Presentation Letter 2. Independent Auditors Report 3. Combined Balance Sheet 4. Combined Statement of Changes in Fund Balances and Net Assets 5

Transcription

1 Combined Financial St a t e m e n t s

2 Table of Contents Presentation Letter 2 Independent Auditors Report 3 Combined Balance Sheet 4 Combined Statement of Changes in Fund Balances and Net Assets 5 Combined Statement of Current Funds Revenues, Expenditures and Other Changes 6 Notes to Combined Financial Statements 7 Administration and Financial Staff 16

3 Presentation Letter W e are pleased to provide Chico St a t e s audited combined financial statements for the year ended. These fin a n c i a l statements present the financial position, changes in fund balances and net assets, and current funds re venues, expenditures and other changes of California State University, Chico and were audited by KPMG LLP. The operations of the University s three auxiliary organizations, Associated Students, California State Un i ve r s i t y, Chico, The Un i versity Foundation, California State Un i ve r s i t y, Chico and the CSU, Chico Research Foundation, are discretely presented in the accompanying combined financial statements. These combined financial statements have been presented utilizing the AICPA In d u s t ry Audit Guide, Audits of Colleges and Universities, and are prepared in accordance with generally accepted accounting principles promulgated by the Governmental Accounting St a n d a rds Board. T h e re f o re, these statements differ both in accounting basis and in re p o rting format from the fin a n c i a l and budget reports prepared on an appropriation basis by the University for the State of California. Dennis C. Graham Vice President for Business and Finance George Wellman Director, Financial Services 2

4 Independent Auditors Report Dr. Manuel A. Esteban President California State University, Chico W e have audited the accompanying combined balance sheet of California State University, Chico (the University) as of June 30, 1999 and the related combined statements of changes in fund balances and net assets and current funds revenues, expenditures and other changes for the year then ended. These combined financial statements are the responsibility of the University s management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We did not audit the fin a n c i a l statements of the discretely presented auxiliary organizations, which statements reflect total assets constituting 20% and total revenues and other additions constituting 22% of the total reporting entity. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented auxiliary organizations, is based solely on the reports of the other auditors. We conducted our audit in accordance with generally accepted auditing standards. Those standards re q u i re that we plan and perf o r m 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 and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the re p o rts of the other auditors, the combined financial statements re f e r red to above pre s e n t fairly, in all material respects, the financial position of the University as of, and the changes in its fund balances and net assets and its current funds revenues, expenditures and other changes for the year then ended in conformity with generally accepted accounting principles. Sacramento, California October 8, 1999, except as to note 12 which is as of February 23,

5 Combined Balance Sheet June30,1999 Total University Current funds Loan Agency Plant (m e m o r a n d u m Au x i l i a ry Unrestricted Restricted funds funds funds o n l y) organizations A S S E TS Cash and cash equivalents $ 3,595,394 29,738 15,776 18,800 3,659,708 14,664,095 18,323,803 Accounts receivable, net 4,139, ,799 7,838,405 2,479,008 14,575,923 8,721,464 23,297,387 Investments 13,938,510 30, ,844 18,092,218 32,379,693 19,901,361 52,281,054 Due from other funds 657, , ,951 Prepaid expenses and other assets 1,952, ,953,348 11,436,623 13,389,971 Property, plant and equipment 197,897, ,897,320 6,207, ,105,224 Total assets $24,284, ,658 8,173,025 18, ,469, ,123,943 60,931, ,055,390 LIABILITIES, FUND BALANCES AND NET ASSETS Total reporting entity (m e m o r a n d u m o n l y ) Liabilities Accounts payable 3,176,753 27, ,695 18,800 1,413,337 5,070,114 2,982,269 8,052,383 Accrued salaries and benefits payable 9,084,238 9,084,238 1,319,644 10,403,882 Due to other funds 118, , , ,951 Deferred revenues 2,205,252 2,205, ,149 3,028,401 Accrued compensated absences 4,859,520 4,859, ,492 5,092,012 Capitalized lease obligations 4,655,354 4,655,354 4,655,354 Long-term debt obligations 345,903 35,666,603 36,012,506 99,999 36,112,505 Self-insurance claims liability 1,982,000 1,982,000 1,982,000 Depository accounts 5,124,088 5,124,088 Other liabilities 1,235, ,078 1,484,371 7,851,167 9,335,538 Total liabilities 22,888, , ,695 18,800 42,523,524 66,011,306 18,432,808 84,444,114 Fund balances and net assets Fund balances Unrestricted designated 1,395,176 1,395,176 5,779,925 7,175,101 Unrestricted undesignated 1,225,920 1,225,920 Restricted 32,330 7,739,330 7,771,660 7,771,660 Unexpended plant, restricted 278, , ,220 Net investment in plant 175,667, ,667, ,667,581 Total fund balances 1,395,176 32,330 7,739, ,945, ,112,637 7,005, ,118,482 Net assets Unrestricted 7,906,978 7,906,978 Temporarily restricted 9,630,030 9,630,030 Permanently restricted 17,955,786 17,955,786 Total net assets 35,492,794 35,492,794 Total fund balances and net assets 1,395,176 32,330 7,739, ,945, ,112,637 42,498, ,611,276 Total liabilities, fund balances and net assets $24,284, ,658 8,173,025 18, ,469, ,123,943 60,931, ,055,390 See accompanying notes to combined financial statements. 4

