ML101690083
| ML101690083 | |
| Person / Time | |
|---|---|
| Site: | University of Wisconsin |
| Issue date: | 06/16/2010 |
| From: | Agasie R Univ of Wisconsin - Madison |
| To: | Document Control Desk, Office of Nuclear Reactor Regulation |
| References | |
| RSC 1047, TAC ME1585 | |
| Download: ML101690083 (45) | |
Text
N uclear Reactor Laboratory UWNR University of Wisconsin-Madison 1513 University Avenue, Room 1215 ME, Madison, WI 53706-1687, Tel: (608) 262-3392, FAX: (608) 262-8590 email: reactor@engr.wisc.edu, hftp://reactor.engr.wisc.edu June 16, 2010 RSC 1047 United States Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 20555
Subject:
Docket 50-156, License R-74 Response to Request for Additional Information for License Renewal to Facility License No. R-74 University Of Wisconsin Nuclear Reactor TAC No. ME1585 (Financial Qualification RAI)
Dear Sirs:
By letter, dated November 13, 2009, the Commission has requested additional information in order to complete the review for the University of Wisconsin Nuclear Reactor's (UWNR) request to renew facility license number R-74.
Enclosed are the responses to the request for additional information. The responses are provided in the same order as the Commission's requests. The format of the enclosure is to restate the request followed by the response. The original request is counter shaded to aid in the separation between request and response.
I certify under penalty of perjury that the foregoing is true and correct.
Sincerely, Executed on: 2/ 1/
Robert J. 4Aga se Reactor Director Enclosure kIlkz
Responses to License Renewal Request for Additional Information Licensee's Response:
The annual financial report for 2009 for the University of Wisconsin has been provided in attachment 1.
Licensee's Response:
The estimated operating costs for fiscal years FY 2011 through 2015 are summarized below:
2011 2012 2013 2014 2015
.Salary & Wages t $216,748 $216,748 $223,452 $225,687 $227,943 Benefits $64,383 $64,383 $66,374 $67,038 $67,709 Supplies & Expenses* $12,000 $12,360 $12,731 $13,113 $13,506 Total $293,132 $293,492 $302,557 $305,837 $309,158 In an effort to reduce a deficit of the biennial state budget, the State of Wisconsin has furloughed state employees, including the University of Wisconsin, for 8 days per year of the biennial budget period. This amounts to a 3% reduction in salaries and wages. This estimate assumes the furloughs will not be reinstated in the next biennial budget period. Furthermore, the historically averaged merit based increase to salaries and wages has been about 1% per year.
tThe projection for supplies and expenses are based on expected cost for 2011 and adjusted by 3% per year to account for inflation.
Page 1 of 9
(b) Confirm th~at the Un~iversity's primary source(s) of fniotcveteopring, cost~s for~the above FY willbe fro6m the state-funded budget asdescribed in the application.~
Licensee's Response:
The following table outlines projected sources of funding to cover the operating costs for fiscal years FY 2011 through 2015:
2011 2012 2013 2014 2015 State Funds $197,022 $197,022 $202,021 $204,521 $207,058 Grants and Giftst $40,480 $40,480 - $40,480 $40,480 $40,480 Auxiliary Enterprise $55,630 $55,990 $60,056 $62,286 $64,554
$293,132 $293,492 $302,557 $305,837 $309,158
-Balancery ~ $0 $1,309> $271 $(610)~ $(1,306) tGrants and gifts include existing state and federal grants and financial gifts made to the University in support of the facility. These funds are encumbered and assumed to be disbursed in equal sharesannually. There are no projections of assumed future grant income.
Auxiliary enterprise income includes services provided by the facility to users for a fee.
These services include, but are not limited to, neutron activation analysis, isotope production, training, outreach and consultation. The projection for 2011 auxiliary enterprise income is based on the historical average over the last decade.. Future projections are adjusted by 3% per year to account for inflation.
Page 2 of 9
Licensee's Response:
The cost analysis that follows was submitted to the NRC in accordance with 10 CFR 50.75 on July 19, 1990 and is reproduced in its entirety. The basis of the 1990 estimate was and the 2010 estimate still is NUREG/CR-1756.
Cost Category Reference Estimate UWNR Estimate (1981$) (1981$)
Disposal of Radioactive Materials 16, 610 10,800 Neutron activated materials reduced by 35%
due to larger distance from core to shield (2.4 m diameter vs. 2.0 m) and UWNR wall not completely surrounding core. Also reduced because UWNR core is 1.2 m above pool bottom vs. 0.46 m.
Contaminated materials 60,600 30,300 Reduction by 50% due to smaller building size, with cooling system and auxiliary equipment compactly housed in one area. Half the assumed rubble volume in reference reactor is outside the reactor building. In addition, pool concrete is well protected against contamination at UWNR due to liner and epoxy coating. Finally, the contamination level at UWNR is extremely low - even the estimate above would require a major fuel rupture to produce enough contamination to require the expenditure indicated.
Page 3 of 9
Cost Category Reference Estimate UWNR Estimate (1981 $) (1981 $)
Radioactive Wastes The number from the reference document is 9,620 9,620 used unchanged.
Total Disposal Costs 86,290 50,720 Staff Labor 530,570 265,285 Our analysis of the work force required for our facility is 6.8 man-years vs. the 12.6 man-year estimate in the reference document. Even this is high, considering that the facility has been operated, upgraded, maintained, health physics services provided, etc. with a considerably smaller staff than indicated for decontamination. In addition, many of the items indicated as chargeable in the reference document are normal university overhead duties not borne specifically for the project in question. Therefore, the final estimate is 50%
of the value in the reference.
Energy 13,790 13,790 The value used in the reference document is used unchanged.
Special Tools and Equipment 21,150 21,150 The value used in the reference document is used unchanged.
Miscellaneous Supplies 6,210 6,210 The value used in the reference document is used unchanged.
Nuclear Insurance 4,620 4,620 The value used in the reference document is used unchanged.
License Fees 13,950 0,000 It is assumed that the university will remain exempted from the NRC licensing fees, so this item is zero for UWNR.
Page 4 of 9
Cost Category Reference Estimate UWNR Estimate (1981$) (1981$)
Subtotal 676,580 361,775 Contingency (25%) 169,150 90,445 TOTAL 845,730 452,220 The cost of spent fuel shipment was assumed to be paid per current fuel contract with the U.S. Department of Energy. Cost for facility demolition and site restoration is not included, since it is expectedthat, once the reactor is decontaminated, the site will be used for other university activities.
The 1990 projection for decommissioning costs in 2000 assumed the decommissioning began in June 2000 when the operating license was scheduled to expire. The 1990 cost estimate assumed an increase of 5% per year. The 5% figure was based on the importance of salary in the estimate and recent history on pay rates for academic staff and civil service employees of the university. Therefore the price above, in 1981 dollars, was expected to escalate by a factor of 2.65 over the 20 year period of 1981-2000.
Therefore the decommissioning cost of the facility was estimated to be $1.2 million in 2000.
A more rigorous approach to address cost escalation using the inflation formula found in 10 CFR 50.75(c)(2) was used to determine the current decommissioning cost estimate, in 2010 dollars, to be $1,995,448. A detailed numerical example of the application of this inflation formula is presented in response to question 3(c) below.
~(b)*
4 st ate mtnont e oif e'd ecommission ingj m ethod to be Used e SAFSTOR,
- g.-DECON or othernmetho~d).
Licensee's Response:
The method of decommissioning will be DECON; that is, the immediate removal of all radioactive material down to residual levels which will permit release of the property for unrestricted access.
Page 5 of 9
(c) A description of the means of adjusting te costestimate and associated udn level periodcally over the life t0 faclitpusantCt.o1 . 7ER 5,d)(2)(i Alorvieanmria xmleudtn the 2-010 cost estimate.~
Licensee's Response:
The means of adjusting the cost estimate and associated funding level for decommissioning of the facility is by use of the inflation formula found in 10 CFR 50.75(c)(2). Specifically, an adjustment factor equal to 0.65*L + 0.13*E + 0.22*B is used
.where Land E are escalation factors for labor and energy, respectively, and taken from regional data from the U.S. Department of Labor's Bureau of Labor Statistics and B is an escalation factor for waste burial taken from NUREG-1307.
To update the initial cost estimate in 1981 dollars to 2010 dollars the labor escalation factor was derived from the Employee Cost Indices, series ID ECU133021 and CIU20100000002301(B) for non seasonally adjusted, total compensation, of private industry in the Midwest.
L1981= 41.9 L20= 108.6 108.6 41.9 =2.592 It should be noted that the value of the Employee Cost Index for 1981 was taken from quarter 4 of 1982 data since no prior data was available and at the time of preparing these responses quarter 1 data for 2010 was not available and therefore quarter 4 data from 2009 was used.
The escalation factor for energy is taken from NUREG-1307, revision 13, section 3.2 for the reference BWR to be:
E = 0.54P + 0.46F Where P reflects escalation in industrial electric power and is derived from the Producer Price Index, series WPU0543, for non seasonally adjusted industrial electric power; and F reflects escalation~in fuel costs and is derived from the Producer Price Index, series WPU057303, for non seasonally adjusted no. 2 diesel fuel. These values were determined to be:
P 1981 = 89.2 F1981 = 105 P2010 = 187 F2010 = 206.8 Page 6 of 9
It should be noted that the value of the Producer Price Index for 1981 was taken from the annual average column and at the time of preparing these responses and the 2010 data was taken to be the preliminary February 2010 values.
Therefore E19 81 =0.54P 198 1+ 0.46F1 98 1 E198 1=0.54(89.2) + 0.46(105)
E1981 = 96.47 And E2 010=0.54P 2010 + 0.46F 2010 E2 010=0.54(187) + 0.46(206.8)
E2010 = 196.1 Finally 196.1 E19 81-20 10 = 9 =2-033 The escalation factor for burial costs is taken from NUREG-1307, revision 13, table 2.1.
The values developed for table 2.1 are normalized to 1986 and do not project beyond 2008. No additional data is available. Therefore the value for the generic LLW disposal site using vendors for the reference BWR, B 198 6-200 8 = 11.198, is assumed as the value for B 1 9 8 1 -2 0 1 0 Applying the above derived escalation factors to the equation, 0.65*L + 0.13*E + 0.22*B, the adjustment factor was determined to be:
0.65(2.592)+0.13(2.033)+0..22(11.198) = 4.413 Applying the 4.413 adjustment factor to the 1981 estimate of $452,220 the current 2010 cost estimate for decommissioning was determined to be $1,995,448.
