FY11-EIU-Fin-Full

              STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
FINANCIAL AUDIT
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors for the
Auditor General, State of Illinois
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
FINANCIAL AUDIT
For the Year Ended June 30, 2011
TABLE OF CONTENTS
Page
University Officials 1
Financial Statement Report
Summary 2
Independent Auditors’ Report 3
Management's Discussion and Analysis 5
Basic Financial Statements
Statement of Net Assets 17
Statement of Revenues, Expenses and Changes in Net Assets 18
Statement of Cash Flows 20
Combining Statements of Component Units
Combining Statement of Net Assets 22
Combining Statement of Revenues, Expenses and
Changes in Net Assets 23
Combining Statement of Cash Flows 24
Notes to Basic Financial Statements 25
Supplementary Information
Unaudited Data Required by Revenue Bond Resolutions 55
Independent Auditors’ Report on Internal Control Over Financial Reporting and
On Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 58
Schedule of Findings 60
Prior Findings Not Repeated 65
The University’s Compliance Examination (including the Single Audit) for the
year ended June 30, 2011, which includes the reports of independent auditors,
Schedule of Findings and Questioned Costs, and Supplementary Information for
State Compliance Purposes, has been issued under separate cover.
1
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
UNIVERSITY OFFICIALS
President Dr. William L. Perry
Provost and Vice President for Academic Affairs Dr. Blair M. Lord
Vice President for Business Affairs Dr. William V. Weber
Vice President for Student Affairs Dr. Daniel P. Nadler
Vice President for University Advancement Mr. Robert K. Martin
Director of Business Services and Treasurer Mr. Paul A. McCann, CPA
General Counsel Mr. Robert L. Miller
Director of Internal Auditing Ms. Sharon K. McRaven, CPA, CIA
BOARD OF TRUSTEES (as of June 30, 2011)
Chairperson Mr. Leo Welch
Vice Chairperson Dr. Robert Webb
Secretary Mr. Roger Krotochvil
Member Pro-tem Mr. William O’Rourke (A)
Member Ms. Julie Nimmons (B)
Member Vacant
Member Vacant
Student Member Ms. Christine Anderson
(A) term expired, continues to serve until a successor is appointed.
(B) term expired, continues to serve until a successor is appointed.
University offices are located at:
600 Lincoln Avenue
Charleston, Illinois 61920
2
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
FINANCIAL STATEMENT REPORT
SUMMARY
The audit of the accompanying financial statements of Eastern Illinois University was
performed by E.C. Ortiz & Co., LLP.
Based on their audit, the auditors expressed an unqualified opinion on the University’s
basic financial statements.
SUMMARY OF FINDINGS
The auditors identified matters involving the University’s internal control over financial
reporting that they considered to be significant deficiencies. The significant deficiencies
are described in the accompanying Schedule of Findings listed in the table of contents, as
finding 11-1, (Inaccurate Accounting for Participation in a Public Entity Risk Pool) and
finding 11-2, (Inaccurate Capital Asset Accounting and Depreciation Calculations).
EXIT CONFERENCE
The findings and recommendations appearing in this report were discussed with
University personnel at an exit conference on January 23, 2012. Attending were:
Eastern Illinois University
William Weber, Vice President of Business Affairs
Paul McCann, Director of Business Services and Treasurer
Michael Hutchinson, Interim Assistant Comptroller
Tami Babbs, Interim Assistant Comptroller
Sherry McRaven, Director of Internal Audit
Kathy Reed, Assistant Vice President – Information Technology Services
Office of the Auditor General
Daniel J. Nugent, Audit Manager
E. C. Ortiz & Co. LLP
Marites Sy, Partner
Shirley Trinidad, Manager
The responses to the recommendations were provided by Paul McCann, Director of
Business Services and Treasurer, in a letter dated January 31, 2012.
E.C. ORTIZ & CO, U P
CERTIfi ED PUBL IC ACCOUNT A N TS
Independent Auditors' Report
Honorable William O. Holland
Auditor General
State of Illinois
and
The Board of Trustees
State of Illinois - Eastern Illinois University
As Special Assistant Auditors for the Auditor General, we have audited the accompanying
financial statements of the business-type activities of the State of illinois - Eastern Illinois
University and its aggregate discretely presented component units, collectively a component
unit of the State of minois, as of and for the year ended June. 30, 2011, which collectively
comprise the State of Illinois - Eastem lllinois University's basic financial statements as
listed in the table of contents. These financial statements are the responsibility of the State
of illinois - Eastern lllinois University's management. Our responsibility is to express
opinions on these fmancial statements based on our audit. The prior year partial
comparative information has been derived from the State of Illinois - Eastern Illinois
University's June 30, 2010 financial statements and, in our report dated April 1, 201 1, we
expressed unqualified opinions on the respective financial statements of the business-type
activities and the aggregate discretely presented component lmits. We did not audit the
financial statements of the aggregate discretely presented component units, as described in
Note 1 of the financial statements. Those financial statements were audited by other
auditors whose report thereon has been provided to us, and our opinion on the financial
statements, insofar as it relates to the amounts included for the aggregate discretely
presented component units, is based on the reports of the other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the aCCDwlting principles used and the
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the repol1 of other auditors provide a
reasonable basis for our opinions.
333 SOUTH DES PLAIN ES ST REET, SUITE 2-N CHI CAGb, I l 60661 l ei: 3 12 .876.1900 fu: 312 .8 76. 191 1
In our opinion, based on our audit and the report of other auditors, the fmancial statements
referred to above present fairly, in all material respects, the respective fmancial position of
the business-type activities and the aggregate. discretely presented component units of State
of Illinois - Eastern Illinois University, as of Jooe 30, 2011, and the respective changes in its
financial position and its cash flows, where applicable, for the year then ended in confonnity
with aCCOlll1ting princip1.es generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated
January 31, 2012 on our consideration of the State of Illinois - Eastern Illinois University's
internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That repOlt is an integral part of
an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of ow' audit.
The Management's Discussion and Analysis on pages 5 through 16 is not a required part of
the basic financial statements but is supplementary information required by accolll1ting
principles generally accepted in the United States of America. We have applied certain
limited procedures, which consisted principally of inquiries of management regarding the
methods of measurement and presentation of the required supplement81y information.
However, we did not audit the infonnation and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the fmancial statem~nts
that coUectively comprise the State of Illinois - Eastern Illinois University's basic financial
statements. The Unaudited Data Required by Revenue Bond Resolutions is presented for
purposes of additional analysis and is not a required part of the basic financial statements.
The Unaudited Data Required by Revenue Bond Resolutions has not been subjected to the
auditing procedures applied by us and the other auditors in the audit of the basic fmancial
statements, and accordingly, we express no opinion on it.
In connection with our audit, nothing came to our attention that caused us to believe that the
State of lllinois - Eastern Illinois University Auxiliary Facilities System was not in
compliance with any of the fund accoWlting covenants of the Resolutions of the Eastern
Illinois University Auxiliary Facilities System Revenue Bonds '(Series 2005, 2008, and
2008B).
Fe· m4{y 1; Go., LLP
January 31, 2012 U
4
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
5
This section of the Eastern Illinois University (the University) annual financial report
presents management’s discussion and analysis (MD&A) of the financial performance of
the University during the fiscal year ended June 30, 2011 with comparative information
for the year ended June 30, 2010. This discussion should be read in conjunction with the
accompanying financial statements and footnotes. The financial statements, footnotes
and this discussion are the responsibility of the University’s management.
Reporting Entity
Eastern Illinois University is an institution of higher education and is considered to be a
component unit of the State of Illinois (the State) because the Governor of the State of
Illinois appoints its Board of Trustees. Accordingly, the University is included in the
State’s financial statements as a discretely presented component unit. Transactions with
the State of Illinois relate primarily to appropriations for operations, grants from various
State agencies, funding of capital projects and payments for employee benefits.
The University is a comprehensive, regional service institution located in Charleston,
Illinois on approximately 320 acres. The University consists of 72 buildings, including 12
residence halls and 17 apartment buildings. The University enrolls approximately 12,000
students and employs approximately 1,800 full time faculty and staff. The University is
primarily an undergraduate institution. Originally established in 1895 as a teachers’
college, today the University encompasses four colleges and a graduate school.
Undergraduate degrees are offered through the College of Arts and Humanities, the
Lumpkin College of Business and Applied Sciences (which includes the School of
Family and Consumer Sciences and the School of Technology), the College of Sciences,
and the College of Education and Professional Studies. Master degrees, and in some
cases specialist degrees, are offered at the graduate level in each of the colleges. In
addition to its on-campus programs, the University maintains a strong continuing
education program.
Using the Annual Report
These financial statements are prepared in accordance with guidance found in the
statements issued by the Governmental Accounting Standards Board (GASB), including
GASB Statement No. 34, Basic Financial Statements - and Management's Discussion
and Analysis - for State and Local Governments; GASB Statement No. 35, Basic
Financial Statements - and Management’s Discussion and Analysis - for Public Colleges
and Universities; GASB Statement No. 37, Basic Financial Statements - Management's
Discussion and Analysis - for State and Local Governments: Omnibus; GASB Statement
No. 38, Certain Financial Statement Note Disclosures; and GASB Statement No. 39,
Determining Whether Certain Organizations are Component Units. These statements
focus on the financial condition of the University, the results of operations and cash flows
of the University as a whole.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
6
As prescribed by GASB Statement No. 35, this annual report includes three financial
statements: the Statement of Net Assets; the Statement of Revenues, Expenses and
Changes in Net Assets; and the Statement of Cash Flows. The financial statements
encompass the University and its discretely presented component units. The Combining
Statements of Net Assets; Combining Statements of Revenues, Expenses and Changes in
Net Assets; and Combining Statements of Cash Flows show the combining of the
discretely presented component units and are not discussed in this MD&A. The
accompanying notes to the financial statements provide more detailed information
regarding the items presented on the face of the financial statements. Information
regarding these component units, including their separately issued financial statements, is
summarized in Note 1 to the financial statements. This MD&A focuses on the University
excluding the discretely presented component units. MD&A for these component units is
included in their separately issued financial statements. An explanation of the financial
statement presentation follows.
The Statement of Net Assets reflects the assets and liabilities of the University using the
accrual basis of accounting and presents the financial position of the University at a
specified point in time. The difference between total assets and total liabilities, known as
net assets, is one indicator of the current financial condition of the University. The
increase or decrease in net assets that occur over time indicate the improvement or
erosion of the University’s financial condition.
The Statement of Revenues, Expenses and Changes in Net Assets presents the revenues
earned and expenses incurred during the fiscal year. Revenues and expenses are reported
as either operating or non-operating. Under the current reporting model, a significant
portion of the University’s revenue is considered non-operating. State and capital
appropriations of $47,794,654 and payments on behalf of the University of $48,399,928
are reported as non-operating revenues and results in the University showing an operating
loss of $98,362,495 for the year ended June 30, 2011.
The Statement of Cash Flows presents information related to cash inflows and outflows
summarized by operating, noncapital financing, capital and related financing and
investing activities.
Financial Highlights
During the year ended June 30, 2011, the University’s net assets increased by
approximately $15.1 million to $213.0 million. This increase is primarily due to an
increase in State payments on behalf of the University and an increase in grant revenues,
primarily the student financial aid grants.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
7
Statement of Net Assets
Condensed Statement of Net Assets, as of June 30,
2011 2010
Assets
Current assets $ 82,140,119 $ 1 00,451,066
Noncurrent assets
Capital assets, net 292,808,934 269,602,692
Other 8,529,946 7,835,287
Total noncurrent assets 301,338,880 277,437,979
Total assets $ 383,478,999 $ 3 77,889,045
Liabilities
Current liabilities $ 30,201,531 $ 3 2,522,346
Noncurrent liabilities 140,263,733 147,405,992
Total liabilities 170,465,264 179,928,338
Net Assets
Invested in capital assets, net 166,087,461 161,921,484
Restricted
Nonexpendable 847,247 459,477
Expendable 4,127,572 5,574,655
Unrestricted 41,951,455 30,005,091
Total net assets 213,013,735 197,960,707
Total liabilities and net assets $ 383,478,999 $ 3 77,889,045
University assets totaled $383.5 million as of June 30, 2011. The largest asset of the
University is its investment in land, buildings and equipment, which totaled
approximately $292.8 million at June 30, 2011.
University liabilities totaled approximately $170.5 million as of June 30, 2011. Long-term
debt of approximately $149.9 million as of June 30, 2011, is the largest portion of
the liability. Long-term liabilities consisted of notes, leases and bonds payable,
Certificates of Participation, accrued compensated absences, housing and registration
deposits, and federal loan program contributions refundable to the federal government.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
8
The University’s current assets of approximately $82.1 million as of June 30, 2011 were
sufficient to cover the current liabilities of approximately $30.2 million as of
June 30, 2011. The current ratio of current assets to current liabilities is $2.72 in current
assets for every $1 in current liabilities at June 30, 2011.
