Annual financial report / University of Arizona

              11/28/12 Annual Financial Report-June 30, 1996
file:///S:/LAPR/Special/eReports/Processed/UA Financial Report/Fiscal Year Ended June 30, 1996.htm 1/19
Annual Financial Report
For the Year Ended
June 30, 1996
Arizona Board
of Regents
EX-OFFICIO
The Honorable J. Fife Symington
Governor of Arizona
The Honorable Lisa Graham Keegan
Superintendent of Public Instruction
APPOINTED
George H. Amos III
Tucson
Judy Gignac
Sierra Vista
Eddie Basha
Chandler
John F. Munger
Tucson
Rudy Campbell
Tempe
Don Ulrich
Paradise Valley
Arthur Chapa
Tucson
John Schmitt
Student Regent
Kurt Davis
Cave Creek
The University
of Arizona
Administration
Manuel T. Pacheco
President
Celestino Fernandez
Executive Vice President and
Provost of Arizona International Campus
Paul Sypherd
Senior Vice President for
Academic Affairs & Provost
Saundra Taylor
Vice President for Student Affairs
Joel D.Valdez
Senior Vice President for
Business Affairs
Ronald E. Smith
Controller
Michael A. Cusanovich
Vice President for Research and
Graduate Studies
Table of Contents Introductory Letter Statement of Current Operating
Funds Revenues, Expenditures
Enrollment Highlights and Other Changes
Financial Highlights Notes to Financial Statements
Current Operating Funds
Revenues
Independent Auditor's Report
Current Operating Funds
Expenditures
Supplemental Schedule of
Bonds and Capitalized Leases
Market Value for Endowments and Other Long-term Liabilities
Current Operating Funds:
Gifts, Grants & Contracts
Supplemental Schedule of
Federal Financial Assistance
Balance Sheet Notes to Schedule of
Statement of Changes Federal Financial Assistance
in Fund Balances
Equal Employment Opportunity Affirmative Action Employer
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As higher education faces increased competition for dwindling resources, The
University of Arizona has continued to excel in providing a quality
education to its students, expanding research efforts and providing public
service activities throughout the state. Faced with the threat of reduced
state appropriations as a percentage of total revenue, the University
continues to emphasize ways to improve efficiency and effectiveness of
programs throughout the institution. This effort is exemplified by the
commitment of resources to support formal business process reengineering
efforts and significant investments in campus technology.
The annual financial report of The University of Arizona is published for
use by all interested persons and submitted as a public accounting of the
University's financial operations for the fiscal year ended June 30, 1996.
The financial information presented in this report is designed to enable the
reader to understand how the University managed its resources to meet the
overall mission of the institution. The financial statements and additional
related highlights provide the evidence of the institution's continued
growth and stability as we prepare to meet the challenges during the coming
year. Comments and questions relating to the information provided are always
welcomed.
Joel Valdez
Senior Vice President
for Business Affairs
Ronald E. Smith
Controller
Enrollment Highlights
Academic Enrollment (Headcount) Undergraduate Graduate Total Fall 1995 Total Fall 1994
Agriculture 1,991 510 2,501 2,364
Architecture 444 38 482 498
Arts & Sciences - General 4,841 4,841 5,057
Business & Public Administration 4,637 475 5,112 5,088
Education 723 998 1,721 1,684
Engineering & Mines 2,536 808 3,344 3,544
Fine Arts 1,878 314 2,192 2,230
Health-Related Professions 122 122 202
Humanities 1,035 415 1,450 1,487
Interdisciplinary Programs 461 461 486
Law 491 491 484
Medicine 556 556 491
Nursing 257 163 420 427
Optical Sciences 138 138 140
Pharmacy 298 298 285
Science 2,811 843 3,654 3,698
Social & Behavioral Sciences 4,412 988 5,400 5,469
Correspondence/Non-Degree 466 1,128 1,594 1,672
Total Enrollment 26,153 8,624 34,777 35,306
Other Enrollment Statistics Fiscal Year: 1995-96 1994-95 1 990-91
Enrollment - undergraduate (fall) 26,153 26,468 27,522
Enrollment - graduate (fall) 8,624 8,838 8,213
Degrees awarded-bachelor 4,612 4,807 4,118
Degrees awarded-advanced 2,086 2,045 1,818
Tuition per full-time student:
Resident 1,884 1,828 1,478
Nonresident
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7,912 7,434 6,484
Faculty and Staff
Instructional Faculty 1,592 1,588 1,652
Staff, Administrators, Professional 10,935 10,445 11,159
Admissions - Fall 1995 In-State Out-of-State Total Freshmen Transfers
Undergraduate
Applications 9,273 12,802 22,075 16,307 5,768
Admissions 8,041 9,510 17,551 13,635 3,916
Matriculations 4,462 2,316 6,778 4,557 2,221
Graduate (not including Law, Medicine, and Pharmacy)
Applications 1,855 7,159 9,014
Admissions 1,549 2,332 3,881
Matriculations 1,303 1,144 2,447
Financial Highlights
Funding Sources 1996 1995 1991
State Appropriations $ 282,488 $ 267,411 $ 243,420
Tuition & Fees 134,053 129,481 105,344
Federal Grants & Contracts 218,344 233,086 156,248
State and Local Grants & Contracts 12,270 12,261 5,670
Private Gifts, Grants & Contracts 66,742 66,425 71,052
Auxiliary Enterprise Operations 80,146 75,049 62,440
Investment Income & Net Realized Gains 15,586 15,740 15,702
Additions to Plant Facilities 87,630 73,507 99,169
Retirement of Indebtedness 12,022 10,619 6,718
Other Sources 43,299 26,540 15,324
Total Funding Sources $ 952,580 $ 910,119 $ 781,087
Funding Uses
Instruction $ 204,419 $ 197,640 $ 177,661
Research 193,650 207,921 149,293
Public Service 30,407 27,736 22,478
Academic Support 57,332 53,878 53,590
Student Services 12,884 12,701 15,656
Institutional Support 49,125 45,856 38,383
Operation & Maintenance of Plant 37,037 35,877 30,954
Scholarships & Fellowships 54,994 52,448 40,573
Auxiliary Enterprise Operations 82,173 76,035 61,366
Indirect Costs Recovered 41,096 40,157 33,764
Facility Additions & Disposals 90,620 56,161 98,131
Debt Servicing 31,734 30,505 6,718
