For the Year Ended June 30, 2012

Transcription

1 For the Year Ended June 30, 2012

2 A MEMBER OF THE UNIVERSITY OF LOUISIANA SYSTEM FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2012 E. JOSEPH SAVOIE PRESIDENT JERRY LUKE LEBLANC VICE PRESIDENT, ADMINISTRATION AND FINANCE RONALD P. LAJAUNIE ASSISTANT VICE PRESIDENT, FINANCIAL SERVICES DEBRA L. CALAIS COMPTROLLER LYNN B. LEBLANC ASSOCIATE COMPTROLLER ARLENE V. HOAG ASSISTANT COMPTROLLER SUE BROUSSARD GENERAL RESTRICTED ACCOUNTANT ANGELA M. SMITH FUNDS HANDLING COMPLIANCE ACCOUNTANT

3 TABLE OF CONTENTS Page Statement of Net Assets Statement of Revenues, Expenses & Changes in Net Assets Simplified Statement of Activities Statement of Cash Flows iii iv v vi Notes to the Financial Statements 1 Schedule Long-Term Debt: Bonds Payable (University & Foundation) 1-A Notes Payable (Foundation) 1-B Long-Term Debt Amortization Schedule: Bonds Payable (University & Foundation) 2-A Notes Payable (Foundation) 2-B Capital Lease (University) 2-C Not Used 3 Schedule of Expenses by University 4 Not Used 5 7 Federal Assistance Schedules: Schedule of Assistance 8 Schedule of Assistance for Fixed Price Contracts 8-1 Reconciliation 8 Reconciliation Total Federal Assistance Combined 8 and 8-1 Schedule of Disclosures for Federally Assisted Loans 8-2 Summary Schedule of Prior Audit Findings 8-3 Schedule of Non-State-Subrecipients of Major Federal Programs 8-4 Schedule of State Agency/University Subrecipients of Federal Programs 8-5 Schedule of Disbursements of ARRA Funds to Sub-recipients 8-6 ii

4 UNIVERSITY OF LOUISIANA SYSTEM Statement of Net Assets, June 30, 2012 University University Foundation Eliminations Total ASSETS Current Assets Cash and cash equivalents (Note C) $ 57,886,059 $ 6,244,754 $ 64,130,813 Receivables, net (Note D) 15,304,385 15,304,385 Pledges receivable 837, ,597 Due from State Treasury 2,904,219 2,904,219 Inventories 1,817,675 1,817,675 Deferred charges and prepaid expenses 1,304,595 1,304,595 Notes receivable 1,427,884 1,427,884 Other current assets 207, ,358 Total current assets 80,852,175 7,082,351 NONE 87,934,526 Noncurrent Assets Restricted assets: Cash and cash equivalents (Note C) 73,428,686 1,980,347 75,409,033 Investments (Note C) 94,258, ,570,297 $ (69,506,485) 146,322,743 Notes receivable, net 9,339,724 9,339,724 Other 89,486 89,486 Pledges receivable 1,920,583 1,920,583 Capital assets, net (Note E) 288,619,757 11,603, ,223,324 Other noncurrent assets 4,651, ,768 (89,486) 5,158,888 Total noncurrent assets 470,388, ,671,562 (69,595,971) 538,463,781 Total assets $ 551,240,365 $ 144,753,913 $ (69,595,971) $ 626,398,307 LIABILITIES Current Liabilities Accounts payable and accrued liabilities $ 11,218,850 98,891 $ 11,317,741 Deferred revenues 9,099,463 9,099,463 Amounts held in custody for others 1,463,985 1,463,985 Other liabilities 2,129,263 92,190 2,221,453 Current Portion of Noncurrent Liabilities: Compensated absences payable (Note I) 647, ,670 Capital lease obligations (Note I) 51,805 51,805 Notes payable (Note I) 16,415 16,415 Pollutution Remediation Obligation (Note I) - Bonds payable (Note I) 945, ,000 Other current liabilities $ - Total current liabilities 25,556, ,496 NONE 25,763,532 Long-term Portion of Noncurrent Liabilities Compensated absences payable 9,166,086 9,166,086 Amounts held in custody for others 26,981,574 $ (26,981,574) Notes payable 467, ,064 OPEB payable 76,040,491 76,040,491 Bonds payable 147,173,063 1,500, ,673,063 Total noncurrent liabilities 232,379,640 28,948,638 (26,981,574) 234,346,704 Total liabilities 257,935,676 29,156,134 (26,981,574) 260,110,236 NET ASSETS Invested in capital assets, net of related debt 185,353,350 10,103, ,456,917 Restricted for: Nonexpendable 45,915,000 66,786,368 (32,591,558) 80,109,810 Expendable 56,441,870 45,477,735 (10,022,839) 91,896,766 Unrestricted 5,594,469 (6,769,891) (1,175,422) Total net assets 293,304, ,597,779 (42,614,397) 366,288,071 Total liabilities and net assets $ 551,240,365 $ 144,753,913 $ (69,595,971) $ 626,398,307 iii