The following graph shows net assets by classification and restriction:
Capital Assets and Related Financing Activities
The Eastern Illinois University facilities include 72 buildings, totaling about 3 million
gross square feet. Funding from State, private, borrowed, and internal sources are used to
accomplish the capital objectives of the University.
The University continues to expand and renovate its campus facilities. University capital
additions totaled approximately $37.9 million for fiscal year 2011. During fiscal year
2011, the University completed a portion of its energy savings projects and residence hall
renovation projects.
The University had approximately $31.8 million of bonded debt outstanding and $98.2
million of Certificates of Participation (COPS) outstanding as of June 30, 2011. For more
information concerning Capital Assets, Construction in Progress, Bonds Payable, Lease
Obligations, and COPS Payable see Notes 6, 7, 10, 11, 12 and 13.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
9
The following chart shows the breakdown of the University’s capital assets, net of
depreciation, by category:
Statement of Revenues, Expenses and Changes in Net Assets
Condensed Statement of Revenues, Expenses and Changes in Net Assets
For the years ended June 30,
2011 2010
Operating revenues
Tuition and fees, net $ 76,341,978 $ 75,349,113
Grants and contracts 6,945,261 8,141,479
Auxiliary enterprises 44,953,396 46,248,703
Other operating revenues 7,104,438 7,124,108
Total operating revenues 135,345,073 136,863,403
Operating expenses 233,707,568 231,594,798
Operating loss (98,362,495) (94,731,395)
Nonoperating revenues (net of expenses)
State appropriations 47,417,250 50,570,713
Payments on behalf of the University 48,399,928 44,755,254
Other nonoperating revenues - net 15,725,249 12,371,375
Net nonoperating revenues 111,542,427 107,697,342
Income before capital contributions 13,179,932 12,965,947
Capital appropriations 377,404 -
Transfers from Capital Development Board 240,471 1,212,275
Capital grants and gifts 1,255,221 450,244
Total increase in net assets 15,053,028 14,628,466
Net assets, beginning of year 197,960,707 183,332,241
Net assets, end of year $ 213,013,735 $ 197,960,707
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
10
Operating Revenues
Operating revenues for fiscal year 2011 totaled $135.3 million. The most significant
sources of operating revenues were tuition and fees, grants and contracts, and auxiliary
services as shown in the graph below:
State appropriations to the University decreased from $50.6 million to $47.4 million.
During fiscal year 2005, the "Truth in Tuition" regulations took affect (a first time
attendee is guaranteed the same tuition rate for four years as long as they are
undergraduates). Because of this, tuition rates were increased by 6% for new students
and approximately 8% for continuing students in fiscal year 2011. The University also
implemented a student fee increase of 4% in fiscal year 2011. These account for the
increase in tuition and fees.
Tuition and Fees
The University's tuition and fees have consistently been one of the lowest out of the nine
State universities in Illinois. It is currently only one of two public universities to continue
to offer textbook rental as a service to students, rather than requiring students to spend
hundreds of dollars for textbooks each year. The following explains the rates for tuition
and fees for a student attending 12 or more hours during the Fall and Spring semesters of
fiscal years 2011 and 2010.
2011 2010
Full-time Undergraduates
In-State
Continuing Non-guaranteed $197.00/hour + $1,003.94
fees/semester
$183.00/hour + $987.57
fees/semester
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
11
2011 2010
In-State
New student FY07 $173.55/hour + $1,003.94
fees/semester
$173.55/hour + $987.57
fees/semester
New student FY08 $194.40/hour + $1,109.90
fees/semester
$194.40/hour + $1,063.53
fees/semester
New student FY09 $218.00/hour + $1,109.90
fees/semester
$218.00/hour + $1,063.53
fees/semester
New student FY10 $239.00/hour + $1,109.90
fees/semester
$239.00/hour + $1,063.53
fees/semester
New student FY11 $254.00/hour + $1,109.90
fees/semester
Out of State
Continuing Non-guaranteed $590.00/hour + $1,003.94
fees/semester
$549.00/hour + $987.57
fees/semester
New students FY07 $520.65/hour + $1,003.94
fees/semester
$520.65/hour + $987.57
fees/semester
New students FY08 $583.20/hour + $1,109.90
fees/semester
$583.20/hour + $1,063.53
fees/semester
New students FY09 $654.00/hour + $1,109.90
fees/semester
$654.00/hour + $1,063.53
fees/semester
New students FY10 $717.00/hour + $1,109.90
fees/semester
$717.00/hour + $1,063.53
fees/semester
New students FY11 $762.00/hour + $1,109.90
fees/semester
Full-time graduates
In State $254.00/hour + $1,006.94
fees/semester
$239.00/hour + $990.07
fees/semester
New students $254.00/hour + $1,112.90
fees/semester
$239.00/hour + $1,066.03
fees/semester
Out of State $686.00/hour + $1,006.94
fees/semester
$717.00/hour + $990.07
fees/semester
New students $686.00/hour + $1,112.90
fees/semester
$717.00/hour + $1,066.03
fees/semester
Room and Board
The University currently has 12 traditional residence halls and a village of fraternity and
sorority residences (“Greek Court”), with a capacity of approximately 4,700 students. In
addition, there are 154 married and graduate student apartments (“University
Apartments”) and 146 undergraduate apartment units in 11 buildings (“University
Court”). For Fall 2010, the residence halls were about 74% occupied; the University
Apartments were about 98% occupied; and the University Court was 100% occupied.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
12
The following table outlines the rates charged for room and board:
2011 2010
University Apartments
Efficiency $438/month $425/month
One bedroom $460/month $447/month
Super efficiency $409/month $398/month
University Court Rates vary from
$2,331 to
$3,116/semester
Rates vary from
$2,263 to
$3,025/semester
Residence Halls
7 plus meal plan $3,808/semester $3,584/semester
10 plus meal plan $3,977/semester $3,743/semester
12 plus meal plan $4,127/semester $3,884/semester
15 plus meal plan $4,292/semester $4,039/semester
The Plus Meal Option permits each student the flexibility to make purchases at various
campus locations, including any residence hall dining center, the food court within the
University Union, and campus convenience centers.
Operating Expenses
GASB Statement No. 35 gives the reporting entities the choice of reporting expenses in
functional or natural classifications. The University chose to report the expenses in their
functional categories on the face of the statement and has displayed the natural categories
in the footnotes to the financial statements. The operating expenses for fiscal year 2011,
including depreciation of $14.6 million, totaled $233.7 million. Under the functional
classifications, $126.0 million, or 54%, was used for instruction, student aid, and student
services; $33.7 million, or 14%, was used for auxiliary services; $29.2 million, or 12%,
was for operations and maintenance of plant and depreciation; $20.1 million, or 9%, was
used for institutional support, which includes such areas as computer services and
University police; $15.7 million, or 7%, was used for academic support, for such areas as
the library and various dean’s offices; and $9.0 million, or 4%, was used for research and
public service, for such areas as grants and contracts. Under the natural classifications,
$165.9 million, or 71%, was used for salaries and benefits; $42.6 million, or 18%, was
used for supplies, contractual services, utilities, travel, repairs and maintenance and other;
$10.6 million, or 5%, was used for scholarships; and $14.6 million, or 6%, was
depreciation.
Operating expenses are shown in the graphs on the next page, by both functional and
natural classifications.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
13
Other
The State appropriation was the largest source of non-operating revenues at $47.4 million
in fiscal year 2011.
Interest expense on outstanding debt was $4.7 million for fiscal year 2011; this was the
largest category of non-operating expenses.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
14
Statement of Cash Flows
The Statement of Cash Flows provides information about the University’s sources and
uses of cash and cash equivalents during the fiscal year.
Condensed Statement of Cash Flows
For the Years Ended June 30,
2011 2010
Cash provided by (used in):
Operating activities $ (35,974,790) $ ( 37,460,984)
Noncapital financing activities 60,273,260 61,181,607
Capital and related financing activities (50,876,817) 10,738,081
Investing activities 106,715 159,290
Net (decrease) increase in cash and cash equivalents (26,471,632) 34,617,994
Cash and cash equivalents, beginning of year 70,437,965 35,819,971
Cash and cash equivalents, end of year $ 43,966,333 $ 70,437,965
Major sources of funds included in operating activities are student tuition and fees, and
auxiliary services. Student tuition and fees provided $75.9 million for fiscal year 2011.
Auxiliary enterprises income provided $44.6 million for 2011. The major source of
funds included in noncapital financing activities is state appropriations, which provided
$39.9 million for 2011.
The net cash used in capital and related financing activities represents numerous
purchases of capital assets as well as costs incurred for many campus construction
projects in progress.
The University’s Economic Outlook
The University’s mission is to “provide superior, yet accessible, undergraduate and
graduate education.” The University’s ability to meet that mission is directly related to
its enrollment, tuition and fee rates, and State support.
Appropriations from the State of Illinois represent a significant, but decreasing, portion of
operating support for University programs. State appropriations declined by
approximately $3,153,500 from fiscal year 2010 to 2011. For fiscal year 2012, State
appropriations decreased by an additional $543,800.
Although the University’s operating budget continues to grow, we project that the State’s
share of funding will continue to decline. As we navigate the financial uncertainties of
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
15
the State and nation, we will continue to manage our resources with care and diligence.
The University remains committed to managing tuition levels to meet its mission of
superior, yet accessible, education.
In 2003, Public Act 93-0228 was enacted. This act placed a limitation on increases in
tuition at Illinois public institutions of higher education. For students that initially enroll
in the University after the 2003-04 academic year, the tuition charged to an
undergraduate student cannot increase, above the amount charged when the student
enrolled, for four continuous academic years, with limited exceptions. Consequently, the
University must establish a tuition rate for incoming students that takes into account all
potential cost increases and the rate of inflation. For the fall semester of 2011, the
University increased tuition for incoming students by 6% over the rate paid by students
starting in the fall semester of 2010. The political climate for tuition increases is
uncertain, and consequently, the University is unable to estimate what, if any, increase
may occur for the fall semester of 2012.
It is the plan of the University to maintain a stable enrollment of approximately 11,600
students. The fall semester of 2011 enrollment was 11,178, a decrease of 3.9% from the
fall semester of 2010. The University does not anticipate any change to its plan in the
foreseeable future and has taken several initiatives to increase enrollment. Increasing
institutional scholarships and tuition waivers and actively recruiting students from border
states are two of these initiatives. Likewise, it is the University’s plan to maintain stable
occupancy in University owned housing. In fall semester of 2011, the University had
3,546 students in University owned housing, a decrease of 6.3% from the fall semester of
2010.
University owned housing rates are not under the same limitations as tuition. However,
they are limited by rates charged in the local housing market for similar accommodations.
All freshman are required to live in University owned housing, and all other students are
encouraged to live there, because it has been the University’s experience that students
living in University owned housing graduate at a higher rate and with higher grade point
averages. For the fall semester of 2011, the typical room and board rate for a full time
student was $4,116, an increase of 3.5% from fall semester of 2010.
The University currently has a two-year agreement with the University Professionals of
Illinois (UPI) Local 4100 (the union representing University faculty members). UPI
represents almost 700 faculty members on campus and is the single largest union
representing employees on campus. During fiscal year 2011, the University negotiated
four smaller collective bargaining agreements and another is in process.
During fiscal year 2011, work on the new biomass-fired Renewable Energy Center
continued, with its grand opening scheduled for October, 2011. Energy savings from the
Renewable Energy Center and other energy conservation projects will generate enough
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
16
cash to repay the debt service on the Certificates of Participation that were issued to fund
this project.
As other funding sources decline, private gifts are an important source of funding for
University operations. In association with the Eastern Illinois University Foundation,
almost $2.8 million was raised in new gifts and additions to the endowment during fiscal
year 2011. The Foundation’s annual return on its endowment in fiscal year 2011 was
21.5%, which is better than the estimated median National Association of College and
University Business Officers institution increase of 19.8%. With public financing
representing a smaller portion of the University’s budget, private philanthropy will
continue to grow in importance.