Other Uses 1,472 1,114 18,403
Total Funding Uses $ 886,943 $ 838,029 $ 746,970
Funding Sources Over Funding Uses
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$ 65,637 $ 72,090 $ 34,117
Endowment (investments at market value; land at book value) $ 92,057 $ 81,405 $ 63,666
Balance Sheet
(in thousands of dollars)
June 30, 1996, with comparative totals at June 30, 1995
Current Operating Funds Nonoperating Funds Total All Funds
Unrestricted
General
Operating
Funds
Designated
Funds
Auxiliary
Enterprises
Funds
Restricted
Funds
Total
Current
Operating
Funds
Student
Loan
Funds
Endowment
and Similar
Funds
Agency
Funds Plant Funds Memorandum Only
Assets 1996 1995
Cash and investments (See
VI) $14,424 $47,681 $21,167 $13,837 $97,109 $1,443 $68,657 $10,375 $32,413 $209,997 $217,991
Donated land 209 209 2,299 242 2,750 2,778
Notes, accounts receivable
and unbilled charges, less
allowance: 1996--$1,880;
1995--$2,252
242 6,910 4,583 25,560 37,295 14,168 986 454 8,374 61,277 57,957
Inventories and supplies 39 267 7,490 7,796 155 7,951 8,468
Due from other funds 58 58 64 122 721
Physical properties
(See VII) 1,248,451 1,248,451 1,196,483
Total Assets $14,705 $54,916 $33,240 $39,606 $142,467 $15,611 $71,942 $10,984 $1,289,544 $1,530,548 $1,484,398
Liabilities and Fund
Balances
Liabilities:
Accounts payable $1,643 $1,781 $2,570 $3,694 $9,688 $6 $140 $7,727 $17,561 $17,908
Accrued payroll 8,174 2,083 1,694 5,819 17,770 6 17,776 16,881
Deferred revenue and
deposits 2,866 2,444 4,637 18 9,965 4 88,670 98,639 104,312
Funds held for others 10,844 10,844 13,596
Due to other funds 122 122 122 721
Capitalized lease obligations
and other long-term liabilities
(See IX)
66,555 66,555 68,075
Bonds payable
(See VIII) 249,910 249,910 259,401
Total Liabilities 12,683 6,308 9,023 9,531 37,545 16 10,984 412,862 461,407 480,894
Fund Balances
(See V) 2,022 48,608 24,217 30,075 104,922 15,595 71,942 876,682 1,069,141 1,003,504
Total Liabilities and Fund
Balances $14,705 $54,916 $33,240 $39,606 $142,467 $15,611 $71,942 $10,984 $1,289,544 $1,530,548 $1,484,398
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Fund Balances consist of:
Restricted:
Amount obligated for
outstanding purchase orders $14,871 $14,871 $12 $14,883 $18,173
U.S. Government grants
refundable 12,205 12,205 11,907
Endowment $38,116 38,116 35,742
Quasi-endowment 20,522 20,522 20,845
General 15,204 15,204 3,378 $14,056 32,638 27,362
Designated:
Amount obligated for
outstanding purchase orders $2,949 $3,036 5,985 11,405 17,390 14,161
Summer sessions 4,703 4,703 4,703 4,482
Quasi-endowment 13,304 13,304 11,896
General $2,022 40,956 21,181 64,159 64,159 54,746
Net Investment in Plant 851,221 851,221 804,190
Total Fund Balances $2,022 $48,608 $24,217 $30,075 $104,922 $15,595 $71,942 $876,682 $1,069,141 $1,003,504
See notes (I-XI) to Financial Statements
Statement of Changes in Fund Balances
(in thousands of dollars)
Current Operating Funds Nonoperating Funds Total All Funds
Unrestricted Total Plant Funds
General Auxiliary Current Student Endowment Unexpended Debt Investment Memorandum Only
Operating Designated Enterprises Restricted Operating Loan and Similar Plant Service In
Funds Funds Funds Funds Funds Funds Funds Funds Funds Plant 1996 1995
Revenues and Other Additions
Unrestricted
current
revenues
$363,001 $106,073 $94,549 $563,623 $ 563,623 $ 537,891
Tuition and
fees $79 79 $ 490 569 574
Federal grants
and contracts 181,232 181,232 $ 236 $ 788 182,256 197,886
State grants
and contracts 9,703 9,703 9,703 9,870
Local grants
and contracts 1,774 1,774 1,774 1,593
Private gifts,
grants and
contracts
46,923 46,923 38 1,055 6,020 $2,024 56,060 54,603
Federal
appropriations 2,017 2,017 6,189 8,206 2,368
State
appropriations 536 536 50 80 10,232 10,898 8,044
Investment
income
including net
realized gains
2,828 2,828 78 896 37 $1,841 5,680 7,072
Interest on
loans 331 331 342
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loans
receivable
331 331 342
Additions to
plant facilities
including
amounts
expended
from current
funds: 1996 -
$38,433;
1995 -
$34,576
87,630 87,630 73,507
Retirement of
indebtedness 12,022 12,022 10,619
Other
additions 8,922 5 4,901 13,828 5,750
Total
revenues and
other
additions
363,001 106,073 94,549 245,092 808,715 733 2,521 32,188 1,846 106,577 952,580 910,119
Expenditures and Other Deductions
Educational
and general
expenditures
363,464 67,807 208,577 639,848 639,848 634,057
Auxiliary
enterprises
expenditures
82,173 82,173 82,173 76,035
Indirect costs
recovered 41,096 41,096 41,096 40,157
Cancellation
of loans and
provision for
bad debt
28 28 341
Administrative
and collection
costs
186 186 220
Expended for
plant facilities
(including
noncapitalized
expenditures
of $3,663 in
1996 and
$3,712 in
1995)
51,921 51,921 41,422
Interest on
indebtedness
including
$939
capitalized as
construction in
progress in
1996 and
$1,221 in
1995
19,712 19,712 19,886
Disposal of
plant facilities 38,699 38,699 14,739
Refunded to
grantors or
donors
1,144 1,144 4 1,148 449
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donors
Retirement of
indebtedness 12,022 12,022 10,619
Other
deductions 110 110 104
Total
expenditures
and other
deductions
363,464 67,807 82,173 250,817 764,261 214 4 51,921 31,844 38,699 886,943 838,029
Transfers
Among
Funds
Mandatory
loan fund
matching
grants
(12) (26) (38) 38
Mandatory
principal and
interest
(375) (25,667) (7,482) (33,524) 45 33,479
Voluntary, net 505 (2,221) (4,023) 3,795 (1,944) (70) 942 21,467 452 (20,847)
Total transfers 130 (27,900) (11,505) 3,769 (35,506) (32) 942 21,512 33,931 (20,847)
Net
increases
(decreases)
for the year
(333) 10,366 871 (1,956) 8,948 487 3,459 1,779 3,933 47,031 65,637 72,090
Fund
balances,
beginning of
year
2,355 38,242 23,346 32,031 95,974 15,108 68,483 10,343 9,406 804,190 1,003,504 931,414
Fund
balances,
end of year
$2,022 $48,608 $24,217 $30,075 $104,922 $15,595 $71,942 $12,122 $
13,339 $851,221 $1,069,141 $1,003,504
See Notes (I-XI) to Financial Statements.
