FY11-ISU-Fin-Full

              State of Illinois
Illinois State University
Financial Audit
(In Accordance with 'the Single Audit Act
and OMB Circular A-133)
For the Years Ended June 30, 2011 and 2010
Performed as Special Assistant Auditors for
the Auditor General, State of Illinois
BKOw CPAs & Advisors
Table of Contents
State of Illinois
Illinois State University
Financial Audit
For the Years Ended June 30, 2011 and 2010
Agency Officials ...........•....•...•................••..........•..........•..•.........••.••.••••.••.••.•..•.......•...•.•.•••••• 1
Financial Statement Report
Summary ............................................................................................................................................ 2
Independent Auditor's Report ............................................................................................................. 4
Management's Discussion and Analysis ............................................................................................ 6
Basic Financial Statements
Statement of Net Assets ............................................................................................................... 16
Statement of Revenues, Expenses and Changes in Net Assets .................................................... 17
Statement of Cash Flows ............................................................................................................. 18
Notes to the Basic Financial Statements ........................................................................................... 20
Other Reports Issued Under a Separate Cover
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.
In accordance with Government Auditing Standards, we have also issued a report under separate
cover entitled Report Required Under Government Auditing Standards for the Year Ended June 30,
2011 on our consideration of the Illinois State 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 report is
an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
State of Illinois
Illinois State University
Financial Audit
June 30, 2011
Agency Officials
President
Vice President for Finance and Planning
Vice President for Academic Affairs and Provost
Vice President for Student Affairs
Vice President for University Advancement
Comptroller
Legal Counsel
Director - Internal Audit
Board of Trustees (as of June 30, 2011)
Chair
Secretary
Member
Member
Member
Member
Student Member
Office Locations
Agency offices are located at:
Hovey Hall
Campus Box 1100
Normal, IL 61790-1100
Dr. C. Alvin Bowman
Dr. Daniel Layzell
Dr. Sheri Everts
Mr. Steve Adams
Ms. Erin Minne'
Mr. Greg Alt
Ms. Lisa Huson
Mr. Robert Blemler
Hon. Judge Michael McCuskey
Ms. Joanne Maitland
Mr. Jay D. Bergman
Ms. Anne Davis
Mr. Bob Dobski
Ms. Betty Kinser
Mr. Sean Palmer
1
Summary
State of Illinois
Illinois State University
Financial Statement Report Summary
June 30, 2011
The audit of the accompanying financial statements of Illinois State University was performed by
BKD, LLP.
Based on their audit, the auditors expressed an unqualified opinion on Illinois State University's
basic financial statements.
Summary of Findings
The auditors identified one matter involving the State of Illinois - Illinois State University's
internal control over financial reporting that they considered to be a material weakness. The
material weakness is described in a report released under separate cover entitled Report Required
Under Government AudilingStandards for the Year Ended June 30, 2011 as Finding 11-1,
Inadequate Controls over Accounts Receivable.
Number of
Findings
Repeated findings
Prior recommendations implemented or not repeated
Exit Conference
Current
Report
1
0
1
Prior
Report
1
0
0
Findings and recommendations appearing in this report were discussed with University personnel
at an exit conference on February 6, 2012. Attending were:
Representing Illinois State University
Vice President for Finance and Planning Dr. Daniel LayzeJl
Comptroller Mr. Greg Alt
Assistant Comptroller Ms. JoEllen Bahnsen
Director - Internal Audit Mr. Robert Blemler
Associate Vice President for Administrative
Technology Ms. Andrea Ballinger
Associate Vice President - Chief Technology Officer Mr. Mark Walbert
Representing BKD LLP
Manager Ms. Heather M. Powell, CPA
2
State of Illinois
Illinois State University
Financial Statement Report Summary
June 30, 2011
Representing the Office of the Auditor General
Audit Manager
Information Systems Audit Manager (via phone)
Mr. Daniel J. Nugent, CPA
Ms. Kathleen A. Devitt
Responses to the recommendations were provided by Mr. Greg Alt, Comptroller, in an e-mail dated
February 10,2012.
3
225 N, Water Street Suite 1100
P.O Box 1580
LLP De c.:llUr. Il62525·1580
CPAs & Advisors 217.429.2411 Fax 217.429.6109 www.bkd.com
Independent Auditors! Report
The Honorable William G. Holland
Auditor General- State of Illinois
and
Board of Trustees
State of Illinois - Illinois State 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 - Illinois State University (University)
and its aggregate discretely presented component unit, collectively a component unit of the State of
Illinois, as of and for the year ended June 30, 2011, which collectively comprise the University's basic
financial statements as listed in the table of contents. These financial statements are the responsibility of
the University's management. Our responsibility is to express an opinion on these financial statements
based on our audit. The financial statements of Illinois State University as of and for the year ended
June 30, 20 10, before they were retToactively restated for the matter discussed in Note 23, were audited
by other accountants whose report dated March 30, 20 II, expressed an unqualified opinion on those
statements. We did not audit the 20 II financial statements and the prior year auditor did not audit the
20] 0 financial statements of Illinois State University Foundation. Those financial statements were
audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it
relates to the amollnts included for Illinois State University Foundation, is based on the report 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 perfonn
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. Vt/e believe that our audit and the report of other auditors provide a reasonable basis for ollr
opinion.
In OUf opinion, based on our audit and the report of other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the business-type
activities of the University and its discretely presented component unit as of June 30, 20 11, the respective
changes in financial position of the University and its discretely presented component unit and cash flows
of the University for the year then ended in conformity with accounting principles generally accepted in
the United States of America.
4 ... - Praxi l(";
experience BKD MEMOER · •
GLOBAL ALLIANCE OF
INDEPENDENT FIRMS
We also audited the adjustment described in Note 23 that was applied to restate the 2010 financial
statements. In our opinion, such adjustment was appropriate and has been properly applied.
In accordance with Government Auditing Standards, we have also issued, under separate cover, our report
dated March 2, 2012 on our consideration of the 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 report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing the
results of our audit. Finding 11-1, referenced within that report (page 6) contains a discussion of a
material weakness in internal control over financial reporting which resulted in the restatement of the
June 30,2010 financial statements, as discussed in the preceding paragraph.
The accompanying management's discussion and analysis as listed in the table of contents is not a
required part of the basic financial statements but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and presentation
of the required supplementary information. However, we did not audit the information and express no
opinion on it.
March 2, 2012
5
Management's Discussion and Analysis June 30, 2011 and 2010
Introduction
The following discussion and analysis provides an overview of the fmancial position and activities of Illinois State
University (the "University") for the year ended June 30, 2011 with selective comparative information for the years
ended June 30, 20 II and 2010. This discussion has been prepared by management and should be read in conjunction
with the financial statements and the notes thereto, which follow this section.
Illinois State University is governed by the Board of Trustees and is the first institution of higher learning in Illinois,
being founded in 1857. The University is a residential university of approximately 21,000 students with six colleges
and thirty-five academic departments that offer more than one hundred sixty programs of study. The Graduate School
coordinates forty-seven masters, specialist, and doctoral programs.
As required by generally accepted accounting principles, these financial statements present the financial position and
financial activities of the University (the primary unit) and its component unit (the Illinois State University Foundation).
The component unit discussed below is included in the University's financial reporting entity (the Entity) due to the
significance of its financial relationship with the University and is in accordance with Governmental Accounting
Standards Board (GASB) Statement No. 39, an amendment ofGASB Statement No. 14.
The Foundation is a University Related Organization as defined under University Guidelines adopted by the State of
Illinois' Legislative Audit Commission in 1982, as amended. The Illinois State University Foundation is reported in a
separate column to emphasize that it is an Illinois non-profit organization that is legally separate from the University.
Complete fmancial statements for the Foundation may be obtained by writing the Illinois State University Foundation,
Campus Box 8000, Normal, Illinois 61790-8000.
The Foundation was incorporated in May 1948 under the "General Not-for-Profit Corporation Act" for the purpose of
providing fund raising and other assistance to the University in order to attract private gifts to support the University's
instructional, research, and public service activities. The Foundation is an organization as described in Section 501c(3)
of the Internal Revenue Code and, is accordingly, exempt from federal income tax.
Overview of the Financial Statements and Financial Analysis
Illinois State University is a component unit of the State of Illinois for financial reporting purposes. The fmancial
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 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 Statements Presentation: The University's fmancial statements include the Statements of Net Assets, the
Statements of Revenues, Expenses, and Changes in Net Assets, and the Statements of Cash Flows. The fmancial
statements are prepared in accordance with Governmental Accounting Standards Board (GASB) principles and
presented on an entity-wide basis. Several ratios have been included in the financial analysis to help assess the
University's fmancial health.
ILLINOIS STATE UNIVERSITY
6
Management's Discussion and Analysis June 30, 2011 and 2010
Statements of Net Assets
The Statements of Net Assets present the assets, liabilities, and net assets of the University as of the end of the fiscal
years. The Statements of Net Assets are point in time fmancial statements. The purpose of the Statements of Net Assets
is to present to the readers of the financial statements a fiscal snapshot of Illinois State University at June 30, 2011 and
2010. The Statements of Net Assets present end-of-year data concerning assets (current and noncurrent), liabilities
(current and noncurrent), and net assets (assets minus liabilities).
From the data presented, readers of the Statements of Net Assets are able to determine the assets available to continue
the operations of the institution. Readers should also be able to determine how much the institution owes vendors,
investors and lending institutions. Finally, the Statements of Net Assets provide a picture of the net assets and their
availability for expenditure by the institution.
Net assets are divided into three major categories. The first category, invested in capital assets, net of related debt,
shows the institution's equity in the property, plant and equipment owned by the institution. The net asset category is
restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of
nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are
available for expenditure by the institution but must be spent for purposes as determined by donors and/or external
entities that have placed time and/or purpose restrictions on the use of the assets. The fmal category is unrestricted net
assets. Unrestricted net assets are those net assets available to the institution for any lawful purpose of the institution.
Following are condensed Statements of Net Assets at June 30, 2011, 2010 and 2009:
(Thousands of dollars)
2011 2010 {as 2009 (as
restated} restated)
Assets:
Current assets $ 114,816 $ 127,426 $ 122,377
Noncurrent assets:
Capital assets, net 420,890 398,771 354,783
Other noncurrent assets 99,339 67,409 81,899
Total assets 635,045 593,606 559,059
Liabilities:
Current liabilities 41,090 45,675 42,538
Noncurrent liabilities 141,569 133,302 140,240
Total liabilities 182,659 178,977 182,778
Net Assets:
Invested in capital assets, net of related debt 298,586 285,373 263,690
Restricted 9,467 9,455 9,422
Unrestricted 144,333 103,169
Total net assets $ 452,386 $ $ 376,281
ILLINOIS STATE UNIVERSITY
7
Management's Discussion and Analysis June 30, 2011 and 2010
Current liabilities are obligations of the University coming due in less than one year. Current liabilities consist
primarily of accounts payable and accrued liabilities, assets held in custody for others, deferred revenues, and current
portion of long-term debt. The following ratio is intended to give an indication of the University's ability to meet its
obligations the following year:
The Current Ratio (current assets/current liabilities) is:
2011
114,816/41,090 2.79
(Thousands of dollars)
2010 (as restated)
127,426/45,675 = 2.79
2009 (as restated)
122,377 142,538 = 2.88
Noncurrent assets are comprised primarily of net capital assets. Net capital assets increased $22.1 million and $44.0
million from June 30, 2010 to 2011 and 2009 to 2010, respectively. The increases are primarily attributable to
construction and major renovation of University buildings.
Noncurrent liabilities are comprised primarily of Bonds Payable, Certificates of Participation, and Accrued
Compensated Absences.
ILLINOIS STATE UNIVERSITY
8
Management's Discussion and Analysis June 30, 2011 and 2010
Statements of Revenues, Expenses, and Changes in Net Assets
Changes in total net assets presented on the Statements of Net Assets are based upon the activity presented in the
Statements of Revenues, Expenses, and Changes in Net Assets. The purpose of the Statements of Revenues, Expenses,
and Changes in Net Assets is to present the revenues received by the institution, both operating and non-operating, and
the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses
received or spent by the institution.
Operating revenues are received for providing goods and services to the various customers and constituencies of the
institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return
for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues
received for which goods and services are not provided. These are called non-exchange transactions. For example,
State appropriations are classified as non-operating because they are provided by the General Assembly to the
institution without the General Assembly directly receiving commensurate goods and services for those revenues.