During the fall of 2010, the University announced its first comprehensive fundraising
campaign, termed Expect Greatness, with a goal of raising $50 million. The gifts from
this campaign will be used for the following priorities:
 Student scholarships and assistantships
 Attracting and retaining world-class faculty and supporting their research
 Capital improvement projects, including a new science center
 Developing and expanding programs, including autism, ethics, community
service, arts, and speakers
The campaign has secured around 92% of its goal, or approximately $46.1 million, with
the number of employees giving up 75% over the prior year. The $46.1 million includes
deferred giving through estates and life insurance contracts.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2011
(With Comparative Totals for 2010)
2011 2010 2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 41,601,939 $ 67,499,797 $ 807,606 $ 778,120
Restricted cash and cash equivalents 2,364,394 2,938,168 2,902,903 3,005,742
Short-term investments 245,000 250,000 466,806 513,866
Restricted short-term investments 16,397 14,244 2,872,973 2,478,703
Accounts receivable, net of allowance for doubtful accounts 13,181,079 12,458,834 340,359 153,742
State appropriation receivable 20,815,237 13,266,497 - -
Interest receivable 991 2,194 - 5,262
Inventories 2,057,629 1,734,194 59,200 48,000
Notes receivable, current portion, net of allowance for doubtful accounts 956,821 922,730 - -
Other assets 900,632 1,364,408 2,777 21,448
Total current assets 82,140,119 100,451,066 7,452,624 7,004,883
Noncurrent assets:
Restricted cash and cash equivalents - - 337,515 448,667
Notes receivable, less current portion, net of allowance for doubtful accounts 5,413,588 5,332,271 - -
Endowment investments 550,971 459,477 35,230,786 33,728,476
Restricted investments - - 21,727,404 14,453,102
Other long-term investments - - 1,118,064 930,309
Other long-term assets 2,565,387 2,043,539 313,608 15,351
Capital assets, net of accumulated depreciation 292,808,934 269,602,692 2,065,476 2,100,118
Total noncurrent assets 301,338,880 277,437,979 60,792,853 51,676,023
TOTAL ASSETS $ 383,478,999 $ 377,889,045 $ 68,245,477 $ 58,680,906
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable and accrued liabilities $ 16,649,738 $ 19,736,802 $ 11,920 $ 37,362
Deferred revenues 3,940,806 3,855,752 - -
Long-term liabilities, current portion 9,610,987 8,929,792 217,769 209,698
Demand mortgage payable - - 1,387,238 1,437,238
Total current liabilities 30,201,531 32,522,346 1,616,927 1,684,298
Noncurrent liabilities:
Long-term liabilities, less current portion 134,552,909 141,685,132 791,962 784,366
Due to others - - 6,281,523 5,679,962
Federal loan program contributions refundable 5,710,824 5,720,860 - -
Total noncurrent liabilities 140,263,733 147,405,992 7,073,485 6,464,328
Total liabilities 170,465,264 179,928,338 8,690,412 8,148,626
Net assets:
Invested in capital assets, net of related debt 166,087,461 161,921,484 678,238 662,880
Restricted:
Nonexpendable
Scholarships and fellowships 847,247 459,477 - -
Endowments - - 35,739,020 34,177,143
Expendable
Scholarships and fellowships 87,125 64,697 - -
Instructional department uses 2,090,517 2,075,257 - -
Loans 1,366,007 1,364,792 - -
Debt service 583,923 2,069,909 - -
Other - - 20,736,974 13,330,054
Unrestricted 41,951,455 30,005,091 2,400,833 2,362,203
Total net assets 213,013,735 197,960,707 59,555,065 50,532,280
TOTAL LIABILITIES AND NET ASSETS $ 383,478,999 $ 377,889,045 $ 68,245,477 $ 58,680,906
University Component Units
See accompanying notes to basic financial statements.
17
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2011
(With Comparative Totals for 2010)
2011 2010 2011 2010
OPERATING REVENUES
Student tuition and fees (net of scholarship
allowances of $13,069,222 in fiscal year 2011
and $10,869,400 in fiscal year 2010) $ 76,341,978 $ 75,349,113 $ - $ -
Federal grants and contracts 2,035,912 2,963,553 - -
State grants and contracts 2,475,164 2,534,502 - -
Local grants and contracts 420,163 310,956 - -
Private grants and contracts 2,014,022 2,332,468 - -
Sales and services of educational departments 4,157,156 4,486,307 - -
Auxiliary enterprises (net of scholarship
allowances of $2,684,744 in fiscal year 2011
and $2,284,702 in fiscal year 2010) 44,953,396 46,248,703 - -
Gifts - - 2,274,824 1,420,944
Service contract with the University - - 244,399 221,108
Budget allocation from the University - - 181,238 151,500
Membership dues - - 59,280 63,049
Merchandise sales - - - 3 51
Royalties - - 15,733 20,769
Alumni promotions - - 8 15 1,280
Other operating revenues 2,947,282 2,637,801 273,826 292,491
Total operating revenues 135,345,073 136,863,403 3,050,115 2,171,492
OPERATING EXPENSES
Educational and general
University Component Units
See accompanying notes to basic financial statements.
Instruction 94,171,743 93,706,501 - -
Research 1,147,875 1,231,187 - -
Public service 7,896,281 8,044,122 - -
Academic support 15,736,629 16,095,347 - -
Student services 20,871,872 19,321,993 - -
Institutional support 20,078,350 18,942,757 1,232,247 1,035,650
Operations and maintenance of plant 14,633,999 14,594,327 - -
Student aid 10,905,280 9,073,353 - -
Auxiliary enterprises 33,661,480 35,716,891 - -
Depreciation expense 14,604,059 14,868,320 34,642 34,642
Total operating expenses 233,707,568 231,594,798 1,266,889 1,070,292
Operating income (loss) (98,362,495) (94,731,395) 1,783,226 1,101,200
18
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED JUNE 30, 2011
(With Comparative Totals for 2010)
2011 2010 2011 2010
NONOPERATING REVENUES (EXPENSES)
State appropriations $ 47,417,250 $ 47,613,750 $ - $ -
State appropriations through Federal ARRA funds - 2,956,963 - -
Payments on behalf of the University 48,399,928 44,755,254 - -
Gifts 1,729,803 1,717,722 - -
Investment income (net) 108,015 155,102 1,476,433 1,026,542
Net increase in fair value of investments 86,145 36,791 6,908,333 4,374,483
Scholarships - - (814,851) (892,838)
Distributions to annuity/unitrust beneficiaries - - (128,951) (125,348)
Actuarial adjustments - - 8 06 43,008
Interest on capital asset-related debt (4,731,328) (4,503,647) (74,133) (82,496)
Nonoperating grants and contracts 16,985,494 14,309,497 - -
Amortization of bond costs, premiums, and discounts (147,037) (57,658) - -
Grants to the University - - (1,408,175) (1,610,092)
Payments to the Foundation (8,340) (6,740) - -
Loss on disposal of capital assets (58,895) (62,856) - -
Other nonoperating revenues 1,761,392 783,164 - -
Total nonoperating revenues 111,542,427 107,697,342 5,959,462 2,733,259
Income before capital contributions 13,179,932 12,965,947 7,742,688 3,834,459
Capital appropriations 377,404 - - -
Capital grants and gifts 1,255,221 450,244 - -
Transfers from Capital Development Board 240,471 1,212,275 - -
Additions to permanent endowments - - 1,280,097 1,075,528
Increase in net assets 15,053,028 14,628,466 9,022,785 4,909,987
NET ASSETS
Net assets, beginning of year 197,960,707 183,332,241 50,532,280 45,622,293
Net assets, end of year $ 213,013,735 $ 197,960,707 $ 59,555,065 $ 50,532,280
University Component Units
See accompanying notes to basic financial statements.
19
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2011
(With Comparative Totals for 2010)
2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 75,884,857 $ 7 3,241,372 $ - $ -
Grants and contracts (noncapital) 7,594,800 7 ,963,396 - -
Sales and services of educational departments 4,076,027 4 ,399,230 - -
Auxiliary enterprise 44,555,000 4 7,457,103 - -
Payments to suppliers (42,800,524) (43,517,381) (886,621) (757,048)
Payments to employees (109,401,962) (111,433,408) - -
Payments for employee benefits (8,309,377) (8,668,417) - -
Payments for scholarships and fellowships (10,555,901) (8,679,413) - -
Federal loan program contributions refundable (10,036) (15,278) - -
Loans issued to students (1,225,241) (1,633,040) - -
Collection of loans from students 1,109,834 1 ,585,607 - -
Royalties - - 1 22,271 123,956
Membership dues - - 5 5,980 61,084
Service contract with the University - - 7 8,625 78,625
Gifts - - 1 ,611,556 1,423,285
Promotional revenues - - 8 15 1,280
Other receipts 3 ,107,733 1 ,839,245 2 73,827 292,842
Net cash provided from (used in) operating activities $ (35,974,790) $ (37,460,984) $ 1 ,256,453 $ 1 ,224,024
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
State appropriations 39,868,510 41,382,924 - -
State appropriations through Federal ARRA funds - 2,956,963 - -
Private gifts other than capital purposes 1,868,548 1,578,798 - -
Payments to the Foundation (8,340) (6,740) - -
Scholarships - - (818,099) (891,880)
Distributions to annuity/unitrust beneficiaries (215 013) (205 966)
University Component Units
See accompanying notes to basic financial statements.
- - 215,013) 205,966)
Agency receipts - - 217,063 192,211
Agency payments - - (244,082) (213,199)
Other nonoperating activities 1,761,392 846,447 1,248,755 1,062,966
Nonoperating grants 16,783,150 14,423,215 (1,408,175) (1,610,092)
Net cash provided by (used in) noncapital financing activities $ 60,273,260 $ 6 1,181,607 $ (1,219,551) $ (1,665,960)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from bond issue/notes payable - 84,930,000 - -
Principal paid on capital debt and leases (6,287,617) (5,945,214) - -
Interest paid on capital debt and leases (4,736,569) (4,151,498) (74,670) (82,496)
Mortgage loan payment - - (50,000) -
Capital appropriations 377,404 - - -
Capital grants and gifts 1,233,468 592,928 - -
Bond issue costs paid - (2,022,280) - -
Purchases of capital assets (41,463,503) (62,665,855) - -
Net cash provided by (used in) capital and related financing activities $ (50,876,817) $ 1 0,738,081 $ (124,670) $ (82,496)
20
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
STATEMENT OF CASH FLOWS (Continued)
FOR THE FISCAL YEAR ENDED JUNE 30, 2011
(With Comparative Totals for 2010)
2011 2010 2011 2010
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale and maturities of investments $ 336,145 $ 2 91,649 $ 3 ,177,648 $ 4 ,429,453
Interest received on investments 109,218 1 54,432 1 ,520,436 1,044,124
Sale of gift stock and real estate 9 7,963 27,233
Purchase of investments (338,648) (286,791) (4,892,784) (5,480,524)
Net cash provided by investing activities 106,715 1 59,290 (96,737) 20,286
Net increase (decrease) in cash and cash equivalents (26,471,632) 34,617,994 (184,505) (504,146)
Cash and cash equivalents, beginning of year 70,437,965 35,819,971 4,232,529 4,736,675
Cash and cash equivalents, end of year $ 43,966,333 $ 7 0,437,965 $ 4,048,024 $ 4 ,232,529
Reconciliation of net operating income (loss) to net cash provided from
(used in) operating activities
Operating income (loss) $ (98,362,495) $ (94,731,395) 1,783,226 $ 1 ,101,200
Adjustments to reconcile operating income (loss) to net cash
provided from (used in) operating activities:
Depreciation 14,604,059 14,868,320 34,642 34,642
Bad debt - - 800 500
Payments on behalf of the University 48,399,928 44,755,254 - -
Noncash stock, real estate gifts - - (74,354) (15,884)
Changes in assets and liabilities:
Accounts receivable (728,252) (1,098,757) (592,213) 17,060
Royalties receivable - - 106,538 -
Inventories (323,435) 242,342 - -
Notes receivable (115,408) (47,432) - -
Other assets (282,458) (369,933) 18,671 85,060
Accounts payable and accrued liabilities 752,958 (227,152) (20,857) 1,446
Deferred revenues 176,412 (108,570) - -
Compensated absences (427,375) (286,070) - -
Federal loan program contributions refundable (10,036) (15,278) - -
Other long-term liabilities 70,910 (813,366) - -
Deposits 270,402 371,053 - -
Net cash provided from (used in) operating activities $ (35,974,790) $ (37,460,984) $ 1 ,256,453 $ 1 ,224,024
NONCASH INVESTING, NONCAPITAL FINANCING, AND CAPITAL
AND RELATED FINANCING TRANSACTIONS
Change in fair value of investments $ 86,145 $ 3 6,791 $ 6 ,908,333 $ 4 ,374,483
Change in interest receivable affecting interest received $ (1,203) $ 6 65 $ - $ -
Change in accrued interest affecting interest paid $ (5,241) $ 3 67,925 $ (537) $ -
Change in accrued costs relating to capital assets $ (3,615,156) $ 8 ,438,966 $ - $ -
Transfers of capital assets $ 240,471 $ 1 ,212,275 $ - $ -
University Component Units
See accompanying notes to basic financial statements.
21
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
COMBINING STATEMENT OF NET ASSETS
COMPONENT UNITS
Foundation
Alumni
Association Total
ASSETS
Current assets
Cash and cash equivalents $ 438,839 $ 368,767 $ 807,606
Restricted cash and cash equivalents 2,902,903 - 2,902,903
Short-term investments 32,000 434,806 466,806
Restricted short-term investments 2,872,973 - 2,872,973
Accounts receivable, net of allowance for doubtful accounts 333,959 6,400 340,359
Interest receivable - - -
Inventories 59,200 - 59,200
Other assets 1,766 1,011 2,777
Total current assets 6,641,640 810,984 7,452,624
Noncurrent assets
Restricted cash and cash equivalents 337,515 - 337,515
Endowment investments 35,230,786 - 35,230,786
Restricted investments 21,727,404 - 21,727,404
Other long-term investments - 1,118,064 1,118,064
Other long-term assets 302,508 11,100 313,608
Capital assets, net of accumulated depreciation 1,871,787 193,689 2,065,476
Total noncurrent assets 59,470,000 1,322,853 60,792,853
TOTAL ASSETS $ 66,111,640 $ 2,133,837 $ 68,245,477
LIABILITIES AND NET ASSETS
June 30, 2011
See accompanying notes to basic financial statements.