Statement of Current Operating
Funds Revenues, Expenditures and Other Changes
(in thousands of dollars)
Year Ended June 30, 1996, with comparative totals for 1995
Unrestricted Funds Total Current Operating
Funds
Memorandum Only
General Operating
Funds
Designated
Funds
Auxiliary Enterprises
Funds
Total Unrestricted
Funds
Restricted
Funds 1996 1995
Revenues
State appropriations $ 271,590 $ 271,590 $ 730 $ 272,320 $ 261,051
Tuition and fees 86,444 $ 36,411 $ 10,629 133,484 368 133,852 129,197
Federal grants and contracts 36,070 18 36,088 145,567 181,655 197,582
State grants and contracts 608 1 609 8,012 8,621 8,399
Local grants and contracts 80 104 184 1,728 1,912 1,546
Private gifts, grants and contracts 7,786 2,896 10,682 43,308 53,990 52,438
Federal appropriations 3,336 5 3,341 2,208 5,549 5,636
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Investment and endowment income 1,593 7,942 40 9,575 2,737 12,312 11,481
Sales and services of educational
departments 1 14,177 14,178 14,178 11,970
Sales and services of auxiliary
enterprises 80,146 80,146 80,146 75,049
Other 37 2,994 715 3,746 3,945 7,691 6,708
Total current revenues 363,001 106,073 94,549 563,623 208,603 772,226 761,057
Expenditures and Mandatory Transfers
Educational and general:
Instruction 156,309 32,336 188,645 15,774 204,419 197,640
Research 42,910 9,288 52,198 141,452 193,650 207,921
Public service 11,332 917 12,249 18,158 30,407 27,736
Academic support 52,862 3,026 55,888 1,444 57,332 53,878
Student services 10,779 1,385 12,164 720 12,884 12,701
Institutional support 32,541 15,828 48,369 756 49,125 45,856
Operation and maintenance of
plant 34,843 2,194 37,037 37,0 37 35,877
Scholarships and fellowships 21,888 2,833 24,721 30,273 54,994 52,448
Educational and general expenditures 363,464 67,807 431,271 208,577 639,848 634,057
Mandatory transfers:
Loan fund matching grants 12 12 26 38 10
Principal and interest 375 25,667 26,042 26,042 18,257
Total educational and general 363,839 93,486 457,325 208,603 665,928 652,324
Auxiliary enterprises:
Expenditures 82,173 82,173 82,173 76,035
Mandatory transfers for principal
and interest 7,482 7,482 7,482 7,213
Total auxiliary enterprises 89,655 89,655 89,655 83,248
Total expenditures and mandatory
transfers 363,839 93,486 89,655 546,980 208,603 755,583 735,572
Other transfers and additions
(deductions):
Restricted receipts over transfers
to revenue (4,607) (4,607) 1,741
Voluntary transfers, net 505 (2,221) (4,023) (5,739) 3,795 (1,944) (12,841)
Refunded to grantors (1,144) (1,144) (449)
Net increases (decreases) in fund
balances $ (333) $ 10,366 $ 871 $ 10,904 $ (1,956) $ 8,948 $ 13,936
See notes (I-XI) to Financial Statements
Notes to Financial Statements
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June 30, 1996
I. FUND ACCOUNTING
To recognize any limitations and restrictions placed on the use of the resources available to the University, the accounts are maintained according to the principles of
fund accounting. Therefore, the resources are classified for accounting and reporting purposes into funds according to the activities or objectives specified. Separate
accounts are maintained in each fund. However, in the accompanying financial statements, individual funds that have similar characteristics have been combined into
fund groups. Accordingly, all financial transactions have been reported by fund group.
For each fund group, fund balances restricted by outside sources are identified and separated from fund balances allocated to specific purposes by action of the
Arizona Board of Regents or the Administration. Externally restricted funds may be used only for the purposes established by the source of such funds. In contrast,
designated funds are controlled by the Administration of the University in achieving its institutional purposes.
Changes in the use of resources require an accounting transfer of the resources to the fund with the activity or objective to be accomplished. Mandatory transfers are
those required to meet legally binding agreements such as bond indentures. Other transfers result from decisions by the Arizona Board of Regents or the
Administration as to permitted use of funds.
II. FUND DESCRIPTIONS
The current operating funds and their functions are as follows:
The General Operating Funds account for activities of State appropriations and Federal agriculture appropriations.
The Designated Funds account for the recovery of indirect costs from sponsored research and academic year tuition and fees retained by the University.
Summer session and extension teaching programs, unrestricted gifts and income from short-term and long-term investments are also included in these funds.
The purposes of these funds are determined by the Arizona Board of Regents and University Administration.
The Auxiliary Enterprises Funds account for the revenues and expenditures of revenue-producing, substantially self-supporting activities that perform a
service to the student body, faculty and public but are not themselves educational activities. Auxiliary enterprises activities include student housing, bookstores,
student unions, stores, intercollegiate athletics and others.
The Restricted Funds account for governmental and private gifts, grants and contracts. The purposes are restricted by the donor or supporting agency.
Funds not used for the restricted purpose may revert to the sponsor or donor. Revenues of the Restricted Funds are reported only to the extent of
expenditures and mandatory transfers in the Statement of Current Operating Funds Revenues, Expenditures and Other Changes.
The non-operating funds and their functions are as follows:
The Student Loan Funds account for loans made to assist students in the financing of their education.
The Endowment and Similar Funds account for private gifts and other funds that require the principal be permanently invested and only the income be
utilized for general or specific requirements. Quasi-endowment funds have been established by the Arizona Board of Regents or the Administration for the
same purpose as endowment funds, except that principal and income may be expended for general or specific requirements.
The Agency Funds account for deposits held in custody for others. These include funds held for the University Physicians, Inc., Arizona State University and
Northern Arizona University student financial aid trust funds, Boyce Thompson Arboretum and others.
The Plant Funds account for activities relating to institutional properties. These include the total investment and debt incurred in the financing of University
properties.