5 UNIVERSITY OF LOUISIANA SYSTEM Statement of Revenues, Expenses, and Changes in Net Assets For the Fiscal Year Ended June 30, 2012 University University Foundation Eliminations Total OPERATING REVENUES Student tuition and fees $ 91,574,872 $ (951,222) $ 90,623,650 Less scholarship allowances (25,532,101) (25,532,101) Net student tuition and fees 66,042,771 NONE (951,222) 65,091,549 Gifts received by foundations $ 7,014,779 (600,000) 6,414,779 Endowment income (42,553) (169,541) (212,094) Federal grants and contracts 20,154,989 20,154,989 State and local grants and contracts 5,875,818 5,875,818 Nongovernmental grants and contracts 15,358,563 15,358,563 Sales and services of educational departments 83,535 83,535 Auxiliary enterprise revenues 30,093,826 30,093,826 Less scholarship allowances (3,307,711) (3,307,711) Net auxiliary revenues 26,786,115 NONE NONE 26,786,115 Other operating revenues 4,640,728 1,040,471 5,681,199 Total operating revenues 138,942,519 8,012,697 (1,720,763) 145,234,453 OPERATING EXPENSES Education and general: Instruction 66,455,381 66,455,381 Research 46,334,306 46,334,306 Public service 4,975,278 4,975,278 Academic support 17,671,228 17,671,228 Student services 17,555,906 17,555,906 Institutional support 24,586,887 24,586,887 Operations and maintenance of plant 16,206,233 16,206,233 Depreciation 12,490, ,369 12,773,255 Scholarships and fellowships 7,066,361 7,066,361 Auxiliary enterprises 34,190,787 34,190,787 Other operating expenses 399,274 6,719,989 (3,289,295) 3,829,968 Total operating expenses 247,932,527 7,002,358 (3,289,295) 251,645,590 OPERATING INCOME (LOSS) (108,990,008) 1,010,339 1,568,532 (106,411,137) NONOPERATING REVENUES (EXPENSES) State appropriations 62,969,092 62,969,092 Gifts 2,659,322 (1,624,786) Federal nonoperating revenues (expenses) 23,542,043 23,542,043 Net investment income (loss) 787,158 4, ,434 Interest expense (2,032,565) (2,032,565) Other nonoperating revenues (expenses) 3,319,850 3,319,850 Net nonoperating revenues (expenses) 91,244,900 4,276 (1,624,786) 89,624,390 INCOME (LOSS) BEFORE OTHER REVENUES (17,745,108) 1,014,615 (56,254) (16,786,747) Capital appropriations 275, ,296 Capital grants and gifts 436, ,518 Additions to permanent endowments 600,000 3,666,569 4,266,569 INCREASE (DECREASE) IN NET ASSETS (16,433,294) 4,681,184 (56,254) (11,808,364) NET ASSETS AT THE BEGINNING OF THE YEAR, AS RESTATED 309,737, ,916,595 (42,558,143) 378,096,435 NET ASSETS AT THE END OF THE YEAR $ 293,304,689 $ 115,597,779 $ (42,614,397) $ 366,288,071 iv

6 UNIVERSITY OF LOUISIANA SYSTEM Simplified Statement of Activities For the Fiscal Year Ended June 30, 2012 Program Revenues Net (Expense) Operating Capital Revenue and (-) Charges for Grants and Grants and Changes in University ( - ) Combined Expenses Services Contributions Contributions Net Assets Foundation Eliminations Total University $ (249,965,092) $ 92,912,421 $ 41,989,370 $ 711,814 $ (114,351,487) University Foundation (7,002,358) 3,666,569 (3,335,789) * Eliminations 3,289,295 (951,222) 2,338,073 Combined Total $ (253,678,155) $ 91,961,199 $ 45,655,939 $ 711,814 $ (115,349,203) General revenues: State appropriations Grants and contributions not restricted to specific programs Interest Miscellaneous Total general revenues, special items, and transfers $ 62,969,092 $ 62,969,092 26,201,365 $ 6,972,226 $ (2,394,327) 30,779, ,158 4, ,434 7,960,578 1,040,471 9,001,049 97,918,193 8,016,973 (2,394,327) 103,540,839 Change in net assets (16,433,294) 4,681,184 (56,254) (11,808,364) Net assets - beginning 309,737, ,916,595 (42,558,143) 378,096,435 Net assets - ending $ 293,304,689 $ 115,597,779 $ (42,614,397) $ 366,288,071 v

7 UNIVERSITY OF LOUISIANA SYSTEM Statement of Cash Flows For the Fiscal Year Ended June 30, 2012 CASH FLOW FROM OPERATING ACTIVITIES Tuition and fees $ 67,236,419 Grants and contracts 40,807,788 Sales and services of educational departments 83,535 Auxiliary enterprise receipts 26,798,426 Payments for employee compensation (116,503,478) Payments for benefits (37,843,810) Payments for utilities (7,428,417) Payments for supplies and services (57,758,640) Payments for scholarships and fellowships (9,097,159) Loans to students (4,972,804) Collection of loans to students 4,930,984 Other receipts (payments) 5,283,154 Net cash provided (used) by operating activities (88,464,002) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State appropriations 68,415,359 Gifts and grants for other than capital purposes 5,760,882 Pell Grant receipts 23,163,308 Private gifts for endowment purposes 600,000 TOPS receipts 19,006,349 TOPS disbursements (19,025,823) Direct lending receipts 43,492,017 Direct lending disbursements (46,609,252) Federal Family Education Loan Program receipts 3,731 Federal Family Education Loan Program disbursements (3,731) Other receipts (payments) 237,179 Net cash provided (used) by noncapital financing sources 95,040,019 CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES Proceeds from capital debt Capital grants and gifts received Purchases of capital assets (64,403,445) Principal paid on capital debt and leases (835,000) Interest paid on capital debt and leases (1,938,186) Other sources 223,266 Net cash provided (used) by capital financing activities (66,953,365) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales and maturities of investments 39,412,764 Interest received on investments 2,241,043 Net cash provided (used) by investing activities 41,653,807 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (18,723,541) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 150,038,286 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 131,314,745 (Continued) vi