6 Combined Statement of Changes in Fund Balances and Net Assets Year ended June 30,1999 To t a l Un i ve r s i t y Current funds L o a n Pl a n t (m e m o r a n d u m Au x i l i a ry Un re s t ri c t e d Re s t ri c t e d f u n d s f u n d s o n l y) organizations Total reporting entity ( m e m o r a n d u m o n l y ) REVENUES AND OTHER ADDITIONS State appropriations $ 95,502,312 2,042,140 97,544,452 97,544,452 Fees and tuition 34,334,571 34,334,571 2,821,101 37,155,672 Investment income 565, , ,529 2,154,593 2,866,122 Endowment income 2,500,466 2,500,466 Federal grants and contracts 183,005 12,288, ,754 12,715,409 7,626,494 20,341,903 State grants and contracts 1,899,914 1,899,914 6,116,045 8,015,959 Private gifts, grants, and contracts 230 1,006,704 11,963,594 12,970,528 6,528,324 19,498,852 Sales and service of educational activities 381, , ,230 Sales and service of auxiliary enterprises 6,225,436 6,225,436 21,787,961 28,013,397 Expended for plant facilities (including current funds of $5,308,931) 15,527,638 15,527,638 15,527,638 Retirement of indebtedness 1,837,240 1,837,240 1,837,240 Other 629,328 1,328,338 1,957,666 3,423,688 5,381,354 Total revenues and other additions 137,821,920 15,196, ,729 32,698, ,105,613 52,958, ,064,285 EXPENDITURES AND OTHER DEDUCTIONS Educational and general Instruction 60,248, ,214 60,527,216 4,665,496 65,192,712 Research 2,705,100 2,705,100 Public service 93,563 93,563 8,001,978 8,095,541 Academic support 21,752, ,036 22,217,065 4,331,025 26,548,090 Student services 12,936, ,204 13,169,405 3,346,298 16,515,703 Institutional support 13,595, ,657 13,821,394 3,296,013 17,117,407 Operation and maintenance of plant 10,827,467 53,016 10,880,483 1,263,747 12,144,230 Student grants and scholarships 6,621,465 14,572,493 21,193, ,643 21,841,601 Total educational and general expenditures 126,074,464 15,828, ,903,084 28,257, ,160,384 Other expenditures Auxiliary enterprise expenditures 6,199,891 6,199,891 19,961,019 26,160,910 Loan cancellations and write-offs 271, , ,881 Expended for plant facilities (including noncapitalized of $35,150) 10,253,857 10,253,857 10,253,857 Retirement of indebtedness 1,837,240 1,837,240 1,837,240 Interest on indebtedness 1,362,793 1,362,793 1,362,793 Disposal of plant facilities 2,870,656 2,870,656 2,870,656 Other 1,623,715 1,623,715 1,291,334 2,915,049 Total other expenditures 7,823, ,881 16,324,546 24,420,033 21,252,353 45,672,386 Total expenditures and other deductions 133,898,070 15,828, ,881 16,324, ,323,117 49,509, ,832,770 TRANSFERS AMONG FUNDS ADDITIONS (DEDUCTIONS) Mandatory transfers Federal program matching (708,009) 654,999 53,010 Principal and interest (1,752,054) 1,752,054 Payments on capital lease obligations (832,800) 832,800 Total transfers (3,292,863) 654,999 53,010 2,584,854 Net increase in fund balances and net assets 630,987 22, ,858 18,959,258 19,782,496 3,449,019 23,231,515 Fund balance and net assets at beginning of year 764,189 9,937 7,569, ,986, ,330,141 39,049, ,379,761 Fund balance and net assets at end of year $ 1,395,176 32,330 7,739, ,945, ,112,637 42,498, ,611,276 See accompanying notes to combined financial statements. 5