III. BASIS FOR REPORTING
The accompanying financial statements present all funds under the authority of the University. The basic criterion for inclusion is the exercise of financial
accountability. Financial accountability for the University remains with the State of Arizona; therefore the University is considered part of the reporting entity for the
state's financial reporting purposes. The financial statements do not include financially interrelated organizations described in Note IV.
The financial statements are prepared on the accrual basis of accounting. The Statement of Current Operating Funds Revenues, Expenditures and Other Changes is a
statement of financial activities for current operating funds during the current reporting period. It is not intended to present the results of operations or the net income
or loss for the period as would a statement of income.
The accounting policies followed by the University conform to generally accepted accounting principles as applied to governmental colleges and universities in the
AICPA College Guide Model as defined in Governmental Accounting Standards Board Statement No. 15. The methods of applying those policies which materially
affect the determination of financial position, current operating funds revenues, expenditures and other changes and the current changes in fund balances are
summarized below:
Investments and donated land are stated at cost or fair market value at the date of acquisition, as appropriate.
Inventories and supplies are stated at the lower of cost (determined by the first-in, first-out method) or market.
Physical properties are stated at cost or fair market value at date of acquisition, as appropriate. Special collections are carried at a nominal value of $1 per collection.
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Capital expenditures reported as current operating expenditures also appear as additions to the Plant Funds. As permitted by generally accepted accounting
principles, the University does not provide for depreciation of physical properties.
Tuition and fees revenue (net of refunds) includes $22,203,000 of waivers charged to Scholarships and Fellowships and $2,939,000 of waivers for faculty and staff
benefits charged to the appropriate expenditure programs to which the applicable personnel relate.
Summer session revenue and expenditures are reported within the fiscal year in which the summer session's program is predominantly conducted.
Revenue and accounts receivable include amounts received and expended by the University under Federal and State funded research, student aid and other
programs. Both the direct and indirect costs of these programs are subject to audit by cognizant governmental agencies or their appointees. The University expects
that adjustments or repayments, if any, resulting from such audits would not have a significant effect on the financial statements.
Transfer of construction debt from Unexpended Plant Funds to Investment In Plant is accomplished as the construction proceeds are expended. The Statement of
Changes in Fund Balances includes $20,847,000 of voluntary transfers all of which are associated with construction and debt. There is no net effect to the Plant Fund
group as a whole.
The financial information shown for fiscal year 1994-1995 in the accompanying financial statements is included as a basis for comparison with fiscal year 1995-1996
and represents summarized totals only. Certain prior year items in the accompanying financial statements have been reclassified, without effect on total fund balances,
revenues or expenditures, to conform with the current year's classifications.
IV. RELATED ORGANIZATIONS
The financial statements of The University of Arizona do not include the operations of the University of Arizona Foundation, Inc., the University Physicians, Inc., the
Arizona Research Park Authority and the Campus Research Corporation (renamed from the Rita Road Campus Corporation in January 1996).
The University Foundation, Inc. is a nonprofit corporation controlled by a separate Board of Directors. The principal goals of the Foundation are to support The
University of Arizona through various fund-raising activities, and to contribute funds to the University for support of various programs. According to the audited
financial statements of the Foundation for the year ended June 30, 1995, assets, liabilities, revenues and expenditures totaled $122 million, $76 million, $25 million,
and $24 million, respectively.
The University Physicians, Inc. (UPI) is a nonprofit corporation established to provide medical services and to support The University of Arizona in its teaching and
research missions. UPI is controlled by a Board of Directors, comprised of the Dean, all clinical department heads, twelve other faculty physicians, and four
community members. The primary purpose of UPI is to assist the University's College of Medicine in achieving the fulfillment of its teaching and research. According
to the audited financial statements of UPI for the year ended June 30, 1995, assets, liabilities, revenues and expenditures totaled $74 million, $25 million, $97 million,
and $85 million, respectively.
The Arizona Research Park Authority (ARPA) is a nonprofit corporation created with the permission of the Arizona Board of Regents (ABOR) and designated by
Arizona law as a political subdivision of the State, governed by a separate board of directors which by law may not include officers or employees of ABOR. ARPA
was established under the State's industrial development authority statute to assist in the acquisition, improvement, and operation of university research parks and
related properties. In August 1994, ARPA, with the approval of ABOR, sold $98 million nontransferable special revenue bonds to International Business Machines
Corporation (IBM) to enable the University to acquire from IBM a 345-acre developed industrial site (the "Research Park") near Tucson, Arizona, together with
1,000 acres of adjacent unimproved land (collectively, the University of Arizona Science and Technology Park or the "Park"). The transaction was accomplished
through the following steps: (1) the University agreed to pay $98 million to IBM for title to the entire Park; (2) ARPA and Campus Research Corporation jointly
agreed to lease the developed portion of the Park from the University for a period of 30 years with a prepaid rental of $98 million; (3) ARPA subleased 79% of the
building space in the developed portion of the Park to IBM for periods of up to 30 years for a rental sufficient to pay debt service on ARPA's bonds; and (4) ARPA
used the $98 million received from its bond sale to make the rental prepayment to the University which, in turn, applied the money to purchase the entire Park from
IBM. The bonds are payable solely from lease rentals paid by IBM. If IBM defaults or cancels its lease, the bonds must be surrendered and discharged. Title to the
entire Park resides in the University and neither the Park nor any payments by the University secures ARPA's bonds. Audited financial statements for the year ended
June 30, 1995, reflecting assets, liabilities, revenues and expenditures are not available.
The Campus Research Corporation (CRC) is a nonprofit corporation governed by a separate Board of Directors and was established to assist the University in the
acquisition, improvement and operation of the Research Park and related properties. CRC leases from the University the remaining 21% of the building space of the
Research Park that is not leased to ARPA (see preceding paragraph). CRC is responsible for developing presently undeveloped portions of the research park and
for subleasing to the University or to third parties existing unoccupied space, newly developed space, and space now occupied by IBM or its subtenants once the
current subleases expire. The University is responsible only for payment of its proportional share of operation expenses. All income received by CRC from its
activities, after payment of expenses and financial reserves, will be turned over to the University. Audited financial statements for the year ended June 30, 1995,
reflecting assets, liabilities, revenues and expenditures are not available.
V. COMPENSATED ABSENCES
The University has not made accruals for vacation pay and other compensated absences. If the accruals were made, General Operating Fund, Designated Fund,
Auxiliary Enterprises Fund and Restricted Fund liabilities would be increased by approximately $14,003,000, $1,918,000, $2,419,000, and $4,630,000,
respectively. The University management believes that this omission does not have a significant effect on the accompanying financial statements as a whole based on
materiality and considering that the General Operating Fund Liability would be funded by the subsequent year's appropriations from the State Legislature.
