,116 - 218,116

Program Wire 97,582 - 97,582

Program Checking 4,399,688 12,335 4,412,023

Program Transfer 958,047 - 958,047

Citizens Bank of Las Cruces

Program Money Market 1,016,781 - 1,016,781

Merrill Lynch

Operations Checking 1,951,436 - 1,951,436

Program Money Market 7,918,863 (78,050) 7,840,813

Program-Cash Gift Annuity Checking & Money Market 29,310 (8,418) 20,892

Program-NMSU Business College Money Market 4,577 - 4,577

Less Cash Allocated to NMSU for AHIT Held in Trust (1,964,539) - (1,964,539)

(Program)

Investment cash - Merrill Lynch

Managers:

Tortoise MLP Money Market 93,769 - 93,769

Private Equity Money Market 451,568 - 451,568

WCMA Money Market 73,717 - 73,717

Cambiar Intl Value Money Market 1,287,570 - 1,287,570

Earnest SCV Money Market 61,687 - 61,687

NWQ Money Market 295,840 - 295,840

Tag - Emerging Money Market 144,382 - 144,382

Eagle SCG Money Market 135,230 - 135,230

Invesco Money Market 1,068,018 - 1,068,018

Short Term Investment Fund Money Market 1,995,767 - 1,995,767

Eagle LCV Money Market 1,048,374 - 1,048,374

Armstrong Money Market 202,294 - 202,294

Western Money Market 120,569 - 120,569

Title V Money Market 19,397 - 19,397

ALTA Money Market 2 - 2

Cohen and Steers Money Market 71,247 - 71,247

ALT Investments Money Market 532 - 532

Santa Barbara Money Market 149,250 - 149,250

Loomis - TMA Money Market 196,876 - 196,876


Total Cash and Cash Equivalents $ 19,966,428 $ (118,077) $ 19,848,351

Corporate Stocks and Bonds Investment $ 66,723,360 - $ 66,723,360

U.S. Government and Agency Securities Investment 834,027 - 834,027

Mortgage Backed Securities Investment 2,657,857 - 2,657,857

Mortgage Backed Securities - Foreign Investment 1,294,830 - 1,294,830

Limited Partnerships - Alternative Investment 32,119,416 - 32,119,416

Mutual Funds Investment 25,912,120 - 25,912,120

Real Estate Holdings

Real Estate Holdings Investment 2,322,528 - 2,322,528

Short-term Investments Investment 332,068 - 332,068

Accrued Investment Interest Investment 23,942 - 23,942


38


Information on the Foundation's cash and cash equivalents and deposit accounts and investments,including reconciling items, at June 30, 2017, is provided below:



BookBalance


Operations Checking $ 524,968 $ (2,454) $ 522,514

Program ACH 27,704 - 27,704

Program Checking 3,118,316 53,445 3,171,761

Program Transfer 313,000 - 313,000

Citizens Bank of Las Cruces

Program Certificate of Deposit 1,006,215 - 1,006,215

Merrill Lynch

Operations Checking 1,309,262 - 1,309,262

Program Money Market 7,339,732 - 7,339,732

Program-Cash Gift Annuity Checking & Money Market 100,415 (9,443) 90,972


(Program)

Investment cash - Merrill Lynch

Managers:

Tortoise MLP Money Market 1,167,707 - 1,167,707

Private Equity Money Market 74,045 - 74,045

WCMA Money Market 69,387 - 69,387

Cambiar Intl Value Money Market 610,585 - 610,585

Earnest SCV Money Market 48,734 - 48,734

NWQ Money Market 56,572 - 56,572

APEX Money Market 43,051 - 43,051

Eagle SCG Money Market 88,307 - 88,307

Invesco Money Market 1,119,195 - 1,119,195

Short Term Investment Fund Money Market 725,703 - 725,703

Eagle LCV Money Market 1,524,166 - 1,524,166

Armstrong Money Market 9,416,561 - 9,416,561

Western Money Market 126,816 - 126,816

Title V Money Market 20,526 - 20,526

ALTA Money Market 4,361 - 4,361

Cohen and Steers Money Market 20,452 - 20,452

ALT Investments Money Market 189,395 - 189,395

Santa Barbara Money Market 276,163 - 276,163

Loomis - TMA Money Market 262,068 - 262,068

NMSU Business College Money Market 852 - 852


Total Cash and Cash Equivalents $ 23,244,999 $ 41,548 $ 23,286,547

Corporate Bonds Investment $ 61,555,800 - $ 61,555,800

U.S. Government and Agency Securities Investment 1,230,891 - 1,230,891

Mortgage Backed Securities Investment 3,259,176 - 3,259,176

Mortgage Backed Securities - Foreign Investment 1,077,515 - 1,077,515

Limited Partnerships - Alternative Investment 28,898,765 - 28,898,765

Mutual Funds Investment 18,799,170 - 18,799,170

Real Estate Holdings

Real Estate Holdings Investment 2,000,700 - 2,000,700

Short-term Investments Investment 385,307 - 385,307

Accrued Investment Interest Investment 30,858 - 30,858


39


Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect thefair value of an investment. In accordance with the University’s investment policy, investment maturitiesare scheduled to coincide with the University’s projected cash requirements. The University does notcommit any discretionary funds to financial instruments with maturities longer than ten years from thedate of purchase. Funds are only committed to maturities longer than five years from date of purchase ifdirectly related to a specific capital or other long-term project. The maturity dates on non-discretionaryfund investments do not exceed the final maturity dates established within the funds’ restrictivepurposes. At least 50% of all cash and investment balances are invested in instruments with maturitiesless than two years.

A summary of the investments at June 30, 2018, and their exposure to interest rate risk based on thelength of the investment follows:

Fair ValueLess than 1

Year 1 - 5 Years 6 - 10 YearsGreater than

10 YearsUniversity

U.S. agency securities $ 84,891,857 $ 15,667,647 $ 69,224,210 $ - $ -

Domestic corporate bonds 5,075,995 - 5,075,995 - -

U.S. treasury securities 29,028,277 14,782,199 14,246,078 - -

Certificate of deposit 4,477,370 996,242 3,481,128 - -

Pooled Investments

Mortgage-backed securities 1,357,210 - 1,357,210 - -

Domestic corporate bonds 379,871 - 87,227 173,439 119,205

US government and agencysecurities 286,376 87,424 44,255 22,047 132,650

125,496,956 $ 31,533,512 $ 93,516,103 $ 195,486 $ 251,855

Items not subject to interest raterisk:

Equity securities 558,610

Pooled Investments

Accrued interest 8,220

Corporate stocks 28,958,449

Limited partnerships - Alternative 11,028,644

Real estate holdings(Investments not securities) 797,472

Total Investments $166,848,351

Foundation

U.S. government and agency securities $ 834,027 $ 254,609 $ 128,885 $ 64,209 $ 386,324Corporate bonds 1,106,321 - 254,037 568,084 284,200


$ 254,609 $ 4,335,609 $ 632,293 $ 670,524

Items not subject

to interest rate risk:



Other investments 2,678,538


40


A summary of the investments at June 30, 2017, and their exposure to interest rate risk based on thelength of the investment follows:

Fair ValueLess than 1

Year 1 - 5 Years 6 - 10 YearsGreater than

10 YearsUniversity

U.S. agency securities $ 75,359,739 $ 7,784,803 $ 67,574,936 $ - $ -

U.S. Treasury securities 62,995 - 62,995 - -

Certificate of deposit 4,269,311 2,251,792 2,017,519 - -

Pooled Investments

US government and agencysecurities 441,016 - 236,199 30,174 174,643Mortgage-backed securities 1,515,793 - 1,515,793 - -

Corporate bonds 550,110 - 209,102 207,990 133,018

82,198,964 $ 10,036,595 $ 71,616,544 $ 238,164 $ 307,661

Items not subject to interest raterisk:

Equity securities 523,952

Pooled Investments



Real estate holdings(Investments not securities) 699,300


Foundation

U.S. government and agency securities $ 1,230,891 $ - $ 644,905 $ 86,329 $ 499,657Corporate bonds 1,573,870 - 598,238 595,063 380,569


$ - $ 5,579,834 $ 681,392 $ 880,226

Items not subject

to interest rate risk:



Other investments 2,416,865


Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. The University’s investment policy limits investment in money market instruments and othersecurities of commercial banks, broker-dealers, or recognized financial institutions to those rated in thehighest rating category by a nationally recognized statistical rating organization (NRSRO) or which areguaranteed by a person or entity whose long-term debt obligations are rated in the highest ratingcategory by a NRSRO. This includes without limitation, securities of, or other interests in, any open-endor closed-end management type investment company or investment trust registered under theprovisions of 15 USC Sections 80(a)-1 et. seq., which invest only in obligations of the government of theUnited States of America or securities that are secured by obligations of the government of the UnitedStates of America.

41


A summary of the investments at June 30, 2018, and their exposure to credit risk follows:

Rating Fair ValueUniversity

U.S. agency securities S&P/Moody's - AA+/Aaa $ 84,891,857

Certificates of deposits Federally insured 4,477,370

U.S. treasury securities Not rated 29,028,277

Corporate bonds S&P/Moody's - AA+/Aaa 5,075,995

Domestic equity securities Not rated 558,610

Pooled Investments

U.S. government and agency securities Aaa 294,596

Mortgage-backed securities AAA+ 1,357,210

Domestic equity securities Not rated 21,271,271

Corporate bonds A1 to BAA1 379,871

Foreign equity securities Not rated 7,687,178

Limited partnerships - Alternative Not rated 11,028,644

Real estate holdings (investments not securities) Not rated 797,472

Total Investments $ 166,848,351

Foundation

U.S. government and agency securities Moody's---Aaa $ 579,418

Corporate bonds A1 62,739



Corporate bonds AAA 129,582

Corporate bonds AA2 95,859

Corporate bonds BAA1 282,766

Government bonds Not rated 254,609


Mutual funds Not rated 25,912,120


Mortgage-backed securities AAA+ 3,952,687


Other investments (real estate and accrued

Investment interest) Not rated 2,678,538


42


A summary of the investments at June 30, 2017, and their exposure to credit risk follows:

Rating Fair ValueUniversity

U.S. agency securities S&P/Moody's - AA+/Aaa $ 75,359,739

Certificates of deposits Federally insured 4,250,000

Certificates of deposits Subject to custodial credit risk 19,311

U.S. treasury securities Not rated 62,995

Domestic equity securities Not rated 523,952

Pooled Investments

U.S. government and agency securities Aaa 441,016

Mortgage-backed securities AAA 1,515,793


Corporate bonds A1 to BAA1 550,110



Real estate holdings (investments not securities) Not rated 699,300


Foundation

U.S. government and agency securities Moody's---Aaa $ 885,919




Corporate bonds BAA1 382,059

Government bonds Not rated 344,971


Mutual funds Not rated 18,799,170


Mortgage-backed securities AAA 4,336,691


Other investments (real estate and accrued)

Investment interest) Not rated 2,416,865


Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributable to themagnitude of an entity’s investment in a single issuer. The University diversifies its use of investmentinstruments to avoid incurring unreasonable risk inherent in over-investing in specific instruments,individual financial institutions or maturities. With the exception of U.S. Treasury securities andauthorized pools, no more that 50% of the total investment portfolio is invested in a single security typeor with a single financial institution or at a single maturity. The University holds no investments subjectto concentration of credit risk with any issuer that represents 5% or more of total investments.

Custodial Credit Risk – Deposits. This is the risk that in the event of a bank failure, the University’sdeposits may not be returned. Neither the University, nor its discretely presented component unit, the

43


Foundation, has a deposit policy for custodial credit risk. As of June 30, 2018 and 2017, total bankbalances of the University were $79,544,359 and $67,314,195, respectively. None of these balancesare subject to custodial credit risk.

Custodial Credit Risk – Investments. This is the risk that, in the event of the failure of thecounterparty, the University will not be able to recover the value of its investments or collateralsecurities that are in the possession of an outside party. None of the investments are subject tocustodial credit risk.

Fair Value of Assets and Liabilities. GASB Statement No.72 (Fair Value Measurement andApplication) defines fair value as the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date. GASB 72 alsoestablishes a fair value hierarchy which requires an entity to maximize the use of observable inputs andminimize the use of unobservable inputs when measuring fair value. The standard describes threelevels of inputs that may be used to measure fair value.

Level 1Where quoted market prices are available in an active market, securities are classified w ithin Level 1 of the valuation hierarchy. Level 1 securities include exchange traded equities.

Level 2If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include governmental and corporate bonds, foreign obligations, and collateralized mortgage backed securities.

Level 3Investments classified within Level 3 have significant unobservable inputs. The valuation of these funds is determined by unobservable inputs such as recent purchases and sales, underlying fund holdings, and information provided by fund managers and general partners including: audited financials, unaudited financial statements, and net asset valuations.

Investments that do not have a readily determinable fair value are recorded using net asset value(NAV). NAV is generally provided by the investment managers but the Foundation considers thereasonableness of the NAV, based on market information, to arrive at the fair value estimate for eachinvestment.

In certain cases, both observable and unobservable inputs may be used to determine the fair value ofinvestments and, in such cases, an investment's level within the fair value hierarchy is based on thelowest level of input that is significant to the fair value measurement. The degree of judgment exercisedin determining fair value is greatest for investments in Level 3. Because of the inherent uncertainty ofvaluation, those estimated values may differ significantly from the values that would have been usedhad a ready market for the investments existed, and the differences could be material. Level 3investments at the University consist of land and buildings held at the Foundation.

44


The following is a description of the valuation methodologies used for assets measured at fair value.

Government Securities and Corporate Bonds are valued at the closing price reported on the majormarket on which the individual securities are traded or have reported broker trades which may beconsidered indicative of an active market. Where quoted prices are available in an active market, theinvestments are classified within Level 1 of the valuation hierarchy. If quoted prices are not available forthe specific security, then fair values are estimated by using pricing models, quoted prices of securitieswith similar characteristics, discounted cash flows and other observable inputs. Such securities wouldbe classified within Level 2 of the valuation hierarchy.

Hedge Fund and Venture Capital Investments, which are not readily marketable, are carried atestimated fair values. Fair value is based upon information provided by the management of each Fund,including audited financial statements and any other relevant factors. Because of the absence of areadily determinable fair value and the inherent uncertainty of valuation, the estimated fair value maydiffer significantly from the value that would have been used had a ready market for the investmentexisted, and the difference could be material. These investments are not immediately redeemable at thereporting date. These investments have significant unobservable inputs and are classified as NAV.

Real Estate is valued at current appraisal or fair value. Real estate is classified within Level 3 of thevaluation hierarchy.

Equity Securities are valued at the closing price reported on the active market on which the individualsecurities are traded and are classified within Level 1 of the valuation hierarchy. Nonredeemablesecurities are not reported on the active market and are classified within Level 3 of the valuationhierarchy.

45


The following table presents the fair value measurements of University assets recognized in theaccompanying Statement of Net Position measured at fair value on a recurring basis and the levelwithin the fair value hierarchy in which the fair value measurements fall at June 30, 2018.

Quoted Prices Significant

in Active Other Significant

Markets For Observable Unobservable

Balance as of Identical Assets Inputs Inputs

2018 June 30, 2018 Level 1 Level 2 Level 3

Debt Securities

U.S. treasury securities $ 29,028,277 $ 29,028,277 $ - $ -

Agency securities (GSEs) 84,891,857 - 84,891,857 -

Corporate bonds 5,075,995 - 5,075,995 -

Certificate of deposit (NCD) 4,477,370 - 4,477,370 -

Total Debt Securities 123,473,499 29,028,277 94,445,222 -

Equity Securities

Common 486,350 486,350 - -

Preferred 71,260 71,260 - -

Nonredeemable securities 1,000 - - 1,000

Total Equity Securities 558,610 557,610 - 1,000

Total Investments by Fair Value Level 124,032,109 $ 29,585,887 $ 94,445,222 $ 1,000

Investments held by Foundation

Corporate stocks and bonds $ 22,899,302 $ 22,519,429 $ 379,873 $ -

Mutual funds 6,439,021 6,439,021 - -

Mortgage backed securities 1,357,209 930,525 426,684 -

Government bonds 286,374 - 286,374 -

Real estate holdings 797,472 - - 797,472

Total investments Held by Foundation by Fair ValueLevel 31,779,378 $ 29,888,975 $ 1,092,931 $ 797,472

Investments Held by Foundation measured by NAV

Unfunded Redemption RedemptionCommitments Frequency Notice Period

Hedge Fund Investments

Multi-strategy $ 8,125,142 $ - Monthly 45 Days

Equity long/short 1,510,602 405,376 Monthly 30 Days

Total Hedge Fund Investments 9,635,744 405,376

Domestic Venture Capital Ivestments

Venture capital 1,392,900 -

Total Domestic Venture Capital Investments 1,392,900 - None None

Total Investments Held by Foundation measured byNAV 11,028,644 $ 405,376

Other Investments held by Foundation

Accrued interest income 8,220


46


The following table presents the fair value measurements of University assets recognized in theaccompanying Statement of Net Position measured at fair value on a recurring basis and the levelwithin the fair value hierarchy in which the fair value measurements fall at June 30, 2017.

Quoted Prices Significant

in Active Other Significant

Markets For Observable Unobservable

Balance as of Identical Assets Inputs Inputs

2017 June 30, 2017 Level 1 Level 2 Level 3

Debt Securities

U.S. treasury securities $ 62,995 $ 62,995 $ - $ -

Agency securities (GSEs) 75,359,739 - 75,359,739 -

Certificate of deposit (NCD) 4,269,311 - 4,269,311 -

Total Debt Securities 79,692,045 62,995 79,629,050 -

Equity Securities

Common 450,871 450,871 - -

Preferred 73,081 73,081 - -

Total Equity Securities 523,952 523,952 - -

Total Investments by Fair Value Level 80,215,997 $ 586,947 $ 79,629,050 $ -

Investments held by Foundation

Corporate stocks and bonds $ 18,356,261 $ 18,356,261 $ - $ -

Mutual funds 7,408,103 7,408,103 - -

Mortgage backed securities 1,505,007 - 1,505,007 -

Government bonds 550,111 - 550,111 -

U.S. government and agency securities 441,016 - 441,016 -

Real estate holdings 699,300 - - 699,300

Total investments Held by Foundation by Fair ValueLevel 28,959,798 $ 25,764,364 $ 2,496,134 $ 699,300

Investments Held by Foundation measured by NAV

Unfunded Redemption RedemptionCommitments Frequency Notice Period

Hedge Fund Investments

Multi-strategy $ 7,477,736 $ - Monthly 45 Days

Equity long/short 1,811,126 549,981 Monthly 30 Days

Total Hedge Fund Investments 9,288,862 549,981

Domestic Venture Capital Ivestments

Venture capital 812,056 -

Total Domestic Venture Capital Investments 812,056 - None None

Total Investments Held by Foundation measured byNAV 10,100,918 $ 549,981

Other Investments held by Foundation

Accrued interest income 10,786


47


Note 4 – Accounts Receivable and Unearned Revenue

Accounts receivable consists of the following at June 30, 2018 and 2017:

2018 2017University

Student tuition and fees $ 52,057,837 $ 48,380,978Federal, state, and private grants and contracts 30,627,204 34,318,807Other 5,297,510 5,558,966Due from Component Unit 2,132,358 1,500,977

Less: allowance for doubtful accounts (37,757,802) (35,452,648)

Net accounts receivable $ 52,357,107 $ 54,307,080

Foundation

Net miscellaneous accounts receivable $ 10,781,211 $ 9,791,044

The allowance for doubtful accounts includes consideration for the credit risk associated with the variousreceivables.

Unearned revenue consists of the following at June 30, 2018 and 2017:

2018 2017University

Student tuition and fees $ 3,427,642 $ 1,265,063Federal, state, and private grants and contracts 6,074,450 6,982,733Other 257,567 218,976

Total unearned revenue $ 9,759,659 $ 8,466,772

Foundation

Total unearned revenue $ 414,367 $ 430,356

Note 5 – Capital Assets

Capital assets as detailed below are stated at cost, or if contributed, at acquisition value at the date ofgift. Net interest expense incurred during the construction period on revenue bond funded projects iscapitalized as an asset.

The University’s main campus has New Mexico State District Court endorsed water rights equaling11,454 acre feet per annum. As there is no cost basis for these assets, neither the water rights nor thelivestock bred by the University are presented in the accompanying Statements of Net Position.

The State of New Mexico Land Office holds 193,272 surface and 254,627 sub-surface acres in trust forthe University and manages the commercial use of this property including various leases and oil andgas exploration. The value of the land is recorded at the State of New Mexico Land Office; thereforethis amount is not presented in the accompanying Statements of Net Position.

48


Changes in capital asset balances for the year ended June 30, 2018, were as follows:

Balance BalanceJuly 1 June 302017 Additions Transfers Retirements 2018

University

Capital assets not depreciated:

Land and land improvements $ 10,662,240 $ - $ - $ - $ 10,662,240

Construction in progress 12,267,687 18,939,828 (15,212,085) - 15,995,430

Total capital assets not beingdepreciated $ 22,929,927 $ 18,939,828 $ (15,212,085) $ - $ 26,657,670

Capital assets being depreciated:

Buildings $ 761,856,800 $ 749,236 $ 12,661,505 $ (2,418,926) $ 772,848,615

Infrastructure 83,176,532 - 2,550,580 - 85,727,112

Equipment 128,062,598 5,438,214 - (19,683,802) 113,817,010

Software 15,019,693 157,570 - (77,179) 15,100,084

Library books 85,833,188 3,273,021 - (145,897) 88,960,312

Total other capital assets 1,073,948,811 9,618,041 15,212,085 (22,325,804) 1,076,453,133

Less accumulated depreciation for:

Buildings (368,529,602) (20,849,376) - 360,307 (389,018,671)

Infrastructure (49,377,066) (3,218,782) - - (52,595,848)

Equipment (99,698,155) (6,733,548) - 19,145,196 (87,286,507)

Software (13,560,846) (630,024) - 50,825 (14,140,045)

Library books (62,812,672) (3,083,305) - 145,897 (65,750,080)

Total accumulated depreciation (593,978,341) (34,515,035) - 19,702,225 (608,791,151)

Capital assets being depreciated,net $ 479,970,470 $ (24,896,994) $ 15,212,085 $ (2,623,579) $ 467,661,982

Capital asset summary:

Capital assets not beingdepreciated $ 22,929,927 $ 18,939,828 $ (15,212,085) $ - $ 26,657,670Other capital assets, at cost 1,073,948,811 9,618,041 15,212,085 (22,325,804) 1,076,453,133

Total cost of capital assets 1,096,878,738 28,557,869 - (22,325,804) 1,103,110,803

Less: accumulated depreciation (593,978,341) (34,515,035) - 19,702,225 (608,791,151)

Capital assets, net $ 502,900,397 $ (5,957,166) $ - $ (2,623,579) $ 494,319,652

Foundation

Capital assets $ 728,337 $ 75,608 $ - $ (48,700) $ 755,245

Less: accumulated depreciation (668,727) (28,882) - 48,007 (649,602)

Capital assets, net $ 59,610 $ 46,726 $ - $ (693) $ 105,643

49


Changes in capital asset balances for the year ended June 30, 2017, were as follows:

Balance BalanceJuly 1 June 302016 Additions Transfers Retirements 2017

University

Capital assets not depreciated:

Land and land improvements $ 10,696,079 $ - $ - $ (33,839) $ 10,662,240

Construction in progress 16,951,174 22,427,266 (27,098,744) (12,009) 12,267,687

Total capital assets not beingdepreciated $ 27,647,253 $ 22,427,266 $ (27,098,744) $ (45,848) $ 22,929,927

Capital assets being depreciated:

Buildings $ 738,367,241 $ 85,864 $ 25,649,159 $ (2,245,464) $ 761,856,800

Infrastructure 80,221,060 1,505,887 1,449,585 - 83,176,532

Equipment 125,815,619 6,424,398 - (4,177,419) 128,062,598

Software 14,944,055 95,521 - (19,883) 15,019,693

Library books 82,618,969 3,318,021 - (103,802) 85,833,188

Total other capital assets 1,041,966,944 11,429,691 27,098,744 (6,546,568) 1,073,948,811

Less accumulated depreciation for:

Buildings (349,471,559) (21,245,840) - 2,187,797 (368,529,602)

Infrastructure (46,278,891) (3,098,175) - - (49,377,066)

Equipment (96,601,653) (6,926,290) - 3,829,788 (99,698,155)

Software (12,399,197) (1,181,532) - 19,883 (13,560,846)

Library books (59,894,529) (3,021,945) - 103,802 (62,812,672)

Total accumulated depreciation (564,645,829) (35,473,782) - 6,141,270 (593,978,341)

Capital assets being depreciated,net $ 477,321,115 $ (24,044,091) $ 27,098,744 $ (405,298) $ 479,970,470

Capital asset summary:

Capital assets not beingdepreciated $ 27,647,253 $ 22,427,266 $ (27,098,744) $ (45,848) $ 22,929,927Other capital assets, at cost 1,041,966,944 11,429,691 27,098,744 (6,546,568) 1,073,948,811

Total cost of capital assets 1,069,614,197 33,856,957 - (6,592,416) 1,096,878,738

Less: accumulated depreciation (564,645,829) (35,473,782) - 6,141,270 (593,978,341)

Capital assets, net $ 504,968,368 $ (1,616,825) $ - $ (451,146) $ 502,900,397

Foundation

Capital assets $ 741,412 $ 6,259 $ - $ (19,334) $ 728,337

Less: accumulated depreciation (598,510) (89,551) - 19,334 (668,727)

Capital assets, net $ 233,879 $ (83,292) $ - $ - $ 59,610

50


Note 6 – Long-Term Liabilities

A summary of changes in long-term liabilities for the University and Discrete Component Unit for theyear ended June 30, 2018, follows:

Balance Balance Current

July 1 June 30 Portion

2017, as restated Additions Reductions 2018 (due in 2019)

University

Bonds and contracts payable:

Revenue bonds payable $ 105,317,291 $ 78,921,450 $ (33,593,201) $ 150,645,540 $ 6,055,000

Subordinate revenue note 12,985,000 - (820,000) 12,165,000 880,000

Contracts payable 801,550 154,800 (444,273) 512,077 316,930

Total bonds and contracts 119,103,841 79,076,250 (34,857,474) 163,322,617 7,251,930

Other liabilities:

Accrued compensated absences 17,501,384 2,559,253 (4,386,413) 15,674,224 3,134,846

Other post employment benefits 134,552,969 4,869,768 (5,523,530) 133,899,207 5,524,000

Net pension liability 507,687,518 269,722,768 (26,736,537) 750,673,749 -

Accrued benefit reserve 659,630 - - 659,630 -

Other 539,287 227,946 - 767,233 -

Total other liabilities 660,940,788 277,379,735 (36,646,480) 901,674,043 8,658,846

Total long-term liabilities $ 780,044,629 $ 356,455,985 $ (71,503,954) $1,064,996,660 $ 15,910,776


July 1 Changes in July 1 Portion

2017 Additions Reductions Estimate 2018 (due in 2019)

Foundation

Gift annuities payable $2,561,203 $ - $ (23,016) $ (189,295) $ 2,348,892 $ 161,346

Payable under unitrusts 154,280 - - (14,099) 140,181 29,525

Total long-term liabilities $2,715,483 $ - $ (23,016) $ (203,394) $ 2,489,073 $ 190,871

51


A summary of changes in long-term liabilities for the University and Discrete Component Unit for theyear ended June 30, 2017, follows:


July 1 June 30 Portion

2016 Additions Reductions 2017 (due in 2018)

University

Bonds and contracts payable:

Revenue bonds payable $114,075,730 $ - $ (8,758,439) $105,317,291 $ 8,240,000

Subordinate revenue note 13,745,000 - (760,000) 12,985,000 820,000

Contracts payable 1,001,751 158,714 (358,915) 801,550 426,885

Total bonds and contracts 128,822,481 158,714 (9,877,354) 119,103,841 9,486,885

Other liabilities:

Accrued compensated absences 18,049,935 4,464,228 (5,012,779) 17,501,384 4,240,471

Other post employment benefits 31,006,000 6,895,000 (4,422,000) 33,479,000 5,524,000

Net pension liability 473,733,007 61,960,808 (28,006,297) 507,687,518 -

Accrued benefit reserve 659,630 - - 659,630 -

Other 536,111 3,176 - 539,287 -

Total other liabilities 523,984,683 73,323,212 (37,441,076) 559,866,819 9,764,471

Total long-term liabilities $652,807,164 $ 73,481,926 $ (47,318,430) $678,970,660 $ 19,251,356


July 1 Changes in July 1 Portion

2016 Additions Reductions Estimate 2017 (due in 2018)

Foundation

Gift annuities payable $ 2,780,960 $ - $ (65,887) $ (153,870) $ 2,561,203 $ 167,357

Payable under unitrusts 167,564 - - (13,284) 154,280 29,525

Total long-term liabilities $ 2,948,524 $ - $ (65,887) $ (167,154) $ 2,715,483 $ 196,882

Bonds Payable. The University issued the 2017 refunding and improvement revenue bonds (Series2017A Refunding and Improvement Revenue Bonds, 2017B Taxable Refunding Revenue Bonds, andthe 2017C Refunding Revenue Bonds). Proceeds of the Series 2017A Bonds were used, in part, tocurrently refund at par the Series 2006 Bonds. The University is undertaking the current refunding of theSeries 2006 Bonds for economic savings.

The refunding transactions resulted in a total economic loss of $1,113,729, including the economicsavings from Series 2006 refunding and an accounting loss of $693,085. The net difference in cashoutflows from the refundings will be an additional $9,793,395. As of June 30, 2018, there are$18,940,000 of outstanding bonds have been defeased through an irrevocable trust. All otheroutstanding University revenue bonds as of June 30, 2018 were issued as parity bonds and are all tax-exempt, with the exception of the Series 2013C, Series 2010B, and Series 2010C bonds. All bonds arepayable solely from, and secured by, a pledge of and a non-exclusive first lien on certain pledgedrevenues. The revenues pledged to meet these debt obligations are student tuition and fees, sales andservices, other operating income, investment income, and building fees. Interest payments are madetwice a year, on October 1 and April 1 while principal is paid annually on April 1. Allowable premiums,and discounts on bonds payable are recorded in total and amortized according to the bondsoutstanding method, which approximates the effective interest method.