This methodology will be used to adjusting the cost estimate and associated funding level every five years over the life of the facility pursuant to 10 CFR 50.75(d)(2)(iii).
Page 7 of. 9
Licensee's Response:
An updated Statement of Intent (SOl) provided by the Vice President for Finance of the University of Wisconsin, dated June 2, 2010, is included in attachment 2.
Licensee's Response:
As indicated in the SOl found in attachment 2, the University is an agency of the State of Wisconsin, established pursuant to Chapter 36 of Wisconsin Statues.
Page 8 of 9
Licensee's Response:
As indicated in the SOl found in attachment 2, the University is an agency of the State of Wisconsin, established pursuant to Chapter 36 of Wisconsin Statues. As such all financial obligations are backed and supported by the full faith and credit of the State of Wisconsin.
(d): Documi-entation~ verifying th~at the signator ofthe 501 is authorized to> execute such a documentthat binds the aplicantfinancia Scopy of the University's, governing board or eqiaetrsluinta hw that th~e ignator of the SOl h~a~sbeen authorized by University to b~ind the Uniiversity
~Kfinancially, at les ih epc to fudn h decommissioning o h WR or provide a copy of n official Universit~y delegation of authority showing that,
<the signator of the SOI isauth~orized to bind the Univ~ersity financially, at least with respect to funding the decommissioning of the UWNR.
Licensee's Response:
As indicated in the SOl found in attachment 2, the Vice President of Finance of the University of Wisconsin is authorized to act on behalf of the University in making the declarations in the SOl pursuant to Regent Policy Document 13-3. A copy of Regent Policy Document 13-3 is provided in attachment 3.
Page 9 of 9
Responses to License Renewal Request for Additional Information Attachment 1 Annual Financial Report for 2009 for the University of Wisconsin
UNIVERSITY OF WISCONSIN SYSTEM Years Ended June 3 0, 2009 and 2008 Audited Financial Statements 27
Statements of Net Assets University of Wisconsin Systern June 30,.2009 June 30, 2008 ASSETS Current Assets:
Cash and Cash Equivalents 891,562,426 $ 699,341,403 Accounts Receivable, Net 268,048,374 264,094,425 Student Loans Receivable, Net 33,867,372 34,011,950 Capital Lease Receivable 2,178,644 2,396,678 Inventories 40,108,400 37,455,028 Prepaid Expenses 39,257,446 33,823,220 Deferred Charges 7,204,596 5,655,363 Total Current Assets 1,282,227,258 1,076,778,067 Noncurrent Assets:
Endowment Investments 308,666,630 348,552,351 Student Loans Receivable, Net 165,447,552 165,787,014 Capital Lease Receivable 10,981,941 13,160,585 Land 130,112,829 121,585,235 Improvements Other Than Buildings, Net 109,471,620 97,423,488 Construction In Progress 227,772,184 358,378,124 Buildings, Net 2,641,202,809 2,324,596,066 Equipment, Net 256,212,875 251,322,813 Library Holdings 1,088,150,074 1,071,268,699 Total Noncurrent Assets 4,938,018,514 4,752,074,375 TOTAL ASSETS $ 6,220,245,772 $ 5,828,852,442 LIABILITIES Current Liabilities:
Accounts Payable and Accrued Liabilities $ 295,806,773 $ 307,269,364 Notes and Bonds Payable 39,836,128 37,075,829 Capital Lease Obligations 5,651,473 5,473,980 Unearned Revenue 169,768,276 121,687,048 Compensated Absences 57,595,924 55,356,706 Deposits of Student Organizations 2,052,918 1,822,818 Total Current Liabilities 570,711,492 528,685,745 Noncurrent Liabilities:
Notes and Bonds Payable 788,739,126 766,657,457 Capital Lease Obligations 102,995,660 109,288,790 Compensated Absences 61,523,309 57,009,879 Total Noncurrent Liabilities 953,258,095 932,956,126 TOTAL LIABILITIES $ 1,523,969,587 $ 1,461,641,871 NET ASSETS Invested in Capital Assets, Net of Related Debt 3,515,700,004 $ 3,306,078,369 Restricted for:
Nonexpendable 122,923,573 150,149,852 Expendable 304,714,582 317,262,199 Student Loans 220,588,341 219,140,599 Other 216,370,915 156,969,265 Unrestricted 315,978,770 217,610,287 TOTAL NET ASSETS 4,696,276,185 $ 4,367,210,571 The accompanying notes to the financialstatements are an integralpart of these statements.
28
Statements of Revenues, Expenses and Changes in Net Assets University of Wisconsin System Year Ended June 30, 2009 Year Ended June 30, 2008 OPERATING REVENUES Student Tuition and Fees (Net of Scholarship Allowances of $99,704,584 and $90,874,751, respectively) 934,842,549 $ 884,962,338 Federal Grants and Contracts 733,360,241 630,867,030 State, Local and Private Grants and Contracts 297,809,784 251,493,658 Sales and Services of Educational Activities 279,487,165 276,972,399 Sales and Services of Auxiliary Enterprises (Net of Scholarship Allowances of $17,582,206 and $15,935,669, respectively) 340,323,929 314,147,533 Sales and Services to UW Hospital Authority 47,491,416 45,864,626 Student Loan Interest Income and Fees 4,071,170 3,732,080 Other Operating Revenue 241,380,107 225,703,354 Total Operating Revenues 2,878,766,361 2,633,743,018 OPERATING EXPENSES Salary and Fringe Benefits 2,691,383,369 2,577,615,559 Scholarships and Fellowships 99,128,864 88,914,660 Supplies and Services 1,059,484,634 1,014,294,964 Other Operating Expenses 4,961,328 4,544,811 Depreciation 189,334,626 174,719,876 Total Operating Expenses 4,044,292,821 3,860,089,870 OPERATING LOSS (1,165,526,460) (1,226,346,852)
NON-OPERATING REVENUES AND EXPENSES State Appropriations 1,012,123,927 953,640,764 Gifts 251,516,230 269,646,231 Investment (Loss) Income (Net of Investment Expense of $1,137,219 and $1,531,057, respectively) (43,959,796) 10,777,248 Loss on Disposal of Capital Assets (16,395,013) (9,578,046)
Interest on Indebtedness (36,971,878) (35,701,859)
Transfer to State Agencies (110,631,225) (57,068,796)
Other Revenues (Expenses), Net 111,354,214 584,017 Income (Loss) Before Capital and Endowment Additions/Deductions 1,509,999 (94,047,293)
Capital Appropriations 202,350,119 114,539,164 Capital Contributions 124,463,862 70,961,590 Additions to Permanent Endowment 741,634 1,280,187 INCREASE IN NET ASSETS 329,065,614 92,733,648 NET ASSETS Net Assets - Beginning of Period 4,367,210,571 4,274,264,046 Prior Period Adjustments 212,877 NET ASSETS - End of Period $ 4,696,276,185 $ 4,367,210,571 The accompanying notes to the financialstatements are an integralpartof these statements.
29
Statements of Cash Flows UIniversity of Wisconsin System Year ended June 30, 2009 Year ended June 30, 2008 Cash Flows from Operating Activities Student Tuition and Fees $ 933,075,358 $ 892,100,577 Federal, State, Local and Private Grants and Contracts 1,065,700,183 852,135,795 Sales and Services of Educational Activities 277,881,720 280,316,855 Sales and Services of Auxiliary Enterprises 338,402,376 319,539,894 Sales and Services to UW Hospital Authority 47,207,140 47,601,848 Payments for Salaries and Fringe Benefits (2,698,899,261) (2,469,304,096)
Payments to Vendors and Suppliers (1,053,971,398) (1,012,774,231)
Payments for Scholarships and Fellowships (99,128,864) (88,914,660)
Student Loans Collected 21,296,464 '.24,418,865 Student Loan Interest and Fees Collected 4,071,170 3,732,079 Student Loans Issued (22,931,523) (34,502,100)
Other Revenue, Net 244,963,594 198,062,982 Net Cash Used in Operating Activities (942,333,041) (987,586,192)
Cash Flows from Investing Activities Interest and Dividends on Investments, Net 15,407,870 25,527,688 Proceeds from Sales and Maturities of Investments 122,791,151 192,286,496 Purchase of Investments (142,110,540) (183,788,082)
Net Cash (Used In) Provided by Investing Activities (3,911,519) 34,026,102 Cash Flows from Capital and Related Financing Activities Proceeds from Issuance of Capital Debt 61,906,160 54,753,733 Capital Appropriations 202,350,119 114,539,164 Gifts and Other Receipts 100,862,102 70,159,170 Purchase of Capital Assets (407,500,086) (419,628,481)
Principal Payments on Capital Debtand Leases (118,876,754) (109,565,465)
Interest Payments on Capital Debt and Leases (88,189,194) (90,240,184)
Net Cash Used in Capital and Related Financing Activities (249,447,653) (379,982,063)
Cash Flows from Noncapital Financing Activities State Appropriations 1,136,024,054 1,074,599,979 Gifts and Other Receipt6 361,780,502 269,025,117 Transfer to State Agencies (110,631,225) (57,068,796)
Additions to Permanent Endowments 741,635 1,280,187 Student Direct Lending Receipts 94,318,579 72,866,661 Student Direct Lending Disbursements (94,320,309) (72,961,847)
Net Cash Provided by Noncapital Financing Activities 1,387,913,236 1,287,741,301 Net Increase (Decrease) in Cash and Cash Equivalents 192,221,023 (45,800,852)
Cash and Cash Equivalents - Beginning of Year 699,341,403 745,084,198 Prior Period Adjustments 58,057 Cash and Cash Equivalents - End of Year $ 891,562,426 $ 699,341,403 30
Statements of Cash Flows (Continued)
Liniversity of Wisconsin System Year ended June 30, 2009 Year ended June 30, 2008 Reconciliation of Operating Loss to Net Cash Used in Operating Activities Operating Loss ) $ (1,165,526,460) $ (1,226,346,852)
Adjustments to Reconcile OperatingLoss to Net Cash Used in OperatingActivities:
Depreciation Expense 189,334,626 174,719,876 Changes in Assets and Liabilities:
Receivables, Net (12,219,849) (20,648,428)
Inventories (2,653,371) (617,678)
Prepaid Expenses (3,029,314) (2,374,176)
Deferred Charges (1,608,053) 1,255,466 Accounts Payable and Accrued Liabilities (1,462,836) 108,019,854 Unearned Revenue 48,079,567 (25,238,169)
Compensated Absences 6,752,649 3,643,915 Net Cash Used in Operating Activities $ (942,333,041) $ (987,586,192)
Noncash Investing, Capital and Financing Activities Capital Leases (Initial Year):
Fair Market Value $ 1,408,032 S 2,558,442 Current Year Cash Payments (30,656) (37,568)
Gifts-In-Kind 27,742,629 5,235,563 Net Change in Unrealized Gains and Losses (58,584,030) (38,711,046)
The accompanyingnotes to the financialstatements are an integralpart of these statements.