Current liabilities
Accounts payable and accrued liabilities $ 11,834 $ 86 $ 11,920
Long-term liabilities, current portion 217,769 - 217,769
Demand mortgage payable 1,387,238 - 1,387,238
Total current liabilities 1,616,841 86 1,616,927
Noncurrent liabilities
Long-term liabilities, less current portion 791,962 - 791,962
Due to others 6,281,523 - 6,281,523
Total noncurrent liabilities 7,073,485 - 7,073,485
Total liabilities 8,690,326 86 8,690,412
Net assets
Invested in capital assets, net of related debt 484,549 193,689 678,238
Restricted for:
Nonexpendable endowment 35,739,020 - 35,739,020
Expendable 20,736,974 - 20,736,974
Unrestricted 460,771 1,940,062 2,400,833
Total net assets 57,421,314 2,133,751 59,555,065
TOTAL LIABILITIES AND NET ASSETS $ 66,111,640 $ 2,133,837 $ 68,245,477
22
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
COMPONENT UNITS
Foundation
Alumni
Association Total
OPERATING REVENUES
Gifts $ 2,268,994 $ 5,830 $ 2,274,824
Service contract with the University 230,330 14,069 244,399
Budget allocation from the University 170,151 11,087 181,238
Membership dues - 59,280 59,280
Merchandise sales - - -
Royalties - 15,733 15,733
Alumni promotions - 815 815
Other operating revenues 273,492 334 273,826
Total operating revenues 2,942,967 107,148 3,050,115
OPERATING EXPENSES
Educational and general
Institutional support 1,093,577 138,670 1,232,247
Depreciation expense 28,643 5,999 34,642
Total operating expenses 1,122,220 144,669 1,266,889
Operating income (loss) 1,820,747 (37,521) 1,783,226
NONOPERATING REVENUES (EXPENSES)
Investment income (net) 1,438,102 38,331 1,476,433
Net increase in fair market value of investments 6,811,232 97,101 6,908,333
Scholarships (809,851) (5,000) (814,851)
Distributions to annuity/unitrust beneficiaries (128,951) - (128,951)
i l dj
For the Year Ended June 30, 2011
See accompanying notes to basic financial statements.
Actuarial adjustments 806 - 806
Interest on capital asset-related debt (74,133) - (74,133)
Grants to the University (1,389,601) (18,574) (1,408,175)
Net nonoperating revenues 5,847,604 111,858 5,959,462
Income before capital contributions 7,668,351 74,337 7,742,688
Additions to permanent endownments 1,280,097 - 1,280,097
Increase in net assets 8,948,448 74,337 9,022,785
NET ASSETS
Net assets, beginning of year 48,472,866 2,059,414 50,532,280
Net assets, end of year $ 57,421,314 $ 2,133,751 $ 59,555,065
23
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
COMBINING STATEMENT OF CASH FLOWS
COMPONENT UNITS
Foundation
Alumni
Association Total
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and vendors $ (773,121) $ (113,500) $ (886,621)
Royalties - 122,271 122,271
Membership dues - 55,980 55,980
Gifts 1,605,726 5,830 1,611,556
Promotional revenues - 8 15 8 15
Service contract with Eastern Illinois University 78,625 - 78,625
Other receipts 273,493 3 34 273,827
Net cash provided from operating activities 1,184,723 71,730 1,256,453
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Grants to the University (1,389,601) (18,574) (1,408,175)
Scholarships (813,099) (5,000) (818,099)
Distributions to annuity/unitrust beneficiaries (215,013) - (215,013)
Agency receipts 217,063 - 217,063
Agency payments (244,082) - (244,082)
Gifts received for endowment purposes 1,248,755 - 1,248,755
Net cash used in noncapital financing activities (1,195,977) (23,574) (1,219,551)
CASH FLOWS FROM RELATED CAPITAL AND FINANCING ACTIVITIES
Interest paid for capital debt and leases (74,670) - (74,670)
Mortagage loan payment (50,000) - (50,000)
Net cash used in capital and related financing activity (124,670) - (124,670)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale and maturities of investments 1,614,421 1,563,227 3,177,648
Interest received on investments 1,476,842 43,594 1,520,436
Sale of gift stock and real estate 97,963 - 97,963
P h fi (3 285 962) (1 606 822) (4 892 784)
For the Year Ended June 30, 2011
See accompanying notes to financial basic statements.
Purchase of investments 3,285,962) 1,606,822) 4,892,784)
Net cash used in investing activities (96,736) (1) (96,737)
Net increase (decrease) in cash and cash equivalents (232,660) 48,155 (184,505)
Cash and cash equivalents, beginning of year 3,911,917 320,612 4,232,529
Cash and cash equivalents, end of year $ 3,679,257 $ 368,767 $ 4,048,024
Reconciliation of operating income (loss)
to net cash provided from operating activities
Operating income (loss) $ 1,820,747 $ (37,521) $ 1,783,226
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation expense 28,643 5,999 34,642
Bad debt expense 8 00 - 8 00
Noncash stock, real estate gifts (74,354) - (74,354)
Changes in assets and liabilities:
Accounts receivable (588,913) (3,300) (592,213)
Royalties receivable - 106,538 106,538
Prepaid expense 18,692 (21) 18,671
Accounts payable (20,892) 35 (20,857)
Net cash provided from operating activities $ 1,184,723 $ 71,730 $ 1,256,453
NONCASH INVESTING TRANSACTIONS
Change in fair value of investments $ 6,811,232 $ 97,101 $ 6,908,333
Change in accrued interest affecting interest paid $ (537) $ - $ (537)
24
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
25
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Eastern Illinois University is a comprehensive, State-assisted, regional service
institution. Established in 1895 as a normal school, Eastern is a multi-purpose
institution, continuing its strong heritage in teacher preparation while at the same
time offering a strong, comprehensive undergraduate program in the arts, sciences,
humanities, and professions. The Graduate School complements and builds upon
the undergraduate curriculum, providing programs of excellence at the master's and
specialist's levels.
Financial Reporting Entity
The financial reporting entity, as defined by Governmental Accounting Standards
Board (GASB) Statement No. 14, The Financial Reporting Entity, consists of the
primary government, organizations for which the primary government is financially
accountable and other organizations for which the nature and significance of their
relationship with the primary government are such that exclusion could cause the
financial statements to be misleading or incomplete. Based upon the factors
discussed below, these financial statements include the accounts of Eastern Illinois
University (the University) as the primary government, and the component units,
Eastern Illinois University Foundation (the Foundation) and Eastern Illinois
University Alumni Association, Inc., (the Alumni Association), discretely
presented.
A primary government is financially accountable for a component unit if it appoints
a voting majority of the organization's governing body and (1) is able to impose its
will on that organization or (2) there is a potential for the organization to provide
specific financial benefits to, or impose specific financial burdens on, the primary
government. The primary government may also be financially accountable if an
organization is fiscally dependent on the primary government.
The University and the related organizations have also implemented GASB No. 39,
Determining Whether Certain Organizations Are Component Units (an amendment
of GASB Statement No. 14, The Financial Reporting Entity) which increased the
factors to consider when determining if a component unit should be included in the
financial reporting entity of a primary government.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
26
As stated in GASB Statement No. 39, Determining Whether Certain Organizations
are Component Units, a legally separate organization should be considered a
component unit of the primary government if the following three factors are met:
1) the separate organization’s economic resources are almost entirely held for the
direct benefit of the primary government; 2) the primary government is entitled to
or has access to the majority of the resources held or received by the separate
organization; and 3) the resources held or received by the separate organization are
significant to the primary government.
The Foundation is a legally separate, tax-exempt component unit. It acts primarily
as a fund-raising organization to supplement the resources that are available to the
University in support of its programs. The Board of Directors of the Foundation is
self-perpetuating and consists of graduates and friends of the University. Although
the University does not control the timing or amount of receipts from the
Foundation, the majority of resources or income thereon that the Foundation holds
and invests is restricted to the activities of the University by the donors. Because
these restricted resources held by the Foundation can only be used by, or for the
benefit of, the University and its students, the Foundation is considered a
component unit of the University and is discretely presented in the University’s
financial statements. An audit of the Foundation’s financial statements, for the
fiscal year ended June 30, 2011, was conducted by an independent certified public
accountant and can be obtained from the University's Administrative Office at 600
Lincoln Avenue, Charleston, Illinois 61920.
The Alumni Association is also a legally separate, tax-exempt component unit. The
Alumni Association is governed by a separately elected Board of Directors and its
primary functions are to foster loyalty and fellowship among the alumni of the
University and to receive gifts, which are contributed for the welfare of the
University. The Alumni Association uses its resources entirely or almost entirely
for the direct benefit of the University or its constituents. In addition, the
University is entitled to or has access to the majority of the resources of the
Association, and such resources are significant to the University. Therefore, the
Alumni Association is considered a component unit of the University and is
discretely presented in the University’s financial statements. An audit of the
Alumni Association’s financial statements, for the fiscal year ended June 30, 2011,
was conducted by an independent certified public accountant and can be obtained
from the University's Administrative Office at 600 Lincoln Avenue, Charleston,
Illinois 61920.
Eastern Illinois University is a component unit of the State of Illinois for financial
reporting purposes. The financial balances and activities included in these financial
statements are also included in the State of Illinois’ Comprehensive Annual
Financial Report. The State of Illinois’ Comprehensive Annual Financial Report
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
27
may be obtained by writing to the State Comptroller’s Office, Division of Financial
Reporting, 325 West Adams Street, Springfield, Illinois, 62704-1871 or accessing
its website at www.ioc.state.il.us.
Financial Statement Presentation
The basic financial statements include prior year comparative information which
has been derived from the University and the Component Units’ 2010 financial
statements. Such information does not include all of the information required to
constitute a presentation in conformity with accounting principles generally
accepted in the United States of America. Accordingly, such information should be
read in conjunction with the University and Component Units’ financial statements
for the year ended June 30, 2010.
Basis of Accounting
For financial reporting purposes, the University is considered a special-purpose
government engaged only in business-type activities. Accordingly, the University's
financial statements have been presented using the economic resources
measurement focus and accrual basis of accounting. Under the accrual basis,
revenues are recognized when earned, and expenses are recorded when an
obligation has been incurred.
The University has the option to apply all Financial Accounting Standards Board
(FASB) pronouncements issued after November 30, 1989, unless FASB conflicts
with GASB. The University has elected to not apply FASB pronouncements issued
after the applicable date.
Cash Equivalents
For purposes of the Statement of Cash Flows, the University considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents. Funds invested through the Illinois Funds are considered cash
equivalents.
Investments
The University accounts for its investments at fair value in accordance with GASB
Statement No. 31, Accounting and Financial Reporting for Certain Investments and
for External Investment Pools. Changes in the unrealized gain (loss) on the
carrying value of investments are reported as net increase (decrease) in fair value of
investments in the Statement of Revenues, Expenses, and Changes in Net Assets.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
28
Inventories
Inventories are carried at the lower of cost (first-in, first-out method) or market.
Accounts Receivable
Accounts receivable consists of tuition and fee charges to students and auxiliary
enterprise services provided to students, faculty, and staff, the majority of each
residing in the State of Illinois. Accounts receivable also includes amounts due
from the federal government, State and local governments, or private sources, in
connection with the reimbursement of allowable expenditures made pursuant to the
University's grants and contracts. Accounts receivable is recorded net of estimated
uncollectible amounts.
Restricted Assets
Restricted assets consist of cash and investments that are restricted by external
sources and are classified as either current or noncurrent assets in the Statement of
Net Assets depending upon when the assets become available for use.
Capital Assets
Capital assets are recorded at cost at the date of acquisition, or fair market value at
the date of donation in the case of gifts. The University's capitalization policy for
capital assets is as follows: equipment $5,000 or greater, land or buildings
$100,000 or greater and site or building improvements $25,000 or greater.
Renovations to buildings and equipment that significantly increase the value or
extend the useful life of the asset are capitalized. Routine repairs and maintenance
are charged to operating expense in the year in which the expense was incurred.
The University purchases textbooks and library materials for its textbook rental
service and library. The University capitalizes all library books and textbooks
purchases.
Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, generally 50 years for buildings, 15 to 20 years for site and
building improvements, 5 years for library books, 4 to 7 years for equipment and 2
years for textbooks. Depreciation also includes amortization of capitalized leased
equipment and purchased software.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
29
Deferred Revenues
Deferred revenues include amounts received for tuition and fees and certain
auxiliary activities prior to the end of the fiscal year, but related to the subsequent
accounting period. Deferred revenues also include amounts received from grant
and contract sponsors that have not yet been earned.