Student tuition and fees, grants and contracts, the Auxiliary facilities system, State appropriations and payments by the
State of Illinois on behalf of the University are the primary sources of funding.
Following are condensed Statements of Revenues, Expenses, and Changes in Net Assets for the fiscal years ended June
30,2011,2010 and 2009:
(Thousands of dollars)
2010 (as 2009 (as
2011 restated} restated)
Operating revenues
Student tuition and fees, net $ 167,142 $ 151,104 $ 135,912
Grants and contracts 20,682 20,379 19,544
Auxiliary facilities 83,018 80,914 73,079
Other 26,090 26,369 25,141
Total operating revenues 296,932 278,766 253,676
Operating expenses 455,896 438,910 396,862
Operating (loss) (158,964) (160,144) (143,186)
Non-operating revenues
State appropriations 79,790 85,146 82,991
Payments on behalf of the University 87,676 79,868 60,803
Other, net 26,070 24,967 22,979
Net non-operating revenues 193,536 189,981 166,773
Capital appropriations 710 7,583 5,770
Capital gifts and grants 2,475 928 997
Increase in net assets 37,757 38,348 30,354
Net assets beginning of year 414,629 376,281 348,243
Prior period adjustment (see Note 23) (2,316)
Net assets - end of year $ 452,386 $ 414,629 $ 376,281
ILLINOIS STATE UNIVERSITY
9
Management's Discussion and Analysis June 30,2011 and 2010
The return of net assets ratio indicates whether the University is financially better off compared to the previous year by
comparing the increase in net assets to beginning net assets. The fluctuations in this ratio are primarily attributable to
funding levels of State of Illinois Capital Development Board and Foundation Capital projects.
The Return on Net Assets Ratio (increase in net assets 1 beginning of year net assets) is:
2011
37,757/414,629 = 9.11%
(Thousands of dollars)
2010 (as restated)
38,348/376,281 = 10.19%
2009 (as restated)
30,354/345,927 = 8.77%
The net operating revenues ratio indicates whether the University is living within available resources. The ratio is
computed by comparing operating income <loss> and net non-operating revenues to total operating revenues and total
non-operating revenues. These continuing positive ratios demonstrate that University expenditures do not exceed
available revenues.
The Net Operating Revenues Ratio (operating income (loss) plus net non-operating revenues
(expenses) I operating revenues plus non-operating revenues) is:
2011
34,572 1 494,888 = 6.99%
(Thousands of dollars)
2010 (as restated)
29,837 1472,027 = 6.32%
2009 (as restated)
23,587 1423,285 = 5.57%
State appropriations revenue has remained in a range from approximately $79 million to $85 million for fiscal years
2009,2010 and 2011. The University enacted tuition and fee increases for fiscal years 2009, 2010 and 2011 to help
offset the State appropriation funding trend.
Payments on behalf of the University are comprised of payments by the State of Illinois for University employees to the
State Universities Retirement System and to Central Management Services for the Department of Healthcare and
Family Services.
Operating Expenses (Thousands of dollars)
2011 2010 2009
Expenses by Function
Instruction $ 113,992 $ 109,970 $ 106,796
Research 13,991 14,202 14,317
Public service 15,695 15,099 16,374
Academic support 18,134 14,191 13,628
Student services 35,748 35,310 33,846
Institutional support 29,544 27,230 28,556
Operation and maintenance of plant 24,246 29,536 27,500
Depreciation 19,779 17,939 16,720
Staff benefits 1,911 1,220 1,574
Student aid 36,921 31,674 23,817
Payments on behalf of the University 86,470 78,553 59,581
Auxiliary facilities 57,127 61,584 51,785
Other 2,338 2,402 2,368
Total operating expenses $ 455,896 $ 438,910 $ 396,862
Expenses by Natural Classification
Compensation and benefits $ 289,775 $ 276,972 $ 254,001
Supplies and services 114,657 116,722 106,265
Scholarships 31,685 27,277 19,876
Depreciation 19,779 17,939 16,720
Total operating expenses $ 455,896 $ 438,910 $ 396,862
ILLINOIS STATE UNIVERSITY
10
Management's Discussion and Analysis June 30, 2011 and 2010
The primary reserve ratio compares unrestricted net assets and certain expendable net assets to total expenses. This
ratio is an indicator of how long the University could function by using its reserves without relying on additional net
assets generated by operations. This ratio continues to remain strong over the last several years as the University has
been successful in increasing net assets while limiting growth in expenditures.
The Primary Reserve Ratio (unrestricted and expendable net assets 1 total expenses) is:
2011
153,800/460,316 = 33.41%
(Thousands of dollars)
2010 (as restated)
129,255/442,190 29.23%
2009 (as restated)
112,590 1399,698 = 28.17%
The following swnmarizes a comparative table of total revenues and total expenses by source/function and percentage:
Percentage
2011 2010 2009
Revenues by Source
Student tuition and fees, net 34% 32% 32%
Grants and contracts 4 4 4
Auxiliary facilities 17 17 17
Other operating revenues 5 5 6
State appropriations 16 18 19
Payments on behalf of the University 18 16 14
Other non-operating revenues 5 6 6
Capital appropriations, gifts, and grants I 2
Total revenues percentage 100% 100% 100%
Expenses by Function
Instruction 25% 25% 27%
Research 3 3 4
Public service 3 3 4
Academic support 4 3 3
Student services 8 8 8
Institutional support 6 6 7
Operation and maintenance of plant 5 7 7
Depreciation 4 4 4
Staff Benefits 1 1 1
Student Aid 8 7 6
Payments on behalf of the University 19 18 15
Auxiliary facilities 13 14 13
Other 1
Total expenses percentage 100% 100% 100%
Expenses by Natural Classification
Compensation and benefits 64% 63% 64%
Supplies and services 25 27 27
Scholarships 7 6 5
Depreciation 4 4
Total operating percentage 100% 100% 100%
ILLINOIS STATE UNIVERSITY
11
Management's Discussion and Analysis June 30, 2011 and 2010
The following graph illustrates total revenues by source:
Total Revenues 2011
Payments on
behalf of the
University 18%
Other non­operating
revenues
5%
State
Ap prop riations
16%
Capital
Appropriations,
Grants, and Gifts
1%
Student tuition and
fees, net 34%
Grants and
Contracts 4%
Other operating
revenues 5%
Auxiliary Facilities
17%
The following graph illustrates total expenditures by function:
Total Expenses 2011
Depreci a tion
Student Aid 4%
Auxiliary Facilities
13%
Staff Benefits
Operation and
maintenance of
plant
5%
1%
Institutional
Support
6%
Student Services
8%
Academic Support
4%
Payments on
behalf of the
University
19%
Other Expenses
1%
Research
3%
Instruction
25%
Public Service
3%
ILLINOIS STATE UNIVERSITY
12
Management's Discussion and Analysis June 30, 2011 and 2010
Statements of Cash Flows
The Statements of Cash Flows provide infonnation about the University's cash receipts and cash payments. The
statements are divided into five sections. The frrst section deals with operating cash flows and shows the net cash used
for the operating activities of the institution. The second section reflects cash flows from noncapital financing activities.
This section reflects the cash received and spent for non-operating, non-investing, and noncapital financing purposes.
The third section shows the cash flows from capital and related financing activities. This section shows the cash used
for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from
investing activities and shows the purchases, proceeds, and interest received from investing activities. The last section
reconciles the operating loss shown on the Statements of Revenues, Expenses, and Changes in Net Assets to the cash
used by operating activities on the Statements of Cash Flows.
Following are condensed Statements of Cash Flows for the Years ended June 30, 2011, 2010 and 2009:
(Thousands of dollars)
2011 2010 2009
Net cash used by operating activities $ (50,554) $ (62,725) $ (70,435)
Cash flows from noncapital financing activities 93,506 122,768 68,567
Cash flows from capital and related fmancing activities (39,191) (59,753) (63,061)
Cash flows from investing activities (28,108) 12,726 17,809
Net increase (decrease) in cash and cash equivalents (24,347) 13,016 (47,120)
Cash - beginning of year 61,029 48,013 95,133
Cash - end of year $ 36,682 $ 61,029 $ 48,013
The Statements of Cash Flows include cash transactions of internal service departments, gross receipts and
disbursements of the agency custodial accounts, and direct lending receipts and disbursements that are not included in
the Statements of Revenues, Expenses, and Changes in Net Assets.
Cash and cash equivalents decreased $24.3 million from 2010 to 2011. Approximately $14.6 million of the decrease is
attributable to the appropriations due from the State at June 30, 2011, of$35.0 million compared to $20.4 million at
June 30, 2010. In addition, at June 30, 201 1, the University had an increase in its allocation of cash to longer tenn
investments of $29 million.
ILLINOIS STATE UNIVERSITY
13
Management's Discussion and Analysis June 30, 2011 and 2010
Capital Asset and Debt Administration
The University's capital assets include land, land improvements, infrastructure, buildings, equipment, library books and
construction in progress.
The following summarizes a table of capital assets, accumulated depreciation and depreciation expense for fiscal years
ended June 30, 2011, 2010 and 2009.
(Thousands of dollars)
2011 2010 2009
Capital Assets $ 753,516 $ 716,806 $ 656,418
Accumulated Depreciation 332,626 318,035 301 z635
Capital Assets, Net $ 420,890 $ 398,771 $ 354,783
Depreciation Expense $ 19,779 $ 17,939 $ 16,720
Capital asset funding includes revenue bonds, State capital appropriations, internal funds and certificates of
participation. These funding sources are used for student housing buildings and classroom buildings.
The University primarily uses revenue bonds and certificates of participation to fund construction projects. The
University also occasionally uses capital leases for certain equipment.
The following summarizes a table of long-term debt for fiscal years ended June 30, 2011, 2010 and 2009.
Revenue Bonds
Certificates of Participation
$
$
2011
97,833
.35,532
(Thousands of dollars)
2010
$ 103,279 $
21,321
2009
107,609
22,142
In March 2008, the University issued Revenue Bond Series 2008 in the amount of$30.6 million. This funding includes
capital projects for auxiliary facilities system buildings.
In June 2008, the University issued Certificates of Participation in the amount of $22.2 million.
In May 2011, the University issued Certificates of Participation in the amount of$15 million.
On March 31, 2011, the University's bond credit rating from Moody's Investors Service was confirmed as A2 with a
negative outlook and the rating from Standard & Poor's was confirmed as A+ with a negative outlook. These ratings
reflect the cash flow stress at all State universities from delays in receiving reimbursement for appropriated
expenditures from the State of Illinois.
The debt burden ratio examines the dependence on borrowed funds as a source of financing and the cost of borrowing
relative to overall expenditures. It compares the level of current debt service with the University's total expenditures.
The Debt Burden Ratio (debt service I total expenses) is:
2011
11,841 /443,252= 2.67%
(Thousands of dollars)
2010
10,991 / 430,456= 2.55%
2009
10,256 / 388,436= 2.64%
ILLINOIS STATE UNIVERSITY
14
Management's Discussion and Analysis June 30, 2011 and 2010
Economic Outlook
In January 2012, the Comptroller of the State of Illinois issued a report that the State's backlog persists despite new
revenue. With $3.798 billion in fiscal year 2011 payables on June 30 to start the new fiscal year and $1.353 billion in
additional fiscal year 2011 payments presented during the lapse period, over $5.15 billion in fiscal year 2012 revenues
will be used to pay last year's bills.
The General Assembly appropriated $78.8 million to the University for operating support in fiscal year 2012, which is a
reduction from appropriations of $79.8 million in fiscal year 2011.
The University continues to benefit from record levels of student enrollment demand and student retention.
The University is not aware of any additional facts, decisions, or conditions that might be expected to have a significant
effect on the fmancial position or results of operations during this and future fiscal years.