8 UNIVERSITY OF LOUISIANA SYSTEM Statement of Cash Flows For the Fiscal Year Ended June 30, 2012 RECONCILIATION OF NET OPERATING REVENUES (EXPENSES) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) $ (108,990,008) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation expense 12,490,886 Amortization of bond issuance costs 44,656 Changes in assets and liabilities: (Increase) decrease in accounts receivables, net 2,723,613 (Increase) decrease in inventories 88,916 (Increase) decrease in deferred revenue (248,395) Increase (decrease) in accounts payable and accrued liabilities (701,806) Increase (decrease) in deferred revenue (1,460,368) Increase (decrease) in amounts held in custody for others 3,558 Increase (decrease) in compensated absences 131,867 Increase (decrease) in OPEB payable 7,494,899 Increase (decrease) in other liabilities (41,820) Net cash provided (used) by operating activities: $ (88,464,002) NONCASH INVESTING, NONCAPITAL FINANCING, AND CAPITAL AND RELATED FINANCING TRANSACTIONS Capital appropriations $ 275,296 Capital gifts and grants 436,518 Net increase in fair value of investments (993,858) RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET ASSETS Cash and cash equivalents classified as current assets $ 57,886,059 Cash and cash equivalents classified as noncurrent assets 73,428,686 Total cash and cash equivalents $ 131,314,745 (Concluded) vii

9 UNIVERSITY OF LOUISIANA SYSTEM NOTES TO THE FINANCIAL STATEMENT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF PRESENTATION In April of 1984, the Financial Accounting Foundation established the Governmental Accounting Standards Board (GASB) to promulgate generally accepted accounting principles and reporting standards with respect to activities and transactions of state and local governmental entities. In July of 1984, the GASB issued Statement No. 1, which provided that all statements and interpretations issued by the National Council on Governmental Accounting (NCGA) continue as generally accepted accounting principles until altered, amended, supplemented, revoked or superseded by subsequent GASB pronouncements. In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management s Discussion and Analysis for Public Colleges and Universities. As a component unit of the State of Louisiana, the University of Louisiana at Lafayette (university) is required to report its financial statements in accordance with GASBs 34 and 35 as amended by GASBs 37 and 38. The financial statement presentation required by GASBs 34 and 35 provides a comprehensive, entity-wide perspective of the university s assets, liabilities, net assets, revenues, expenses, changes in net assets, and cash flows, and replaces the fund-group perspective previously required. GASB Codification Section 2100 has defined the governmental reporting entity to be the State of Louisiana. Therefore, the accompanying financial statements of the university/system contain sub-account information of the various funds of the State of Louisiana. As such, the accompanying financial statements present information only as to the transactions of the programs of the university/system as authorized by Louisiana statutes and administrative regulations. 2. REPORTING ENTITY The University of Louisiana at Lafayette is a publicly supported institution of higher education. Using the criteria established in GASB Statement 14, The Financial Reporting Entity as amended by GASB 39, the university is reported as a discrete component unit of the State of Louisiana since it is legally separate from and is financially accountable to the State. Annually, the State of Louisiana issues a comprehensive financial report, which includes the activity contained in the accompanying financial statements. The Louisiana Legislative Auditor audits the basic financial statements. 3. BASIS OF ACCOUNTING For financial reporting purposes, the university is considered a special-purpose government engaged in only business-type activities. Accordingly, the university s financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-agency transactions have been eliminated. The university has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The university has elected not to apply FASB pronouncements issued after the applicable date. The financial statements of the university/system have been prepared on the accrual basis of accounting. 1

10 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, CASH EQUIVALENT The university considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. 5. INVESTMENTS The university accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in the carrying value of investments resulting in unrealized gains or losses are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. 6. INVENTORIES Inventories are valued at the lower of cost or market on the weighted average basis. The university accounts for its inventories using the consumption method. 7. NONCURRENT CASH AND INVESTMENTS Cash and investments that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital or other noncurrent assets, are classified as noncurrent assets in the Statement of Net Assets. 8. CAPITAL ASSETS Capital assets are reported at cost at the date of acquisition or their estimated fair value at the date of donation. The System s capitalization policy provides that movable property items with a unit cost of $5,000 or more and an estimated useful life greater than one year and buildings and improvements with a cost of $100,000 or more are capitalized. Renovations to buildings, infrastructure, and land improvements that significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense is incurred. Depreciation is computed using the straight-line method over the estimated useful life of the assets, generally 40 years for buildings and infrastructure, 20 years for depreciable land improvements, and 3 to 10 years for most movable property. Library collections regardless of age, with a total acquisition value of $5,000,000 or more will be capitalized and depreciated. 9. DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year, but are related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned. 10. NONCURRENT LIABILITIES Noncurrent liabilities include (1) principal amounts of revenue bonds payable, notes payable, and capital lease obligations with contractual maturities greater than one year; (2) estimated amounts for accrued compensated absences and other liabilities that will not be paid within the next fiscal year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets. 2

11 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, NET ASSETS The university s net assets are classified as follows: (a) INVESTED IN CAPITAL ASSETS, NET OF RELATED DEBT This represents the university s total investment in capital assets, net of accumulated depreciation and reduced by outstanding debt obligations related to acquisition, construction, or improvement of those capital assets. (b) RESTRICTED NET ASSETS EXPENDABLE Restricted expendable net assets include resources that the university is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties. (c) RESTRICTED NET ASSETS NONEXPENDABLE Restricted nonexpendable net assets consist of endowment and similar type funds for which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. (d) UNRESTRICTED NET ASSETS Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the university, and may be used at the discretion of the governing board to meet current expenses and for any purpose. When an expense is incurred that can be paid using either restricted or unrestricted resources, the university s policy is to first apply the expense towards unrestricted resources, and then towards restricted resources. 12. CLASSIFICATION OF REVENUES The university has classified its revenues as either operating or non-operating revenues according to the following criteria: (a) (b) OPERATING REVENUE - Operating activity include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and allowances, and (3) most Federal, state, and local grants and contracts and Federal appropriations. NON-OPERATING REVENUE Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions. 13. SCHOLARSHIP DISCOUNTS AND ALLOWANCES Student tuition and fee revenues, and certain other revenues from students, are reported net of scholarship discounts and allowances in the Statement of Revenues, Expenses, and Changes in Net Assets. Scholarship discounts and allowances are the difference between the stated charge for goods and services provided by the university, and the amount that is paid by students and/or third parties making payments on the student s behalf. 14. ELIMINATING INTERFUND ACTIVITY Activities between the university and the university s service units are eliminated for purposes of preparing the Statement of Revenues, Expenses and Changes in Net Assets, and the Statement of Net Assets. 3