Compensated Absences
Employee vacation pay, sick pay, and compensable time are accrued at year-end for
financial statement purposes. The liabilities outstanding are reported as accrued
liabilities in the Statement of Net Assets, and the expenses incurred are reported as
functionalized expenses in the Statement of Revenues, Expenses, and Changes in
Net Assets.
Long-term Liabilities
Long-term liabilities include (1) principal amounts of revenue bonds payable, notes
payable, and capital lease obligations with contractual maturities greater than one
year and (2) estimated amounts for accrued compensated absences and other
liabilities that will not be paid within the next fiscal year.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and contingent assets and liabilities at the date of the financial statements. Actual
results could differ from those estimates.
Net Assets
The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University's total
investment in capital assets, net of outstanding debt obligations related to those
capital assets. To the extent debt has been incurred but not yet expended for capital
assets, such amounts are not included as a component of invested in capital assets,
net of related debt.
Restricted net assets - expendable: Restricted expendable net assets include
resources in which the University is legally or contractually obligated to spend in
accordance with restrictions imposed by external third parties.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
30
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist
of endowment and similar type funds in which donors or other outside sources have
stipulated, as a condition of the gift instrument, that the principal is to be
maintained inviolate and in perpetuity, and invested for the purpose of producing
present and future income, which may either be expended or added to principal.
Unrestricted net assets: Unrestricted net assets represent resources derived from
student tuition and fees, State appropriations, and sales and services of educational
departments and auxiliary enterprises. These resources are used for transactions
relating to the educational and general operations of the University and may be used
at the discretion of the governing board to meet current expenses for any purpose.
These resources also include auxiliary enterprises, which are substantially self-supporting
activities that provide services for students, faculty, and staff.
When an expense is incurred that can be paid using either restricted or unrestricted
resources, the fiscal agent of the University account uses discretion in deciding
which resources to apply.
Income Taxes
The University, as a political subdivision of the State of Illinois, is excluded from
Federal income taxes under Section 115(I) of the Internal Revenue Code, as
amended.
Reclassifications
Certain accounts in the prior year financial statements have been reclassified for
comparative purposes to conform to the presentation in the current year financial
statements. The Statement of Net Assets for fiscal year 2010 has been changed to
reclassify restricted cash of certain funds to unrestricted.
Classification of Revenues
The University has classified its revenues as either operating or non-operating
revenues according to the following criteria:
Operating revenues: Operating revenues include activities that have the
characteristics of exchange transactions, such as (1) student tuition and fees, net of
scholarship discounts and allowances, (2) sales and services of auxiliary enterprises,
net of scholarship discounts and allowances, (3) most federal, state and local grants
and contracts and federal appropriations, and (4) interest on institutional student
loans.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
31
Non-operating revenues: Non-operating revenues include activities that have the
characteristics of non-exchange transactions, such as gifts and contributions, and
other revenue sources that are defined as non-operating revenues by GASB
Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust
Funds and Governmental Entities That Use Proprietary Fund Accounting, and
GASB Statement No. 34, Basic Financial Statements – and Management’s
Discussion and Analysis – for State and Local Governments, such as State
appropriations and investment income.
On-Behalf Payments for Fringe Benefits
In accordance with GASB Statement No. 24, Accounting and Financial Reporting
for Certain Grants and Other Financial Assistance, the University has reported on-behalf
payments made by the State of Illinois to the Department of Central
Management Services State Employees Group Insurance Program and the State
Universities' Retirement System of Illinois (SURS), totaling $48,399,928,
representing $29,185,716 and $19,214,212 for group insurance and retirement
costs, respectively. These costs are reflected as non-operating revenues and
operating expenses with revenues reported as payments on behalf of the University
and expenses allocated to each educational and general program.
Scholarship Discounts and Allowances
Student tuition and fee revenues, and certain other revenues from students, are
reported net of scholarship discounts and allowances in the Statement of Revenues,
Expenses, and Changes in Net Assets. Scholarship discounts and allowances are
the difference between the stated charge for goods and services provided by the
University, and the amount that is paid by students and/or third parties making
payments on the students' behalf. Certain governmental grants, such as other
federal, State or nongovernmental programs, are recorded as operating revenues in
the University's financial statements. To the extent that revenues from such
programs are used to satisfy tuition and fees and other student charges, the
University has recorded a scholarship discount and allowance.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
32
2. CASH AND CASH EQUIVALENTS, OTHER DEPOSITS, AND
INVESTMENTS
Cash and Deposits
The University maintains deposits at financial institutions authorized by the Board
of Trustees. The carrying amount of the University’s deposits was $16,233 as of
June 30, 2011. These were fully covered by federal deposit insurance. In addition,
the University had cash on hand in various petty cash and change funds in the
amount of $35,940 as of June 30, 2011.
Investments
State statutes and the Board of Trustees authorize the University to invest in United
States Government securities, securities guaranteed by the full faith and credit of
the United States Government, interest-bearing savings accounts, certificate and
time deposits in financial institutions fully insured by the FDIC, and any other
security or investment permitted by law and approved by the Board. The Vice
President for Business Affairs has the authority to prescribe investment guidelines
consistent with the Board of Trustees’ regulations, the provisions of the Public
Funds Investment Act (30 ILCS 235/0.01 et seq.) and the Uniform Prudent
Management of Institutional Funds Act (760 ILCS 51/1 et seq.).
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair
value of an investment. The University has established a maximum maturity of up
to four years for any investment. State statutes limit maturity on commercial paper
investments to 180 days. Effective maturity ranges for investments as of
June 30, 2011 are as follows:
Effective Maturity 0-1 Year 1-5 Years 6-10 Years
Illinois Funds $43,914,160 $ - $ -
Mutual bond funds - 31,163 102,888
$43,914,160 $ 31,163 $ 102,888
Credit Risk
Credit risk is the risk that an issuer or other counterparty to a debt investment will
not fulfill its obligations. Credit ratings for University investments are shown
below. The bond funds are not rated. The University’s investment policy has no
specific guidelines addressing the credit rating of mutual bond funds.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
33
Credit Rating AAA Not Rated
Illinois Funds $43,914,160 $ -
Mutual bond funds - 134,051
$43,914,160 $134,051
Custodial Credit Risk
Custodial credit risk is the risk that when, in the event a financial institution or
counterparty fails, the University would not be able to recover value of deposits,
investments or collateral securities that are in the possession of an outside party.
All of the University’s investments are held by a custodian in the University’s name
and are not subject to creditors of the custodial bank.
The University’s investments in the Illinois Funds and mutual funds are not subject
to detailed disclosure because the University owns shares of each investment fund
and not the physical securities.
Concentration Risk
The University does not have any investments representing 5% or more of total
assets in any single issuer other than the U.S. Government, its agencies or
sponsored corporations. State statutes limit investment in short term debts of
corporations to one-third of the agency’s funds, and no more than 10% of any one
corporation’s outstanding obligations. The University has limited commercial paper
investments to two million dollars per issuer.
The University has not held foreign currency positions other than the purchase of
foreign payment drafts to vendors, nor has it participated in securities lending.
The Illinois Funds are in the custody of the State Treasurer and are pooled and
invested with other State funds in accordance with the Deposit of State Moneys Act
(15 ILCS 520/11). Details on the nature of these investments are available within
the State of Illinois' Comprehensive Annual Financial Report. The Illinois Funds
do not have any direct or indirect investments in derivative instruments.
The mutual funds have not disclosed to the University whether derivatives are used,
held, or were written during the period covered by the financial statements.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
34
Reconciliation to the Statement of Net Assets
A reconciliation of cash and investments as presented previously to amounts
reported in the Statement of Net Assets as of June 30, 2011 are as follows:
Current Noncurrent Total
Cash and cash equivalents $41,601,939 $ - $41,601,939
Restricted cash and cash equivalents 2,364,394 - 2,364,394
Short-term investments 245,000 - 245,000
Restricted investments 16,397 - 16,397
Endowment investments - 550,971 550,971
$44,227,730 550,971 $44,778,701
Breakdown and carrying amounts of the cash and investments are as follows:
Cash deposits $ 16,233
Petty cash funds 35,940
The Illinois Funds accounts 43,914,160
Bond mutual funds – Charles Schwab and Co., Inc. 134,051
Equity mutual funds – Charles Schwab and Co., Inc. 433,317
Certificate of deposit 245,000
$ 44,778,701
3. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following as of June 30, 2011:
Sales and services $ 2,190,724
Student tuition and fees 5,168,213
Auxiliary enterprises and other operating activities 5,404,129
Federal, State, and private grants and contracts 1,091,879
Others 5,196,409
Total 19,051,354
Less allowance for doubtful accounts (5,870,275)
Net accounts receivable $ 13,181,079
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
35
4. INVENTORIES
Inventories consisted of the following as of June 30, 2011:
Bookstore $ 1,176,192
Facilities 591,256
Food services/housing 164,385
Union operation 57,156
Postage 43,072
Pharmacy 24,117
Others 1,451
$ 2,057,629
5. NOTES RECEIVABLE
Student loans made through the Federal Perkins Loan Program (the "Program")
comprise substantially all of the notes receivable as of June 30, 2011. Under the
Program, the federal government provides funds for approximately 75% of the total
contribution for student loans, with the University providing the balance. Under
certain conditions, such loans can be forgiven at annual rates of 10% to 30% of the
original balance up to maximums of 50% to 100% of the original loan. The federal
government reimburses the University to the extent of 10% of the amounts forgiven
for loans originated prior to July 1, 1993 under the Federal Perkins Loan Program.
No reimbursements are provided for loans originated after this date. Amounts
refundable to the U.S. Government upon cessation of the Program of $5,710,824 as
of June 30, 2011, are reflected in the accompanying Statement of Net Assets as
noncurrent liabilities.
As the University determines that loans are uncollectible and not eligible for
reimbursement by the Federal government, the loans may be assigned to the U.S.
Department of Education. The allowance for uncollectible loans only applies to
University funded loans and the University portion of federal student loans, as the
University is not obligated to fund the federal portion of uncollected student loans.
The University has provided an allowance for uncollectible loans, which, in
management's opinion, is sufficient to absorb loans that will ultimately be written
off. As of June 30, 2011, the allowance for uncollectible loans was $84,149.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
36
6. CAPITAL ASSETS
6/30/2010 Additions Deletions Transfers 6/30/2011
Capital assets not being depreciated
Land and land improvements $ 2,968,015 $ - $ - $ - $ 2,968,015
Capitalized collections 198,646 - - - 198,646
Construction in progress 69,201,059 32,634,254 30,631 (20,036,506) 81,768,176
Total capital assets not being depreciated 72,367,720 32,634,254 30,631 (20,036,506) 84,934,837
Capital assets being depreciated
Site improvements 17,226,197 - - 2 17,376 17,443,573
Buildings and building improvements 290,790,242 6,140 - 1 9,819,130 310,615,512
Equipment 6 7,083,172 5,255,838 5,931,709 - 66,407,301
Capital leases-equipment 50,585 - - - 50,585
Total capital assets being depreciated 375,150,196 5,261,978 5,931,709 2 0,036,506 394,516,971
Less accumulated depreciation for:
Site improvements 11,046,394 810,577 - - 11,856,971
Buildings and building improvements 111,540,700 8,301,608 - 7 7 119,842,385
Equipment 5 5,386,707 5,430,341 5,876,409 (77) 54,940,562
Capital leases-equipment 22,883 7,226 - - 30,109
Total accumulated depreciation 177,996,684 14,549,752 5,876,409 - 186,670,027
Intangible assets being amortized
Software 3 80,146 - - - 380,146
Less amortization 298,686 54,307 - - 352,993
Total intangible assets being amortized 81,460 (54,307) - - 27,153
Total capital assets,
being depreciated or amortized, net 197,234,972 (9,342,081) 55,300 20,036,506 207,874,097
Capital assets, net $ 269,602,692 $ 23,292,173 $ 85,931 $ - $ 292,808,934
For the Year Ended June 30, 2011
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
37
7. CONSTRUCTION IN PROGRESS
Below is a listing of the major construction projects in progress as of June 30, 2011:
Project Expended
Estimate to 6/30/11 Committed
Renewable Energy Center/ESCO III $ 7 5,435,214 $ 69,374,844 $ 6,060,370
Lincoln Hall renovations 4 ,571,637 4,117,899 453,738
Electrical distribution upgrade 4 ,319,433 4,319,433 -
Residence hall sprinkler projects 3 ,204,287 1,641,923 1,562,364
Other miscellaneous 6 ,346,889 2,314,077 4,032,812
$ 9 3,877,460 $ 81,768,176 $ 12,109,284
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following as of June 30, 2011:
Accounts payable $ 932,243
Accrued wages 7,193,363
Accrued expenses 7,918,055
Other 606,077
$ 16,649,738
9. DEFERRED REVENUES
Deferred revenues consisted of the following as of June 30, 2011:
Tuition and fees $ 2,058,390
Sales and services 369,716
Auxiliary enterprises 327,230
Grants and contracts 1,137,729
Miscellaneous 47,741
$ 3,940,806
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
38
10. LONG-TERM LIABILITIES
Balance 6/30/10 Additions Reductions Balance 6/30/11
Amounts due
within one year
Revenue bonds, notes payable
and Certificates of Participation
Revenue bonds payable (1) $ 3 5,405,000 $ - $ 3,620,000 $ 31,785,000 $ 3,780,000
Revenue bond discounts (15,908) - (1,597) (14,311) (1,418)
Revenue bond premiums 6 41,044 - 203,032 438,012 152,366
Deferred accounting loss (717,279) - (121,338) (595,941) (121,338)
Notes payable (1) 5 4,070 - 26,268 27,802 27,802
Certificates of Participation (COPS) (2) 1 00,805,000 - 2,630,000 98,175,000 2,810,000
COPS premium 2 1,826 - 12,000 9,826 6,682
COPS discount (122,968) - (14,749) (108,219) (13,665)
Capital lease obligations (3) 2 0,618 - 11,349 9,269 9,269
Other liabilities
Accrued compensated
absences * 1 3,385,818 13,585 440,959 12,958,444 1,482,275
Deposits * 1 ,137,703 341,311 - 1,479,014 1,479,014
Federal loan program
contributions * 5 ,720,860 - 10,036 5,710,824 -
Total long-term liabilities $ 1 56,335,784 $ 354,896 $ 6,815,960 $ 149,874,720 $ 9,610,987
As of June 30, 2011
(1) See Note 11 for more information on revenue bonds and notes payable.