7 Combined Statement of Current Funds Revenues, Expenditures and Other Changes Year ended June 30,1999 Current Funds Unrestricted Restricted Total ( m e m o r a n d u m o n l y ) REVENUES State appropriations $ 95,502,312 95,502,312 Fees and tuition 34,334,571 34,334,571 Investment income 565, ,554 Federal grants and contracts 183,005 12,266,257 12,449,262 State grants and contracts 1,899,914 1,899,914 Private gifts, grants, and contracts 230 1,006,704 1,006,934 Sales and service of educational activities 381, ,230 Sales and service of auxiliary enterprises 6,225,436 6,225,436 Other 629, ,328 Total current revenues 137,821,920 15,173, ,995,541 EXPENDITURES AND MANDATORY TRANSFERS Educational and general Instruction 60,248, ,214 60,527,216 Public Service 93,563 93,563 Academic support 21,752, ,036 22,217,065 Student services 12,936, ,204 13,169,405 Institutional support 13,595, ,657 13,821,394 Operation and maintenance of plant 10,827,467 53,016 10,880,483 Student grants and scholarships 6,621,465 14,572,493 21,193,958 Total educational and general expenditures 126,074,464 15,828, ,903,084 Auxiliary enterprises expenditures 6,199,891 6,199,891 Other expenditures 1,623,715 1,623,715 Transfers among funds additions (deductions) Mandatory transfers Federal program matching (708,009) 654,999 (53,010) Principal and interest (1,752,054) (1,752,054) Payments on capital lease obligations (832,800) (832,800) Total transfers (3,292,863) 654,999 (2,637,864) Total expenditures and transfers 137,190,933 15,173, ,364,554 Excess of restricted receipts over transfers to revenues 22,393 22,393 Net increase in fund balances $ 630,987 22, ,380 See accompanying notes to combined financial statements. 6

8 Note 1 O RGA N I Z AT I ON California State Un i ve r s i t y, Chico (the Un i versity) was established as a campus of the California State University under the State of California Education Code to offer undergraduate and graduate instruction for professional and occupational goals emphasizing a broad liberal arts education. As one of 22 campuses in the California State Un i versity system (the System), the University is included in the combined financial statements of the System. Responsibility for the System is vested in the Trustees of California State University (the Trustees) who, in turn, appoint the Chancellor, the chief executive officer of the System and the University President, the chief executive officer of the University. The University pr ovides instruction for baccalaureate, master s and certificate programs, and operates various auxiliary enterprises such as student dormitories and parking facilities. In addition, the University administers a variety of financial aid programs which are funded primarily through state and Federal programs. Note 2 S U M M A RY OF SIGNIFICANT ACC O U N T I N G P O L I C I E S Financial Rep o rting Entity The accompanying combined financial statements include the accounts of the University and the University s t h ree re c o g n i zed Au x i l i a ry Organizations. These Au x i l i a ry Organizations are legally separate entities that prov i d e s e rvices primarily to the Un i ve r s i t y s students and faculty. Separate financial statements are issued for each of the re c o g n i zed Au x i l i a ry Organizations and may be obtained from the University. The discretely presented Auxiliary Organizations are as follows: Associated Students, California State University, Chico The University Foundation, California State University, Chico The CSU, Chico Research Foundation N OTE 2 S u m m a ry Info rm ation for the Discre t e ly Presented Au x i l i a ry Orga n i z at i o n s The University The CSU, Associated Foundation, Chico Students, California State Research California State University, Chico Foundation University, Chico Total Current assets $29,421,337 11,044,705 5,953,369 46,419,411 Investment in plant 794,198 3,879,659 1,534,047 6,207,904 Total assets 38,198,746 15,245,285 7,487,416 60,931,447 Current liabilities 755,037 7,990,458 1,790,166 10,535,661 Long-term liabilities 7,648, ,982 7,897,147 Total liabilities 8,403,202 8,239,440 1,790,166 18,432,808 Revenues 8,507,963 26,137,993 18,312,716 52,958,672 Current expenditures 5,687,904 24,944,949 18,876,800 49,509,653 Excess of revenues ove r expenditures (expenditures over revenues) 2,820,059 1,193,044 (564,084) 3,449,019 Continued 7

