-" -4 'f I .i': -I ,-' " /I Edinboro University of Pennsylvania of the StateI System of Higher EducationI Financial Statements and .Supplementary InformationI June 30, 2010 and 2009 II-I I II I -. I I -"0 G".- -. I Edinboro University of Pennsylvania of the State System of Higher Education --- Table of ContentsI June 30, 2010 and 2009 I f ',' I 'f PaQeI Independent Auditors' Report 1 Financial StatementsI Balanae Sheet -Primary Institution 3 Statement of Revenues, Expenses, and Changes in Net Assets -Primary Institution 5I Statement of Cash Flows -Primary Institution 6I Combined Balance Sheet -Component Units 7 Combined Statement of Revenues, Expenses, and Changes in Net Assets Component Units 8I Notes to Financial Statements 9I Supplementary Information III Schedule of Funding Progress for the System Plan and REHP (OPEB) 36 ~ :""~I ,1:;:'1) , '. I ! --."'", I I I ~renteBeard -'I I .t '/ I I -We .discretely ~ .financial ~ .discretely ~ .our ~ Independent Auditors'Report Council of Trustees Edinboro University of Pennsylvania of the S,ate System of Higher Education have audited the accompanying : !: basic financial statements of Edinboro University of Pennsylvania of the State System of Higher Education (the "University") and its aggregate presented component units as of and for the years ended June 30, 2010 and 2009. 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 audits. We did not audit the statements of Edinboro University of Pennsylvania Alumni Association, Edinboro University of Pennsylvania Student Government Association, or Edinboro University Services, Inc., which collectively represent 5%, 44% and 49% of the assets, net assets and revenues of the presented component units for 2010, and 9%, 44%, and 69%, respectively, of the assets, net assets and revenues of the discretely presented component units for 2009. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and opinion, insofar as it relates to the amounts included for Edinboro University of Pennsylvania Alumni Association, Edinboro University of Pennsylvania Student Government Association, and Edinboro University Services, Inc., is based on the reports of the other auditors. -We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit .includes examining, on a test basis, evidence supporting the amounts and disclosures in the ~ 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 audits and the reports of the other auditors provide a reasonable ~ basis for our opinion. I In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the University and its aggregate discretely presented component units as of June 30, 2010 and 2009,. and the respective changes in financial position and cash flows, where applicable, thereof, for the years then ended in conformity with accounting principles generally accepted in the United States of America. .The University has not presented Management's Discussion and Analysis (MD&A) that accounting principles generally accepted in the United States of America have determined is necessary to supplement, although not required to be part of, the basic financial statements. .. .1 -~L G" i The Schedule of Funding Progress for the System Plan and REHP (OPEB) on page 36 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United State of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. ':p~~ 15eMILJ--I~ I Williamsport, Pennsylvania December 6,2010 1i , Q i!: " ';~~:; , 0 2 -'.,. Balance Sheet -Primary June30,2010and2009 Institution 2010 2009 .,.. Assets Current Assets Cash and cash equivalents: Unrestricted cash and cash equivalents Restricted cash and cash equivalents $ Tbtal cash and cash equivalents Accounts receivable: Governmental grants and contracts Students, net of allowance for doubtful accounts of $2,684,716 in 2010 and $2,513,675 in 2009 Other Investment income receivable Inventory Prepaid expenses Loans receivable, net of allowance for doubtful accounts of $507,560 in 2010 and $495,993 in 2009 Other current assets Total current assets Noncurrent Assets Endowment investments Loans receivable Capital assets, net Other assets Total noncurrent assets Total assets See notes to financial statements 3 -- 46,785,758 1,824,634 $ 45,265,546 2,039,946 48,610,392 47,305,492 3,981,039 1,054,477 2,059,475 766,767 31,904 56,758 175,865 1,667,602 558,887 67,861 60,025 80,504 238,582 1,483,645 289,430 567,337 57,404,427 51,651,615 4,754,326 1,363,790 67,531,534 459,702 4,443,706 1,370,988 71,452,866 504,176 74,109,352 77,771,736 $ 131,513,779 $ 129,423,351 I Edinboro University of Pennsylvania of the State System of Higher Education Balance Sheet -Primary Institution-June 30, 2010 and 2009-";' 2010 Liabilities -Current .Current ..Other -Net 2009 and Net Assets Liabilities.Accounts payable and accrued expenses Deferred revenue Students' deposits Workers' compensation absences and postretirement benefit obligations portion of bonds payable, net Due to component units Due to PASSHE, Academic FacilitiesI Renovation Bond Program (AFRP) current liabilities I $ current liabilities 13,412,489 2,665,209 277,972 297,196 3,986,515 2,495,127 231,264 275,297 441,894 $ 9,294,248~ 2,622,419 255,116 266,451-Compensated 3,841,297 2,682,327~ 154,646 238,010 445,270-Total 24,082,963 19,799,784 Noncurrent Liabilities revenue Workers' compensation Compensated absences and postretirement obligations 78,068 391,495 106,760 266,469 56,687,368 52,794,808 Bonds payable Due to PASSHE, AFRP noncurrent liabilities 32,053,439 3,705,024 1,905,763 34,548,972 3,861,125-Other 1,943,008 94,821,157 93,521,142-Total Total noncurrent liabilities liabilities 118,904,120 113,320,926 29,646,446 30,909,154 3,004,180 2,974,468 Assets Invested in capital assets, net of related debt Restricted for:-Nonexpendable, Scholarships and fellowships Expendable:-Scholarships and fellowships Student loans Unrestricted net assets liabilities and net assets -See notes to fin~nCial statements ~- 2,402,323 313,616 (22,756,906) 2,301,774 342,449 (20,425,420)-Total 12,609,659 16,102,425-Total $ 131,513,779 $ 129,423,351 .D I~ i '.b i~ i I Edinboro University of Pennsylvania of the State System of Higher Education I Years Ended June 30, 2010 and 2009I I I .Interest .Investment Statement of Revenues, Expenses, and Changes in Net Assets -Primary Institution .,. 2010 I Operating Revenues ,,' Tuition and fees Less scholarship discounts and allowances $ 56,623,612 22,723,742 Net tuition and fees Governmental grants and contracts: Federal State Nongovernmental grants and contracts SaleS and services of educational departments, Auxiliary enterprises Other revenues net Total operating revenues Operating ExpensesI Instruction Research Public service Academic support Student services Institutional support Operations and maintenance Depreciation Student aid Auxiliary enterprises of plant operating expenses Operating Nonoperating Revenues (Expenses) State appropriations, general and restricted ARRA state fiscal stabilization funds Gifts for other than capital purposes expense on capital asset-related debt income, net of related investment expense of $142,360 in 2010 and $156,476 in 2009 Other nonoperating revenue Loss on disposal of assets revenues, in net assets Ending 32,310,584 13,997,375 8,207,171 279,915 1,113,683 16,013,178 1,206,169 9,476,402 8,251,756I 201,607 1,119,179 16,636,713 807,640 74,717,361 68,803,881 45,473,227 72,994 205,238 11413218 10:336: 104 12,623,386 8,463,641 8,496,914 958,503 12,420,754 42,640,278 94,676 377,183 11772430 10:007:741 12,605,078 8,46,6,429I 8,018,753 1,024,763 12,955,076-Total I 107,962,407 (39,158,526) 25,812,507 4,014,4622,084,131 (1,620,663) 28,550,436 1,764,556 (1,794,930) I 965,023 172,978 (710,944) 28,947,119I (10,211,407) 250,110 111,193 66,775 747,340 361,303 814,115-Decrease I (3,492,766) (9,397,292) 16,102,425 $ I (35,746,618) -(3,854,069) Total other revenues Net Assets, 33,899,870 31,892,549 Other RevenuesI Capital gifts and grants State appropriations, capital Beginning 49,314,491 17,003,907 1,508,220 151,740 (57,848) net Loss before other revenues Net Assets, $ 110,463,979 loss Nonoperating 2009 12,609,659 25,499,717 $ 16,102,425-See notes to fin~nCial statements j I Edinboro University of Pennsylvania of the State System of Higher Education ~ Statement of Cash Flows -Primary InstitutionI Years EndedJune 30,2010 and 2009I 2010 Cash Flows from Operating Activities Net tuition and fees Grants and contracts Payments to suppliers for goods and services Payments to employees Loans issued to students Loans collected from students Student aid Auxiliary enterprise charges Sales and services of educational departments Other operating receipts $ 33,869,784 19337486 (20:749:818) (72,046,818) (317,709) 375755 (958:503) 16,005,632 747752 433'542 ---,--- N~i cash used in operating activities Cash Flows from Noncapital Financing ActivitiesI State appropriations Gifts for other than capital purposes PLUS, Stafford, and other loans receipts (non-Perkins) PLUS, Stafford, and other loans disbursements (non-Perkins) Agency transactions, net Other Net cash provided by noncapital financing activities Cash Flows from Capital Financing Activities Proceeds from issuance of bonds Capital appropriations Costs associated with abandonment of building 2009 32,674,326I 18033582 (25:727:592) (71,018,866) (701,843)I 429313 (1,024: 763) 16,710,407 1 377 566 '601'756 ---,.-- I $ (23,302,897) (28,646,114) 29,826,969 2,084,131 46,233,487 (46,233,487) 1,710 151740 ---,. 