The bond interest expense incurred for the fiscal years 2018 and 2017 was $6,351,560 and $4,945,420,respectively, net of interest income. Of these amounts, $1,255,550 and $429,579 was capitalized duringfiscal years 2018 and 2017, respectively.

52


Total University bonds issued and outstanding at June 30, 2018 and 2017, excluding bonds issued bythe Community College Districts, (See Note 13), consisted of:

Total OutstandingIssued 2018 2017

Improvement Revenue Bonds

Bond Series 2006,

(4.00% - 5.25%) Final Maturity 2026$ 10,245,000 $ - $ 5,680,000

Refunding and Improvement Revenue Bonds

Bond Series 2010A, 2010B, 2010C, 2010D

(1.89% - 5.27%) Final Maturity 203078,670,000 46,505,000 54,810,000


Bond Series 2013A, 2013B, 2013C

(2.00% - 5.00%) Final Maturity 203356,200,000 23,345,000 41,695,000


Bond Series 2017A, 2017B, 2017C

(1.75% - 5.00%) Final Maturity 2042 73,240,000 72,045,000 -

Total Bonds Payable 218,355,000 141,895,000 102,185,000

Plus: Unamortized Net Premium 17,590,465 8,750,540 3,132,291

Bonds Payable, net $ 235,945,465 $ 150,645,540 $ 105,317,291

The maturity schedule for the University bonds payable at June 30, 2018, follows:

Year Ending June 30 Principal Interest

2019 $ 6,055,000 $ 6,828,375

2020 7,075,000 6,572,799

2021 9,165,000 6,256,308

2022 9,180,000 5,827,102

2023 9,175,000 5,383,314

2024-2028 42,615,000 20,283,317

2029-2033 32,050,000 9,839,764

2034-2038 18,665,000 4,201,793

2039-2042 7,915,000 1,013,500

Total $ 141,895,000 $ 66,206,272

Notes Payable. The Board of Regents issued a tax-exempt Subordinate Lien Improvement RevenueNote, Series 2014 on April 21, 2014 in a direct purchase with BOKF, NA dba Bank of Albuquerque. Theoriginal principal amount of the note was $15,865,000 and the interest rate is 3.07%. The note ispayable solely from, and secured by, a pledge of, and a non-exclusive subordinate lien on the followingrevenues: student tuition and fees; sales and service revenue; other operating revenue; investmentincome; and, building fees. Interest payments began on October 1, 2014 and are due semiannuallythereafter on April 1 and October 1 of each year. Principal payments are due April 1 each year,beginning April 1, 2016. The note matures April 1, 2029.

53


The interest expense incurred on the note was $398,640 and $421,972 for fiscal years ended June 30,2018 and 2017, respectively.

The maturity schedule for the subordinate revenue note at June 30, 2018, follows:

Year Ending June 30 Principal Interest

2019 $ 880,000 $ 373,466

2020 945,000 346,450

2021 1,015,000 317,438

2022 1,090,000 286,278

2023 1,165,000 252,815

2024-2028 7,070,000 678,317

Total $ 12,165,000 $ 2,254,764

Contracts Payable. The University acquires various types of equipment under capital leaseagreements. All lease agreements contain a fiscal funding clause, which allows the lease agreements tobe canceled if funding for future periods is not appropriated. University administration believes that thelikelihood of this occurrence is remote. The following tables detail the carrying value of assets acquiredunder these arrangements, the net present value of minimum lease payments, future minimum leasepayments and the portion of the lease payments representing interest at June 30, 2018.

Asset Net PresentType of Property Carrying Value of Minimum

Value Lease Payments

Office equipment $ 378,640 $ 285,177

Computer equipment 577,710 226,900

Total $ 956,350 $ 512,077

MinimumYear Ending June 30 Principal Interest Payments

2019 $ 316,931 $ 15,873 $ 332,804

2020 75,604 10,440 86,044

2021 69,975 5,736 75,711

2022 37,218 2,019 39,237

2023 12,349 178 12,527

Total $ 512,077 $ 34,246 $ 546,323

54


Note 7 – Health Insurance

The University provides group health insurance coverage for all regular employees working 30 hoursper week or more and term appointment employees working 30 hours per week or more. Coverage isoptional and is available the first pay period after 30 days of employment. The University’s portion of thepremium is based on the employee’s annual salary. Employee contributions are required for personal,as well as spouse, qualified domestic partner and dependent coverage.

The University participates in the State of New Mexico (State) group health insurance program.Premiums are paid to the State. The State program assumes full responsibility for all claims.

Eligible retirees who were enrolled in health insurance for a minimum of ten consecutive years prior toretirement may elect to continue health insurance coverage through the University’s program. TheUniversity contributes 60% of the premiums for retirees and their dependents until the retiree reachesage 70, after which, the University contributes 30%. Retiree health insurance is not offered toemployees hired after June 30, 2016.

The University participates in a fully insured plan for the eligible active retirees. Premiums are paid tothe insurance carrier. The insurance carrier assumes full responsibility for all claims.

Note 8 – Retirement Programs

The University offers three retirement plans. All eligible employees working more than 25% full-timeequivalent are required to participate in one of the first two plans described below. Student employeesdo not participate in these plans.

A. Educational Retirement Act

Plan Description. Substantially all of the University’s eligible employees, except those who participatein the Alternative Retirement Plan (ARP) described below, participate in a public employee retirementsystem authorized under the Educational Retirement Act (ERA) of the State of New Mexico (Chapter22, Article11 NMSA 1978). The Educational Retirement Board (ERB) is the administrator of the plan,which is a cost-sharing multiple-employer defined benefit retirement plan. The plan provides forretirement benefits, disability benefits, survivor benefits, and cost-of-living adjustments to plan members(certified teachers, and other employees of State public school districts, colleges and universities) andbeneficiaries. ERB issues a separate, publicly available financial report that includes financialstatements and required supplementary information for the plan. That report may be obtained by writingto ERB, P.O. Box 26129, Santa Fe, New Mexico 87502. The report is also available on ERB’s websiteat www.nmerb.org.

Return to Work Program. Effective January 1, 2002, the ERB implemented a retiree Return-To-Work(RTW) program whereby the University is required to make regular employer contributions on eligibleretiree wages. As of July 1, 2011, House Bill 129 was passed requiring returning retirees to contributethe employee portion.

Funding Policy. The contribution requirements of plan members and the University are established inState statute under Chapter 22, Article 11, NMSA 1978. The requirements may be amended by acts ofthe legislature.

55


A summary of member and employer contributions to the Educational Retirement Board is providedbelow:

2018 2017 2016Employee's earning $20,000 or less:

University contribution 13.90% 13.90% 13.90%

Employee contribution 7.90% 7.90% 7.90%

Employee's earning more than $20,000:



University's contribution to ERB $ 24,574,007 $ 25,880,341 $ 26,736,537

University's contribution to ERB for Return to Work Program $230,807 $209,946 $211,022

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflowsof Resources Related to Pensions

The total ERB pension liability, net pension liability, and sensitivity information were based on an annualactuarial valuation performed as of June 30, 2016. The total ERB pension liability was rolled forwardfrom the valuation date to the plan year June 30, 2017, using generally accepted actuarial principles.Therefore, the employer’s portion was established as of the measurement date of June 30, 2017. AtJune 30, 2018 and 2017 the University reported liabilities of $750,673,749 and $507,687,518,respectively, for its proportionate share of the net pension liability. The proportion of the net pensionliability is based on the employer contributing entity’s percentage of total employer contributions for thefiscal year ended June 30, 2017. The contribution amounts were defined by Section 22-11-21, NMSA1978. At June 30, 2017, the University’s proportion was 6.75462% which was a decrease of 0.30009%from its proportion measured as of June 30, 2016. At June 30, 2016, the University proportion was7.05471% which was a decrease of 0.25907% from its proportion measured as of June 30, 2015.

For the year ended June 30, 2018, the University recognized a pension expense of $105,576,830. AtJune 30, 2018, the University reported deferred outflows of resources and deferred inflows of resourcesrelated to pensions from the following sources:

2018

Deferred Outflows ofResources

Deferred Inflows ofResources

Differences between expected and actual experience $ 1,347,530 $ 11,564,818

Changes of assumptions 219,136,069 -

Net difference between projected and actual earnings onpension plan investments - 102,977

Changes in proportion and differences between Universitycontributions and proportionate share of contributions - 25,955,363

University contributions subsequent to the measurement date 25,880,341 -

Total $ 246,363,940 $ 37,623,158

56


The $25,880,341 reported as deferred outflows of resources related to pensions resulting fromUniversity contributions subsequent to the measurement date of June 30, 2017 will be recognized as areduction of the net pension liability in the year ended June 30, 2019.

For the year ended June 30, 2017, the University recognized a pension expense of $38,141,503. AtJune 30, 2017, the University reported deferred outflows of resources and deferred inflows of resourcesrelated to pensions from the following sources:

2017

Deferred Outflows ofResources


Differences between expected and actual experience $ 2,202,537 $ 4,828,749

Changes of assumptions 10,334,483 -

Net difference between projected and actual earnings onpension plan investments 30,304,718 -

Changes in proportion and differences between Universitycontributions and proportionate share of contributions 531,860 19,830,352

University contributions subsequent to the measurement date 26,736,537 -

Total $ 70,110,135 $ 24,659,101

Other amounts reported as deferred outflows of resources and deferred inflows of resources related topensions will be recognized in pension expense as follows:

Year Ending June 30

2019 $ 65,863,322

2020 75,753,721

2021 47,424,615

2022 (6,181,217)

$ 182,860,441

Actuarial assumptions: As described above, the total ERB pension liability and net pension liabilityare based on an actuarial valuation performed as of June 30, 2016. The total ERB pension liability wasrolled forward from the valuation date to the Plan year June 30, 2017 using generally accepted actuarialprinciples. Specifically, the liabilities measured as of June 30, 2017 incorporate the followingassumptions:

All members with an annual salary of more than $20,000 will contribute 10.70% during the fiscal yearended June 30, 2015 and thereafter.

Members hired after June 30, 2013 will have an actuarially reduced retirement benefit if they retirebefore age 55 and their COLA will be deferred until age 67.

COLAs for most retirees are reduced until ERB attains a 100% funded status.

These assumptions were adopted by ERB on June 12, 2015 in conjunction with the six-year experiencestudy period June 30, 2014.

57


For the purposes of projecting future benefits, it is assumed that the full COLA is paid in all future years.

The actuarial methods and assumptions used to determine total pension liability included in themeasurement are as follows:

Inflation 2.50%

Salary Increases Composition; 2.50% inflation, plus .75% productivityincrease rate, plus step-rate promotional increases formembers with less than 10 years of service

Investment Rate of Return 7.25%

Single Discount Rate 5.90%

Retirement Age Experienced-based table rates based on age andservice. Adopted by NMERB on June 12, 2015 inconjunction with the six- year experience study for theperiod ended June 30,2014.

Mortality Healthy Males - RP-2000 Combined Mortality Tablewith white collar adjustments, generational mortalityimprovements with scale BB.

Healthy Females - GRS Southwest Region TeacherMortality Table, set back one year, generational mortality improvements in accordance with scale BBfrom the table's base year of 2012.

Cost-of-living increases 1.90% per year, compounded annually

Payroll growth 3.00% per year

Contribution accumulation 5.5% increase per year for all years prior to the valuation date

Disability Incidence Approved rates applied to eligible members with at least10 years of service

Actuarial Cost Method Entry Age Normal

The long-term expected rate of return on pension plan investments is determined annually using abuilding-block method in which best-estimate ranges of expected future real rates of return aredeveloped for each major asset class. These ranges are combined to produce the long-term expectedrate of return by weighting the expected future real rates of return by the target asset allocationpercentage and by adding expected inflation.

Changes of Benefit Terms and Assumptions: There were no modifications to the benefit provisionsthat were reflected in the actuarial valuation as of June 30, 2017. Actuarial assumptions and methodsare set by the Board of Trustee, based upon recommendations made by the Plan's actuary. The Boardadopted new assumptions on April 21, 2017 in conjunction with the six-year actuarial experience studyperiod ending June 30, 2016. At that time, The Board adopted a number of economic assumptionchanges, including a decrease in the inflation assumption from 3.00% to 2.50%. The 0.50% decrease inthe inflation assumption also led to decreases in the nominal investment return assumption from 7.75%to 7.25%, the assumed annual wage inflation rate from 3.75% to 3.25%, the payroll growth assumptionfrom 3.50% to 3.00%, and the annual assumed COLA from 2.00% to 1.90%.

58


The target allocation for each major asset class and total expected real rate of return are summarized inthe following table:

Asset Class Target Allocation

Long TermExpected Real Rate

of Return

Equities - Domestic 19%

Equities - International 14%

Fixed Income 26%

Alternatives 40%

Cash 1%

Total 100% 7.25%

Discount rate: A single discount rate of 5.90% and 7.75% was used to measure the total ERB pensionliability as of June 30, 2017 and June 30, 2016, respectively. For 2017, the single discount rate wasbased on an expected rate of return on pension plan investments of 7.25% and a municipal bond rate of3.56%. Based on the stated assumptions and the projection of cash flows, the Plan’s fiduciary netposition and future contributions were sufficient to finance the benefit payments through the year 2053.As a result, the long term expected rate of return on Plan investments was applied to projected benefitpayments through the 2053 fiscal year, and the municipal bond rate was applied to all benefit paymentsafter that date. For 2016, the single discount rate was based on the expected rate of return on pensioninvestments of 7.75%. Based on the stated assumptions and the projection of cash flows, the Plan'sfiduciary net position and future contributions were projected to be available to finance all projectedfuture benefit payments of the current pension plan members.

Sensitivity of the University’s proportionate shares of the net pension liability to changes in thediscount rate: The following tables show the sensitivity of the net pension liability to changes in thediscount rate as of fiscal year end 2018 and 2017. In particular, the table presents the University’s netpension liability under the current single rate assumption, as if it were calculated using a discount rateone percentage point lower, (4.90%) and (6.75%), or one percentage point higher, (6.90%) and (8.75%)than the single discount rate for June 30, 2017 and 2016, respectively.

20181% Decrease

(4.90%)Current Discount

Rate (5.90%)1% Increase

(6.90%)

New Mexico State University's proportionateshare of the net pension liability $ 977,188,976 $ 750,673,749 $ 565,513,796

20171% Decrease


Rate (7.75%)1% Increase

(8.75%)

New Mexico State University's proportionateshare of the net pension liability $ 672,420,328 $ 507,687,518 $ 371,005,825

Pension plan fiduciary net position: Detailed information about the ERB’s fiduciary net position isavailable in the separately issued audited financial statements as of and for June 30, 2017 and 2016which are publicly available at www.erb.org.

B. Alternative Retirement Program

Plan Description. The New Mexico Alternative Retirement Plan (ARP) was established by amendment

59


to Chapter 22, Article 11, Section 47-52. Certain faculty and professional staff hired on or after July 1,1991, may elect to participate in an alternative defined contribution retirement plan in lieu ofparticipation in the ERA in accordance with policies stipulated by the Board of Regents. The twocarriers approved by the ERB are the Teachers Insurance and Annuity Association/College RetirementEquities Fund and Fidelity Investments. Employees are allowed to transfer between carriers once eachyear. Vesting is immediate and benefits may be distributed as an annuity, a roll over, or a withdrawl.

Effective July 1, 2009, employees, after 7 years of contribution to the ARP, have a one-time opportunityto move to the ERB’s defined benefit plan. Section 51 allows members of the ARP the option to cashout or rollover the ARP account once they have left employment.

A summary of member and employer contributions to the Educational Retirement Board for theAlternative Retirement Program is provided below:

2018 2017 2016Employee's earning $20,000 or less:



Employee's earning more than $20,000:



Administration fee to ERB 3.00% 3.00% 3.00%

Payroll expenses covered by ARP $ 29,453,438 $ 29,449,905 $ 27,853,706

University's contribution to the ERB for ARP $ 3,212,401 $ 3,210,313 $ 3,036,291

Administration fee paid to ERB for ARP $ 883,603 $ 883,491 $ 827,516

Employee contributions made to ARP $ 3,153,458 $ 3,151,409 $ 2,781,785

C. Federal Retirement Program

Plan Description. Certain employees of the University working under the auspices of the UnitedStates Department of Agriculture (through various University sponsored extension programs) arecovered under the Civil Service Retirement System (CSRS) or the Federal Employees RetirementSystem (FERS), established with the passage of Public Law 99-335. Both are defined benefitretirement plans. FERS is a three-tiered retirement plan (covering substantially all Federal employeeshired subsequent to December 31, 1986) combining Social Security benefits with a basic benefit planand a thrift savings plan. Employees hired prior to 1984 do not participate in Social Security, but havethe ability to transfer to FERS at their own discretion. The CSRS and FERS are administered by theU.S. Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers,Pennsylvania 16017.

Contributions Required. Employees covered by CSRS and FERS are considered federal employees,and as such, are obligated to contribute according to the guidelines of the federal government. For theyear ended June 30, 2018 there were 2 employees enrolled under CSRS and 11 employees underFERS.

60


A summary of member and employer contributions to the Federal Retirement Program is providedbelow:

2018 2017 2016Employee's covered by CSRS:



Employee's covered by FERS:



University's contribution $ 135,101 $ 136,061 $ 142,235

Employee's contribution $ 16,287 $ 16,343 $ 19,980

Note 9 – Other Postemployment Benefits Plan

Plan Description. New Mexico State University is a single employer that offers employees and theireligible dependents retiree benefits. This is an unfunded OPEB plan operating on a pay as you gobasis. The authority to establish and amend the benefit provisions rests with the Board of Regents.

Retirees, who have had 10 consecutive years of health insurance coverage with the University at thetime of retirement, are offered the opportunity to participate in a fully-insured PPO medical plan,including prescription drugs. Medicare retirees (for retirees 65 years of age and over) are offered theopportunity to participate in a Medicare carve-out medical plan, including prescription drugs. Eligibleretired employees may select a Life Insurance benefit up to $10,000. All premiums for life insurance arepaid by the retiree.

The University currently pays 60% of the monthly medical and prescription premium for retirees andtheir eligible dependents until the retiree reaches age 70, at which time the University reduces theircontribution to 30%. As of June 30, 2018, 1,347 retirees met the eligibility requirements for healthinsurance.

Employees hired after June 30, 2016 are not offered this benefit.

Plan Participation Percentage. The participation percentage is the assumed rate of future eligibleretirees who elect to continue health coverage at retirement. It is assumed that 87% of all pre Medicareemployees and their dependents who are eligible for early retirement will participate in the retireemedical plan. It is also assumed that 80% of those enrolled in the pre Medicare plans will continue onthe plan once Medicare eligible. Lastly, it is assumed that 87% of all pre Medicare employees who areeligible for the retiree life insurance benefit will participate, and 90% of those enrolled will continue onthe plan once Medicare eligible. This assumes that a one-time irrevocable election to participate ismade at retirement.

Employees covered by benefit terms - At June 30, 2018, the following employees were covered by thebenefit terms:

2018

Current retirees receiving benefits 1,716

Inactive employees entitled but not yet receiving benefits -

Current active members 2,594

61


Other Post Employment Benefits, OPEB expense, and Deferred Outflows of Resources andDeferred Inflows of Resources related to OPEB - Year Ended June 30, 2018 Presented inAccordance with GASB 75.

The following note disclosures related to OPEB pertains to fiscal year 2018 as a result of theimplementation for GASB Statement No. 75, Accounting and Financial Reporting for PostemploymentBenefits other than Pensions - an amendment of GASB Statement No. 45.

Annual OPEB Cost and Net OPEB Obligation. The University’s annual other postemployment benefit(OPEB) Service/Interest cost (expense) is the portion of the Actuarial Present Value of plan benefitsand expenses for active employees which is allocated to a valuation year by the Actuarial Cost Method.The annual OPEB expense replaces the Annual Required Contribution (ARC from GASB 45), withfaster recognition than what was previously required. The following table shows the components of theUniversity’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes inthe University’s net OPEB obligation related for fiscal year 2018:

Increase (Decrease)

Total OPEBLiability (a)

Plan FiduciaryNet Position

(b)Net OPEB

Liability (a)-(b)

Total OPEB Liability - Start of Year (July 1, 2017) $ 134,552,969 $ - $ 134,552,969

Changes for the year

Service cost 4,936,250 - $ 4,936,250

Interest cost 5,291,343 - 5,291,343

Changes in assumptions or other inputs (5,357,825) - (5,357,825)

Benefit payments (5,523,530) - (5,523,530)

Net change in total OPEB liability (653,762) - (653,762)

Net OPEB Liability - End of Year (June 30,2018) $ 133,899,207 $ - $ 133,899,207

The total OPEB liability and sensitive information were based on an annual actuarial valuationperformed as of June 30, 2018.

A summary of the key results are shown below:

2018

Present Value of Future Benefits $ 169,701,000

Total OPEB Liability (Beginning of Fiscal Year) $ 134,553,000

Total OPEB Liability (End of Fiscal Year) $ 133,899,207

Net OPEB Liability $ 133,899,207

62


For the year ended June 30, 2018, the University recognized a OPEB expense of $9,202,601. At June30, 2018, the University reported deferred outflows of resources and deferred inflows of resourcesrelated to OPEB from the following sources:

2018

Deferred Outflowsof Resources


Changes of assumptions $ - $ (4,332,832)

Total $ - $ (4,332,832)

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEBwill be recognized in OPEB expense as follows:

Year Ending June 30

2019 $ (1,024,992)

2020 (1,024,992)

2021 (1,024,992)

2022 (1,024,992)

2023 (232,864)

$ (4,332,832)

Reconciliation to Prior Valuation. Healthcare Analytics Consulting prepared a previous valuationunder GASB 45 for the University on July 19, 2015, with an effective date of July 1, 2015. This priorvaluation resulted in a liability of $90.4 million. Projecting that liability forward to June 30, 2018 wouldproduce an estimated liability of $97 million. The table below shows the difference between theexpected Net OPEB Liability (NOL) using the prior valuation assumptions and the current UnfundedActuarial Accrued Liability (AAL).

Expected AAL $ 97,000,000

Current AAL 134,000,000

% Difference %38.14

The increase in liability is mostly due to: (1) a decrease in discount rate from 4.00% to 3.87%, (2) achange in actuarial cost method from Projected Unit Credit to Entry Age Normal, (3) an increase in theUniversity’s subsidy contribution and (4) an update to the participation assumptions using more recentexperience.

63


Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes arebased on the substantive plan (the plan as understood by the employer and the plan members) andinclude the types of benefits provided at the time of each valuation and the historical pattern of sharingof benefit costs between the employer and plan members to that point.

Valuation Date June 30, 2018

Measurement Date June 30, 2018

Discount Rate 3.58% per annum (BOY)3.87% per annum (EOY) Source: Bond Buyer 20-Bond GO Index

Salary Increase Rate 2.5% per annum

Inflation Rate 3.0% per annum

Mortality Rate RP-2014 generational table scaled using MP17 and applied on a gender-specific basis

Other Information. The Entry Age Normal Actuarial Cost Method was used based on level percentageof projected salary. Experience/Assumptions gains and losses are amortized over a closed period of 5.2years starting on July 1, 2017, equal to the average remaining service of active and inactive planmembers (who have no future service). Currently, the plans are considered to be unfunded as there areno assets and retiree benefits are expected to be paid annually on a cash basis. The actuarial valuationassumes an annual health care cost trend on a select and ultimate basis: medical and prescriptionbenefits on a select basis at 6.5% for retirees 65 years of age and under and 5.5% for retirees over 65years of age and on an ultimate basis at 4.5%. The select trend rates are reduced .5% each year untilreaching the ultimate trend.

Health Care Trend Sensitivity Analysis. The following schedule measures the Net OPEB Liability ifthe health care cost trend rate used was 1% higher than than the assumed health care cost trend rateand 1% lower than the assumed health care cost trend rate.

20181% Decrease Current Trend 1% Increase

New Mexico State University's net OPEB liability $ 155,588,873 $ 133,899,207 $ 117,095,000

Discount Rate Sensitivity Analysis. The following table shows the sensitivity of the OPEB liability tochanges in the discount rate as of fiscal year end 2018. In particular, the table presents the University’sOPEB liability under the current single rate assumption, as if it were calculated using a discount rateone percentage point lower, (2.87%) and (4.87%) for June 30, 2018.

20181% Decrease


Rate 3.87%1% Increase

(4.87%)

New Mexico State University's net OPEB liability $ 153,925,016 $ 133,899,207 $ 117,765,178

Other Post Employment Benefits, OPEB expense, and Deferred Outflows of Resources andDeferred Inflows of Resources related to OPEB - Year Ended June 30, 2017 Presented inAccordance with GASB 45.

Funding Policy. The University does not use a trust fund to administer the financing and payment ofbenefits. The retired employees that elect to participate in post-employment benefits are required to

64


make contributions in the form of monthly premiums based on current rates established under themedical and life plans.

The University funds the plan on a pay-as-you-go basis. The pay-as-you-go expense is the netexpected cost of providing retiree benefits, and includes all expected claims and related expenses andis offset by retiree contributions. The pay-as-you-go expense for fiscal years 2018 and 2017 were$5,523,530 and $4,422,000, respectively, net of retiree contributions.

Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes arebased on the substantive plan (the plan as understood by the employer and the plan members) andinclude the types of benefits provided at the time of each valuation and the historical pattern of sharingof benefit costs between the employer and plan members to that point. The actuarial methods andassumptions used include techniques that are designed to reduce the effects of short-term volatility inactuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspectiveof the calculations.

In the July 1, 2016, actuarial valuation related for fiscal year 2017, the projected unit credit actuarial costmethod was used. The actuarial assumptions included a 4.0% annual discount rate, assuming theUniversity funds the retirement benefit on a pay-as-you go basis. Currently, the plans are considered tobe unfunded as there are no assets and retiree benefits are expected to be paid annually on a cashbasis. The actuarial valuation assumes an annual health care cost trend on a select and ultimate basis:medical and prescription benefits on a select basis at 7.5% for retirees 65 years of age and under and6.5% for retirees over 65 years of age and on an ultimate basis at 4.5%. The select trend rates arereduced .5% each year until reaching the ultimate trend. The Unfunded Actuarial Accrued Liability isamortized over the maximum acceptable period of 30 years and is calculated assuming a levelpercentage of projected payrolls. Payroll is projected to increase 2.5% per year.

Annual OPEB Cost and Net OPEB Obligation. The University’s annual other postemployment benefit(OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC),an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARCrepresents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost eachyear and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30years. The following table shows the components of the University’s annual OPEB cost for the year, theamount actually contributed to the plan, and changes in the University’s net OPEB obligation related tofiscal year 2017:

2017

Annual required contribution $ 6,921,000

Interest on net OPEB obligation 1,240,000

Adjustment to annual required contribution (1,266,000)

Annual OPEB cost (expense) 6,895,000

Contributions made (4,422,000)

Increase in net OPEB obligation 2,473,000

Net OPEB obligation beginning of year 31,006,000

Net OPEB obligation end of year $ 33,479,000

The percentage of annual OPEB cost contributed to the plan was 55%, 53% and 47% for fiscal years2017, 2016, and 2015, respectively.

Funded Status and Funding Progress. As of June 30, 2016, the updated actuarial valuation date, thepresent value of all future expected post-retirement health payments and administrative costsattributable to past service, was $90,297,000 and the actuarial value of assets was zero. The covered

65


payroll (annual payroll of active employees covered by the plan) was $164,627,765 and the ratio of theUAAL to the covered payroll was 55%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts andassumptions about the probability of occurrence of events far into the future. Examples includeassumptions about future employment, mortality, and the healthcare cost trend. Amounts determinedregarding the funded status of the plan and the annual required contributions of the employer aresubject to continual revision as actual results are compared with past expectations and new estimatesare made about the future. The Schedule of Funding Progress and Employee Contributions (Schedule5), presented as required supplementary information following the notes to the financial statements,presents multiyear trend information about whether the actuarial value of plan assets is increasing ordecreasing over time relative to the actuarial accrued liabilities for benefits.

Note 10 – Commitments

Capitalizable Project Commitments and Financing. The University has entered into contracts for theconstruction and renovation of various facilities. At June 30, 2018, the estimated remaining costs tocomplete these and other in-house construction and renovation projects was approximately $84.5million. These projects are in various stages of completion. Those deemed to be major projects areexpected to be completed by August 2019. The remaining cost of all budgeted projects (both capitaland non-capital) will be financed as follows:

Funding Sources Amount

Revenue bonds $ 29,210,704

General obligation bonds (State of New Mexico) 21,235,724

General obligation bonds (local) 7,516,063

Severance tax bonds (State of New Mexico) 215,169

University funds 15,257,620

State funds 8,760,137

Gifts, grants and contracts 2,325,577

Total $ 84,520,994

Operating Leases. The University is obligated under certain lease (rental) agreements which areaccounted for as operating leases. The items being leased are primarily office and storage facilities andoffice equipment. Incorporated into each lease agreement is a fiscal funding clause which allows theUniversity to cancel the operating lease if funding for future periods is not appropriated. As withcontracts payable, University administration considers the likelihood of such an occurrence to beremote.

Future minimum rental payments required under operating leases are as follows:

Year Ending June 30MinimumPayments

2019 $ 990,622

2020 595,279

2021 364,298

2022 118,226

2023 24,207

Years thereafter 52,700

Total minimum lease payments $ 2,145,332

66


Operating lease payments made in fiscal years 2018 and 2017 are as follows:

2018 2017

Minimum rentals $ 1,045,886 $ 1,040,458

Contingent rentals 127,197 190,238

Total lease payments $ 1,173,083 $ 1,230,696

Contingent rentals are determined based on usage clauses in certain contracts.