VI. CASH AND INVESTMENTS
The University follows Arizona Board of Regents policies which require that deposits be made only to accounts authorized by the Board and at depository banks that
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have been approved. Pooled operating investments are restricted to the purchase of collateralized time certificates of deposit and repurchase agreements with
commercial banks, and United States obligations such as Treasury bills, notes, bonds and obligations of agencies sponsored by the United States Government.
Gifts and grants received as endowments or for restricted purposes are invested according to conditions stipulated by the donor or grantor; however, if no conditions
are imposed, such funds are usually invested in one of two Consolidated Endowment Pools. The Consolidated Endowment Pools function as highly-diversified
investment funds under the control of the University Investment Committee whose responsibility is to define, develop, and implement investment objectives, policies
and restrictions relating to the Endowment funds held by the University. The primary investment objective of one pool is maximum long-term total return from income
and capital appreciation under a policy of maximum investment productivity at an acceptable level of risk and volatility. The primary investment objective of the other
pool is to maximize the current income earned. The Separately Held Endowment funds are separately invested according to the terms of the donor's gift or the
administrator.
Cash and securities on deposit with trustees are held in trust for the University by various commercial banks. Trust funds are invested by the trustee in accordance
with the Board's authorizing resolutions.
At year-end, the University's bank balance is $2,194,000. Of this balance, $153,000 is covered by federal depository insurance. The remaining balance is
collateralized by U.S. Government obligations held by the bank's trust department in the University's name. Securities are collateralized as follows:
1. Certificates of deposit are covered by FDIC or SIPC insurance.
2. Repurchase agreements are col-lateralized with securities held by the University's custodial banks in the University's name.
3. Common stocks, preferred stocks and corporate bonds are registered in the name of and held by the University or are held by the University's custodial bank
in the name of the University in a book entry system. These securities were either purchased from a broker/dealer or a financial institution by the University.
4. U.S. Treasury and Agency Government obligations:
a. $63,523,000 are registered in the name of and held by the University or are held by the University's custodial bank in the name of the University in a
book entry system. These securities were either purchased from a broker/dealer or a financial institution by the University.
b. $34,644,000 are held by major financial institutions in the name of the University. The financial institutions act as both custodial and purchasing agent
for these investment transactions.
c. $5,746,000 are held by trustees. Bond funds held by trustees include money market funds invested in U.S. Government obligations, U.S.
Government obligations, and obligations of agencies sponsored by the Federal Government held in the trustee's Federal Reserve Bank account. These
securities are recorded in the University's name in the records of the trustee. The trustee acts as both custodial and purchasing agent for these investment
transactions.
5. Endowment funds held by trustees include deposits, mutual funds, common stocks, corporate bonds, U.S. Government obligations, obligations of agencies
sponsored by the Federal Government and mortgage backed notes receivable. These deposits and securities are held by the trustees as irrevocable trusts in
the names of the individual donors for the benefit of the University according to the donors' stipulations.
6. At June 30, 1996, the University held investment contracts with both a major insurance company and a bank amounting to $1,503,000 of proceeds from the
1994A Certificates of Participation and $1,187,000 of proceeds from the 1994B Certificates of Participation, respectively.
a.The Guaranteed Investment Contract (GIC) with the insurance company is uncollateralized. The insurance company is rated Aa3/AA+ and there is a
provision in the contract requiring collateralization of the investment with U.S. Government obligations if the company's rating falls below A2 by
Moody's or below A by Standard & Poors, or the University may terminate the contract.
b.The Bank Investment Contract (BIC) is also uncollateralized. The bank is rated Aaa/AAA and there is a provision in the contract whereby if the
bank's rating falls below Aa but is at least A by Moody's and below AA but is at least A by Standard & Poors, then the bank must collateralize the
investment with U.S. Government obligations. If the rating falls below A/A, then the University has the option to terminate the contract.
Deposits and Investments, at June 30, 1996, consist of the following:
Deposits: Total Cost Total Market
Cash on Deposit with State Treasurer $ 3,058,000 $ 3,058,000
Cash -5,557,000 -5,557,000
Securities:
Certificates of deposit 160,000 160,000
Repurchase Agreements 47,470,000 47,470,000
Common Stocks 20,656,000 37,787,000
Preferred Stocks 634,000 651,000
Corporate Bonds 28,385,000 27,820,000
U.S. Treasury and Agency Govt. obligations 103,913,000 103,563,000
Endowments held by trustees 8,588,000 13,035,000
Investment contracts (GIC & BIC) 2,690,000 2,690,000
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Totals $ 209,997,000 $ 230,677,000
The cash overdraft results from an aggressive short-term investment policy in which the University invests its funds until outstanding check are cashed.
Deposits and Investments, at June 30, 1996, by management areas are as follows:
Total Cost Total Market
Current Operating Funds:
Cash on Deposit with State Treasurer $ 3,058,000 $ 3,058,000
Cash and short-term investments 45,289,000 45,175,000
Long-term investments 48,762,000 48,182,000
Endowment Funds:
Consolidated Pools:
Cash and short-term investments 1,884,000 1,880,000
Long-term investments 47,157,000 61,653,000
Separately held:
Cash and short-term investments 2,351,000 2,351,000
Long-term investments 8,677,000 9,853,000
Funds held by trustees 8,588,000 13,035,000
Plant Funds:
Cash and short-term investments 11,533,000 11,533,000
Funds held by trustees 20,880,000 20,908,000
Other Nonoperating Funds:
Cash and short-term investments 5,789,000 5,803,000
Long-term investments 6,029,000 7,246,000
Totals $ 209,997,000 $ 230,677,000
VII. PHYSICAL PROPERTIES
Physical Properties at June 30, 1996, consist of the following:
Buildings and Improvements $ 683,535,000
Land 70,177,000
Equipment 327,392,000
Library Materials 111,822,000
Construction in Progress 55,525,000
Total Physical Properties $ 1,248,451,000
In addition to expenditures through June 30, 1996 it is estimated that $57,008,000 will be required to complete projects under or planned for construction. Of
this amount $21,943,000 is contractually encumbered. On April 1, 1996, the University changed its equipment capitalization criteria from $500 or more in
valuation and two years or more life expectancy to $1,000 and one year, resulting in a one-time write off of $23,927,000 in assets.