12 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, COMPONENT UNITS Blended Component Unit Ragin Cajun Facilities, Inc. is considered a blended component unit and is included in the reporting entity because it is fiscally dependent on the university. The purpose of this organization is to promote, assist, and benefit the mission of the university through the acquisition, construction, development, management, leasing or otherwise assisting in the acquisition, construction, development, management or leasing of student housing or other facilities on behalf of the universities. Although the facilities corporation is legally separate, it is reported as a part of the university because the majority of their revenue comes from the leasing of facilities to the university. To obtain the corporations latest audit reports, write to: Ragin Cajun Facilities, Inc., c/o Ms. Debra L. Calais, University of Louisiana at Lafayette, P.O. Box 40400, Lafayette, Louisiana Discretely Presented Component Unit The University of Louisiana at Lafayette Foundation, Inc. is a legally separate, tax-exempt organization and is reported within the university as a discrete component unit. The foundation acts primarily as a fund-raising organization to supplement the resources that are available to the university in support of its programs. Although the university does not control the timing or amount of receipts from the foundation, the majority of resources or income that the foundation holds and invests is restricted to the activities of the university by the donors. Because these restricted resources held by the foundation can only be used by or for the benefit of the university, the foundation is considered a component unit of the university and is discretely presented in the financial statements. During the year ended June 30, 2012, the foundations made distributions of $3,276,313 to or on behalf of the university for both restricted and unrestricted purposes. To obtain the foundations latest audit reports, write to: University of Louisiana at Lafayette Foundation, Inc., c/o Ms. Debra L. Calais, University of Louisiana at Lafayette, P.O. Box 40400, Lafayette, Louisiana These blended and discretely presented component units are private nonprofit organizations that report under Financial Accounting Standards Board (FASB) standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria, presentation, and disclosure requirements are different from GASB revenue recognition criteria and presentation features. With the exception of presentation adjustments, no modifications have been made to these component units financial information in the System s report for these differences. Accordingly, the financial data of the discretely presented component units are shown on a statement of financial position and a statement of activities. B. BUDGETARY PRACTICES The annual budget for the General Fund of the university is established by annual Legislative action and by Title 39 of the Louisiana Revised Statutes. The submission of the budget for approval by the Board of Regents and the Legislative budget process is required. Other funds of the university, although subject to internal budgeting, are not required to be submitted for approval through the Legislative budget process. State law provides that appropriations lapse at the end of the fiscal year with the exception noted in Note H, General Fund. In compliance with these legal restrictions, budgets are adopted on the accrual basis of accounting with some exceptions. The following is a list of exceptions, but is not all inclusive, (1) depreciation is not recognized; (2) leave costs are treated as budgeted expenditures to the extent that they are expected to be paid; (3) summer school tuition and fees and summer school faculty salaries and related benefits for June are not prorated but are recognized in the succeeding year; and (4) certain capital leases are not recorded. 4

13 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 BUDGETARY COMPARISON The following is an appropriation budgetary comparison for current year General Fund appropriation: Adjustment Actual on Variance Budgeted to Budget Budget Favorable Original Final Actual Basis Basis (Unfavorable) REVENUES: Appropriated by Legislature: State General Fund (Direct) $ 65,125,417 $ 60,406,249 $ 60,406,249 $ 60,406,249 State General Fund by Self- Generated Revenues 67,835,359 67,835,359 67,956,264 67,956,264 $ 120,905 State General Fund by Interagency Transfers Non-Recurring Self-Generated Carry Forward 8,096,673 8,096,673 (8,096,673) Federal Funds Statutory Dedications 2,683,748 2,683,748 2,562,843 2,562,843 (120,905) Other Total Revenues 143,741, ,022, ,925,356 NONE 130,925,356 (8,096,673) EXPENDITURES: Program Expenditures 143,741, ,022, ,031,537 $ (9,508) 139,022,029 Unallotted Expenditures Total Expenditures 143,741, ,022, ,031,537 (9,508) 139,022,029 NONE UNEXPENDED APPROPRIATION -CURRENT YEAR NONE NONE $ (8,106,181) $ (9,508) $ (8,096,673) $ (8,096,673) C. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS 1. Deposits with Financial Institutions For reporting purposes, deposits with financial institutions include savings, demand deposits, time deposits, and certificates of deposit. Further, the university/system may invest in time certificates of deposit in any bank domiciled or having a branch office in the state of Louisiana; savings accounts or shares of savings and loan associations and savings banks; and share accounts and share certificate accounts of federally or state chartered credit unions. For the purpose of the Statement of Cash Flows and Statement of Net Assets presentation (see appendix reference), all highly liquid investments (including negotiable CDs and restricted cash and cash equivalents) and deposits (including nonnegotiable CDs and restricted cash and cash equivalents) with a maturity of three months or less when purchased are considered to be cash equivalents. 5