ILLINOIS STATE UNIVERSITY
15
ILLINOIS STATE UNIVERSITY
STATEMENTS OF NET ASSETS
AS OF JUNE 30,
2011 2010
Universi!l Foundation Unlversi~ Foundation
ASSETS (restated)
Current Assets:
Cash and cash equivalents $ 25,621.673 $ 5,749.271 $ 49,826.109 $ 6,298,635
Restricted cash and cash equivalents 11,060.733 11,202.703
Investments 21,612.550 28,505.635
Investments Restricted 4,431,054
Accrued Interest receivable 451,994 670,500
Accrued interest receivable restricted 19.897
Accounts receivable. net 9.062,810 15,708 8,472,970 272.874
Student loans receivable. net 921,929 928.736
Pledges receivable. net 1.197.737 455.336
Appropriations receivable from State 35.047,150 20,390.047
Inventories 2.950,152 3.585,799
Prepaid expenses. deposits and other 3.635.581 3,843.510
Total current assets 114.815,523 6,962,716 127,426,009 7,026,845
Noncurrent Assets:
Restricted cash and cash equivalents 442,202 2,840.041
Investments 83,703.480 19.832,017 54,621.670 12.817.071
Investments Restricted 3,244,036
Endowment Investments 69.194.754 59,521.293
Student loans receivable. net 8,450,775 8.827.664
Pledges receivable, net 416.400 553,755
Debt issuance costs 2,141.076 1,859,646
Capital assets not depreciated 40,858.095 980,000 101.319,767 980,000
Capital assets, net of depreciation 380,031.529 8,441,780 297.450.979 8,863,116
Other noncurrent assets 1,800,000 1,283:414 2,1001°00 11166,563
Total noncurrent assets 520.228,991 100.590,567 466,179,726 86,741,839
Total assets 635,044.514 107,553,283 593,605,735 93,768,684
UABIUTIES
Current liabilities:
Accounts payable and accrued liabilities 21.510,325 444,889 25,968,104 445,458
Assets held in custody for others and deposits 3,512.424 3,604,740
Deferred revenue 6.998.466 7,344.044
Certificates of participation 1.198.237 850.297
Revenue bonds payable 6.134,984 6.151,471
Accrued compensated absences 1.735,598 1.756.753
Other 391.590 405.919
Total current liabilities 41,090,034 836,479 45.675,409 851.377
Noncurrent Liabilities:
Assets held in custody for others and deposits 215,484 228.701
Certificates of participation 34.334,008 20,471,234
Revenue bonds payable 91,697,562 97,127,359
Accrued compensated absences 15,321,701 15,474.492
Other 5,047.272 51539,259
Total noncurrent liabilities 141,568,755 5,047,272 133,301,786 5.539,259
Total liabilities 182,658,789 5,883,751 178.977,195 6,390,636
NET ASSETS
Invested In capital assets, net of related debt 298,585.566 6,299,489 285,373.087 6,656.076
Restricted for:
Nonexpendable 68,904,359 59.611,136
Expendable 9,467,386 24,698,256 9,455,338 23,071,363
Unrestricted 144,332.773 1,767,428 119,800,115 {1 z960,527}
Total net assets $ 452,385,725 $ 101,669,532 $ 414,628,540 $ 87,378,048
The accompanying notes are an integral part of the financial statements.
ILLINOIS STATE UNIVERSITY 16
ILLINOIS STATE UNIVERSITY
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
YEARS ENDED JUNE 30,
2011 2010
Universi!l Foundation Universi!l Foundation
OPERATING REVENUES
(restated)
Student tuition and fees, net $ 167,142,161 $ $ 151,104,041 $
Federal grants and contracts 13,355,923 12.513,264
State and local grants and contracts 3,074,534 1,755,690 3,221,832 1,907,897
Nongovernmental grants and contracts 4,251,390 4,643,825
Sales and services of educational activities 2,570.384 2,634,827
Auxiliary enterprises:
Auxiliary facilities 83,018,067 80,914,263
Other operating revenues 23,520,035 605.526 23.734,054 601,858
Total operating revenues 296,932.494 2.361.216 278.766.106 2.509,755
OPERATING EXPENSES
Educational and General:
Instruction 113,991,733 109,969,512
Research 13,991,116 14,202,048
Public service 15,695,327 15,098,876
Academic support 18,133,671 14,190,544
Student services 35,748.251 35,310,245
Institutional support 29,543,894 27.229,921
Operations 2,771.802 2,784,149
Operation and maintenance of plant 24,246,285 29,536,156
Depreciation 19,779,251 421,336 17,939,398 422,750
Staff benefits 1,911,309 1,220,296
Student aid 36,920,437 2,525,397 31,674,364 2,061,522
Payments on behalf of the University 86,469,651 78.553,377
Auxiliary facilities:
Student housing, activity facilities. and parking 57.126,802 61,583.757
Other operating expenditures 2,338.291 50,728 2,401,736 243,819
Expenditures on behalf of the University 4.225.461 4,308,456
Total operating expenses 455,896.018 9.994.724 438.910.230 9,820.696
Operating loss {158,963,524} F,633,508} {160.144.1241 (7.310.941)
NONOPERATING REVENUES (EXPENSES)
State appropriations 79,789.500 85.146,430
Payments on behalf of the University - State 86.469,651 78.553,377
Payments on behalf of the University - Foundation 1,205,883 1.314.581
Laboratory Schools 9,085,803 7,731,508
Gifts and donations 320,767 7,670,530 256.484 5,169,552
Investment income, net of Investment expenses 1.561,596 13,426.171 2.352.613 7.643.982
Interest expense (4,419,723) (205,251) (3,280.279) (209,315)
Other nonoperating revenues 19.522.828 734.848 17,906,543 708.346
Other nonoperating expenses {3,185.9361 {241.951}
Net nonoperating revenues (expenses) 193.5361305 18.440,362 189.981.257 131070,614
Income before capital items 34,572.781 10,806.854 29.837,133 5.759.673
Capital appropriations 709.628 7.583.879
Capital grants and gifts 2,474,776 927,928
Additions to permanent endowments 3,484,630 7,075.315
Total capital Items 3,184.404 3.484,630 8.511.807 71075.315
Increase in net assets 37,757,185 14,291.484 38,348,940 12.834,988
NET ASSETS
Net assets· beginning of year, as previously stated 414,628,540 87.378.048 379.953.643 74,543,060
Adjustment applicable to previous years, see Note 23
Correction of error in amounts recorded as Acets Rec. i3.674.043l
Net assets· end of year $ 452,385.725 $ 101.669.532 $ 414.628.540 $ 871378.048
The accompanying notes are an Integral part of the financial statements.
ILLINOIS STATE UNIVERSITY 17
ILLINOIS STATE UNIVERSITY
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30,
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees
Grants and contracts
Payments to suppliers
Payments to employees for salaries and benefits
Payments for scholarships and fellowships
Student loans issued
Collection of student loans
Auxiliary enterprise charges:
Auxiliary Facilities
Sales and service of educational activities
Payments to internal service departments
Internal service departments receipts
Agency custodial receipts
Agency custodial disbursements
Other receipts
Net cash used by operating activities
CASH FLOWS FROM NON CAPITAL FINANCING ACTIVITIES
State appropriations
Gifts and grants for other than capital purposes
Student direct lending receipts
Student direct lending disbursements
Other receipts
laboratory schools
Net cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from issuance of capital debt:
Capital long-term debt
Gifts and grants for capital purposes
Net purchases of capital assets
Principal paid on capital debt and leases:
Capital debt and leases
Interest paid on capital debt and leases
Payments of debt issuance costs
Net cash used by capital financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales and maturities of investments
Interest on investments
Purchase of investments
Net cash provided/(used) by investing activities
NET INCREASEI(DECREASE) IN CASH AND CASH EQUIVALENTS
Balance - beginning of year
Balance - end of year
'rhe accompanying notes are an integral part of the financial statements.
ILLINOIS STATE UNIVERSITY
$
$
2011 2010
University University
161,329.778 $ 147,214,874
22,700,853 21,723,888
(97,183,825) (100,509,112)
(213,016,684) (209,707,402)
(31,684,858) (27,277,142)
(1,307,339) (1,144,269)
1,176,424 1.087,240
82,950,314 80,936,805
2,570,384 2,634,827
(16,984,553) (15,970,441)
16,984,553 15,970,441
104,702,557 98,303,606
(104,920,456) (98,256,283)
22,128,670 22,267,654
(50.554,182) {62.725,314l
65,132,398 97,906,771
853 2,557
108,352,602 99,549,539
(108,352.602) (99,549,539)
19,529,059 16,788,053
8.843,349 8,070,211
93,505,659 122,767,592
15,061,380
1,432,297 992,134
(43,409,165) (49,754,662)
(7,135,000) (6,205,000)
(4,706,264) (4,785,439)
{433,786}
(39,190,538) {59,752,967l
28,000,000 24,494,624
2,580,373 3,687,229
~58,687,7181 ( 15,455,4691
~28, 107,345} 12,726,384
(24,346,406) 13,015,695
61,028,812 48.013,117
36,682,406 $ 61,028,812
18
ILLINOIS STATE UNIVERSITY
STATEMENTS OF CASH FLOWS - CONTINUED
YEARS ENDED JUNE 30,
2011 2010
University University
(restated)
RECONCILIATION
Operating (loss) $ (158,963,524) $ (160.144.124)
Adjustments to reconcile operating (loss) to
net cash used by operating activities:
Depreciation expense 19,779,251 17,939,398
Payments on behalf of the University 87,675,534 79,867,958
Donated equipment below capitalization threshold 319,917 253,927
Changes in assets and liabilities:
Accounts receivables, net (70,158) 1,148,418
Student loans receivable, net 383,696 190,175
Inventories 635,647 (252,928)
Other assets 528,709 (557,481)
Accounts payable and accrued liabilities (218,197) (651,686)
Deferred revenue (345,578) 854,701
Assets held in custody for others and deposits (105,533) (508,435)
Compensated absences ~173.946l {865,237}
Net cash used by operating activities $ (50,554,182) $ (62,725,314}
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Payments on behalf of the University $ 87,675,534 $ 79,867,958
Donated capital assets 870,596 64,372
Capital appropriation acquisitions 709,628 7,583,879
Bond accretion 840,022 . 1,056,360
Donated equipment below capitalization threshold 319,917 253,927
Tuition and fee waivers where services were provided 5,255,400 4,334,200
Construction costs in accounts payable 4,349,733' 8,764,965
Investment income unrealized gain (loss) and amortization (1,694,310) 2,057,820
RECONCILIATION OF CASH AND CASH EQUIVALENTS TO
THE STATEMENT OF NET ASSETS
Cash and cash equivalents classified as current assets $ 25,621,673 $ 49,826,109
Restricted cash and cash equivalents classified as current assets 11,060,733 11,202,703
$ 36,682,406 $ 61,028,812
The accompanying notes are an integral part of the financial statements.
ILLINOIS STATE UNIVERSITY 19
Notes to Financial Statements June 30, 2011 and 2010
Note 1. Summary of Significant Accounting Policies
THE FINANCIAL REPORTING ENTITY AND COMPONENT UNIT DISCLOSURES
Illinois State University, which is governed by the ~oard of Trustees, was founded in 1857 and is the oldest public
institution of higher learning in llIinois. As required by accounting principles generally accepted in the United States
of America, these fmancial statements present the financial position and financial activities of the University (the
primary government) and its discretely presented component unit (the Imnois State University Foundation). The
component unit discussed below is included in the University's financial reporting entity (the Entity) due to the
significance of its financial relationship with the University and is in accordance with Governmental Accounting
Standards Board (GASB) Statement No. 39, an amendment ofGASB Statement No. 14.
The Foundation is a University Related Organization as defined under University Guidelines adopted by the State of
Illinois' Legislative Audit Commission in 1982. The Illinois State University Foundation is reported in a separate
column to emphasize that it is an Illinois non-profit organization that is legally separate from the University. Complete
financial statements for the Foundation may be obtained by writing the lHinois State University Foundation, Campus
Box 8000, Nonnal, Illinois 61790-8000.
The Foundation was incorporated in May 1948 under the "General Not-for-Profit Corporation Act" for the purpose of
providing fund raising and other assistance to the University in order to attract private gifts to support the University's
instructional, research, and public service activities. The Foundation is an organization as described in Section
50 1 (c)(3) of the Internal Revenue Code and, accordingly, exempt from federal income tax. See Note /3, Transactions
with Related Organizations.
The Foundation has fonned two limited liability companies (LLC) to carry out the Foundation'S mission to assist the
University. The Foundation is a sole member of each ofthese LLC's. The governing board for each LLC, known as
"Launching Futures, LLC" and "Launching Futures II, LLC", consists of the executive officers of the Foundation.
This LLC activity is included as part of the Foundation'S financial statements.
Illinois State 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 may be obtained by writing to
the State Comptroller's Office, Division of Financial Reporting, 325 West Adams Street, Springfield, Illinois, 62704-
1871 or assessing its website at www.ioc.state.il.us.