Other Commitments. At June 30, 2018, the University had outstanding purchase orders for materialsand services which were not received, and thus are not recorded as liabilities in the accompanyingStatements of Net Position. The approximate amount of such commitments is $25.1 million.

Note 11 - Component Units

The following entities support the University in accomplishing its various missions. These entities wereselected for inclusion based on criteria as set forth in GASB 14, The Reporting Entity, GASB 39,Determining Whether Certain Organizations Are Components Units, GASB 61, Financial ReportingEntity: Omnibus – an amendment of GASB Statements No. 14 and No. 34 and GASB 80, BlendingRequirements for Certain Component Units - an amendment of GASB Statement No 14. Completefinancial statements for these component units can be obtained from each respective administrativeoffice at the addresses listed below.

The Foundation is discretely presented on the face of the financial statements, as prescribed by GASB14, amended by GASB 39, and further amended by GASB 61. The entity qualifies as discretelypresented according to GASB 14, paragraph 40a, because of the nature and significance of itsrelationship with the University. This relationship meets the direct benefit, access to economicresources and significance of resources criteria. The other component units are blended because theUniversity either completely controls its activities or the entity provide services entirely, or almostentirely to the University in accordance with GASB 39 and GASB 80.

Arrowhead Center, Inc. Arrowhead Center, Inc., a blended component unit, was organized pursuant tothe provisions of the State of New Mexico University Research Park Act of 1989. Its purposes are topromote and contribute to economic development and protect, license, and market intellectual propertydeveloped by faculty, staff, and students of the University, as well as members of the community, inorder to further research and economic development for the State of New Mexico. Arrowhead Center,Inc.’s address is: Arrowhead Center, Inc., MSC 3CR, P.O. Box 30001, Las Cruces, NM 88003.

Summary financial information as of June 30, 2018 and 2017, and for the fiscal years then endedfollows:

2018 2017

Net Position

Total assets $ 1,146,658 $ 902,167

Total liabilities 83,328 104,459

Total net position $ 1,063,330 $ 797,708

Changes in Net Position

Total revenues $ 923,398 $ 883,301

Total expenditures 657,776 765,795

Change in net position 265,622 117,506

Net position, beginning 797,708 680,202

Net position, ending $ 1,063,330 $ 797,708

67


The New Mexico State University Foundation, Inc. The Foundation is a non-profit corporation formedfor the purpose of obtaining and disbursing funds for the sole benefit of the University. It is a discretecomponent unit of the University with financial information presented in a separate column in theUniversity’s financial statements. Separate audited financial statements are prepared in accordancewith the Financial Accounting Standards Board (FASB). The Foundation’s address is: New MexicoState University Foundation, Inc., P.O. Box 3590, Las Cruces, NM 88003.

Aggie Development, Inc. Aggie Development, Inc., was organized pursuant to the provisions of theState of New Mexico University Research Park Act of 1989. The corporation was established to benefitthe University by (1) managing and developing designated University real estate and water rights; (2)contributing all of the corporation’s net revenues to the University; and (3) enhancing learningopportunities for students. Since inception, Aggie Development Inc. did not meet the materialitythreshold that requires audited financial statements and therefore its activity is included in the NMSUaudited financial statements, but no separate details are presented herein. Aggie Development, Inc.’saddress is: Aggie Development, Inc., P.O. Box 3145, Las Cruces, NM 88003.

Note 12 – Contingent Liabilities

The University has evaluated contingent liabilities from the balance sheet date through December 12,2018, the date at which the financial statements were available to be issued, and determined there areno additional items to disclose.

Note 13 – Natural Classification Operating Expenses

The University's and Discrete Component Unit's operating expenses by natural classification were asfollows:

2018 2017

UniversityComponent

Unit UniversityComponent

UnitOperating Expenses

Salaries

Faculty $ 92,999,916 $ - $ 94,901,192 $ -

Exempt staff 100,670,412 2,081,291 102,915,959 2,298,654

Non-exempt staff 14,041,439 - 15,385,378 -

Student/graduate assistant 29,694,683 24,542 29,711,828 21,752

Other compensation 2,635,215 5,325 2,174,151 5,400

Total salaries 240,041,665 2,111,158 245,088,508 2,325,806

Other Operating Expenses

Benefits 158,708,878 - 84,918,550 -

Travel 12,475,335 139,765 12,471,014 118,789

Scholarship and fellowships and other program support 33,913,139 10,657,340 38,024,453 8,931,420

Utilities 12,321,568 9,982 12,097,149 3,657

Professional fees 17,009,781 335,084 18,077,767 294,750

Supplies and other services 63,107,716 812,424 81,661,310 744,595

Depreciation 34,515,035 28,882 35,473,782 89,551

Total operating expenses $572,093,117 $ 14,094,635 $527,812,533 $ 12,508,568

68


Note 14 – Unrestricted Net Position

Unrestricted net position supports the missions of the University in current and future years. Thefollowing is a breakdown of the University’s unrestricted net position as of June 30, 2018 (unaudited):

2018 2017

Unrestricted Net Position $ (536,546,367) $ (368,393,810)

Less: Unfunded Pension (541,932,967) (462,236,483)

Less: Long-Term Compensated Absences (12,539,378) (13,260,913)

Less: Other Post Employment Benefits (138,232,038) (33,479,000)

Adjusted Unrestricted Net Position 156,158,016 140,582,586

Desiginated for Operations - Instruction and General $ 31,617,485 $ 29,611,531

Desiginated for Operations - Research 17,310,500 17,194,671

Desiginated for Operations - Public Service 8,403,675 8,330,629

Desiginated for Operations - Other 10,638,285 9,934,289

Quasi Endowments Funds 17,880,788 15,953,875

Renewals and Replacements - Buildings 25,873,630 21,987,851

Renewals and Replacements - Auxiliary Enterprises 8,606,557 6,243,351

Renewals and Replacements - Internal Services Units 6,442,548 5,959,937

Renewals and Replacements - Equipment 12,343,953 10,076,971

Unexpended plant - Designated to Projects 5,552,944 8,513,316

Unexpended plant - Future Projects/Contingency 11,487,651 6,776,165

Total $ 156,158,016 $ 140,582,586

Note 15 – Tax Abatements

NMSU does not collect tax revenue nor does it enter into any individual tax abatement agreements.NMSU receives funding through appropriations from the State of New Mexico and the amounts of suchappropriations to NMSU may be indirectly affected by Tax Abatement agreements entered into by theState of New Mexico. As a taxing authority, the State of New Mexico has the ability to collect taxrevenue and enter into individual tax abatement agreements. The State of New Mexico is requiredunder GASB 77 to provide detailed disclosure regarding its tax abatement agreements in itscomprehensive annual financial report (CAFR). No University revenue was impacted by abatementagreements.

Note 16 – New Accounting Standards

GASB Statement No. 75 (Accounting and Financial Reporting for Postemployment Benefits other thanPensions) became effective for fiscal year 2018. The primary objective of this statement is to improveaccounting and financial reporting by state and local governments for postemployment benefits otherthan pensions (other postemployment benefits, or OPEB). The Statement's impact for the Universitywas an increase in the beginning OPEB liability by $101 million.

GASB Statement No. 83 (Certain Asset Retirement Obligations) will become effective for fiscal year2019. The objective of this Statement is to enhance comparability of financial statements amonggovernments by establishing uniform criteria to recognize and measure certain Asset RetirementObligations (AROs). This statement requires that recognition of a liability be recognized when theliability is both incurred and reasonably estimable. The liability is incurred based on external laws,regulations, contracts, or court judgments, together with an internal event that obligates a governmentto perform asset retirement activities. The University has not been legally required to perform assetretirement activities, and as such, this statement is not considered applicable at this time. Continuedconsideration will be performed in future periods.

69


GASB Statement No. 84 (Fiduciary Activities) will become effective for fiscal year 2020. This statementestablishes criteria for identifying fiduciary activities of all state and local governments. The focus of thecriteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2)the beneficiaries with whom a fiduciary relationship exists. The University has not yet determined theimpact of this statement.

GASB Statement No. 85 (Omnibus 2017) became effective for fiscal year 2018. This statementaddresses various practice issues related to blending component units, goodwill, fair valuemeasurement and application, and postemployment benefits (pension and other postemploymentbenefits). This statement will enhance consistency in the application of accounting and financialreporting requirements. This statement had no impact on the University.

GASB Statement No. 86 (Certain Debt Extinguishment Issues) became effective for fiscal year 2018.The primary objective of this statement is to improve consistency in accounting and financial reportingfor in-substance defeasance of debt by providing guidance for transactions in which cash and othermonetary assets acquired with only existing resources are placed in an irrevocable trust for the solepurpose of extinguishing the debt. The University does not currently place current resources in trust forrefunding, and as such, the statement does not have an impact.

GASB Statement No. 87 (Leases) will become effective for fiscal year 2021. This statement increasesthe usefulness of governments’ financial statements by requiring recognition of certain lease assets andliabilities for leases that previously were classified as operating leases and recognized as inflows ofresources or outflows of resources based on the payment provisions of the contract. Under thisstatement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset,and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The University has not yet determined the impact of this statement.

GASB Statement No. 88 (Debt Disclosures) will become effective for fiscal year 2019. The primaryobjective of this Statement is to improve the information that is disclosed in notes to governmentfinancial statements related to debt, including direct borrowings and direct placements. It also clarifieswhich liabilities governments should include when disclosing information related to debt. This statementdefines debt as a liability that arises from a contractual obligation to pay cash (or other assets that maybe used in lieu of cash) in one or more payments to settle an amount that is fixed at the date thecontractual obligation is established. This statement requires additional essential information related todebt be disclosed in notes to the financial statements, including amount of unused lines of credit; assetspledged as collateral for debt; and terms specified in debt agreements related to significant events ofdefault with finance-related consequences, significant termination events with finance-relatedconsequences, and significant subjective acceleration clauses. The University has not yet determinedthe impact of this statement.

GASB Statement No. 89 (Construction Interest Costs) will become effective for fiscal year 2021. Theobjectives of this Statement are (1) to enhance the relevance and comparability of information aboutcapital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interestcost incurred before the end of a construction period. This Statement establishes accountingrequirements for interest cost incurred before the end of a construction period. Such interest costincludes all interest that previously was accounted for in accordance with the requirements ofparagraphs 5–22 of Statement No. 62, Codification of Accounting and Financial Reporting GuidanceContained in Pre-November 30, 1989 FASB and AICPA Pronouncements, which are superseded bythis Statement. This Statement requires that interest cost incurred before the end of a constructionperiod be recognized as an expense in the period in which the cost is incurred for financial statementsprepared using the economic resources measurement focus. The University has not yet determined theimpact of this statement.

GASB Statement No. 90 (Majority Equity Interests) will become effective fiscal year 2019. The primary

70


objectives of this Statement are to improve the consistency and comparability of reporting agovernment’s majority equity interest in a legally separate organization and to improve the relevance offinancial statement information for certain component units. It defines a majority equity interest andspecifies that a majority equity interest in a legally separate organization should be reported as aninvestment if a government’s holding of the equity interest meets the definition of an investment. Amajority equity interest that meets the definition of an investment should be measured using the equitymethod, unless it is held by a special-purpose government engaged only in fiduciary activities, afiduciary fund, or an endowment (including permanent and term endowments) or permanent fund.Those governments and funds should measure the majority equity interest at fair value. The Universityhas implemented this statement for fiscal year ended June 30, 2018, resulting in the recognition of a$1,000 investment.

Note 17 – Subsequent Events

The University has evaluated subsequent events from the balance sheet date through December 12,2018, the date at which the financial statements were available to be issued, and determined there areno additional items to disclose.

71

New Mexico State University Supplementary Schedules For the Year Ended June 30, 2018

Schedule 1 - Combining Statement of Net Position

New MexicoState University

2018

ArrowheadCenter, Inc.

2018Total2018

ASSETSCurrent assets:

Cash and cash equivalents $ 16,561,306 $ 1,075,940 $ 17,637,246Restricted cash and cash equivalents 9,887,363 - 9,887,363Cash and cash equivalents held in trust by component unit for NMSU 4,521,307 - 4,521,307Cash and cash equivalents held in trust by others 3,048,643 - 3,048,643Short-term investments 31,446,089 - 31,446,089Accounts receivable, net 50,189,001 35,748 50,224,749Due from component unit 2,132,358 - 2,132,358Inventories 2,484,382 - 2,484,382Prepaid expenses 3,709,435 1,543 3,710,978Loans receivable - current portion, net 954,389 - 954,389

Total current assets 124,934,273 1,113,231 126,047,504

Non-current assets:Unrestricted cash and cash equivalents 41,773,187 - 41,773,187Restricted cash and cash equivalents 6,223,907 - 6,223,907Investments held by others - - -Investments held in trust by component unit for NMSU 42,816,242 - 42,816,242Investments held in trust for others - - -Restricted long-term investments 14,665,449 - 14,665,449Other long-term investments 77,887,144 33,427 77,920,571Loans receivable, net 9,514,499 - 9,514,499Prepaid expenses and other assets - - -Capital assets, net 494,319,652 - 494,319,652

Total non-current assets 687,200,080 33,427 687,233,507

TOTAL ASSETS 812,134,353 1,146,658 813,281,011

DEFERRED OUTFLOWS OF RESOURCES 246,879,669 - 246,879,669

LIABILITIESCurrent liabilities:

Accounts payable 13,339,254 50,673 13,389,927Other accrued liabilities 14,787,597 26,242 14,813,839Accrued interest payable 1,800,459 - 1,800,459Unearned revenue 9,753,246 6,413 9,759,659Held in trust by NMSU 5,319,195 - 5,319,195Long-term liabilities - current portion 15,910,776 - 15,910,776

Total current liabilities 60,910,527 83,328 60,993,855

Non-current liabilities:Accrued benefit reserves 659,630 - 659,630Other long-term liabilities 169,377,298 - 169,377,298Net pension liability 750,673,749 - 750,673,749Other post-employment benefit liability 128,375,207 - 128,375,207

Total non-current liabilities 1,049,085,884 - 1,049,085,884

TOTAL LIABILITIES 1,109,996,411 83,328 1,110,079,739

DEFERRED INFLOWS OF RESOURCES 42,046,491 - 42,046,491

NET POSITIONNet investment in capital assets 386,309,799 - 386,309,799Restricted for:

Non-expendable:Endowments 28,109,389 - 28,109,389

Expendable:Endowments 1,964,539 - 1,964,539General activities 6,296,810 - 6,296,810Federal student loans 12,783,937 - 12,783,937Capital projects 8,039,238 - 8,039,238Related entity activities 13,775 1,063,330 1,077,105

Unrestricted (536,546,367) - (536,546,367)

TOTAL NET POSITION $ (93,028,880) $ 1,063,330 $ (91,965,550)

See accompanying independent auditor's report.

72


Schedule 1 - Combining Statement of Net Position

New MexicoState University

2017

ArrowheadCenter, Inc.

2017Total2017

ASSETSCurrent assets:

Cash and cash equivalents $ 8,843,562 $ 823,143 $ 9,666,705Restricted cash and cash equivalents 10,144,470 - 10,144,470Cash and cash equivalents held in trust by component unit for NMSU 6,339,259 - 6,339,259Cash and cash equivalents held in trust by others 6,619,165 - 6,619,165Short-term investments 10,036,594 - 10,036,594Accounts receivable, net 52,762,554 43,549 52,806,103Due from component unit 1,500,977 - 1,500,977Inventories 2,289,331 - 2,289,331Prepaid expenses 3,232,255 3,048 3,235,303Student loans receivable - current portion, net 1,103,696 - 1,103,696

Total current assets 102,871,863 869,740 103,741,603

Non-current assets:Unrestricted cash and cash equivalents 38,274,357 - 38,274,357Restricted cash and cash equivalents 6,319,877 - 6,319,877Investments held by others - - -Investments held in trust by component unit for NMSU 39,071,502 - 39,071,502Other long-term investments 70,146,976 32,427 70,179,403Student loans receivable, net 9,933,269 - 9,933,269Prepaid expenses and other assets - - -Capital assets, net 502,900,397 - 502,900,397

Total non-current assets 666,646,378 32,427 666,678,805

TOTAL ASSETS 769,518,241 902,167 770,420,408

DEFERRED OUTFLOWS OF RESOURCES 70,110,135 - 70,110,135

LIABILITIESCurrent liabilities:

Accounts payable 10,397,459 11,847 10,409,306Due to NMSU (48,765) 48,765 -Other accrued liabilities 17,696,040 - 17,696,040Accrued interest payable 1,715,659 - 1,715,659Unearned revenue 8,422,925 43,847 8,466,772Held in trust by NMSU 6,052,135 - 6,052,135Long-term liabilities - current portion 19,251,356 - 19,251,356

Total current liabilities 63,486,809 104,459 63,591,268Non-current liabilities:

Accrued benefit reserves 659,630 - 659,630Other long-term liabilities 123,417,156 - 123,417,156Net pension liability 507,687,518 - 507,687,518Other post-employment benefit liability 27,955,000 - 27,955,000

Total non-current liabilities 659,719,304 - 659,719,304

TOTAL LIABILITIES 723,206,113 104,459 723,310,572

DEFERRED INFLOWS OF RESOURCES 24,850,193 - 24,850,193

NET POSITIONNet investment in capital assets 396,576,507 - 396,576,507Restricted for:

Non-expendable:Endowments 28,142,453 - 28,142,453

Expendable:Endowments 1,906,228 - 1,906,228General activities 6,762,073 - 6,762,073Federal student loans 14,302,898 - 14,302,898Capital projects 12,277,620 - 12,277,620Related entity activities (1,899) 797,708 795,809

Unrestricted (368,393,810) - (368,393,810)

TOTAL NET POSITION $ 91,572,070 $ 797,708 $ 92,369,778


73


Schedule 2 - Combining Statement of Revenues, Expenses, and Changes in Net Position

New Mexico StateUniversity

2018

Arrowhead Center,Inc

2018

Total PrimaryInstitution

2018


Student tuition and fees (gross) $ 108,816,066 $ - $ 108,816,066

Less: scholarship allowances (42,295,668) - (42,295,668)

Student tuition and fees (net) 66,520,398 - 66,520,398

Federal appropriations, grants and contracts 82,542,027 - 82,542,027

State grants and contracts 11,387,324 - 11,387,324

Local Appropriations, grants and contracts 2,712,130 - 2,712,130

Non-governmental grants, contracts and gifts 9,023,251 - 9,023,251

Sales and services 6,106,044 - 6,106,044

Auxiliary enterprises (net of scholarship allowances) 14,733,291 - 14,733,291

Other operating revenues 14,872,592 - 14,872,592

Total operating revenues 207,897,057 - 207,897,057

EXPENSES

Operating expenses:

Instruction 164,630,659 - 164,630,659

Research 92,298,663 - 92,298,663

Public service 59,650,388 - 59,650,388

Academic support 30,182,089 - 30,182,089

Student services 19,623,830 - 19,623,830

Institutional support 37,007,447 - 37,007,447

Operation and maintenance of plant 38,522,138 - 38,522,138

Scholarships and fellowships 27,490,837 - 27,490,837

Auxiliary enterprises 23,052,121 - 23,052,121

Independent operations 19,447,085 - 19,447,085

Intercollegiate athletics 20,450,904 - 20,450,904

Student social and cultural 4,007,265 - 4,007,265

Loan administration (net) 1,214,656 - 1,214,656

Depreciation 34,515,035 - 34,515,035

Total operating expenses 572,093,117 - 572,093,117

Net operating income (loss) (364,196,060) - (364,196,060)

Non-operating revenues (expenses):

State appropriations 190,893,756 - 190,893,756

Federal Pell grants 41,162,544 - 41,162,544

State lottery scholarship 9,983,665 - 9,983,665

Local tax levy revenue 14,440,619 - 14,440,619

Gifts and non-exchange grants 9,292,924 - 9,292,924

Investment income (loss) 1,825,340 - 1,825,340

Building fees 4,815,669 - 4,815,669

Land lease and permanent fund 4,321,577 - 4,321,577

Loss on disposal of plant (1,698,579) - (1,698,579)

Additions to quasi endowments 78,786 - 78,786

Interest and other expenses on capital asset-related debt (6,457,869) - (6,457,869)

Other non-operating revenues (expenses) (917,291) 265,622 (651,669)

Net non-operating revenues 267,741,141 265,622 268,006,763

Income (loss) before other revenues (96,454,919) 265,622 (96,189,297)

Capital appropriations 7,633,119 - 7,633,119

Capital grants, gifts, and other income 2,694,375 - 2,694,375

Additions to permanent endowments 2,600,444 - 2,600,444

Increase (decrease) in net position (83,526,981) 265,622 (83,261,359)

NET POSITIONBeginning of year, as previously reported 91,572,070 797,708 92,369,778Change in accounting principle (Note 2) (101,073,969) - (101,073,969)

Beginning of year, as restated (9,501,899) 797,708 (8,704,191)

End of year $ (93,028,880) $ 1,063,330 $ (91,965,550)


74


Schedule 2 - Combining Statement of Revenues, Expenses, and Changes in Net PositionNew Mexico State

University2017

Arrowhead Center,Inc

2017

Total PrimaryInstitution

2017


Student tuition and fees (gross) $ 107,477,271 $ - $ 107,477,271

Less: scholarship allowances (40,352,088) - (40,352,088)

Student tuition and fees (net) 67,125,183 - 67,125,183

Federal appropriations, grants and contracts 89,478,461 - 89,478,461

State grants and contracts 16,508,697 - 16,508,697

Local Appropriations, grants and contracts 2,898,663 - 2,898,663

Non-governmental grants, contracts and gifts 9,060,235 - 9,060,235

Sales and services 5,429,962 - 5,429,962

Auxiliary enterprises (net of scholarship allowances) 14,637,709 - 14,637,709

Other operating revenues 16,566,675 - 16,566,675

Total operating revenues 221,705,585 - 221,705,585

EXPENSES

Operating expenses:

Instruction 147,433,569 - 147,433,569

Research 86,441,908 - 86,441,908

Public service 53,831,021 - 53,831,021

Academic support 27,494,971 - 27,494,971

Student services 15,372,147 - 15,372,147

Institutional support 31,711,240 - 31,711,240

Operation and maintenance of plant 36,537,879 - 36,537,879

Scholarships and fellowships 29,942,054 - 29,942,054

Auxiliary enterprises 21,195,218 - 21,195,218

Independent operations 17,699,739 - 17,699,739

Intercollegiate athletics 17,947,564 - 17,947,564

Student social and cultural 3,863,536 - 3,863,536

Loan administration (net) 2,867,905 - 2,867,905

Depreciation 35,473,782 - 35,473,782

Total operating expenses 527,812,533 - 527,812,533

Net operating income (loss) (306,106,948) - (306,106,948)

Non-operating revenues (expenses):

State appropriations 193,515,000 - 193,515,000

Federal Pell grants 39,587,298 - 39,587,298

State lottery scholarship 15,641,172 - 15,641,172

Local tax levy revenue 12,941,281 - 12,941,281

Gifts and non-exchange grants 9,066,256 - 9,066,256

Investment income (loss) 3,009,469 - 3,009,469

Building fees 4,126,169 - 4,126,169

Land lease and permanent fund 3,110,115 - 3,110,115

Loss on disposal of plant (405,298) - (405,298)

Gain on sale of land 2,455,510 - 2,455,510

Additions to quasi endowments 151,320 - 151,320

Interest and other expenses on capital asset-related debt (4,948,886) - (4,948,886)

Other non-operating revenues (expenses) 376,475 117,506 493,981

Net non-operating revenues 278,625,881 117,506 278,743,387

Income (loss) before other revenues (27,481,067) 117,506 (27,363,561)

Capital appropriations 18,620,802 - 18,620,802

Capital grants, gifts, and other income 2,550,164 - 2,550,164

Additions to permanent endowments 2,196,737 - 2,196,737

Increase (decrease) in net position (4,113,364) 117,506 (3,995,858)

NET POSITIONBeginning of year, as previously reported 158,145,777 680,202 158,825,979Change in accounting principle (Note 2) (62,460,343) - (62,460,343)

Beginning of year, as restated 95,685,434 680,202 96,365,636

End of year $ 91,572,070 $ 797,708 $ 92,369,778


75


Schedule 3A - Budgetary Comparison Schedules - Unrestricted and Restricted - All Operations

Revised Budget vs

Actuals - Variance

Original Revised Favorable

Budget Budget Actuals (Unfavorable)

Unrestricted and restricted beginning fund balance $ 130,177,291 $ 152,919,694 $ 151,269,719 $ (1,649,975)

Unrestricted and restricted revenues:

State government appropriations 191,133,500 190,860,775 190,893,756 32,981

Federal revenue sources 133,211,834 133,196,775 123,824,259 (9,372,516)

Tuition and fees income 110,630,390 107,718,388 108,633,314 914,926

Land and permanent fund 2,925,900 3,500,000 4,321,577 821,577

Endowment and private gifts 12,561,846 15,661,347 11,628,557 (4,032,790)

Other sources 133,599,212 148,722,273 128,359,768 (20,362,505)

Total unrestricted and restricted revenues 584,062,682 599,659,558 567,661,231 (31,998,327)

Unrestricted and restricted expenditures:

Instruction 147,768,579 149,697,059 135,773,120 13,923,939

Academic support 28,491,169 29,560,368 28,173,577 1,386,791

Student services 16,767,406 17,163,815 16,303,451 860,364

Institutional support 30,987,998 30,784,605 30,010,646 773,959

Operation and maintenance 25,958,941 22,431,127 23,335,473 (904,346)

Subtotal instruction and general 249,974,093 249,636,974 233,596,267 16,040,707

Student social and cultural activities 4,249,067 4,304,093 3,662,065 642,028

Research 99,273,837 94,868,710 91,331,502 3,537,208

Public service 53,234,630 58,125,633 53,353,847 4,771,786

Internal services 723,570 3,352,235 (523,792) 3,876,027

Student aid, grants and stipends 79,929,623 81,586,821 75,128,324 6,458,497

Auxiliary services 19,909,510 22,520,027 20,392,892 2,127,135

Intercollegiate athletics 17,493,763 21,863,112 18,881,807 2,981,305

Independent operations 16,578,603 20,010,709 16,940,368 3,070,341

Capital outlay 23,318,639 31,590,203 23,347,972 8,242,231

Renewal and replacement 13,379,234 11,954,033 9,091,104 2,862,929

Retirement of indebtedness 13,860,028 16,655,837 17,617,980 (962,143)

Total unrestricted and restricted expenditures 591,924,597 616,468,387 562,820,336 53,648,051

Net transfers to (from) - 366,181 67,749 298,432

Change in fund balance (7,861,915) (17,175,010) 4,773,146 21,948,156

Ending fund balance $ 122,315,376 $ 135,744,684 $ 156,042,865 $ 20,298,181

Under title 5 of the New Mexico Administrative Code, chapter 3, part 4, paragraph 10 - Items of Budgetary Control: The total expenditures in each of thefollowing budgetary functions will be used as the items of budgetary control. Total expenditures or transfers in each of the following items of budgetarycontrol may not exceed the amounts shown in the approved budget: A. Unrestricted expenditures and restricted expenditures. B. Instruction andgeneral. C. Each budget function in current funds other than instruction and general. D. Within the plant funds budget: major projects, library bonds,equipment bonds, minor capital outlay, renewals and replacements, and debt service. E. Each individual item of transfer between funds and/orfunctions. Budgets are presented on a modified accrual basis of accounting.