14 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 As reflected on the Statement of Net Assets, the university had deposits with financial institutions totaling $131,314,745 at June 30, Deposits in bank accounts are stated at cost, which approximates market. Under state law these deposits must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities are held in the name of the university by a holding or custodial bank that is mutually acceptable to both parties. GASB Statement 40, which amended GASB Statement 3, requires only the disclosure of deposits considered to be exposed to custodial credit risk. An entity s deposits are exposed to custodial credit risk if the deposit balances are either: 1) uninsured and uncollateralized, 2) uninsured and collateralized with securities held by the pledging financial institution, or 3) uninsured and collateralized with securities held by the pledging financial institution s trust department or agent, but not in the entity s name. The deposits at June 30, 2012, consisted of the following: Cash Nonnegotiable Certificates of Deposit Other (Ragin Cajun Facilities blended component unit) Total Deposits per Statement of Net Assets (SNA) $ 69,343,161 $ 29,059,106 $ 32,618,672 $ 131,020,939 Deposits in bank accounts per bank $ 72,476,350 $ 29,059,106 $ 32,618,672 $ 134,154,128 Bank balances of deposits exposed to custodial credit risk: a. Uninsured and uncollateralized b. Uninsured and collateralized with securities held by the pledging institution c. Uninsured and collateralized with securities held by the pledging institution's trust department or agent, but not in the entity's name To aid in reconciling amounts reported on the statement of net assets, the following is also included in cash and cash equivalents in the statement of net assets: Cash in State Treasury None Petty Cash $ 293,806 6

15 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 The following is a breakdown by banking institution, program, reference number, and amount of the bank balances shown above: Banking Institution Program Amount JP Morgan Chase Bank Operating $ 44,421,766 JP Morgan Chase Bank Operating 1,322,136 JP Morgan Chase Bank Operating 45,158 JP Morgan Chase Bank Nursing Loan Fund 91,935 JP Morgan Chase Bank Clearing Acct 2,736 JP Morgan Chase Bank Alumni Assoc. Fund 208,569 JP Morgan Chase Bank Endowment Fund 17,439 JP Morgan Chase Bank Gen-Restr Fund 25,000 Whitney National Bank SEOG Fund 9,162 Whitney National Bank Workstudy Fund 1,002 Whitney National Bank DFAFS Fund 1,000 Whitney National Bank Perkins Loan Fund 41,932 Whitney National Bank Clearing Acct 5,382,775 Whitney National Bank Clearing Acct 26,173 Whitney National Bank Perkins Loan Fund 1,219,133 Capital One Athletic Dev. Fund 2,527,413 Capital One Pell Grant Fund 688,523 Capital One Student Loan Fund 329,607 Iberia Bank NIRC Fund 3,324,490 Iberia Bank Endw Fund 291,240 Iberia Bank Plant Fund 13,760,734 Iberia Bank NIRC Fund 1,318,043 Iberia Bank Endowment Fund 4,587,639 Iberia Bank Endowment Fund 2,459,798 Iberia Bank Endowment Fund 8,384,286 Iberia Bank Endowment Fund 537,499 Iberia Bank Endowment Fund 287,489 Iberia Bank Plant Fund 5,317,511 Iberia Bank Plant Fund 594,119 Iberia Bank Plant Fund 4,300,515 Smith Barney Endowment Fund 10,634 Regions Bank Blended Component Unit. 32,618,672 Total $ 134,154,128 7

16 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, Investments The University of Louisiana at Lafayette does maintain investment accounts as authorized by Louisiana Revised Statute 49:327. A summary of the university s investments follows: Fair Less Greater Type of Investment Value Than Than 10 Investments held by foundation: Common and preferred stock $ 3,582,564 U.S. Treasury Notes and Bonds 5,174,458 $ 547,370 $ 4,627,088 Federal Home Loan Mortgage Corporation 2,626,657 $ 397, , ,158 $ 1,032,802 Federal National Mortgage Association 3,229, , ,137 1,108,313 1,638,815 Government National Mortgage Association 600, ,755 Federal Farm Credit Bank 686,503 54, ,253 Corporate bonds/obligations 2,645, ,118 1,619, ,359 Mutual funds 50,329,783 Other 630,833 Sub-total investments held by foundation 69,506, ,574 3,325,188 7,588,171 3,272,372 Held by blended component unit - Ragin Cajun Facilities, Inc. 24,752,446 Total $ 94,258,931 $ 777,574 $ 3,325,188 $ 7,588,171 $ 3,272,372 Investments held by the private foundation in an external investment pool is managed in accordance with the terms outlined in a management agreement executed between the university and its discretely presented component unit, the University of Louisiana at Lafayette Foundation, Inc. The university is a voluntary participant. This investment totaling $69,506,485 has no credit quality rating. The foundation holds and manages funds received by the university as state matching funds for the Endowed Chairs and Endowed Professorship programs. Of the $69,506,485 reported as investments held by foundation, the entire amount is held by its discretely presented component unit. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits the university s investments to U.S. Treasury obligations, U.S. government agency obligations, direct security repurchase agreements, reverse direct repurchase agreements, investment grade commercial paper, investment grade corporate notes and bonds, and money market funds. The university does not have policies to further limit credit risk. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the university will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. For U.S. Treasury obligations and U.S. government agency obligations, the university s investment policy requires that issuers must provide the university with safekeeping receipts, collateral agreements, and custodial agreements. At June 30, 2012, investments held by blended component units totaling $24,752,446 are uninsured and unregistered and held by the counterparty and are, therefore, exposed to custodial credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of an entity s investment in a single issuer. State law requires that at no time shall the funds invested in U.S. government agency obligations exceed 60% of all monies invested with maturities of 30 days or longer. In addition, state law limits the investment in commercial paper and corporate notes and bonds to 20% of all investments. The university does not have policies to further limit concentration of credit risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. State law as applicable to institutions of higher education does not address interest rate risk. The university does not have policies to limit interest rate risk. 8