Financial Statements Presentation: The University'S financial statements include the Statements of Net Assets, the
Statements of Revenues, Expenses, and Changes in Net Assets, and the Statements of Cash Flows. The financial
statements are prepared in accordance with GASB principles and presented on an entity-wide basis.
Basis of Accounting: For fmancial reporting purposes, the University is considered a special-purpose government
engaged only in business-type activities, as defined by GASB Statement No. 35. Business-type activities are those that
are fmanced in whole or in part by fees charged to external parties for goods or services. Accordingly, the University's
fmancial statements have been presented using the economic resources measurement focus and the accrual basis of
accounting. Under the accrual basis, revenue is recognized when earned, and expenses are recorded when an
obligation has been incurred. All significant intra-agency transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (F ASB) 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. The University does follow F ASB pronouncements issued prior to
November 30, 1989.
ILLINOIS STATE UNIVERSITY
20
Notes to Financial Statements June 30,2011 and 2010
Cash and Cash Equivalents: In accordance with GASB Statement No.9, cash equivalents are defined as short-term,
highly liquid investments that are both:
a. Readily convertible to known amounts of cash.
b. So near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
Generally, only investments with original maturities of three months or less meet this definition.
Restricted Cash and Cash Equivalents: Included in restricted cash and cash equivalents is the unspent proceeds
from revenue bonds and certificates of participation.
Investments: The University accounts for its investments at fair value as determined by quoted market prices in
accordance with GASB Statement No. 31, Accounting and Financial Reportingfor Certain investments and for
External investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a
component of investment income in the Statements of Revenues, Expenses, and Changes in Net Assets.
Accounts Receivable: Accounts receivable consist of tuition and fee charges to students and auxiliary facilities
service provided to students, faculty and staff. Accounts receivable also include amounts due from the Federal
government, state and local governments, or private sources, in connection with reimbursement of allowable
expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated
uncollectible amounts.
Loans to Students: The University makes loans to students under various Federal and other loan programs. Such
loans receivable are recorded net of estimated uncollectible amounts.
Inventories: Inventories are carried at the lower of cost or market on either the first-in, first-out; weighted average; or
average cost methods.
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. Livestock for educational purposes is recorded at estimated fair value. For equipment,
the University'S capitalization policy includes all items with a unit cost of$S,OOO or more and an estimated useful life
of greater than two years. Renovations to buildings, infrastructure, and land improvements that significantly increase
the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to
operating expense in the year in which the expense was incurred. The University reviews long-lived assets for
impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be
recoverable.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 years
for buildings, 40 years for infrastructure and land improvements, 10 years for library books, and 3 to 7 years for
equipment.
Capitalization of Interest: Interest is charged to expense as incurred except for interest related to borrowings used for
construction projects which is capitalized net of interest earned on construction funds borrowed. Interest capitalization
ceases when the construction project is substantially complete. During fiscal years ended 2011 and 2010, the
University capitalized $1,321,062 and $2,677,817 net interest expense for construction projects, respectively.
Deferred Revenue: Deferred revenue includes amounts received for tuition and fees, advance ticket sales, and certain
auxiliary activities prior to the end ofthe fiscal year but related to the subsequent accounting period. Deferred revenue
also includes amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences: Employee vacation and sick pay is accrued at year-end for financial statement purposes.
The liability is recorded at year-end as current and long-term liabilities (see Note 9) in the Statements of Net Assets.
The expense is recorded in the Statements of Revenues, Expenses, and Changes in Net Assets as a component of
operating expenses.
ILLINOIS STATE UNIVERSITY
21
Notes to Financial Statements June 30, 2011 and 2010
Debt issuance costs: The costs related to the issuance of revenue bonds and certificates of participation are being
amortized over the life of the bonds and/or certificates using the straight line method.
Employment Contracts for Certain Academic Personnel: Employment contracts for certain academic personnel
provide for twelve monthly salary payments, although the contracted services are rendered during a nine month period.
The liability for those employees who have completed their contracted services, but have not yet received final
payment, was $4,612,969 and $4,589,394 at June 30, 2011 and 2010, respectively, and is recorded in the
accompanying fmancial statements.
Noncurrent Liabilities: Noncurrent liabilities include (I) principal amounts of revenue bonds payable, certificates of
participation, and capital lease obligations with contractual maturities greater than one year; (2) estimated amounts for
accrued compensated absences and other liabilities that will not be paid within the next fiscal year; and (3) other
liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets: The University's net assets are classified as follows:
Invested ill capital assets, net ojrelated 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 - 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.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is
legally or contractually obligated to spend resources in accordance with restrictions imposed by external third
parties.
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 facilities. 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
facilities, 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 University's policy is
to first apply the expense towards restricted resources, and then towards unrestricted resources.
Income Taxes: Certain activities of the University are subject to State sales tax and some activities may be subject to
taxation as unrelated business income under the Internal Revenue Code.
Classification of Revenue: The University has classified its revenue as either operating or non-operating revenue
according to the following criteria:
Operating revenue: Operating revenue includes activities that have the characteristics of exchange transactions,
such as (I) student tuition and fees, net of scholarship discounts and allowances, (2) sales and services of auxiliary
facilities, net of scholarship discounts and allowances, (3) most Federal, state and local grants and contracts except
for training and (4) interest on institutional student loans.
Non-operating revenue: Non-operating revenue includes activities that have the characteristics of non-exchange
transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenue by
GASS No.9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities
That Use Proprietary Fund Accounting, and GASS No. 34, such as State appropriations and investment income.
ILLINOIS STATE UNIVERSITY
22
Notes to Financial Statements June 30, 2011 and 2010
Scholarship Discounts and Allowances: Student tuition and fee revenue, and certain other revenue from students, are
reported net of scholarship discounts and allowances in the Statements of Revenues, Expenses, and Changes in Net
Assets using the National Association of College and University Business Officers Advisory Report 2000-05 alternate
method calculations. 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 Pell grants, and other Federal, State or nongovernmental
programs, are recorded as either operating or non-operating revenue 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.
2011 2010 (as
restated)
Student tuition and fees $ 205,333,387 $ 184,921,407
Less scholarship discounts and allowances (37,457,227) (33,167,914)
Less discounts for employee waivers (733,999l (649,452)
Net student tuition and fees $ 167,142,161 $ 151,104,041
Auxiliary facilities $ 94,045,056 $ 91,464,201
Less scholarship discounts and allowances (11,026,989l (10,549,938)
Net auxiliary facilities $ 83,018,067 $ 80,914,263
Use of Estimates in Preparing Financial Statements: The preparation of fmancial 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 disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications: Certain prior year amounts have been reclassified to conform to current year presentations.
ILLINOIS STATE UNIVERSITY
23
Notes to Financial Statements June 30, 2011 and 2010
Note 2. Deposits
At June 30, 2011 and 2010, the University's bank balances were $18,992,077 and $14,453,270, respectively, and were
covered by the Federal Deposit Insurance Corporation or pledged collateral.
Foundation Custodial Credit Risk - Deposits: Custodial credit risk is the risk that in the event of a bank failure, deposits may
not be returned. The Federal Deposit Insurance Corporation or the Security Investor Protection Corporation insured account
had a balance of $467,530 and $85,196 at June 30, 2011 and 2010, respectively. Bank balances of$5,915,585 at June 30,
2011 and $10,070,264 at June 30, 2010 were invested in investment sweep funds secured by U.S. government obligations. In
addition, at June 30, 2011, $430,000 was in uninsured cash awaiting investment and was subsequently invested as of July 31,
2011. The Foundation does not have a formal deposit policy for custodial credit risk.
DEPOSITS:
University
Bank
Balance
2011
Carrying
Amount
Bank
Balance
2010
Carrying
Amount
Bank Checking Funds $ 18,992,077 $ 14,922,095 $ 14,453,270 $ 11,815,458
Foundation
Cash in bank $ 6,383,119 $ 6,191,473 $ 10,155,460 $ 9,138,676
Reconciliation of cash and cash equivalents to deposits:
Universi!l Foundation
Cash and cash equivalents
Current $ 36,682,406 $ 5,749,271
Noncurrent 442,202
Total cash and cash equivalents 36,682,406 6,191,473
Less: Vault cash and change funds (241,658)
Less: Money market mutual funds classified as
investments for purposes of categorization {21,518,653)
Carrying amount of deposits $ 14,922,095 $ 6,191,473
2010
Universi!l Foundation
Cash and cash equivalents
Current $ 61,028,812 $ 6,298,635
Noncurrent 2,840,041
Total cash and cash equivalents 61,028,812 9,138,676
Less: Vault cash and change funds (186,742)
Less: Money market mutual funds classified as
investments for purposes of categorization (49,026,612)
Carrying amount of deposits $ 11,815,458 $ 9,138,676
ILLINOIS STATE UNIVERSITY
24
Notes to Financial Statements June 30, 2011 and 2010
Note 3. Investments
Investments are recorded at fair market value, as determined by quoted market prices.
UNIVERSITY INVESTMENTS
As of June 30, 2011, the University had the following investments:
Fair Market Less Than 1 to 6 S&P/Moody's
1 Year Years Rating
U.S. Treasuries $ 34,124,860 $ 3,124,110 $ 31,000,750
Federal Farm Credit Bank 29,406,120 8,183,140 21,222,980 AAA/Aaa
Federal National Mortgage Association 7,700,094 1,015,154 6,684,940 AAA/Aaa
Federal Home Loan Bank 40,465,525 13,721,200 26,744,325 AAA/Aaa
Federal Home Loan Mortgage Corporation 1,294,521 1,294,521
Illinois Funds Investment Pool 10,457,505 10,457,505 AAAm
Bank Money Market Funds 11,061,148 11,061,148 Not Rated
Total University $ $ 47,562,257 $ 86,947,516
Interest Rate Risk: The University does not have a formal policy that limits investment maturities as a means of
managing its exposure to fair value losses arising from increasing interest rates.
Concentration of Credit Risk: The University places no limit on the amount that may be invested in anyone issuer.
More than 5% of the University investments are in Federal Farm Credit Bank (21.9%), Federal Home Loan Bank
(30.1%), and Federal National Mortgage Association (5.7%).
Credit Risk: State law authorizes investments of U.S. Government Securities (Treasuries and Agencies), commercial
paper (not more than 33% of total cash and investments), money market mutual funds and repurchase agreements. The
University's investments are rated by Moody's Investors Service and Standard and Poor's Corporation.
As of June 30, 2010, the University had the following investments:
Fair Market Less Than 1 to 6 S&PlMoody's
Value 1 Year Rating
U.S. Treasuries $ 23,822,750 $ 5,007,050 $ 18,815,700
Federal Farm Credit Bank 27,117,200 2,039,380 25,077,820 AAAIAaa
Federal National Mortgage Association 5,132,800 5,132,800 AAA/Aaa
Federal Home Loan Bank 27,054,555 16,326,405 10,728,150 AAA/Aaa
Illinois Funds Investment Pool 37,823,909 37,823,909 AAAm
Bank Money Market Funds 11,202,703 11,202,703 Not Rated
Total University $ 132,153,917 $ 77,532,247 $
ILLINOIS STATE UNIVERSITY
25
Notes to Financial Statements June 30, 2011 and 2010
Concentration of Credit Risk: The University places no limit on the amount that may be invested in anyone issuer.
More than 5% of the University investments are in Federal Farm Credit Bank (20.5%) and Federal Home Loan Bank
(20.5%).
FOUNDATION INVESTMENTS
The carrying value of the investment portfolio of the Foundation at June 30, 2011 and 2010 is as follows:
2011 2010
U.S. Treasury Notes $ 62,650 $ 62,505
Common Stock 303,007 246,945
Mutual Funds - investing in:
Stocks 33,370,541 27,671,503
Bonds 8,192,968 8,499,223
Commodities 3,149,112 1,969,652
International 15,302,637 9,065,614
U.S. Government Securities 212,376 2,463,669
Limited Partnerships 9,906,598 7,711,138
Hedged and Alternative Funds 17,926,251 14,047,484
Real Estate Investment 600,631 600,631
Total Foundation $ 89,026,771 $ 72,338,364
Interest Rate Risk: The Foundation's investment policy requires the average duration of the fixed income portfolio to
be within 20% of the duration of the index to which the portfolio is benchmarked.