76


Schedule 3B - Budgetary Comparison Schudules - Unrestricted - Instruction and General

Revised Budget vs

Actuals - Variance



Unrestricted beginning fund balance $ 18,518,022 $ 29,492,613 $ 29,492,613 $ -

Unrestricted revenues:

Tuition and fees income 91,055,914 87,642,395 87,346,058 (296,337)

Miscellaneous fees 7,846,365 7,870,513 9,211,400 1,340,887

Federal government appropriations - - - -

State government appropriations 146,986,000 147,027,457 147,070,207 42,750

Local government appropriations 11,515,000 13,613,946 14,434,639 820,693

Federal government grants and contracts 132,700 132,700 174,479 41,779

State government grants and contracts - - - -

Local government grants and contracts - - - -

Private gifts, grants and contracts - - - -

Endowments - - - -

Land and permanent fund 2,925,900 3,500,000 4,321,577 821,577

Private gifts 10,000 10,000 - (10,000)

Sales and services 624,270 740,780 726,080 (14,700)

Other sources 14,297,808 14,616,302 14,535,550 (80,752)

Total unrestricted revenues 275,393,957 275,154,093 277,819,990 2,665,897

Unrestricted expenditures:

Instruction 135,821,814 137,260,665 128,150,922 9,109,743

Academic support 25,647,580 26,725,198 25,614,900 1,110,298

Student services 15,931,077 16,405,639 15,930,694 474,945

Institutional support 30,716,998 30,347,505 29,656,481 691,024

Operation and maintenance 25,938,741 22,395,727 23,309,083 (913,356)

Total unrestricted expenditures 234,056,210 233,134,734 222,662,080 10,472,654

Net transfers to (from) 39,852,743 52,106,052 51,940,167 165,885

Change in fund balance 1,485,004 (10,086,693) 3,217,743 13,304,436

Ending fund balance $ 20,003,026 $ 19,405,920 $ 32,710,356 $ 13,304,436


77


Schedule 3C- Budgetary Comparison Schedules - Restricted - Instruction and General

Revised Budget vs

Actuals - Variance



Restricted beginning fund balance $ - $ - $ - $ -

Restricted revenues:

Tuition and fees income - - - -

Miscellaneous fees - - - -

Federal government appropriations - - - -

State government appropriations - - - -

Local government appropriations - - - -

Federal government grants and contracts 8,109,455 7,915,231 5,210,070 (2,705,161)

State government grants and contracts 2,085,068 2,121,858 1,678,702 (443,156)

Local government grants and contracts - - - -

Private gifts, grants and contracts 724,512 818,414 512,103 (306,311)

Endowments - - - -

Land and permanent fund - - - -

Private gifts 4,998,848 5,646,737 3,533,312 (2,113,425)

Sales and services - - - -

Other sources - - - -

Total restricted revenues 15,917,883 16,502,240 10,934,187 (5,568,053)

Restricted expenditures:

Instruction 11,946,765 12,436,394 7,622,198 4,814,196

Academic support 2,843,589 2,835,170 2,558,677 276,493

Student services 836,329 758,176 372,757 385,419

Institutional support 271,000 437,100 354,165 82,935

Operation and maintenance 20,200 35,400 26,390 9,010

Total restricted expenditures 15,917,883 16,502,240 10,934,187 5,568,053

Net transfers to (from) - - - -

Change in fund balance - - - -

Ending fund balance $ - $ - $ - $ -


78


Schedule 3 - Budgetary Comparison Schedules - Combined Campuses

Reconciliation of Budget

Unrestricted and Restricted - All Operations

For the Year Ended June 30, 2018

Total Unrestricted and Restricted Revenues: $ 567,661,231

Reconciling Items:

Scholarship allowance $ (48,311,230)

Elimination of Internal Revenues (14,577,476)

Endowment fund revenues (1,923,913)

Blended Component Unit Revenues (AHC, ADI) 941,686

Loan Fund Additions (180,272)

Financial statement adjustments 502,772

Unexpended Plant Revenue reclassification (6,411,021)

Total reconciling items (69,959,454)

Total reconciled unrestricted and restricted revenues $ 497,701,777


Operating revenues $ 207,897,057

Non-operating revenues 276,814,870

Non-operating revenues netted in other non-operating revenues and expenses 61,912

Other Revenues 12,927,938

Total revenues per Financial Statements $ 497,701,777

Difference $ -

Total Unrestricted and Restricted Expenses: $ 562,820,336

Reconciling Items:

Scholarship allowance $ (48,311,230)

Elimination of Internal Sales (14,577,476)

Blended Component Unit expenditures (AHC, ADI) 824,180

Depreciation expense 34,515,035

Loan fund expenditures 1,214,656

Capitalized expenditures (28,557,869)

Bond principal payments (14,215,010)

Pension Expense 79,696,483

Accounts Payable accrual, net (584,915)

Financial statement reporting adjustments (12,132)

Increase in unamortized bond premium 6,452,509

Loss on disposal of plant 1,698,579

Total reconciling items 18,142,810

Total reconciled unrestricted and restricted expenses $ 580,963,146


Operating expenditures $ 572,093,117

Non-operating expenditures 6,457,869

Loss on disposal of plant 1,698,579

Non-operating expenditures netted in other non-operating revenues and expenses 713,581

Total Expenditures per Financial Statements $ 580,963,146

Difference $ -


79


Schedule 4 - Bank Balances, Pledged Collateral Requirements and Pledged Collateral by Financial Institution

Page 1

Type of CUSIP No./ Maturity Fair Value of DepositAccount Security Security # Date Collateral Amount

CITIZEN'S BANK OF LAS CRUCES Certificate of Deposit Endowment None $ 31,116

FIRST NATIONAL BANK OF ALAMOGORDO Cash Mortgage-Backed 31418BBB1 3/1/2024 $ 323,902 $ 471,294

WELLS FARGO BANK OF NEW MEXICO Cash FMAC FGPC 3128MJ3A6 12/1/2047 $17,364,560 Cash FNMA FNMS 3138WSFU1 10/1/2035 $ 5,126,318

$ 25,121,726

WESTERN COMMERCE BANK, CARLSBAD Cash $ 21,973

WELLS FARGO SECURITIES, LLC (CERTIFICATES OF DEPOSIT)Ally Bank Midvale Utah None $ 250,000Ally Bank Interest Bearing None 250,000BMW Bank of North America None 250,000Barclays Bank Interest Bearing CD None 250,000Bank United NA Interest Bearing CD None 250,000Capital One NA Interest Bearing CD None 250,000Comenity Cap Bank Interest Bearing CD None 250,000Discover Bank Interest Bearing CD None 250,000First Savings Bank Interest Bearing CD None 250,000Goldman Sachs Bank Interest Bearing CD None 250,000Morgan Stanley Bank NA None 250,000Wells Fargo Sioux Falls None 250,000

$ 3,000,000

FTN FINANCIAL CAPITAL MARKETS (CERTIFICATES OF DEPOSIT)American Express National Bank None $ 250,000Bar Harbor Bank & Trust None 250,000Citibank NA None 250,000Comenity Capital Bank None 250,000Sallie Mae Bank/Salt Lake None 250,000Synchrony Bank None 250,000

$ 1,500,000

Note: The Foundation is not subject to the State of New Mexico pledged collateral requirement.


80


Schedule 4 - Bank Balances, Pledged Collateral Requirements and Pledged Collateral by Financial Institution

Page 2

Excess

By the pledging Amounts over

FDIC/SPIC Unisured Federal 50% Collateral

Account Insurance Public Funds Institution Requirement

CITIZEN'S BANK OF LAS CRUCES

Certificate of Deposit

Endowment $ 31,113 $ - $ - $ -

FIRST NATIONAL BANK OF ALAMOGORDO

Cash $ 250,000 $ 221,294 $ 323,902 $ 213,255

WELLS FARGO BANK OF NEW MEXICO

Cash $ 250,000 $ 24,871,726 $ 22,490,878 $ 10,055,015

WESTERN COMMERCE BANK, CARLSBAD

Cash $ 21,973 $ - $ - $ -

WELLS FARGO SECURITIES, LLC (CERTIFICATES OF DEPOSIT)

Ally Bank Midvale Utah $ 250,000 $ - $ - $ -

Ally Bank Interest Bearing 250,000 - - -

BMW Bank of North America 250,000 - - -

Barclays Bank Interest Bearing CD 250,000 - - -

Bank United NA Interest Bearing CD 250,000 - - -

Capital One NA Interest Bearing CD 250,000 - - -

Comenity Cap Bank Interest Bearing CD 250,000 - - -

Discover Bank Interest Bearing CD 250,000 - - -

First Savings Bank Interest Bearing CD 250,000 - - -

Goldman Sachs Bank Interest Bearing CD 250,000 - - -

Morgan Stanley Bank NA 250,000 - - -

Wells Fargo Sioux Falls 250,000 - - -

$ 3,000,000 $ - $ - $ -

FTM FINANCIAL CAPITAL MARKETS (CERTIFICATES OF DEPOSIT)

American Express National Bank $ 250,000 $ - $ - $ -

Bar Harbor Bank and Trust 250,000 - - -

Citibank NA 250,000 - - -

Comenity Capital Bank 250,000 - - -

Sallie Mae Bank Salt Lake 250,000 - - -

Synchrony Bank 250,000 - - -

$ 1,500,000 $ - $ - $ -


81

New Mexico State University Required Supplementary Information For the Years Ended June 30, 2018 and 2017

Schedule 5 - Schedule of Changes in Net OPEB liability and Related Ratios in accordance with GASBStatement 75. (unaudited)

2018

Total OPEB liability

Service Cost $ 4,936,250

Interest 5,291,343

Current Recognized deferred outflows/(inflows):

Changes of assumptions or other inputs (5,357,825)

Benefit payments (5,523,530)

Net change in total OPEB liability $ (653,762)

Total OPEB liability-beginning $ 134,552,969

Total OPEB liability-ending $ 133,899,207

Covered-employee payroll $ 150,205,439

Total OPEB liability as a percentage of covered-employee payroll %89

2018

Current retirees receiving benefits 1,716

Inactive employees entitled but not yet receiving benefits -

Current active members 2,594

This schedule is presented to illustrate the requirements to show information for 10 years. However, until a full 10-year trend is compiled, the University is showing one year's presentation. No assets are accumulated in a trust topay the related benefits.


82

New Mexico State University Required Supplementary Information For the Years Ended June 30, 2018 and 2017

Schedule 6 - Schedule of Proportionate Share of Net Pension Liability and Employer Contributions(unaudited)

The schedule of proportionate share of net pension liability and the schedule of employer contributions presentmultiyear trend information for the last ten fiscal years. Fiscal year 2015 was the first year of implementation,therefore only four years are shown. Until a full 10-year trend is compiled, information for those years for whichinformation is available will be presented.

Schedule of Proportionate Share of Net Pension Liability - ERB Plan

2018 2017 2016 2015

University's proportion of the net pension liability 6.75462% 7.05471% 7.31378% 7.56103%

University's proportion share of the net pension liability $ 750,673,749 $ 507,687,518 $ 473,733,007 $431,412,011

University's covered-employee payroll $ 194,360,458 $ 201,383,448 $ 199,689,623 $229,696,230University's proportionate share of the net pension liability (asset) asa percentage of its covered-employee payroll %386.23 %252.10 %237.23 %187.82

Plan fiduciary net position as a percentage of the total pension liability 52.95% 61.58% 63.97% 66.54%

Schedule of Employer Contributions - ERB Plan

2018 2017 2016 2015

Statutorily required employer contribution $ 25,880,341 $ 26,736,537 $ 28,006,297 $ 31,140,209

Contribution in relation to the statutorily required contribution 25,880,341 26,736,537 28,006,297 31,140,209

Contribution deficiency (excess) $ - $ - $ - $ -

University's covered-employee payroll 193,115,948 194,360,458 201,383,448 199,689,623

Contributions as percentage of covered-employee payroll %13.40 %13.76 %13.91 %15.59

Notes to Schedules:

Changes of Benefit Terms and Assumptions

There were no modifications to the benefit provisions that were reflected in the actuarial valuation asof June 30, 2017. Actuarial assumptions and methods are set by the Board of Trustee, based uponrecommendations made by the Plan's actuary. The Board adopted new assumptions on April 21, 2017in conjunction with the six-year actuarial experience study period ending June 30, 2016. At that time,The Board adopted a number of economic assumption changes, including a decrease in the inflationassumption from 3.00% to 2.50%. The 0.50% decrease in the inflation assumption also led todecreases in the nominal investment return assumption from 7.75% to 7.25%, the assumed annualwage inflation rate from 3.75% to 3.25%, the payroll growth assumption from 3.50% to 3.00%, and theannual assumed COLA from 2.00% to 1.90%.


83

New Mexico State University Single Audit Information For the Year Ended June 30, 2018

Schedule�7�Ͳ�Schedule�of�Expenditures�of�Federal�Awards

Name�of�Program�/�Agency Award�TitleCFDA�

NumberGrant�Code

Subrecipient�

Expenditures��Total�Expenditures�

RESEARCH�AND�DEVELOPMENT�CLUSTER

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTAGRICULTURAL�RESEARCH_BASIC�&�APPLIED 10.001 Ͳ$�� 1,575,108$��

CFDA�10.001�Total Ͳ$�� 1,575,108$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECT

PLANT�&�ANIMAL�DISEASE,�PEST�CONTROL,�&�ANIMAL�CARE 10.025 Ͳ$�� 257,898$��CFDA�10.025�Total Ͳ$�� 257,898$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTSPECIALTY�CROP�BLOCK�GRANT 10.170 97,556$�� 383,124$��

CFDA�10.170�Total 97,556$�� 383,124$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECT

GRANTS�FOR�AGRICULTURAL�RESEARCH 10.200 Ͳ$�� 781,593$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Kansas�State�University GRANTS�FOR�AGRICULTURAL�RESEARCH 10.200 2015Ͳ38624Ͳ24333 Ͳ$�� 30,223$��Regents�University�of�California�Davis GRANTS�FOR�AGRICULTURAL�RESEARCH 10.200 2015Ͳ34383Ͳ23709 Ͳ$�� (591)$��Regents�University�of�California�Davis GRANTS�FOR�AGRICULTURAL�RESEARCH 10.200 2017Ͳ34383Ͳ27027 Ͳ$�� 76,437$��

CFDA�10.200�Total Ͳ$�� 887,662$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECT

HATCH�FEDERAL�APPROPRIATIONS 10.203 Ͳ$�� 1,521,390$��CFDA�10.203�Total Ͳ$�� 1,521,390$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTANIMAL�HEALTH�FEDERAL�APPROPRIATION 10.207 Ͳ$�� 46,763$��


SUSTAINABLE�USE�OF�BIOMASS�RESOURCE 10.210 Ͳ$�� 85,590$��CFDA�10.210�Total Ͳ$�� 85,590$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRUUtah�State�University SUSTAINABLE�AGRICULTURE�RESEARCH�&�EDUCATION 10.215 2014Ͳ38640Ͳ22175 36,718$�� 104,693$��Utah�State�University SUSTAINABLE�AGRICULTURE�RESEARCH�&�EDUCATION 10.215 2016Ͳ38640Ͳ25383 Ͳ$�� 22,811$��Utah�State�University SUSTAINABLE�AGRICULTURE�RESEARCH�&�EDUCATION 10.215 2017Ͳ38640Ͳ26913 Ͳ$�� 3,303$��


HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 82,245$�� 575,555$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Texas�A&M�UniveristyͲ�Kingsville HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2013Ͳ38422Ͳ20957 Ͳ$�� 30,590$��Texas�A&M�UniveristyͲ�Kingsville HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2017Ͳ38422Ͳ27298 Ͳ$�� 37,706$��Texas�State�University HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2014Ͳ38422Ͳ22084 Ͳ$�� 26,671$��The�Florida�International�University�Board�of�Trustees HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2015Ͳ38422Ͳ24075 Ͳ$�� 58,223$��University�of�Texas HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2014Ͳ38422Ͳ22078 Ͳ$�� 99,143$��University�of�Texas HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2015Ͳ35422Ͳ24112 Ͳ$�� 136,427$��University�of�Texas HISPANIC�SERVING�INSTITUTION�GRANTS 10.223 2015Ͳ38422Ͳ24059�(03) Ͳ$�� 141,398$��

CFDA�10.223�Total 82,245$�� 1,105,713$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Dine�College TRADITION�NAVAJO�FOOD�&�FIBER�CROP 10.227 2015Ͳ38424Ͳ24052 Ͳ$�� 2,432$��CFDA�10.227�Total Ͳ$�� 2,432$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRURegents�of�the�University�of�Minnesota INTERNATIONAL�BENCHMARKING�OF�U.S. 10.290 58Ͳ0111Ͳ17Ͳ016 Ͳ$�� 8,516$��


BREEDING�NONͲCOMMODITY�CORN�FOR�ORG 10.307 Ͳ$�� 74,082$��CFDA�10.307�Total Ͳ$�� 74,082$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTSPECIALTY�CROP�RESEARCH�INITIATIVE 10.309 436,183$�� 579,138$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRUUniversity�of�Florida SPECIALTY�CROP�RESEARCH�INITIATIVE 10.309 2015Ͳ70016Ͳ23010 Ͳ$�� 25,757$��


AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 6,639$�� 150,970$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Colorado�State�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2015Ͳ68001Ͳ23240 Ͳ$�� 264,400$��Colorado�State�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2016Ͳ68007Ͳ25066 Ͳ$�� 63,875$��North�Carolina�State�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2011Ͳ68003Ͳ30395 Ͳ$�� 3,000$��Texas�A&M�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2015Ͳ68001Ͳ23234 Ͳ$�� 89,259$��Texas�A&M�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2016Ͳ68003Ͳ24607 Ͳ$�� 16,368$��Texas�A&M�University AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2017Ͳ68007Ͳ26318 Ͳ$�� 201,796$��The�Board�of�Trustees�of�the�University�of�Illinois AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2016Ͳ67019Ͳ25212 Ͳ$�� 37,315$��University�of�Arizona AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2017Ͳ68005Ͳ26867 Ͳ$�� 206,657$��University�of�Connecticut AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2012Ͳ68001Ͳ19956 Ͳ$�� 18,559$��University�of�Maryland AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 201668007Ͳ25064 Ͳ$�� 153,663$��University�of�Tennessee AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2014Ͳ67001Ͳ2185 Ͳ$�� 222$��University�of�Texas AGRICULTURE�&�FOOD�RESEARCH�INITIATIVE 10.310 2015Ͳ68007Ͳ23130 Ͳ$�� 137,325$��

CFDA�10.310�Total 6,639$�� 1,343,409$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

State�of�Oklahoma SUN�GRANT�PROGRAM 10.320 2014Ͳ38502Ͳ22598 Ͳ$�� 45,472$��Texas�A&M�University SUN�GRANT�PROGRAM 10.320 2014Ͳ38502Ͳ22598 Ͳ$�� 16,758$��

CFDA�10.320�Total Ͳ$�� 62,230$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Regents�University�of�California�Davis ALFALFA�&�FORAGE�RESEARCH�PGROAM 10.330 2014Ͳ70005Ͳ22537 Ͳ$�� 14,050$��CFDA�10.330�Total Ͳ$�� 14,050$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTFOREST�HEALTH�PROTECTION 10.680 Ͳ$�� 4,578$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRUEnergy�And�Minerals�Department FOREST�HEALTH�PROTECTION 10.680 N/A Ͳ$�� 10,544$��


METHODS�DEVELOPMENT�TIMBER�TRACKING 10.684 Ͳ$�� 16,226$��CFDA�10.684�Total Ͳ$�� 16,226$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTBORLAUG�AGRICULTURE�SCIENCE�&�TECH�FELLOWSHIP 10.777 Ͳ$�� 38,914$��


SOIL�&�WATER�CONSERVATION 10.902 Ͳ$�� 138,336$��DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�PASS�THRU

Pheasants�Forever�Inc.�and�Quail�Forever SOIL�&�WATER�CONSERVATION 10.902 68Ͳ3A75Ͳ14Ͳ120 Ͳ$�� 38,812$��CFDA�10.902�Total Ͳ$�� 177,148$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECT


84




NumberGrant�Code

Subrecipient�



PLANT�MATERIALS�FOR�CONSERVATION 10.905 Ͳ$�� 41,162$��CFDA�10.905�Total Ͳ$�� 41,162$��

DEPARTMENT�OF�AGRICULTURE��(USDA)�Ͳ�DIRECTSTRATEGIES�TO�IMPROVE�SOIL�&�WATER 10.912 Ͳ$�� 519,132$��

CFDA�10.912�Total Ͳ$�� 519,132$��DEPARTMENT�OF�COMMERCE�(DOC)�Ͳ�PASS�THRU

University�of�Arizona CLIMAS�AIR�QUALITY�&�CLIMATE�ASSE 11.431 NA12OAR4310124 Ͳ$�� 22,026$��University�of�Arizona CLIMAS�AIR�QUALITY�&�CLIMATE�ASSE 11.431 NA17OAR4310288 Ͳ$�� 17,301$��

CFDA�11.431�Total Ͳ$�� 39,327$��DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�DIRECT

BASIC�&�APPLIED�SCIENTIFIC�RESEARCH 12.300 58,383$�� 180,111$��CFDA�12.300�Total 58,383$�� 180,111$��

DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�DIRECTBASIC�SCIENTIFIC�RESEARCH 12.431 409,593$�� 2,936,718$��

DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�PASS�THRU CFDA�12.431�TotalStanford�University BASIC�SCIENTIFIC�RESEARCH 12.431 W911NFͲ07Ͳ2Ͳ0027 Ͳ$�� 84,718$��

CFDA�12.431�Total 409,593$�� 3,021,436$��DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�DIRECT

BASIC,�APPLIED,�&�ADVANCED�RESEARCH�IN�SCIENCE�&�ENG 12.630 Ͳ$�� 259,372$��CFDA�12.630�Total Ͳ$�� 259,372$��

DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�DIRECTAIR�FORCE�DEFENSE�RESEARCH�SCIENCES�PROGRAM 12.800 Ͳ$�� 204,443$��

DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�PASS�THRUUniversity�of�Arizona AIR�FORCE�DEFENSE�RESEARCH�SCIENCES�PROGRAM 12.800 FA9550Ͳ14Ͳ1Ͳ0184 Ͳ$�� (885)$��University�of�Arizona AIR�FORCE�DEFENSE�RESEARCH�SCIENCES�PROGRAM 12.800 FA9550Ͳ15Ͳ1Ͳ0430 Ͳ$�� 9,145$��University�of�Dayton�Research�Institute AIR�FORCE�DEFENSE�RESEARCH�SCIENCES�PROGRAM 12.800 FA9550Ͳ12Ͳ1Ͳ0449 Ͳ$�� 54,695$��

CFDA�12.800�Total Ͳ$�� 267,398$��DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECT

CULTURAL�RESOURCE�MANAGEMENT 15.224 Ͳ$�� 2,569$��CFDA�15.224�Total Ͳ$�� 2,569$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�PASS�THRUUniversity�of�Alaska�Fairbanks RECREATION�RESOURCE�MANAGEMENT 15.225 L12AC20032 Ͳ$�� 2,479$��


FISH,�WILDLIFE,�&�PLANT�CONSERVATION�RESOURCE�MGT 15.231 Ͳ$�� 26,895$��DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�PASS�THRU

New�Mexico�Association�of�Conservation�District FISH,�WILDLIFE,�&�PLANT�CONSERVATION�RESOURCE�MGT 15.231 L15AC000274 Ͳ$�� 109,884$��CFDA�15.231�Total Ͳ$�� 136,779$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECTINVESTIGATION,�EVALUATION�&�INTER 15.238 Ͳ$�� 16,480$��


WATER�DESALINATION�RESEARCH�&�DEV� 15.506 Ͳ$�� 454,567$��CFDA�15.506�Total Ͳ$�� 454,567$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�PASS�THRUTexas�AgriLife�Research FISH�&�WILDLIFE�COORDINATION�ACT 15.517 R12AP40043 5,000$�� 10,808$��

CFDA�15.517�Total 5,000$�� 10,808$��DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECT

SECURE�WATER�ACT 15.560 R17AC00035 Ͳ$�� 4,436$��RESEARCH�GRANTS,�GENERIC 15.650 Ͳ$�� 57,091$��


MIGRATORY�BIRD�MONITORING,�ASSESSMENT�&�CONSERV 15.655 Ͳ$�� 39,620$��CFDA�15.655�Total Ͳ$�� 39,620$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECTASSISTANCE�TO�STATE�WATER�RESEARCH�INSTITUTES 15.805 51,223$�� 261,330$��


US�GEOLOGICAL�SURVEY 15.808 289,025$�� 322,456$��CFDA�15.808�Total 289,025$�� 322,456$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECTCOOPERATIVE�RESEARCH�UNITS�PROGRAM 15.812 1,667$�� 395,252$��


COOPERATIVE�RESEARCH�&�TRAINING�PROGRAM 15.945 Ͳ$�� 266,608$��CFDA�15.945�Total Ͳ$�� 266,608$��

DEPARTMENT�OF�STATE�(DOS)�Ͳ�PASS�THRUWashington�State�University BUILDING�CAPACITY�FOR�RESEARCH�& 19.040 SͲC0200Ͳ16ͲGR176 Ͳ$�� 8,817$��

CFDA�19.040�Total Ͳ$�� 8,817$��DEPARTMENT�OF�TRANSPORTATION�(DOT)�Ͳ�DIRECT

AIR�TRANSPORTATION�CENTERS�FO�EXCELLENCE 20.109 67,350$�� 217,345$��CFDA�20.109�Total 67,350$�� 217,345$��

DEPARTMENT�OF�TRANSPORTATION�(DOT)�Ͳ�PASS�THRUBoard�of�Regents�Nevada�System�of�Higher�Education UNIVERSITY�TRANSPORTATION�CENTERS�PROGRAM 20.701 UNRͲ14Ͳ59�(DTRT13ͲGͲUTC55) Ͳ$�� 15,207$��Louisiana�State�University�and�A�&�M�College UNIVERSITY�TRANSPORTATION�CENTERS�PROGRAM 20.701 69A3551747106 Ͳ$�� 124,408$��

CFDA�20.701�Total Ͳ$�� 139,615$��NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�DIRECT

SCIENCE�GRANTS 43.001 Ͳ$�� 1,243,067$��NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�PASS�THRU

California�Institute�of�Technology SCIENCE�GRANTS 43.001 NNN12AA01C Ͳ$�� 41,634$��NorthWest�Research�Associates,�Inc. SCIENCE�GRANTS 43.001 NNX17A136G Ͳ$�� 38,984$��William�Marsh�Rice�University SCIENCE�GRANTS 43.001 NNX17AD31G Ͳ$�� 47,139$��

CFDA�43.001�Total Ͳ$�� 1,370,824$��NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�DIRECT

EDUCATION 43.008 389,539$�� 1,735,030$��CFDA�43.008�Total 389,539$�� 1,735,030$��

NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�DIRECTABSORPTION�OF�NDMA�ON�CARBONS 43.010 Ͳ$�� 114,651$��

CFDA�43.010�Total Ͳ$�� 114,651$��NATIONAL�ENDOWMENT�FOR�HUMANITIES�(NEH)�Ͳ�PASS�THRU

New�York�University AMERASIA:�A�RENAISSANCE�DISCOVERY 45.161 RZͲ249862Ͳ16 Ͳ$�� 2,339$��CFDA�45.161�Total Ͳ$�� 2,339$��

NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECTENGINEERING�GRANTS 47.041 Ͳ$�� 615,274$��

NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU


85




NumberGrant�Code

Subrecipient�



Arizona�State�University ENGINEERING�GRANTS 47.041 EECͲ1449501 3,000$�� 513,955$��Stanford�University ENGINEERING�GRANTS 47.041 1559984 Ͳ$�� 40,840$��Stanford�University ENGINEERING�GRANTS 47.041 EECͲ1028968 Ͳ$�� 472,203$��University�of�Texas ENGINEERING�GRANTS 47.041 CNSͲ1042341 Ͳ$�� 48,341$��University�Systems�of�New�Hampshire ENGINEERING�GRANTS 47.041 1662098 Ͳ$�� 29,705$��

CFDA�47.041�Total 3,000$�� 1,720,318$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECT

MATHEMATICAL�&�PHYSICAL�SCIENCES 47.049 Ͳ$�� 899,652$��CFDA�47.049�Total Ͳ$�� 899,652$��

NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECTGEOSCIENCES 47.050 Ͳ$�� 444,124$��

CFDA�47.050�Total Ͳ$�� 444,124$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECT

COMPUTER�&�INFORMATION�SCIENCE�&�ENGINEERING 47.070 Ͳ$�� 1,009,205$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU

University�of�New�Mexico COMPUTER�&�INFORMATION�SCIENCE�&�ENGINEERING 47.070 1541340 Ͳ$�� (2,398)$��University�of�Texas�at�El�Paso COMPUTER�&�INFORMATION�SCIENCE�&�ENGINEERING 47.070 1551221 Ͳ$�� 11,377$��

CFDA�47.070�Total Ͳ$�� 1,018,184$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECT

BIOLOGICAL�SCIENCES 47.074 5,985$�� 1,875,536$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU

Northern�Arizona�University BIOLOGICAL�SCIENCES 47.074 1602081 Ͳ$�� 8,568$��CFDA�47.074�Total 5,985$�� 1,884,104$��

NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECTSOCIAL,�BEHAVIORAL,�&�ECONOMIC�SCIENCES 47.075 21,523$�� 226,396$��

CFDA�47.075�Total 21,523$�� 226,396$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECT

EDUCATION�&�HUMAN�RESOURCES 47.076 203,615$�� 2,239,191$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU

National�Alliance�for�Partnerships�in�Equity�Education�Found EDUCATION�&�HUMAN�RESOURCES 47.076 NSF�DUEͲ1601548 Ͳ$�� 30,974$��CFDA�47.076�Total 203,615$�� 2,270,165$��

NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECTA�NEW�COLLABORATIVE�EFFORT�FOR�BIOM 47.079 Ͳ$�� 13,354$��

CFDA�47.079�Total Ͳ$�� 13,354$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU

University�of�New�Mexico NM�EPSCOR�RII�4:�ENERGIZE�NEW�MEXIC 47.080 IIAͲ1301346 Ͳ$�� 942,858$��CFDA�47.080�Total Ͳ$�� 942,858$��

ENVIRONMENTAL�PROTECTION�AGENCY�(EPA)�Ͳ�PASS�THRUState�of�New�Mexico SEDIMENT�&�AGRICULTURAL�SAMPLING 66.204 01F22301 Ͳ$�� 69,156$��

CFDA�66.204�Total Ͳ$�� 69,156$��ENVIRONMENTAL�PROTECTION�AGENCY�(EPA)�Ͳ�DIRECT

POLLUTION�PREVENTION�GRANTS 66.708 Ͳ$�� 117,921$��CFDA�66.708�Total Ͳ$�� 117,921$��

ENVIRONMENTAL�PROTECTION�AGENCY�(EPA)�Ͳ�DIRECTSOURCE�REDUCTION�ASSISTANCE 66.717 Ͳ$�� 6,723$��

CFDA�66.717�Total Ͳ$�� 6,723$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�DIRECT

OFFICE�OF�SCIENCE�FINANCIAL�ASSISTANCE�PROGRAM 81.049 Ͳ$�� 590,483$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRU

ITN�Energy�Systems,�Inc. OFFICE�OF�SCIENCE�FINANCIAL�ASSISTANCE�PROGRAM 81.049 DEͲAR0000651 Ͳ$�� 63,168$��CFDA�81.049�Total Ͳ$�� 653,651$��

DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRUBattelle�Memorial�Institute IMPROVED�&�CATALYTIC�HYDROTHERMAL 81.079 DEͲAC05Ͳ76RL01830 Ͳ$�� 131,952$��

CFDA�81.079�Total Ͳ$�� 131,952$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRU

Arizona�State�University RENEWAL�ENERGY�RESEARCH�&�DEVELOPMENT 81.087 DEEE0007562 Ͳ$�� 104,854$��University�of�Arizona RENEWAL�ENERGY�RESEARCH�&�DEVELOPMENT 81.087 DDͲEE0006269 Ͳ$�� 85,871$��

CFDA�81.087�Total Ͳ$�� 190,725$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�DIRECT

ENVIR�REMEDIATION�&�WASTE�PROCESSING�&�DISPOSAL 81.104 Ͳ$�� 2,535,454$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRU

Savannah�River�Nuclear�Solutions,�LLC ENVIR�REMEDIATION�&�WASTE�PROCESSING�&�DISPOSAL 81.104 DEͲAC09Ͳ08SR22470 Ͳ$�� 238,750$��CFDA�81.104�Total Ͳ$�� 2,774,204$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�DIRECTEXTENDING�ACADEMIC�ANALYTICS:�APPLI 84.120 11,002$�� 102,074$��

CFDA�84.120�Total 11,002$�� 102,074$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECT

FOOD�&�DRUG�ADMINISTRATION�RESEARCH 93.103 Ͳ$�� 749,180$��CFDA�93.103�Total Ͳ$�� 749,180$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTMATERNAL�&�CHILD�HEALTH�FEDERAL�CONSOLIDATED 93.110 Ͳ$�� 61,121$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUUniversity�of�New�Mexico MATERNAL�&�CHILD�HEALTH�FEDERAL�CONSOLIDATED 93.110 T04MC26891 Ͳ$�� 35,179$��

CFDA�93.110�Total Ͳ$�� 96,300$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECT

RESEARCH�RELATED�TO�DEAFNESS�&�COMMUNICATION 93.173 Ͳ$�� 368,248$��CFDA�93.173�Total Ͳ$�� 368,248$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTDISCOVERY�&�RESEARCH�FOR�TECH�INNOVATIONS 93.286 Ͳ$�� 32,945$��

CFDA�93.286�Total Ͳ$�� 32,945$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRU

State�of�New�Mexico CHARACTERIZATION�&�CONTROL�OF�AED 93.323 5NU50CK000413 Ͳ$�� 230,391$��CFDA�93.323�Total Ͳ$�� 230,391$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTPARTNERSHIP�FOR�THE�ADVANCEMENT 93.397 Ͳ$�� 879,752$��


FDA�FERN�COOPERATIVE�AGREEMENT(U18) 93.448 Ͳ$�� 232,788$��CFDA�93.448�Total Ͳ$�� 232,788$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTALLERGY,�IMMUNOLOGY�&�TRANSPLANTATION�RESEARCH 93.855 Ͳ$�� 426,961$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUUniversity�of�Texas ALLERGY,�IMMUNOLOGY�&�TRANSPLANTATION�RESEARCH 93.855 1U01Ai115577Ͳ01 Ͳ$�� 120,952$��



86




NumberGrant�Code

Subrecipient�



BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 2,464,147$�� 5,473,287$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRU

Board�of�Regents�Nevada�System�of�Higher�Education BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 5U54GM104944Ͳ05 Ͳ$�� 95,028$��El�Paso�Community�College BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 1R25GM123928Ͳ01 Ͳ$�� 10,676$��Regents�of�the�University�of�Colorado BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 2r25ns080685Ͳ06 Ͳ$�� 128,182$��University�of�New�Mexico BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 1R01CA94496Ͳ01A1 Ͳ$�� 78,728$��University�of�New�Mexico BIOMEDICAL�RESEARCH�&�RESEARCH�TRAINING 93.859 2K12GM088021Ͳ06 Ͳ$�� 14,059$��

CFDA�93.859�Total 2,464,147$�� 5,799,960$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECT

CHILD�HEALTH�&�HUMAN�DEV�EXTRAMURAL�RESEARCH 93.865 Ͳ$�� 400,029$��CFDA�93.865�Total Ͳ$�� 400,029$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTVISION�RESEARCH 93.867 Ͳ$�� 6,650$��


Dona�Ana�County ASSISTED�OUTPATIENT�TREATMENT 93.997 1H79SM063538 Ͳ$�� 61,141$��Dona�Ana�County ASSISTED�OUTPATIENT�TREATMENT 93.997 1H79SM063538Ͳ01 Ͳ$�� 104,002$��

CFDA�93.997�Total Ͳ$�� 165,143$��DEPARTMENT�OF�HOMELAND�SECURITY�(DHS)�Ͳ�PASS�THRU

Northeastern�University CENTERS�FOR�HOMEL&�SECURITY 97.061 2013ͲSTͲ061ͲED0001 Ͳ$�� 63,198$��CFDA�97.061�Total Ͳ$�� 63,198$��

AGENCY�FOR�INTERNATIONAL�DEVELOPMENT�(USAID)�Ͳ�PASS�THRUUniversity�of�Georgia USAID�DEVELOMENT�PARTNERSHIPS 98.012 AIDECGA000700001 7,025$�� 19,965$��

CFDA�98.012�Total 7,025$�� 19,965$��DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�DIRECT

DEPARTMENT�OF�DEFENSE�(DOD) DEPARTMENT�OF�DEFENSE 12.rd 2,930,015$�� 13,051,841$��DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�PASS�THRU

Aerojet�Rocketdyne�Coleman�Aerospace DEPARTMENT�OF�DEFENSE 12.rd HQ0147Ͳ14ͲCͲ0001 Ͳ$�� 231,423$��ATA�Aerospace,�LLC DEPARTMENT�OF�DEFENSE 12.rd FA9453Ͳ14ͲDͲ0312/TO06 Ͳ$�� 62,125$��BAE�Systems DEPARTMENT�OF�DEFENSE 12.rd W911NFͲ08Ͳ2Ͳ0004 159,092$�� 159,092$��Chemring�Sensors�and�Electronic�Systems�Inc DEPARTMENT�OF�DEFENSE 12.rd W911FRͲ14ͲCͲ0045 Ͳ$�� (820)$��Corvid�Technologies,�LLC DEPARTMENT�OF�DEFENSE 12.rd N/A 24,835$�� 39,177$��Georgia�Institute�of�Technology DEPARTMENT�OF�DEFENSE 12.rd FA8075Ͳ14ͲDͲ0018 Ͳ$�� 16,285$��Hamilton�Sundstrand DEPARTMENT�OF�DEFENSE 12.rd FA8650Ͳ17ͲCͲ9101 Ͳ$�� 420,019$��HyͲTek�Manufacturing�Co. DEPARTMENT�OF�DEFENSE 12.rd W911SRͲ16ͲCͲ0056 Ͳ$�� 23,871$��JSL�Technologies,�Inc DEPARTMENT�OF�DEFENSE 12.rd N00178Ͳ10ͲDͲ6124 Ͳ$�� 73,544$��Kratos�Defense�&�Security�Solutions�Inc DEPARTMENT�OF�DEFENSE 12.rd W9124QͲ08ͲDͲ0800 Ͳ$�� 17,681$��Luna�Innovations�Incorporated DEPARTMENT�OF�DEFENSE 12.rd W9115RͲ16ͲCͲ050 Ͳ$�� 38,431$��NorthWest�Research�Associates,�Inc. DEPARTMENT�OF�DEFENSE 12.rd FA9550Ͳ17ͲCͲ0021 Ͳ$�� 22,777$��Oceanit�Laboratories�Inc. DEPARTMENT�OF�DEFENSE 12.rd WͲ911SRͲ15ͲCͲ0011 Ͳ$�� 7,718$��Oceanit�Laboratories�Inc. DEPARTMENT�OF�DEFENSE 12.rd W911SRͲ16ͲCͲ0065 Ͳ$�� 28,522$��PHYSICAL�SCIENCES,�INCORPORATED DEPARTMENT�OF�DEFENSE 12.rd W911SRͲ17ͲCͲ0013 Ͳ$�� 31,398$��Raytheon DEPARTMENT�OF�DEFENSE 12.rd HR001117C0049 Ͳ$�� 19,779$��Roccor,�LLC DEPARTMENT�OF�DEFENSE 12.rd HQ0147Ͳ16ͲCͲ7726 Ͳ$�� 25,359$��Science�Research�Laboratory DEPARTMENT�OF�DEFENSE 12.rd HQ0147Ͳ16ͲCͲ7725 Ͳ$�� 32,948$��Secotec�Inc DEPARTMENT�OF�DEFENSE 12.rd 17Ͳ031�2015Ͳ340ͲINIT0004 Ͳ$�� 4,337$��Tau�Technologies,�LLC DEPARTMENT�OF�DEFENSE 12.rd FA9451Ͳ16ͲCͲ0406 Ͳ$�� 11,441$��Teledyne�Brown�Engieneering,�Inc. DEPARTMENT�OF�DEFENSE 12.rd N/A Ͳ$�� 188,954$��

CFDA�12.rd�Total 3,113,942$�� 14,505,902$��DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECT

DEPARTMENT�OF�INTERIOR 15.rd Ͳ$�� 15,063$��DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�PASS�THRU

State�of�NM�Dept�Of�Game�And�Fish DEPARTMENT�OF�INTERIOR 15.rd N/A Ͳ$�� 19,735$��State�of�NM�Dept�Of�Game�And�Fish DEPARTMENT�OF�INTERIOR 15.rd SPORTFISH�RESTORATION�FͲ91ͲM Ͳ$�� 54,171$��

CFDA�15.rd�Total Ͳ$�� 88,969$��DEPARTMENT�OF�TRANSPORTATION�(DOT)�Ͳ�PASS�THRU

Mississippi�State�University DEPARTMENT�OF�TRANSPORTATION 20.rd 15ͲCͲUASͲNMSUͲA Ͳ$�� 1,596$��CFDA�20.rd�Total Ͳ$�� 1,596$��

NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�DIRECTNATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd Ͳ$�� 205,176$��

NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�PASS�THRUCalifornia�Institute�of�Technology NATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd NNN12AA01C Ͳ$�� 65,826$��Orbital�Science�Corporation NATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd NNG15WA53C Ͳ$�� 70,005$��Orbital�Science�Corporation NATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd NNG16WA70C Ͳ$�� 616,451$��Peraton�Inc. NATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd NNG09DA01C Ͳ$�� 308,392$��Space�Telescope�Science�Institute NATIONAL�AERONAUTICS�&�SPACE�ADMINISTRATION 43.rd NAS5Ͳ26555 Ͳ$�� 82,572$��

CFDA�43.rd�Total Ͳ$�� 1,348,422$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�DIRECT

NATIONAL�SCIENCE�FOUNDATION 47.rd Ͳ$�� 83,931$��NATIONAL�SCIENCE�FOUNDATION�(NSF)�Ͳ�PASS�THRU

Stanford�University NATIONAL�SCIENCE�FOUNDATION 47.rd N/A Ͳ$�� 11,240$��CFDA�47.rd�Total Ͳ$�� 95,171$��

DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRUArgonne�National�Laboratory DEPARTMENT�OF�ENERGY 81.rd DEͲAC02Ͳ06CH11357 Ͳ$�� 36,006$��Battelle�Energy�Alliance,�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲAC07Ͳ015D14517 Ͳ$�� 12,863$��Brookhaven�National�Laboratory DEPARTMENT�OF�ENERGY 81.rd N/A Ͳ$�� 161,700$��FERMI�RESEARCH�ALLIANCE�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲAC02Ͳ07CH11359 Ͳ$�� 8,323$��Los�Alamos�National�Security�LLC DEPARTMENT�OF�ENERGY 81.rd AC52Ͳ06NA25396 Ͳ$�� 77,708$��Los�Alamos�National�Security�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲAC52Ͳ06NA25396 Ͳ$�� 491,392$��Los�Alamos�National�Security�LLC DEPARTMENT�OF�ENERGY 81.rd DECͲAC52Ͳ06NA25396 Ͳ$�� 238,172$��NTESS�Sandia�National�Laboratories DEPARTMENT�OF�ENERGY 81.rd 1875431 Ͳ$�� 20,518$��Nuclear�Waste�Partnership�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲEM0001971 Ͳ$�� 187,417$��Nuclear�Waste�Partnership�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲEMͲ0001971 Ͳ$�� 59,824$��Sandia�Corporation DEPARTMENT�OF�ENERGY 81.rd 1190106 Ͳ$�� 151,720$��UTͲBattelle�LLC DEPARTMENT�OF�ENERGY 81.rd DEͲAC05Ͳ00OR22725 Ͳ$�� 50,320$��

CFDA�81.rd�Total Ͳ$�� 1,495,963$��AGENCY�FOR�INTERNATIONAL�DEVELOPMENT�(USAID)�Ͳ�DIRECT

AGENCY�FOR�INTERNATIONAL�DEVELOPMENT 98.rd Ͳ$�� 78,459$��CFDA�98.rd�Total Ͳ$�� 78,459$��

RESEARCH�&�DEVELOPMENT�CLUSTER�Ͳ�MAJOR�PROGRAM�TOTAL 7,761,360$�� 58,910,618$��


87




NumberGrant�Code

Subrecipient�


STUDENT�FINANCIAL�AID�CLUSTER

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�LOANS

PERKINS�LOANS�Ͳ�BEGINNING�BALANCE 84.038 11,407,420$��

PERKINS�LOANS�Ͳ�DISBURSED�IN�FY18 84.038 221,486$��

PERKINS�LOAN�CANCELLATIONS 84.037 Ͳ$�� 66,311$��

TOTAL�PERKINS�LOANS� 11,695,217$��

FEDERAL�DIRECT�LOANS 84.268 47,395,245$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�LOANS�Total 59,090,462$��

DEPARTMENT�OF�EDUCATION�(EDUC)

FEDERAL�SUPPLEMENTAL�EDUCATIONAL�OPPORTUNITY�GRANTS 84.007 Ͳ$�� 311,704$��

FEDERAL�WORKͲSTUDY�PROGRAM 84.033 Ͳ$�� 1,376,353$��

FEDERAL�PELL�GRANT�PROGRAM 84.063 Ͳ$�� 41,162,544$��

TEACHER�EDUCATION�ASSISTANCE�FOR�COLLEGE�AND�HIGHER�ED�GRANTS 84.379 Ͳ$�� 7,448$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Total Ͳ$�� 42,858,049$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS) SCHOLARSHIPS�FOR�DISADVANTAGED�STUDENTS 93.925 Ͳ$�� 294,209$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Total Ͳ$�� 294,209$��

TOTAL�STUDENT�FINANCIAL�ASSISTANCE�CLUSTER Ͳ$�� 102,242,720$��


88




NumberGrant�Code

Subrecipient�


INDIVIDUAL�AWARDS�Ͳ�OTHER

DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�DIRECT

WILDLIFE�SERVICES 10.028 Ͳ$�� 48,648$��

CFDA�10.028�Total Ͳ$�� 48,648$��DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�DIRECT

ORGANIC�CERTIFICATION�COST�SHARE 10.171 Ͳ$�� 50,609$��

CFDA�10.171�Total Ͳ$�� 50,609$��DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�PASS�THRU

University�of�Delaware HIGHER�EDUUCATION�Ͳ�CHALLENGE�GRANTS 10.217 2012Ͳ70003Ͳ20059 Ͳ$�� 22,000$��

CFDA�10.217�Total Ͳ$�� 22,000$��DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�PASS�THRU

University�of�Tennessee SECONDARY�AND�TWOͲYEAR�AGRICULTURE�EDUCATION 10.226 2015Ͳ38414Ͳ24223 Ͳ$�� 33,050$��

Ͳ$�� 33,050$��DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�DIRECT

AGRICULTURAL�AND�RURAL�ECONOMIC�RESEARCH 10.250 Ͳ$�� 2,856$��


CONSUMER�DATA�AND�NUTURITION�RESEARCH 10.253 Ͳ$�� 90,656$��


INTEGRATED�PROGRAMS 10.303 Ͳ$�� 34,673$��


HOMELAND�SECURITY_AGRICULTURAL 10.304 Ͳ$�� 67,295$��

DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�PASS�THRU

Purdue�University HOMELAND�SECURITY_AGRICULTURAL 10.304 2017Ͳ37620Ͳ27136 Ͳ$�� 21,438$��

Regents�University�of�California�Davis HOMELAND�SECURITY_AGRICULTURAL 10.304 2016Ͳ37620Ͳ25851 Ͳ$�� 22,924$��

CFDA�10.304�Total Ͳ$�� 111,657$��


BEGINNING�FARMER�AND�RANCHER�DEVELOPMENT�PRO 10.311 32,998$�� 176,521$��

CFDA�10.311�Total 32,998$�� 176,521$��


CROP�PROTECTION�AND�PEST�MANAGEMENT 10.329 Ͳ$�� 80,247$��

CFDA�10.329�Total Ͳ$�� 80,247$��


FARM�OPERATING�LOANS 10.406 Ͳ$�� 32,851$��

CFDA�10.406�Total Ͳ$�� 32,851$��


STATE�MEDIATION�GRANTS 10.435 CFDA�10.435�Total Ͳ$�� 38,003$��

Ͳ$�� 38,003$��


Developing�Innovations�in�Navajo�Education,�Inc.�DINE,�Inc. OUTREACH�&�ASSISTANCE�FOR�SOCIALLY�DISADVANTAGED 10.443 59Ͳ2501Ͳ16Ͳ010 Ͳ$�� 4,371$��

Developing�Innovations�in�Navajo�Education,�Inc.�DINE,�Inc. OUTREACH�&�ASSISTANCE�FOR�SOCIALLY�DISADVANTAGED 10.443 AO172501X443G010 Ͳ$�� 7,257$��

CFDA�10.443�Total Ͳ$�� 11,628$��


COOPERATIVE�EXTENSION�SERVICE 10.500 Ͳ$�� 2,629,265$��


Kansas�State�University COOPERATIVE�EXTENSION�SERVICE 10.500 2013Ͳ48696Ͳ21184 Ͳ$�� 15,233$��

Kansas�State�University COOPERATIVE�EXTENSION�SERVICE 10.500 2016Ͳ48696Ͳ25889 Ͳ$�� 7,568$��

University�of�Arizona COOPERATIVE�EXTENSION�SERVICE 10.500 00Ͳ41580Ͳ0867 Ͳ$�� 93,642$��

Washington�State�University COOPERATIVE�EXTENSION�SERVICE 10.500 2015Ͳ49200Ͳ24227 Ͳ$�� 41,281$��

CFDA�10.500�Total Ͳ$�� 2,786,989$��


Children�Youth�and�Family�Dept�State�NM HEADSTART�CHILD�AND�ADULT�CARE�FOOD 10.558 N/A Ͳ$�� 145,287$��

CFDA�10.558�Total Ͳ$�� 145,287$��


FACULTY�EXCHANGE�PROGRAM 10.613 Ͳ$�� 49,336$��

CFDA�10.613�Total Ͳ$�� 49,336$��


Mississippi�State�University RURAL�COOPERATIVE�DEVELOPMENT�GRANTS 10.771 RBSͲ14Ͳ23 Ͳ$�� (238)$��

CFDA�10.771�Total Ͳ$�� (238)$��


Mississippi�State�University RURAL�DEVELOPMENT�COORPERATIVE�AGREEMENT 10.890 RDͲRBͲ16Ͳ38 Ͳ$�� 20,382$��

CFDA�10.890�Total Ͳ$�� 20,382$��


CONSERVATION�STEWARDSHIP�PROGRAM 10.924 Ͳ$�� 56,204$��

CFDA�10.924�Total Ͳ$�� 56,204$��


TECHNICAL�AGRICULTURAL�ASSISTANCE 10.960 Ͳ$�� 243,394$��

CFDA�10.960�Total Ͳ$�� 243,394$��


COCHRAN�FELLOSHIP�PROGRAM 10.962 Ͳ$�� 42,576$��

CFDA�10.962�Total Ͳ$�� 42,576$��

DEPARTMENT�OF�COMMERCE�(DOC)�Ͳ�DIRECT

CLUSTER�GRANTS 11.020 Ͳ$�� 123,071$��

CFDA�11.020�Total Ͳ$�� 123,071$��

DEPARTMENT�OF�COMMERCE�(DOC)�Ͳ�DIRECT

ECONOMIC�DEVELOPMENT_TECHNICAL�ASSISTANCE 11.303 Ͳ$�� 100,916$��

CFDA�11.303�Total Ͳ$�� 100,916$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�DIRECT

ENDANGERED�SPECIES�CONSERVͲ�WOLF�LIVESTOCK�LOSS 15.666 (1,500)$�� (1,500)$��


89




NumberGrant�Code

Subrecipient�



CFDA�15.666�Total (1,500)$�� (1,500)$��

DEPARTMENT�OF�INTERIOR�(DOI)�Ͳ�PASS�THRU

America�View NATIONAL�LAND�REMOTE�SENSINGEDUCATION�OUTREACH 15.815 G14AP00002 Ͳ$�� 4,206$��

CFDA�15.815�Total Ͳ$�� 4,206$��

DEPARTMENT�OF�LABOR�(DOL)�Ͳ�PASS�THRU

Santa�Fe�Community�College TRADE�ADJUSTMENT�COMMUNITY�COLLEGE 17.282 TCͲ26486Ͳ14Ͳ60ͲAͲ35 Ͳ$�� 189,445$��

CFDA�17.282�Total Ͳ$�� 189,445$��

DEPARTMENT�OF�LABOR�(DOL)�Ͳ�PASS�THRU

University�of�Texas SUSAN�HARWOOD�TRAINING�GRANT�PROGRA 17.502 SHͲ29638Ͳ16Ͳ60ͲFͲ48 Ͳ$�� 12,144$��

CFDA�17.502�Total Ͳ$�� 12,144$��

DEPARTMENT�OF�TRANSPORTATION�(DOT)�Ͳ�DIRECT

HIGHWAY�TRAINING�AND�EDUCATION 20.215 Ͳ$�� 27,245$��

CFDA�20.215�Total Ͳ$�� 27,245$��

NATIONAL�ENDOWMENT�FOR�THE�ARTS�Ͳ�DIRECT

PROMOTION�OF�THE�ARTS_GRANTS�TO�ORGANIZATIONS 45.024 Ͳ$�� 19,696$��

CFDA�45.024�Total Ͳ$�� 19,696$��

NATIONAL�ENDOWMENT�FOR�THE�ARTS�Ͳ�PASS�THRU

New�Mexico�Department�of�Cultural�Affairs PROMOTION�OF�THE�ARTS_PARTNERSHIP�AGREEMENTS 45.025 17Ͳ6100Ͳ2031 Ͳ$�� 5,634$��

CFDA�45.025�Total Ͳ$�� 5,634$��

SMALL�BUSINESS�ADMINISTRATION��(SBA)�Ͳ�PASS�THRU

New�Mexico�Small�Business�Development�Center SMALL�BUSINESS�DEVELOPMENT�CENTERS 59.037 OSBDCͲ2017Ͳ02 Ͳ$�� 87,355$��

CFDA�59.037�Total Ͳ$�� 87,355$��

SMALL�BUSINESS�ADMINISTRATION��(SBA)�Ͳ�DIRECT

FEDERAL�AND�STATE�TECHNOLOGY�PARTNERSHIP 59.058 Ͳ$�� 130,725$��

CFDA�59.058�Total Ͳ$�� 130,725$��

ENVIRONMENTAL�PROTECTION�AGENCY�(EPA)�Ͳ�DIRECT

CONSOLIDATED�PESTICIDE�ENFORCEMENT�COOP 66.700 Ͳ$�� 322,394$��

CFDA�66.700�Total Ͳ$�� 322,394$��

ENVIRONMENTAL�PROTECTION�AGENCY�(EPA)�Ͳ�PASS�THRU

State�of�New�Mexico GOLD�KING�MINE�LONG�TERM�MONITORING 66.802 01F16901 Ͳ$�� 51,426$��

CFDA�66.802�Total Ͳ$�� 51,426$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRU

New�Mexico�Higher�Education�Department ADULT�EDUCATION 84.002 V002A160032 Ͳ$�� (2,564)$��

New�Mexico�Higher�Education�Department ADULT�EDUCATION 84.002 V002A170032 Ͳ$�� 510,201$��

CFDA�84.002�Total Ͳ$�� 507,637$��DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�DIRECT

HIGHER�EDUUCATION_INSTITUTIONAL�AID 84.031 Ͳ$�� 1,846,182$��CFDA�84.031�Total Ͳ$�� 1,846,182$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRUNew�Mexico�Public�Education�Department CAREER�AND�TECHNICAL�EDUCATION 84.048 V048A150031Ͳ15A Ͳ$�� (1,417)$��New�Mexico�Public�Education�Department CAREER�AND�TECHNICAL�EDUCATION 84.048 V048A150031Ͳ15B Ͳ$�� 18,391$��New�Mexico�Public�Education�Department CAREER�AND�TECHNICAL�EDUCATION 84.048 V048A160031Ͳ16A Ͳ$�� 14,424$��New�Mexico�Public�Education�Department CAREER�AND�TECHNICAL�EDUCATION 84.048 V048A170031 Ͳ$�� 478,298$��New�Mexico�Public�Education�Department CAREER�AND�TECHNICAL�EDUCATION 84.048 V048S160031Ͳ16A Ͳ$�� 38,411$��

CFDA�84.048�Total Ͳ$�� 548,107$��DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRU

Western�Interstate�Comission�for�Higher�Education FUND�FOR�THE�IMPROVEMENT�OF�POSTSECONDARY�EDUC 84.116 P116FF150044 Ͳ$�� 11,396$��CFDA�84.116�Total Ͳ$�� 11,396$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�DIRECTCOLLEGE�ASSISTANCE�MIGRANT�PGM�CAMP 84.149 Ͳ$�� 352,153$��


GRADUATION�ASSISTANCE�IN�AREAS�OF�NATIONAL�NEED 84.200 Ͳ$�� 195,306$��CFDA�84.200�Total Ͳ$�� 195,306$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRUNew�Mexico�Public�Education�Department TWENTYͲFIRST�CENTURY�COMMUNITY�LEARNING 84.287 S287C160031 Ͳ$�� 3,337$��New�Mexico�Public�Education�Department TWENTYͲFIRST�CENTURY�COMMUNITY�LEARNING 84.287 S287C170031 Ͳ$�� 2,162,615$��

CFDA�84.287�Total Ͳ$�� 2,165,952$��DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRU

Corporation�For�Public�Broadcasting READY�TO�LEARN�COMMUNITY�COLLECTIVE 84.295 U295A150003Ͳ17 Ͳ$�� 5,000$��CFDA�84.295�Total Ͳ$�� 5,000$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRUTexas�A&M�University INSTITUTE�OF�EDUCATION�SCIENCES 84.305 R305150057 Ͳ$�� 22,103$��


SPECIAL�EDUCATION�Ͳ�PERSONNEL�DEVELOPMENT 84.325 184,005$�� 316,820$��CFDA�84.325�Total 184,005$�� 316,820$��

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�DIRECTENGLISH�LANGUAGE�ACQUISITION�STATE�GRANTS 84.365 Ͳ$�� 533,103$��

CFDA�84.365�Total Ͳ$�� 533,103$��DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRU

National�Writing�Project� IMPROVING�TEACH�QUALITY�STATE�GRANTS 84.367 U367D150004 Ͳ$�� 6,052$��New�Mexico�Higher�Education�Department IMPROVING�TEACH�QUALITY�STATE�GRANTS 84.367 5367B140028 Ͳ$�� 88,032$��New�Mexico�Higher�Education�Department IMPROVING�TEACH�QUALITY�STATE�GRANTS 84.367 S367B140028 Ͳ$�� 87,469$��


STRENGTHENING�MINORITYͲSERVING�INSTITUTIONS 84.382 Ͳ$�� 31,536$��CFDA�84.382�Total Ͳ$�� 31,536$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUUniversity�of�New�Mexico AREA�HEALTH�EDUCATION�CENTERS 93.107 2�U77HP23074Ͳ07Ͳ00 Ͳ$�� 28,382$��University�of�New�Mexico AREA�HEALTH�EDUCATION�CENTERS 93.107 U77HP23074Ͳ02Ͳ00 Ͳ$�� 17,030$��


GRADUATE�PSYCHOLOGY�EDUCATION�PROGRAM 93.191 Ͳ$�� 276,134$��CFDA�93.191�Total Ͳ$�� 276,134$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECT


90




NumberGrant�Code

Subrecipient�



SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 Ͳ$�� 92,684$��CFDA�93.243�Total Ͳ$�� 92,684$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUChildren�Youth�and�Family�Dept�State�NM SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 1H79SM061905 102,000$�� 850,701$��Children�Youth�and�Family�Dept�State�NM SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 1H79SM061905Ͳ01 742,744$�� 910,765$��Children�Youth�and�Family�Dept�State�NM SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 1H79T1026032Ͳ01 62,070$�� 67,007$��Children�Youth�and�Family�Dept�State�NM SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 TI�025480 27,855$�� 39,100$��Children�Youth�and�Family�Dept�State�NM SUBSTANCE�ABUSE�AND�MENTAL�HEALTH�SERVICES 93.243 TI025480 31,338$�� 58,327$��

CFDA�93.243�Total 966,007$�� 2,018,584$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRU

HealthInsight�Management�Corporation NATIONAL�DIABETES�PREVENTION�PROGRAM 93.261 1�NU58DP006369Ͳ01Ͳ00 Ͳ$�� 125$��CFDA�93.261�Total Ͳ$�� 125$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTLEADERSHIP�IN�PUBLIC�HEALTH�SOCIAL�WORK�EDUCATION 93.330 Ͳ$�� 150,476$��


RESEARCH�INFRASTRUCTURE�PROGRAMS 93.351 49,316$�� 170,396$��CFDA�93.351�Total 49,316$�� 170,396$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUNew�Mexico�Public�Education�Department PREGNANCY�ASSISTANCE�FUND 93.500 5�SP1AH000021Ͳ04Ͳ00 Ͳ$�� 2,008$��


State�of�New�Mexico COURT�IMPROVEMENT�PROJECT 93.586 GͲ1701NMSCIP Ͳ$�� 45,198$��CFDA�93.586�Total Ͳ$�� 45,198$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�DIRECTHEAD�START 93.600 Ͳ$�� 2,254,081$��

CFDA�93.600�Total Ͳ$�� 2,254,081$��DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRU

Joslin�Diabetes�Center,�Inc. HEALTH�CARE�INNOVATION�AWARDS 93.610 1C1CMS331021Ͳ01Ͳ00 Ͳ$�� 72,062$��CFDA�93.610�Total Ͳ$�� 72,062$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUChildren�Youth�and�Family�Dept�State�NM CHILDREN'S�JUSTICE�GRANTS�TO�STATES 93.643 GͲ1501NMCJA1 Ͳ$�� 22,500$��


Children�Youth�and�Family�Dept�State�NM TITLE�IVͲE�PROGRAM 93.658 G1501NMFOST/G1601NMFOST Ͳ$�� 44$��Children�Youth�and�Family�Dept�State�NM TITLE�IVͲE�PROGRAM 93.658 G1601ͲNMFOST/G170ͲNMFOST Ͳ$�� 453,137$��


MENTAL�&�BEHAVIORAL�HEALTH�EDUCATION�&�TRAINING 93.732 Ͳ$�� 289,622$��CFDA�93.732�Total Ͳ$�� 289,622$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUState�of�New�Mexico EMPOWERING�OLDER�ADULTS 93.734 N/A Ͳ$�� 78,716$��


Children�Youth�and�Family�Dept�State�NM OPIOID�STR 93.788 1H79TI080267Ͳ01�FAIN�TI080267 Ͳ$�� 132,948$��CFDA�93.788�Total Ͳ$�� 132,948$��

DEPARTMENT�OF�HOMELAND�SECURITY�(DHS)�Ͳ�PASS�THRUNM�Department�Of�Homeland�Security HAZARD�MITIGATION�GRANT 97.039 FEMAͲ4199ͲDRͲNM Ͳ$�� 168,988$��


NM�Department�Of�Homeland�Security EMERGENCY�MANAGEMENT�PERFORMANCE�GRANTS 97.042 EMTͲ2016ͲEPͲ00005ͲS01 Ͳ$�� 727$��NM�Department�Of�Homeland�Security EMERGENCY�MANAGEMENT�PERFORMANCE�GRANTS 97.042 EMTͲ2017ͲEPͲ00002ͲS01 Ͳ$�� 294,317$��


NM�Department�Of�Homeland�Security HOMELAND�SECURITY�GRANT�PROGRAM 97.067 DHSͲ16ͲGPDͲ067Ͳ00Ͳ01 Ͳ$�� 64,938$��NM�Department�Of�Homeland�Security HOMELAND�SECURITY�GRANT�PROGRAM 97.067 EMWͲ2016ͲSSͲ00105 Ͳ$�� 4,914$��


DEPARTMENT�OF�AGRICULTURE 10.xx Ͳ$�� 52,166$��CFDA�10.xx�Total Ͳ$�� 52,166$��

DEPARTMENT�OF�COMMERCE�(DOC)�Ͳ�PASS�THRUSynoptic�Data�Corp. DEPARTMENT�OF�COMMERCE 11.xx EAͲ133WͲ16ͲCQͲ0054 Ͳ$�� 57,491$��

CFDA�11.xx�Total Ͳ$�� 57,491$��DEPARTMENT�OF�DEFENSE�(DOD)�Ͳ�PASS�THRU

AGEISS DEPARTMENT�OF�DEFENSE 12.xx W9113MͲCͲ0036 Ͳ$�� 35,399$��CFDA�12.xx�Total Ͳ$�� 35,399$��

NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION�(NASA)�Ͳ�PASS�THRUJacobs�Technology�Inc. NATIONAL�AERONAUTICS�AND�SPACE�ADMINISTRATION 43.xx NNJ11HA02C Ͳ$�� 267,923$��

CFDA�43.xx�Total Ͳ$�� 267,923$��DEPARTMENT�OF�ENERGY�(DOE)�Ͳ�PASS�THRU

Los�Alamos�National�Security�LLC DEPARTMENT�OF�ENERGY 81.xx DEͲAC52Ͳ06NA25396 Ͳ$�� 169,859$��Sandia�Corporation DEPARTMENT�OF�ENERGY 81.xx DEͲAC04ͲA94AL85000 Ͳ$�� 69,494$��

CFDA�81.xx�Total Ͳ$�� 239,353$��DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�PASS�THRU

New�Mexico�Higher�Education�Department DEPARTMENT�OF�EDUCATION 84.xx V002A170032 Ͳ$�� 62,213$��CFDA�84.xx�Total Ͳ$�� 62,213$��

DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES�(HHS)�Ͳ�PASS�THRUSocial�&�Scientific�Systems,�Inc DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES 93.xx HHSN22612014000101 Ͳ$�� 5,125$��Social�&�Scientific�Systems,�Inc DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES 93.xx HHSN2612014000101 Ͳ$�� 32,868$��University�of�New�Mexico DEPARTMENT�OF�HEALTH�&�HUMAN�SERVICES 93.xx 2�U77HP23074Ͳ07Ͳ00 Ͳ$�� 57,412$��

CFDA�93.xx�Total Ͳ$�� 95,405$��SNAP�CLUSTER

DEPARTMENT�OF�AGRICULTURE�(USDA)�Ͳ�PASS�THRUNew�Mexico�Human�Services�Department SUPPLEMENTAL�NUTRITION�ASSISTANCE�PROGRAM 10.561 GSA�17Ͳ630Ͳ9000Ͳ0043 Ͳ$�� 410,272$��New�Mexico�Human�Services�Department SUPPLEMENTAL�NUTRITION�ASSISTANCE�PROGRAM 10.561 N/A Ͳ$�� 1,217,792$��

CFDA�10.561�Total Ͳ$�� 1,628,064$��

SNAP�Cluster�Total Ͳ$�� 1,628,064$��TRIO�CLUSTER

DEPARTMENT�OF�EDUCATION�(EDUC)�Ͳ�DIRECTTRIO�STUDENT�SUPPORT�SERVICES�PROGR 84.042 Ͳ$�� 601,742$��


TRIO�UPWARD�BOUND 84.047 Ͳ$�� 654,393$��CFDA�84.047�Total Ͳ$�� 654,393$��


91




NumberGrant�Code

Subrecipient�



TRIO�Cluster�Total Ͳ$�� 1,256,135$��

INDIVIDUAL�AWARDS�Ͳ�OTHER�TOTAL 1,230,826$�� 22,106,410$��

TOTAL�EXPENDITURES�OF�FEDERAL�AWARDS 8,992,186$�� 183,259,748$��


92


Schedule�7�Ͳ�Schedule�of�Expenditures�of��Federal�Awards

Federal�Awards:

Federal�Appropriations,�Grants�and�Contracts 82,542,027$��

Federal�Pell�Grant�revenue 41,162,544��

Portion�of�Capital�Grants,�Gifts�and�other�Income�related�to�Federal�Awards 512,747��

124,217,318��

Plus�reconciling�items:

Adjustment�to�federal�revenue�for�accrued�liabilites 18,279��

Adjustment�to�federal�revenue�for�Department�of�Education�loans 59,024,151��

Federal�Expenditures�per�Schedule�7 183,259,748$��

Note A: Basis Of Presentation

Note B: Significant Accounting Policies:

Note C:

Note D:

Note E:

Note F: New Mexico State University has elected not to use the 10% de minimis indirect cost rate.

Federal Perkins Loan Program, CFDA # 84.038. Perkins loans awarded for the year ended June 30, 2018 totaled $221,486,

and the outstanding student loan balances under the Federal Perkins Loan Program was $10,468,888.

Reconciliation�to�Statement�of�Revenues,�Expenditures�and�Changes�in�Net�Position

Notes�to�Schedule�of�Expenditures�of�Federal�Awards

The accompanying Schedule of Expenditures of Federal Awards (the schedule) includes the federal grant activity of the

University under programs of the Federal Government for the year ended June 30, 2018. The information in this schedule ispresented in accordance with 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and AuditRequirements for Federal Awards. Because the schedule presents only a selected portion of the operations of the University,it is not intended to and does not present the financial position, changes in net position, or cash flows of the University.

The accompanying schedule follows the accounting policies presented in Note 2 of the Notes to Financial Statements.

Federal Direct Student Loans, CFDA # 84.268. During the fiscal year ended June 30,2018, the University processed$47,395,245 in new loans under the Direct Student Loan Program (which includes Stafford Loans and Parents' Plus Loans).

During the fiscal year ended June 30, 2018, there were no federal funds made available in the form of non-cash assistance.


93



Independent Auditors¶ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government

Auditing Standards

Board of Regents New Mexico State University And Mr. Wayne Johnson, New Mexico State Auditor:

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities, and the discretely presented component unit of New Mexico State University (the University), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the University¶s basic financial statements, and have issued our report thereon dated December 12, 2018.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the University¶s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University¶s internal control. Accordingly, we do not express an opinion on the effectiveness of the University¶s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity¶s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2018-001, which we consider to be a significant deficiency.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the University¶s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of

94

our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We noted certain matters that are required to be reported per section 12-6-5 NMSA 1978 that we have described in the accompanying schedule of other findings as required by New Mexico state statute, section 12-6-5 NMSA 1978 as items 2018-002, 2018-003, and 2018-004.

The University¶s Responses to the Findings

The University¶s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs and the schedule of other findings. The University¶s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the responses.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University¶s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University¶s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


95



Independent Auditors¶ Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance

Board of Regents New Mexico State University And Mr. Wayne Johnson, New Mexico State Auditor:

Report on Compliance for Each Major Federal Program

:H�KDYH�DXGLWHG�1HZ�0H[LFR�6WDWH�8QLYHUVLW\¶V��WKH University) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on HDFK�RI�WKH�8QLYHUVLW\¶V�PDMRU�IHGHUDO�SURJUDPV�IRU�WKH�\HDU�HQGHG�-XQH ��7KH�8QLYHUVLW\¶V�PDMRU�IHGHUDO�SURJUDPV�DUH�LGHQWLILHG�LQ�WKH�VXPPDU\�RI�DXGLWRUV¶�UHVXOWV�VHFWLRQ�RI�WKH accompanying schedule of findings and questioned costs.

0DQDJHPHQW¶V�5HVSRQVLELOLW\

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

AuditorV¶�5HVSRQVLELOLW\

2XU�UHVSRQVLELOLW\�LV�WR�H[SUHVV�DQ�RSLQLRQ�RQ�FRPSOLDQFH�IRU�HDFK�RI�WKH�8QLYHUVLW\¶V�PDMRU�IHGHUDO�SURJUDPV�based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the 8QLYHUVLW\¶V�FRPSOLDQFH�ZLWK�WKRVH�UHTXLUHPHQWV�DQG�SHUIRUPLQJ�such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. HowevHU��RXU�DXGLW�GRHV�QRW�SURYLGH�D�OHJDO�GHWHUPLQDWLRQ�RI�WKH�8QLYHUVLW\¶V�FRPSOLDQFH�

Opinion on Each Major Federal Program

In our opinion, New Mexico State University complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018.

Other Matters

The results of our auditing procedures disclosed an instance of noncompliance, which are required to be reported in accordance with the 12-6-5 NMSA 1978 and which are described in the accompanying schedule of other findings as required by New Mexico state statute,section 12-6-5 NMSA 1978 as item 2018-005. Our opinion on each major federal program is not modified with respect to this matter.

96

7KH�8QLYHUVLW\¶V�UHVSRQVH�WR�WKH�QRQFRPSOLDQFH�ILQGLQJ identified in our audit is described in the accompanying VFKHGXOH�RI�RWKHU�ILQGLQJV��7KH�8QLYHUVLW\¶V�UHVSRQVH�ZDV�QRW�VXEMHFWHG�WR�WKH�DXGLWLQJ�SURFHGXUHV�DSSOLHG�LQ�the audit of compliance and, accordingly, we express no opinion on the response.

Report on Internal Control Over Compliance

Management of the University is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit RI�FRPSOLDQFH��ZH�FRQVLGHUHG�WKH�8QLYHUVLW\¶V�LQWHUQDO�FRQWURO�RYHU�FRPSOLDQFH�ZLWK�WKH�W\SHV�RI�UHTXLUHPHQWV�that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control RYHU�FRPSOLDQFH��$FFRUGLQJO\��ZH�GR�QRW�H[SUHVV�DQ�RSLQLRQ�RQ�WKH�HIIHFWLYHQHVV�RI�WKH�8QLYHUVLW\¶V�LQWHUQDO�control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.


97


Schedule of Findings and Questioned CostsYear ended June 30, 2018

(1) Summary of Auditors’ Results

(a) Type of report issued on whether the financial statements were prepared in accordance withgenerally accepted accounting principles: Unmodified

(b) Internal control deficiencies over financial reporting disclosed by the audit of the financialstatements:

Material weaknesses: No

Significant deficiencies: Yes

(c) Noncompliance material to the financial statements: No

(d) Internal control deficiencies over major programs disclosed by the audit:

Material weaknesses: No

Significant deficiencies: None reported

(e) Type of report issued on compliance for major programs: Unmodified

(f) Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): No

(g) Major programs:

Student Financial Assistance Cluster – various CFDA numbers

Research and Development Cluster - various CFDA numbers

(h) Dollar threshold used to distinguish between Type A and Type B programs: $3,000,000

(i) Auditee qualified as a lowrisk auditee: No

98


Schedule of Findings and Questioned CostsYear ended June 30, 2018

(2) Findings Relating to the Financial Statements Reported in Accordance with GovernmentAuditing Standards

2018-001 Misstatement in bond and investment amounts on the financial statements -Significant Deficiency

Criteria:Governmental Accounting Standards and Board Codification (GASBC) D20.105 indicates thatdefeased debt is no longer reported as a liability on the face of the financial statements.

Condition:In the current year, the University issued the 2017 series bonds (New Debt), which provided monies forfour objectives: the current refunding of the 2006 bonds, the advanced refunding of portions of the2010 and 2013 bond issues (Old Debt), crossover refunding of a portion of the 2010 bond issue, andnew funds to provide for improvements at the University.

The advanced refunding of portions of the 2010 and 2013 bond issues qualified as a defeasance ofdebt which would result in accounting for the debt as if it had been paid off. However, the Universitycontinued to record the Old Debt of $22,130,000 as a liability while adding the proceeds to be utilizedto retire the Old Debt as an asset. This effectively “grossed up” both the assets and liabilities in theStatement of Net Position.

Cause:The University has a process of reviewing new issuances of debt to determine the appropriateaccounting for that debt. In accounting for the issuance of the 2017 series bonds, the University failedto identify the fact that the advanced refunding of portions of the 2010 and 2013 bond issues qualifiedas a defeasance of debt.

Effect:The University “grossed up” the investments and the bonds payable, by approximately the amount ofthe defeased debt. In addition, the loss on defeasance of the Old Debt was not computed and recordedas a deferred outflow of resources

Recommendation:We recommend management enhance the current process for review of new debt issuancedocumentation and the recording of new issuances. While management has a process in place toappropriately identify new issuances and consider the accounting for those issuances, this process isnot in sufficient detail to ensure each aspect of a debt issuance is appropriately recorded.

Management's Response:The University has implemented additional oversight and verification procedures enhancing thereviewing and recording of new debt issuance. This includes modification of the oversight model for ourcapital financing unit to ensure that there is a full understanding of all aspects of bond accounting andworking together with all departments involved with the accounting. Historically, the Budget Office,Capital Finance and Treasury Services have all contributed to the accounting for bonds. Documentedprocedures will be utilized to enhance the capital finance unit’s knowledge in verifying the related bondaccounting process.

(3) Federal Award Findings and Questioned Costs

None

99


Schedule of Other FindingsAs Required by New Mexico State Statute 12-6-5, NMSA 1978

Year ended June 30, 2018

Prior Year Findings None

Other Findings as Required by New Mexico State Statute, Section 12-6-5, NMSA 1978

2018-002 General IT review of user access to the Banner System - Finding that does not rise tothe level of a significant deficiency.

Criteria:The entities' system processes, records, and stores information that is vital to its daily operations andcertain systems contain personally identifiable information (PII) of its employees and students. It iscritical that access to this system is properly maintained to prevent inappropriate transactions fromoccurring, data from being lost, and to prevent PII from being released.

Condition:The University uses the Banner system in order to record and retain employee, student, and financialinformation. In the current year, we noted that the University had effective procedures to maintainappropriate access for the employees involving a change when the change in system access isdirectly related to a documented change within the human resources system (HR); however, we notedthat there is not a documented process to review individual employee’s current access for all usersabove read-only and whether the privileges/roles are in line with their job responsibilities and LeastPrivileges principle.

Cause: We note that the University has a set of procedures that involve the data custodian review of theirdepartment’s current access in Banner; however, the review is not documented as to the frequency,the level of the review, or response to inappropriate privileges/roles.

Effect:We note that if an active user has privileges/roles that are obtained outside of a change in HR or if theHR controls missed an individual, there is not a regular formal process to ensure that user access islimited to the Least Privileges principle.

Recommendation:We recommend that the University ensure each data custodian review privileges/roles for each userwith above real-only access with a minimum frequency of annually. This review should includedocumentation of completion of the review and should include the reviewer’s considerations. Thereview should include evidence to support whether any access identified as unnecessary orinappropriate was utilized.

Management’s Response:The University identified this deficiency over a year ago and implemented automatedsafeguards/reports for data custodians to review and developed procedures, but recognizes that theexisting process and reviews may need to be more formally documented. The University's ITCompliance Officer and designated Chief Privacy Officer will work with the appropriate datacustodians to establish and document a process that will ensure regular review of privileges/roles foreach user including its frequency, reviewer’s considerations, anomalies noted, rectification, and willcreate a central repository to maintain the documented reviews for the entire University system byJune 30, 2019.

100




2018-003 Budget Compliance – Finding that does not rise to the level of a significant deficiency.

Criteria:2.2.2.10 R(1)(a), requires that a finding be reported if actual expenditures exceeds budgetedexpenditures at the legal level of budgetary control.

Condition:An annual budget is set by the University to allocate amounts of appropriate expenses andexpenditures for the University and that it is considered to be the legal budget authority within theUniversity. The University has a process in place to monitor expenditures recorded throughout theperiod, however this process does not include full consideration of accounting entities recorded afterthe end of the fiscal year.

We noted in our review of the financial statements and budget schedules, that budget authority wasexceeded in relation to the retirement of indebtedness budget line. On schedule 3a in the financialstatements, the retirement of indebtedness actuals exceeded the revised budgeted amount by$962,143.

Cause:The University had set the original and revised budget per protocol; however, the excess spending onthe retirement of indebtedness that resulted from issuance of the 2017 refunding bonds was notidentified until after year end.

Effect:Given the requirements of budgetary accounting that are set in order to allow governmental entitiesthe appropriate transparency to the general public in amounts spent, we note that this is a findingunder state audit rule. The amount overspent in the Retirement of Indebtedness is $962,143.

Recommendation:We recommend that the University review its spending policies and procedures in order to ensure thatactual spending remains within the budget authority approved.

Management’s Response:The budget overage was detected during the fiscal year end process before the books were closed.However, no adjustments can be made to the University’s approved budget after the May 1 HigherEducation Department deadline. In the future, closer reviews will be conducted in March withadequate time to make the Budget Adjustment Requests with the state. Supplementary reviews willalso be conducted by the Controller's office as an additional control procedure. As this was a result ofaccounting for a new bond issuance, extensive scrutiny will be conducted on any future bondissuances. We modified the oversight model for capital financing unit. We will document ourprocedures for the related bond accounting process to include the appropriate budgets.

101




2018-004 Arrowhead Center, Inc. determination of accounting for majority equity interest –Finding that does not rise to the level of a significant deficiency.

Criteria:GASBC 2100 establishes standards for defining the financial reporting entity and requiresgovernments to consider whether legally separate organizations qualify as component units.

Condition:During fiscal year 2018 Arrowhead Center, Inc. (Arrowhead) became the holder of the majority equityinterest with a $1,000 investment in a separate legal entity. Becoming the majority equity interestrequired Arrowhead to determine the appropriate accounting for that separate legal entity inaccordance with U.S. generally accepted accounting principles. This would include consideration ofwhether the entity qualified as a component unit and/or an investment. Management did not have aprocess in place to consider and document applicable accounting literature in determination of theaccounting for this new transaction.

Cause:Management did not fully consider all applicable accounting principles related to Arrowhead’saccounting for the separate legal entity, including whether the separate legal entity qualified as acomponent unit and/or an investment. In addition they did not consider the appropriate method ofaccounting for the investment (equity method).

Effect:This lack of fully considering the applicable accounting principles could have resulted in a componentunit being inappropriately excluded from the Arrowhead reporting entity.

Recommendation:We recommend management consider all relevant accounting principles when entering into newtransactions to ensure that the transaction and subsequent measurement/consideration of thattransaction is reflected in the financial statements in accordance with U.S. generally acceptedaccounting principles. We further recommend that this consideration and management’s conclusionsbe documented.

Management’s Response:Management will implement a documented process for new and/or significant transactions thatensures consideration of all relevant accounting principles. This process will include ArrowheadCenter Inc. management and the University accounting personnel for a consistent and documenteddetermination on accounting and reporting treatment of such transactions. This process will be inplace by June 30, 2019.

102




2018-005 Federal Direct Loans Disbursements to and on Behalf of Students Notification Letters– Finding that does not rise to the level of a Uniform Guidance other matter or a significantdeficiency

Criteria:34 SFR section 668.165 (a)(6)(i) requires institutions to make this notification to the student or parentno earlier than 30 days before, and no later than 30 days after, crediting the student's account at thisinstitution with Direct Loan.

Condition: As a participant in the Federal Direct Student Loans program, the University is responsible forinforming the students that receive Federal Direct Student Loans of the date and amount ofdisbursement, right to cancel all or a portion of that loan or loan disbursement, and procedures andtime by which to cancel.

In reviewing the loan disbursement notification letters, we noted in the beginning of the fall semesterthat notification letters were not sent to students. This resulted in approximately 13% of the totalFederal Direct Student Loan disbursements not being sent to student to notify them of their right tocancel and the procedures and time by which to cancel associated with that individual loandisbursement.

Cause: This issue appears to be the result of an IT system error whereby the loan notification process was notset to be turned on in order to trigger the system to produce the disbursement letters at the time of thedisbursement. The University personnel did not identify the issue until after the time frame to send thedisbursement letters expired.

Effect:We noted the following:

Date and amount of disbursement: the amount and date was posted to the student’s account and

available for the students to see indicating they were notified of the date and amount of each

disbursement.

Right to cancel all or a portion of that loan or loan disbursement: none of the students who were

effected were first time borrowers. Each student impacted had been notified of their rights to cancel

in association with earlier disbursements.

Procedures and time by which to cancel: none of the students who were effected were first time

borrowers. Each student impacted had been notified of the process to cancel in association with

earlier disbursements.

The issue with the IT system was remediated and did not recur in the following semester.

Recommendation:We recommend that the system loan notification process be activated at the same time as the loandisbursement process to eliminate the possibility of reoccurrence. Management has already revisedthe activation process to ensure these processes are activated concurrently for each academic year.

Management’s Response:The loan disbursement notification is a standalone process that has to be turned on each academicyear, after which it automatically runs each day until it is turned off. There was a delay in turning onthe notification, so continuing students were not notified, however no incoming freshmen wereaffected. To mitigate against this, the University Financial Aid and Scholarship Services Office have:

modified the disbursement chain to include the loan disbursement notification,

implemented a daily reconciliation of loan disbursement and notification letters. We compare the

number of letters generated with the daily loan reconciliation file and the result is recorded on the

loan reconciliation file.

103


Summary Schedule of Prior Audit FindingsYear ended June 30, 2018

Section II - Financial Statement Findings Relating to the Financial Statements Reported inAccordance with Government Auditing Standards

None

Section III - Federal Awards Findings and Questioned Costs

None

104

New Mexico State University Exit Conference For the Year Ended June 30, 2018

An exit conference was held on October 29, 2018, to discuss the current audit report and auditors’comments. In attendance were the following individuals:

Representing the Board of Regents for New Mexico State University

Debra P. Hicks ChairCindy Seipel Audit Committee Community MemberShari Jones Audit Committee Community Member

Representing New Mexico State University

John Floros PresidentAndrew J. Burke Senior Vice President for Administration and FinanceNorma Noel University ControllerKim Rumford Chief Budget OfficerErmelinda Quintela Chief Audit OfficerLizbeth G. Ellis Chief Legal Affairs OfficerRoss Justus Associate ControllerCarolina Munoz Manager, Accounting and FinanceDamian Lopez Audit LiaisonAdam Cavotta Board of Regents Chief of Staff

Representing New Mexico State University Component Units

Randy Frye Controller, NMSU Foundation, Inc.Kathryn Hansen CEO, Arrowhead Center Inc.Mario Naverrete Accountant, Senior

Representing KPMG LLP

John T. Kennedy Lead Engagement PartnerSuzette Longfellow Managing Director

The University’s management prepared the Financial Statements. The University is responsible for theFinancial Statements and its contents.

105

C-1

APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION

C-2

The following are excerpts from the parameters Bond Resolution, adopted September 4, 2019(the "Bond Resolution").

Definitions

Throughout the Bond Resolution, the following terms as used therein will have the meaning setforth below:

"Act” means the general laws of the State, including Sections 6-17-1 through 6-17-19 NMSA1978, as amended, 6-14-1 through 6-14-12 NMSA 1978, as amended, and the enactments of the Regentsrelating to the issuance of the Series 2019 Bonds, including the Bond Resolution and the SaleCertificate.

"Bond Purchase Agreement" means the agreement for purchase and sale of the Bonds to beentered into between the Regents and the Underwriter and to be approved by the Delegate within theparameters set forth in this Resolution.

"Bond Resolution" means the Bond Resolution adopted by the Regents on September 4, 2019,as amended or supplemented by the Sale Certificate.

"2010 Bond Resolution" means the Resolution of the Regents of November 19, 2009, asamended by a Resolution adopted by the Regents on January 13, 2010 authorizing the issuance of theSeries 2010A Bonds, the Series 2010B Bonds, the Series 2010C Bonds, and the Series 2010D Bonds.

"2013 Bond Resolution" means the Resolution of the Regents adopted on January 28, 2013, asamended by a Resolution adopted by the Regents on April 3, 2013 authorizing the issuance of the Series2013A Bonds, the Series 2013B Bonds, and the Series 2013C Bonds.

"2014 Bond Resolution" means the Resolution of the Regents adopted on January 31, 2014, asamended by a Resolution adopted by the Regents on April 16, 2014 authorizing the issuance of theSeries 2014 Note.

“2017 Bond Resolution” means Resolution 2017-02 of the Regents adopted March 6, 2017, asamended and supplemented by Resolution 2017-03 adopted by the Regents on June 16, 2017authorizing the issuance of the Series 2017 Bonds.

"Business Day" means any day other than a Saturday, Sunday, legal holiday or a day on whichbanking institutions or the New York Stock Exchange are authorized or obligated by law or executiveorder to be closed.

"Code" means the Internal Revenue Code of 1986, as amended, including when appropriate,the statutory predecessor of the Code, and all applicable regulations whether proposed, temporary orfinal, including regulations issued and proposed pursuant to the statutory predecessor of the Code, and,in addition, all official rulings and judicial determinations applicable to the Series 2019 Bonds, andunder the statutory predecessor of the Code and any successor provisions to those sections orregulations.

"Continuing Disclosure Undertaking" means the Continuing Disclosure Undertaking withrespect to the Series 2019 Bonds to be executed on the day of issuance and delivery of the Series 2019Bonds to the Purchaser and to be approved at the time of adoption of the Sale Resolution.

C-3

"Debt Service Grants" means, collectively, the aggregate of the payments received or to bereceived by the Regents, whether as grants or otherwise, pursuant to agreements of the Regents with theUnited States of America, or any of its agencies, within the meaning of the provisions of Section 6-17-14 NMSA 1978, as amended.

"Delegate" means the President of the Board of Regents, the Chancellor of the University, thePresident of the University, the Senior Vice President for Finance and Administration or otherAuthorized Officer of the University delegated the authority to approve the final terms of the bonds.

"Escrow Agreement" means an escrow agreement for the Refunded Bonds for deposit of all ora portion of the Refunded Bond Requirements on the date of delivery of the Series 2019 Bonds.

"Expenses" means all expenses relating to the issuance of the Series 2019 Bonds, including,without limitation, costs of advertising and publication of the Bond Resolution, rating agency fees andexpenses, costs of printing the Preliminary Official Statement, the Official Statement and the Series2019 Bonds, financial advisor fees and expenses, legal fees and expenses, escrow agent and accountingfees and expenses, fees and expenses of the Purchaser, and all reasonable and necessary fees andadministrative costs of the Regents related thereto.

"Fiscal Year" means the twelve-month period used by the University for its general accountingpurposes as the same may be changed from time to time, presently being a period beginning on July 1of each year and ending on June 30 of the next succeeding year.

"Government Obligations" means direct obligations of the United States of America, includingobligations the principal of and interest on which are unconditionally guaranteed by the United Statesof America.

"Income from the Permanent Fund” and "Income from the Income Fund” mean the grossincome from the Permanent Fund of the University and the gross income from the Income Fund of theUniversity derived from the lease or rentals of such of the University's lands as remain unsold or itsother property, as in part established and provided for by Article XII of the New Mexico Constitution,which income may be pledged to the payment of the obligations of the Regents pursuant to Sections 6-17-1 through 6-17-19 NMSA 1978.

"Independent Accountant" means (a) an accountant employed by the State of New Mexico andunder the supervision of the State Auditor of the State of New Mexico, or (b) any certified publicaccountant, registered accountant or firm of such accountants duly licensed to practice and practicingas such under the laws of the State of New Mexico, appointed and paid by the University who (i) is, infact, independent and not under the domination of the University or the Regents, (ii) does not have anysubstantial interest, direct or indirect, with the University, and (iii) is not connected with the Universityor the Regents as an officer or employee of the University or the Regents, but who may be regularlyretained to make annual or similar audits of the books or records of the University and the Regents.

"Insured Bank" means a bank or savings and loan association whose deposits are insured by anagency of the United States.

"Interest and Retirement Fund” means that fund for the deposit of Pledged Revenues from theRevenue Fund to be used for the payment of principal of and interest on the Parity Bonds, previouslyestablished by the Regents and maintained by the University.

C-4

"Operating and Maintenance Expenses" means the reasonable operating and maintenanceexpenses of the System which will be deemed to include all costs of heating and lighting the buildings,improvements or facilities comprising the System, insurance, the cost of services of employeesoperating and maintaining the buildings, improvements or facilities comprising the System, the cost offood, repairs, costs of reasonable replacements of equipment and any other incidental costs notspecifically enumerated, but which are reasonably necessary to operate and maintain the buildings,facilities, improvements and equipment comprising the System.