28,550,436 1,764,556 49,108,077 (49,108,077) (20,480) 172978 ,- -- 32,064,550 30,467,490 I I 186,010 3,999,518 111193 747340 , -(542:947) Capital andsales grantsof capital receivedassets Proceedsgifts from 250 ' 110-204'495 66775I Purchases of capital assets Principal paid on debt including AFRP (4,633,430) (2,833,439) (10,709:222) (5,146,187) Interest paid on debt (1,770,754) (1,929,520)I Net cash used in capital financing activities (8,690,310) (13,309,748) 2,237,073 1,143,580 (2,147,096) 876,130 1,675,579 (699,108) Net cash provided by investing activities 1,233,557 1,852,601I Net increase (decrease) 1,304,900 (9,635,771) 47,305,492 56,941,263I Cash Flows from Investing ActivitiesI Proceeds from sales of investments Interest income Purchase of investments in cash and cash equivalents Cash and Cash Equivalents, Beginning Cash and Cash Equivalents, Ending Reconciliation of Operating in Operating ActivitiesI Operating $ $ to reconcile $ 47,305,492 Loss to Net Cash Used loss Adjustments 48,610,392 1 'I operating loss to net cash used (35,746,618) $ (39,158,526) i in I operating activities: Depreciation expense Changes in assets and liabilities: Receivables, net Inventories Other assets Accounts payable and accrued expenses Deferred revenue Students' deposits Compensated absences Loans to students Other liabilities including workers' compensation Net cash used in operating activities $ Seenotesto fin~nCial statements 8,496,914 8,018,753 (3,546,573) 3,267 (879,259) 4,123,154 14,098 22,856 276,159 58,046 3,875,059 714,344 36,712 (25,928)I (1,651,186) (87,307) 23,621 155,401 (272,530)I 3,600,532 (23,302,897) $ I (28,646_114) i i .Current -Noncurrent .Permanently .. - Combined Balance Units.Years Sheet -Component Ended June 30, 2010 and 2009."" 2010 2009 -. ,; Assets Assets Cash and cash equivalents Trustee held funds Accounts receivable Inventory Prepaid expenses Du~ from University Other current assets $ current assets Noncurrent Assets. Endowment investments Trustee held funds Capital assets, net Deferred financing costs assets Total noncurrent assets assets 5,333,841 3,089,755 58,570 774,979 30,557 231,244 2,873,114 $ 5,472,544. 3,811,031 68,211 729,827 44,965. 154,646 2,388,546.Total 12,392,060 12,669,770 11,094,782 64,610,273 54,781,525 875,862 1,127,368 9,035,326 12,499,552 47,185,108 496,824.Other 1,877,328 132,489,810 71,094,138.Total :::;:~~~~~~ ~=::~~;;:;;:-Liabilities and Net Assets Current Liabilities. Accounts payable and accrued expenses Other current liabilities $ Total current liabilities 5,554,476 1,362,538 $ 6,917,014 5,687,967 456,697 6,144,664 Liabilities Funds under investment management for. Edinboro Unversity of Pennsylvania Other noncurrent liabilities 4,755,146 117,648,152 4,438,706 57,391,416.Total noncurrent liabilities 122,403,298 61,830,122 129,320,312 67,974,786 Net Assets Unrestricted Temporarily restricted restricted 6,750,106 2,585,400 6,226,052 6,892,538 3,124,415 5,772,169 Total net assets 15,561,558 Total liabilities liabilities and net assets $ notes to fin~nCial statements 144,881,870 . 15,789,122.Total $ 83,763,908-See I I I I Edinboro University of Pennsylvania of the State System of Higher Education Combined Statement of Revenues, Expenses, Years Ended June 30, 2010 and 2009I and Changes in Net Assets ";' -Component 2010 UnitsI 2009 I Changes in Unrestricted Net Assets Revenues and other additions: Rental income University store and services Net assets released from restrictions Student activity fees Other revenues Contributions Special activities Unrealized gain on investments Investment income $ Total revenues and other additions 5,646,981 4,898,743 1,439,420 1,164,797 516,465 322,640 173,028 132,80097,392 ==~~:;;:~;~ $ 1,264,125 4,731,109I 1,441,098 1,034,366 511,682 217,754I 55,352 683,774I I ===~:;;;~;~ Expenses and other deductions: Program expenses University store Supporting services expenses Management and general Special activities I 8,687,828 3,421,219 1,573,485 537,847 85,301 Scholarships Other expenses Unrealized loss on investments 3,701,281 3,260,793 1,153,897 489,808 70,395 153,962 75,056 -647,767I Total expenses and other deductions (Decrease) Increase in unrestricted 14,534,698 net assets 88,399I 51,751 9,464,091 (142,432) 475,169I 563,599 291,941 105,555 (64,484) (1,435,626) 472,470 28,613I (71,005) (66,493) (1,447,248) (539,015) (1,083,663) 493,976 (36,299) (3,794) 421,119 (100,004) 6,150 Increase in permanently restricted net assets 453,883 327,265I Decrease in net assets (227,564) (281,229) 15,789,122 16,070,351I Changes. in !emporarily Restricted Net Assets Contributions and support Investment income Unrealized gain (loss) on investments Other reductions, net Satisfaction of donor restrictions Decrease in temporarily restricted net assets Changes in Permanently Restricted Contributions Other changes, net Satisfaction of donor restrictions Net Assets, Beginning Net Assets, Ending Net Assets $ 15,561,558 See notes tofin~ncial st~tements $ , 15,789,122 -. Notes to Financial StatementsI June 30, 2010 and 2009I 1. Nature of Operation~ Organization and Summary of Significant Accounting Policies iI Edinboro University of Pennsylvania of the State System of Higher Education (the "University"), a public four-year institution located in Edinboro, Pennsylvania, was founded inI 1857. The University is one of fourteen universities of the State System of Higher Education ("PASSHE"). PASSHE was created by the State System of Higher Education Act of November 12,1982, P.L. 660, No. 188, as amended ("Act 188"). PASSHE is a componentI ~nit of the Commonwealth of Pennsylvania (the "Commonwealth"). Reporting EntityI In accordance with Government Accounting Standards Board ('GASB') Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB 14, The Financial Reporting Entity, it has been determined that Edinboro UniversityI Foundation (the "Foundation"), Edinboro University of Pennsylvania Student Government Association (the "Association"), Edinboro University Services, Inc. ("USI") and Edinboro University of Pennsylvania Alumni Association ("Alumni") should be included in theI University's financial statements as discretely presented component units. A component unit is a legally separate organization for which the primary institution is financially accountable or closely related.I The Foundation is a legally separate, tax-exempt entity that acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of itsI programs. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or incomes thereon that the Foundation holds are 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,I the Foundation is considered a component unit of the University and is included within the University's financial reporting entity. The financial activity of the Foundation is presented as of June 30, 2010 and 2009.I During the years ended June 30, 2010 and 2009, the Foundation contributed $575,000 and $427,800, respectively, to the University for both restricted and unrestricted purposes.I The Association is a legally separate, tax-exempt entity responsible for the planning and sponsoring of University social and cultural events and providing budget oversight to allI student organizations. Although the University does not control the resources of the Association, the activities of the Association are solely for the benefit of the University and its students. Because these resources are held by the Association and can only be used toI benefit the University and its students, the Association is considered a component unit of the University and is included within the University's financial reporting entity. The financial activity of the Association is presented as of June 30, 2010 and 2009.I During the year ended June 30, 2010, the Association contributed $125,100 to the University for both restricted and unrestricted purposes. No contributions were made to the University during the year ended June 30, 2009. II ~'-~." 9 j I I I I I Edinboro University of Pennsylvania of the State System of Higher Education Notes to Financial StatementsI June 30, 2010 and 2009 "I 1. Nature of Operations ~nd Summary of Significant Accounting Policies (Continued) USI is a legally separate, tax-exempt entity that is responsible for the University bookstoreI as well as the provision of a variety of other services such as recreation, vending, cable and internet, which supplement services provided by the University. Although the University does not control the resources of USI, the activities of USI are solely for the benefit of the University and its students. Because these resources are held by USI and can only be used to benefit the University and its students, USI is considered a component unit of the University and is included within the University's financial reporting entity. The financial activity of USI is presented as of June 30, 2010 and 2009. I r. During the years ended June 30, 2010 and 2009, USI contributed $589,800 and $156,400, respectively, to the University for both restricted and unrestricted purposes.I Alumni is a legally separate, tax-exempt entity that serves to promote the general interests and welfare of the University by making gifts, scholarships, grants and other financial assistance available for the advancement of higher education. Although the University does not control the resources of Alumni, the activities of Alumni are solely for the benefit of the University. Because these resources are held by Alumni and can only be used to benefit the University, Alumni is considered a component unit of the University and is included within the University's financial reporting entity. The financial activity of Alumni is presented as of June 30, 2010 and 2009.I During the years ended June 30, 2010 and 2009, the Alumni contributed $84,600 and $85,500, respectively, to the University for both restricted and unrestricted purposes.I Complete financial statements for the component units may be obtained at the University's administrative office.I Measurement Focus, Basis of Accounting and Basis of Presentation The University functions as a business-type activity, as defined by GASB.I The accompanying financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, as prescribed by GASB. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items areI recognized as revenue as soon as all eligibility requirements have been met. ~he University applies only the Financial Accounting Standards Board pronouncements Issued before November 30, 1989, except for those that conflict with GASB pronouncements. I II I ~~- 10 I I Notes to Financial Statements June 30, 2010 and 2009 I 1. Nature of Operations I I I I I I I Operating ,and Summary of Significant Accounting Policies (Continued) Revenues-Operating revenues of the University consist of tuition, all academic, instructional, and other student fees, grants and contracts, sales and services of educational activities and auxiliary enterprise revenues. In addition, governmental and private grants and contracts in which the grantor receives equal value for the funds given to the University are recorded as operating revenue. All expenses, with the exception of interest expense, loss on the sale ofI investments, loss on the disposal of assets, and extraordinary expenses are recorded as operating expenses. Appropriations, gifts, interest income, capital grants, gains on the sale of investments, gains on the disposal of assets, parking and library fines, and governmental and private research grants and contracts in which the grantor does not receive equal value for the funds given to the University are reported as nonoperating revenue. Scholarship Discounts and Allowance 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 students' behalf. To the extentI that revenues from such programs are used to satisfy tuition and fees and other student services, the University has recorded a scholarship discount and allowance. NetAssets The University maintains the following net asset classifications: Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, repair, or improvement of those assets.I Restricted -nonexpendable: Net assets subject to externally requiring that they be maintained by the University in perpetuity. imposed conditions Restricted -expendable: Net assets whose use is subject to externally imposed conditions that can be fulfilled by the actions of the University or by the passage of time.I Unrestricted: All other categories of net assets. Unrestricted net assets designated for specific purposes by the University's Council of Trustees.I When both restricted and unrestricted funds are available for expenditure, which funds are used first is left to the discretion of the University.I Cash Equivalents may be the decision as to and Investments The University considers all demand and time deposits and money market funds to be cashI equivalents. Investments purchased are stated at fair value. Investments received as gifts are recorded at their fair value as of the date of the gift. I ..,.,,~11 I .Inventory -Equipment 8 Edinboro University -- of Pennsylvania of the State System of Higher Education Notes to Financial Statements-June 30, 2010 and 2009I 1. Nature of Operations,and Accounts Summary of Significant Accounting Policies (Continued) and Loans Receivable-Accounts and loans receivable consist of tuition and fees charged to current and former students, amounts due from federal and state governments in connection withI reimbursements of allowable expenditures made pursuant to grants and contracts and other miscellaneous sources..Accounts and loans receivable are reported at net realizable they are determined to be uncollectible based upon individual accounts. The allowance for doubtful accounts University's historical losses and periodic review of individual value. Accounts are written off.When management's assessment of is estimated based upon theI accounts. Inventory of the University consists mainly of housekeeping, maintenance, and office.supplies and is stated at the lower of cost or market, with cost determined principally on the weighted average method.I Capital Assets.Land and buildings at the University's campus acquired or constructed prior to the creation.of PASSHE on July 1, 1983, are owned by the Commonwealth and made available to the University. Since the University neither owns such assets nor is responsible to service associated bond indebtedness, no value is ascribed thereto in the accompanying financialI statements. Li~~~ise, no. value is ascribed. to the portion of any land or buildings acquired or constructed utilizing capital funds appropriated by the Commonwealth after June 10, 1983, and made available to the University.I All assets with a purchase cost, or fair value if acquired by gift, in excess of $5,000, with an estimated useful life of two years or greater, are capitalized. Buildings, portions of buildings,.and capital improvements acquired or constructed by the University after June 30, 1983,.through the expenditure of University funds or the incurring of debt are stated at cost less accumulated depreciation. and furnishings are stated at cost less accumulated depreciation. All library books are capitalized and depreciated. The University provides for depreciation on the straight-line method over the estimated useful lives of the related assets. Buildings and i 1 ! improvements are depreciated over useful lives ranging from 10 to 40 years. Equipment and furnishings are depreciated over useful lives ranging from 3 to 10 years. Library books areI depreciated over 10 years. Normal repair and maintenance expenditures are not capitalized because they neither add to the value of the property nor materially prolong its useful life. , ! Where applicable, intangible assets (i.e., assets lacking physical substance, which are non-I financial in nature and having an initial useful life extending beyond a single reporting period) are stated at cost less accumulated amortization. The University provides for amortization on the straight line method over the estimated useful lives of the relatedI intangible assets. Intangible capital assets considered to have indefinite useful lives are not amortized. Intangible assets considered to have indefinite useful lives which existed as of July 1, 2009 are not reported. I 12 ~:; J .contingent .Edinboro University of Pennsylvania of the State System of Higher Education Notes to Financial Statements-June 30, 2010 and 2009.1. Nature of Operations Trustee and Summary of Significant Accounting Policies (Continued) Held Funds (Foundation).Trustee held funds include cash equivalents held by a trustee under the terms of a loan agreement the Foundation has entered into with the Pennsylvania Higher EducationalI Facilities Authority ("PHEFA") (Note 6). Deferred RevenueI [)eferred revenue includes amounts received for tuition and fees, grants, corporate sponsorship payments and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. I Compensated I Absences Employees' right to receive annual leave and sick leave payments retirement for services already rendered is recorded as a liability.I Pension upon termination or Plans Employees of the University are required to enroll in one of three available cost-sharing.multiple-empl retirement plans immediately upon employment. The University.recognizes annual pension expenditures equal to its contractually required contributions to the Plan.-Income Taxes The University, as a member of PASSHE, which is tax-exempt; accordingly, no provision for-income taxes has been made in the accompanying financial statements. Use of EstimatesI The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of assets and liabilities at the date of the financial statements, and the reported.amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.I Reclassifications Certain amounts in the 2009 financial statements have been reclassified to conform to the-2010 I presentation.II "':..~.. 13 I Edinboro University of Pennsylvania of the State System of Higher Education Notes to Financial StatementsI June 30, 2010 and 2009I 1. Nature of Operations New Accounting a,nd Summary of Significant Accounting Policies (Continued) StandardsI In June 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets. Statement No. 51 establishes accounting and financial reportingI requirements for intangible assets, specifically with regard to whether and when intangible assets should be considered capital assets for financial reporting purposes. Statement No. 51 is effective for the fiscal year ending June 30, 2010.I In ~une 2008, GASB issued Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. Statement No. 53 provides a comprehensive framework for the measurement, recognition and disclosure of derivative instrument transactions. StatementI No. 53 is effective for the fiscal year ending June 30, 2010. In February 2009, GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. Statement No. 54 establishes fund balanceI classifications for governmental funds. The University is required to adopt Statement No. 54 for the fiscal year ending June 30, 2011.I In December 2009, GASB issued Statement No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. Statement No. 57 amends Stateme.nt No. 45, Accounting and Financial Reporting by Employers for Postemployment BenefIts Other Than Pensions and Statement No. 43, Financial Reporting for PostemploymentI Benefit Plans Other Than Pension Plans. The University is required to adopt Statement No. 57 for the fiscal year ending June 30, 2012.I In December 2009, GASB issued Statement No. 58, Accounting and Financial Reporting for Chapter 9 Bankruptcies. Statement No. 58 provides accounting and financial reporting guidance for governments that have petitioned for protection from creditors by filingI bankruptcy under Chapter 9 of the United States Bankruptcy Code. The University is required to adopt Statement No. 58 for the fiscal year ending June 30, 2011. In June 2010, GASB issued Statement No. 59, Financial Instruments Omnibus. StatementI No. 59 updates existing standards regarding financial reporting and disclosure requirements of certain financial instruments and external investment pools. The University is required to adopt Statement No. 59 for the fiscal year ending June 30, 2011.I IIIII The University has determined that Statements No. 51, 53, 54, 57, 58, a~d 59 have no effect on its balance sheet or statement of revenues, expenses, and changes In net assets. ...