31
UNIVERSITY OF WISCONSIN SYSTEM Notes to tile Financial Statements Years Ended June 30, 2009 and 2008 NOTE I - Organization and Summary of Significant Accounting Policies Organization and Basis of Presentation: The University of Wisconsin System consists of 13 universities, 13 two-year colleges, University of Wisconsin-Extension, and System Administration. The financial statements do not include the accounts of the University of Wisconsin Hospital and Clinics Authority (UWHCA), which became a legally separate public authority on June 29, 1996; the La Crosse Medical Health Science Consortium, Inc., which is a Wisconsin non-stock corporation tax exempt under Internal Revenue Code (IRC) 501(c)(3); or the University of Wisconsin Foundation. In addition, the financial statements do not include the accounts of various legally independent and fully self-governing support organizations, such as booster clubs and alumni groups; funds contributed to the University of Wisconsin System by these organizations are reported at the time they are received. Note 11 describes the effect on the financial statements of other organizations, including the various affiliation and operating agreements with the UWHCA and La Crosse Medical Health Science Consortium, Inc. Post-retirement benefit plans for the University of Wisconsin System employees are administered by the State of Wisconsin's Department of Employee Trust Funds. The assets and liabilities of these programs are reported by the State of Wisconsin and not by the University of Wisconsin System.
The University of Wisconsin System is a major enterprise fund of the State of Wisconsin. The financial statements are discretely presented in the proprietary fund financial statements of the State of Wisconsin's, Comprehensive Annual Financial Report (CAFR). The University of Wisconsin System's financial information presented in the CAFR has been adjusted to reflect reclassifications which are done to conform with reporting requirements related to the CAFR.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board (GASB). In addition, the University of Wisconsin System applies allapplicable Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins of the Committee on Accounting Procedures issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The University of Wisconsin System has elected not to apply FASB pronouncements issued after November 30, 1989.
The.University of Wisconsin System's annual report consists of three basic financial statements prepared in accordance with GASB principles: the Statements of Net Assets; the Statements of Revenues, Expenses and Changes in Net Assets; and the Statements of Cash Flows.
The Statements of Net Assets; the Statements of Revenues, Expenses and Changes in Net Assets; and the Statements of Cash Flows have been prepared using the economic resources measurement focus and the accrual basis of accounting. The University of Wisconsin System reports as a Business Type Activity, as defined by GASB Statement 35, Basic FinancialStatements - Management Discussion andAnalysis -for Public Colleges and Universities. Business Type Activities are those that are financed in whole or in part by fees charged to external parties for goods or services.
The Statements of Revenues, Expenses, and Changes in Net Assets classify the University of Wisconsin System's fiscal year activity as operating and nonoperating. Operating revenue results from exchange transactions, such as payment received for providing goods and services, including tuition and fees, certain grants and contracts, sales and services of educational activities, and auxiliary enterprise revenue. Certain significant revenue streams relied upon for operations are reported as nonoperating revenues, as defined by GASB Statement 35, including state appropriations, gifts, and investment income. The majority of the University of Wisconsin System's expenses are exchange transactions which GASB defines as operating expenses for financial statement presentation. Nonoperating expenses include capital financing costs and costs related to investment activity.
32
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE I - Organization and Summary of Significant Accounting Policies (continued)
Summary of Significant Accounting Policies: Student tuition and fees are presented net of scholarships and fellowships applied to student accounts. Stipends and other payments made directly to students are presented as scholarship and fellowship expenses.
Restricted funds received as gifts and grants and contracts are used according to donor restrictions or the specific purpose of the grantor. In addition, restrictions are statutorily established that limit the use of certain resources for specific purposes. These restrictions apply not only to state support but to many of the University 'ofWisconsin System's program revenue sources, including auxiliary operations. The net assets reported as restricted will be used in accordance with the purposes for which they are restricted and are the first resources used for these purposes. Unrestricted net assets would be used only secondarily to support these restricted purposes.
The University of Wisconsin System eliminates intra-fund assets and liabilities to prevent double counting in the Statements of Net Assets. Likewise, revenues and expenses relative to internal service activities are also eliminated in the Statements of Revenues, Expenses and Changes in Net Assets.
Unearned revenues consist of payments received but not yet earned as of June 301h, primarily summer session tuition payments, tuition and room deposits for. the next fall term, advance ticket sales for athletic events, and amounts received from grant and contract sponsors which have not yet been earned under the terms of the agreement.
Prepaid items represent payments made prior to June 3 0 th for goods and services received after the close of the fiscal year, primarily health and life insurance coverage.
Deferred charges represent costs associated with revenues that have not yet been earned as of June 3 0 th, primarily summer session costs incurred prior to the close of the fiscal year. The revenues and expenses of the 2009 summer session are reportable within the fiscal year beginning July 1, 2008 and ending June 30, 2009, based on the prorated portion of the number of summer session days that occurred in fiscal year 2009.
The revenues and expenses of the 2008 summer session are reportable within the fiscal year beginning July 1, 2007 and ending June 30, 2008, based on the prorated portion of the number of summer session days that occurred in fiscal year 2008.
Accrual of interest on bonds payable and salaries and fringe benefits paid after the close of the fiscal year, for hours worked by the University of Wisconsin System employees prior to June 3 0 th, account for the major portion of accounts payable and accrued liabilities.
Inventories consist of consumable supplies used in operations or items held for resale. Supplies held by central stores are valued at average cost, fuels are reported at market value, and other inventories held by individual institutional cost centers are valued using a variety of cost flow assumptions that, for each type of inventory, are consistently applied from year to year. In addition to central stores and fuels, the major types of inventories include laboratory supplies, physical plant supplies, food service and student housing supplies, and items held for resale by campus microcomputer outlets. Accounting polices related to capital assets are described in Note 9:
The Statements of Cash Flows present the change in the cash and cash equivalents balance for the fiscal year. Cash and cash equivalents include bank accounts and investments with original maturity dates of ninety days or less at the time of purchase. These investments consist primarily of commercial paper, money market funds, and U.S. Treasury bills.. Investments in marketable securities are carried at fair value as established by the major securities markets. Investments in limited partnerships are carried at fair value 33
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 1 - Organization and Summary of Significant Accounting Policies (continued) based on quarterly reports from the limited partnerships' management. Annually, the reports are audited by independent auditors.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Certain items in the June 30, 2008 financial statements have been reclassified.or restated to correspond to the June 30, 2009 presentation. For example, Student Direct Lending Receipts and Disbursements as presented in the year ended June 30, 2008 Statement of Cash Flows were reduced by $112,684,674 as a result of reclassifying the amounts to reflect Federal Family Education Loans rather than Direct Loans.
NOTE 2 - Cash and Investments Cash and Cash Equivalents Cash and cash equivalents consist primarily of shares in the State Investment Fund (SIF), a short term pool of state and local funds managed by the State of Wisconsin Investment Board (SWIB) with oversight by a Board of Trustees as authorized in s. 25.14 and 25.17, Wisconsin Statutes. SWIB is not registered with the SEC as an investment company. The objectives of this fund are to provide liquidity, safety of principal, and a reasonable rate of return. Investments consist primarily of obligations of the U.S. Government and its agencies and high quality commercial bank and corporate debt obligations.
Of the $891.6 and $699.3 million in cash and cash equivalents as of June 30, 2009 and 2008, respectively,
$629.0 and $512.3 million, respectively, represents an amount held within the SIF; $235.2 and $141.8 million, respectively, was maintained by individual University of Wisconsin System institutions in local bank accounts to meet operating needs; and $27.4 million and $45.2 million, respectively, was held at Mellon Bank of Boston to meet the cash needs associated with the investing activities of the Long Term and Intermediate Term Funds, which is also categorized as investments in accordance with governmental standards. Except for balances associated with trust funds, auxiliary operations, and federally funded financial aid programs which receive interest distributions on a monthly basis, no investment earnings from these assets accrue to the University of Wisconsin System.
Custodial Credit Risk: Custodial credit risk related to deposits is the risk that, in the event of a failure of a depository financial institution, the University of Wisconsin System will not be able to recover deposits that are in possession of an outside party. The University of Wisconsin System does not have a formal deposit policy for custodial credit risk.
The University of Wisconsin System had balances in excess of Federal Deposit Insurance Corporation limits in the amount of $231.4 and $139.9 million at June 30, 2009 and 2008, respectively. These amounts, deposited in approved financial institutions, are uninsured and uncollateralized. A state appropriation for losses on public deposits (s. 34.08, Wisconsin Statutes) insures up to $400,000 over the amount of federal insurance.
Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of a deposit. Deposits in foreign currency at June 30, 2009 and 2008 are immaterial.
The University of Wisconsin System does not have a formal deposit policy for foreign currency risk.
34
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 2 - Cash and Investments (continued)
Investments The University of Wisconsin System invests its Trust Funds, principally gifts and bequests, in two of its own investment pools: the Long Term and the Intermediate Term Funds. Investment policies and guidelines for these funds are governed and authorized by the Board of Regents. The current approved asset allocation policy for the Long Term Fund sets a general target of 24.5% marketable equities, 16.5% fixed income, 34% alternatives, and 25% tactical strategies. The approved asset allocation for the Intermediate Term Fund is 15% marketable equities, 65% fixed income, 10% alternatives, and 10% cash.
These target allocations were last affirmed/approved in December 2008.
Benefiting University of Wisconsin System entities receive quarterly distributions from the Long Term Fund, principally endowed assets, based on an annual spending rate applied to a twelve-quarter moving average market value of the Fund. The annual spending rate is currently 4.0%. Distributions from the Intermediate Term Fund, principally quasi-endowments and unspent income distributions, consist of interest earnings distributed quarterly. Spending rate and interest distributions from both of these Funds are transferred to the SIF, pending near-term expenditures. During the fiscal year ending on June 30, 2009, the amount available to spend from the Long Term Fund was $12,276,180, relative to $11,756,158 available during the fiscal year ending June 30, 2008.