"Outstanding" or "outstanding" when used in reference to bonds of the Regents means, on anyparticular date, the aggregate of all such bonds delivered under the applicable resolution authorizing theissuance of such bonds, except:

(a) those cancelled at or prior to such date or delivered or acquired by the Regents ator prior to such date for cancellation;

(b) those otherwise deemed to be paid in accordance with Sections 23 and 24 of theBond Resolution or similar section of any resolution of the Regents authorizing the issuanceof the applicable bonds;

(c) those in lieu of or in exchange or substitution for which other bonds will havebeen delivered, unless proof satisfactory to the Regents and the paying agent for theapplicable bonds is presented that any bond for which a new bond was issued or exchanged isheld by a bona fide holder in due course; and

(d) those which have been refunded in accordance with the Bond Resolution orsimilar section of any resolution of the Regents authorizing the issuance of the applicablebonds.

"Paying Agent" or "Paying Agent/Registrar" means the Senior Vice President forAdministration and Finance of the University, or successor in function, and any substitute payingagent/registrar appointed by the University pursuant to Section 8 of the Bond Resolution, as agent ofthe Regents for the payment, registration, transfer and exchange of the Series 2019 Bonds.

"Permitted Investments" means direct obligations of (including obligations issued or held inbook entry form on the books of) the Department of the Treasury of the United States of America, orany of its agencies other than Farm Credit Consolidated System wide Discount Notes, Federal FarmCredit Banks Consolidated System wide Bonds, Federal Land Banks, Federal intermediate CreditBanks, Banks for Cooperatives and Farmers Home Administration, or obligations fully guaranteed bythe United States of America, to the extent permitted under the Investment Policy of the Regents.

"Pledged Revenues" means:

(a) The gross income and revenues of whatever nature derived from the operation orownership of the System (except as otherwise excluded under the definition of System).

(b) All gross proceeds of student tuition and fees of every nature collected fromstudents at the University, except (i) the fees now known as "Student Activity Fees," "BusFees" and "Equipment Maintenance Fees" and (ii) fees expressly imposed for the use or

C-5

availability of buildings, structures or facilities excluded from the System under the definitionthereof.

(c) The gross amounts received by the University from the Income from thePermanent Fund and the Income from the Income Fund.

(d) The proceeds of Debt Service Grants and the proceeds of any interest subsidy withrespect to Parity Bonds (to the extent any such Debt Service Grant or interest subsidy isapplicable with respect to a series of Parity Bonds) paid for or on account of the Regents orthe University by any governmental body or agency.

(e) All other income or revenues received by the University from proprietaryactivities carried on by the University, but excluding: (i) the proceeds of ad valorem taxes, (ii)State appropriations, and (iii) the proceeds of any University appropriations, gifts, contracts,grants and endowments, whether from or with public, private or governmental sources, whichare restricted as to use. If the pledge of any one or more sources of other income or revenue tothe payment of the Parity Bonds shall ever be held by final decision of a court of competentjurisdiction to be invalid or to make the Parity Bonds invalid because of constitutionalrestrictions on State indebtedness, the income or revenue derived from such source or sourcesshall not be subject to the pledge contained in the Bond Resolution; and provided further, thatthere shall not be included in the other income or revenue which is the subject of thisparagraph any income or revenue excluded under the provisions of paragraphs (a) or (b) ofthis definition.

"Preliminary Official Statement" and "Official Statement" mean the disclosure documents ofthe University to be used by the Purchaser in connection with the offer and sale of the Series 2019Bonds to the public and to be approved at the time of adoption of the Bond Resolution.

"Rebate Fund” means "The Regents of New Mexico State University Refunding RevenueBonds Series 2019 Rebate Fund," established by Section 12 of the Bond Resolution, to be maintainedby the Regents.

"Record Date" means the 15th day of the month preceding any interest payment date of theSeries 2019 Bonds.

"Refunded Bonds" means, collectively, the Series 2019A Refunded Bonds and the Series 2019BRefunded Bonds.

"2019A Refunded Bonds" means $13,915,000 principal amount of the Series 2010B Bondsmaturing on April 1, 2021, April 1, 2022, April 1, 2025 and April 1, 2030 as set forth and designated inthe Sale Certificate.

"2019B Refunded Bonds" means $8,080,000 principal amount of the Series 2010C Bondsmaturing on April 1, 2025 and April 1, 2030 as set forth and designated in the Sale Certificate.

"Refunded Bonds Deposit" means, collectively, the 2019A Refunded Bonds Deposit and the2019B Refunded Bonds Deposit

"2019A Refunded Bonds Deposit" means an amount to be designated in the Sale Certificatefrom proceeds of the 2019A Bonds and any other legally available moneys of the Regents (which total

C-6

amount may be increased or decreased by the Senior Vice President for Administration and Finance ofthe University, if such increase or decrease shall be required to comply with applicable United StatesTreasury Regulations or to otherwise provide sufficient funds to pay the 2019A Refunded BondRequirements) to be used to pay the 2019A Refunded Bond Requirements.

"2019B Refunded Bonds Deposit" means an amount to be designated in the Sale Certificatefrom proceeds of the 2019B Bonds and any other legally available moneys of the Regents (which totalamount may be increased or decreased by the Senior Vice President for Administration and Finance ofthe University, if such increase or decrease shall be required to comply with applicable United StatesTreasury Regulations or to otherwise provide sufficient funds to pay the 2019B Refunded BondRequirements) to be used to pay the 2019B Refunded Bond Requirements.

"Refunded Bonds Requirements" means, collectively, the 2019A Refunded BondsRequirements and the 2019B Refunded Bonds Requirements.

"2019A Refunded Bonds Requirements" means the principal of and the interest on (i.e., all debtservice requirements for) the 2019A Refunded Bonds required to pay and defease the 2019A RefundedBonds on and until their first optional prior redemption date.

"2019B Refunded Bonds Requirements" means the principal of and the interest on (i.e., all debtservice requirements for) the 2019B Refunded Bonds required to pay and defease the 2019B RefundedBonds on and until their first optional prior redemption date.

"Refunding Project" or "Project" means, collectively, the 2019A Refunding Project and the2019B Refunding Project.

"2019A Refunding Project" means refunding, refinancing, discharging and paying the 2019ARefunded Bonds including but not necessarily limited to the payment of Expenses and to the paymentand discharge of the 2019A Refunded Bonds.

"2019B Refunding Project" means refunding, refinancing, discharging and paying the 2019BRefunded Bonds including but not necessarily limited to the payment of Expenses and to the paymentand discharge of the 2019B Refunded Bonds.

"The Regents of New Mexico State University" or "Regents" means the body corporate in whichis vested the management and control of the University pursuant to Article XII, Section 13 of the StateConstitution and Section 21-8-5 et seq., NMSA 1978.

"Renewal and Replacement Fund” means "The Regents of New Mexico State UniversityRevenue Bonds Renewal and Replacement Fund" previously established by the Regents and maintainedby the University.

"Revenue Fund” means the fund of the Regents for the deposit of Pledged Revenues previouslyestablished by the Regents and maintained by the University.

"Sale Certificate" means one or more certificates executed by the Delegate dated on or beforethe date of delivery of the Bonds, setting forth the following final terms of the Bonds: (i) the interestand principal payment dates; (ii) the principal amounts, denominations and maturity amortization; (iii)the sale prices; (iv) the interest rate or rates; (v) the interest payment periods; (vi) the redemption andtender provisions; (vii) the creation of any capitalized interest fund, including the size and funding of

C-7

such fund(s); (viii) the amount of Underwriter’s discount; (ix) the acquisition of and terms related to abond insurance policy, if any, and (x) the final terms of agreements, if any, with agents or serviceproviders required for the purchase, sale, issuance and delivery of the Bonds, all subject to theparameters and conditions contained in the Bond Resolution.

"Senior Lien Debt Service Account" means that account which is part of the Interest andRetirement Fund for the deposit of Pledged Revenues to be used for the payment of the principal of,premium, if any, and interest on the Senior Lien Parity Bonds, previously established by the Regentsand maintained by the University.

"Senior Lien Parity Bonds" means all bonds or obligations of the Regents now outstanding orhereafter issued or outstanding payable from and constituting a first lien on the Pledged Revenues on aparity with the outstanding Series 2010B Bonds, the Series 2010C Bonds, the Series 2010D Bonds, theSeries 2013A Bonds, the Series 2013B Bonds, the Series 2017A Bonds, the Series 2017B Bonds, andthe Series 2017C Bonds.

"Series 2010 Bonds" means collectively, the Series 2010B Bonds, the Series 2010C Bonds, andthe Series 2010D Bonds.

"Series 2010B Bonds" means the Regents of New Mexico State University ImprovementRevenue Bonds, Series 2010B (Taxable Direct Payment Build America Bonds).

"Series 2010C Bonds" means the Regents of New Mexico State University TaxableImprovement Revenue Bonds, Series 2010C.

"Series 2010D Bonds" means the Regents of New Mexico State University Refunding RevenueBonds, Series 2010D.

"Series 2013 Bonds" means, collectively, the Series 2013A Bonds and the Series 2013B Bonds.

"Series 2013A Bonds" means the Regents of New Mexico State University ImprovementRevenue Bonds, Series 2013A (Tax-Exempt).

"Series 2013B Bonds" means the Regents of New Mexico State University Refunding RevenueBonds, Series 2013B (Tax-Exempt).

"Series 2014 Note" means the Regents of New Mexico State University Subordinate LienImprovement Revenue Note, Series 2014.

“Series 2017 Bonds” means, collectively, the Series 2017A Bonds, the Series 2017B Bonds,and the Series 2017C Bonds.

“Series 2017A Bonds” means the Regents of New Mexico State University System Refundingand Improvement Revenue Bonds, Series 2017A.

“Series 2017B Bonds” means the Regents of New Mexico State University Taxable SystemRefunding Revenue Bonds, Series 2017B.

“Series 2017C Bonds” means the Regents of New Mexico State University Refunding RevenueBonds, Series 2017C (Crossover Refunding).

C-8

"Series 2019 Bonds," "2019 Bonds" and "Bonds" means the bonds designated as "The Regentsof New Mexico State University Refunding and Improvement Revenue Bonds, Series 2019" authorizedby the Bond Resolution to be issued, in one or more series, in the original principal amount not to exceed$25,275,000.

"State" means the State of New Mexico.

"Subordinate Lien Bonds" means all bonds or obligations of the Regents now outstanding orhereafter issued or outstanding payable from and constituting a lien on the Pledged Revenuessubordinate and junior to the lien thereon of the Senior Lien Parity Bonds on a parity with the lien ofthe Series 2014 Note on the Pledged Revenues.

"Subordinate Lien Debt Service Account" means that account which is part of the Interest andRetirement Fund for the deposit of Pledged Revenues to be used for the payment of the principal of,premium, if any, and interest on the Subordinate Lien Bonds, after payment of the principal of, premium,if any, and interest on the Senior Lien Parity Bonds as set forth in Section 14 of this Resolution and aspreviously established by the Regents and maintained by the University.

"System" means all housing facilities (student, faculty and other) and all other buildings,structures, improvements and facilities located on any campus of the University from the use andavailability of which income or revenue (including in the term "income or revenue" the proceeds ofstudent tuition and fees, other than the fees now known as Student Activity Fees, Bus Fees andEquipment Maintenance Fees) is produced, present and future, owned or operated by the University orthe Regents, including, without limitation, dormitories, student unions, auditoriums, dining halls,bookstores, stadiums, golf courses, swimming pools, hospitals or infirmaries, utility facilities, andprinting plants owned or operated by the University or the Regents; provided that as additional housingand other facilities are acquired by the University or the Regents from time to time hereafter, and asexisting facilities in the System are improved or extended, such additional, improved or extendedfacilities shall become part of the System; except that the Regents retain the right to acquire, construct,improve or extend any one or more such facilities hereafter and to provide by resolution that any suchfacility so acquired, constructed, improved or extended shall not become a part of the System, and anysuch facility so excepted shall not become a part of the System and the income and revenues derivedtherefrom shall not be part of the Pledged Revenues.

"Tax Compliance Certificate" means the Tax Compliance Certificate to be executed anddelivered by the Regents at the time of the issuance of the Series 2019A Bonds, as the same may beamended or supplemented in accordance with its terms.

"University" or "New Mexico State University" means the state educational institutiondesignated as New Mexico State University and so confirmed by Section 11 of Article XII of the NewMexico Constitution, as amended.

Bond Funds

(a) Funds Continued. The Regents continue the following special and separate fundspreviously established by the Regents:

C-9

(i) Revenue Fund. "The Regents of New Mexico State UniversityRevenue Bonds Revenue Fund" for the deposit of Pledged Revenues shall be maintained in anaccount or accounts in one or more regular depositories of the Regents.

(ii) Interest and Retirement Fund. "The Regents of New Mexico StateUniversity Revenue Bonds Interest and Retirement Fund" shall be maintained in an account oraccounts in one or more depositories of the Regents. The Debt Service Account has beenestablished as a separate account of the Interest and Retirement Fund.

(iii) Renewal and Replacement Fund. "The Regents of New Mexico StateUniversity Revenue Bonds Renewal and Replacement Fund" shall be maintained with one ormore regular depositories of the Regents.

(b) Escrow Fund. The Regents established in the Bond Resolution, "The Regents ofNew Mexico State University Revenue Bonds, Series 2019A Escrow Fund" for the deposit ofcertain of the Series 2019A Bond proceeds, and "The Regents of New Mexico State UniversityRefunding Revenue Bonds, Taxable Series 2019B Escrow Fund" for the deposit of certain ofthe 2019B Bond proceeds

(c) Rebate Fund. The Regents established in the Bond Resolution, "The Regents ofNew Mexico State University Revenue Bonds, Series 2019A Rebate Fund" for the purposes setforth in Section 32 of the Bond Resolution.

Disposition of Pledged Revenues. So long as any of the Senior Lien Parity Bonds or theSubordinate Lien Parity Bonds are outstanding, either as to principal or interest, or both, the Regentsshall cause the Pledged Revenues to be collected and deposited as received on a regular basis in theRevenue Fund and to make the payments from the Revenue Fund into the Interest and Retirement Fund,the Renewal and Replacement Fund and as otherwise required or permitted by Section 14 of the BondResolution.

Deposits and Use of Pledged Revenues.

(a) Senior Lien Debt Service Account. While any Senior Lien Parity Bonds areoutstanding, Pledged Revenues shall first be transferred from the Revenue Fund into the SeniorLien Debt Service Account as provided below.:

(i) such amounts, at least five days prior to the applicable interest payment date,as will be sufficient, together with other monies, if any, then on deposit therein for such purpose,to pay the interest scheduled to come due on the Senior Lien Parity Bonds on the next interestpayment date; and

(ii) such amounts, at least five days prior to the applicable principal paymentdate, as shall be sufficient to pay the next maturing principal payment on the Senior Lien ParityBonds.

In order to allow for seasonal variations in Pledged Revenues, the Regents may make thepayment of such installments in an amount greater than the above required amounts. If on or before theapplicable payment date there has been accumulated in the Senior Lien Debt Service Account an amountin excess of the amount required to then be on deposit therein, the payment required by such date maybe appropriately reduced by the excess on deposit in the Senior Lien Debt Service Account; provided

C-10

that the amount accumulated in the Senior Lien Debt Service Account on the fifth day prior to an interestpayment date for Senior Lien Parity Bonds must always be sufficient to pay in full all principal andinterest becoming due on such interest payment date on all Senior Lien Parity Bonds then outstanding.Except as provided in paragraph C of this Section, the moneys in the Senior Lien Debt Service Accountshall be used only to pay the principal of and interest on Senior Lien Parity Bonds as the same becomedue and shall be transferred to the Paying Agent/Registrar by 1:00 p.m. New York City time at leastfive days preceding the due date thereof.

(b) Debt Service Reserve Account. There is no debt service reserve account for theSeries 2019 Bonds.

(c) Termination upon Deposits to Maturity. No payment need be made into the SeniorLien Debt Service Account if the amount on deposit in the Interest and Retirement Fund totalsa sum at least equal to the entire amount of principal and interest due and to become due on theOutstanding Senior Lien Parity Bonds to their respective maturities, both accrued and notaccrued. In such case, moneys in the Interest and Retirement Fund shall be used solely to payprincipal and interest on Senior Lien Parity Bonds as the same become due, and any moneys inexcess thereof in the Interest and Retirement Fund and any other Pledged Revenues may beused as provided below in this Section.

(d) Defraying Delinquencies in the Senior Debt Service Account. If at any time a depositdue pursuant to paragraph A of this Section for the debt service payable on the Bonds shall notbe paid, for any reason, into the Senior Lien Debt Service Account, then the difference betweenthe amount paid and the amount required shall be paid therein from the first Pledged Revenuesthereafter received not required to be otherwise applied.

(e) Subordinate Lien Debt Service Account and Reserve Accounts forSubordinate Lien Bonds. After and subject to the payments required by subparagraph(A) for the outstanding Senior Lien Parity Bonds, Pledged Revenues shall be depositedinto the Subordinate Lien Debt Service Account and any Reserve Accounts, if any, forthe outstanding Subordinate Lien Bonds.

(e) Renewal and Replacement Fund. The Renewal and Replacement Fund may be usedfor the purpose of paying the costs of improvements, replacements, enlargements, extensions,additions, or other capital expenditures relating to the facilities of the University or theacquisition of land in connection therewith, and for paying extraordinary repairs andmaintenance of University facilities, or for paying principal of and interest on any bonds, whenand to the extent the amount in the Interest and Retirement Fund is insufficient for such purpose.

After making the required deposits from the Revenue Fund as set forth in paragraphs(a), (d) and (e), the Regents may make deposits from the Revenue Fund into the Renewal andReplacement Fund in each Fiscal Year until the amount therein is equal to a maximum amountof 10% of the value of the University's buildings, equipment, furnishings and library books asstated in the Regents' annual audit for such Fiscal Year. If the amount on deposit in the Renewaland Replacement Fund is reduced to an amount less than such maximum amount, or if theRegents provide for an increase in such maximum amount in any resolution authorizingAdditional Bonds, the Regents may, after making the deposits required by Paragraphs (a), (d)and (e) of this Section, make additional deposits from the Revenue Fund into the Renewal andReplacement Fund up to the then applicable maximum amount. Notwithstanding anything tothe contrary set forth in the Bond Resolution, the Regents may use interest earned on the

C-11

amounts on deposit in the Renewal and Replacement Fund for any lawful purpose or purposesauthorized by the Constitution and laws of the State.

(f) Use of Surplus Pledged Revenues. After making the payments required to be madeunder this Section and except as provided in Section 32 of the Bond Resolution, the remainingPledged Revenues, if any, may be applied to payment of junior lien obligations, and asdetermined by the Regents to any other lawful purpose or purposes authorized by theConstitution and laws of the State or as the Regents may direct and Pledged Revenues shall bebudgeted for the Operating and Maintenance Expenses as is necessary from that portion of thePledged Revenues which may be used by the Regents for such purposes.

General Administration of Funds. The funds and accounts designated in the Bond Resolutionshall be administered as follows:

(a) Investment of Money. Money in the Revenue Fund may be invested in any mannerallowed by the laws of the State and money in the Senior Lien Debt Service Account andSubordinate Lien Debt Service Account may be invested in Permitted Investments maturingprior to the date on which the money so invested will be needed for the payment of principal ofor interest on Outstanding Obligations. Money in the Renewal and Replacement Fund may beinvested in Permitted Investments maturing not more than 10 years from the date of purchase.Moneys in each such Fund may also be invested in any of the following as may hereafter bepermitted by the laws of the State:

(i) interest bearing demand or time deposits (including certificates ofdeposit) i) Insured Banks, which deposits are fully insured by the Federal Deposit InsuranceCorporation or continuously secured by Permitted Investments (valued at least every 14 days)not less than the amount so invested; and

(ii) investment agreements with Insured Banks, which agreements arefully insured by the Federal Deposit Insurance Corporation or continuously secured byPermitted Investments (valued at least every 14 days) not less than the amount so invested.

Except as otherwise set forth in the Bond Resolution, the obligations so purchased as aninvestment of moneys in any such fund or account shall be deemed at all times to be part of such fundor account, and the interest accruing thereon and any profit realized therefrom shall be credited to suchfund or account (subject to withdrawal at any time as permitted by Section 14 of the Bond Resolution),and any loss resulting from such investment shall be charged to the fund or account. Any obligationsso purchased as an investment of moneys in any fund or account shall be presented for redemption orsale on the prevailing market whenever it shall be necessary to do so in order to provide moneys to meetany payment or transfer from such fund or account.

(b) Deposits of Funds. The moneys and investments comprising the funds designatedin the Bond Resolution shall be maintained and kept in an Insured Bank or Banks. Eachpayment shall be made into and credited to the proper fund at the designated time, except thatwhen the designated time shall be a Saturday, a Sunday or a legal holiday, then such paymentshall be made on the next succeeding Business Day; provided that moneys for the payment ofthe Outstanding Obligations shall be deposited with the Paying Agent/Registrar by 1:00 p.m.New York City time at least five days prior to the applicable payment date. Nothing hereinshall prevent the establishment of one or more such accounts in Insured Banks for all of thefunds and accounts in Section 12 of the Bond Resolution or shall prevent the combination of

C-12

such funds with any other Insured Bank account or accounts for other funds and accounts of theRegents. The moneys in funds which are not invested shall be secured at all times in a mannerrequired by the laws of the State for the securing of public moneys of the Regents. Thedepository holding the amounts on deposit in the Interest and Retirement Fund shall make suchcredit arrangements with any other bank or banks at which Outstanding Obligations are payableas will assure, to the extent of the moneys in the Interest and Retirement Fund, prompt paymentof the principal of, premium, if any, and interest on the Outstanding Obligations as set forth inthe applicable resolution of the Regents.

Lien on Pledged Revenues; Equality of Parity Bonds. The Series 2019 Bonds are secured by anirrevocable first lien, but not an exclusive first lien, on the Pledged Revenues. The Regents pledge andgrant to the owners of Parity Bonds, now owned or hereafter acquired, a security interest in the PledgedRevenues and in the moneys and securities on deposit in the Revenue Fund and Interest and RetirementFund for the payment of the principal of, premium, if any, and interest on the Parity Bonds.

The owners of Series 2019 Bonds and other Parity Bonds from time to time outstanding shallnot be entitled to any priority one over the other in the application of the Pledged Revenues, regardlessof the time or times of their issuance.

Refunding Bonds. The provisions of Section 17 of the Bond Resolution (relating to AdditionalBonds) are subject to these exceptions (see "THE SERIES 2019 BONDS—Additional Bonds"):

(a) Privilege of Issuing Refunding Obligations. If at any time the Regents shallfind it desirable to refund bonds or other obligations payable from and constituting a lien uponPledged Revenues, the bonds or other obligations, or any part thereof, may be refunded (but theowners of bonds to be refunded may not be compelled to surrender their bonds, unless the bondsor other obligations, at the time or times of their required surrender for payment shall thenmature, or shall then be callable for prior redemption at the Regents' option upon proper call),regardless of whether the priority of the lien for the payment of the refunding obligations on thePledged Revenues is changed (except as provided in paragraph (c) of Section 17 of the BondResolution, i.e., prohibiting superior lien bonds, and except as provided in paragraphs (b), (c)and (d) of this Section). Any bonds issued for refunding purposes may be delivered in exchangefor the outstanding bonds authorized to be refunded, or sold at public or private sale, or sold inpart and exchanged in part.

(b) Limitations upon Issuance of Parity Refunding Obligations. No refundingbonds or other refunding obligations payable from Pledged Revenues shall be issued on a paritywith the Series 2019 Bonds unless:

(i) the outstanding obligations so refunded are Senior Lien Parity Bondsand the refunding bonds or other refunding obligations do not increase annual principal andinterest obligations evidenced by such refunded obligations; or

(ii) the refunding bonds or other refunding obligations are issued incompliance with paragraph (a) of Section 17 of the Bond Resolution.

(c) Refunding Part of an Issue. The refunding bonds or other refunding obligationsissued shall enjoy complete equality of lien on the Pledged Revenues with the portion of anybonds or other obligations of the same issue which are not refunded, if any; and the holder or

C-13

holders of such refunding bonds or other refunding obligations shall be subrogated to all ofthe rights and privileges enjoyed by the owner or owners of the same issue refunded thereby.

(d) Limitations upon Issuance of any Refunding Obligations. Any refunding bondsor other refunding obligations payable from Pledged Revenues shall be issued with suchdetails as the Regents may by resolution provide, subject to the inclusion of any such rightsand privileges designated in paragraph (c) of this Section but without impairment of anycontractual obligation imposed upon the Regents by any proceedings authorizing the issuanceof any unrefunded portion of such outstanding obligations of any one or more issues(including but not necessarily limited to the Series 2019 Bonds). If only a part of theoutstanding bonds and any other outstanding obligations of any issue or issues payable fromthe Pledged Revenues is refunded, then such obligations may not be refunded, unless:

(i) the refunding bonds or other refunding obligations do not increase anyannual principal and interest requirements for any Fiscal Year evidenced by such refundedobligations and by the then outstanding obligations not refunded; or

(ii) the lien on the Pledged Revenues for the payment of the refundingobligations is subordinate to each such lien for the payment of any obligations not refunded;or

(iii) the refunding bonds or other refunding obligations are issued incompliance with paragraph (a) of Section 17 of the Bond Resolution (relating to AdditionalBonds).

General Covenants. The Regents covenant and agree that:

(a) The Regents will faithfully perform at all times any and all covenants, undertakings,stipulations and provisions contained in the Bond Resolution and in each and every Senior LienParity Bond. The Regents will promptly pay or cause to be paid from the Pledged Revenues theprincipal of and interest on every Parity Bond, on the dates and in the places and mannerprescribed in such Senior Lien Parity Bonds. The Regents will, at the times and in the mannerprescribed in the Bond Resolution, deposit or cause to be deposited, from the Pledged Revenues,the amounts of money specified in the Bond Resolution.

(b) The Regents are duly authorized under the laws of the State to issue and deliverthe Series 2019 Bonds. All action on the Regents' part for the authorization, issuance anddelivery of the Series 2019 Bonds has been duly and effectively taken, and the Series 2019Bonds in the hands of the owners thereof are and will be valid and enforceable specialobligations of the Regents in accordance with their terms.

(c) The Regents lawfully own and are lawfully possessed of the lands upon which theexisting campuses, buildings and facilities constituting the University are located. The Regentsare lawfully qualified to pledge the Pledged Revenues to the payment of Senior Lien ParityBonds in the manner prescribed in the Bond Resolution, and have lawfully exercised suchrights.

(d) The Regents will, from time to time, and before the same become delinquent, payand discharge all taxes, assessments and governmental charges, if any, which shall be lawfullyimposed upon the University, or the campus, buildings and facilities of the University.

C-14

(e) The Regents will, if necessary to meet the payment to the Interest andRetirement Fund, adopt such reasonable regulations and requirements relating to the residenceof the students attending the University and the use of the University's facilities as will benecessary to assure that the facilities will be as fully occupied and utilized as reasonablypossible.

(f) The Regents will continuously and efficiently operate and maintain in goodcondition, the University and the facilities and services thereof, so long as any Senior LienParity Bonds are outstanding.

(g) While the Senior Lien Parity Bonds are outstanding and unpaid, the Regents willnot additionally encumber the Pledged Revenues in any manner, except as permitted by theBond Resolution.

(h) Proper books of record and account will be kept in which full, true andcorrect entries will be made of all dealings, activities and transactions relating to the PledgedRevenues, and all books, documents and vouchers relating thereto will at all reasonable timesbe available for inspection upon request of any owner of Senior Lien Parity Bonds.

(i) Each year while any of the Senior Lien Parity Bonds are outstanding, an audit willbe made of the University's books and accounts relating to the Pledged Revenues by a certifiedor registered public accountant, such audit to be based on the Fiscal Year of the University.

(j) While any Senior Lien Parity Bonds are outstanding and unpaid, the Regents shallkeep the System in reasonable repair and shall not sell, convey, mortgage, or in any mannertransfer title to, or lease (except to provide professional management of auxiliary facilities orservices after the chief financial officer of the University certifies that the Regents reasonablyanticipate that (a) the University will receive increased Pledged Revenues as a result of suchlease or that (b) the Operating and Maintenance Expense of the University will be reduced as aresult of such lease), or otherwise dispose of any property providing Pledged Revenues, exceptthat whenever the Regents deem it necessary to dispose of any furnishings and equipment, theymay sell or otherwise dispose of such furnishings and equipment when they have madearrangements to replace the same or provide substitutes therefor. However, the Regents reservethe right to abandon the use of, or sell at fair market value, any facilities that provide PledgedRevenues, provided that:

(i) the Regents are in full compliance with all covenants andundertakings in connection with all of the Senior Lien Parity Bonds outstanding;

(ii) the Regents will, in the event of sale, apply the proceeds to either (a)redemption of outstanding Senior Lien Parity Bonds in accordance with the provisionsgoverning repayment of Parity Bonds in advance of maturity, or (b) replacement of the facilitydisposed of by another facility and in such case the revenues of such facility will be part of thePledged Revenues, or (c) depositing such proceeds in the Debt Service Account for paymentof the next ensuing payments of principal of and interest on Parity Bonds;

(iii) the chief financial officer of the University certifies, prior to anyabandonment of use, that (A) the facility to be abandoned is of substandard quality and nolonger capable of producing positive net revenues after payment of operation and maintenance

C-15

expenses thereof, and/or (B) the conversion, abandonment, razing or removal is necessary tocarry out the University's campus master plan and/or (C) the conversion, abandonment, razingor removal is in the best interest of the University;

(iv) the chief financial officer of the University certifies that the PledgedRevenues during either the University's prior Fiscal Year or the twelve calendar month periodimmediately preceding such abandonment, sale or other disposition would have been at least175% of the maximum annual principal and interest requirements on all outstanding SeniorLien Parity Bonds for such Fiscal Year or twelve month period, if such sale, abandonment ordisposition had occurred at the beginning of such Fiscal Year or twelve month period; and

(v) the chief financial officer of the University certifies that the estimatedPledged Revenues for the then succeeding Fiscal Year plus the estimated revenues of thefacility, if any, to be added to the Pledged Revenues satisfy the earnings test required inSection 17 for the issuance of Additional Senior Lien Parity Bonds.