(2) See Note 12 for more information on Certificates of Participation.
(3) See Note 13 for more information on capital lease obligations.
* Due to limitations in the University's accounting system, the gross amounts for additions and
reductions are not readily available for fiscal year 2011.
Total interest expense for the year ended June 30, 2011 was $4,731,328. There was
$2,521,602 of interest capitalized as part of capital projects in progress during the
year.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
39
11. REVENUE BONDS AND NOTES PAYABLE
Revenue bonds payable consisted of the following as of June 30, 2011:
$19,345,000, Auxiliary Facilities System Revenue Bonds, Series
2005, term bonds due in annual installments (principal only) of
$885,000 to $1,370,000 through April 1, 2013; $965,000 to
$1,595,000 through April 1, 2018; $540,000 to $635,000 through
April 1, 2023; $665,000 to $730,000 through April 1, 2026;
interest ranges from 3.0% to 5.0%. $ 14,570,000
$18,590,000 Auxiliary Facilities System Revenue Bonds, Series
2008, term bonds due in annual installments (principal only) of
$1,000,000 to $2,900,000 through October 1, 2015; interest
ranges from 3.25% to 5.0%. 13,175,000
$4,230,000 Auxiliary Facilities System Revenue Bonds, Series
2008B, term bonds due in annual installments (principal only) of
$95,000 to $1,340,000 through October 1, 2033; interest ranges
from 2.0% to 5.85%. 4,040,000
Total bonds outstanding $ 31,785,000
On July 1, 2005, the Series 2005 Bonds were issued in the principal amount of
$19,345,000. Proceeds from the sale of the Series 2005 Bonds were used to
advance refund all of the Series 1997 Bonds and portions of the outstanding Series
1998 and Series 2000 Bonds. The net proceeds were deposited in an irrevocable
trust with an escrow agent to provide for all future debt service payments on the
1997 Series Bonds as well as the portions of the Series 1998 and Series 2000 Bonds
that were advance refunded. As a result, the 1997 Bonds and refunded portions of
the 1998 and 2000 Bonds are considered defeased and the liability for those bonds
has been removed from the University's Statement of Net Assets.
Although the advance refunding resulted in the recognition of an accounting loss of
$1,164,045, the University in effect reduced its aggregate debt service payments by
$951,513 over the next 21 years and also gained the University the release of the
Series 1997 Debt Service Reserve Fund in the amount of $953,416.
During March of 2008, the Series 2008 Bonds were issued in the principal amount
of $18,590,000. Proceeds from the sale of the Series 2008 Bonds were used to
refund and redeem in April 2008, all of the outstanding Auxiliary Facilities System
Revenue Bonds, Series 1998, that matured on and after October 1, 2008. The
Series 1998 Bonds due on April 1, 2008 were paid from other available University
funds. This portion of the Series 1998 Bonds are no longer outstanding and the
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
40
liability for those bonds has been removed from the University’s Statement of Net
Assets.
Although the current refunding resulted in the recognition of an accounting loss of
$124,024, the University in effect reduced its aggregate debt service payments by
$920,974 over the next eight years.
All bonds outstanding are payable by the Board of Trustees solely from the net
revenue of the Eastern Illinois University Auxiliary Facilities System (System) and
from pledged tuition and fees, as well as from certain other funds pledged to pay the
principal, redemption premiums, if any, and interest on the bonds.
As of June 30, 2011, $280,000 of previously refunded bonds were outstanding.
Assets held in irrevocable trust accounts, along with interest, are anticipated to be
sufficient to retire these bonds. As such, these bonds are defeased and accordingly
have been accounted for as if they were retired. The balance of the related escrow
fund was $280,276 as of June 30, 2011.
The estimated annual amounts required for the payment of principal and interest on
the outstanding revenue bonds as of June 30, 2011, are set forth in the following
table:
Year ending
June 30 Principal Interest
Total
Payments
2012 $ 3,780,000 $ 1,450,334 $ 5,230,334
2013 3,975,000 1,259,946 5,234,946
2014 4,175,000 1,059,324 5,234,324
2015 4,385,000 848,518 5,233,518
2016 4,610,000 626,891 5,236,891
2017-2021 4,685,000 1,990,261 6,675,261
2022-2026 4,195,000 1,128,249 5,323,249
2027-2031 1,130,000 415,630 1,545,630
2032-2034 850,000 75,980 925,980
Total $ 31,785,000 $ 8,855,133 $ 40,640,133
The following reserve accounts were established by the bond resolutions for the
2005, 2008 and 2008B Bond Series:
Retirement of Indebtedness -- These accounts include the Bond and Interest Sinking
Accounts.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
41
The bond indenture requires the University to set aside in the Bond and Interest
Sinking Account on or before five banking days prior to April 1 and October 1,
amounts sufficient to equal the next semi-annual payment (principal and interest).
These amounts are to be provided after payment of current operating and
maintenance costs.
Repair and Replacement Reserve Account -- Under the terms of the bond indenture,
a transfer is made each fiscal year, if approved by the Board, to the Repair and
Replacement Reserve Account. The maximum amount which may be accumulated
in this account, including investments thereof, shall not exceed 5 percent of the
replacement costs of the facilities constituting the System, plus either 10 percent of
the historical costs of the parking lots or 100 percent of the estimated cost of
resurfacing any one existing parking lot. This account will be used to pay the cost
of unusual or extraordinary maintenance or repairs, renewals, replacements and
renovating of the facilities or replacement of fixed equipment not paid as part of the
ordinary maintenance and operations. Funds can be transferred from this account to
the Bond and Interest Sinking Account if a deficiency occurs in that account which
cannot be funded from the Debt Service Reserve Account.
Development Reserve Account -- Under the terms of the bond indenture, funds
approved by the Board for expenditure for new space or construction of a facility
are deposited in this account.
Equipment Reserve Account -- Under the terms of the bond indenture, funds
approved by the Board for expenditure in connection with the acquisition of
movable equipment to be installed in the facilities are deposited in this account.
The maximum amount accumulated shall not exceed 20 percent of the cost of the
movable equipment of the System.
Surplus Revenues -- After all mandatory transfers to the above accounts have been
made, any excess funds may be used to: redeem or purchase bonds, advance refund
bonds, credit funds to a utility reserve to provide for the payment of utilities
(amount not to exceed 5 percent of the operating costs during such fiscal year), or to
establish a self-insurance fund in connection with claims against or damage to the
System.
The amounts required by the bond resolution for these purposes as of June 30, 2011
compared with the amounts included within the accounts as of June 30, 2011 are as
follows:
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
42
Minimum
Amount
Required
By Bond
Resolution
Cash and
Investments
Deposited
in the
Account
Repair and Replacement Reserve Account $ - $ 7,587,806
Pledged Revenues and Debt Service Requirements
The University has pledged specific revenues, net of specified operating expenses,
to repay the principal and interest of revenue bonds. The following is a schedule of
the pledged revenues and related debt:
Pledged Revenues
Bond Issue Purpose
Source of Revenue
Pledged
Future
Revenues
Pledged1
Term of
Commitment
Debt Service to
Pledged Revenues
Auxiliary
Facilities System
(AFS)
Refundings, various
improvements and
additions to the System
Net AFS revenue, student
tuition and fees $ 40,640,133 2033 5.89%
1 Total future principal and interest payments on bonds.
For the current year, principal and interest paid by the University and the total net
revenues pledged were $5,233,439 and $88,858,388, respectively.
Notes payable consisted of the following as of June 30, 2011.
University demand note payable to First Mid-Illinois Bank and
Trust, to finance equipment for the Union bowling center; payable
on demand, but if no demand is made, payable in annual
installments of $29,239 including interest at 5.44%; final payment
due February, 2012; secured by Union bowling center equipment $ 27,802
$ 27,802
Maturity Information
The University has classified the note payable as a current liability because it is
payable on demand and the University does not have agreements in place to extend
the note in case the bank makes demand.
Year ending Total
June 30 Principal Interest Payments
2011 $ 27,802 $ 1,509 $ 29,311
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
43
12. CERTIFICATES OF PARTICIPATION
The Certificates of Participation (COPS) consisted of the following as of
June 30, 2011:
$10,775,000 Certificates of Participation, Series 2001; due in annual
installments (principal only) of $650,000 beginning August 15, 2002,
to $1,550,000 through August 15, 2011; interest ranges from 2.35%
to 5.25%; certificates are subject to redemption, in whole, at the price
of par (100%), plus accrued interest to the date fixed for redemption
in the event of non-appropriation as defined in the Indenture. $ 1,550,000
$8,640,000 Certificates of Participation, Series 2003; due in annual
installments (principal only) of $695,000 beginning August 15, 2004,
to $1,075,000 through August 15, 2013; interest ranges from 3% to
4%; certificates are subject to redemption, in whole, at the price of
par (100%), plus accrued interest to the date fixed for redemption in
the event of non-appropriation as defined in the Indenture. 3,060,000
$9,730,000 Certificates of Participation, Series 2005; due in annual
installments (principal only) of $260,000 beginning February 15,
2008, to $1,020,000 through February 15, 2025, interest ranges from
3.0% to 4.3%; certificates are subject to redemption, in whole, at the
price of par (100%), plus accrued interest to the date fixed for
redemption in the event of non-appropriation as defined in the
Indenture and are subject to mandatory redemption, in whole, at the
price of the principal amount, plus accrued interest, on February 15,
2025 should the Board renew the Purchase Contract. The certificates
are also callable at the option of the Board on any date on or after
February 15, 2015 at the price of the principal amount, plus accrued
interest. 8,635,000
$84,930,000 Certificates of Participation, Series 2009A; due in
annual installments (principal only) of $960,000 beginning April 1,
2013, to $3,710,000 through April 1, 2036, interest ranges from 3.5%
to 6.35%; certificates are subject to redemption, in part or whole, at
the price of par (100%) plus accrued interest to the date fixed for
redemption in the event of non-appropriation as defined in the
Indenture. The certificates due April 1, 2020 and thereafter are also
callable at the option of the Board on any date on or after April 1,
2019 at the price of the principal amount, plus accrued interest. 84,930,000
Total Certificates of Participation $98,175,000
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
44
Per the COPS Series 2001, COPS Series 2003, the COPS Series 2005, and the
COPS Series 2009A official statements, the Board is obligated to make installment
payments either from funds derived from State appropriations or from legally
available non-appropriated funds. Such legally available non-appropriated funds
will include payments from the auxiliary facilities system using the savings derived
from improvements within the system that are part of the energy services
component of the issues. In addition, for the COPS Series 2003, such legally
available funds include an increase of the student technology fee related to the
network infrastructure upgrade and for the COPS Series 2005, such legally
available funds include an increase in the campus improvement fee. The estimated
annual amounts required for the payment of principal and interest on the
outstanding Certificates of Participation as of June 30, 2011, are set forth in the
following table:
Year
Ending
June 30
Build
America
Principal Interest Total Subsidy
2012 $ 2,810,000 $ 5,524,004 $ 8,334,004 $ (1,761,392)
2013 2,285,000 5,433,881 7,718,881 (1,761,392)
2014 2,610,000 5,347,859 7,957,859 (1,749,631)
2015 2,155,000 5,267,774 7,422,774 (1,733,047)
2016 2,415,000 5,175,391 7,590,391 (1,704,865)
2017-2021 20,030,000 23,378,604 43,408,604 (7,741,185)
2022-2026 21,150,000 17,760,588 38,910,588 (6,070,586)
2027-2031 20,945,000 11,607,327 32,552,327 (4,062,565)
2032-2036 23,775,000 4,427,855 28,202,855 (1,549,749)
Total $98,175,000 $83,923,283 $182,098,283 $(28,134,412)
13. LEASES PAYABLE
The University leases various equipment under capital lease purchase contracts.