Foreign Currency Risk. Foreign currency risk exists when there is a possibility that changes in exchange rates could
adversely affect investments denominated in foreign currencies. The Foundation does not have a formal policy that
addresses foreign currency risk.
As of June 30, 2011, the Foundation had $14,551,741 in U.S. dollar balances of international mutual fund investments
exposed to foreign currency risk. Listed below are the U.S dollar balances of the Foundation's international mutual
fund investments exposed to foreign currency risk as of June 30, 2011 :
International Emerging
Egui~ Markets Total
Euro $ 1,932,372 $ $ 1,932,372
British Pound 1,879,739 1,879,739
Japanese Yen 1,541,386 1,541,386
Brazilian Real 22,557 1,018,716 1,041,273
Chinese Yuan 338,353 1,321,148 1,659,501
South Korean Won 22,557 819,748 842,305
Other (individually below 5% of total) 1,556,423 4,098,742 5,655,165
Total $ 7,293,387 $ 7,258,354 $ 14,551,741
Credit Risk: Credit risk exists when there is a possibility that the issuer or other counterparty to an investment may be
unable to fulfill its obligations. The Foundation's investment policy states that no more than 25% of the fixed income
portfolio may be rated below investment grade.
ILLINOIS STATE UNIVERSITY
26
Notes to Financial Statements June 30, 2011 and 2010
As of June 30, 2011, the Foundation had the following investments exposed to interest rate risk and credit risk:
Fair Market Weighted S&P
Value A verage Life Rating
U.S. Treasury Notes $ 62,650 4.0 years
Bond Mutual Funds 8,192,968 8.5 years AA
Commodities Mutual Fund 3,149,112 0.9 years AA+
U.S. Government Securities Fund 212,376 0.14 years
As of June 30, 2010, the Foundation had the following investments exposed to interest rate risk and credit risk:
Fair Market Weighted S&P
Value A verage Life Rating
U.S. Treasury Notes $ 62,505 4.9 years
Bond Mutual Funds 8,499,223 7.1 years AA
Commodities Mutual Fund 1,969,652 1.3 years AA+
U.S. Government Securities Fund 2,463,669 8.8 years
INVESTMENTS CONSIST OF THE FOLLOWING:
2011 2010
Universi~ Foundation University Foundation
Current:
Investments $ 26,043,604 $ $ 28,505,635 $
Noncurrent:
Investments 86,947,516 19,832,017 54,621,670 12,817,071
Endowment investments 69,194,754 59,521,293
112,991,120 89,026,771 83,127,305 72,338,364
Money market mutual
funds classified as cash
and cash equivalents 21,518,653 49,026,612
Total $ 134,509,773 $ 89,026,771 $ 132,153,917 $ 72,338,364
Bond resolutions restrict investments in the Auxiliary Debt Retirement account to U.S. Government Securities. All
other auxiliary facilities money may be invested in any instrument permitted by the laws of the State of Illinois for the
investment of public funds.
Foundation policy states that assets are to be invested in a diversified portfolio of equity, fixed income and alternative
strategies. No investment is to be made that will cause the total investment in equities or fixed income securities issued
or guaranteed by anyone person, firm, or corporation to exceed five percent of the then fair market value of the
Foundation; provided, this restriction is not to apply to either well diversified mutual funds, pooled funds, unit trust, or
the like, or direct obligations of the U.S. Government and its fully guaranteed agencies. Equity investments have an
asset allocation range from 47% to 67% ofthe portfolio with a target weight of 57%; fixed income investments have an
asset allocation range from 3% to 15% with a target weight of 5%; marketable alternative investments have an asset
allocation range from 10% to 30% with a target weight of 20%; and real assets have an asset allocation range from 5%
to 28% with a target weight of 18%.
ILLINOIS STATE UNIVERSITY
27
Notes to Financial Statements June 30, 2011 and 2010
Note 4. Accounts Receivable
Accounts receivable consist of the following at June 30, 20 II and 2010:
2011 2010 (as
restated)
Student tuition and fees $ 5,828,862 $ 5,002,784
Auxiliary facilities and other operating activities 2,102,240 2,118,687
Other 1,193,840 1,016,535
Federal, state, and private grants and contracts 2,599,411 2,793,724
Sub-total 11,724,353 10,931,730
Less allowance for uncollectible accounts {2,66 1 ,543) (2,458,760)
Net Accounts Receivable $ 9,062,810 $ 8,472,970
Note 5. Student Loans Receivable
Student loans receivable at June 30,2011 and 2010 are summarized as follows:
2011 2010
Perkins student loan fund $ 9,929,554 $ 10,286,404
Nursing loan fund 384,729 387,787
University loan fund 52,205 55,993
Sub-total 10,366,488 10,730,184
Less allowance for uncollectible accounts {993,784) {973,7842
Net Student Loans Receivable $ 9,372,704 $ 9,756,400
Estimated current portion $ 921,929 $ 928,736
Estimated noncurrent portion 8,450,775 8,827,664
Total $ 9,372,704 $ 9,756,400
ILLINOIS STATE UNIVERSITY
28
Notes to Financial Statements June 30, 2011 and 2010
Note 6. Foundation Pledges Receivable
Foundation pledges receivable at June 30, 2011 and 2010 are summarized as follows:
2011 2010
Pledges to be collected $ 1,773,460 $ 1,175,186
Less discount for the time value of money (26,313) ( 44,206)
Less allowance for uncollectible accounts (133,010) (121,889)
Net Foundation Pledges Receivable $ 1,614,137 $ 1,009,091
Estimated current portion $ 1,197,737 $ 455,336
Estimated noncurrent portion 416,400 553,755
Total $ 1,614,137 $ 1,009,091
Note 7. Deferred Revenue
Deferred revenue consists of the following at June 30,2011 and 2010:
2011 2010
Prepaid tuition and fees $ 4,913,146 $ 4,800,148
Auxiliary facilities 542,025 656,249
Grants and contracts 1,470,250 1,808,116
Other 73,045 79,531
Deferred Revenue $ 6,998,466 $ 7,344,044
ILLINOIS STATE UNIVERSITY
29
Notes to Financial Statements June 30, 2011 and 2010
Note 8. Capital Assets
Capital assets activity for the year ended June 30, 2011 is summarized as follows:
University
Beginning Ending
Balance Additions Retirements Transfers Balance
Capital assets not being
depreciated
Land $ 14,158,006 $ $ $ $ 14,158,006
Construction in progress 80,378,947 25,381,831 (89, I 73, 178) 16,587,600
Intangible -internally
generated software 6,782,814 3,600,933 {271,258} 10,112,489
Total capital assets not
being depreciated $ 101,319,767 $ 28,982,764 $ $ {89,444,436} $ 40,858,095
Capital assets being
depreciated
Land Improvements $ 33,063,588 $ 17,804 $ (188,039) $ 419,978 $ 33,313,331
Infrastructure 12,682,559 12,682,559
Buildings 422,051,885 2,302,912 (3,435,290) 88,753,200 509,672,707
Equipment 73,351,021 6,945,041 (1,689,535) 271,258 78,877,785
Library Materials 74,336,701 3,774,371 78,111,072
Total capital assets
being depreciated $ 615,485,754 $ 13,040,128 $ {5,312,864) $ 89,444,436 $ 712,657,454
Less Accumulated
Depreciation for
Land Improvements $ 9,756,015 $ 994,422 $ (188,040) $ $ 10,562,397
Infrastructure 6,071,004 311,507 6,382,511
Buildings 186,555,250 9,976,032 (3,421,534) 193,109,748
Equipment 57,770,472 5,263,786 ( 1,578,527) 61,455,731
Library Materials 57,882,034 3,233,504 61,115,538
Total Accumulated
Depreciation $ 318,034,775 $ 19,779,251 $ ~5, 188,101} $ $ 332,625,925
Total capital assets being
depreciated, net $ 297,450,979 $ (6,739,123) $ ~124,763} $ 89,444,436 $ 380,031,529
Capital assets, net $ 398,770,746 $ 22,243,641 $ ~124,763l $ $ 420,889,624
Foundation
Beginning Ending
Balance Additions Retirements Balance
Capital assets not being
depreciated $ 980,000 $ $ $ $ 980,000
Capital assets being
depreciated 10,410,371 10,410,371
Less accumulated
depreciation 1,547,255 1,968,591
Total capital assets
being depreciated $ 8,863,116 $ {421,336} $ $ $ 8,441,780
Capital assets, net $ 9,843,116 $ {421,336~ $ $ $
ILLINOIS STATE UNIVERSITY
30
Notes to Financial Statements June 30, 2011 and 2010
Capital assets activity for the year ended June 30, 2010 is summarized as follows:
University
Beginning Ending
Balance Additions Retirements Transfers Balance
Capital assets not being
depreciated
Land $ 14,158,006 $ $ $ $ 14,158,006
Construction in progress 78,676,407 51,926,302 (5,202,357) (45,021,405) 80,378,947
Intangible -internally
generated software 2,570,906 4,211,908 6,782,814
Total capital assets not
being depreciated $ 95,405,319 $ 56,138,210 $ ~5,202,357} $ ~45,021,405} $ 101,319,767
Capital assets being
depreciated
Land Improvements $ 26,519,625 $ 425,566 $ (24,999) $ 6,143,396 $ 33,063,588
Infrastructure 12,682,559 12,682,559
Buildings 381,427,798 1,746,078 38,878,009 422,051,885
Equipment 69,758,543 5,220,226 (l ,627,748) 73,351,021
Library Materials 70,624,011 3,712,690 74,336,701
Total capital assets
being depreciated $ 561,012,536 $ 11,104,560 $ ~ 1 ,652, 747} $ 45,021,405 $ 615,485,754
Less Accumulated
Depreciation for
Land Improvements $ 8,851,556 $ 920,161 $ (15,702) $ $ 9,756,015
Infrastructure 5,759,775 311,229 6,071,004
Buildings 178,351,503 8,203,747 ] 86,555,250
Equipment 54,077,564 5,217,102 (1,524,194) 57,770,472
Library Materials 54,594,875 3,287,159 57,882,034
Total Accumulated
Depreciation $ 301,635,273 $ 17,939,398 $ ~ 1,539,896} $ $ 318,034,775
Total capital assets being
depreciated, net $ 259,377,263 $ (6,834,838) $ ~1 12,851) $ 45,021,405 $ 297,450,979
Capital assets, net $ 354,782,582 $ 49,303,372 $ (5,315,208) $ $ 398,770,746
Foundation
Beginning Ending
Balance Additions Retirements Transfers Balance
Capital assets not being
depreciated $ 980,000 $ $ $ $ 980,000
Capital assets being
depreciated 10,410,371 10,410,371
Less accumulated
depreciation 1,124,505 422,750 1,547,255
Total capital assets
being depreciated $ 9,285,866 $ {422,75Ol $ $ $ 8,863,116
Capital assets, net $ 10,265,866 $ ~422,750l $ $ $ 9,843,116
ILLINOIS STATE UNIVERSITY
31
Notes to Financial Statements June 30, 2011 and 2010
Note 9. Long-term Liabilities
UNIVERSITY LONG-TERM LIABILITIES
Long-term liability activity for the year ended June 30, 2011 was as follows:
Beginning Ending
Balance Additions Retirements Balance
Total
Accrued compensated absences $ 17,231,245 $ 1,498,027 $ 1,671,973 $ 17,057,299
Certificates of participation 21,321,531 15,061,380 850,666 35,532,245
Revenue bonds payable 103,278,830 840,022 6,286,306 97,832,546
Total $ 141,831,606 $ 17,399,429 $ 8,808,945 $ 150,422,090
Current portion
Accrued compensated absences $ 1,756,753 $ 1,735,598
Certificates of participation 850,297 1,198,237
Revenue bonds payable, net 6,134,984
Total current portion $ 8,758,521 $ 9,068,819
Noncurrent portion
Accrued compensated absences $ 15,474,492 $ 15,321,701
Certificates of participation 20,471,234 34,334,008
Revenue bonds payable, net 97,127,359 91,697,562
Total noncurrent portion $ 133,073,085 $ 141,353,271
Long-term liability activity for the year ended June 30, 2010 was as follows:
Beginning Ending
Balance Additions Retirements Balance
Total
Accrued compensated absences $ 18,096,482 $ 934,485 $ 1,799,722 $ 17,231,245
Certificates of participation 22,141,828 820,297 21,321,531
Revenue bonds payable 107,608,777 1,056,360 5,386,307 103,278,830
Total $ 147,847,087 $ 1,990,845 $ 8,006,326 $ 141,831,606
Current portion
Accrued compensated absences $ 1,761,291 $ 1,756,753
Certificates of participation 820,298 850,297
Revenue bonds payable, net 5,251,695 6,151,471
Total current portion $ 7,833,284 $
Noncurrent portion
Accrued compensated absences $ 16,335,191 $ 15,474,492
Certificates of participation 21,321,530 20,471,234
Revenue bonds payable, net 102,357,082 97,127,359
Total noncurrent portion $ 140,013,803 $
ILLINOIS STATE UNIVERSITY
32
Notes to Financial Statements June 30, 2011 and 2010
Revenue bonds payable at June 30, 2011 and 2010 consists of the following:
2011 2010
Revenue Bonds, Series 1989:
Capital Appreciation Bonds $ 648,239 $ 4,293,260
Insured Revenue Bonds, Series 1993:
Capital Appreciation Bonds 1,615,439 1,521,229
Revenue Bonds, Series 1996:
Capital Appreciation Bonds 10,072,628 9,506,794
Revenue Bonds, Series 2003:
New Project Bonds 4,909,579 5,347,115
Current Refunding Bonds 9,477,445 9,530,862
Revenue Bonds, Series 2006:
New Project Bonds 38,869,120 38,830,847
Current Refunding Bonds 2,450,096 3,613,723
Revenue Bonds, Series 2008
New Project Bonds 29,790,000 30,635,000
Total revenue bonds payable $ 97,832,546 $ 103,278,830
Maturities and interest requirements on revenue bonds payable at June 30, 2011, are as follows:
Year Ending
June 30 Princigal Interest Total
2012 $ 6,190,000 3,757,986 9,947,986
2013 6,330,000 3,617,701 9,947,701
2014 6,625,000 3,347,217 9,972,217
2015 7,025,000 3,101,776 10,126,776
2016 7,075,000 3,054,511 10,129,511
Sub-total 33,245,000 16,879,191 50,124,191
2017-2021 18,300,000 13,600,624 31,900,624
2022-2026 20,845,000 9,442,876 30,287,876
2027-2031 24,685,000 4,525,524 29,210,524
2032-2033 4,105,000 310,250 4,415,250
Sub-total 101,180,000 $ 44,758,465 $ 145,938,465
Additions(Deductions ):
Unaccreted Appreciation (2,743,694)
Unamortized Discounts (775,784)
Unamortized Premiums 172,024
Total $ 97,832,546
ILLINOIS STATE UNIVERSITY
33
Notes to Financial Statements June 30,2011 and 2010
The Series 1989, 1993, 1996,2003,2006, and 2008 bonds are secured by a pledge of the net revenue of auxiliary
facilities, as well as the pledged portion of the tuition, health service and athletic & service fees charged to students.