(k) Insurance on the University's facilities and equipment will be maintained in anamount equal to 80% of the full insurable value thereof. In case of loss, the proceeds of suchinsurance will be used to repair, restore or replace such facilities, if necessary to theUniversity's function. If the insurance proceeds are not sufficient to repair, restore or replacesuch facility, any available revenues of the Regents may be used for such purpose. If theRegents determine that the repair, restoration or replacement of such facilities is not necessaryto the function of the University or other revenues are not available at the time to make suchrepairs, restoration or replacement, then the insurance proceeds will be used promptly asfollows:

(i) for the redemption prior to maturity of Senior Lien Parity Bonds, if any,ratably in the proportion that the outstanding principal of each series or issue of Parity Bondsbears to the total outstanding principal of all Senior Lien Parity Bonds; provided that if on anysuch occasion the principal of any such series or issue of Senior Lien Parity Bonds is not subjectto redemption within 12 months of the date that such proceeds are available to the Regents,such series or issue shall not be regarded as outstanding in making the foregoing computation;or

(ii) for payment of the next ensuing payments of principal of, premium, ifany, and interest on Parity Bonds in the same proportion as prescribed in clause (i) above;

(iii) if Senior Lien Parity Bonds are available for purchase, insurance proceedsmay be used for the purchase on the open market and retirement of Senior Lien Parity Bonds,in the same proportion as prescribed in the foregoing clause (i), to the extent practicable;provided that the purchase price for any such Senior Lien Parity Bond shall not exceed theredemption price of such Senior Lien Parity Bond on the first date upon which it thereafterbecomes subject to redemption; or

(iv) to the extent that the foregoing clauses (i), (ii) and (iii) cannot becomplied with, the insurance proceeds, or the remainder thereof, will be deposited in a specialand separate trust fund, at an official depository of the Regents, to be designated the InsuranceAccount. The Insurance Account will be held until such time as either clause (i), (ii) and/or(iii) can be complied with, or until other revenues become available which, together with the

C-16

moneys in the Insurance Account, will be sufficient to make the repairs or replacementsoriginally required.

(l) The Regents will at all times impose and collect rates and charges for the use of allbuildings and facilities comprising the System and for all commodities and services sold orsupplied therein or furnished thereby, and will impose and collect such student tuition and feesfor the use and availability of the System, as will be fully sufficient, together with the otherincome and revenues of the University received from sources other than (i) sources excludedfrom the System, (ii) the proceeds of ad valorem taxation, (iii) State appropriations, or (iv) theproceeds of any University appropriations, gifts, contracts, grants and endowments, whetherfrom or with public, private or governmental sources, which are restricted as to use, to permitthe performance of all the covenants in and requirements of the Bond Resolution, including theprompt payments required by Section 14 into the Senior Lien Debt Service Account, theSubordinate Lien Debt Service Account, the Renewal and Replacement Fund, the Rebate Fundand the payment of Operating and Maintenance Expenses.

Events of Default. Each of the following events is declared to be an "event of default":

(a) Nonpayment. The failure to make any payment of principal of, premium, if any, orinterest on any Senior Lien Parity Bond on the date the same becomes due and payable.

(b) Default of Any Provision. Default in the due and punctual observance orperformance of any of the covenants, conditions and agreements on the part of the Regents inthe Senior Lien Parity Bonds or in any resolution of the Regents authorizing the issuance ofoutstanding Senior Lien Parity Bonds, other than as specified in paragraph (a) of this Section,and failure to remedy such default for a period of sixty (60) days after written notice thereofspecifying such failure and requiring the same to be remedied shall have been given to theRegents by the holders of not less than twenty-five percent (25%) in aggregate principal amountof the outstanding Senior Lien Parity Bonds.

(c) Bankruptcy. The Regents shall file a petition seeking relief or a petition shallbe filed against the Regents seeking relief, which shall not be stayed or dismissed within 60days, under any bankruptcy law or similar law for relief of debtors.

Rights and Remedies. Upon the occurrence of any event of default, the owners of not less thantwenty-five percent (25%) in aggregate principal amount of the Senior Lien Parity Bonds,including a trustee or trustees for the owners of Senior Lien Parity Bonds, shall, in addition toall other remedies and rights of owners of any of the Senior Lien Parity Bonds, have the rightand power for the equal benefit and protection of all owners of the Senior Lien Parity Bondssimilarly situated, by suit, action, mandamus or proceeding, at law or in equity, to protect,enforce and compel performance by the Regents and any of the officers, agents and employeesof the Regents, to perform and carry out its and their duties and obligations under the resolutionor the law pursuant to which the Senior Lien Parity Bonds have been issued, or to enforce thecovenants and agreements of the Regents with the owners of the Senior Lien Parity Bonds.Nothing in this Section shall be construed to authorize any action by or on behalf of such ownerswhich is contrary to any presently existing law, nor to require the Regents to perform any actor to do anything which shall require the expenditure in any manner or for any purpose of anyfunds by the Regents other than the Pledged Revenues.

C-17

Amendment of Resolution.

(a) Limitation upon Amendments. The Bond Resolution as supplemented by the SaleCertificate may be amended without the consent of the owners of the Bonds to cure anyambiguity, to cure, correct or supplement any defect or inconsistent provision contained thereinor to cause or continue to cause interest on the 2019A Bonds to be excluded from gross incomefor federal income tax purposes, if applicable. Except as provided above, the Bond Resolutionas supplemented by the Sale Certificate may only be amended or supplemented by resolutionsadopted by the Regents in accordance with the laws of the State, with the written consent of theowners of a majority in aggregate principal amount of the 2019A Bonds and 2019B Bonds,respectively, then outstanding (not including in any case any 2019A Bonds or 2019B Bondswhich may then be held or owned for the account of the Regents, but including such refundingbonds as may be issued for the purpose of refunding any of the 2019A Bonds or 2019B Bonds,respectively, if such refunding bonds are not owned by the Regents); provided, however, thatno such resolutions shall have the effect of permitting:

(i) an extension of the maturity of any Series 2019 Bond; or

(ii) a reduction in the principal amount of any Series 2019 Bond, the rateof interest thereon, or the redemption premium payable thereon; or

(iii) the creation of a lien upon or a pledge of Pledged Revenues rankingprior to the lien or pledge created by the Bond Resolution; or

(iv) a reduction of the principal amount of Series 2019 Bonds required forconsent to such amendatory or supplemental resolution; or

(v) the establishment of priorities as between Series 2019 Bonds issued andoutstanding under the provisions of the Bond Resolution; or

(vi) the modification of, or otherwise affecting, the rights of the owners ofless than all of the Series 2019 Bonds then outstanding (other than as originally permittedby the Bond Resolution); or

(vii) the modification of the terms of payment of principal of or interest onthe Series 2019 Bonds or the imposition of any conditions with respect to such payment.

(b) Notice of Amendment. Notice of a proposed amendment requiring the consent of theowners of Bonds shall be mailed to the owners of the Bonds then Outstanding at their addressesas the same last appear in the registration books kept by the Paying Agent/Registrar. Suchnotice shall briefly set forth the nature of the proposed amendment and shall state that copiesof the resolution pertaining to such amendment are on file at the office of the PayingAgent/Registrar for inspection by all owners of Bonds. If within sixty (60) days, or such longerperiod as shall be prescribed by the Regents following the giving of such notice, the owners ofa majority in aggregate principal amount of the Bonds Outstanding shall have consented to andapproved the amendment as herein provided, the amendment shall become effective and noowner of any Bond shall have any right to object to such amendment, or the operation thereof.

(c) Proof of Instruments. The fact and date of the execution of any instrument under theprovisions of this Section may be proved by the certificate of any officer in any jurisdiction

C-18

who by the laws thereof is authorized to take acknowledgments of deeds within suchjurisdiction that the person signing such instrument acknowledged before him the executionthereof, or may be proved by an affidavit of a witness to such execution sworn to before suchofficer.

Defeasance. When all principal, interest and prior redemption premiums, if any, in connectionwith the Bonds have been duly paid, the pledge and lien therefor on the Pledged Revenues and allobligations of the Regents under the Bond Resolution shall thereby be discharged and the Bonds shallno longer be deemed to be Outstanding within the meaning of the Bond Resolution. There shall bedeemed to be such payment when the Regents have caused to be placed in escrow and in trust with abank doing business in the State which is a member of the Federal Deposit Insurance Corporation andexercising trust powers, an amount sufficient (including the known minimum yield from GovernmentObligations or Tax-Exempt Obligations, defined below, in which such amounts are initially invested)to meet all requirements of principal, interest and prior redemption premium, if any, on the Bonds asthe same become due to their final maturities or upon designated prior redemption dates. TheGovernment Obligations or Tax-Exempt Obligations shall become due prior to the respective times onwhich the proceeds thereof shall be needed, in accordance with a schedule established and agreed uponbetween the Regents and such bank at the time of the creation of the escrow, or the GovernmentObligations or Tax-Exempt Obligations shall be subject to redemption at the option of the holders orowners thereof to assure such availability as needed to meet such schedule. Tax-Exempt Obligationswithin the meaning of this Section are those obligations exempt from federal income tax having a ratingwithin the highest rating category assigned to such obligations by Moody's Investors Service or Standard& Poor's Corporation to the extent then allowed by the laws of the State to be purchased by the Regentsfor the purpose of paying the Bonds. Any authorized University representative may limit the defeasancesecurities in connection with the sale of the Bonds. If any Bond is to be redeemed prior to maturity,notice of redemption shall have been given or arrangements satisfactory to the Paying Agent/Registrarshall have been made for the giving of such notice. No Bonds may be refunded unless they mature orare callable for prior redemption under their terms, as set forth in the Sale Certificate, within fifteen (15)years, or such other period as may then be allowed by the laws of the State, from the date of issuanceof the refunding bonds or unless the owners thereof voluntarily surrender them for exchange or payment.

Series 2019 Bonds Not Presented When Due. If any Bonds shall not be duly presented forpayment when due at maturity or on the redemption date thereof, and if moneys sufficient to pay suchBonds are on deposit with the Paying Agent/Registrar for the benefit of the owners thereof, and in thecase of Bonds to be redeemed, if notice of redemption has been given as provided in the BondResolution or other applicable resolution, all liability of the Regents to such owners for the payment ofsuch Bonds shall be completely discharged, such Bonds shall not be deemed to be Outstanding and itshall be the duty of the Paying Agent/Registrar to segregate and to hold such moneys in trust, withoutliability for interest thereon, for the benefit of the owners of such Bonds for a period of four (4) years,after which time such moneys shall be returned to the Regents for use in any lawful manner.

Covenants Regarding Tax Exemption. The University covenants that it will restrict the use ofthe proceeds of the tax exempt Series 2019A Bonds in such manner and to such extent, if any, as maybe necessary so that the tax-exempt Series 2019A Bonds will not constitute arbitrage bonds underSection 148 of the Code. The Chancellor and other officers of the University having responsibility forthe issuance of the tax-exempt Series 2019A Bonds will give an appropriate certificate of the University,for inclusion in the transcript or proceedings for the tax-exempt Series 2019A Bonds, setting forth thereasonable expectations of the University regarding the amount and use of all the proceeds of the tax-exempt Series 2019A Bonds, the facts, circumstances and estimates on which they are based, and otherfacts and circumstances relevant to the tax treatment of interest on the tax-exempt Series 2019A Bonds.

C-19

With respect to the Series 2019A Bonds intended to be tax exempt under the Code, theUniversity covenants that it (a) will take or cause to be taken such actions which may be required of itfor the interest on the tax-exempt Series 2019A Bonds to be and remain excluded from gross incomefor federal income tax purposes, and (b) will not take or permit to be taken any actions which wouldadversely affect the exclusion, and that it or persons acting for it, will, among other acts of compliance,(i) apply the proceeds of the tax-exempt Series 2019A Bonds to the governmental purpose of theborrowing, (ii) restrict the yield on investment property acquired with those proceeds, (iii) if required,make timely rebate payments to the federal government, (iv) maintain books and records and makecalculations and reports, and (v) refrain from certain uses of proceeds, all in such manner and to theextent necessary to assure such exclusion of that interest under the Code. The Chancellor and otherappropriate officers are authorized and directed to take any and all actions, make calculations and rebatepayments, and make or give reports and certifications, if any, as may be required or appropriate to assuresuch exclusion of that interest.

In order to facilitate compliance with the above covenants the University will make anynecessary deposits into the Rebate Fund for the sole benefit of the United States of America, and suchFund will not be subject to the claim of any other person, including without limitation the bondholders.

It is the understanding of the University that the covenants contained in the Bond Resolutionare intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S.Department of the Treasury pursuant thereto. In the event that regulations or ruling are hereafterpromulgated which modify, or expand provisions of the Code, as applicable to the tax exempt Series2019 Bonds, the University will not be required to comply with any covenant contained in the BondResolution to the extent that such modification or expansion, in the opinion of nationally-recognizedbond counsel, will not adversely affect the exemption from federal income taxation of interests on thetax-exempt Series 2019A Bonds under Section 103 of the Code. In the event that regulations or rulingsare hereafter promulgated which impose additional requirements which are applicable to the tax-exemptSeries 2019A Bonds, the University agrees to comply with the additional requirements to the extentnecessary, in the opinion of nationally-recognized bond counsel, to preserve the exemption from federalincome taxation of interest on the tax-exempt Series 2019A Bonds under Section 103 of the Code.

D-1

APPENDIX D

FORM OF BOND COUNSEL OPINION

November __, 2019

The Regents of New Mexico State UniversityLas Cruces, New Mexico

$_____________THE REGENTS OF NEW MEXICO STATE UNIVERSITY

$____________ Refunding Revenue Bonds, Series 2019A$__________ Taxable Refunding Revenue Bonds, Series 2019B

Ladies and Gentlemen:

We have examined the transcript of proceedings (the “Transcript”) relating to theissuance of The Regents (the “Regents”) of New Mexico State University (the “University”)$_______________ Refunding Revenue Bonds, Series 2019A (the “Series 2019A Bonds”),and the $______________ Taxable Refunding Revenue Bonds, Series 2019B (the “Series2019B Bonds” and, together with the Series 2019 Bonds, the “Bonds”). The Bonds are issuedpursuant to the Constitution and laws of the State of New Mexico (the “State”) and resolutionof the Regents adopted on September 4, 2019, as supplemented by the Sale Certificate dated__________, 2019 (collectively, the “Resolution”). Any capitalized term used herein and notdefined herein shall have the same meaning ascribed thereto in the Resolution unless the contextshall clearly otherwise require.

The Series 2019 Bonds are issued to: (a) refund, refinance and defease the Regents’outstanding Improvement Revenue Bonds, Series 2010B (Taxable Direct Payment BuildAmerica Bonds), (b) refund, refinance and defease the Regents’ outstanding TaxableImprovement Revenue Bonds, Series 2010C; and (c) fund the costs of issuance associated withthe Bonds.

We have examined the Resolution and such other laws, certified proceedings, legalopinions, including the opinion of the University Counsel and other documents as we deemnecessary to deliver this opinion. Based on our examination, we are of the opinion that, underthe law existing on the date of this opinion, subject to the provisions of federal bankruptcy lawand other laws affecting creditors’ rights and further subject to the exercise of judicial discretionin accordance with general principles of equity:

1. The Bonds constitute valid and binding special obligations of the Regentsenforceable in accordance with the terms and provisions thereof.

2. The Bonds, together with any bonds of the Regents now outstanding or hereafterissued on a parity therewith pursuant to the Resolution, are payable solely from, and suchpayment is secured by a first pledge (but not an exclusive first pledge) of, Pledged Revenues(as defined in the Resolution). The owners of the Bonds have no right to have taxes levied by

D-2

the State or any political subdivision thereof for the payment of principal and interest on theBonds. The Regents do not have taxing power.

3. Interest on the Series 2019A Bonds is excludable from gross income for federalincome tax purposes, and interest on the Series 2019A Bonds will not be included in computingthe alternative minimum taxable income of the owners thereof.

The Code imposes various restrictions, conditions and requirements relating to theexclusion from gross income for federal income tax purposes of interest on obligations such asthe Series 2019A Bonds. The Regents have covenanted in the Resolution to comply withcertain covenants designed to assure that interest on the Series 2019A Bonds will not becomeincluded in gross income for federal income taxation purposes. Failure to comply with thesecovenants may result in interest on the Series 2019A Bonds being included in gross incomefrom the date of issue of the Series 2019A Bonds. Our opinion assumes compliance with suchcovenants.

The accrual or receipt of interest on the Series 2019A Bonds may otherwise affect thefederal income tax liability of the recipient. The extent of these other tax consequences willdepend upon the recipient’s particular tax status or other items of income or deduction. Weexpress no opinion regarding any such consequences.

Except as stated above or in paragraph 4 below, we express no opinion as to any taxconsequences resulting from the ownership of, receipt of interest on, or disposition of the Series2019A Bonds.

4. Under the laws of the State of New Mexico as enacted and construed on the datehereof, the interest on the Bonds is exempt from all taxation by the State of New Mexico orany political subdivision thereof.

The rights of the owners of the Bonds and the enforceability of the Bonds and theResolution may be subject to bankruptcy, insolvency, reorganization, moratorium and othersimilar laws affecting creditors’ rights heretofore or hereafter enacted to the extentconstitutionally applicable and their enforcement may also be subject to the exercise of judicialdiscretion in appropriate cases. The foregoing opinions represent our legal judgment basedupon a review of existing legal authorities as of the date of issuance and delivery of the Bondsthat we deem relevant to render such opinions and are not a guarantee of result. We expressno opinion with respect to any pending legislation.

The scope of our engagement has not extended beyond the examinations and therendering of the opinions expressed herein. This opinion is issued to and for the sole benefitof the above addressees and is issued for the sole purpose of the transaction specifically referredto herein. No person other than the above addressees may rely upon this opinion without ourexpress prior written consent. This opinion may not be utilized by you for any other purposewhatsoever and may not be quoted by you without our express prior written consent. We havenot assumed any responsibility with respect to the creditworthiness of the security for theBonds, and our engagement as Bond Counsel with respect to the transaction referred to hereinterminates upon the date of this opinion. We assume no obligation to review or supplement

D-3

this opinion subsequent to its date, whether by reason of a change in the current laws, bylegislative or regulatory action, by judicial decision or for any other reason.

Respectfully submitted,

E-1

APPENDIX E

FORM OF CONTINUING DISCLOSURE UNDERTAKING

E-2

CONTINUING DISCLOSURE UNDERTAKING

This Continuing Disclosure Undertaking (“Disclosure Undertaking”) is executed anddelivered by The Regents of New Mexico State University (“Regents”) on behalf of NewMexico State University (“University”) in connection with the issuance by the Regents of theRefunding Revenue Bonds, Series 2019A and the Taxable Refunding Revenue Bonds, Series2019B (collectively, the “Bonds”). The Bonds are being issued pursuant to Bond Resolutionadopted by the Regents on September 4, 2019 as supplemented by the Sale Certificate datedOctober__, 2019 (collectively, the “Resolution”).

BACKGROUND

1. The Bonds are being issued to finance the Project as defined in the Resolution,including paying costs of issuance associated with the Bonds.

2. In order to allow the underwriters of the Bonds to comply with Rule 15c2-12promulgated by the Securities and Exchange Commission under the Securities Exchange Actof 1934, as amended (17 CFR Part 240, § 240.15c2-12), to the date hereof, the Regents arerequired to make certain continuing disclosure undertakings for the benefit of owners(including beneficial owners) of the Bonds.

3. This Disclosure Undertaking is intended to satisfy the requirements of Rule15c2-12, as in effect on the date hereof.

COVENANTS AND AGREEMENTS

Section 1. Definitions.

“Annual Financial Information” means the financial information or operating data withrespect to the University, delivered at least annually pursuant to Section 2(a) and 2(b) hereof,described in “APPENDIX A – NEW MEXICO STATE UNIVERSITY ORGANIZATION,PROGRAMS AND SUMMARY FINANCIAL INFORMATION” of the final OfficialStatement.

“Audited Financial Statements” means the annual financial statements for theUniversity, prepared in accordance with generally accepted accounting principles consistentlyapplied, as in effect from time to time, audited by a firm of certified public accountants.

“EMMA” means the MSRB’s Electronic Municipal Market Access System located onits website at emma.msrb.org.

“Events” means any of the events listed in Section 2(d) of this Disclosure Undertaking.

“Financial Obligation” shall mean a (i) debt obligation; (ii) derivative instrumententered into in connection with, or pledged as security or a source of payment for, an existingor planned debt obligation, or (iii) guarantee of (i) or (ii). The term Financial Obligation shall

E-3

not include municipal securities as to which a final official statement has been provided to theMunicipal Securities Rulemaking Board in compliance with Rule 15c2-12.

“Fiscal Year” means the Fiscal Year of the University, ending June 30.

“MSRB” means the Municipal Securities Rulemaking Board.

“Official Statement” means the final Official Statement delivered in connection withthe original issue and sale of the Bonds.

“Owners” means the registered owners of the Bonds, and so long as the Bonds aresubject to the book-entry system, any Beneficial Owner, as such term is defined in theResolution.

“Rule 15c2-12” shall mean Rule 15c2-12 adopted by the SEC under the SecuritiesExchange Act of 1934, as the same may be amended from time to time.

“SEC” means the Securities and Exchange Commission.

Section 2. Provision of Annual Information and Reporting of Events.

(a) Annually while the Bonds remain outstanding, the Regents shall provideor cause to be provided to EMMA Annual Financial Information and Audited FinancialStatements.

(b) Such Annual Financial Information shall be provided on or beforeMarch 31 of each year. If the Audited Financial Statements are not available by the time theAnnual Financial Information must be provided, unaudited financial statements shall beprovided as part of the Annual Financial Information. If not provided as a part of the AnnualFinancial Information, the Audited Financial Statements will be provided when available.

(c) The Regents may provide Annual Financial Information by specificreference to other documents, including information reports and official statements relating toother debt issues of the Regents, which have been submitted to each Repository; provided,however, that if the document so referenced is a final official statement within the meaning ofthe Rule, such final official statement must also be available through EMMA.

(d) At any time the Bonds are outstanding, the Regents shall provide, in atimely manner, not in excess of ten business days, to EMMA notice of any of the followingevents with respect to the Bonds (provided that notice of any event under clauses (ii), (vii),(viii), (x), (xiii) and (xiv) will be provided only if material):

i. Principal and interest payment delinquencies;

ii. Non-payment related defaults;

iii. Unscheduled draws on debt service reserves reflecting financialdifficulties;

E-4

iv. Unscheduled draws on credit enhancements reflecting financialdifficulties;

v. Substitution of credit or liquidity providers, or their failure to perform;

vi. Adverse tax opinions or the issuance by the Internal Revenue Service ofproposed or final determinations of taxability, Notices of Proposed Issue(IRS Form 5701-TEB) or other material notices or determinations withrespect to the tax status of the Bonds;

vii. Modifications to rights of Bond holders;

viii. Bond calls or tender offers;

ix. Defeasances;

x. Release, substitution or sale of any property securing repayment of thesecurities;

xi. Rating changes;

xii. Bankruptcy, insolvency, receivership or similar proceedings;

xiii. Mergers, consolidations, acquisitions, the sale of all or substantially allof the assets of the obligated person or their termination;

xiv. Appointment of a successor or additional trustee or the change of nameof a trustee;

xv. Incurrence of a Financial Obligation of the obligated person, if material,or an agreement to covenants, events of default, remedies, priority rights,or other similar terms of a Financial Obligation of the obligated person,any of which affect security holders, if material; and

xvi. Default, event of acceleration, termination event, modification of terms,or other similar events under the terms of a Financial Obligation of anobligated person, any of which reflect financial difficulties.

(e) At any time the Bonds are outstanding, the Regents shall provide, in atimely manner, to EMMA notice of any failure of the Regents to timely provide the AnnualFinancial Information as specified in Sections 2(a) and 2(b) hereof.

Section 3. Method of Transmission. Subject to technical and economic feasibility,the Regents shall employ such methods of electronic or physical information transmission asis requested or recommended by the MSRB unless otherwise required by law.

Section 4. Enforcement. The obligations of the Regents hereunder shall be for thebenefit of the owners (including the beneficial owners) of the Bonds. The owner or beneficial

E-5

owner of any Bonds is authorized to take action to seek specific performance by court order tocompel the Regents to comply with their obligations under this Disclosure Undertaking, whichaction shall be the exclusive remedy available to it or any other owners or beneficial owners ofthe Bonds. Any such action shall be brought only in a State court of competent jurisdiction inLas Cruces, New Mexico. Breach of the obligations of the Regents hereunder shall notconstitute an event of default under the Resolution and none of the rights and remedies providedby the Resolution shall be available to the owners (including the beneficial owners) of theBonds.

Section 5. Additional Information. Nothing in the Disclosure Undertaking shall bedeemed to prevent the Regents from disseminating any other information, using the means ofdissemination set forth in this Disclosure Undertaking or any other means of communication,or including any other annual information or notice of occurrence of an event which is notEvent information, in addition to that which is required by this Disclosure Undertaking;provided that the Regents shall not be required to do so. If the Regents choose to include anyannual information or notice of occurrence of an event in addition to that which is specificallyrequired by this Disclosure Undertaking, the Regents shall have no obligation under thisDisclosure Undertaking to update such information or include it in any future annual filing orEvent filing.

Section 6. Term. This Disclosure Undertaking shall be in effect from and after theissuance and delivery of the Bonds and shall extend to the earliest of (i) the date all principaland interest on the Bonds shall have been paid or legally defeased pursuant to the terms of theResolution; (ii) the date that the Regents shall no longer constitute an “obligated person” withrespect to the Bonds within the meaning of the Rule; or (iii) the date on which those portionsof the Rule which require this Disclosure Undertaking are determined to be invalid by a courtof competent jurisdiction in a non-appealable action, have been repealed retroactively orotherwise do not apply to the Bonds.

Section 7. Amendments and Waivers. Notwithstanding any other provision of thisDisclosure Undertaking, the Regents may amend this Disclosure Undertaking from time totime, and any provision of this Disclosure Undertaking may be waived, without the consent ofthe owners or beneficial owners of the Bonds upon the Regents’ receipt of an opinion of counselexperienced in federal securities laws to the effect that such amendment or waiver will notadversely affect compliance with the Rule. Any Annual Financial Information containingamended operating data or financial information will explain, in narrative form, the reasons forthe amendment and the impact of the change in the type of operating data or financialinformation being provided. If an amendment changes the accounting principles to be followedin preparing financial statements, the Annual Financial Information and Audited FinancialStatements for the year in which the change is made will present a comparison between thefinancial statements or information prepared on the basis of the new accounting principles andthose prepared on the basis of the former accounting principles. The Regents shall providenotice of any such amendment or waiver to EMMA.

Section 8. Beneficiaries. This Disclosure Undertaking shall inure solely to thebenefit of the owners (including beneficial owners) from time to time of the Bonds, and shallcreate no rights in any other person or entity.

E-6

Section 9. Governing Law. This Disclosure Undertaking shall be governed by thelaws of the State.

Dated: November __, 2019

THE REGENTS OF NEW MEXICO STATEUNIVERSITY

By________________________________________Chair

By________________________________________Secretary and Treasurer

F-1

APPENDIX F

PRINCIPAL PAYDOWN FACTOR TABLE

PRO RATA PASS-THROUGH DISTRIBUTION OF PRINCIPAL

[___ Term Bond Due ___]

PrincipalPaydown Date

MandatorySinkingFund/PaydownAmounts(1)

PaydownAmount per$1,000

RemainingBalance per$1,000

PaydownFactor

RemainingBondFactor

[DATE] $_______ $xxx.xx $xxx.xx 0.xxxxxx 0.xxxxxx[DATE] $_______ $xxx.xx $xxx.xx 0.xxxxxx 0.xxxxxx[DATE] $_______ $xxx.xx $xxx.xx 0.xxxxxx 0.xxxxxx[DATE] $_______ $xxx.xx $xxx.xx 0.xxxxxx 0.xxxxxx

__________________________(1) Subject to change in the event of certain optional redemptions or purchases of Bonds and subject to DTC’s(or other securities depository) operational procedures on the date such mandatory sinking fund redemption.

G-1

APPENDIX G

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

MUNICIPAL BOND INSURANCE POLICY

ISSUER: [NAME OF ISSUER]

MEMBER: [NAME OF MEMBER]

Policy No: _____

BONDS: $__________ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on]

Effective Date: _________

Risk Premium: $__________ Member Surplus Contribution: $ _________

Total Insurance Payment: $_________

BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”), for consideration received, hereby UNCONDITIONALLY

AND IRREVOCABLY agrees to pay to the trustee (the “Trustee”) or paying agent (the “Paying Agent”) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner’s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner’s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner’s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment.

Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. “Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer’s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. “Due for Payment” means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. “Nonpayment” means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. “Nonpayment” shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. “Notice” means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. “Owner” means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that “Owner” shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

2

BAM may appoint a fiscal agent (the “Insurer’s Fiscal Agent”) for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer’s Fiscal Agent. From and after the date of receipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer’s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer’s Fiscal Agent on behalf of BAM. The Insurer’s Fiscal Agent is the agent of BAM only, and the Insurer’s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer’s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.

To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked.

This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT.

In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its Authorized Officer.

BUILD AMERICA MUTUAL ASSURANCE COMPANY By: _______________________________________ Authorized Officer

3

Notices (Unless Otherwise Specified by BAM) Email: [email protected] Address: 1 World Financial Center, 27th floor 200 Liberty Street New York, New York 10281 Telecopy: 212-962-1524 (attention: Claims)

notice - amazon s3...the bonds may be subject to optional and mandatory sinking fund redemption...

Documents