17 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 INVESTMENTS - COMPONENT UNITS Component unit s investments totaling $121,570,297, as shown on the Statement of Financial Position, are reported under FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations, which does not require the disclosures of GASB Statement No. 40, Deposit and Investment Risk Disclosures. The fair value of investments held by the component unit at June 30, 2012, follows: Type of Investment Total Certificates of deposit $ 4,053,953 U.S. Treasury and agency bonds 8,145,526 Municipal and other government agency bonds 97,423 Asset backed securities 8,045,219 Commerical bonds 3,365,567 Equities 7,311,227 Mutual and exchange traded funds 70,944,142 Hedge funds and alternative investments 19,607,240 Total $ 121,570,297 D. RECEIVABLES Receivable are shown on the Statement of Net Assets, net of an allowance for doubtful accounts, at June 30, These receivables are composed of the following: Type Accounts Receivable Allowance for Doubtful Accounts Net Accounts Receivable Noncurrent Portion Student tuition and fees $ 3,908,981 $ 2,626,101 $ 1,282,880 $ Auxiliary enterprises 1,953,340 1,001, ,956 Contributions and gifts 1,624,786 1,624,786 Federal, state and private grants and contracts Insurance recoveries 7,465, ,264 7,465, ,264 Other 3,874, ,595 3,340,183 Total $ 19,466,465 $ 4,162,080 $ 15,304,385 $ NONE E. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2012, follows: 9

18 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 SCHEDULE OF CAPITAL ASSETS University Balance 6/30/2011 Prior Period Adjustments Restated Balance 6/30/2011 Additions Transfers Retirements Balance 6/30/2012 Capital assets not depreciated: Land $ 8,644,185 $ $ 8,644,185 $ $ $ $ 8,644,185 Non-depreciable land improvements - - Capitalized collections - - Livestock - - Construction in progress 49,065,574 (1,007,760) 48,057,814 58,707,886 (63,363,210) 43,402,490 Total capital assets not depreciated $ 57,709,759 $ (1,007,760) $ 56,701,999 $ 58,707,886 $ (63,363,210) $ - $ 52,046,675 Other Capital Assets Infrastructure - - Less accumulated depreciation - - Total infrastructure Depreciable land improvements 4,803,650 4,803,650 1,698,365 6,502,015 Less accumulated depreciation (3,310,705) (3,310,705) (188,462) (3,499,167) Total land improvements 1,492,945-1,492,945 (188,462) 1,698,365-3,002,848 Buildings 286,829,176 1,692, ,521, ,270 60,071,539 (535,495) 348,597,492 Less accumulated depreciation (120,908,466) (172,566) (121,081,032) (8,179,479) 370,618 (128,889,893) Total buildings 165,920,710 1,519, ,440,146 (7,639,209) 60,071,539 (164,877) 219,707,599 Equipment (including library books) 81,983,053 81,983,053 3,948,285 1,593,306 (1,033,755) 86,490,889 Less accumulated depreciation (69,490,698) (69,490,698) (4,122,945) 985,389 (72,628,254) Total equipment 12,492,355-12,492,355 (174,660) 1,593,306 (48,366) 13,862,635 Total other capital assets $ 179,906,010 $ 1,519,436 $ 181,425,446 $ (8,002,331) $ 63,363,210 $ (213,243) $ 236,573,082 Capital asset summary: Capital assets not depreciated $ 57,709,759 $ (1,007,760) $ 56,701,999 $ 58,707,886 $ (63,363,210) $ - $ 52,046,675 Other capital assets, at cost 373,615,879 1,692, ,307,881 4,488,555 63,363,210 (1,569,250) 441,590,396 Total cost of capital assets 431,325, , ,009,880 63,196,441 - (1,569,250) 493,637,071 Less accumulated depreciation (193,709,869) (172,566) (193,882,435) (12,490,886) - 1,356,007 (205,017,314) Capital assets, net $ 237,615,769 $ 511,676 $ 238,127,445 $ 50,705,555 $ - $ (213,243) $ 288,619,757 10

19 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 SCHEDULE OF CAPITAL ASSETS Component Units Balance 6/30/2011 Prior Period Adjustments Restated Balance 6/30/2011 Additions Transfers Retirements Balance 6/30/2012 Capital assets not depreciated: Land $ 804,541 $ $ 804,541 $ 22,600 $ $ $ 827,141 Non-depreciable land improvements Capitalized collections 2,685,823 2,685, ,775 2,824,598 Livestock Construction in progress Total capital assets not depreciated $ 3,490,364 $ - $ 3,490,364 $ 161,375 $ - $ - $ 3,651,739 Other Capital Assets Infrastructure - - Less accumulated depreciation - - Total infrastructure Depreciable land improvements - - Less accumulated depreciation - - Total land improvements Buildings 10,023,266 18,800 10,042, ,400-10,184,466 Less accumulated depreciation (2,029,102) 2 (2,029,100) (244,912) (2,274,012) Total buildings 7,994,164 18,802 8,012,966 (102,512) - - 7,910,454 Equipment (including library books) 526,451 (18,801) 507,650 2, ,729 Less accumulated depreciation (430,897) (430,897) (37,458) (468,355) Total equipment 95,554 (18,801) 76,753 (35,379) ,374 Total other capital assets $ 8,089,718 $ 1 $ 8,089,719 $ (137,891) $ - $ - $ 7,951,828 Capital asset summary: Capital assets not depreciated $ 3,490,364 $ - $ 3,490,364 $ 161,375 $ - $ - $ 3,651,739 Other capital assets, at cost 10,549,717 (1) 10,549, , ,694,195 Total cost of capital assets 14,040,081 (1) 14,040, , ,345,934 Less accumulated depreciation (2,459,999) 2 (2,459,997) (282,370) - - (2,742,367) Capital assets, net $ 11,580,082 $ 1 $ 11,580,083 $ 23,484 $ - $ - $ 11,603,567 11