9 N OTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (c o n t i nu e d) The Auxiliary Organizations are presented in the accompanying combined financial statements as component units due to the nature and significance of their relationship with the University. The relationships are such that exclusion of these organizations from the reporting entity would re n d e r the financial statements incomplete, primarily due to the activities that the organizations carry out on behalf of the Un i ve r s i t y, such as re s e a rch, grant administration, foods e rvice and academic support. The Auxiliary Or g a n i z a t i o n s a re discretely presented to allow the fin a n c i a l statement users to distinguish them from the University. Basis of P re s e n t at i o n The accompanying combined financial statements are prepared on the accrual basis of accounting in accordance w i t h generally accepted accounting principles pro m u l g a t e d by the Governmental Accounting Standards Board and the financial statement model of the American Institute of Certified Public Accountants Industry Audit Guide, Audits of Colleges and Universities. The accompanying combined statement of current funds revenue, expenditures and other changes is a statement of financial activities of funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income and expense. Fund Accounting In order to ensure the observance of limitations and restrictions placed on the use of the re s o u rces available to the University, the accounts are maintained in accordance w i t h the principles of fund accounting. Re s o u rces for va r i o u s purposes are classified for accounting and reporting purposes into funds that are in accordance with specified activities or o b j e c t i ves. This is done in accordance with re g u l a t i o n s, restrictions or limitations imposed by donors or sponsoring agencies outside the University, or in accordance with directives issued by the Trustees. A fund is an accounting entity with a self-balancing set of accounts for re c o rding assets, liabilities, fund balance and changes in the fund balance. Separate accounts are maintained for each fund; however, funds with similar characteristics are combined into fund groups for re p o rting purposes. T h e funds maintained by the University are as follows: Cu r rent Fu n d s Used primarily to account for transactions that are expended in performing the primary and support objectives of the University, i.e., instruction, research, p u b- lic service, academic support, student services, institutional support, operation and maintenance of plant, scholarships and fellowships and auxiliary enterprise activities. Current funds are segregated into separately balanced fund groups as follows: Unrestricted Used to account for transactions related to the University s general fund appropriations, its operation of extended education programs, its portion of State of California lottery revenues allocated to the System and the activities of auxiliary enterprises and other substantially self-supporting activities. Extended education instructional programs include master s, certificate and other non-degree programs. Lottery revenues are used to support augmented instructional 8