At June 30, 2009 and 2008, the University of Wisconsin System's investments include credit risk Category I investments as defined by GASB (investments that are insured or registered and held by the University of Wisconsin System or its agents in the name of the University of Wisconsin System) and other investments not categorized by risk category as follows:
2009 2008 Category 1:
U.S. Government Securities $ 26,189,790 $ 35,310,280 U*S Agency Securities 12,475,867 13,303,707 Bonds and Preferred Stock 27,067,615 29,093,063 Common Stock and Convertible Securities 33,931,083 46,198,532 99,664,355 123,905,582 Not Categorized:
Pooled Equity Funds 73,013,822 88,909,167 Pooled Allocation Fund 58,155,616 57,456,075 Pooled Fixed Income Fund 28,088,917 19,934,461 Custodial Pooled Cash and Cash Equivalents 27,393,912 45,153,083 Limited Partnerships 49,743,920 58,347,066 236,396,187 269,799,852 Total Investments $ 3 36,060.542 $ 393.705.434 35
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 2 - Cash and Investments (continued)
The Long Term Fund consisted of the following investment categories on June 30, 2009 and 2008:
2009 2008 Investment Category Common Stock and Convertible Securities 36.7% 38.5%
Bonds and Preferred Stock 14.4% 13.9%
Alternative Assets 18.5% 19.3%
Tactical Allocation Strategies 21-.6% 17.4%
Custodial Pooled Cash and Cash Equivalents 8.8% 10.9%
Total 100.0% 100.0%
The Intermediate Term Fund consisted of the following investment categories on June 30, 2009 and 2008:
2009 2008 Investment Category Common Stock and Convertible Securities 12.7% 3.7%
Bonds and Preferred Stock 81.9% 81.9%
Custodial Pooled Cash and Cash Equivalents 5.4% 14.4%
Total 100.0% 100.0%
The total return on the Long Term Fund, including capital appreciation, was (14.7)% compared to (2.7)% in fiscal year 2008. The total return on the Intermediate Fund, including capital appreciation, was 2.2%
compared to 7.6% in fiscal year 2008. External investment counsel was utilized for funds representing 84.6%, compared to 83.8% in fiscal year 2008, of the market value of the Long Term and .Intermediate Term Funds. In addition to the limited partnerships market value listed above, the University of Wisconsin System had unfunded limited partnership commitments of $30.6 million for the fiscal year ending June 30, 2009, relative to $20.6 million for the fiscal year ending June 30, 2008.
Credit Risk: Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. For the Long Term Fund, fund-level asset allocation constraints limit exposure to below investment grade debt securities to no more than 10%; for the Intermediate Term Fund, exposure is limited to 6%. In addition, actively-managed, investment grade fixed income separate accounts must maintain an average portfolio quality of AA by Standard & Poor's and/or Aa by Moody's, and hold only securities rated BBB- by Standard & Poor's and/or'Baa3 by Moody's or higher. Credit risk guidelines for all mutual or commingled funds used are carefully reviewed and monitored. As of June 30, 2009, the actively-managed, investment grade fixed income separate accounts held a CIT Group Inc. security in the amount of $114,862 rated Ba2 by Moody's and BB- by Standard & Poor's and a Windsor Financing, LLC security in the amount of $89,765 rated Ba3 by Moody's and BB by Standard & Poor's. The CIT Group Inc. security was disposed of on August 3, 2009'and the Windsor Financing, LLC security was disposed of on July 16, 2009.
36
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements J
Years Ended June 30, 2009 and 2008 NOTE 2 - Cash and Investments (continued)
The following schedule displays the credit ratings as provided by Moody's Investor Service for debt securities held as of June 30, 2009 and 2008. Obligations of the United States and obligations explicitly guaranteed by the U.S. government have been included in the Aaa rating below, although they are considered to be without credit risk.
Ratings 2009 2008 Aaa $ 52,620,304 $ 61,873,806 Aal 1,181,754 Aa2 1,591,081 1,171,886 Aa3 1,134,921 2,989,847 Al 1,523,942 1,694,912 A2 5,150,987 1,663,987 A3 4,794,441 3,182,833 Baal 860,018 1,724,573 Baa2 3,665,300 1,599,247 Baa3 1,253,211 1,742,248 Bal 2,468,963 1,154,508 Ba2 2,518,060 1,755,612 Ba3 4,361,573 2,440,603 BI 3,350,655 3,064,299 B2 2,561,262 2,875,127 B3 2,327,121 3,964,843 Caal 987,440 589,679 Caa2 56,671 Caa3 8,133 No Rating 2,588,105 2,971,747 Unrated Pooled Cash 27,393,912 45,153,083 Totals $ 121.216,100 $ 142,794,594 Custodial Credit Risk: Custodial credit risk related to investments is the risk that, in the event of a failure of a counterparty to a transaction, the University of Wisconsin System will not be able to recover the value of investment or collateral securities that are in possession of an outside party. The University of Wisconsin System's investments are registered in the name of the University of Wisconsin System and the University of Wisconsin System does not participate in any securities lending programs through its custodian bank.
Investment securities underlying the University of Wisconsin System's investment in shares of external investment pools or funds are in custody at those funds. The shares owned in these external investment pools are registered in the name of the University of Wisconsin System.
Concentrationof Credit Risk: Concentration of credit risk is the risk of loss attributed to the magnitude of an organization's investment in a single issuer. Actively-managed, fixed income separate accounts are limited to holding no more than 7% in any one issuer (U.S. Government/Agencies are exempted). Credit confcentration guidelines for all mutual or commingled funds used are carefully reviewed and monitored.
During fiscal year 2009 and 2008, the largest concentration by a non-U.S. Government/Agency was Wachovia Bank with 0.6% and 0.9%, respectively, of total Trust Funds assets.
37
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 2 - Cash and Investments (continued)
Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Actively-managed, fixed income separate accounts are expected to maintain their overall duration to within plus or minus one year of the established benchmark's duration. Duration-related guidelines for mutual or commingled funds used are carefully reviewed and monitored. The University of Wisconsin System uses the option adjusted modified duration method to analyze interest rate risk. The University of Wisconsin System had interest rate risk statistics for fixed income separate accounts as detailed below:
- 2009 2008 Fixed Income Sector:
Modified Modified Market Value Duration Market Value Duration Treasury Inflation Protected Securities $ 23,916,020 3.61 $ 30,444,649 7.37 Government 2,488,731 7.42 968,791 1.29 U.S. Government Mortgages 7,797 2.80 4,170,685 5.49 Corporates and Other Credit 16,918,966 4.11 14,581,521 3.28 Collateralized Mortgage Obligations: 8,326,606 2.92 10,080,400 3.70 U.S. Agencies Collateralized Mortgage Obligations: 4,353,435 1.91 11,145,632 2.90 Corporate Commercial Mortgage Backed Securities 2,150,651 3.33 - N/A U.S. Private Placements 3,151,710 3.28 2,425,644 3.09 U.S. Agencies 4,242,963 4.91 3,308,069 4.28 Asset Backed Securities 793,912 3.70 1,276,448 3.04 Totals $ 78.401,839 In addition, the University of Wisconsin System had interest rate risk statistics for actively-managed commingled accounts as detailed below:
2009 2008 Fixed Income Commingled Fund:
Modified Modified Market Value Duration Market Value Duration Seix Advisors High Yield Fund $ 18,387,582 4.10 $ 16,796,566 4.18 Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment. As of June 30, 2009, the Long Term and Intermediate Term Funds held equity securities denominated in foreign currencies within pooled investment vehicles only, with market values totaling $75,967,071 and $4,203,800, respectively, compared to prior fiscal year amounts of
$94,307,013 and $1,153,656, respectively. Some of the trades for such foreign positions will not settle in foreign currencies until after the fiscal year end. For the Long Term and Intermediate Term Funds, it is generally expected and desired that foreign currency exposure is not hedged, as this enhances the diversification benefits from non-U.S. investments. Foreign currency management practices and policies for mutual or commingled funds used are carefully reyiewed and monitored.
38
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 3 - Receivables Accounts receivable, amounts due from state agencies and other governments, amounts due from capital lease receivables, and student loans receivable as of June 30, 2009 and 2008, are summarized as follows:
2009 2008 Receivables (Net):
Student Academic Fees $ 22,745;420 $ 19,966,011 Grants and Contracts 61,321,890 45,676,609 Educational Activities and Other 11,920,913 15,607,511 Auxiliary Enterprises 5,663,497 2,252,614 UW Hospital Authority and La Crosse Medical Health Science Consortium, Inc. 14,679,596 16,791,998 Investment 1,150,638 9,930,666 Student Loans Receivable 199,314,924 199,798,964 State Agencies 57,843,933 62,753,863 Other Governments 105,883,072 106,672,416 Total Receivables (Net) $ 480.523.883 $ 479.450.652 Student loans receivable at June 30, 2009 included allowances for un collectible loans of $10.5 million relative to $10.8 million in the prior year. Principal repayment and interest rates of university and federal loans vary. Federal loan programs are funded primarily with federal contributions to the University of Wisconsin System under the Perkins loan program and a variety of health professions loan programs.
The University of Wisconsin System distributed $94.3 million in student loans through the United States Department of Education federal direct lending program during fiscal year 2009 and $73.0 million in 2008.
These distributions and the related funding sources are not reflected as expenses and revenues in the financial statements. However, cash inflows and outflows are shown in the Statements of Cash Flows.