~ .,.:0.- 14 .Edinboro .June University of Pennsylvania of the State System of Higher Education Notes to Financial Statements 30, 2010 and 2009 i .2. Condensed Compo~ent Unit Information .component The following represents combining units as of June 30: . of net asset information Due from the University .Total assets Funds under 68,567 $ 52,992,200 83,895,596 $ Total 162,677 $ 1,789,325 5,973,505 136,956,363 $ 4,755,146 $ 231,244 $ 54,781,525 89,869,101 7,925,507 $ Non-Major Component Units Foundation 34,697 $ 45,392,139 30,381,535 144,881,870 $ 4,755,146 $ 119,949 Total $ 1,792,969 6,042,619 75,808,371 $ 4,438,706 $ 7,955,537 154,646 47,185,108 36,424,154 $ 83,763,908 investment management University Long-term $ net for the 2009 Non-Major Component Units Foundation Capital assets, Other assets . statement 2010 i . condensed for Edinboro of Pennsylvania $ debt Other liabilties .Total liabilities $ -$ $ 4,438,706 115,876,300 186,470 116,062,770 55,627,416 218,966 55,846,382 7,637,643 864,753 8,502,396 6,909,657 780,041 7,689,698 128,269,089 $ 1,051,223 $ 129,320,312 $ 1,254,433 $ 5,495,673 $ 6,750,106 $ 66,975,779 $ 999,007 $ 67,974,786 1,243,790 $ 5,648,748 $ 6,892,538 Net assets: . Unrestricted Temporarily Permanently . Total $ restricted restricted net assets $ 2,123,553 461,847 2,585,400 2,708,871 415,544 3,124,415 5,309,288 916,764 6,226,052 4,879,931 892,238 5,772,169 8,687,274 $ 6,874,284 $ 15,561,558 0 15 $ 8,832,592 $ 6,956,530 $ 15,789,122 Edinboro University-- of Pennsylvania of the State System of Higher Education Notes to Financial StatementsI June 30, 2010 and 2009 I 'I 2. Condensed Compol1ent Unit Information (Continued) The following represents combining statement of revenues, expenses, and changes in netI assets for the component units for the years ended June 30: I 2010 2009 Non-Major Non-Major Component Foundation I Changes in Unrestricted Net Assets Revenues and other additions: Rentlllincome University store and services Net assets released from restrictions Student activity fees Other revenues Contributions Special activities Unrealized gain on investments Investment income _ I $ 5,646,981 Expenses and other deductions: University store Program expenses Supporting services expenses Management and general Special activities SCholarships Other expenses loss on investments 6,976,002 7,162,151 1..525,677 3,421,219 1,573,485 318,377 153,962 85,301 51,056 ~~;~ 338,629 231,896 87,876 (60,740) (1,182,979) Foundation $ 1,264,125 Units Total $ $ 1,264,125 4,731,109 1,441,098 1,034,366 511,682 217,754 55,352 169,706 53,292 30,647 4,731,109 227,561 1,034,366 341,976 164,462 24,705 636,519 47,255 14,392,266 3,367,826 6,571,434 9,939,260 8,687,828 3,421,219 1,573,485 537,847 153,962 85,301 75,056 2,308,221 1,393,060 3,260,793 1,153,897 267,158 70,395 88,399 51,751 24657 3,701,281I 3,260,793 1,153,897 489,808 70,395 88,399 51,751-Unrealized 647767 ~~~ 1,213,537 222,650 =~:= 683,774-Total ~~~~~~ 213,845 =~~:~~ (153,075) (142,432) 261,324 224,970 60,045 17,679 (3,744) (252,647) 563,599 291,941 105,555 (64,484) (1,435,626) 266,501 134,017 (10,431) (48,780) (1,219,687) 205,969 (105,404) (60,574) (17,713) (227,561) 472,470 28,613 (71,005)~ (66,493)~ (1,447,248) (1,083,663)~ (585,318) 46,303 (539,015) (878,380) (205,283) 469,450 (36,299) (3,794) 24,526 493,976 (36,299) (3,794) 392,831 (100,004) 6150 28,288 475,169~ Net Assets~ Contributions Other reductions, net Satisfaction of donor restrictions in permanently restricted net assets 429,357 (Decrease) increase in net assets Net Assets, Beginning Net Assets, Ending 7,416,264 10,643 (Decrease) increase in temporariiy restricted net assets I 5,646,981 4,898,743 1,439,420 1,164,797 516,465 322,640 173,028 132,800 97,392 =~~~ Changes in Temporarily Restricted Net Assets Contributions and support Investment income Unrealized gain (loss) on investments Other reductions, net Satisfaction of donor restrictions Restricted $ 24,000 --623110 Increase (decrease) in unrestricted net assets Changes in Permanently 129,844 130,956 142,277 122,695 56,738 4,898,743 252,647 1,164,797 386,621 191,684 30,751 10,105 40,654 219,470 Total expenses and other deductions Total $ 1,186,773 revenues and other additions Component Unit $ ===~~~~ 453,883 (145,318) (82,246) (227,564) 8,832,592 6,956,530 15,789,122 8,687,274 $ 6,874,284 [ $ ~" 15,561,558 =~~ 421,119 (100,004) -6150..Increase ==~~ (365,558) 8,832,592 ~ 84,329 9,198,150 $ ==~= (281,229) 6,872,201 $ 6,956,530 16,070,351 $ -.. I 16 - .1.[.[ 15,789,122 Edinboro University of Pennsylvania of the State System of Higher Education Notes to Financial Statements~ June 30, 2010 and 2009~I 3. Deposits Primary and Investments Government~I The University predominantly maintains its cash balances on deposit with PASSHE. PASSHE maintains these and other PASSHE funds on a pooled basis. Although PASSHE~ I I I .$46,716,444 I I I I I I I J J pools its funds in a manner similar to an internal entities do not hold title to any assets in the fund. investment pool, individual PASSHE as a whole owns PASSHE~ title to all assets. The University does not participate in the unrealized gains or losses on the investment pool; instead, the University holds shares equal to its cash balance. Each share~ has a constant value of $1, and income is allocated based on the number of shares owned. Revenue realized at the PASSHE level is calculated on a daily basis and posted monthly to each entity's account as interest income. The University's portion of pooled funds totals and $44,972,892 at June 30,2010 and 2009, respectively. PASSHE invests its funds in accordance with the Board of Governor's Investment Policy,. which authorizes PASSHE to invest in repurchase agreements, commercial paper, obligations of the United States Treasury, agencies and sponsored entities, certificates of deposit, municipal bonds, mortgage-backed securities, asset-backed securities, banker's acceptances, and corporate bonds. Restricted nonexpendable funds and amounts designated by the Board of Governors or University trustees may be invested in the investments described above, as well as in corporate equities and approved pooled. common funds. For purposes of convenience and expedience, the University uses local financial institutions for activities such as cash deposits. In addition, the University may accept gifts of investments from donors as long as risk is limited to the investment itself.I Restricted gifts of investments fall outside the scope of the investment policy. In keeping with its legal status as a system of public universities, PASSHE recognizes a fiduciary responsibility to invest all funds prudently in accordance with ethical and prevailing legal standards. In addition, PASSHE recognizes that the funds in its custody can be classified according to purpose, time frame for use, source, and other similar classifications. Differential investment guidelines and objectives are required to manage various funds classifications appropriately and optimally. Regardless of funds classifications, certain general tenets apply. Investments in all classifications seek to minimize exogenous risks while maintaining or expanding purchasing power. Adequate liquidity is maintained so assets are held to maturity. In all classifications, high quality investments are preferred. Reasonable portfolio diversification is pursued to e~sure th~t no single. se~.urity ~r investment or class of s~curities or investments will. have a disproportionate or significant Impact on the total portfolio. Investments are made In U.S.based corporations. Investment performance in all classifications is monitored on a frequent and regular basis to ensure that objectives are attained and guidelines are followed. A portfolio duration target of 1.8 years is maintained with an upper limit of 2.2 years. I itI I ~ 17 .