10 N OTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (c o n t i nu e d) p rograms for specific purposes not necessarily funded f rom general fund appropriations. Au x i l i a ry enterprises include, but are not limited to, parking and student housing and are separate and distinct from the re c o g- n i zed Au x i l i a ry Organizations discussed in the Financial Re p o rting Entity section above. W h e re a s assets, liabilities and fund balances of auxiliary enterprises are combined with other unrestricted curre n t funds for re p o rting purposes, re venue and expenditure s of auxiliary enterprises are re p o rted separately. Selfs u p p o rting activities primarily provide services for students, faculty and staff and are funded by fees, unrestricted gifts and other income designated for specific purposes by the Trustees. Fund balances, even though considered unrestricted for reporting purposes, have legislative or bond indenture re q u i rements associated with their use. These re q u i re m e n t s limit the area of operations for which expenditures from the funds may be made and require that fund balances be designated to support future operations in those areas. Primary among the funds that have designated uses are those related to the operations of the campus housing program. Re s t r i c t e d Used to account for current funds expended for operating purposes but restricted by donors or other outside agencies as to the specific purpose for which they may be expended. Loan Funds Consist of funds received primarily from the Federal government for student loans. Funds under Federal loan programs may be re-loaned after collection, but are ultimately refundable to the Federal government. Agency Funds Consist primarily of resources held by the University on behalf of others. As these funds are custodial in nature and transactions do not represent activities carried out by the University, such transactions are not included in the combined statement of changes in fund balances. Plant Funds Consist primarily of property, plant, equipment, library books, bound periodicals and collections and the related debt. This fund also accounts for transactions related to the University s State of California capital outlay appropriations. I nve s t m e n t s University investments are reflected at fair value. Gains and losses on the investments are included in the accompanying combined statement of changes in fund balances and net assets as investment income. P ro p e rt y, Plant and Equipment Pro p e rt y, plant and equipment are stated at cost or estimated historical cost when purchased and estimated fair value when donated. Equipment with a value of less than $5,000 is not c a p i t a l i zed. Title to all assets, whether purchased, constru c t e d or donated, is held by the State of California. No prov i s i o n for depreciation has been re c o rded in the accompanying combined financial statements for these assets. Due to/from Other Funds All interfund borrowings and claims are generally payable within one year without interest. D e fe rred Reve nu e s Deferred revenues consist primarily of fees collected in advance for summer session continuing education programs and fall housing rent. Continued 9

11 N OTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (c o n t i nu e d) C o m p e n s ated Absences University employees accrue annual leave at rates based on length of service and job classification. S t ate Ap p ro p r i at i o n s The State of California appropriates funds to the System on an annual basis. The appropriations are, in turn, allocated among the campuses by the Of fice of the Chancellor. Appropriations are recognized as revenue when authorization is received and are reported in either the Current Unrestricted Fund when used to support general operations or in the Plant Fund when used for capital projects. State appropriations revert back to the State of California after five years. Income Ta xe s The System was established under the State of California Education Code as an agency of the State of California. As a campus of the System, the Un i versity is generally not subject to Federal or state income taxes. However, the University remains subject to income taxes on any net income which is d e r i ved from a trade or business, re g u l a r l y carried on and not in furtherance of the purpose for which it was granted e xemption. No income tax provision has been re c o rded as the net income, if any, from any unrelated trade or business, in the opinion of management, is not material to the combined financial statements taken as a whole. The Un i versity has not undergone any recent In t e r n a l Revenue Service or state income tax audits and no provision has been made for any assessments that may result from such audits. In the opinion of management, any such possible assessments would not be material to the combined financial statements taken as a whole. re p o rted amounts of assets and liabilities in the accompanying combined financial statements. Actual results could differ from those estimates. Total Columns (Memorandum Only ) The total columns on the accompanying combined fin a n c i a l statements are captioned (memorandum only) to indicate that they are presented only to facilitate financial analysis. Such data is not comparable to a consolidation as interfund eliminations have not been made. T h e re f o re, amounts in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Note 3 CASH, CASH EQUIVALENTS AND INVESTMENTS The deposits of the Un i ve r s i t y, included as cash and cash e q u i valents in the accompanying combined financial statements, are maintained at financial institutions and are fully i n s u red or collateralized as re q u i red by state law. State law and regulations stipulate the eligible securities for i n vestment of surplus monies for the Un i ve r s i t y. T h e Sy s t e m s investment policy authorizes excess funds to be invested in obligations of the Federal and California State governments, certificates of deposit and certain other investment instruments. At, University investments are pooled at both the campus and systemwide levels. Separate accounting is maintained as to the amounts allocable to the various campuses, funds and programs. Investments for the University consisted of the following at : E s t i m at e s The preparation of financial statements in conformity with generally accepted accounting principles re q u i res management to make estimates and assumptions that affect the 10