The equipment and related capital lease obligations are presented on the Statement
of Net Assets at the net present value of the future minimum lease payments due
under the capital leases as determined using applicable discount rates.
Following is a schedule by years of the total future minimum lease payments due
under these equipment capital leases together with the net present value of the
future minimum lease payments as of June 30, 2011:
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
45
Minimum lease payments year ending June 30, 2012 $ 9,675
Less amount representing interest (406)
Net present value of future minimum lease payment $ 9,269
The University also made rental payments under operating leases during 2011 of
$27,224 primarily for office space used by various grant activities, storage for
surplus equipment, and the University's textbook rental system.
14. RETIREMENT PLAN
Plan Description
Eastern Illinois University contributes to the State Universities’ Retirement System
of Illinois (SURS), a cost-sharing multiple-employer defined benefit pension plan
with a special funding situation whereby the State of Illinois makes substantially all
actuarially determined required contributions on behalf of the participating
employers. SURS was established July 21, 1941, to provide retirement annuities
and other benefits for staff members and employees of the State universities, certain
affiliated organizations, and certain other State educational and scientific agencies
and for survivors, dependents, and other beneficiaries of such employees. SURS is
considered a component unit of the State of Illinois’ financial reporting entity and is
included in the State’s financial reports as a pension trust fund. SURS is governed
by Section 5/15, Chapter 40, of the Illinois Compiled Statutes. SURS issues a
publicly available financial report that includes financial statements and required
supplementary information. That report may be obtained by accessing its website at
www.SURS.org, or calling 1-800-275-7877.
Funding Policy
Plan members are required to contribute 8.0% of their annual covered salary (9%
for University Police Officers) and substantially all employer contributions are
made by the State of Illinois on behalf of the individual employers at an actuarially
determined rate. The rate for the years ended June 30, 2011, 2010, and 2009 were
21.27%, 18.61%, and 12.88%, respectively, of annual covered payroll. The
contribution requirements of plan members and employers are established and may
be amended by the Illinois General Assembly. The employer contributions to
SURS for the years ended June 30, 2011, 2010, and 2009 were $19,453,172,
$18,020,036, and $11,511,485, respectively, equal to the required contributions for
each year.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
46
15. POST EMPLOYMENT BENEFITS
The State provides health, dental, vision, and life insurance benefits for retirees and
their dependents in a program administered by the Department of Healthcare and
Family Services along with the Department of Central Management Services.
Substantially all State employees become eligible for post-employment benefits if
they eventually become annuitants of one of the State sponsored pension plans.
Health, dental, and vision benefits include basic benefits for annuitants and
dependents under the State's self-insurance plan and insurance contracts currently in
force. Annuitants may be required to contribute towards health, dental, and vision
benefits with the amount based on factors such as date of retirement, years of
credited service with the State, whether the annuitant is covered by Medicare, and
whether the annuitant has chosen a managed health care plan. Annuitants who
retired prior to January 1, 1998, and who are vested in the State Employee’s
Retirement System do not contribute towards health, dental, and vision benefits.
For annuitants who retired on or after January 1, 1998, the annuitant’s contribution
amount is reduced five percent for each year of credited service with the State
allowing those annuitants with twenty or more years of credited service to not have
to contribute towards health, dental, and vision benefits. Annuitants also receive
life insurance coverage equal to the annual salary of the last day of employment
until age 60, at which time the benefit becomes $5,000.
The State pays the University’s portion of employer costs for the benefits provided.
The total cost of the State’s portion of health, dental, vision, and life insurance
benefits of all members, including post-employment health, dental, vision, and life
insurance benefits, is recognized as an expenditure by the State in the Illinois
Comprehensive Annual Financial Report. The State finances the costs on a pay-as-you-
go basis. The total costs incurred for health, dental, vision, and life insurance
benefits are not separated by department or component unit for annuitants and their
dependents nor active employees and their dependents.
A summary of post-employment benefit provisions, changes in benefit provisions,
employee eligibility requirements including eligibility for vesting, and the authority
under which benefit provisions are established are included as an integral part of the
financial statements of the Department of Healthcare and Family Services. A copy
of the financial statements of the Department of Healthcare and Family Services
may be obtained by writing to the Department of Healthcare and Family Services,
201 South Grand Avenue, Springfield, Illinois, 62763-3838.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
47
16. SELF INSURANCE
The University is self insured for general liability through SURMA, the State
Universities’ Risk Management Association. SURMA is a cooperative agency
voluntarily established by contracting Illinois State Universities, as defined by
various sections of Chapter 110 of the Illinois Compiled Statutes. Its purpose is to
prevent or lessen casualty losses to State University properties and injuries to
persons or property which might result in claims being made against the State
University and which would not be defended by the Illinois Attorney General and
paid for by the State of Illinois and in most cases adjudicated through the Court of
Claims. Each participating University’s portion of the premium was determined
based upon an actuarial evaluation. The University carries commercial excess
general liability coverage with coverage up to $11 million with a $350,000 self-insured
retention. Settled claims have not exceeded commercial general liability
coverage in any of the three preceding years.
In addition, the University offers a self-insured health plan to its students and is the
administrator of this plan. A student health insurance fee is assessed each semester
to fund this plan. Students who enroll for nine or more hours are automatically
covered and students who enroll for six to eight hours can request to be included
under the plan. Dependents of an eligible student are not allowed to enroll in this
plan. Students who are enrolled for nine or more hours may elect not to participate
in the plan if they can provide proof of existing medical insurance that exceeds the
benefits offered under the University’s plan.
This plan is considered secondary or excess insurance if the student possesses any
other medical insurance. This plan has a $50 deductible per diagnosis, per school
year, and allows benefits up to 80%, subject to some limitations. The lifetime
maximum benefits of the plan are $25,000 per diagnosis for medical services and
$5,000 for mental illness and substance abuse. Total claims of $1,106,673 were
paid for the year ended June 30, 2011.
The University has established a reserve for its self insurance costs to offset claims
incurred but not submitted and the continuing rise of health care costs. This reserve
is based on estimated ultimate cost of settling claims applying historical experience.
Changes in the reserve balance for the year ended June 30, 2011 are as follows:
Reserve balance, June 30, 2010 $1,779,476
Transfers and fees 1,576,164
Payment of claims (1,106,673)
Administrative cost (260,117)
Reserve balance, June 30, 2011 $1,988,850
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
48
17. TRANSACTIONS WITH RELATED PARTIES
The University, being a State university, is a component unit of the State of Illinois
(the State). The State provided the University $47,413,000 for general and
educational purposes during fiscal year 2011.
The University also received assets from the Capital Development Board (CDB), an
agency of the State of Illinois. CDB administered various capital improvements at
the University. During fiscal year 2011, the University received $240,471 of capital
improvements that were funded and paid for directly by CDB.
The Eastern Illinois University Foundation (Foundation) has a contract with Eastern
Illinois University in which the Foundation has agreed to aid and assist the
University in achieving its education, research and service goals by developing and
administering gifts made to the Foundation to be used for the benefit of the
University for scholarships, grants and other supporting programs. The University
agreed, as part of this contract, to furnish certain services necessary to the operation
of the Foundation which are to be repaid by the Foundation either in the form of
money or its equivalent in services or resources.
During the year ended June 30, 2011, the University provided cash, services and
other resources to the Foundation, totaling $230,330, to help defray the
Foundation’s cost incurred under the contract. During the year ended June 30,
2011, the Foundation incurred expenses of $151,705 under the contract.
During the year ended June 30, 2011, the Foundation gave the University
$1,466,003 of cash, services and resources, unrestricted or restricted only as to
department, which were generally for on-going operations of the University. In
addition, the Foundation gave the University restricted scholarships, grants and
awards of $809,851 during the year. Also, the Foundation received $26,274 for the
year ended June 30, 2011 in gifts from the University’s restricted gift account with
the donor’s consent and $146,000 from a University grant account.
The Eastern Illinois University Alumni Association, Inc. (Association) has an
agreement with Eastern Illinois University to coordinate the University’s alumni
activities. The University agreed to provide the Association with money or in-kind
services in an amount not to exceed the Association’s cost of coordinating these
activities. The Association agreed to pay the University for all facilities, services,
and resources used. The payment was to be either in the form of money or its
equivalent in services or resources. During the year ended June 30, 2011, the
University provided the Association with $14,069 in services in accordance with
the contract.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
49
In fulfilling its fiscal year 2011 contract with the University, the Association
incurred $143,087 of expenses and $25,156 of in-kind expenses. Included in the
fiscal year 2011 expenses of $143,087 are unrestricted gifts, grants and scholarships
of $23,574 to the University. In addition, the Association provided the use of its
facilities at no charge to the University. The value of these facilities was $47,800
for the year ended June 30, 2011.
18. COMMITMENTS AND CONTINGENT LIABILITIES
The University is party to various lawsuits arising out of the normal conduct of its
operations. In the opinion of University management, the ultimate resolution of
these matters will not have a material adverse effect upon the University's financial
position.
The University participates in certain federal and State government agencies grant
programs. These programs are subject to financial and compliance audits by the
grantor or its representative. Such audits could lead to requests for reimbursement
to the grantor agency for expenditures disallowed under terms of the grant.
Management believes disallowances, if any, will not be material.
19. NATURAL CLASSIFICATIONS OF EXPENSES
Operating expenses by natural classification for the year ended June 30, 2011 are as
follows:
Salaries $ 109,636,214
Benefits 56,281,930
Supplies 5,389,367
Contractual services 17,982,582
Utilities 6,345,896
Travel 1,355,496
Repairs and maintenance, equipment and buildings 2,639,723
Scholarships 10,555,901
Other 8,916,400
Depreciation 14,604,059
$ 233,707,568
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
50
20. DISCLOSURES OF COMPONENT UNITS
As the cash, investments and liabilities of the Foundation are considered material to
the University’s financial statements taken as a whole, the following disclosures are
made regarding these items.
Cash and Cash Equivalents
The Foundation’s cash deposits mainly represent funds held by the University in the
Illinois Funds. The Illinois Funds are pooled short term fully collateralized money
market accounts administered by the State Treasurer. The Foundation also
maintains deposits at those depository institutions authorized by the Foundation’s
Board of Directors. These deposits are fully covered by federal deposit insurance.
Investments
The Foundation is authorized by the Foundation’s Board of Directors to invest
funds in compliance with stated investment policies. All other investments are
carried at their fair value, as determined by quoted market prices for investments
that have readily available fair value. For investments for which a readily
determinable fair value does not exist (e.g. private equities and alternative
investments), the investments are valued at estimated fair values based on
information provided by the fund managers. Because of the inherent uncertainty of
valuation relating to the Foundation’s investments in investee funds and their
underlying investments, the estimate of fair value may differ from the values that
would have been used had a ready market existed, and any difference could be
material.
If a donor has not provided specific instructions, the Uniform Prudent Management
of Institutional Funds Act (760 ILCS 51/4) permits the Foundation’s Board of
Directors to authorize for expenditure the net appreciation (realized and unrealized)
of the investments of endowment funds. When administering its power to spend net
appreciation, the Foundation’s Board of Directors is required to consider the
Foundation’s long-term and short-term needs, present and anticipated financial
requirements, expected total return on its investments, price-level trends, and
general economic conditions. Any net appreciation that is spent is required to be
spent for the purposes for which the endowment was established.
The long-term objective of the endowment funds, as determined by the
Foundation’s Board of Directors, is to achieve a total return in excess of its current
spending rate policy over a twenty-year time horizon. The current rate of the
spending rate policy is 5% per year, comprised of a 4.25% spending rate and 0.75%
for administrative expenses. In addition to achieving the 5% spending rate policy,
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
51
the policy asset allocation is designed to cover the costs of inflation, investment
management/consulting fees, and other related costs. The spending allowance
calculation is determined by taking the spending rate (currently 5%) times the
investment portfolio’s trailing twelve-quarter average market value, as of June 30th
of each year. Any remaining return over the 5% spending rate will be retained for
use in future years. As of June 30, 2011, net appreciation of $10,864,408 is
available to be spent, but is restricted to specific purposes. Also, as of
June 30, 2011, the fair market values of certain endowment investments were below
their original cost by $505,954.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair
value of an investment. The Foundation’s fixed income investments as of
June 30, 2011 are disclosed as follows:
Effective Maturity 0-1 Year 1-5 Years 5-10 Years 10-15 Years 15-20 Years Total
The Illinois Funds $3,679,257 $ - $ - $ - $ - $3,679,257
Money Market Funds 1,130,238 - - - - 1,130,238
Mutual Bond Funds - 7,780,402 3,019,101 - 1,199,120 11,998,623
The Foundation does not have a policy that specifically addresses interest rate risk.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to a debt investment will
not fulfill its obligations. The Foundation has no specific guidelines addressing the
credit rating of fixed income securities. The quality ratings for investments
disclosed as of June 30, 2011 are as follows.