NOTE 4 - Liabilities Accounts payable and accrued liabilities, consisting of salary and fringe benefits, due to state agencies and other governments, and vendor payables, resulting from University of Wisconsin System activities as of June 30, 2009 and 2008, are summarized as follows:
Due to State Agencies and Fiscal Year 2009 Salary and Fringe I Other Total Benefits Governments Vendors Pavables UW System Activities:
Operating $ 71,063,732 $ 46,531,418 $ 37,971,607 $ 155,566,757 Gifts, Grants and Contracts 46,471,234 2,937,216 22,783,863 72,192,313 Capital Projects 868,617 49,917,876 50,786,493 Auxiliary Enterprises 5,453,301 1,170,077 5,914,800 12,538,178 Investment and Other 477,769 430,953 3,814,310 4,723,032 Total Activities $ 123.466.036 $ 51.938.281 L 120,402,456 $ 295.806.773 39
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 4 - Liabilities (continued)
Due to State Agencies and Fiscal Year 2008 Salary and Fringe Other Total Benefits Governments Vendors Pavables UW System Activities:
Operating $ 74,180,592 $ 59,179,334 $ 32,024,076 $ 165,384,002 Gifts, Grants and Contracts, 41,405,170 3,038,729 28,125,054 72,568,953 Capital Projects 1,178,132 42,967,342 44,145,474 Auxiliary Enterprises 5,540,810 2,590,452 4,120,404 12,251,666 Investment and Other 442,350 1,205,080 11,271,839 12,919,269 Total Activities $121.568.922
$ 67.191727 $ 118,508,715 $ 307.269.364 As of June 30, 2009, current liabilities totaled $570.7 million inclusive of $2.1 million in deposits of student organizations, $295.8 million of accounts payable and accrued liabilities, $169.8 million of unearned revenue, and the current portion of notes and bonds payable, capital lease obligations, and compensated absences. Noncurrent liabilities consisted of notes and bonds payable, capital lease obligations, and compensated absences that totaled $953.3 million at June 30, 2009, relative to a total of $933.0 million at June 30, 2008. Total noncurrent liabilities increased by $20.3 million relative to fiscal year 2008.
A summarization of noncurrent liability activity for the fiscal year ended June 30, 2009 and 2008 follows:
2009 Balance Increases/ Balance Current Noncurrent Liabilities July 1. 2008 Decreases June 30, 2009 Portion Bonds Payable $ 738,608,942 $ 32,563,410 $ 771,172,352 $ 31,312,313 Notes Payable 65,124,344 (7,721,442) 57,402,902 8,523,815 Capital Lease Obligations 114,762,770 (6,115,637) 108,647,133 5,651,473 Compensated Absences 112,366,585 6,752,648 119,119,233 57,595,924 Total $ 1,030,862,641 $ 25.478.979 $1,056,341.620 $ 103,083-525 2008 Balance Increases/ Balance Current Noncurrent Liabilities July 1, 2007 Decreases June 30, 2008 Portion Bonds Payable $ 709,742,012 $ 28,866,930 $ 738,608,942 $ 29,354,807 Notes Payable 72,807,570 (7,683,226) 65,124,344 7,721,022 Capital Lease Obligations 119,234,560 (4,471,790) 114,762,770 5,473,980 Compensated Absences 108,722,670 3,643,915 112,366,585 55,356,706 Total $ 1.010.506.812 $ 20.35 5-829 $ 1.030,862,641 $ 97.906.515 40
UNIVERSITY OF WISCONSIN SYSTEM
.Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 5 - Lease Commitnments The University of Wisconsin System had capital lease obligations with a net present value of $108,647,133 as of June 30, 2009 compared to $114,762,770 at June 30, 2008. The payment schedule for capital lease obligations is as follows:
2010 $ 10,511,221 2011 10,212,972.
2012 9,990,172 2013 9,795,283 2014 9,773,518 2015-2019 31,579,099 2020-2024 25,308,377 2025-2029 30,791,510 2030-2034 37,462,580 2035-2039 17,166,827 Total Scheduled Lease Payments 192,591,559 Amount Representing Interest (83,944,426)
Net Present Value $ 108.647,133 Assets Held Under Capital Lease:
Original Cost Accumulated Book Value 2009 June 30, 2009 Depreciation June 30, 2009 Buildings and Improvements $ 145,780,535 $ 27,452,092 $ 118,328,443 Equipment 6,904,759 5,012,510 1,892,249 Total Assets $ 152,685,294 $ 32.464.602 $ 120220,692 Original Cost Accumulated Book Value 2008 June 30, 2008 Depreciation June 30, 2008 Buildings and Improvements $144,907,037 $ 22,193,636 $ 122,713,401 Equipment 6,961,965 5,222,473 1,739,492 Total Assets $151,869,002 $ 27,416,109 $ 124,452,893 41
UNIVERSITY OF WISCONSIN SYSTEM Notes to tile Financial Statements Years Ended June 30, 2009 and 2008 NOTE 5 - Lease Commitments (continued)
Facilities and equipment rented through operating leases are not recorded as assets on the balance sheet.
Operating lease expenditures amounted to $24,971,724 for the fiscal year ended June 30, 2009. Minimum commitments for future operating lease payments are as follows:
2010 $ 22,036,251 2011 10,859,042 2012 7,448,927 2013 5,431,201 2014 4,915,157 2015-2019 24,169,742.
2020-2024 24,957,212 2025-2029 24,332,838 2030-2034 17,819,725 Total $ 141.970.095 NOTE 6 - Compensated Absences The compensated absences liability at June 30, 2009 consists of accumulated unpaid annual leave, compensatory time, personal holiday hours, and Saturday/legal holiday hours earned and vested.
Compensated absences for the University of Wisconsin System employees at June 30, 2009 totaled
$119,119,233 compared with $112,366,585 for the previous year. The compensated absences balance consists of a $57,595,924 current liability and $61,523,309 noncurrent liability compared to a $55,356,706 current liability and $57,009,879 noncurrent liability for the previous year. The University of Wisconsin System leave policies restrict the accumulation of unused vacation and thus limit the actual payments made to employees upon termination or retirement.
NOTE 7 - Retirement Benefits Retirement benefits are provided for substantially all employees through the Wisconsin Retirement System (WRS), a cost-sharing, multiple-employer, defined benefit plan governed by Chapter 40 of the Wisconsin
..Statutes. State and local government public employees are entitled to an annual formula retirement benefit based on the employee's final average earnings, years of creditable service, and a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. If an employee's contributions, matching employer's contributions, and interest credited to the employee's account exceed the value of the formula benefit, the retirement benefit may instead be calculated as a money purchase benefit. WRS is part of the State of Wisconsin's financial reporting entity. Copies of the separately issued financial report that includes financial statements and required supplementary information may be obtained by writing to: Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-793 1.
Generally, the State's policy is to fund retirement contributions on a level-percentage-of-payroll basis to meet normal costs of the retirement system. The retirement plan requires employee contributions equal to specified percentages of qualified earnings based on the employee's classification, as well as employer contributions at a rate determined annually. The University of Wisconsin System made contributions of
$192,305,871 for fiscal year 2009, compared to $182,100,932 for the previous fiscal year. In December 2003, the State issued bonds and subsequently fully liquidated its prior service liability balance as of 42
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 7- Retirement Benefits (continued)
January 2003.. State agencies are required to make future contributions to fund the bond payments. Bond payments totaling $45,426,987 during fiscal year 2009, compared to bond payments totaling $42,068,796 during fiscal year 2008, are included in transfer to state agencies on the financial statements.
In addition to the Wisconsin Retirement System, certain employees associated with federally funded activities are partially covered by the Federal Retirement Program. The University of Wisconsin System's contributions to this program amounted to $276,461 during the current year, compared with $361,304 for the previous year.
NOTE 8 - Posteemploynment Benefits Other Than Pensions In accordance with the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, state and local governmental employers are required to display in financial reports other postemployment benefit expense/expenditures and related liabilities (assets), note disclosures, and if applicable, required supplementary information. The employees of the University of Wisconsin System are employees of the State. The financial statements of the University of Wisconsin System do not include other postemployment benefit expense/expenditures or the related liabilities (assets) other than those actually paid during fiscal year 2009, which are included in salary and fringe benefits on the financial statements.
Health Insurance The State's Health Insurance Program, a cost-sharing multiple-employer defined benefit plan not held in trust, is an employer-sponsored program offering group medical coverage to eligible employees and retirees of the State. The State Department of Employee Trust Funds and the Group Insurance Board have program administration and oversight responsibilities under Wisconsin Statutes Sections 15.165(2) and 40.03(6).
Under this plan, retired employees of the State contribute the same healthcare premium as active employees, creating an implicit rate subsidy for retirees. This implicit rate subsidy, which is calculated to cover pre-age 65 retirees (since at age 65 retirees are required to enroll in Medicare when eligible), is treated as an other postemployment benefit (OPEB).
As of the January 1, 2007 actuarial valuation, the State's annual required contributions were $158.7 million for 2008 and $148.5 million for 2007. The State's actual contributions were $48.8 million in 2008 and
$44.3 million in 2007, which results in a net OPEB obligation for the State of $214.1 million as of December 31, 2008, and $104.2 million as of December 31, 2007. The portion of this obligation allocated to the University of Wisconsin System increased from $47.1 million in fiscal year 2008 to $96.6 million in fiscal year 2009. This obligation is included in the CAFR, but is not included in the University of Wisconsin System's financial statements dueto differences in reporting requirements.
The CAFR includes financial statements, additional note disclosures, and required supplementary information for this plan. That report is publicly available at www.doa.state.wi.us or may be obtained by writing to: The Department of Administration, 101 East Wilson Street, Madison, Wisconsin 53702.
43
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 8 - Postemployment Benefits Other Than Pensions (continued)
Life Insurance and Duty Disability The Life Insurance program, a cost-sharing multiple-employer defined benefit plan held in trust, provides post-employment coverage to all eligible employees. The plan is administered under Wisconsin Statutes Section 40.70. Beginning at age 65, retirees and terminating members continue to receive basic coverage for life at the level of insurance in force before retirement. Retirees and terminating members under age 65 must continue to pay the employee premium to maintain coverage. The amount contributed by the University of Wisconsin System to this plan could not be determined.
The Duty Disability program, a cost-sharing multiple-employer defined benefit plan held in trust, offers special disability insurance for employees in protective occupations. This plan is administered under Wisconsin Statutes Section 40.65. Qualified employees receive benefits under this program approximating 80% of salary, less certain offsets, based upon the type and level of disability suffered and the implications of the disability on their ability to work. There are no employee contributions associated with this plan.
The University of Wisconsin System contributed $728,727 to this program during fiscal year 2009 compared to $660,330 during fiscal year 2008.
The Department of Employee Trust Funds issues publicly available financial reports that include financial statements, additional note disclosures, and required supplementary information for these plans. The reports are available at www.etfwi.gov or may be obtained upon request from: The Department of Employee Trust Funds, 801 West Badger Road, P.O. Box 7931, Madison, Wisconsin 53707-7931.