VIII. BONDS PAYABLE
Bonds Payable at June 30, 1996, consist of the following:
Interest Year of Maturity Original Issue Currently Outstanding
Student Housing Revenue Bonds 3.0-3.75% 2002-2008 $ 8,500,000 $ 2,935,000
1988 - System Revenue Bonds 6.3-7.0% 1999 31,950,000 2,390,000
1990A - System Revenue Bonds 6.5-9.0% 2003 46,300,000 9,580,000
1990B - System Revenue Bonds 6.9-9.4% 2003 39,630,000 7,485,000
1991 - System Revenue Bonds 6.0-8.5% 2010 9,665,000 4,575,000
1992 - System Revenue Bonds 3.1-6.625% 2011 113,150,000 110,835,000
1992A - System Revenue Bonds 2.9-6.2% 2016 55,490,000 53,185,000
1993 - System Revenue Bonds 2.7-5.0% 2017 42,085,000 31,310,000
1994 - System Revenue Bonds 4.8-6.35% 2014 28,500,000 27,615,000
$ 375,270,000 $ 249,910,000
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Principal and interest on bonds outstanding at June 30, 1996, are collateralized by registration fees, tuition, rentals and other charges and such obligations are
generally callable by the University. The principal amounts due over the next five years are as follows:
1997 $ 9,360,000
1998 9,830,000
1999 10,335,000
2000 10,865,000
2001 11,515,000
Cash and securities on deposit with trustees, restricted for retirement of bonded indebtedness and renewals and replacements, are $507,000 and $645,000
respectively, at June 30, 1996, as required by the bond indentures. In addition, $10,645,000 was held by trustees for payment of future construction costs.
In fiscal years 1977, 1990, 1992 and 1993 the University refunded in advance of maturity certain outstanding revenue bonds. At June 30, 1996, the
outstanding principal balance of the refunded bonds is $112,185,000 which will be paid by investments held in trust with a carrying value of $84,944,000.
These amounts are not included in the accompanying financial statements.
IX. LEASES AND OTHER LONG-TERM LIABILITIES
The University has entered into certain operating leases (generally, the leases include options for annual renewal) and other rental agreements for real property,
equipment and films generally for periods not in excess of one year. During the 1995-1996 fiscal year, rent expenditures amounted to $9,303,000.
The University also acquired a building, certain computer, telecom-munications and farm equipment, and agricultural land under various capital leases and
certificates of participation (COPs). At June 30, 1996, the balance sheet includes $39,979,000 representing the cost of assets included in land, buildings, and
equipment.
Cash and securities on deposit with the trustee, restricted for retirement of certificates of participation, are $8,016,000 at June 30, 1996. In addition,
$1,067,000 is held by trustee for payment of future construction costs.
In 1991 the University refunded in advance of maturity certain outstanding certificates of participation. At June 30, 1996, the outstanding principal balance of
the refunded certificates was $16,355,000 which will be paid by investments held in trust with a carrying value of $17,237,000. These amounts are not
included in the accompanying financial statements.
Summary of Future Lease Payments at June 30:
Capitalized Operating Leases & COPs Leases
1997 $ 7,376,000 $ 656,000
1998 7,140,000 546,000
1999 7,611,000 235,000
2000 5,945,000 153,000
2001 5,902,000 103,000
Thereafter 76,304,000 206,000
Total minimum lease payments 110,278,000 $ 1,899,000
Less: Amount representing interest ( 43,723,000)
Present value of net minimum lease payments$ 66,555,000
X. PENSION PLANS
Full-time, permanent employees of the University are, in general, required to be members of an authorized retirement program. The program, consisting of
several plans described below, is funded through payroll deductions from covered employees' gross earnings and amounts contributed by the University. In
general, employees' rights vest after five years of service under all plans. University contributions for, and interest forfeited by, employees who leave
employment before five years of service are used to reduce the University's future-period contribution requirements. Retirement payments are obligations of
the respective retirement funds and not of the University.
Eligible Faculty, Academic Professionals and Administrators at the University may select from the following retirement plans: Arizona State Retirement System,
TIAA/CREF Retirement Plan, VALIC Retirement Plan, Fidelity Investments Retirement Plan and Aetna Variable Annuity Retirement Plan. The former is a
defined benefit plan and the latter four are defined contribution plans. Eligible classified staff belong to the Arizona State Retirement System.
A. Defined Benefit Plan - Arizona State Retirement System
The Arizona State Retirement System is a cost-sharing multiple-employer defined benefit pension plan. The payroll for employees covered by the
System for the year ended June 30, 1995 was approximately $4,228,265,000. The University's total payroll for the year ended June 30, 1996 was
$416,554,000; the base salary amount for those employees who participate in the Arizona State Retirement System was $189,838,000.
Employees who retire at or after age 65 with any number of years of credited service, at or after age 62 with 10 or more years of credited service, or at
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or after any combination of years of service and age that totals 80, are entitled to a monthly benefit of 2 percent of their average monthly earnings, as
defined in the plan, for each year of credited service. Employees who are age 50 or older with at least five years of credited service may retire early and
receive reduced retirement benefits. The plan also provides death benefits and limited retiree health benefits. Benefits are established by state statute.
The Legislature established a new long-term disability program and removed the long-term disability benefit from the plan. Effective October 1, 1995,
that liability for current beneficiaries was transferred to the new program.
The actuarially determined contribution rate for both employees and employers for fiscal year 1995-96 was 3.95 percent of compensation ($7,499,000
each). This contribution rate would have covered the actuarially determined current service costs plus amortization of the unfunded past service liability
over a rolling 30-year period, which is being phased in. The current amortization period is 11 years. However, during the year ended June 30, 1996,
state statutes required that both employees and the University contribute an amount equal to only 3.36 percent of the employee's base salary. Both the
University and the covered employees made the required 3.36 percent contribution, amounting to $6,379,000 from each source, totaling $12,758,000.
The actuarial computation of the contribution rate is made two years in advance based on June 30 information and, therefore, the rate for fiscal year
1995-96 was based on June 30, 1994 information.
The amount reported below as "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for
the effects of projected salary increases, estimated to be payable in the future as a result of employee service to date. The measure is the actuarial
present value of credited projected benefits and is intended to help users assess the plan's funding status on a going-concern basis, assess progress
made in accumulating sufficient assets to pay benefits when due, and make comparisons among government pension plans and employers. The System
does not make separate measurements of assets and the pension benefit obligation for individual employers.
The pension benefit obligation at June 30, 1995, (the date of the last actuarial valuation) for the System as a whole, determined through an actuarial
valuation performed as of that date, was $10,289,740,000. The System's net assets available for benefits on that date were $10,752,930,000 (market
value $12,464,462,000), resulting in net assets in excess of the pension benefit obligation of $463,190,000. The University's contribution represented
approximately 4.02 percent of total contributions required of all participating employers.