-0: ~ I Edinboro I University - of Pennsylvania of the State System of Higher Education Notes to Financial Statements June30,2010and2009 I I 3. Deposits and Investments (Continued) Safety of principal and liquidity are the top priorities for the investment of PASSHE's operating funds. Within those guidelines, income optimization is pursued. Speculative investment activity is not allowed; this includes investing in asset classes such as commodities, futures, short-sales, equities, real or personal property, options, ventureI capital investr:nen!s, private placements, I~tter stocks, and unlisted securities. Collateralized mortgage obligations (CMOs) are sometimes based on cash flows from interest-only (10) payments or principal-only (PO) payments and are sensitive to prepayment risks. The CMOsI i~ PASSHE's portfolio do not have 10 or PO structures; however, they are subject to extension or contraction risk based on movements in interest rates. PASSHE's operating funds are invested and reinvested in the following types of instruments with qualifications asI provided. Investment I Limit Categories Single (% of MarketValue) Government I securities/repurchase agreements Issuer (maximum) Rating Limit (Moody's) Greater than 20% 5% Repurchase N/A Less than 30% Less than 20% Less than 20% 5% of each type 5% NA P-1 Aa or higher Aa or higher Less than 20% Less than 20% Less than 20% NA NA 5% Aaa Aaa N/AI Commercial paper/certificates I of deposiUbanker's acceptances Municipal bonds Corporate bonds Collateralized mortgage obligations (CMO's) Asset-backed securities System notes I At June 30, 2010 and 2009, the carrying amount of the University's demand and time deposits were $1,893,948 and $2,332,598, respectively, as compared to bank balances ofI $2,027,304 and $2,921,788, respectively. The differences are primarily caused by items intransit and outstanding checks. All bank balances were covered by federal depository insurance or were collateralized by a pledge of United States Treasury obligations held by Federal Reserve banks in the name of the banking institutions, or uninsured andI uncollateralized, but covered under the collateralization provisions of the Commonwealth of Pennsylvania Act 72 of 1971 ("Act 72"), as amended. Act 72 allows banking institutions to satisfy the collateralization required by pooling eligible investments to cover total publicI funds on deposit in excess of federal insurance. Such pooled collateral is pledged with the financial institutions' trust departments. At June 30, 2010, none of the University's demand and time deposits are exposed to foreign currency risk. I Investment Risk FactorsI There are many factors that can affect the value of investments. Some, such as custodial credit risk, concentration of credit risk and foreign currency risk may affect both equity and fixed income securities. Equity securities respond to such factors as economic conditions,I individual company earnings performance, and market liquidity, while fixed income securities are particularly sensitive to credit risks and changes in interest rates. I 18 I Edinboro University I - of Pennsylvania of the State System of Higher Education Notes to Financial Statements June 30, 2010 and 2009 I 3. Deposits and Investments (Continued) Interest Rate Risk I I Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of the investment. Modified duration of a security is a measure of interest rate risk and expresses the amount of time in years until principal is returned. This calculation takes into account the coupon rate, interest and principal payment frequency, call options and sensitivity to price changes in interest rates. Duration will also change as the level of interestI r~tes in the economy rise and fall. The carrying value (fair value) of investments for the University at June 30 is as follows: I I Modified Duration Investments: Equity-based mutual funds Common stocks Fixed income mutual funds U.S. government and agency obligations 2010 N/A N/A 2.74 $ 2,192,565 833000 1,460:011 1.57 $ 1,386,591 1 262747I 1 :397:688 268,750 Total investments Major Component 2009 $ 4,754,326 396,I680 $ 4,443,706I Unit I 2010 The fair value of investments for the Foundation at June 30 is as follows: Investments: Cash and cash equivalents $ Equity-based mutual funds Governmental securities Corporate bonds Debt-based mutual j funds $ 4,816,512 543,069 85,955 3 Common stock I 226,933 2009I , 299 , 226 2,123,087 Total $ 11,094,782 $ I I I I ~c_~- 19 358,130 I 3,271,844 786,746 125,754 2 , 480 , 891 2,011,961 9,035,326 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 4. Capital Assets ..' Capital assets acquired or constructed by the University funds or the incurrence of debt consist of the following: I through the expenditures of University I FortheyearendedJune30,2010: Estimated Beginning Lives Balance (in years) Ending Reclassifica- July 1, 2009 Additions Retirements I Balance tions June 30, 2010 [ Land $ Construction in progress I Total capital assets not being depreciated I 511,567 $ -$ -$ -$ 511,567 6,451,661 2,815,061 -(7,845,192) 1,421,530 6,963,228 2,815,061 -(7,845,192) 1,933,097 Buildings, including I improvements Furnishings I 10-40 77,155,680 -(1,108,764) 7,625,077 83,671,993 and equipment (including cost of capital leases) Library books 39,376,762 7,376,912 1,689,902 128,467 (469,199) (11,766) 123,909,354 1,818,369 (1,589,729) (28,678,665) (4,156,038) 1,065,284 -(31,769,419) (24,113,811) (6,627,240) (4,207,854) (133,022) 454,831 11,766 -(27,866,834) -(6,748,496) (59,419,716) (8,496,914) 1,531,881 -(66,384,749) depreciated, net 64,489,638 (6,678,545) (57,848) Capital assets, net $ 71,452,866 $ (3,863,484) $ (57,848) Total capital assets beingI depreciated Less accumulated depreciation: Buildings, including Improvements Furnishings and equipment Library books 3-10 10 220,115 40,817,580 -7,493,613 7,845,192 131,983,186 I I I Total accumulated depreciation I Total assets capital being I I I G" I , -'",' 20 7,845,19~ $ 65,598,437 $ 67,531,534 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 4. Capital Assets (Continued) For the year ended June 30, 2009: I I Estimated Lives (in years) land Constructionin progress Beginning Balance July 1,2008 Additions ~--~~~~:~ ~ 3,843,996 Retirements ~ ~ 8,941,493 Ending ReclassificaBalance tions June30,2009 ~ -~ ~ -(6,333,828) ~ :~:-:: 6,451,661I Tbtal capital assets not beingI depreciated 4,355,563 8,941,493 -(6,333,828) 6,963,228 Buildings,includingI improvements Furnishings I 10-40 79,259,524 663,773 (2,767,617) -77,155,680 34,779,057 7,348,858 947,524 156,433 (2,683,647) (128,379) 6,333,828 39,376,762 -7,376,912 121,387,439 1,767,730 (5,579,643) 6,333,828 (27,137,280) (3,943,041) 2,401,656 -(28,678,665) (22,839,550) (3,951,376) 2,677,115 -(24,113,811) and equipment(including cost of capital leases) Librarybooks 3-10 10 Total capital assetsbeingI depreciated 123,909,354 I less accumulated depreciation: Buildings,including Improvements'" FurnishingsandI equipment Library books ,. (6,631,283) (124,336) I 128,379 -(6,627,240) Total accumulated depreciation (56,608,113) (8,018,753) 64,779,326 (6,251,023) I 5,207,150 -(59,419,716) Total assets capital being depreciated, net I 6,333,828 64,489,638 Capital assets, net $ 69,134,889 $ 2,690,470 I I I I (372,493) 21 $ (372,493) $ $ 71,452,866 I Edinboro University - of Pennsylvania of the State System of Higher Education Notes to Financial StatementsI June 30, 2010 and 2009I 4. Capital Assets (Continued) Major Component UnitI I 2009 Fixed asset of the Foundation at June 30, 2010 and 2009 are summarized as follows: 2010 Buildings Construction in progress -Student Housing Facility Furniture and fixtures Equipment land $ 46,870,091 5,151,747 1,648,883 909,447 improvements $ 161,366- Vehicles 81,214 Total 51,614 54,822,748 less accumulated depreciation Payable and Accrued 45,796,026I (1,830,548) Total fixed assets, net 5. Accounts 22,892,173I 21,784,751 739,284 328,204I $ (403,887)I 52,992,200 $ 45,392,139I Expenses I Accounts payable and accrued expenses consisted of the following at June 30: 2010 Employees Suppliers $ and services 7,960,478 2009I $ 5,386,029 Accrued interest payable 2,732,015 65,982 Total $ 13,412,489 6,491,338 70,895I $ 9,294,248I 6. Bonds Payable Bonds payable consist of several outstanding tax-exempt revenue bonds issued by theI PASSHE through the Pennsylvania Higher Educational Facilities Authority ("P~EFA"). In connection with the bond issuances, the PASSHE entered into a loan agreement with PHEFA on behalf of the University under which PASSHE has pledged its full faith and credit for theI repayment of the bonds. The loans constitute an unsecured general obligation of the PASSHE. The PASSHE's Board of Governors has allocated portions of certain bond issuances to the University to undertake various capital projects or to advance refund certain previously issuedI bonds. The University is responsible for the repayment of principal and interest on its applicable portion of each obligation. II 22 I Edinboro University of Pennsylvania of the State System of Higher Education I June 30, 2010 and 2009 I 6. Notes to Financial Statements Bonds Payable The various (Continued) bond series allocated to the University for the year ended June 30, 2010 are asI follows: I Weighted Average Interest Rate Series S used for inside wiring 'and PBX 5.52% Series T used for inside wiring, PBX, data equipment, and in-ground wiring Series U used for Residence Hall renovations Series W used for renovations to the Student Union Series X used for renovations to Student Union and Residence Halls Series Z used for renovations to the Student Union Series AC used for renovations to Residence Halls and the University Center Series AE used for Energy Savings projects and renovations to the University Center Series AG used for renovations to the Student Union Series AH used for renovations to the University Center Series AI used for Sprinkler System Series AK used for inside wiring and PBX $ Balance July 1, Bonds Bonds June Balance 30, 2009 Issued Redeemed 2010 180,584 $ -$ 180,584 I $ - I I I 4.87% 969,941 -235,441 734,500 4.38% 994,559 -60,136 934,423 4.74% 296,415 -55,990 240,425I 4.37% 3,417,241 -269,818 3,147,423 3.96% 368,047 -180,731 187,316 4.91% 7,615,491 -322,177 7,293,314 4.99% 17,626,647 -877,434 16,749,213 4.53% 697,795 -166,519 531,276 4.69% 1,409,555 -47,311 1,362,244 3.98% 2,438,837 -132,474 2,306,363I I I I I I Total bonds payable Plus premium/issuance costs Outstanding at end of year 3.68% -186,010 36,015,112 $ 186,010 $ 186,010 - 2,714,625 33,486,497 1,216,187 1,062,069I $ 37,231,299 $ 34,548,566 I I ."