NOTE 9 - Capital Assets Land, buildings, improvements (e.g., parking lots, fences, street lighting, etc.), equipment, and library holdings are capitalized at cost at date of acquisition or fair market value at date of donation in the case of gifts-in-kind. Generally, capital equipment is defined as any single asset with a minimum value of $5,000 and having a useful life of more than one year. Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets: buildings over forty years, improvements over twenty years, and capital equipment over periods ranging from three to fifteen years for specified asset classes. The componentized methodology of depreciation is used for major research facilities generally using estimated useful lives ranging from ten to fifty years. Library'holdings are not depreciated because these resources are viewed as inexhaustible assets. Disposals of library holdings are removed at either a historically calculated average cost or at an amount that approximates original cost as nearly as is practical to determine. The University of Wisconsin System does not capitalize the $245.3 million in works of art or historical treasures that are held for exhibition, education, research, and public service. These collections, are neither disposed of for financial gain nor encumbered in any way. Proceeds from the sale, exchange, or other disposal of any item belonging to a collection of works of art or historical treasures must be applied to the acquisition of additional items for the same collection.
GASB Statement No. 42, Accounting and FinancialReporting for Impairment of Capital Assets andfor Insurance Recoveries, establishes accounting and financial reporting standards for a capital asset that has experienced a significant, unexpected decline in its service utility. Two assets met the temporarily impaired definition of this standard. The University of Wisconsin - Whitewater's Central Heating Plant, net book value of $5.3 million was idle as of June 30, 2008; however it was fully functional in Fall, 2008. The University of Wisconsin - Oshkosh's River Commons, net book value of $.5 million, was idle as of June 30, 2008 and 2009. A decision was made on October 7, 2009 that the building will be replaced with expected insurance proceeds of $3.1 million within the next two years. Insurance recoveries for the two buildings amounting to $1.2 and $1.0 million, respectively, are included in the other non-operating revenues (expenses), net, account on the financial statements.
44
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 9 - Capital Assets (continued)
Depreciation expense for the fiscal years ended June 30, 2009 and 2008 was $189.3 and $174.7 million, respectively.
The change in book value from July 1, 2008 to June 30, 2009 is summarized as follows:
Book Value Book Value July 1, 2008 Additions Transfers Deductions June 30. 2009 Buildings $3,911,206,476 $ 168,418,495 $ 265,406,745 $ (9,350,431) $4,335,681,285 Improvements 264,077,200 10,667,059 10,872,261 285,616,520 Land 121,585,235 8,527,594 130,112,829 Construction in Progress 358,378,124 145,673,066 (276,279,006) 227,772,184 Equipment 877,539,803 80,263,212 (43,071,374) 914,731,641 Library Holdings 1,071,268,699 23,482,507 (6,601,132), 1,088,150,074 Subtotal 6,604,055,537 437,031,933 (59,022,937) 6,982,064,533 Less Accumulated Depreciation:
Buildings 1,586,610,410 114,424,933 (6,556,867) 1,694,478,476 Improvements 166,653,712 9,491,188 - 176,144,900
'Equipment 626,216,990 65,418,505 (33,116,729) 658,518,766 Total Accumulated Depreciation 2,379,481,112 189,334,626 (39,673,596) 2,529,142,142 Capital Assets, Net $4,224,574,425 $ 247.697.307 $ (19,349,341) $4,452-922,391 The change in book value from July 1, 2007 to June 30, 2008 is summarized as follows:
Book Value Book Value July 1, 2007 Additions Transfers Deductions June 30. 2008 Buildings $3,641,003,285 $ 92,009,915 $ 182,784,383 $ (4,591,107) $3,911,206,476 Improvements 252,892,496 7,442,996 4,116,808 (375,100) 264,077,200 Land 118,360,744 3,231,813 (7,322) 121,585,235 Construction in Progress 314,073,031 231,206,284 (186,901,191) 358,378,124 Equipment 839,552,980 65,474,237 (27,487,414) 877,539,803 Library Holdings 1,052,657,879 22,589,901 (3,979,081) 1,071,268,699 Subtotal 6,218,540,415 421,955,146 (36,440,024) 6,604,055,537 Less Accumulated Depreciation:
Buildings 1,486,385,416 103,128,136 - (2,903,142) 1,586,610,410 Improvements 158,160,759 8,857,235 - (364,282) 166,653,712 Equipment 579,275,024 62,734,505 - (15,792,539) 626,216,990 Total Accumulated Depreciation 2,223,821,199 174,719,876 (19,059,963) 2,379,481,112 Capital Assets, Net $3,994,719,216 $ 247,235,270 $ (17.380.061) $4,224,574,425 45
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 10 - Long Term Debt The State of Wisconsin issues general obligation bonds and notes on behalf of its constituent agencies, including the University of Wisconsin System, the proceeds of which are used to construct or acquire facilities and other capital assets. The University of Wisconsin System holds title to the assets thus acquired. As an enterprise fund of the State of Wisconsin, the University of Wisconsin System reports on its Statements of Net Assets that portion of the debt that will be repaid with program revenues generated by the University of Wisconsin System's self-supporting operations. Debt on academic facilities that is repaid by an appropriation from the State of Wisconsin 'to the University of Wisconsin System for that purpose is reported by the State of Wisconsin and not as an obligation of the University of Wisconsin System.
However, cash inflows and outflows are shown in the Statements of Cash Flows.
The following information relates to the status of bonds and notes payable outstanding at June 30, 2009:
Maturity Balance New Debt/ Principal Paid/ Balance Dates July 1, 2008 Accretion Adjustments June 30, 2009 Bonds (Gross) 2010-2034 $ 718,765,149 $ 59,476,278 $ (27,081,774) $ 751,159,653 Notes 2010-2017 65,124,344 - (7,721,442) 57,402,902
$ 783.889.493 $ 59.476.278 $ (34,803,216) $ 808.562.555 The bonds have maturity dates ranging from October 15, 2009 to April 15, 2034. The notes have maturity dates ranging from May 1,2010 to May 1, 2017.
As of June 30, 2009, the current and noncurrent bonds payable net of discounts, premiums, and deferred refunding totaled $31,312,313 and $739,860,039, respectively.
. Balance June 30, 2009 Current Noncurrent Bonds (Gross) $ 751,159,653 $ 28,729,490 $ 722,430,163 Discount (74,086) (12,854) (61,232)
Premium 27,821,503 3,589,986 24,231,517 Deferred Refunding (7,734,718) (994,309) (6,740,409)
Bonds (Net) 771,172,352 31,312,313 739,860,039 Notes 57,402,902 8,523,815 48,879,087
$ 828.575.254 $ 39,8.36,128 $ 788,739.126 The following information relates to the status of bonds and notes payable outstanding at June 30, 2008:
Maturity Balance New Debt/ Principal Paid/ Balance Dates July 1, 2007 Accretion Adiustments June 30, 2008 Bonds (Gross) 2009-2034 $ 690,647,324 $51,945,502 $ (23,827,677) $ 718,765,149 Notes 2009-2017 72,807,570 - (7,683,226) 65,124,344
$ 763,454,894 $51.945.502 $(31.510.903) $S783.889.493 The bonds have maturity dates ranging from October 15, 2008 to April 15, 2034. The notes have maturity dates ranging from May 1, 2009 to May 1, 2017.
46
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 10.- Long Terni Debt (continued)
As of June 30, 2008, the current and noncurrent bonds payable net of discounts, premiums, and deferred refunding totaled $29,354,807 and $709,254,135, respectively.
Balance June 30, 2008 Current Noncurrent Bonds (Gross) $ 718,765,149 $ 27,052,706 $ 691,712,443 Discount (86,940) (12,854). (74,086)
Premium 28,815,008 3,470,957 25,344,051 Deferred Refunding (8,884,275) (1,156,002) 7,728,273)
Bonds (Net) 738,608,942 29,354,807 709,254,135 Notes 65,124,344 7,721,022 57,403,322
$ 803.733.286 $ 37.075.829 $ 766.657.45"7 Future debt service requirements for bonds and notes outstanding at June 30, 2009 are as follows:
Future Repayment Schedule Bonds Notes Fiscal Year Principal Interest Principal Interest 2010 $ 28,729,489 $ 36,857,661 $ 8,523,815 $ 2,871,078 2011 29,318,799 35,405,172 8,946,571 2,444,421 2012 32,624,403 33,879,799 7,427,756 1,996,626 2013 34,516,556 32,267,915 7,789,463 1,625,238 2014 33,867,960 30,540,214 8,181,874 1,235,765 2015-2019 200,123,773 125,479,205 16,533,423 1,542,818 2020-2024 213,316,919 73,811,844 2025-2029 159,205,520 24,404,662 2030-2034 19,456,234 2,937,574 Total $ 75 1,159.653 $ 395.54.4 $ 57.402,902 $ 11715.946 As noted above, debt on academic facilities that is repaid by an appropriation from the State of Wisconsin to the University of Wisconsin System for that purpose is reported by the State of Wisconsin and not as an obligation of the University of Wisconsin System. As of June 30, 2009, the principal balance of such bonds and notes was $1,065,111,382 and $137,649,536, respectively. As of June 30, 2008, the principal balance of such bonds and notes was $997,418,270 and $137,649,536, respectively.
47
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 10- Long Term Debt (continued)
Debt service payments made by the State of Wisconsin for the years ended June 30, 2009 and 2008 were allocated as follows:
2009 Bonds Notes Principal '$ 76,117,449 $ -
Interest 45,781,343 2,001,335 Total Paid $121.898.792 $ 2,001,335 2008 Bonds Notes Principal $ 70,359,938 $ -
Interest 45,374,533 5,224,744 Total Paid $115.734.471 $ 5.224.744 NOTE 11 - Other Organizations The Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, and Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB Statement No. 14, provide guidance in determining whether organizations are to be included as part of a reporting entity. The University of Wisconsin System has determined that, in accordance with the provisions of GASB Statement No. 14 and 39, the accounts of the following three groups of organizations are not included in the financial statements; however, the following financial information is provided.
A - University of Wisconsin Foundation The University of Wisconsin (UW) Foundation is the official not-for-profit fund raising corporation for the University of Wisconsin-Madison and several other units of the University of Wisconsin System. It receives gifts and bequests, administers and invests securities and property, and disburses payments to and on behalf of the University of Wisconsin for advancement of scientific, literary, athletic, and educational purposes. The UW Foundation reports on a fiscal year ended December 31. Copies of the separately issued financial statements may. be obtained by writing to: University of Wisconsin Foundation, Attn:
Finance, P.O. Box 8860, Madison, WI 53708-8860.