20 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 SCHEDULE OF CAPITAL ASSETS Balance 6/30/2011 Prior Period Adjustments Restated Balance 6/30/2011 Additions Transfers Retirements Balance 6/30/2012 tal assets not depreciated: Land $ 9,448,726 $ - $ 9,448,726 $ 22,600 $ - $ - $ 9,471,326 Non-depreciable land improvements Capitalized collections 2,685,823-2,685, , ,824,598 Livestock Construction in progress 49,065,574 (1,007,760) 48,057,814 58,707,886 (63,363,210) - 43,402,490 Total capital assets not depreciated $ 61,200,123 $ (1,007,760) $ 60,192,363 $ 58,869,261 $ (63,363,210) $ - $ 55,698,414 r Capital Assets Infrastructure Less accumulated depreciation Total infrastructure Depreciable land improvements 4,803,650-4,803,650-1,698,365-6,502,015 Less accumulated depreciation (3,310,705) - (3,310,705) (188,462) - - (3,499,167) Total land improvements 1,492,945-1,492,945 (188,462) 1,698,365-3,002,848 Buildings 296,852,442 1,710, ,563, ,670 60,071,539 (535,495) 358,781,958 Less accumulated depreciation (122,937,568) (172,564) (123,110,132) (8,424,391) - 370,618 (131,163,905) Total buildings 173,914,874 1,538, ,453,112 (7,741,721) 60,071,539 (164,877) 227,618,053 Equipment (including library books) 82,509,504 (18,801) 82,490,703 3,950,364 1,593,306 (1,033,755) 87,000,618 Less accumulated depreciation (69,921,595) - (69,921,595) (4,160,403) - 985,389 (73,096,609) Total equipment 12,587,909 (18,801) 12,569,108 (210,039) 1,593,306 (48,366) 13,904,009 Total other capital assets $ 187,995,728 $ 1,519,437 $ 189,515,165 $ (8,140,222) $ 63,363,210 $ (213,243) $ 244,524,910 tal asset summary: Capital assets not depreciated $ 61,200,123 $ (1,007,760) $ 60,192,363 $ 58,869,261 $ (63,363,210) $ - $ 55,698,414 Other capital assets, at cost 384,165,596 1,692, ,857,597 4,633,034 63,363,210 (1,569,250) 452,284,591 Total cost of capital assets 445,365, , ,049,960 63,502,295 - (1,569,250) 507,983,005 Less accumulated depreciation (196,169,868) (172,564) (196,342,432) (12,773,256) - 1,356,007 (207,759,681) Capital assets, net $ 249,195,851 $ 511,677 $ 249,707,528 $ 50,729,039 $ - $ (213,243) $ 300,223,324 12

21 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 F. COLLECTIONS (WORKS OF ART and HISTORICAL TREASURES) The University does not capitalize collections. Special Collections include the Louisiana Room, the Rare Book Collection, the University Archives and Acadiana Manuscripts Collection, the Creole and Cajun Music Collection, the University Records Management Program, the Microforms Room and the Ernest J. Gaines Center. The Louisiana Room provides access to special materials pertaining to Louisiana, including books, periodicals, state government documents, genealogical materials, rare books, newspapers, and other special collections. The University Archives and Acadiana Manuscripts Collection houses the archival records of the University starting in There are also over 300 collections of personal or family papers, business or organizational records, photograph collections, and much more. Special strengths of the collection include the rice industry, Louisiana politics, Louisiana education, and women's studies. The Rare Book Room contains items published before 1900, and items that have intrinsic value such as limited editions. The Creole and Cajun Music Collection consists of commercial recordings published since 1928 of the music of the Creoles and Cajuns of Louisiana, representing the history, influences and styles of indigenous music of the local cultures. These items are considered inexhaustible and are held for public exhibition, educational purposes, or research in enhancement of primarily student and public service instead of financial gain. They have never been capitalized. G. NOT USED H. GENERAL FUND At June 30, 2012, the General Fund did not have any unexpended appropriation due to the State Treasury. I. LONG-TERM LIABILITIES (Current and Noncurrent Portion) The following is a summary of bond reimbursement contracts and other long-term debt transactions of the university for the year ended June 30, 2012: 13

22 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 University Restated Balance Restatements Balance Balance Amounts June 30, June 30, June 30, June 30, due w ithin Additions Reductions 2012 one year Notes & bonds payable: Notes payable $ - $ $ - $ $ $ - $ Bonds payable 148,854, ,854, , ,118, ,000 Total bonds and notes payable 148,854,121 NONE 148,854,121 NONE 736, ,118, ,000 Other liabilities: Compensated absences payable 9,681,889 9,681, , ,615 9,813, ,670 Amounts held in custody for others Pollution remediation obligations 8,912 8,912 8,912 - OPEB payable 68,545,592 68,545,592 11,815,500 4,320,601 76,040,491 Total other liabilities 78,236,393 NONE 78,236,393 12,757,982 5,140,128 85,854, ,670 Total long-term liabilities $ 227,090,514 $ NONE $ 227,090,514 $ 12,757,982 $ 5,876,186 $ 233,972,310 $ 1,592,670 Restated Balance Restatements Balance Balance Amounts Component Units June 30, June 30, June 30, June 30, due within Additions Reductions 2012 one year Notes & bonds payable: Notes payable $ 497,452 $ $ 497,452 $ $ 13,973 $ 483,479 $ 16,415 Bonds payable 1,500,000 1,500,000 1,500,000 Total bonds and notes payable 1,997,452 NONE 1,997,452 NONE 13,973 1,983,479 16,415 Other liabilities: Compensated absences payable Amounts held in custody for others 27,234,149 27,234, ,575 26,981,574 Pollution remediation obligations OPEB payable Total other liabilities 27,234,149 NONE 27,234, ,575 26,981,574 NONE Total long-term liabilities $ 29,231,601 $ NONE $ 29,231,601 $ NONE $ 266,548 $ 28,965,053 $ 16,415 Restated Combined Total Balance Restatements Balance Balance Amounts June 30, June 30, June 30, June 30, due w ithin Additions Reductions 2012 one year Notes & bonds payable: $ Notes payable 497,452 $ - $ 497,452 $ - $ 13,973 $ 483,479 $ 16,415 Bonds payable 150,354, ,354, , ,618, ,000 Total bonds and notes payable 150,851,573 NONE 150,851,573 NONE 750, ,101, ,415 Other liabilities: Compensated absences payable 9,681,889-9,681, , ,615 9,813, ,670 Amounts held in custody for others 27,234,149-27,234, ,575 26,981,574 - Pollution remediation obligations 8,912-8,912-8, OPEB payable 68,545,592-68,545,592 11,815,500 4,320,601 76,040,491 - Total other liabilities 105,470,542 NONE 105,470,542 12,757,982 5,392, ,835, ,670 Total long-term liabilities $ 256,322,115 $ NONE $ 256,322,115 $ 12,757,982 $ 6,142,734 $ 262,937,363 $ 1,609,085 14