-" 23 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 6. BondsPayable (Continued) The various I bond series allocated to the University for the year ended June 30, 2009 are as follows: I I Weighted Average Series S used for inside wiring and PBX Series T used for inside wiring, PBX, data equipment, and in-ground wiring Series U used for Residence Hall renovations Series V used for Sprinkler Installation Series W used for renovations to the Student Union Series X used for renovations to Student Union and Residence Halls Series Y used for Sprinkler Installation Series Z used for renovations to the Student Union Series AB used for SprinklerI Installation Series AC used for renovations to Residence Halls and the UniversityI Center Series AD used for Sprinkler Installation Series AE used for Energy Savings projects and renovations to the University Center Series AG used for renovations to the Student Union Series AH used for renovations to the University Center Series AI used for Sprinkler System Balance Balance Interest July 1, Bonds Bonds June 30, Rate 2008 Issued Redeemed 2009 5.52% $ 351,093 $ -$ 170,509 $ 180,584 I I I I I Total bonds payable I Plus premium/issuance costs Outstanding at end of year 4.88% 1,193,815 -223,874 969,941 4.32% 1,052,845 -58,286 994,559 var% 391,715 391,715- 4.72% 350,475 4.48% 3,674,140 var % 934,165 3.96% 542,852 var % 1,085,501 4.91% 7,922,532 var % 102,749 4.99% 18,461,624 -834,977 17,626,647 4.48% 855,252 -157,457 697,795 -54,060 296,415 -256,899 3,417,241 934,165-I -174,805 368,047 1,085,501- -307,041 7,615,491 I 102,749- I I 4.70% -1,450,788 41,233 1,409,555 3.95% -2,548,730 109,893 2,438,837 4,903,164 36,015,112 36,918,758 $ 3,999,518 $ I 1,336,143 1,216,187 $ 38,254,901 $ 37,231,299 24 I Edinboro University - of Pennsylvania of the State System of Higher Education Notes to Financial Statements I June 30, 2010 and 2009 I 6. Bonds Payable (Continued) Principal and interest maturities for each of the next five years and in subsequent five-yearI periods ending June 30, as follow: 2011 2012 2013 2014 2015 2016 2020 2021 2025 2026I 2030 Total Series T I Principal Interest $ 247,490 $ 36,130 39,298 $ 23,755 40,745 $ 21,791 42,794 $ 19,957 45,085 $ 17,978 259,297 $ 54,942 59,791 $ 2,990 S 734,500 -177,543 283,620 63,053 62,536 62,751 63,063 314,239 62,781 -912043 ,I Principal Interest 61,061 41,258 62,912 38,968 66,612 36,609 68,463 33,944 72,163 30,692 409,851 103,671 193,361 13,887 934,423 -299,029 Total 102,319 101,880 103,221 102,407 102,855 513,522 207,248 -1,233,452 Principal Interest 57,872 11,133 58,812 8,556 60,694 5,878 63,047 3,032 240,425 28,599 Total 69,005 67,368 66,572 66,079 269024 ~ 133,194 -;:;: -::::; -::;;; ---~~ -~: 123,963 114,266 104,104 95,550 337,189 Total 317,829 317,896 Principal Interest 187,316 7,493 187,316 7,493 Total 194,809 194,809 Principal Interest 338,394 356,517 354,611 339,597 372,990 321,867 391,370 303,217 410,830 283,648 2,383,895 3,041,224 1,088,767 433,858 7,293,314I .3,127,471 Total 694,911 694,208 694,857 694,587 694,478 3,472,662 3,475,082 -10,420,785 Principal 921,639 965,844 1,016,497 1,068,024 1,123,649 6,560,373 4,306,603 Interest 851,556 805,473 Total U I W X Z AC ' AE Principal Interest Total I AG Principal Interest I Total AH I AI I I Total 317,497 317,961 317,377 1,588,454 74,620 ~ -982,886I 953,295 -4,130,309 I 757,181 703,815 647,744 2,299,128 768,998 1,773,195 1,771,317 1,773,678 1,771,839 1,771,393 8,859,501 5,075,601 172,183 17,494 189,677 176,715 11,899 188,614 I 786,584 16,749,213 39,329 6,873,224 825,913 23,622,437 182,378 531,276 6,155 35548 --,-- 188,533 566824 Principal Interest 49,690-:;;-::: 63,877 61,889 -:::-:::59,306 56,597 53,749 ~ 220,804 Total 113,567 113,561 113,489 113,555 113,483 567,708 567,867 Principal Interest 136,957 91,317 141,648 86,524 146,843 81,566 152,038 76,794 157,234 71,472 881,974 260,077 689,669 69,485 2,306,363 -737,235 Total 228,274 228,172 228,409 228,832 228,706 1,142,051 759,154 -3,043,598 Principal Interest Total I ~ I :: -;:::: ~ 135,855 29,572 340,663 681,649 2,043,893 2,357,237 2,045,445 2,144,173 2,056,551 2,090,522 12,093,559 9,601,335 1,097,675 33,486,497 1,609,969 1,500,624 1,404,619 1,301,460 1,200,833 4,364,578 1,499,693 68,901 12,950,677 $ 3,967,206$ 3,546,069$ 3,548,792$ 3,358,011$ 3,291,355$ 16,458,137$ 11,101,028$ 1166,576 $ 46437 , " 174 25 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 6. Bonds Payable (Continued) In addition, the University participates in the PASSHE's Academic Facilities Renovation BondI Program (AFRP), which was established for the purpose of renovating the academic facilities across the PASSHE. This program will provide $100,000,000 in funding over the next several years. PASSHE will issue bonds to provide a pool for funding for AFRP ($47,857,567 andI $49,354,148 was outstanding as of June 30, 2010 and 2009). Universities can request funds for AFRP projects in accordance with their pre-approved amount of funding from the pool. Repayments to the pool are made annually based on the University's proportionate share of theI total allocation of funds under the program. As of June 30, 2010 and 2009, the balance owed by the IUniversity to PASSHE's AFRP pool of funding was $3,980,321 and $4,099,135, respectively.I Major Component Unit Long-term debt of the Foundation consisted of the following at June 30, 2010 and 2009: I I 2010 Note payable (Series 2008 Bonds). Wells Fargo Bank, N.A., as more fully described below, due in varying annual installments through July 1, 2042, interestI rates of 4.95% to 5.95% Note payable (Series 2010 Bonds), Wells Fargo Bank N.A., as more fully described below, due in varying annual installments through July 1, 2043 interest rates of 3.63% to 6.00% $ 2009 56,125,000 $ 56,125,000 I Long-term debt 116,945,000 Less unamortized discount I (497,584)I 115,876,300 Less current portion I 56,125,000I (1,068,700) Long-term debt, net of discount I 60,820,000- 55,627,416 -- Long-term debt, non-current portion $ 115,876,300 $ 55,627,416I In February 2008, PHEFA issued its Edinboro University Foundation Student Housing Project At Edinboro University of Pennsylvania Revenue Bonds -Series 2008 (the "Series 2008 Bonds"), the proceeds of which were loaned to the Foundation pursuant to a Loan Agreement betweenI PHEFA and the Foundation dated February 1, 2008 (the "Loan Agreement"). The proceeds of the Series 2008 Bonds were used by the Foundation to provide funds to: finance the cost of acquiring, constructing, furnishing and equipping a 796-bed student housing facility ("StudentI Housing Facility"), including the buildings, furniture, fixtures and equipment therefore and the certain demolition activities related thereto to be located on the main campus of the University on land leased by the Foundation from the University; to fund a portion of the interest payments on the Series of 2008 Bonds during construction of the Student Housing Facility and for a period of up to six months thereafter; to fund a debt service reserve fund for the Series 2008 Bonds, and; to pay the costs of issuing the Series 2008 Bonds. 26 I Edinboro University I Notes to Financial Statements June 30, 2010 and 2009 I 6. - of Pennsylvania of the State System of Higher Education Bonds Payable (Continued) Following the issuance of the Series 2008 Bonds, PHEFA assigned the Loan Agreement toI Wells Fargo Bank, N.A. ("Trustee"), as trustee, under a Trust Indenture dated February 1, 2008, as security for the Series 2008 Bonds.I Contemporaneously with the assignment of the Loan Agreement to the Trustee, the Trustee and the Foundation entered into an open-ended leasehold mortgage and security agreement as additional security for the Series 2008 Bonds, granting the Trustee a security interest in theI premises, buildings, machinery and equipment, all rents, royalties and income, and the Ground Lease Agreement between the University (as lessor) and the Foundation (as lessee). Under the terms of the Loan Agreement, the Foundation is required to remit interest paymentsI to the Trustee on or before the 25th day of each calendar month in an amount equal to onesixth of the interest due on the next succeeding interest payment date. Principal payments are due on or before the 25th day of each calendar month in amounts equal to one-twelfth of theI principal amount maturing on the next succeeding July 1 (if any) commencing July 25, 2017. Payments required to effect mandatory redemption of principal amounts are due in amounts equal to one-twelfth of the Series 2008 Bonds subject to mandatory redemption on the nextI succeeding July 1 (if any) beginning July 25,2010. I In May 2010, PHEFA issued its Edinboro University Foundation Student Housing Project AtI Edinboro University of Pennsylvania Revenue Bonds -Series 2010 (the "Series 2010 Bonds"), the proceeds of which were loaned to the Foundation pursuant to a Loan Agreement between PHEF A and the Foundation dated May 1, 2010 (the "Loan Agreement"). The proceeds of theI Series 2010 Bonds are being used by the Foundation to provide funds to: finance the cost of acquiring, demolishing, constructing, equipping and furnishing of student housing on the campus of Edinboro University of Pennsylvania consisting of 856 beds; to fund a portion of the interest payments on the Series of 2010 Bonds during construction of the Student Housing Facility and for a period of up to six months thereafter; to fund a Debt Service Reserve Fund for the Series 2010 Bonds, and; to pay the costs of issuing the Series 2010 Bonds.I Following the issuance of the Series 2010 Bonds, PHEFA assigned the Loan Agreement to Wells Fargo Bank, N.A. ("Trustee"), as trustee, under a Trust Indenture dated May 1, 2010, as security for the Series 2010 Bonds. I I I I Contemporaneously with the assignment of the Loan Agreement to the Trustee, the Trustee and the Foundation entered into an open-ended leasehold mortgage and security agreement as additional security for the Series 2010 Bonds, granting the Trustee a security interest in the premises, buildings, machinery and equipment, all rents, royalties and income, and the Ground Lease Agreement between the University (as lessor) and the Foundation (as