12 N OTE 3 CASH, CASH EQUIVALENTS AND INVESTMENTS (c o n t i nu e d) Carrying amount Met West Total Return Fund $ 2,687,455 Met West Short-Term Fund 140,811 Funds held at State Treasury 11,255,873 Other investments 18,295,554 $32,379,693 For information regarding the investments of the discretely presented Auxiliary Organizations, please refer to the separately issued Auxiliary Organizations reports. Note 4 R E C E I VA B L E S Receivables at, by fund, consisted of the following: Current Unrestricted Funds State appropriations $ 2,785,724 Auxiliary organizations 617,250 Student accounts, net of allowance for doubtful accounts of $154, ,657 Other, net of allowance for doubtful accounts of $18, ,080 Current Restricted Funds $ 4,139,711 Government grants and contracts, net of allowance for doubtful accounts of $3,900 $ 118,799 Note 5 P RO P E RT Y, PLANT AND EQUIPMENT Property, plant and equipment at consisted of the following: Land $ 4,065,427 Buildings and building improvements 91,646,964 Improvements, other than buildings 35,006,620 Equipment 29,897,454 Library books, bound periodicals and collections 23,128,262 C o n s t ruction work in pro c e s s 1 4, 1 5 2, Note 6 LEASE OBLIGAT I ON S $ 1 9 7, 8 9 7, The University is obligated under various capital and operating leases and installment purchase agreements for the acquisition of equipment and facility rentals. Capital leases consist primarily of leases of certain facility and office equipment with a carrying value of $6,995,560 at. The leases bear interest at rates ranging from 4.34% to 9.7% and have terms expiring in various years through Operating leases consist of miscellaneous facility rentals and have terms expiring in various years through Continued Loan Funds Government grants and contracts $ 241,015 Student loans receivable, net of allowance for doubtful accounts of $895,600 Plant Funds 7,597,390 $ 7,838,405 State appropriations $ 2,115,814 Other, accounts receivable CSU 363,194 $ 2,479,008 11

13 N OTE 6 LEASE OBLIGAT I ONS (c o n t i nu e d) Future minimum lease payments under capital and operating leases having remaining terms in excess of one year as of June 30, 1999 are as follows: Capital Operating Year ending June 30: leases leases 2000 $ 948,469 $10, ,335 2, , , ,398 Thereafter 2,000,000 Total minimum lease payments 5,628,272 $12,000 Less amount representing interest (972,918) Present value of future minimum lease payments $4,655,354 Lease financing is provided to the System for the construction of various system and campus facilities through its participation with the State of California in the State Public Works Board Lease Revenue Bond Program. Certain capital assets recorded by the University may have been financed under these arrangements. However, since the obligation for the repayment of this financing rests with the System and the p roceeds of such financing are not readily identifiable with a campus or project, a substantial portion of such financing is not allocated to the individual campuses of the System. Unallocated Lease Re venue Bonds outstanding for the System as of totaled approx i m a t e l y $739,287,000. Note 7 LONG-TERM DEBT OBLIGAT I ON S General Obligation Bond Pro gr a m The General Obligation Bond program of the State of California has provided capital outlay funds for the thre e segments of California Higher Education through vo t e r - a p p roved bonds. Each of the approved bond pro g r a m s p rovides a pool of available funds which is allocated on a project-by-project basis among the University of California, the California State Un i versity and the Community Colleges. Financing provided to the Un i versity through State of California General Obligation Bonds is not allocated to the System by the State of California. This debt remains the obligation of the state and is funded by state tax revenues. Accordingly, such debt is not reflected in the accompanying combined financial statements. Total General Ob l i g a t i o n Bond debt carried by the state related to California St a t e University projects is approximately $564,858,000. Reve nue Bond Pro gr a m s The Re venue Bond Act of 1947 provides the Board of Tru s t e e s with the ability to issue re venue bonds to fund four specific s e l f - s u p p o rting programs. The statute has enabled the Trustees to finance student housing, parking facilities, s t udent unions and health centers. Outstanding bonds at consist of campus student housing and student union bonds. The housing program provides on-campus housing primarily for students. Housing is a self-supporting program deriving its revenues from fees collected for the use of the residence facilities. Funds are used for current operating expenses, maintenance and re p a i r, improvements to facilities, and i n t e rest and principal payments on outstanding bonds. Available balances after payment of all operating expenses and re q u i red charges remain available for future pro g r a m expenses and capital needs. 12