48
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE I I - Other Organizations (continued)
A - University of Wisconsin Foundation (continued)
Significant financial data for the UW Foundation for the years ending December 31, 2008 and 2007 are presented below (in thousands):
Condensed Balance Sheet 2008 2007*
Assets:
Cash, Investments and Other Assets $ 2,266,575 $ 2,876,047 Capital Assets, Net 7,523 7,788 Total Assets $ 2.274.098 $ 2.883.835 Liabilities:
Accounts Payable and Other Current Liabilities $ 47,640 $ 24,116 Amounts Held for Other Component Units 213,384 260,026 Long-term Liabilities (Current and Noncurrent Portions) 43,599 54.457 Total Liabilities 304,623. 338,599 Fund Equity:
Invested in Capital Assets, Net of Related Debt 7,523 7,788 Restricted 1,841,876 1,844,345 Unrestricted 120,076 693,103 Total Fund Equity 1,969,475 2,545,236 Total Liabilities and Fund Equity $ 2.274.098 $ 2.883,835 Condensed Statement of Revenues, Expenses and Changes in Fund Equity Program Expenses:
Depreciation $ 427 $ 358 Payments to Primary Government 203,345 228,686 Other 40,451 57,391 Total Program Expenses 244,223 286,435 Program Revenues:
Investment and Interest Income (493,024) 183,334 Operating Grants and Contributions 160,980 269,929 Other 506 91 Total Program Revenues (331,538) 453,354 Net Program (Expenses) Revenues (575,761) 166,919 Change in Fund Equity (575,761) 166,919 Fund Equity, Beginning of Year 2,545,236 2,378,317 Fund Equity, End of Year $ 1.969.475 $ 2,545,2336
- The Balance Sheet was audited but the Statement of Revenues, Expenses and Changes in Fund Equity was not.
49
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 11 - Other Organizations (continued)
B - Funds Held In Trust by Others Funds held in trust by others are endowment funds held by trustees outside of the University of Wisconsin System Trust Funds for the benefit of the University of Wisconsin System. The market value of these funds amounted to $138,413,060 at June 30, 2009, compared with $190,553,080 at June 30, 2008.
C - Lease Agreements University of Wisconsin Hospital and Clinics Authority The University of Wisconsin Hospital and Clinics Authority (UWHCA), pursuant to an act of the Wisconsin State Legislature, began operating on June 29, 1996 as a separate public authority. As required by this legislation, the University of Wisconsin System has entered into various affiliation and operating agreements with UWHCA, including a lease agreement. Under the terms of the lease, UWHCA makes payments equal to the debt service on all outstanding bonds issued by the State of Wisconsin to acquire, construct, or improve the leased facilities. At June 30, 2009, the present value of these future lease payments totaled $7.7 million, an amount equal to the principal on the related bonds outstanding; the asset is included on the balance sheet as part of the capital lease receivable, and the related debt is included as part of the total UW System bonds outstanding of $751.2 million. The leased facilities are not included as part of the University of Wisconsin System's investment in buildings since they have been reported by UWHCA in their audited financial statements in accordance with the generally accepted accounting principles that pertain to the reporting of leased assets.
During the fiscal year ended June 30, 2009, the University of Wisconsin System received services from UWHCA totaling $4.7 million and provided services to UWHCA totaling $47.5 million. The cost of the services provided and the associated revenue are separately identified in the Statements of Revenues,,
Expenses and Changes in Net Assets. The amounts spent for services received are included as salaries and fringe benefits and supplies and services expenses on this statement. The services received were funded by an equivalent amount of state appropriations revenue.
La Crosse Medical Health Science Education Research Center On June 6, 1997, the Board of Regents of the University of Wisconsin System entered into a Use Agreement with The La Crosse Medical Health Science Consortium, Inc. (The Consortium), a Wisconsin non-stock corporation tax exempt under Internal Revenue Code (IRC) 501(c)(3) with offices at 1725 State Street, La Crosse, Wisconsin 54601. The Use Agreement makes available the exclusive use of the La Crosse Medical Health Science Education Research Center to The Consortium. As required by this Use Agreement, the University of Wisconsin System has entered into various operating agreements with The Consortium, including a lease agreement. Under the terms of the lease, The Consortium makes payments equal to the debt service on all outstanding bonds issued by the State of Wisconsin to acquire, construct, or improve the leased facilities. At June 30, 2009, the present value of these future lease payments totaled
$5.5 million, an amount equal to the principal on the related bonds outstanding; the asset is included on the balance sheet as part of the capital lease receivable, and the related debt is included as part of the total UW System bonds outstanding of $751.2 million. The leased facilities are not included as part of the University of Wisconsin System's investment in buildings since they have been reported by The Consortium in their audited financial statements in accordance with the generally accepted accounting principles that pertain to the reporting of leased assets.
50
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE I I - Other Organizations (continued)
C - Lease Agreements (continued)
During the fiscal year ended June 30, 2009, the University of Wisconsin System provided services and rent to The Consortium totaling $.7 million. The cost of the services provided and the associated revenue are included in the Statements of Revenues, Expenses and Changes in Net Assets. *The amounts spent for services received are included as salaries and fringe benefits and supplies and services expenses on this statement. The services received were funded by an equivalent amount of state appropriations revenue.
D - Other Agreements University of Wisconsin Medical Foundation The University of Wisconsin (UW) Medical Foundation is the not-for-profit clinical practice organization for the. faculty physicians of the UW School of Medicine and Public Health within UW-Madison. The UW Medical Foundation provides clinical sites, technical and professional staff and administrative services for the UW faculty physicians group.
During fiscal year 2007-08, the Wisconsin Department of Health Services (DHS) implemented a Certified Public Expenditure (CPE) program for the services the UW faculty physicians group provides to Medical Assistance (MA) recipients. Because the UW faculty physicians group qualifies as a public provider, it is eligible to receive cost-based reimbursement under federal MA rules.
Under the CPE program, DHS is able to claim additional federal MA funds based upon the difference between the established MA reimbursement rate for the services provided by the UW faculty physicians group and the actual cost of providing those services. To enable the draw of these federal funds by DHS, UW-Madison remitted a total of $35.9 million to DHS during fiscal years 2009 and 2008, representing the state's share of this difference. DHS then claimed the federal share of the difference from the federal government and subsequently provided $79.6 million, representing both the state and federal share of the difference, to the UW Medical Foundation. During fiscal year 2009, the UW Medical Foundation remitted
$65.9 million to UW-Madison as reimbursement for the $35.9 million that UW-Madison remitted to DHS as well as reimbursement for annual $15 million transfers made by UW-Madison to the State's MA Trust Fund during fiscal years 2009 and 2008. The $65.9 million that UW-Madison received from the UW Medical Foundation is included in the other non-operating revenues (expenses), net, account on the financial statements. The $15 million transfers to the MA Trust Fund are reported as a transfer to state agencies on the financial statements.
University of Wisconsin Hospital and Clinics Authority The University of Wisconsin Hospital and Clinics Authority (UWHCA) provides inpatient and outpatient hospital services to Medical Assistance (MA) recipients. Under federal MA rules, services provided by UWHCA are eligible for supplemental payments for the difference between the established MA reimbursement rate for the services provided and the actual cost of providing those services. Supplemental payments of $49 million were paid to UWHCA by the Wisconsin Department of Health Services during the fiscal year ended June 30, 2009 for services provided during 1990 through 2006. UWHCA provided the funds to UW-Madison, which reported the $49 million in the other non-operating revenues (expenses) account, net, on the financial statements.
Pursuant to 2009 Act 28, UW-Madison transferred $49 million to the State's General Fund. This transfer is reported as a transfer to state agencies on the financial statements.
51
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years'Ended June 30, 2009 and 2008 NOTE 12 - Operating Expenses by Functional Classification Operating expenses by functional classification for the fiscal year ended June 30, 2009:
Salary Scholarships Supplies and and and Fringe Benefits Fellowships Services Other Depreciation Total Instruction $ 973,669,916 $ 1,136,826 $ 122,049,930 $ 559,731 $ $ 1,097,416,403 Research 571,014,985 2,666,305 175,829,683 623,707 750, 134,680 Public Service 189,516,419 199,588 109,146,413 1,424,550 300,286,970 Academic Support 266,033,887 62,839 68,062,634 (13,574) 334,145,786 Farm Operations 9,633,504 5,039,588 (1,192) 14,671,900 Student Services 237,387,994 (2,548,474) 131,033,769 87,176 365,960,465 Institutional Support 190,071,913 32,525 7,522,028 21,053 197,647,519 Operation/Maintenance 146,235,386 214 149,509,122 5,602 295,750,324 Financial Aid 5,798,883 97,562,080 275,615 2,488,899 106,125,477 Auxiliary Enterprises 102,020,482 16,961 193,525,615 (234,624) 295,328,434 Hospital 97,490,237 97,490,237 Depreciation - ______ - 189,334,626 189,334,626 Total Operating Expenses $ $ $.5484.64 $ _91. "13462 $
Operating expenses totaled $4.0 billion. Salary and fringe benefits, scholarships and fellowships, and supplies and services and other expenses constituted 66.5%, 2.5%, and 26.3% of total operating expenses, respectively. Depreciation comprised $189.3 million or 4.7% of total operating expenses.
Operating expenses by functional classification for the fiscal year ended June 30, 2008:
Salary Scholarships Supplies and and and Fringe Benefits Fellowships Services Other Depreciation Total Instruction $ 932,078,774 $ 987,188 $ 117,982,906 $ 225,984 $ $ 1,051,274,852 Research 548,444,232 2,502,810 203,559,504 834,705 755,341,251 Public Service 186,454,866 242,083 125,041,155 814,432 312,552,536 Academic Support 256,170,823 64,119 67,539,601 (81,215) 323,693,328 Farm Operations 9,236,410 5,711,328 (11,584) 14,936,154 Student Services 226,241,604 (5,650,279) 117,656,728 (112,555) 338,135,498 Institutional Support 177,467,122 29,693 15,153,724 (250,691) 192,399,848 Operation/Maintenance 138,534,114 129,411,602. (19,663) 267,926,053 Financial Aid 5,475,134 90,725,492 4,360 2,876,652 99,081,638 Auxiliary Enterprises 97,512,480 13,554 185,333,309 268,746 283,128,089 Hospital 46,900,747 46,900,747 Depreciation 174,719,876 174,719,876 Total Operating Expenses $2577615559 $88914.66_0 $.04294964 $4544811 $174719876 $3860089870 Operating expenses totaled $3.9 billion. Salary and fringe benefits, scholarships and fellowships, and supplies and services and other expenses constituted 66.8%, 2.3%, and 26.4% of total operating expenses, respectively. Depreciation comprised $174.7 million or 4.5% of total operating expenses.