lessee). Under the terms of the Loan Agreement, the Foundation is required to remit interest payments to the Trustee on or before the 1 st day of each semi-annual period in an amount equal to the interest due from the last interest payment date through to the current interest payment date. Principal payments are due annually commencing July 1, 2013. Payments required to effect mandatory redemption of principal amounts are due annually beginning July 1, 2021. I Interest expense on the Foundation's notes was $3,554,795 in 2010 and $3,261,875 in 2009 of which $546,574 in 2010 and $2,478,120 in 2009 was capitalized to construction in progress. I 27 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 6. Bonds Payable (Continued) The aggregate future principal payments on long-term debt at June 30, 2010 are as follows: I Years ending June 30: 2011 2012 2013 2014 2015 r Thereafter $ -I 100,000 200,000 850,000 1,125,000I 114,670,000 ~ I Total $ 116,945,000 7. Deferred Revenue I Deferred revenue consisted of the following at June 30:I 2010 Student tuition and fees Dining improvements Grant revenue Sponsorship fees Total 2009 $ 2,424,919 137,500 40,834 140,024 $ 2,049,668I 269,298 238,441 171,772I $ 2,743,277 $ 2,729,179I I 8. Compensated Absences and Postretirement Benefits Compensated absences and postretirement benefits consisted of the following at June 30: 2010 2009 Current Compensated absences I ~---~~:~:~-; Post-retirement benefit obligations Total $ Noncurrent $ 5,889,712 3,261,000 50,797,656 3,986,515 $ 56,687,368 I I I I 28 NoncurrentI Current $ $ 565,297 $ 5,773,771 3,276,000 47,021,037 3,841,297 $ 52,794,808 I I Notes to Financial Statements June 30, 2010 and 2009 I 8. I Compensated Absences Compensated Absences and Postretirement Benefits (Continued) Compensated absences activity for the year ended June 30, is as follows: I 2010 Balance July 1 Current changes in estimate Payouts $ 6,339,068 801,387 (525,228) $ 6,183,667I 522,187 (366,786)I Balance June 30 $ 6,615,227 $ 6,339,068 Postretirement I 2009 Benefits University employees who retire after meeting specified service and age requirements become eligible for participation in one of two defined healthcare benefits plans. These plans include hospital, medical/surgical, and major medical coverage, and provide aI Medicare supplement for individuals over age 65. System PlanI I Plan Description Employee members of the Association of Pennsylvania State College and University Faculties, the State College and University Professional Association, Security Police and Fire Professionals of America, Pennsylvania Nurses Association, and non representedI employees participate in a single-employer defined benefit healthcare plan administered by PASSHE (System Plan). The System Plan provides eligible retirees and their eligible dependents with healthcare benefits as well as tuition waivers at any of PASSHE'sI universities. The State System of Higher Education Act of November 12, 1982, P. L. 660, No. 188, as amended (Act 188) empowers the Board to establish and amend benefit provisions. The System Plan is unfunded and no financial report is prepared. I I I I I I 29 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 8. Compensated Funding I I Absences and Postretirement Benefits (Continued) Policy The contribution requirements of plan members and PASSHE are established and may be amended by the Board. The System Plan is funded on a pay-as-you-go basis; i.e.,I premiums are paid to an insurance company and various health maintenance organizations to fund the healthcare benefits provided to current retirees. Tuition waivers are provided by the retiree's sponsoring University as they are granted. PASSHE paid premiums of $31,830,000 and $43,847,000 for the fiscal years ended June 30,2010 andI 2009, respectively. Plan members receiving benefits who retired prior to July 1, 2005, are not required to make contributions. Plan members receiving benefits who retire after July 1, 2005, contribute at various rates, depending upon when they retire, whether theyI are eligible for Medicare, the contribution rate in effect on the day of their retirement, the contribution rate for active employees, and applicable collective bargaining agreements. As of June 30, 2010, the maximum rate being contributed by the plan members wasI 10% of the premium currently paid by active employees. Total contributions made by plan members for fiscal years ended June 30, 2010 and 2009, were $2,080,000 and $1,951,000, respectively, or approximately 6.1% and 4.3%, respectively, of the totalI premiums. Annual OPEB Cost and Net OPEB ObligationI The University's annual other post employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC representsI a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.I The following shows the components of the University's annual OPES cost for the year, the amounts actually contributed to the plan, and changes in the University's net OPESI obligation: Annual required contribution Interest on net OPES obligation Adjustment to annual required contribution I $ Annual OPES cost (expense) 6,151,000 Contributions made I (2,389,381) Increase in net OPES obligation 3,761,619 Net OPES obligation at July 1, 2009 I I 6,244,000 2,389,000 (2,482,000) 50,297,037 Net OPES obligation at June 30, 2010 $ I I .~-.-.", 30 54,058,656 I I Notes to Financial Statements June 30, 2010 and 2009 I 8. Compensated Absences and Postretirement Benefits (Continued) The University's annual OPES cost, the percentage of annual OPES cost contributed to theI plan, and the net OBEB obligation for June 30, 2010, and the two preceding years were as follows: I Year Ended June 30 I. I 2010 2009 2008 $ Annual OPEB % of Annual OPEB Cost Net OPEB Cost Contributed ObligationI 6,151,000 5,735,000 5,977,000 38.8% 38.1 % 27.5% $ 54,058,656 50,297,037 46,744,871 Funded Status and Funding ProgressI The funded status of the plan as of July 1, 2009, the most recent actuarial valuation date, was as follows (in thousands):I Actuarial Actuarial accrued liability ("ML") value of plan assets $ 75,697,000 -I Unfunded actuarial accrued liability ("UML") $ Funded ratio (actuarial value of plan assets/ML) 0.0%I Covered payroll (active plan members) $ UML $ as a percentage of covered payroll 75,697,000 35,442,000I 213.6% Actuarial valuations of an ongoing plan involve estimates of the value of reported amountsI and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results areI compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether theI actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. I I I I 31 I Edinboro University I Notes to Financial Statements June 30, 2010 and 2009 I 8. Compensated Actuarial I of Pennsylvania Absences of the State and Postretirement Benefits System of Higher Education (Continued) Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types ofI benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-termI volatility Ibng-term in actuarial accrued liabilities perspective of calculations. the and the actuarial value of assets, consistent with the In the July 1, 2009, actuarial valuation, the projected unit credit method was used. TheI actuarial assumptions included a 4.75% investment rate of return, which is the expected rate to be earned on PASSHE's operating portfolio, and an annual healthcare cost trend rate of 8.50% initially, reduced by decrements to an ultimate rate of 4.8% by 2020. The UML isI being amortized as a level percentage of payroll on a closed basis. The remaining amortization period at July 1, 2009, was 26 years.I Retired Employees Health Program Plan DescriptionI Employee members of the American Federation of State, County and Municipal Employees; Pennsylvania Doctors Alliance; and Pennsylvania Social Services Union participate in the Retired Employees Health Program (REHP), which is sponsored by theI Commonwealth and administered by the Pennsylvania Employee Benefits Trust Fund (PEBTF). The REHP provides eligible retirees and their eligible dependents with health care benefits. Benefit provisions are established and may be amended under pertinentI statutory authority. The REHP neither issues a stand-alone financial report nor is it included in the report of a public employee retirement system or other entity.I Funding Policy The contribution requirements of plan members covered under collective bargainingI agreements are established by the collective bargaining agreements. The contribution requirements of nonrepresented plan members and contributing entities are established and may be amended by the Commonwealth's Office of Administration and theI Governor's Budget Office. Plan members who enrolled prior to July 1, 2004 are not required to make contributions. Plan members who enrolled after July 1, 2004, contribute a percentage of their final salary, the rate of which varies based on the plan member's retirement date. Agency member (employer) contributions are established primarily on a pay-as-you-go basis. In 2009/10, PASSHE contributed $248.68 for each current active employee per biweekly pay period. PASSHE made contributions of $25,318,000, $26,131,000 and $24,858,000, for the fiscal years ended June 30, 2010,I 2009, and 2008, respectively, which equaled the required contributions for the year. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend informationI about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. I I 32 I Edinboro University of Pennsylvania of the State System of Higher Education I Notes to Financial Statements June 30, 2010 and 2009 I 9. I Pension Benefits The University's employees participate in one of three multiple-employer cost sharing retirementI plans. The Public School Employees' Retirement System ("PSERS") and the Commonwealth of Pennsylvania State Employees' Retirement System ("SERS") are governmental cost-sharing multiple employer defined benefit plans. The Alternative Retirement Plan ("ARP") is a defined contribution plan administered by PASSHE. PSERS provides retirement and disability benefits, legislative-mandated ad hoc cost-of-livingI adjustments, and health care insurance premium assistance to qualifying annuitants. The Public Scholol Employees' Retirement Code (Act No. 96 of October 2, 1975, as amended) (24 Pa.C.S.8101-8535) is the authority by which PSERS benefits provisions are established and may be amended. The contribution policy for PSERS is established in the Public SchoolI Employees' Retirement Code and requires contributions by active members, the employer (the University), and the Commonwealth of Pennsylvania. Active members contribute at a rate of between 5.25% and 7.50% of their qualifying compensation, depending upon when the activeI member was hired and what benefit class was selected. The contribution rate for the University is an actuarially determined rate. The rate was 2.39% and 2.38% of annual covered payroll at June 30, 2010 and 2009. The University's contributions to PSERS for the years ended June 30,I 2010, 2009, and 2008 were approximately $29,000, $21,000, and $22,000, respectively, equal to the required contractual contribution. PSERS issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copyI of the report may be obtained by writing to Public School Employees' Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 17108-0125.I SERS also provides retirement, death, and disability benefits, and legislative-mandated ad hoc cost-of-living adjustments. Article II of the Commonwealth of Pennsylvania's Constitution assigns the authority to establish and amend the benefit provisions of the plan to the General Assembly. The contribution policy for SERS, as established by the State Employees' RetirementI Code, requires contributions by active members and the employer (the University). The contribution rate for both active members and the University depends upon when the active member was hired and what benefits class is selected. Active members contribute at a rate ofI either 5.0% or 6.25% of their qualifying compensation. The University contributed at an actuarially determined rate of either 2.52% or 3.15% of an active member's annual covered payroll at June 30, 2010. The University's contributions to SERS for the years ended June 30,I 2010, 2009, and 2008 were $777,000, $715,000, and $719,000, respectively, equal to the required contractual contribution. SERS issues a publicly available annual financial report that includes financial statements and required supplementary information for the plan. A copy of theI report may be obtained by writing to Commonwealth of Pennsylvania, State Employees' Retirement System, P.O. Box 1147, Harrisburg, Pennsylvania 17108-0125. I I Because the ARP is a defined contribution plan, benefits depend on amounts contributed to the plan plus investment earnings. Act 188 empowers the Board to establish and amend benefit provisions. The State Employees' Retirement Code establishes the employer contribution rate for the ARP, while the Board establishes the employee contribution rates. Active membersI contribute at a rate of 5% of their qualifying compensation. The University's contribution rate for June 30, 2010 and 2009 was 9.29% of qualifying compensation. The contributions to the ARP for the years ended June 30, 2010 and 2009 were approximately $2,450,000 and $2,379,000,I respectively, from the University, and $1,284,000 and $1,269,000, respectively, from active members. 33 I Edinboro University of Pennsylvania I Notes to Financial Statements June 30, 2010 and 2009 I 10. Termination of the State System of Higher Education Benefits In March 2010, PASSHE's Board of Governors approved a Voluntary Retirement IncentiveI Program for both union and nonrepresented employees meeting certain age and service requirements. Eligible employees who, by May 28, 2010, indicated their intent to retire between June 18, 2010 and August 27, 2010, qualify for a cash incentive payout of between $6,000 andI $30,000, depending on base salary and years of service. As of June 30, 2010, 14 eligible University employees accepted the offer by signing a release and settlement agreement releasing the University from all legal claims related to their employment and retirement. For the year ended June 30, 2010, the University recorded an expense of $200,100 for the cash incentive and $15,300 for associated Social Security and Medicare taxes, for a total expense of $215,400. The cash incentive is not eligible for retirement benefits. The Association of Pennsylvania State college and University Faculties declined to participate in this program. I I 11. Workers' I Compensation The University is self-insured for workers' compensation losses. For claims occurring prior to July 1, 1995, the University is responsible for claims less than $100,000; for claims occurring onI or after July 1, 1995, the University is responsible for claims less than $200,000. Claims in excess of the self-insurance limits are funded through the Workers' Compensation Collective Reserve Fund (the "Reserve Fund"), to which all PASSHE universities contribute in the amountI as determined by an independent actuarial study. Based on updated actuarial studies, the University contributed $101,559 to the Reserve Fund during the year ended June 30, 2010 and $46,431 to the Reserve Fund during the year ended June 30,2009.I For the years ended June 30, 2010 and 2009, the aggregate liability for claims under the selfinsurance limit was $688,691 and $532,920, respectively. Changes in the University's workers' compensation claims liability were as follows: I Year 2010 2009 Beginning of Fiscal Year Liability Current Year Claims and Changes in Estimates $ $ 532,920 601,160 307,728 159,697 I I I I ~ I 34 BalanceI at Fiscal Year EndI Claims Payments $ (151,957) (227,937) $ 688,691 532,920 I Edinboro University of Pennsylvania I Notes to Financial Statements June 30, 2010 and 2009 I 12. Commitments of the State System of Higher Education and Contingencies General I I The nature of the education industry is such that, from time to time, the Universities of PASSHE are exposed to various risks of loss related to torts; alleged negligence; acts ofI discrimination; breach of contract; labor disputes; disagreements arising from the interpretation of laws or regulations; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. While some of these claims may be for substantial amounts, they are not unusual in the ordinary course of providingI educational services in a higher education system. The University is self-insured for workers' compensation up to stated limits (see Note 11). For all other risks of loss, the University pays annual premiums to the Commonwealth to participate in its Risk Management Program. The University does not participate in any public entity risk pools, and does not retain risk related to any aforementioned exposure, except for those amounts incurred relative to policy deductibles that are not significant.I Additionally, the University has not reduced significantly any of its insurance coverage from the prior year. Settled claims have not significantly exceeded the University's insuranceI coverage in any of the past three years. It is not expected that the resolution of any outstanding claims and litigation will have a material adverse effect on the accompanying financial statements.I Under the terms of federal grants, periodic audits are required and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Such auditsI could lead to reimbursement to the grantor agencies. The University's management believes disallowances, if any, will be immaterial. Construction CommitmentsI I Authorized expenditures for construction projects unexpended as of June 30, 2010 and 2009 were approximately $22,486,000 and $49,404,000, respectively. 13. Subsequent I Event In July 2010, the University was allocated a portion of the proceeds from the Series AL taxexempt bonds issued by the System through PHEFA totaling approximately $6,720,000. TheI Series AL revenue bonds were used to advance refund the Series T revenue bonds, as well as finance renovations to McNerney Hall, the Campus Police & Welcome Center, Compton Hall Gymnasium, and the Porreco Center. I I I I 35 I I Edinboro University of Pennsylvania of the State System of Higher Education ~ Years Required Ended Supplementary June 30, 2010 Information and 2009-~ (Unaudited)I Schedule of Funding Progress for the System Plan (OPEB) (in "I thousands) Actuarial Accrued Actuarial Actuarial Valuation Date JuIy 1,2007 Value of Assets (a) ~ ~ UAAL as a Percentage of Liability (AAL) (b) -~-~~~:- Unfunded AAL (UAAL) (b-c) ~--~~::- Funded Ratio (a/b) ---~::- Covered Payroll (c) $ 33,188 Covered Payroll ([b-a]/c)I -~:::- July 1, 2008 -70,449 70,449 0% 34,410 204.7% July 1, 2009 -75,697 75,697 0% 35,442 213.6% The information below relates to the Commonwealth's REHP as a whole, i.e" it is inclusive of all participating Commonwealth agencies and instrumentalities. Nearly all Commonwealth agencies and instrumentalities participate in the REHP. Schedule of Funding Progress for the REHP (OPEB) (in thousands) ., .." Actuarial Actuarial Accrued Value of Liability Unfunded Funded Assets (AAL) AAL (UAAL) Ratio (a) (b) (b-c) (a/b) Actuarial Valuation Date July 1, 2007 $ 38,500 $ 7,297,500 $ - Covered Payroll (c) 7,259,000 .52% July 1, 2008 60,000 12,863,270 12,803,270 .47% 3,559,000 360% July 1, 2009 47,920 13,257,570 13,209,650 .36% 4,093,000 323% See notes to financial statements 36 $ 3,559,000 UAAL as a Percentage of Covered Payroll ([b-a]/c) $ 203%