14 N OTE 7 LONG-TERM DEBT OBLIGAT I ONS (c o n t i nu e d) The student union program provides facilities and programs aimed at creating and enhancing learning experie n c e s outside the classroom by promoting interaction among students, faculty and staff. The student union program is s e l f - s u p p o rting and derives its re venues primarily from student fees and interest income. Funds are used for maintenance and re p a i r, improvements to facilities, and interest and p r i ncipal payments on outstanding bonds. After payment of all authorized charges, the balances of these funds are available for transfer to the campus auxiliary organization that has contracted with the Un i versity to operate the facility. The operating entity may derive additional re venue fro m facility subrental, recreational and commercial activities, and interest income. Long-term debt principal obligations outstanding at June 30, 1999 mature in the following fiscal years: Year ending June 30: 2000 $ 850, ,325, ,106, ,187, ,263, and thereafter 30,279,162 $ 36, 012, 506 L o n g - t e rm Debt Obligations of the Unive rsity at Interest Fiscal year Original Amount Description rate m a t u rity date issue amount o u t s t a n d i n g Housing System Revenue Bonds Series B 3% 2006/07 $ 3,141, ,750 Series N 3% 2021/22 4,320,000 3,700,000 Series AW 5% 2017/18 4,580,000 4,580,000 Student Union Revenue Bonds Series A 3% 2006/07 1,100, ,000 Series B 12% 2028/29 23,370,000 23,370,000 Faculty Workstation Loan 6% 1999/00 751, ,980 Housing Loan University Village Acquisition 6% 2006/07 3,900,000 2,465,109 Centrix Services 8% 2000/01 1,802, ,903 ISDN Phone 7% 1999/00 25,628 12,764 Total long-term debt obligations $42,991,542 36,012,506 Continued 13

15 Note 8 P E N S I ON PLAN AND POSTRETIREMENT B E N E F I T S Plan Description The University, as an agency of the State of California, contributes to the California Public Em p l oye e s Re t i re m e n t System (CalPERS). The state s plan with CalPERS is an agent multiple-employer defined benefit pension plan. Fo r the Un i ve r s i t y, the plan acts as a cost-sharing multiplee m p l oye r defined benefit pension plan which provides a defined benefit pension and postre t i rement benefit program for substantially all eligible Un i versity employe e s. C a l PERS functions as an investment and administrative agent for its members. The plan also provides surv i vo r, death and disability benefits. Eligible employees are covered by the Public Employees Medical and Hospital Care Act (PEMHCA) for medical benefits. CalPERS issues a publicly available comprehensive annual financial re p o rt that includes financial statements and re q u i red supplementary information. Copies of the CalPERS annual financial report may be obtained from the California Public Employees Retirement System Executive Office, 400 P Street, Sacramento, California Funding Po l i cy University personnel are required to contribute 5% of their monthly earnings in excess of $513 per month to CalPERS. The University is required to contribute at an actuarially determined rate; the rate for the year ended was approximately 8.5% of annual covered payroll. The contribution requirements of the plan members are established and may be amended by CalPERS. The University s contributions to CalPERS for the most recent three fiscal years were equal to the required contributions and were as follows: Year ending June 30: 1997 $8,810, ,940, ,215,765 Note 9 SELF-INSURANCE CLAIMS LIABILITY The System and certain Auxiliary Organizations have established a public entity risk pool to manage centrally work e r s compensation, industrial and nonindustrial disability, and general organizational risks. The liability included in the accompanying combined financial statements reflects the estimated ultimate cost of settling claims relating to events that have occurred on or before. The liability includes the amount that will be required for future payments of claims that have been re p o rted and claims re l a t e d to events that have occurred but have not been reported. The liability is estimated through an actuarial calculation u s i n g individual-case basis valuations and statistical analyses. Although considerable variability is inherent in such estimates, management believes that the liability is reasonably adequate at. Changes in the System s selfinsurance claims liability for the two years ended June 30, 1999 are as follows: Liability at July 1, 1997 $51,172,000 Incurred claims and changes in estimates 28,586,000 Claim payments (18,832,000) Liability at June 30, ,926,000 Incurred claims and changes in estimates 35,721,000 Claim payments (24,524,000) Liability at $72,123,000 14