23 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 A detailed summary, by issues, of all debt outstanding at June 30, 2012, including outstanding interest of $141,623,245 for the university, is shown on Schedule 1-A. Component unit debt outstanding at June 30, 2012, including outstanding interest of $389,850, is shown on Schedule 1-A (Component Unit) in the amount of $306,000 and on Schedule 1-C (Component Unit) in the amount of $83,850. Schedule 2-A, Schedule 2-A (Component Unit) and Schedule 2-B (Component Unit) are amortization schedules of the outstanding debt. J. SHORT-TERM DEBT The university s School of Architecture and Design Building Institute has started a new neighborhood housing program. The program s goal is to revitalize empty neighborhood lots with innovative and affordable homes. The Lafayette Public Trust Financing Authority provided a $400,000 non-interest line of credit for the neighborhood program through a five-year agreement with Ragin Cajun Facilities, Inc. Proceeds from the sale of each house will be used for construction of future houses. Short-term debt activity for the year ended June 30, 2012, was as follows: Beginning balance NONE Issued $ 268,266 Redeemed (45,000) Ending balance $ 223,266 K. COMPENSATED ABSENCES Employees accrue and accumulate annual and sick leave in accordance with state law and administrative regulations. The leave is accumulated without limitation; however, nine-month faculty members do not accrue annual leave, but are granted faculty leave during holiday periods when students are not in classes. Employees who are considered having non-exempt status according to the guidelines contained in the Fair Labor Standards Act may be paid for compensatory leave (K-time) earned. Upon separation or termination of employment, both classified and non-classified personnel or their heirs are compensated for accumulated annual leave not to exceed 300 hours. In addition, academic and unclassified personnel or their heirs are compensated for accumulated sick leave not to exceed 25 days upon retirement or death. Act 343 of 1993 allows members of the Louisiana State Employees Retirement System, upon application for retirement, the option of receiving an actuarially determined lump sum payment for annual and sick leave, which would otherwise have been used to compute years of service for retirement. Unused annual leave in excess of 300 hours plus unused sick leave are used to compute retirement benefits. Upon termination or transfer, an employee will be paid for any time and one-half compensatory leave earned and may or may not be paid for any straight hour-for-hour compensatory leave earned. Compensation paid will be based on the classified employee s hourly rate of pay at termination or transfer. The liability for unused annual leave, sick leave, and compensatory leave at June 30, 2012, computed in accordance with the Codification of Governmental Accounting and Financial Reporting Standards Section C C60.105, is estimated to be $4,723,853, $4,948,002, and $141,901 respectively. The leave payable is recorded in the accompanying financial statement. 15

24 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2012 The university s liability for compensated absences (annual, sick, and compensatory leave) at June 30, 2012 is as follows: Current liability estimated to be paid within one year $ 647,670 Long-term liability 9,166,086 Total liability for compensated absences $ 9,813,756 L. ON-BEHALF PAYMENTS FOR FRINGE BENEFITS AND SALARIES On-behalf payments for fringe benefits and salaries are direct payments made by one entity to a third-party recipient for the employees of another, legally separate entity. On-behalf payments include pension plan contributions, employee health and life insurance premiums, and salary supplements or stipends. For example, a nongovernmental fund-raising foundation affiliated with a governmental university may supplement salaries of certain university employees. Those payments constitute on-behalf payments for purposes of reporting by the university. The amount of on-behalf payments for fringe benefits and salaries included in the accompanying financial statement for fiscal year 2012 is $845,063. M. CONTINGENT LIABILITIES Losses arising from judgments, claims, and similar contingencies such as guaranty of mortgage loans on sorority and fraternity houses are considered state liabilities and paid upon appropriation by the Legislature and not the university. Other losses arising from judgments, claims, and similar contingencies are paid through the state s self-insurance fund operated by the Office of Risk Management, the agency responsible for the state s risk management program, or by appropriation from the state s General Fund. During fiscal year 2012, no direct claims or litigation costs were incurred by the university. N. RELATED PARTY TRANSACTIONS The university did not have any related party transactions. O. VIOLATIONS OF FINANCE-RELATED LEGAL OR CONTRACTUAL PROVISIONS At June 30, 2012, the university had no violations of finance-related legal or contractual provisions. P. LEASES Operating Leases The university does not have any operating leases. Capital Leases The university records items under capital leases as assets and obligations in the accompanying financial statements. The university s capital leases at June 30, 2012, consists of the following lease: Nature of Lease Equipment Gross amount of leased assets (historical cost) $ 103,611 Remaining interest to end of lease 1,814 Remaining principal to end of lease 51,805 16