On October I, 1989, $11,702,450 in Revenue Bonds, Series 1989 were issued. The Series 1989 Bonds consisted of
$7,770,000 in Current Interest Bonds and $3,932,450 in Capital Appreciation Bonds. The Current Interest Bonds
mature annually on April 1, commencing April I, 2013, through April I, 2014, and bear interest at 7.40%. Interest is
payable on April 1 and October I of each year, commencing April 1, 1990. The Capital Appreciation Bonds have a
principal at maturity of$17,065,000 and an original issue discount of$13, 132,550. The original issue discount is being
accreted to interest expense over the term of the bonds. The Capital Appreciation bonds mature semi-annually
commencing April I, 2008, through October 1, 2012. The Capital Appreciation bonds were issued at prices to yield
7.30% to 7.35% at maturity.
On June 23, 1993, $10,221,971 in Insured Revenue Bonds, Series 1993 were issued. The Series 1993 Bonds consisted
of$9,675,000 in Current Interest Bonds and $546,971 in Capital Appreciation Bonds. The Current Interest Bonds
were called and redeemed in full on April 10,2003. The Capital Appreciation Bonds have a principal at maturity of
$1,665,000 and an original issue discount of $1 , 118,029. The original issue discount is being accreted to interest
expense over the term of the bonds. The Capital Appreciation Bonds yield 6.10% interest and mature October 1, 2011,
and April 1, 2012.
On December 10, 1996, $18,101,018 in Revenue Bonds, Series 1996 were issued. The Series 1996 Bonds consisted of
$13,760,000 in Current Interest Bonds and $4,341,018 in Capital Appreciation Bonds. The Current Interest Bonds
mature beginning April 1, 1999, and continuing through April 1, 2013. These Current Interest Bonds bear interest from
4.30% to 5.40%. Interest is payable on April 1 and October 1 of each year, commencing April 1, 1997. The Capital
Appreciation Bonds have a principal at maturity of $12,755,000 and an original issue discount of $8,413,982. The
original issue discount is being accreted to interest expense over the term of the bonds. The Capital Appreciation
Bonds yield 5.80% to 5.90% interest and mature annually commencing April I, 2014, through April 1, 2016.
On March 11,2003, $16,905,000 in Revenue Bonds, Series 2003 were issued. The Series 2003 Bonds consisted of
. $7,570,000 of New Project Bonds and $9,335,000 in Current Refunding Bonds. The New Project Bonds mature
beginning April 1, 2004, and continuing through Aprill, 2023. These New Project Bonds bear interest from 2.00% to
4.70%. Interest is payable on April 1 and October 1 of each year, commencing October 1,2003. The Current
Refunding Bonds mature beginning Aprill, 2012, and continuing through Aprill, 2014. The Current Refunding
Bonds bear interest from 4.00% to 5.00%. Interest is payable on April 1 and October 1 of each year, commencing
October 1, 2003.
On March 21, 2006, $45,595,000 in Revenue Bonds, Series 2006 were issued. The Series 2006 Bonds consisted of
$39,625,000 of New Project Bonds and $5,970,000 in Current Refunding Bonds. The New Project Bonds mature
beginning April 1, 2017, and continuing through April 1, 2031. These New Project Bonds bear interest from 3.90% to
4.40%. Interest is payable on April 1 and October 1 of each year, commencing October 1, 2006. The Current
Refunding Bonds mature beginning April!, 2007, and continuing through April 1, 2013. The Current Refunding
Bonds bear interest from 3.35% to 3.70%. Interest is payable on Aprill and October 1 of each year, commencing
October 1, 2006.
Proceeds from the sale of the Series 2006 Current Refunding Bonds, were used to provide for the advance refunding of
a portion of the Series 1996 Bonds and to pay certain expenses related to the issuance of the bonds. The Series 1996
Current Interest Bonds were redeemed with a call premium of2% for a total of$S,829,300 on October 1,2006. The
Series 1996 Bonds had a book value of$5,674,321 and unamortized issuance costs of$45,332. Although the advanced
refunding resulted in the recognition of an accounting loss of $227,321 for the year ended June 30, 2006, the issuance
of the 2006 refunding bonds at lower interest rates will cause aggregate debt service payments to be decreased by
$209,511 and will result in an economic gain or present value gain of $190,972 over the life of the refunded bonds.
On March l, 2008, $30,635,000 in Revenue Bonds, Series 2008 were issued. The New Project Bonds mature
beginning April 1, 2011, and continuing through April I, 2033. These New Project Bonds bear interest from 2.70% to
5.00%. Interest is payable on April 1 and October 1 of each year, commencing October 1, 2008.
ILLINOIS STATE UNIVERSITY
34
Notes to Financial Statements June 30, 2011 and 2010
As a requirement of issuing revenue bonds the University is subject to certain covenants. The University monitors its compliance
with these covenants and is not aware of violations of these covenants.
PLEDGED REVENUES & DEBT SERVICE REQUIRMENTS
The University has pledged fees relating to tuition, health services, athletics, health insurance, student activities and all other fees
(excluding laboratory, and library fees) collected from students, to repay the principal and interest of revenue bonds. A total of
$145,938,466 of future revenues is pledged through 2033. Debt service to pledged revenues for the current year is 6.43%.
DEFEASED BONDS
In June ]993, the University defeased a portion of the Series 1989 bonds by creating a separate irrevocable trust fund. New debt
(series 1993 bonds) was issued and the proceeds used to purchase U.S. Treasury securities that were placed in the trust fund. The
investments and fixed earnings from the investment are sufficient to service the defeased amount until the debt matures. For
financial reporting purposes, the debt has been considered defeased and removed as a liability on the Statements of Net Assets. The
defeased debt outstanding for the years ended lune 30, 2011 and 2010 was $10,948,993 and $10,727,614, respectively.
CERTIFICATES OF PARTICIPATION PAYABLE
On June 4, 2008, $22,230,000 in Certificates of Participation were issued. The Series 2008 Certificates of Participation mature
beginning April I, 2010 and continuing through April 1,2028. These Certificates of Participation bear interest from 3.00% to
4.50%. Interest is payable on April 1 and October I of each year, commencing October I, 2008.
On May 17, 201 ], $] 5,000,000 in Certificates of Participation were issued. The Series 2011 Certificates of Participation mature
beginning April1, 2012 and continuing through April 1, 2032. These Certificates of Participation bear interest from 4.00% to
5.375%. Interest is payable on April 1 and October I of each year, commencing October 1, 2011.
Maturities and interest requirements on certificates of participation at June 30, 2011, are as follows:
Year Ending
June 30
2012
2013
2014
2015
2016
Sub-total
2017-202]
2022-2026
2027-2031
2032
Sub-total
Additions(Deductions):
Unamortized Discounts
Unamortized Premiums
Total
ACCRUED COMPENSATED ABSENCES
$
Principal
1,200,000
1,515,000
1,555,000
1,620,000
1,675,000
7,565,000
9,410,000
11,675,000
6,195,000
705,000
35,550,000
(78,767)
61,012
$ -===3===,5,_ 53_ 2,;.",,2=-45. ....
$
$
Interest
1,449,363
],499,567
1,443,518
1,385,992
1,323,630
7,102,070
5,559,613
3,362,860
899,525
37,894
]6,961,962
$
$
Total
2,649,363
3,014,567
2,998,518
3,005,992
2,998,630
14,667,070
14,969,613
15,037,860
7,094,525
742,894
52,511,962
Compensated absences consist of accrued vacation and sick leave. The total for accrued vacation and sick leave for the University is
shown below:
Vacation Sick Total
2011 $ 10,522,155 $ 6,535,144 $ 17,057,299
2010 $ 10,114,061 $ 7,117,184 $ 17,231,245
ILLINOIS STATE UNIVERSITY
35
Notes to Financial Statements June 30, 2011 and 2010
FOUNDATION LONG-TERM LIABILITIES
Long-term liability activity for the year ended June 30, 2011 was as follows:
Beginning Ending
Balance Additions Retirements Balance
Total
Beneficiary payments $ 358,138 $ $ 141,567 $ 216,571
Deferred rent 2,400,000 300,000 2,100,000
Contract-for-deed payabJe 3,187,040 64,749 3,122,291
Total $ 5,945,178 $ $ 506,316 $ 5,438,862
Current portion
Beneficiary payments $ 41,170 $ 22,505
Deferred rent 300,000 300,000
Contract-for-deed payable 64,749 69,085
Total current portion $ 405,919 $ 391,590
Noncurrent portion
Beneficiary payments $ 316,968 $ 194,066
Deferred rent 2,100,000 1,800,000
Contract-for-deed payable 3,122,291 3,053,206
Total noncurrent portion $ 5,539,259 $ 5,047,272
Long-term liability activity for the year ended June 30, 2010 was as follows:
Beginning Ending
Balance Additions Retirements Balance
Total
Beneficiary payments $ 354,080 $ 50,554 $ 46,496 $ 358,138
Deferred rent 2,700,000 300,000 2,400,000
Contract-for-deed payable 3,247,724 60,684 3,187,040
Total $ 6,301,804 $ 50,554 $ 407,180 $ 5,945,178
Current portion
Beneficiary payments $ 34,525 $ 41,170
Deferred rent 300,000 300,000
Contract-for-deed payable 60,684 64,749
Total current portion $ 395,209 $ 405,919
Noncurrent portion
Beneficiary payments $ 319,555 $ 316,968
Deferred rent 2,400,000 2,100,000
Contract-for-deed payable 3,187,040 3,122,291
Total noncurrent portion $ 5,906,595 $ 5,539,259
ILLINOIS STATE UNIVERSITY
36
Notes to Financial Statements June 30, 2011 and 2010
FOUNDATION CONTRACT-FOR-DEED PAYABLE
A contract at June 30, 2011 consisted ofa $3,300,000 installment contract-for-deed secured by the Alumni Center
building. The contract requires 119 monthly payments of $22,500 at 6.5% interest with a final payment of the
remaining outstanding balance.