16 N OTE 9 SELF-INSURANCE CLAIMS LIABILITY (c o n t i nu e d) At, approximately $17,216,000 in assets have been set aside to fund the claims liability. The System maintains excess general liability insurance coverage provided by Schools Excess Liability Fund (SELF), a Joint Powe r s Au t h o r i t y, with coverage for individual claims betwe e n $1,000,000 and $24,000,000 per occurrence. The Sy s t e m also maintains excess work e r s compensation insurance p rovided by SELF for individual claims over $350,000 per o c c u r rence. T h e re have been no settlements in the most recent three fiscal years that have exceeded insurance limits. The Un i ve r s i t y s allocation of the unfunded self-insurance claims liability at was approximately 3.61%, or $1,982,000, and has been recorded in the accompanying combined financial statements. Note 10 COMMITMENTS AND CON T I N G E N C I E S Federal grant programs are subject to review by the grantor agencies, which could result in requests for re i m b u r s e- ment to grantor agencies for disallowed expenditure s. Management believes that it has adhered to the terms of its grants and that any disallowed expenditures resulting from such review would not have a material effect on the financial position of the University. Au t h o r i zed expenditures for construction projects unexpended as of totaled $15,908,264. These expenditures will be funded primarily from state appropriations. Note 11 T R A N S AC T I ONS WITH RELATED ENTITIES The System is an agency of the State of California and, as such, p rocesses substantially all of its re venue and expenditure activity through the Of fice of the California State Contro l l e r. State appropriations allocated to the Un i versity through the Of fice of the Chancellor aggregated $97,544,452 for the ye a r ended. State appropriations re c e i vable aggregated $4,901,538 at. As headquarters for the System, the Office of the Chancellor administers certain activities centrally for the individual campuses. Primary among these activities are debt administration and risk pool administration. The administrative costs associated with the operations of the Office of the Chancellor are not allocated to the individual campuses financial statements. As discussed at notes 6 and 7, the University has recorded p ro p e rt y, plant and equipment which we re financed by System or State of California obligations which have not been allocated to the University. For the year ended June 30, 1999, such additions of property, plant and equipment totaled $985,547 and are included in other revenue in the plant fund in the accompanying statement of changes in fund balances and net assets. Note 12 NEW ACCOUNTING STA N DA R D On Fe b ru a ry 23, 2000, the Governmental Ac c o u n t i n g St a n d a rds Board issued Technical Bulletin (TB) , Disclosures About Year 2000 Issues A Rescission of Technical Bulletin 98-1 and TB rescinds the Year 2000 disc l o s u re re q u i rements of TBs 98-1 and 99-1 effective for financial statements issued after Fe b ru a ry 22, The University has elected to apply TB , and to omit the Year 2000 disclosures previously required by TBs 98-1 and

17 Administration and Financial Staff UNIVERSITY ADMINISTRAT I ON F I NANCIAL STA F F Manuel A. Esteban President Scott G. McNall Provost and Vice President for Academic Affairs Dennis C. Graham Vice President for Business and Finance Paul L. Moore Vice President for University Advancement and Student Affairs Dennis C. Graham Vice President for Business and Finance William A. Jones Financial Analyst R. Miles Allen Director, New Technologies Business Process Mapping George A. Wellman Director, Financial Services Jan Burnham Director, Student Financial Services Cindy J. Cleland Director, Accounting Operations Sue P. Cottrell Director, Budget Analysis & Research Patrice M. Hannemann Director, Procurement Services and Contracting Michelle L. Korte Director, External Reporting and Audits Stephanie Yule Director, Financial Aid Business Services 16 Design: Instructional Media Center, California State University, Chico Printing: University Printing Services, California State University, Chico