Historical trend information for all years available presenting the System's progress in accumulating sufficient assets to pay benefits when due is
presented in the Arizona State Retirement System 41st Component Unit Financial Report for the Year Ended June 30, 1995.
B. Defined Contribution Plans
The University offers pension benefits for its eligible Faculty, Academic Professionals and Administrators through its defined contribution plans -
TIAA/CREF, VALIC, Fidelity Investments and Aetna Variable Annuity. In a defined contribution plan, benefits depend solely on amounts contributed
to the plan plus investment earnings. State statute requires that both the employee and the University contribute an amount equal to 7 percent of the
employee's base salary.
The University's total payroll in fiscal year 1995-96 was $416,554,000. The University's contributions were calculated using the base salary amount of
$148,531,000 for those employees who selected a defined contribution plan. Both the University and the covered employees made the required 7
percent contribution. For the defined contribution plans each source contributed $10,397,000 for a total of $20,794,000.
XI. SELF-INSURANCE PROGRAM
The University of Arizona is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to
employees; and natural disasters. The University of Arizona participates in a self-insurance program administered by the State of Arizona, Department of Risk
Management. Arizona statutes provide that any judgment assessed against the University not covered by insurance would be paid by the State from the self-insurance
program or by a future appropriation from the State Legislature.
State of Arizona
Office of the
AUDITOR GENERAL
Independent Auditors' Report
Members of the Arizona State Legislature
The Arizona Board of Regents
We have audited the accompanying balance sheet of The University of Arizona as of June 30, 1996, and the related statements of changes in fund balances
and current operating funds revenues, expenditures and other changes for the year then ended. These financial statements are the responsibility of the
University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and 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
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The University of Arizona as of June 30,
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1996, and the changes in its fund balances and its current operating funds revenues, expenditures and other changes for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial statements of The University of Arizona taken as a whole. The accompanying
supplemental schedule of bonds and capitalized leases and other long-term liabilities as of June 30, 1996, and the supplemental schedule of federal financial
assistance for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements. The information in
the schedules has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material
respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we will also issue reports on our consideration of the University's internal control structure and on its
compliance with laws and regulations at a future date.
Douglas R. Norton
Auditor General
September 13, 1996
Supplemental Schedule of Bonds & Capitalized Leases & Other
Long-term Liabilities
(in thousands of dollars)
June 30, 1996 Bonds Payable and Leases Debt Service Commitments by Fiscal Year
Issue Interest
Rates
Year of
Maturity
Original
Issue
Currently
Outstanding
at
June 30,
1996
1997 1998 1999 2000 2001 Thereafter
Student Housing:
1962 - Sonora 3.375% 2002 $ 1,500 $ 366 $ 72 $ 70 $ 68 $ 66 $ 69 $ 63
1963 - Arizona 3.0 - 3.5% 2003 1,500 368 68 71 69 67 70 70
1965 - Coronado 3.0% 2005 3,000 1,016 134 131 132 134 136 486
1967 - Married Student Housing 3.75% 2008 2,500 1,185 123 125 122 123 125 852
System Revenue Bonds:
1988 - System Revenue Bonds 6.3 - 7.0% 1999 31,950 2,390 1,199 1,199 268
1990A - System Revenue Bonds 6.5 - 9.0% 2003 46,300 9,580 1,805 1,780 1,758 1,761 1,766 3,541
1990B - System Revenue Bonds 6.9 - 9.4% 2003 39,630 7,485 1,431 1,410 1,382 1,384 1,381 2,767
1991 - System Revenue Bonds 6.0 - 8.5% 2010 9,665 4,575 504 502 504 504 508 4,580
1992 - System Revenue Bonds 3.1 -
6.625% 2011 113,150 110,835 7,561 7,559 8,495 13,124 13,121 131,220
1992A - System Revenue Bonds 2.9 - 6.2% 2016 55,490 53,185 3,406 3,408 3,409 3,409 3,408 86,266
1993 - System Revenue Bonds 2.7 - 5.0% 2017 42,085 31,310 5,474 5,479 5,473 1,111 1,111 23,740
1994 - System Revenue Bonds 4.8 - 6.35% 2014 28,500 27,615 2,562 2,562 2,564 2,561 2,565 33,317
Total bonds payable $ 375,270 $ 249,910 $
24,339
$
24,296
$
24,244
$
24,244
$
24,260
$
286,902
Capitalized Leases and Other Long-term Liabilities:
Telecommunication Certificates 4.6 - 6.5% 2012 25,995 21,200 2,649 2,646 2,645 1,847 1,848 21,966
Educational Certificates 3.2 - 6.4% 2007 4,670 4,020 477 475 472 472 472 3,274
Residence Life Certificates 4.1 - 5.8% 2014 16,725 16,725 1,468 1,468 1,470 1,469 1,471 19,090
Maingate Admin Certificates 4.25 - 6.0% 2024 16,170 16,170 1,177 1,175 1,178 1,180 1,180 27,156
Agriculture Demonstration Farm 9.0% 2003 2,282 1,258 250 250 250 250 250 500
University Foundation Building 4.75 -
7.75% 2007 4,950 3,780 484 485 484 482 483 3,330
Other Capitalized Leases 4.6 - 9.22% Various 4,107 3,402 871 641 1,112 245 198 988
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Total capitalized leases and other long-term liabilities $ 74,899 $ 66,555 $ 7,376 $ 7,140 $ 7,611 $ 5,945 $ 5,902 $ 76,304
Refunded Issues:
Bonds:
1968 - Student Union 5.25 - 5.5% 1998 3,000 350
1977 - Revenue Refunding 6.0% 2002 22,315 22,315
1988 - System Revenue Bonds 7.0 -
7.625% 2011 24,135 24,135
1990A - System Revenue Bonds 6.5 - 9.0% 2015 33,210 32,435
1990B - System Revenue Bonds 6.9 - 9.4% 2016 29,205 28,525
1991 - System Revenue Bonds 6.5 - 8.5% 2017 4,425 4,425
Total refunded bonds $ 116,290 $ 112,185
Certificates of Participation:
1988 Telecommunications
Certificates 6.1 - 7.6% 2003 27,595 16,355
Total refunded issues $ 143,885 $ 128,540
95/96 Supplemental Schedule of Federal Financial Assistance
(in thousands of dollars)
Year Ended June 30, 1996
Federal Grantor/Pass-Through Grantor
Funding Agency Expenditures
Federal Student Financial Aid Programs:
Department of Health & Human Services
Other Financial Aid Programs $ 106
Subtotal Department of Health & Human Services 106
Department of Education
Federal Pell Grant Program 10,372
Federal Work Study Program 839
Federal Perkins Loan Program 231
Federal SEOG Program 1,096
Other Financial Aid Programs 40
Subtotal Department of Education 12,578
Miscellaneous Federal Agencies
Other Financial Aid Programs 759
Total Federal Student Financial Aid Programs $ 13,443
Federal Research & Training Programs:
Agency for International Development $ 655
Department of Energy 3,889
Department of the Interior 8,580
Department of Agriculture
Agriculture Extension Service 3,672
Agriculture Experiment Station 1,954