Maturities and Interest Requirements on the contract payable at June 30, 2011, are as follows:
Note 10. Leases
Year Ending
June 30
2012
2013
2014
2015
2016-2019
Total
CAPITALIZED LEASES
Principal
$ 69,085
73,712
78,649
83,916
2,816,929
$ 3,122,291
Interest
$ 200,915
196,288
191,351
186,084
536,706
$ 1,311,344
$
$
Total
270,000
270,000
270,000
270,000
3,353,635
4,433,635
Certain leases in which the Board of Trustees, the governing board of the University, is the lessee are considered to be
equivalent to installment purchases for accounting presentation. The assets recorded under these leases have been
capitalized at the present value of future lease payments, measured at lease inception date as required by Financial
Accounting Standards Board (F ASB) Statement No. 13.
On March 30, 2011, the University entered into a capital lease agreement in an amount not to exceed $2,410,000 with
Bane of America Public Capital Corp to fmance equipment and IT costs for the Mennonite Lab Building. The available
funds are on deposit in an escrow account held by Deutsche Bank Trust. A total of $153,548 was paid during fiscal
year 2011 to various vendors for progress payments related to the contract.
Year Ending
June 30
2012
2013
2014
2015
2016
Total minimum lease payments
Less amount representing interest
Present value of future minimum
lease payments
$ 521,401
521,401
521,401
521,401
521,400
2,607,004
197,004
$ 2,410,000
ILLINOIS STATE UNIVERSITY
37
Notes to Financial Statements June 30, 2011 and 2010
OPERATING LEASES
The University has entered into agreements to lease recreational space and office space that the University is treating as
operating leases. Rent expense for the years ended June 30, 2011 and 2010 was $1,349,250 and $912,323,
respectively. The leases expire between July 2011 and June 2018. Following is a schedule of future minimum lease
payments.
Year Ending
June 30
2012
2013
2014
2015
2016
2017-2018
Total
Building
1,315,504
1,093,342
863,339
863,339
300,000
600,000
$ 5,035,524
In 1990, the Foundation established a Chicago office to provide the University with direct access to Chicago area
alumni, corporations, and Foundation networks. Lease payments for the Chicago office were $56,532 in 2011 and
$64,103 in 2010. The current lease expires on December 31,2014.
Year Ending
June 30
2012
2013
2014
2015
Total
$
$
Building
75,401
76,809
78,216
39,460
269,886
The University leases fifteen vehicles for the Athletic Department employees at a cost of $65,670 in fiscal year 2011
and $64,526 in fiscal year 2010. The Foundation makes the payments on these leased vehicles. One, two and twelve
vehicle leases expire during fiscal years 2012, 2013, and 2014, respectively. Following is a schedule of future
minimum lease payments.
Year Ending
June 30
2012
2013
2014
Total
$
$
Vehicles
52,248
50,040
44,685
146,973
ILLINOIS STATE UNIVERSITY
38
Notes to Financial Statements June 30,2011 and 2010
Note 11. State Universities Retirement System (SURS)
Plan Description: Illinois State University contributes to the State Universities Retirement System of Illinois (SURS),
a cost-sharing multiple-employer defmed 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 the website at www.SURS.org, or by calling 1-800-275-7877.
Funding Policy: Plan members are required to contribute 8.0% (up to 9.5% for police officers) of their annual
covered salary and substantially all employer contributions are made by the State of Illinois on behalf of the individual
employers at an actuarially determined rate. The current rate is 24.21% (for FY 2012) 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 ending June 30, 2011, 2010, and 2009, were
$35,249,606, $31,104,831, and $19,954,109, respectively, equal to the required contributions for each year.
Note 12. 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 do 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 Illinois State 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 State's 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 fmancial 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 Ave., Springfield, Illinois, 62763-3838.
ILLINOIS STATE UNIVERSITY
39
Notes to Financial Statements June 30, 2011 and 2010
Note 13. Transactions with Related Organizations
Illinois State University Foundation (The Foundation) is a related organization formed to support in various ways the
University's instructional, research, and public service missions. The University and the Foundation entered into a
three year Support Agreement effective July 1, 2009, whereby the University agrees to provide to the Foundation fair
and reasonable compensation in exchange for development and fundraising services up to a maximum value of
$2,200,000 during the first year of the agreement. For the year ended June 30, 2010 the University made a cash
payment to the Foundation of $200,000 for these services. In additional consideration for these services, the University
provided office space, clerical, accounting and computer support estimated to be $1,755,690 and $1,707,897 during
fiscal years 201 I and 2010, respectively. During fiscal years 2011 and 2010 the Foundation contributed services and
expenditures of $8,0 12,794 and $6,611,929, respectively that were for the direct and/or indirect support of the
University .
In June 2007, Launching Futures II invested in real estate for $600,631 for use by the University as a remote parking
lot. Concurrently, Launching Futures II signed a lease agreement with the University for the real estate providing for
annual payments of $49,992 from the University to Launching Futures II. The lease has a five year term with the
University having the option to extend the lease term for an additional five year period.
In fiscal year 2009, Launching Futures, LLC acquired real estate for approximately $6.3 million that was being leased
by the University from an outside party. Once the sales contract was signed, the University continued to lease the
property from the seller until the initial closing. The acquired real estate serves as the University's Alumni Center. To
assist with construction improvement costs, the University made a $3 million prepaid rent payment in July 2008. The
LLC leases the property to the University at $19,167 per month. Also, the University and Foundation are amortizing
the $3 million prepaid rent over a ten-year period at $300,000 per year.
The Illinois Institute for Entrepreneurship Education (BEE) was created by an act of the Illinois General Assembly in
1988. The purpose of the IIEE is to foster growth and development of entrepreneurship by educating Illinois citizens to
the viability of entrepreneurship as a career option and to the role and contributions of entrepreneurs in economic
development and job creation. The IIEE is mandated to reach all areas of the State, all ages, all ethnic groups, and
income levels. The IIEE was created under the oversight of Illinois State University and, by working cooperatively
with the University, the IIEE offers llJinois teachers two university-accredited graduate courses in entrepreneurship.
During fiscal year 2010, the University contributed $184,000 of revenue and direct public service expenditures to the
IIEE. These amounts are discretely blended in the University financial statements. During fiscal year 2011, $200,000
was transferred to Chicago State University who is now overseeing IIEE.
ILLINOIS STATE UNIVERSITY
40
Notes to Financial Statements June 30, 2011 and 2010
Note 14. Student Health Insurance
The University contracts with Aetna Student Health (ASH) fonnerly known as The Chickering Group, an Aetna
Company of Cambridge, Massachusetts for administration of the Aetna Accident and Sickness Plan to provide
insurance benefits to students of the University. Students enrolled in 9 or more semester hours of credit pay a premium
for this coverage. As part of the contractual agreement between the University and ASH, the University has a premium
stabilization reserve (PSR) which is used to minimize future plan year increases in the premium based on unexpectedly
high claims utilization. As each Plan Year is finalized, costs are debited (gains are credited) to an account funded by
the University each year (15% of expected premium at the initial deposit, but adjusted to 15% of actual premium upon
reconciliation). The reserve for 2008-2009 of$I,144,323 became available upon final calculation in November 2010, a
portion of the reserve, $1,016,735, was rolled over to complete funding of2011-2012 Plan Year, with an
additional $130,325 available to the University, which can be returned or held to fund future periods. Potential refunds
are still at risk for unexpected claims losses, they are not recorded as assets. Assuming a 10% trend, no plan design
changes, and no change in enrollment, the University estimates $1,028,500 to be needed to fund 2012-2013.
Note 15. Student Financial Assistance
The University participates in the U.S. Department of Education Direct Student Loan Program. The University
awarded $108,352,602 and $99,549,539 in Direct Student Loans for the years ended June 30, 2011 and 2010,
respectively. The University classified this loan program as noncash federal awards, and it is disclosed in the footnotes
to the Office of Management and Budget (OMB) Circular A-I33 Schedule of Expenditures of Federal Awards.
Accordingly, no revenue or expenditures are included in the financial statements of the University.
Note 16. Risk-Management
The University is exposed to various loss related exposures. These exposures include torts, theft, damages, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The University purchases
commercial insurance for these loss exposures. During the years ended June 30, 2011 and 2010, there were no
significant reductions in coverage.
As a public University in the State of Illinois, Illinois State University enjoys certain statutory protections from liability
through the Illinois Court of Claims statute and the State Employee Indemnification Act. In addition, the University
purchases liability insurance that covers related claims subject to a $350,000 self-insured retention. The educator's
legal liability policy has aggregate and occurrence limits of $5,000,000. The general liability insurance policy has a
per occurrence limit of $1 0,650,000 and an aggregate of $19,650,000.
To augment existing State and commercial coverage, and to assist in addressing potential risks and liabilities incurred
through its operations, the University is self-funded. In accordance with the requirement'of GASB Statement No. 10, a
liability for claims is reported if information prior to the issuance of the financial statements indicates that it is probable
that a liability has been incurred at the date of the fmancial statements and the amount of loss can be reasonably
estimated. At June 30, 2011 and 2010 the liability was $0. There were no settlements which exceeded insurance
coverage for the last three years. Following is a schedule of changes in self-insurance for fiscal year 2010:
Beginning Balance
Revenue
Expenses
Reclassification from
liability reserve to board
designated self-insurance
Ending Balance
2010
$ 1,115,707
$
15,158
(12,374)
(1,118,491)
-----
ILLINOIS STATE UNIVERSITY
41
Notes to Financial Statements June 30, 2011 and 2010
Note 17. Net Assets
UNIVERSITY NET ASSETS
University restricted net assets are comprised of the following at June 30, 2011 and 2010:
2011 2010
Expendable Student loans $ 9,467,386 $ 9,455,338
The University's Board of Trustees designated unrestricted net assets are comprised of the following at June 30, 2011
and 2010:
2011 2010
Capital asset renewal and replacement
for the internal service departments $ 254,511 $ 376,427
Self- Insurance 1,118,491 1,118,491
Total $ 1,373,002 $ 1,494,918
FOUNDATION NET ASSETS
The Foundation's restricted net assets are comprised of the following at June 30, 2011 and 2010:
2011 2010
Nonexpendable
Scholarship and fellowship $ 40,686,811 $ 35,190,065
College and academic department support 14,717,890 9,943,241
Faculty and staff compensation 6,260,595 7,321,387
Other 7,239,063 7,156,443
Total nonexpendable $ 68,904,359 $ 59,611,136
Expendable
Scholarship and fellowship $ 8,823,050 $ 7,647,477
Instructional departmental uses 9,761,855 10,739,698
University capital projects 2,050,018 3,104,929
Other restricted expendable 4,063,333 1,579,259
Total expendable $ 24,698,256 $ 23,071,363
ILLINOIS STATE UNIVERSITY
42
Notes to Financial Statements June 30, 2011 and 2010
Note 18. Foundation Donor Restricted Endowments
If a donor has not provided specific instructions, state law permits the Foundation to authorize expenditure from
available endowment funds. The Foundation Investment Committee has adopted a weighted average spending policy
based on the following components:
1. Prior year spending amount plus 4.5% of the value of new gifts. The sum is adjusted by the Higher
Education Price Index inflation factor for the past 12 months then weighted at 70%.
2. End of the year market value times 4.5%, then weighted at 30%.
3. A fundraising fee of .8%, based on the end of the year market value, is assessed each endowed fund to
help support Foundation fundraising and general operations.
Due to the market value of the Foundation's endowed investments declining 20.4% during the year ended June 30,
2009, the Foundation Board decided not to make a distribution for fiscal year 2010.
The Investment Committee reinstated the distribution for fiscal year 2011 which resulted in $2,868,470 being
distributed on July 1,2010. $2,395,330 was distributed to expendable for endowed funds and $473,140 was distributed
to the Foundation for fundraising and general operations expenses.
In September of2010, the Foundation reached a verbal agreement to return to a donor, who is a Foundation Board
member, $1.924 million in gifts to an endowed fund, which will be terminated at the donor's request. These funds
were returned to the donor during fiscal year 2011.