Quality Rating AAA Not Rated
The Illinois Funds $3,679,257 $ -
Money Market Funds 111,388 1,018,850
Mutual Bond Funds - 11,998,623
$3,790,645 $13,017,473
The money market funds administered by Charles Schwab & Co., Inc. do not have a
quality rating, but the fund’s policy generally limits investments to the top two tiers.
Mutual bond fund ratings represent investments in the portfolio, but the bond funds
themselves are not rated.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
52
Custodial Credit Risk
Custodial credit risk is the risk that when, in the event a financial institution or
counterparty fails, the Foundation would not be able to recover the value of
deposits, investments or collateral securities that are in the possession of an outside
party. The Foundation’s policy does not address custodial credit risk. One hundred
percent of the Foundation's investments are held by a custodian in the Foundation’s
name and are not subject to creditors of a custodial bank.
The Foundation’s investments in The Illinois Funds, money market mutual funds,
mutual funds, bond funds, equity funds and Federated Treasury Obligations Trust
are not subject to detail disclosure because the Foundation owns shares of each
investment fund and not the physical securities. Cash surrender value of life
insurance and real estate are also not subject to disclosure.
Concentration Risk
The Foundation does not have any investments representing 5% or more of total
assets in any single issuer. The Foundation does not have a policy that specifically
addresses concentration risk.
The Foundation has not held foreign currency positions. Managers are authorized
to participate in securities lending, but did not participate in securities lending other
than participation in a mutual fund.
The Illinois Funds are in the custody of the State Treasurer and are pooled and
invested with other State funds in accordance with the Deposit of State Moneys Act
of the Illinois Compiled Statutes (15 ILCS 520/11). Details on the nature of these
investments are available within the State of Illinois' Comprehensive Annual
Financial Report. The Illinois Funds do not have any direct or indirect investments
in derivative instruments.
The money market mutual funds, bond funds, equity funds, and mutual funds have
not disclosed to the Foundation whether derivatives were used or held during the
period covered by the financial statements.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
53
Reconciliation to the Statement of Net Assets
A reconciliation of cash and investments as shown on the June 30, 2011 Statement
of Net Assets is as follows:
Current Noncurrent Total
Cash and cash equivalents $ 438,839 $ - $ 438,839
Restricted cash and cash equivalents 2,902,903 337,515 3,240,418
Restricted investments 2,872,973 21,727,404 24,600,377
Other current investments 32,000 - 32,000
Endowment investments - 35,230,786 35,230,786
Total cash and investments $ 6,246,715 $ 57,295,705 $ 63,542,420
Breakdown and carrying amount of the cash and investments are as follows:
$ 3,679,257
Money market accounts administered by First-Mid-Illinois Bank and Trust 111,388
Money market accounts administered by Charles Schwab & Co., Inc. 1,018,850
Investments administered by Charles Schwab & Co., Inc.
Open Ended Mutual Bond funds 10,799,503
Open Ended Mutual Equity funds 31,092,244
Corporate Equity 88,482
Investments administered by Brandywine Global
Open Ended Mutual Bond funds 1,199,120
Investments administered by Davis Funds
Open Ended Mutual Equity funds 396,490
Private Equity - Alternative Investments
Investments administered by Corbin Pinehurst 4,550,325
Investments administered by CITCO Fund Services 3,469,586
Investments administered by Park Street Capital 940,466
Investments administered by Goldman Sachs 536,403
Investments administered by Portfolio Advisors 283,938
Cooperative stock 1,774
Life insurance cash values 79,460
Real estate 5,295,134
Total cash and investments $ 63,542,420
The Illinois Funds money market accounts
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2011
54
Long-term Liabilities
The Foundation incurred a demand mortgage note payable to a bank for the
purchase of land and construction of a new foundation center, known as the Neal
Welcome Center. The building, as well as two unitrust gifts, were pledged as
collateral on this note. Accrued interest is payable on demand, but if no demand is
made, then on the tenth day of each month. At June 30, 2011, the interest rate on
this note was 5.25%. The principal is payable on demand, but if no demand is
made, then on August 5, 2014.
The balance of the demand mortgage note payable was $1,387,238 as of
June 30, 2011.
In addition, the Foundation had $6,281,523 due to others as of June 30, 2011.
These liabilities arose as the Foundation acts as the trustee for certain trusts. Also,
the Foundation has control of the assets under certain split interest agreements,
which will eventually need to be paid to outside parties.
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
UNAUDITED DATA REQUIRED BY REVENUE BOND RESOLUTIONS
June 30, 2011
55
SCHEDULE OF INSURANCE
Insurance Coverage:
Property damage including buildings, contents, business interruption, and electronic data
processing. Coverage is for fire, lightning, windstorms, hail, explosion, riot, civil
commotion, vandalism and malicious mischief, and flood and earthquake.
Coverage
Amount Deductible
Most buildings, contents, business
interruption, electronic data processing and
builder’s risk $ 500,000,000 $ 25,000
Boiler and machinery 100,000,000 25,000
Flood 50,000,000 25,000
Earthquake 100,000,000 25,000
Insurance company: Lexington Insurance Company
Policy period: July 1, 2010 to July 1, 2011
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
UNAUDITED DATA REQUIRED BY REVENUE BOND RESOLUTIONS
June 30, 2011
RATES
Double
Occupancy
Single
Occupancy
Residence halls
Summer 2010 $ 1,328 $ 1 ,663
Fall 2010
7 meals 3,808 4,608
10 meals 3,977 4,777
12 meals 4,127 4,927
15 meals 4,292 5,092
Spring 2011
7 meals 3,808 4,608
10 meals 3,977 4,777
12 meals 4,127 4,927
15 meals 4,292 5,092
Summer 2011 (8 week session) 1,411 1,767
RATES Efficiency
One
Bedroom
Super
Efficiency
Married student housing (monthly rent)
Fall 2010 $ 438 $ 460 $ 409
Spring 2011 $ 438 $ 460 $ 409
Summer 2011 $ 438 $ 460 $ 409
University Court (semester) Range
Fall 2010 $ 2,231 to $ 3,116
Spring 2011 2,231 to 3,116
Summer 2011 (8 week session) 928 to 1,042
Fees
Bond revenue fees
Summer 2010 $ 391.62
Fall 2010 399.47
Spring 2011 399.47
Summer 2011 399.47
56
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
UNAUDITED DATA REQUIRED BY REVENUE BOND RESOLUTIONS
ENROLLMENT DATA
Enrollment Date
Undergraduate
Students
Graduate
Students
Extension
Students Total
Summer 2010 1,796 898 1,385 4,079
Fall 2010 9,281 1,230 1,119 11,630
Spring 2011 8,397 1,152 1,101 10,650
Summer 2011 1,817 797 1,320 3,934
OCCUPANCY DATA
Occupancy
Rate
Occupancy
% of
Occupancy
Residence halls
Summer 2010 79 150 53%
Fall 2010 3,509 4,722 74%
Spring 2011 3,239 4,722 69%
Summer 2011 78 150 52%
Married student housing
Summer 2010 46 130 35%
Fall 2010 128 130 98%
Spring 2011 128 130 98%
Summer 2011 73 130 56%
University Court
Summer 2010 74 146 51%
Fall 2010 146 146 100%
Spring 2011 145 146 99%
Summer 2011 134 146 92%
June 30, 2011
57
E.c. ORTIZ & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Govemmenl Auditing Standards
Honorable William G. Holland
Auditor General
State of Illinois
and
The Board of Trustees
State of Illinois - Eastern Illinois University
As Special Assistant Auditors for the Auditor General, we have audited the financial
statements of the business-type activities of the State oflilinois - Eastern Illinois University
and its aggregate discretely presented component units, collectively a component unit of the
State ofTIlinois, as of and for the year ended June 3D, 2011 , which collectively comprise the
State ofIllinois - Eastern lllinois University's basic financial statements and have issued our
report thereon dated January 31, 2012. Our report was modified to include a reference to
other auditors. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the
United States. Other auditors audited the financial statements of the University's discretely
presented component units, as described in our repOlt on the University's financial
statements. Tlus rep0l1 does not include the results of the other auditors' testing of internaJ
control over financial repOlting or compliance and other matters that are repOited on
separately by those auditors.
lnternal Control Over Financial Reporting
Management of the State of Illinois - Eastern Illinois University is responsible for
establishing and maintaining effective internal control over financial reporting. In planning
and performing our audit, we considered the State of llIinois - Eastern illinois University's
internal control over financial reporting as a basis for designing our auditing procedures for
the purpose of expressing our opinion on the financial statements and not for the purpose of
expressing an opinion on the effectiveness of the State of llIinois - Eastern Illinois
University's internal control over fmancial reporting. Accordingly, we do not express an
opinion on the effectiveness of the State of Illinois - Eastern fIlinois University's internal
control over financial reporting.
333 SOUTH DES PLAINES STREET, SU ITE 2·N CHICAGO, IL 60661
58
[el: 312 .876.1900 fax: 312 .876.1911
A deficiency in internal control exists when the design or operation of a control does not
allow manage!Uent or employees, in the normal course of perfolTIling their assigned
functions, to prevent, or detect and COlTect misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies. in internal control such that there
is a reasonable possibility that a material misstatement of the entity's financial statements
will not be prevented, or detected and cOlTected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all
deficiencies in the intemal control over financial reporting that might be deficiencies,
significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses, as
defmed above. However, we identified certain deficiencies in intemal control over financial
reporting, described in findings 11-1 and 11-2 in the accompanying schedule of fmdings,
that we consider to be significant deficiencies in internal control over financial reporting. A
Significant deficiency is a deficiency, or a combination of deficiencies, in intemal control
that is less severe than a material weakness, yet important enough to merit attention by those
charged with govemance.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the State of Illinois - Eastern
Illinois University's financial statements are free of material misstatement, we performed
tests of its compliance with celtain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the
determination of fmancial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do
not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government A udiling
Standards.
The State of Ill inois - Eastern Illinois University'S responses to the findings identified in
our audit are described in the accompanying schedule of findings. We did not audit the
State of Illinois - Eastern Illinois University's responses and, accordingly, we express no
opinion on them.
This report is intended solely for the infOimation and use of the Auditor General, the
General Assembly, the Legislative Audit COJrunission, the Governor, the Board of Trustees,
the State of Illinois - Eastern Illinois University management, and federal awarding
agencies and pass-through entities and is not intended to be an~ should not be used by
anyone other than these specified pmties.
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January 31, 20lf
Co.L-t-f ;
59
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
SCHEDULE OF FINDINGS
June 30, 2011
60
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
11-1. Finding (Inaccurate Accounting for Participation in a Public Entity Risk Pool)
Eastern Illinois University (University) did not properly account for its
participation in the State Universities Risk Management Association (SURMA) in
accordance with accounting principles generally accepted in the United States of
America (GAAP).
The University has been a member of SURMA since its inception on February 1,
1996. SURMA was created as a successor to the Board of Governors’ Self-
Insurance Liability Program. SURMA was initially funded by the surplus of the
Board of Governors’ Self-Insurance Liability Program upon its termination
(treated as capital contributions of the original participants), as well as additional
contributions which were assessed to the members. The SURMA members are
Chicago State University, Eastern Illinois University, Governors State University,
Northeastern Illinois University, and Western Illinois University. Each university
has an employee appointed as a member to the SURMA Board, which meets on a
quarterly basis.
While all past payments made by the University to SURMA have been recorded
to prepaid insurance and amortized over the term of the current insurance policies,
the capital contributions to SURMA have not been recorded as an asset on the
books of the University. The University’s share of the excess capital
contributions to SURMA was $729,712 and $764,451 as of June 30, 2011 and
June 30, 2010, respectively. SURMA’s bylaws state that in the event of
termination, if there are surplus funds available, such surplus shall be distributed
to the then-existing members in the same proportion that each existing member’s
contributions over the immediately previous five years were in proportion to the
contributions of all members. Similar provisions also apply to members who elect
to withdraw (if approved by the remaining participants) prior to the termination of
SURMA. An adjusting entry was proposed to the University to correct this error,
which the University recorded.
Further, we noted the University did not adequately monitor SURMA to ensure
SURMA underwent an annual audit in fiscal year 2010 to provide assurance as to
the accuracy of financial information required to be reported by the University.
Governmental Accounting Standards Board (GASB) Interpretation No. 4 -
Accounting and Financial Reporting for Capitalization Contributions to Public
Entity Risk Pools was issued in February 1996 with an effective date of periods
beginning after June 15, 1996. It states, “A capitalization contribution to a public
STATE OF ILLINOIS
EASTERN ILLINOIS UNIVERSITY
SCHEDULE OF FINDINGS
June 30, 2011
61
entity risk pool with transfer or pooling of risk should be reported as a deposit if it
is probable that the contribution will be returned to the entity upon either the
dissolution of or approved withdrawal from the pool. An entity’s determination
that a return of the contribution is probable should be based on the provisions of
the pooling agreement and an evaluation of the pool’s financial capacity to return
the contribution.”
Further, the Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires
the University to establish and maintain a system of fiscal and administrative
controls to ensure resources are properly recorded and accounted for to permit the
preparation o