52
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 13 - Classification of Net Assets Net assets are reported in the following six categories: 2009 2008
" Invested in capital assets, net of related debt $ 3,515,700,004 $ 3,306,078,369
" Restricted - Nonexpendable Net assets subject to externally-imposed stipulations that they be maintained permanently by the University of Wisconsin System including:
Gifts provided in trust as permanent endowment 122,923,573 150,149,852
" Restricted - Expendable Net assets whose use by the University of Wisconsin System is subject to externally-imposed stipulations that can be fulfilled by actions of the University of Wisconsin System pursuant to those stipulations or that expire by the passage of time including:
> Funds managed by the University of Wisconsin System in trust as quasi-endowment 165,295,490 176,179,645
> Auxiliary operations as established by state statute 139,419,092 141,082,554
" Restricted - Student Loans 220,588,341 219,140,599
- Restricted - Other Net assets of other legally separate appropriations 216,370,915 156,969,265
" Unrestricted Net assets that are not subject to externally-imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of management or the Board of Regents or may otherwise be limited by contractual agreements with outside parties.
Substantially all unrestricted net assets are designated for academic and research programs and initiatives, and capital programs. 315,978,770 217,610,287 The following table shows reclassifications which are done to conform to reporting requirements related to the State of Wisconsin's CAFR. As a reporting entity, the Board of Regents of the University of Wisconsin System cannot exercise total discretion over the use of net assets of auxiliary operations because of statutory mandates; however, they do have discretion in the use of the net assets of quasi-endowments reported as unrestricted.
53
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and .2008 NOTE 13 - Classification of Net Assets (continued)
CAFR reclassifications as of June 30, 2009:
(In Millions)
University Other State of of Wisconsin Auxiliary Quasi- Student Postemployment Wisconsin System Operations Endowments Loans Benefits (Note 8) CAFR Invested in Capital Assets, Net of Related Debt $ 3,515.7 $( - $5. $- $- $ 3,515.7 Restricted for Nonexpendable 122.9 122.9 Expendable 304.7 (139.4) 54.7 220.0 Student Loans 220.6 (7.7) 212.9 Other 216.4 7.7 (17.6) 206.5 Unrestricted 316.0 139.4 (54.7) (79.0) 321.7 TOTAL NET ASSETS 00 $ 0.0
_-129661 CAFR reclassifications asof June 30, 2008:
(In Millions)
University Other State of of Wisconsin Auxiliary Quasi- Student Postemployment Wisconsin System Operations Endowments . Loans Benefits (Note 8) CAFR Invested in Capital Assets, Net of Related Debt $ 3,306.1 $ $ -. $ $ $ 3,306.1 Restricted for Nonexpendable 150.1 150.1 Expendable 317.3 (141.1) 69.4 245.6 Student Loans 219.1 (8.9) 210.2 Other 157.0 8.9 (8.6) 157.3 Unrestricted 217.6 141.1 (69.4) (38.5) 250.8 TOTAL NET ASSETS i$0.Q iALO-Q $ 00 ISJ (41 S 4320.1 NOTE 14 - Prior Period Adjustments The June 30, 2009 Statement of Net Assets does not include a prior period adjustment.
The June 30, 2008 Statement of Net Assets include prior period adjustments showing an increase of
$212,877. These adjustments are summarized as follows:
Adiustment Amount Cash $ 58,057 Buildings, Net of Accumulated Depreciation 154,820 Total $ 2 12,877 54
UNIVERSITY OF WISCONSIN SYSTEM Notes to the Financial Statements Years Ended June 30, 2009 and 2008 NOTE 15 - Contingent Liabilities The University of Wisconsin System is covered by the State of Wisconsin's self-insurance program with settlements or judgments paid from the State Risk Management Fund. Loss experience is rated back to the individual University of Wisconsin institutions in subsequent years with a maximum payment of $100,000 per incident.
The University of Wisconsin System is party in a number of legal actions. While final resolutions have not yet been determined, management is of the opinion that any liabilities resulting from these actions will not have a material adverse effect on the University of Wisconsin System's financial position.
NOTE 16 - Subsequent Events In September 2009, the State of Wisconsin issued long-term debt of $138.4 million of 2009 Series C and D general obligation bonds on behalf of the University of Wisconsin System to be used for the acquisition, construction, development, extension, enlargement, or improvement of land, property, buildings, equipment, or facilities. A 3% through 5.9% interest rate is payable semiannually on May 1 and November 1, beginning May 1, 2010 for the 2009C series and 2009D series respectively. The bonds mature May I of the years 2012 through 2030, 2034, and 2040.
55
Responses to License Renewal Request for Additional Information Attachment 2 Statement of Intent
UNIVERSITY OF Vice President for Finance Fw WISCONSIN SYSTEM 1624 Van Hise Hall 1220 Linden Drive Madison, Wisconsin 53706 (608) 262-1311 (608) 263-2046 Fax website: http://www.wisconsin.edu June 2, 2010 William C. Schuster IV, Project Manager Research and Test Reactors Branch A Division of Policy and Rulemaking Office of Nuclear Reactor Regulation United States Nuclear Regulatory Commission Washington, D.C. 20555-0001 Re: University of Wisconsin-Request for Additional Information Regarding the License Renewal for the University of Wisconsin Nuclear Reactor (TAC No. ME1585); Docket No. 50-156
Dear Mr. Schuster:
The Board of Regents of the University of Wisconsin System doing business as the University of Wisconsin-Madison ("University"), hereby states its intent to obtain funds necessary for decommissioning, when necessary, for the University of Wisconsin Nuclear Reactor (TAC No. ME 1585). The estimated cost for decommissioning, as set forth in the related submission of Mr. Robert Agasie, Reactor Director, is $1,995,488. The University is an agency of the State of Wisconsin, established pursuant to Chapter 36, Wisconsin Statutes. I certify that, in accordance with Regent Policy Document 13-3 (attached), I am authorized to act on behalf of the University in making this declaration.
Sincerely, Deborah A. Durcan Vice President for Finance University of Wisconsin System Paricia A. Brady Notary Public.
Permanent Commission Attachment C: Robert Agasie, Reactor Director Patricia A. Brady, General Counsel Universities: Madison, Milwaukee, Eau Claire, Green Bay, La Crosse, Oshkosh, Parkside, Platteville, River Falls, Stevens Point, Stout, Superior, Whitewater.
Colleges: Baraboo/Sauk County, Barron County, Fond du Lac, Fox Valley, Manitowoc, Marathon County, Marinette, Marshfield/Wood County, Richland, Rock County, Sheboygan, Washington County, Waukesha. Extension: Statewide.
Responses to License Renewal Request for Additional Information Attachment 3 Regent Policy Document 13-3
'13-63 AUTHORIZATION TO SIGN DOCUMENTS Page 1 of 2 magium]
0F1`:RE GENT$
UW System Home > Board of Regents > Policies Regent Policy Documents SECTION 13: CONTRACTS 13-3 AUTHORIZATION TO SIGN DOCUMENTS (Formerly 93-1)
Upon recommendation of the President of the University of Wisconsin System, Regent Resolution #7844, approved by the Board on February 5, 1999, is rescinded; and the following revised resolution is approved, effective immediately:
Any of the following corporate or administrative officers of the University of Wisconsin System:
Secretary, Assistant Secretary of the Board, the President, any Vice President, and any administrative officer or administrative assistant designated by the President of the University of Wisconsin System are authorized to sign:
- 1. Proposals, agreements, contracts, and contract supplements for research work or any other purposes upon approval of the project by the President or any Vice President of the University of Wisconsin System or the appropriate chancelloror designee with the following extramural entities: the United States Government, any of its agencies or departments, any state or municipality, or any agency or department thereof, or any nonprofit organization.
- 2. Certifications, releases, inventory reports and other documents as required by the government in connection with the termination of the contracts with the federal government for research and educational services furnished by the University of Wisconsin System.
- 3. Applications, notices, bonds and other instruments required by the federal government in connection with matters relating to federal laws and regulations for the purchase and use of tax-free alcohol in the laboratories of the University of Wisconsin System.
- 4. Purchase orders and other instruments required by the federal government for the procurement of narcotics for use in laboratories of the University of Wisconsin and in University Hospitals.
- 5. Grants, contracts, and leases, except were paragraph 8 of this policy applies, and agreements with private, profit-making organizations, with the understanding that those agreements in excess of $500,000 require formal acceptance by the Regents prior to execution.
- 6. Royalty agreements with the University of Wisconsin Press.
- 7. Transactions of the University of Wisconsin System's employee savings bond accounts.
- 8. Leases require formal acceptance by the Board of Regents prior to execution if: (1) a proposed leased space is not available in an existing building and would require the construction of a new building to satisfy the space need; or (2) negotiations for a new lease would involve leased space in excess of 10,000 assignable square feet; or (3) the proposed initial term of a lease would exceed 5 years (excluding renewal options).
A summary of grants, contracts, leases and agreements, including royalty agreements with the University of Wisconsin Press, will be reported quarterly. to the Vice President for Finance.
History: Res. 6314 adopted 2/5/93; replaces 72-2(a), 75-2, 83-2,91-10,92-2. (See also Policy 13-2); amended by Res.
7548 (9/5/97) and by Res. 7844 (2/5/99) and by Res. 8074 (2/00) and by Res. 8875 (6/04).
Return to the policy index The Regent Policy Documents were adopted and are maintainedpursuant to the policy-making authority vested in the Board of Regents by Wis. Stats. § 36. The Regent Policy Documents manifest significant policies approved by the Universityof Wisconsin System Board of Regents.
hftfn-/lxrurui 1iiw~n PcAii/Ihcr/nrilic~i-; rnci/rnc1 11_1~ htns,1 1;I/1 1 /1lf ()
-- ',., 3-3 AUTHORIZATION TO SIGN DOCUMENTS Page 2 of 2 This document is a ready reference for those chargedwith carrying out these policies. Unless noted otherwise, associated documents and reports may be obtained from the Office of the Secretary of the Board of Regents, 1860 Van Hise Hall, 1220 Linden Drive, Madison, WI 53706, ph 608-262-2324. http.//www. uwsa.edu/borlpoliciesl
© 2010 Board of Regents - University of Wisconsin System. AlI.Rights Reserved I I Accessibility Policy I Privacy Policy I Contact Webmaster XHTMLICSS kffnv //iimmTi nxio -tliillAI rirlicmI"i, nr n111 -1~ lifý,) I (A
ýz/") 1 /1