On June 30, 2009, the Illinois Governor signed the Uniform Prudent Management of Institutional Funds Act
(UPMIFA) into law. UPMIFA replaced the Uniform Management of Institutional Funds Act (UMFIA) and eliminated
the historic dollar value rule with respect to endowment fund spending. UPMIF A also updated the prudence standard
for the management and investment of charitable funds. In accordance with UPMIF A, the Foundation Board considers
the factors in Section 3(e)(l) and 4(a) of the act in determining the investment, management and disbursement of
endowment funds.
Note 19. Commitments
The University entered into two real estate deposit and option agreements during 2005, with one of the agreements
being amended in 2006 and 2008. The agreements grant the University an irrevocable seven year option period to
purchase the properties. The agreements provide that the option periods may be renewed for up to two additional
periods of seven years. The University has made non-refundable option deposit payments of$I,955,250 at June 30,
2010 ($610,000 in 2010, and $1,345,250 in 2008,2007,2006 and 2005 collectively) which can be credited toward the
purchase price. The deposit extends the option period agreement to August 2014 with the option to renew an additional
period of five years. If the University exercises the option agreements, the purchase price for the properties will be
$4,180,000. The agreements also require annual maintenance fees which will not be credited toward the purchase
price. In October 2011, the Board of Trustees authorized the exercise of options on the properties located at 302 N.
School St. and 209,211,213, and 215 N. Fell Streets.
The University has entered into contracts for significant repairs and replacement of University capital assets. Total
estimated costs under these contracts are $29,026,881, approximately $14,645,691 (50.5 percent) of the work has been
completed as of June 30, 2011. The University is obligated to pay the remainder of the costs under the contracts as the
work is completed.
In June 2010, the University entered into a 40 year ground lease agreement with Collegiate Housing Foundation
Normal, LLC (lessee), a non-profit limited liability company, for the purpose of financing, constructing, furnishing and
equipping a new 896 bed student housing facility at the current Cardinal Court Apartment complex site. The
construction cost of the project is estimated at $47,000,000 and will be financed with revenue bonds issued by the
Illinois Finance Authority as debt of the lessee. Construction began in February 2011 with completion expected by
ILLINOIS STATE UNIVERSITY
43
Notes to Financial Statements June 30, 2011 and 2010
August 2012. The facility will house Illinois State University students and be managed by the University. The lessee
will pay the University rent on the ground lease on an annual basis as defined by the tenns of the agreement.
In October 2010, University Board of Trustees approved a $5.5 million capital improvement project to Hovey Hall as
well as an energy conservation measures contract at a project cost of$8.5 million. The Series 2011 Certificates of
Participation were issued to finance the cost of these improvements.
The University has secured natural gas and electricity at a fixed price for fiscal years 2012 through mid·20 14 by
executing forward fixed price purchase contracts with Integrys Energy, IMGA, and MidAmerican Energy. As of June
30,2011, the University's commitment to these contracts is approximately $11,638,990 for natural gas and
$17,572,973 for electricity. These are considered normal purchase contracts.
The Foundation has invested in various limited partnerships. According to the terms of the investment agreements, the
Foundation has committed to invest $20,196,457 and $16,296,457 as of June 30, 2011 and 2010, respectively. As of
June 30, 2011 and 2010, the Foundation had invested $10,378,030 and $9,074,772, respectively and has future
investment commitments of$9,818,427 and $7,221,685, respectively.
In October 2011, the University purchased the property at 216 N. Main for $173,816. An estimated $50,000 will be
spent on demolition costs and site improvements.
In February 2012, the University Board of Trustees approved additional expenditures of up to $23.5 million for capital
improvements to Hancock Stadium. Previously, the Board had authorized expenditures of up to $1.5 million for
planning improvements to Hancock Stadium. The cost of the additional project expenditures will be funded by a
combination of$21.5 million of bond proceeds, $1.0 million of University funds and $2.5 million of anticipated private
contributions.
Note 20. Contingencies
The University is, from time to time, subject to various claims, legal actions, and inquiries related to compliance with
environmental and other govemmentallaws and regulations. Although it is difficult to quantify the potential impact of
these claims, management believes that the ultimate cost of these matters will not adversely affect the University's
future fmancial condition or results of operations.
Accordingly, management does not believe that a reserve of the future effect, if any, of these matters on the financial
condition or results of operations of the University is necessary at June 30, 2011, as it is not possible to detennine with
any degree of probability the level of future expenditures for these matters.
ILLINOIS STATE UNIVERSITY
44
Notes to Financial Statements June 30, 2011 and 2010
Note 21. Crosswalk of Natural Classification with Functional Classifications
Natural Classification for the Year Ended June 30, 2011
Compensation Supplies
University and Benefits and Services ScholarshiEs DeEreciation Total
Instruction $ 97,901,819 $ 16,089,914 $ $ $ 113,991,733
Research 10,190,860 3,800,256 13,991,116
Public Service 7,524,860 8,170,467 15,695,327
Academic Support 11,492,493 6,641,178 18,133,671
Student Services 18,419,496 17,328,755 35,748,251
Institutional Support 16,895,834 12,648,060 29,543,894
Operation of Plant 11,547,231 12,699,054 24,246,285
Depreciation 19,779,251 19,779,251
Staff Benefits 1,864,382 46,927 1,911,309
Student Aid 5,282,507 31,637,930 36,920,437
Payments on Behalf 86,469,651 86,469,651
Auxiliary Facilities 25,176,579 31,950,223 57,126,802
Other 2,292,074 46,217 2,338,291
Total University $ 289,775,279 $ 114,656,631 $ 31,684,857 $ 19,779,251 $ 455,896,018
Natural Classification for the Year Ended June 30, 201O
Compensation Supplies
University and Benefits and Services ScholarshiEs DeEreciation
Instruction $ 95,898,643 $ 14,070,869 $ $ $ 109,969,512
Research 10,549,779 3,652,269 14,202,048
Public Service 7,239,160 7,859,716 15,098,876
Academic Support 11,503,250 2,687,294 14,190,544
Student Services 17,989,802 17,320,443 35,310,245
Institutional Support 16,171,660 11,058,261 27,229,921
Operation of Plant 12,018,186 17,517,970 29,536,156
Depreciation 17,939,398 17,939,398
Staff Benefits 1,178,173 42,123 1,220,296
Student Aid 4,439,345 27,235,019 31,674,364
Payments on Behalf 78,553,377 78,553,377
Auxiliary Facilities 23,527,036 38,056,721 61,583,757
Other 2,343,212 2,401,736
Total University $ 276,972,278 $ $ 27,277,142 $ 17,939,398 $ 438,910,230
ILLINOIS STATE UNIVERSITY
45
Notes to Financial Statements June 30, 2011 and 2010
Note 22. Additional Auxiliary Facilities System Disclosure Information
The University operates auxiliary facilities that include student housing, student activities and parking.
Following are condensed fmancial statements for the Auxiliary Facilities System:
Condensed Statements of Net Assets at June 30 2011 2010 (as
restated)
Assets:
Current assets $ 26,448,178 $ 41,802,002
Noncurrent assets:
Capital assets, net 193,742,160 180,493,574
Other noncurrent assets 62,381,412 55,966,756
Total assets 282,571,750 278,262,332
Liabilities:
Current liabilities 14,385,736 20,334,795
Noncurrent liabilities 93,724,613 99,140,744
Total liabilities 108,110,349 119,475,539
Net assets:
Invested in capital assets, net of related debt 97,209,831 82,473,843
Unrestricted 76,312,950
Total net assets $ 158,786,793
Condensed Statements of Revenues, Expenses and
Changes in Net Assets for the year ended at June 30
Operating revenues $ 83,018,067 $ 80,914,263
Depreciation expense (6,074,942) (4,973,799)
Other operating expenses {57,126,802) (61,583,757)
Operating income 19,816,323 14,356,707
Non-operating revenues 239,706 1,225,117
Non-operating expenses {4,381,421} {3,280,279}
Increase in net assets 15,674,608 12,301,545
Net assets - beginning of year 158,786,793 146,762,195
Prior period adjustment (276,947)
Net assets - end of year $ 174,461,401 $ 158,786,793
Condensed Statements of Cash Flows for the year ended June 30
Net cash flows provided by operating activities $ 24,357,802 $ 17,278,246
Net cash flows provided by non-capital financing activities 239,643 246,299
Net cash flows provided by (used in) capital and related financing
activities (32,478,188) (30,491,077)
Net cash flows provided by (used in) investing activities 323,810 (2,946,219)
Net increase (decrease) in cash and cash equivalents (7,556,933) (15,912,751 )
Cash and cash equivalents, beginning of year 7,844,425
Cash and cash equivalents, end of year $ 287,492 $
ILLINOIS STATE UNIVERSITY
46
Notes to Financial Statements June 30, 2011 and 2010
Following is additional disclosure infonnation relating to University Auxiliary Facilities revenue bonds. See Note 9
RESERVES FOR DEBT SERVICE, REP AIR AND REPLACEMENT, AND DEVELOPMENT
Debt Senice
A portion of the Debt Service Reserve Account (DSRA) that was established under the tenns of the Revenue
Bond Series 1989, 1992, 1993 and 1996 indentures was used to purchase a Surety Bond. This Surety Bond
constitutes a Reserve Account Credit Instrument under the requirements of the Bond Resolution. The Surety
Bond is payable to the Bond Registrar. The proceeds of the Surety Bond held in the DSRA may be used solely
for the purpose of paying principal and interest on the Series 1989, 1992, 1993 and 1996 Bonds and any
outstanding Parity Bonds.
Repair and Replacement and Development
The Bond indentures also require a deposit be made in the Repair and Replacement Reserve Account. The sum
of the deposit shall be greater than 10% of the Maximum Debt Service and shall not exceed the sum of 5% of
the replacement cost of the auxiliary facilities' structures plus 20% of the replacement cost of their equipment
plus 10% of either the historical cost of the parking lots or 100% of the estimated cost of resurfacing any
existing auxiliary facilities' parking lot. The Development Reserve Account consists of funds for projects
approved by the Board.
2011 2010
Repair and Develop- Repair and Develop-
Replacement ment Replacement ment
Reserve Reserve Reserve Reserve
Maximum Allowable Deposits at June 30 $ 39,024,111 $ N/A $ 36,775,944 $ N/A
Assets Reserved 27,626,970 25,935,606 1,319,295
Project Amount Approved by Board N/A N/A 1,250,000
During 2011, the Development Reserve balance of$I,328,533 was used for the renovation ofMcConnick Hall in
conjunction with the construction of the Student Fitness Center.
ILLINOIS STATE UNIVERSITY
47
Notes to Financial Statements June 30, 2011 and 2010
Note 23. Prior Period Adjustment
Subsequent to the issuance of the fiscal year 2010 fmancial statements, the University determined that certain
receivables related to State funded scholarships were uncollectible. This resulted in the previously recorded Total
Assets, as presented in the fiscal year 2010 Statement of Net Assets, being overstated by $5,189,664. These
receivables were related to State of Illinois military scholarship programs for fiscal years 2006 through 2010. With the
determination that the State of Illinois will not be paying on these receivables, it was necessary to reduce the previously
recorded Total Assets and corresponding Net Assets by the uncollectible balance of $5, 189,664. The fiscal year 2010
amounts are properly presented in the fiscal year 2011 comparative Statement of Net Assets.
The following financial statement line items for fiscal year 20 I 0 were affected by the correction.
As Previously Adjustment As Restated
ReE°rted
Statement of Net Assets
Accounts Receivable $ 13,662,634 $ (5,189,664) $ 8,472,970
Unrestricted Net Assets 124,989,779 (5,189,664) 119,800,115
Statement of Revenues, Expenses, and
Changes in Net Assets
Student tuition and fees, net 152,516,115 (1,412,074) 151,104,041
Auxiliary facilities 81,017,810 (103,547) 80,914,263
Operating loss (158,628,503 ) (1,515,621) (160,144,124)
Income before capital items 31,352,754 (1,515,621 ) 29,837,133
Increase in net assets 39,864,561 (1,515,621) 38,348,940
Statement of Cash Flows - Reconciliation
Operating loss (158,628,503) (1,515,621) (160,144,124)
Accounts Receivables, net (367,203) 1,515,621 1,148,418
This information is an integral part of the accompanying financial statements.
ILLINOIS STATE UNIVERSITY
48