U.S. Department of Agriculture 4,027
U.S. Forestry Service 674
Other Programs 0
Subtotal Department of Agriculture 10,327
Department of Defense
Air Force 7,348
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Army 3,071
Navy 3,881
Subtotal Department of Defense 14,300
Department of Commerce 1,215
Department of Health & Human Services
Agency for Health Care Policy and Research 1,248
Division of Medicine 397
U.S. Dept. of Health & Human Services 8,625
Health Resources and Services Administration 1,472
National Cancer Institute 12,279
National Center for Nursing Research 236
National Heart, Lung & Blood Institute 5,835
National Institute on Aging 1,030
National Institute of Allergy & Infectious Diseases 1,421
National Institute of Child Health/Human Development 1,018
National Institute on Drug Abuse 3,681
National Institute of Diabetes, Digestive & Kidney Diseases 1,462
National Institute of Environmental Health Sciences 4,968
National Institute of General Medical Sciences 3,008
National Institutes of Health 8,098
National Institutes of Mental Health 1,426
National Institute of Neurological Disorders 1,860
Other Programs 4,045
Subtotal Dept. of Health & Human Services 62,109
Department of Justice 242
Department of Transportation 165
National Aeronautics & Space Administration
NASA AMES Research Center 313
Goddard Space Flight Center 19,880
NASA Headquarters 6,072
Other Programs 682
Subtotal NASA 26,947
National Science Foundation 19,186
Department of Education
Research 1,588
Training 3,334
Subtotal Department of Education 4,922
Environmental Protection Agency 1,024
Nuclear Regulatory Commission 817
National Endowment for the Humanities 255
National Endowment for the Arts 97
Miscellaneous Federal Agencies
Defense Advanced Research Projects Agency 290
Defense Logistics Agency 17
Smithsonian 1,130
Veterans Administration 3,984
Other Programs 603
Subtotal Miscellaneous Federal Agencies 6,024
Through State Government 2,249
Through Local Government 445
Through For-profits 2,243
Through Non-profits
Amity 74
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Jet Propulsion Laboratory 8,063
Other Programs 7,689
Subtotal Through Non-profits 15,826
Through Miscellaneous Private 122
Total Federal Research & Training Programs $ 181,639
Total Federal Financial Assistance $ 195,082
See Notes to Schedule of Federal Financial Assistance
Notes to Schedule of Federal Financial Assistance
June 30, 1996
A. BASIS OF PRESENTATION
The purpose of the Schedule of Federal Financial Assistance is to summarize those expenditures of The University of Arizona for the year ended June 30,
1996, that have been financed by the U.S. government (federal awards). This schedule includes expenditures financed by all federal assistance and
procurement relationships entered into directly between The University of Arizona and the federal government, and expenditures of subawards from nonfederal
organizations made under federally sponsored agreements. For reporting purposes, federal awards have been classified into two types:
federal student financial aid programs
federal research & training programs
The accounting principles followed by The University of Arizona in each of these areas and used in preparing the accompanying schedule are as follows:
Federal Student Financial Aid Programs - Expenditures are recognized on the accrual basis for awards made to students and allowable administrative
expenses incurred in connection with the student loan programs. The student financial aid programs are funded by the federal government under various
programs. For loan programs only the federal portion of administrative costs are included in the Schedule. Other disbursements are discussed in Notes C and
D.
Federal Research & Training Programs - Expenditures for direct costs are recognized as incurred using the accrual method of accounting and the cost
principles set forth in OMB Circular A-21, Cost Principles for Educational Institutions. Under those cost principles and requirements of the individual grant
agreements, certain types of expenditures are not allowable or are limited as to reimbursement. Moreover, expenditures include a portion of costs associated
with general university activities (indirect costs) that are allocated to federal awards under negotiated formulas commonly referred to as indirect cost rates.
Indirect costs and related revenues applicable to these cost recoveries are classified as unrestricted expenditures and revenues on the financial statements.
B. The University did not identify Catalog of Federal Domestic Assistance Numbers due to the large number of individual assistance programs. In addition,
many of the assistance programs do not have Catalog of Federal Domestic Assistance Numbers as they are specific to the University.
C. The University administers the following Department of Education loan program:
CFDA
Number
Federal Perkins 84.038
For Department of Education program the following information is provided:
Loans outstanding at 6/30/96 $11,964,000
New loans to students FY 95/96 1,834,000
Loans cancelled FY 95/96 74,000
The University administers the following Department of Health and Human Services (HHS) loan programs:
CFDA
Number
Nursing (NSL 2 Programs) 93.364
Health Profession (HPSL 4 Programs) 93.342
For Health and Human Services loan programs the following information is provided:
Loans outstanding at 6/30/96 $2,484,000
New loans to students FY 95/96 324,000
Loans cancelled (recovered) FY 95/96 (4,000)
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D. Federal Family Education Loans are not considered grants to the University since the University is responsible only for determining student eligibility and
distributing the loans directly to students. Consequently, such loans distributed by the University during the year ended June 30, 1996, are not included in the
Schedule of Federal Financial Assistance. However, because the Federal Family Education Loans Program is a Title IV, Higher Education Act student
financial assistance program (CFDA number 84.032) sponsored by the U.S. Department of Education, it is considered a federal financial assistance program
for single audit purposes. During fiscal year 1995/96 the University distributed approximately $79 million of Federal Family Education Loans to students.
E. Revenues equal to the expenditures reported on the Schedule of Federal Financial Assistance are included in the accompanying basic financial statements as
follows (in thousands of dollars):
Statement of Current Operating Funds Revenues, Expenditures and Other Changes:
Federal grants and contracts $181,655
Federal appropriations 5,549
Statement of Changes in Fund Balances - Items not recognized as revenue:
Federal portion of student loan funds:
Financial Aid expenditures 231
Transfers for Admin charges 110
Federal portion of plant funds:
Construction/renovations - current 6,977
FY 94/95 unexpended balance 860
Less: FY 95/96 unexpended balance (300)
Total Federal Financial Assistance $195,082